×

DSW Manages to Top Profit Forecasts, But Sales Fall Short

Helped by better expense controls and inventory management, DSW Inc. today produced significant fourth-quarter profit growth, but its sales remained soft.

As of 10:15 a.m., investors cheered the firm’s uptick in profitability, sending DSW’s stock climbing almost 5 percent, to $20.80.

The off-price footwear retailer said its Q4 net income soared 160 percent year-over-year, to $30.5 million, or 38 cents per diluted share. Adjusted net income was $16.5 million, or 20 cents per diluted share, an increase of 43 percent over last year, and well above analysts’ bets for diluted earnings per share of 16 cents.

Sales improved 0.4 percent, to $674.6 million — including a $27.9 million contribution from Ebuys, which the firm acquired last year — but market watchers had expected the company’s sales to reach $691.5 million. Comparable sales decreased 7 percent.

Our fourth quarter continued our return to year-over-year profitability growth, with top-line results that met our comp guidance,” CEO Roger Rawlins said in a release. “Inventory management and a product-focused campaign drove significantly higher gross margin, which, coupled with better expense control, resulted in a 22 percent increase in adjusted earnings per share this fall season.”

The company’s full-year sales increased 3.5 percent, to $2.7 billion, including $83.9 million from the company’s acquisition of Ebuys.

Comparable sales decreased by 3 percent and reported net income was $124.5 million, or $1.52 per diluted share. Adjusted net income was $120.1 million, or $1.46 per diluted share, a 5 percent decrease from last year.

After making fundamental changes to our core business last year, we are laser-focused on driving comp growth through our merchandise and allocation initiatives and the elevation of our customer’s digital experience,” Rawlins said. “Furthermore, we are building a foundation to support the growth of Ebuys and Town Shoes and to leverage synergies across all of our retail brands.”

Looking ahead, the company expects full-year revenue growth of 3 to 5 percent, with comparable sales to range from a flat to low single digit decline compared to the prior year.

Full-year adjusted EPS is expected to range between $1.45 to $1.55 per diluted share.

ECCO Sponsored By ECCO

News for the Sporty (and Not So Sporty)

ECCO is shifting toward athleisure with the launch of its ECCO Athletic Leisure Club division and accompanying fall footwear styles.
Learn More

Access exclusive content