25 Aug DSW Meets Q2 Profit Forecast
DSW Inc. reported second quarter sales increased 6.8 percent to $627 million with comparable sales ahead 1.8 percent. Net income from continuing operations increased by 10.7 percent to $37.6 million, or 42 cents a share.
Wall Street’s consensus estimate had been 42 cents a share.
Mike MacDonald, president and CEO, 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 percent to $627 million compared to last year’s sales of $587 million.
Comparable sales increased by 1.8 percent compared to last year’s increase of 0.8 percent.
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 percent to $37.6 million.
Earnings per share from continuing operations increased by 13.5 percent 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 percent to $1.28 billion compared to last year’s sales of $1.19 billion.
Comparable sales increased by 3.5 percent compared to last year’s decrease of 1.5 percent.
Net income from continuing operations increased by 17.0 percent to $85.0 million.
Earnings per share from continuing operations increased by 20.3 percent 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 percent. Excluding opportunistic buys, inventories on a cost per square foot increased by 6.3 percent.
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.