DSW Inc. Reports Second Quarter 2015 Financial Results

-- Second quarter sales increase 6.8% to $627 million; comparable sales increase 1.8%

-- First six months sales increase 8.1% to $1.28 billion; comparable sales increase 3.5%

-- Second quarter EPS from continuing operations increases 13.5% to $0.42 per share compared to last year's $0.37 per share

-- Company reiterates full year outlook for EPS in the range of $1.80 to $1.90 per share

-- Board of Directors approves a quarterly dividend of $0.20 per share

Aug 25, 2015, 07:00 ET from DSW Inc.

COLUMBUS, Ohio, Aug. 25, 2015 /PRNewswire/ -- DSW Inc. (NYSE: DSW), a leading branded footwear and accessories retailer, announced financial results for the thirteen week period ended August 1, 2015, which compares to the thirteen week period ended August 2, 2014.

Mike MacDonald, President and Chief Executive Officer, commented, "We were encouraged with our accomplishments in the second quarter. Our double digit earnings growth over the prior period reflected a significant shift in favor of regular priced merchandise selling. This shift enabled us to achieve meaningful merchandise margin rate expansion and gross profit dollar growth. We also advanced our strategy of becoming a more customer-centric company by evolving our organization, systems, and processes to meet our customers' changing expectations. As a result of this financial and strategic process, we remain confident in our direction."

Second Quarter Operating Results

  • Sales increased 6.8% to $627 million compared to last year's sales of $587 million.
  • Comparable sales increased by 1.8% compared to last year's increase of 0.8%.
  • Gross profit increased 120 bps driven primarily by lower markdown activity.
  • Operating expense rate increased by 80 bps due to higher stock and incentive compensation.
  • Net income from continuing operations increased by 10.7% to $37.6 million.
  • Earnings per share from continuing operations increased by 13.5% to $0.42 per share compared to last year's $0.37 per share.

Six Months Ended August 1, 2015 Operating Results

  • Sales increased 8.1% to $1.28 billion compared to last year's sales of $1.19 billion.
  • Comparable sales increased by 3.5% compared to last year's decrease of 1.5%.
  • Net income from continuing operations increased by 17.0% to $85.0 million.
  • Earnings per share from continuing operations increased by 20.3% to $0.95 per share compared to last year's $0.79 per share.

Second Quarter Balance Sheet Highlights

  • Cash, short-term and long-term investments totaled $471 million compared to $465 million in the second quarter last year.
  • Inventories were $505 million compared to $415 million at the end of the second quarter last year. On a cost per square foot basis, DSW inventories increased by 14.2%. Excluding opportunistic buys, inventories on a cost per square foot increased by 6.3%.

Regular Dividend DSW Inc.'s Board of Directors declares a quarterly cash dividend payment of $0.20 per share. The dividend will be paid on September 30, 2015 to shareholders of record at the close of business on September 18, 2015.

Fiscal 2015 Annual Outlook For the fifty-two week fiscal year ending January 30, 2016, the Company reiterated its earnings outlook to range from $1.80 to $1.90 per share.

Webcast and Conference Call To hear the Company's live earnings conference call, log on to http://www.dswinc.com/ today at 8:30 a.m. Eastern Time, or call 1-888-317-6003 in the U.S. or 1-412-317-6061 outside the U.S. using passcode 0043755 approximately ten minutes prior to the start of the call. A telephone replay of this call will be available until 5:00 p.m. Eastern Time on September 8, 2015 and can be accessed by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 outside the U.S. and using passcode 10070803. An audio replay of the conference call, as well as additional financial information, will also be available at http://www.dswinc.com.

About DSW Inc. DSW Inc. is a leading branded footwear and accessories retailer that offers a wide selection of brand name and designer dress, casual and athletic footwear and accessories for women, men and kids. As of August 25, 2015, DSW operates 449 stores in 42 states, the District of Columbia and Puerto Rico, and operates an e-commerce site, http://www.dsw.com, and a mobile website, http://m.dsw.com. DSW Inc. also supplies footwear to 372 locations in the United States under the Affiliated Business Group. For store locations and additional information about DSW Inc., visit http://www.dswinc.com. Follow DSW on Twitter at http://twitter.com/DSWShoeLovers and Facebook at http://www.facebook.com/DSW.

DSW INC.

Q2 2015 SEGMENT RESULTS

Net sales by reportable segment

Thirteen weeks ended

Twenty-six weeks ended

August 1, 2015

August 2, 2014

% change

August 1, 2015

August 2, 2014

% change

(in thousands)

(in thousands)

DSW segment

$

592,583

$

553,814

7.0

%

$

1,204,794

$

1,112,680

8.3

%

ABG segment

34,623

33,282

4.0

%

77,898

73,363

6.2

%

DSW Inc.

$

627,206

$

587,096

6.8

%

$

1,282,692

$

1,186,043

8.1

%

 

Comparable sales change by reportable segment

Thirteen weeks ended

Twenty-six weeks ended

August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014

DSW segment

1.9%

0.8%

3.5%

(1.7)%

ABG segment

0.7%

2.5%

3.1%

1.6%

DSW Inc.

1.8%

0.8%

3.5%

(1.5)%

 

Gross profit by reportable segment

Thirteen weeks ended

Twenty-six weeks ended

August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014

DSW segment

31.2%

30.0%

32.3%

30.9%

ABG segment

19.0%

17.5%

20.0%

21.2%

DSW Inc.

30.5%

29.3%

31.5%

30.3%

 

Stores and square footage data

As of

August 1, 2015

August 2, 2014

DSW stores open, end of period

449

410

DSW stores total square footage (in thousands)

9,529

8,924

 

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Any statements in this release that are not historical facts, including the statements made in our "Fiscal 2015 Annual Outlook," are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's current expectations and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to: our success in executing our omni-channel strategy; our success in opening and operating new stores on a timely and profitable basis; maintaining strong relationships with our vendors; our ability to anticipate and respond to fashion trends; disruption of our distribution and/or fulfillment operations; continuation of supply agreements and the financial condition of our affiliated business partners; fluctuation of our comparable sales and quarterly financial performance; risks related to our information systems and data; failure to retain our key executives or attract qualified new personnel; our competitiveness with respect to style, price, brand availability and customer service; our reliance on our DSW Rewards program and marketing to drive traffic, sales and customer loyalty; uncertain general economic conditions; our reliance on foreign sources for merchandise and risks inherent to international trade; risks related to our handling of sensitive and confidential data; risks related to leases of our properties; risks related to the realization of benefits related to our equity interest in Town Shoes, a leading branded shoe retailer in Canada; foreign currency exchange risk; and risks related to our cash and investments. Additional factors that could cause our actual results to differ materially from our expectations are described in the Company's latest annual or quarterly report, as filed with the SEC. All forward-looking statements speak only as of the time when made. The Company undertakes no obligation to revise the forward-looking statements included in this press release to reflect any future events or circumstances.

 

DSW INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

August 1, 2015

January 31, 2015

August 2, 2014

Assets

Cash and equivalents

$

151,007

$

59,171

$

87,406

Short-term investments

140,821

171,201

151,647

Accounts receivable, net

18,596

24,407

27,868

Inventories

505,170

450,836

414,988

Prepaid expenses and other current assets

31,599

43,108

52,515

Deferred income taxes

23,167

19,747

22,331

Total current assets

870,360

768,470

756,755

Property and equipment, net

354,477

337,903

331,269

Long-term investments

179,305

216,756

225,972

Goodwill

25,899

25,899

25,899

Deferred income taxes

8,944

11,332

12,466

Investment in Town Shoes

21,986

25,887

24,788

Note receivable from Town Shoes

44,627

43,304

47,755

Other assets

8,466

8,692

8,863

Total assets

$

1,514,064

$

1,438,243

$

1,433,767

Liabilities and shareholders' equity

Accounts payable

$

190,911

$

170,610

$

192,999

Accrued expenses

113,466

113,180

107,123

Total current liabilities

304,377

283,790

300,122

Non-current liabilities

144,029

143,333

142,479

Total shareholders' equity

1,065,658

1,011,120

991,166

Total liabilities and shareholders' equity

$

1,514,064

$

1,438,243

$

1,433,767

 

DSW INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

Thirteen weeks ended

Twenty-six weeks ended

August 1, 2015

August 2, 2014

August 1, 2015

August 2, 2014

Net sales

$

627,206

$

587,096

$

1,282,692

$

1,186,043

Cost of sales

(435,904)

(415,192)

(878,332)

(826,134)

Gross profit

191,302

171,904

404,360

359,909

Operating expenses

(131,721)

(118,582)

(271,207)

(245,336)

Operating profit

59,581

53,322

133,153

114,573

Interest income, net

752

659

1,672

1,650

Non-operating (expense) income

(7)

3,305

Income from continuing operations before income taxes and (loss) income from Town Shoes

60,326

53,981

138,130

116,223

Income tax provision

(22,486)

(20,860)

(51,582)

(44,463)

(Loss) income from Town Shoes

(230)

849

(1,572)

849

Income from continuing operations

37,610

33,970

84,976

72,609

Income from discontinued operations, net of tax

358

358

Net income

$

37,610

$

34,328

$

84,976

$

72,967

Diluted shares used in per share calculations:

89,693

91,126

89,660

91,618

Diluted earnings per share:

Diluted earnings per share from continuing operations

$

0.42

$

0.37

$

0.95

$

0.79

Diluted earnings per share from discontinued operations

0.00

0.00

Diluted earnings per share

$

0.42

$

0.38

$

0.95

$

0.80

 

SOURCE DSW Inc.



RELATED LINKS

http://www.DSWinc.com