DSW Q2 Results Top Estimates, Boosts 2014 Outlook

(RTTNews) - Footwear specialty retailer DSW, Inc. (DSW) reported Tuesday a profit for the second quarter that increased from last year, reflecting lower operating expenses and sales growth at established stores. Both adjusted earnings per share and quarterly adjusted net sales topped analysts' expectations. The company also raised its guidance for the full-year 2014.

"In the quarter we accomplished our goal of achieving improvement in the underlying sales trends and eliminating any inventory imbalances. All major categories recorded improved sales performance in the second quarter compared to the first quarter," President and CEO Mike MacDonald said in a statement.

The Columbus, Ohio-based company reported net income of $34.33 million or $0.38 per share for the second quarter, higher than $33.72 million or $0.37 per share in the prior-year quarter.

Excluding items, adjusted net income for the quarter was $33.59 million or $0.37 per share, compared to $44.56 million or $0.49 per share in the year-ago quarter.

On average, 16 analysts polled by Thomson Reuters expected the company to report earnings of $0.32 per share for the quarter. Analysts' estimate typically excludes special items.

Net sales for the quarter grew 4.5 percent to $587.10 million from $562.06 million in the same quarter last year. Excluded sales from the company's luxury test, total adjusted sales grew 5.2 percent to $587.10 million, and topped fifteen Wall Street analysts' consensus estimate of $564.84 million.

Comparable store sales for the quarter increased 0.8 percent over the 4.4 percent growth reported in the year-ago quarter.

Operating expenses for the quarter declined to $118.59 million from $129.46 million in the year-ago quarter.

On August 19, the company's board approved a quarterly cash dividend of $0.1875 per share, payable on September 30 to shareholders of record at the close of business on September 19, 2014.

Looking ahead to fiscal 2014, the company raised its adjusted earnings forecast to a range of $1.50 to $1.65 per share on mid single digit range revenue growth, from the prior guidance of $1.45 to $1.60 per share on low single-digit range revenue growth. Street is currently looking for full-year 2014 earnings of $1.53 per share.

The company also said it now anticipates full-year comparable store sales to be flattish, up from the earlier projection of low single-digit comparable sales decline.

"We continued to make progress in our omni-channel initiative. The changes we are making are fundamental to the way we serve our customers. They will enable DSW to respond to the rapidly changing customer shopping patterns and maintain our position of strength in the footwear industry," MacDonald added.

DSW closed Monday's regular trading session at $28.37, down $0.17 on a volume of 2.66 million shares.