DSW Banks on New Trends for Spring

NEW YORK — After a strong quarter driven by women’s boots, DSW Inc. is looking to the Americana craze and athletic styles to drive spring sales.

“This fall, DSW was once again the boot headquarters for women,” said DSW President and CEO Michael MacDonald in a call with analysts, adding that sales of women’s boots in the third quarter were up 10 percent, on top of a 47 percent increase recorded in the same period a year ago.

“In contrast with last year, where we were scrambling to get inventory to beat the sales trend, this year we planned the receipts that would allow us to feed a strong sales trend. Our inventory per square foot is up 13 percent [over] last year, and we’re pleased with that stock position,” added MacDonald.

Looking ahead, Deborah Ferrée, DSW’s chief merchandising officer, said the Americana trend is “probably the biggest one we’re seeing” going into spring.

“[It] is really a trend that crosses both genders. The other trend I feel very strongly about is vulcanized wedges, and new materials that are going into not only casuals but also dress shoes,” said Ferrée.

DSW also announced it will open about 20 new doors in 2011. The stores, to measure at least 17,500 square feet, are slated for three small markets that the retailer previously avoided due to population size, and that will pave the way for DSW to enter 50 additional markets.

“The difference in the three small markets is that we’ve been able [to] strike real estate deals that will allow us to afford the bigger space that hopefully we can grow into. It can represent the best of our growth,” said MacDonald.

Scott Krasik, analyst at BB&T Capital Markets, said “accelerating the store openings shows a lot of confidence [on DSW’s part].”

DSW’s third-quarter profit jumped 33 percent, the firm said last Tuesday, sending shares of the Columbus, Ohio-based firm up 2.6 percent in morning trading.

Net income for the period was $35.5 million, and earnings per share were 79 cents, up from 60 cents. Analysts were looking for 75 cents a share.

Net sales totaled $489.3 million in the quarter, a 10 percent increase from $444.6 million a year ago.

By category, women’s sales advanced 10 percent while men’s rose 6 percent. Athletic increased 9 percent and accessories surged 19 percent, thanks to hosiery posting a 38 percent comp increase.

DSW said same-store sales rose by 10.1 percent in the quarter, and the firm expects the annual comp increase to come in at about 12 percent. It also expects EPS of about $2.30 to $2.40 for fiscal 2010, up from $1.23 in fiscal 2009. DSW ended the quarter with cash and cash equivalents of $103.8 million and no long-term debt.

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