DSW Q1 Results Miss View, Lowers Full-year Outlook

(RTTNews) - Branded footwear and accessories retailer DSW Inc. (DSW) on Wednesday reported a 12 percent increase in profit for the first quarter from last year, as lower expenses helped offset flat net sales and a decline in comparable sales. However, results for the quarter missed analysts' estimates.

In addition, the company slashed its earnings outlook for fiscal 2014. The company's shares are down more than 26 percent in the regular trading session.

Mike MacDonald, President and Chief Executive Officer of DSW said, "We had a challenging quarter due to unseasonal weather and an aggressively promotional retail environment. We sharpened our prices for key items while proactively managing our clearance levels during the quarter. Monthly sales trends were weak but improved sequentially during the quarter."

Columbus, Ohio-based DSW's net income for the first quarter was $38.64 million or $0.42 per share, up from $34.52 million or $0.38 per share in the year-ago period. The prior-year quarter's results included a net charge of $11.4 million or $0.12 per share from the company's luxury test.

Adjusted earnings for the latest quarter were $0.42 per share, compared to $0.50 per share in the prior-year quarter. On average, 17 analysts polled by Thomson Reuters expected the company to earn $0.48 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales for the quarter edged down 0.4 percent to $598.95 million from $601.36 million in the year-ago quarter. Adjusted sales increased 0.5 percent to $598.95 million from $596.11 million in the prior-year quarter. Analysts had a consensus revenue estimate of $622.33 million for the quarter.

Comparable sales for the quarter decreased 3.7 percent, compared to a 2.4 percent decline in the same period last year.

Operating expenses were down 2 percent from the year-ago period to $126.75 million.

Looking ahead to fiscal 2014, DSW now forecasts adjusted earnings in a range of $1.45 to $1.60 per share, assuming low single-digit comparable sales decline and adjusted sales growth in the low single-digit range.

Earlier, the company forecast adjusted earnings for the year in a range of $1.80 to $1.95 per share, on revenue growth of 6 to 7 percent and comparable sales growth in the low single-digit range.

Analysts expect the company to earn $1.90 per share for the year on revenues of $2.50 billion.

The company's board approved a quarterly cash dividend of $0.1875 per share, to be paid on June 30, 2014 to shareholders of record at the close of business on June 20, 2014.

DSW is currently trading at $23.89, down $8.63 or 26.54 percent on a volume of 10.16 million shares.