DSW Boosts Outlook as Cost Management Improves
23 November 2016 - 1:20AM
Dow Jones News
DSW Inc. raised its outlook for the year and said efforts to
improve cost management and reinvigorate sales are taking hold.
Adjusted profit topped views in the latest quarter, and shares,
up 11% this month, rose another 6.2% premarket to $24.50 in light
trading.
"This quarter reflects the first step in our return to year over
year earnings growth," said Chief Executive Roger Rawlins, pointing
to a 16% increase in adjusted earnings after four consecutive
declines.
He said tighter inventory management drove gross margin
improvement that, together with expense management, lifted net
income.
"We've reduced clearance markdowns and we are positioned to
generate more profitable sales in the holiday season," Mr. Rawlins
said.
For the full year, DSW now expects to post $1.35 to $1.45 in
adjusted per-share profit, up from its previous outlook for $1.32
to $1.42.
The discount shoe store recently completed the review it
launched earlier this year, identifying $25 million in annual cost
savings from organization realignment and improvements in
procurement and other business processes.
Ohio-based DSW has in recent years spent heavily on technology,
stores, marketing and support services, efforts that have helped
sales but cut into the bottom line. This as retailers across the
board struggle with dwindling foot traffic as shoppers increasingly
move online. In a move to beef up its e-commerce business, DSW in
February struck a deal to buy online shoe retailer Ebuys Inc. for
$62.5 million.
In its latest period, DSW said sales at stores open at least a
year fell 2%—more than anticipated but less than last year's 3.9%
decline.
Over all for the October quarter, the company reported a profit
of $39 million, down slightly from $39.3 million. Per-share
earnings rose three pennies to 47 cents, thanks to a lower share
count. The latest quarter's result includes 2 cents a share in
Ebuys acquisition costs and a penny a share in
restructuring-related expenses.
Adjusted earnings rose to 51 cents a share, above analyst
estimates for 49 cents, according to Thomson Reuters.
Total revenue increased 4.7% to $696.6 million. Analysts were
looking for $712.1 million in sales.
Gross margin improved 50 basis points.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
November 22, 2016 09:05 ET (14:05 GMT)
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