The Columbus, Ohio-based off-price retailer said its net income for the first quarter of 2016 declined 37 percent, to $30 million, or 36 cents per diluted share, from the comparable quarter when net income was $47 million, or 53 cents per diluted share. Analysts, who had already trimmed their expectations last week, expected the firm to produce diluted earnings per share of 46 cents.
DSW’s sales advanced 4 percent in the quarter, to $681 million, while comparable store sales slipped 1.6 percent. Market watchers had predicted that the company would post sales of $700 million and that comps would be roughly flat.
Newly appointed CEO Roger Rawlins said the firm was compelled to reduce its full-year guidance as it works toward several improvements throughout the year.
“We have reduced our sales and earnings guidance for the year to reflect the current trend of our business,” Rogers said during the company’s conference call. “We believe this is the prudent thing to do, as we work to improve how and what we buy, where we allocate goods and how we execute in the field. This decision will help us manage inventories, expenses and capital investments as we continue to make progress through the back half of the year.”
The company downward revised its full-year diluted EPS guidance to $1.32 to $1.42 per share, from $1.54 to $1.64 per share. The company now expects approximately 6 percent revenue growth driven on a comparable sales decline in the 1 to 2 percent range. Previously, DSW had expected revenue growth of 8 to 10 percent, with comparable sales growth in the 1 to 2 percent range.
Debbie Ferrée, DSW’s vice chairman and chief merchandising officer, said athletic remains a standout category for the firm, while the company is “not satisfied” with the results in its men’s business. Once again, weather played a role in overall trends as colder post-Easter temperatures suppressed demand for casual sandals, Ferrée said.
“Within the DSW segment, athletic significantly outperformed the chain with a mid-teens comp increase while comps for the women’s, men’s and accessories categories declined in the mid-single digits,” Ferrée said during the company’s conference call. “The first quarter was disappointing with challenges in casual sandals, closed up dress, women’s evening and men’s casual, more than offsetting the positive signs we are seeing in the balance of the business.”
Looking ahead, Ferrée said the team is “laser-focused on offering the brands and the products that are most important to our customers,” while its merchants continue to “secure a large number of exclusives for DSW.”
“We are pleased with how customers are responding to our recent products and brand introductions,” Ferrée said. “Although it’s early, we are excited with the successful relaunch of one of our most important private brands. Starting this year, we have identified a new partner with strong design and sourcing capabilities that will bring our private brand business to its fullest potential.”