DSW Shutters Ebuys Division & Sees Bump From Tax Cuts

DSW Inc. is shedding one of its businesses.

The Columbus, Ohio-based retailer reported today a plan to shutter its Ebuys division. DSW acquired the e-commerce off-price footwear and accessories company in February 2016 for $62.5 million upfront, plus additional payments.

It stated today that after a strategic review of the Ebuys business, DSW has chosen to liquidate all inventory and assets — a process that it expects to complete in early 2018.

Meanwhile, the retailer had other, more positive news to report. Its earnings for the fiscal year 2017 and recent fourth quarter saw favorable gains and beat Wall Street expectations.

For the most recent quarter, ended Feb. 8, DSW reported earnings of 15 cents per diluted share. On an adjusted basis, EPS were 38 cents, outpacing analyst estimates for 27 cents a share.

For the fiscal year, EPS were $1.52 on an adjusted basis, marking DSW’s first increase since 2013. And revenues for the year increased 3.3 percent to a new high of $2.8 billion.

In a statement, CEO Roger Rawlins credited the results to DSW’s ongoing initiatives to redefine the brick-and-mortar shopping experience, and the recent tax cuts.

“Our initiatives drove comparable sales growth and strong margin improvement at the DSW segment this quarter,” said Rawlins. “The sales inflection at our Power 35 locations, including our Lab store, where we have introduced an elevated warehouse experience, prove our initiatives are gaining traction and provide us a blueprint to drive sales. We are drawing on our strong cash flow and the benefit from U.S. tax reform to enhance shareholder returns by boosting our quarterly dividend and reinvesting in strategic initiatives that will advance DSW’s dominant position in the marketplace in the years to come.”

According to the company, it recorded an additional $10.1 million net tax expense resulting from the remeasurement of its net federal deferred tax assets. And for the upcoming fiscal year 2018, its effective tax rate will be 29 percent, compared with its historical rate of 39 percent.

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