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DSW returns to comparable sales growth, raises outlook

By Prachi Singh

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Business |INTERACTIVE

DSW Inc. said in a statement that total revenue for the second quarter increased by 16.4 percent to 795 million dollars, including 72.5 million dollars from the consolidation of its Canadian retail business. Comparable sales increased 9.7 percent for the 13-week period excluding results from its Canada Retail segment. Total revenue increased 9.6 percent to 1.5 billion dollars for the first half year, including 72.5 million dollars from the consolidation of its Canadian retail business, while comparable sales increased 5.8 percent compared to last year's 1.3 percent decrease.

Commenting on the company’s results, DSW’s Chief Executive Officer, Roger Rawlins stated in a statement: "We are thrilled to report record sales and earnings results this quarter as our merchandise strategy and marketing investment fueled strong customer engagement, traffic and transaction activity, resulting in a 10 percent comp. After completing our strategic assessment of the Canadian marketplace, we have decided to close its smallest retail banner and focus on the three largest family footwear banners.”

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Highlights of DSW’s Q2 and H1 results

Reported gross profit, as a percent of sales, increased by 280 bps in the second quarter, due to favorable merchandise margin and occupancy leverage.

For the six months, reported gross profit, as a percent of sales, increased by 170 bps, driven by favorable merchandise margin and business mix. Reported net loss was 14.1 million dollars or 0.18 dollar per diluted share, including pre-tax charges totalling 98.4 million dollars or 1.20 dollars per diluted share, primarily related to the acquisition of the Canadian retail business and the exit of Ebuys.

Adjusted net income, DSW said, was 82.4 million dollars or 1.02 dollars per diluted share, a 47 percent increase to last year. This includes a loss of 0.01 dollar per diluted share from the operations of the Town Shoes banner, which the company said, will be mostly exited by the end of the fiscal year.

DSW announces integration of Canada retail segment

DSW has also announced that upon the completion of its comprehensive review, the company will focus on its largest retail banners, Shoe Company, Shoe Warehouse and DSW Designer Shoe Warehouse. The company will exit its full price, mall-based Town Shoes banner, which operates 38 locations, mostly by the end of the fiscal year.

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The acquisition is expected to generate approximately 215 million dollars in revenues and will be slightly accretive to adjusted earnings in 2018.

DSW Inc.'s board of directors has declared a quarterly cash dividend of 0.25 dollar per share to be paid on October 5, 2018 to shareholders of record at the close of business on September 24, 2018.

DSW raises fiscal 2018 earnings outlook

The company updated its full year outlook for adjusted earnings in the range of 1.60 dollars to 1.75 dollars per diluted share, compared to its previous range of 1.52 dollars to 1.67 dollars per diluted share.

DSW expects revenues to increase in the range of 6 to 9 percent against previous outlook of decrease between 1 to 3 percent. Comparable sales are now expected to rise between low to mid-single digit range compared to earlier outlook of low single digit range.

Picture:Facebook/DSW

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