DESIGNER BRANDS INC COLUMBUS, Ohio, Nov. 25, 2014 /PRNewswire/ -- DSW Inc. (NYSE: DSW), a leading branded footwear and accessories retailer, announced financial results for the thirteen week period ended November 1, 2014, which compare to the thirteen week period ended November 2, 2013.
Mike MacDonald, President and Chief Executive Officer stated, ''We were pleased with the progress we made in the quarter, particularly the improvements in top line performance. Sales in all major categories accelerated compared to first half performance. We are especially encouraged by the performance of women's footwear, which posted its first positive comparable sales increase since the second quarter of 2013. The merchandise initiatives we began to implement at the start of the year are gaining traction."
''Over the past twelve months, DSW has also made significant inroads in becoming even more customer centric in the way we operate. Customers now have visibility and access to our full assortment of choices regardless of how and where they are shopping. We have also launched new technologies that make it easier for online customers to shop and pay for their purchases. There are many more improvements to be made to create a seamless and relevant shopping experience for DSW customers, but we are pleased with our progress to date,'' Mr. MacDonald added.
Third Quarter Operating Results
-- Reported sales increased 5.8% to $670 million compared to last year's
sales of $633 million.
-- Adjusted sales increased 7.2% to $670 million compared to last year's
sales of $625 million, which excluded sales from the Company's luxury
test.
-- Comparable sales increased by 2.6% compared to last year's decrease of
0.7%.
-- Gross margin declined 100 bps, of which 55 bps was due to asset
impairment.
-- Reported net income was $49.6 million, or $0.55 per diluted share, on 90
million shares, which includes a RVI tax provision adjustment. This
compares to Reported net income in the third quarter of 2013 of $55.0
million, or $0.60 per diluted share, on 92 million shares, which
included a net after-tax income of $1.4 million, or $0.01 per share,
from the Company's luxury test.
-- Adjusted net income was $50.4 million, or $0.56 per diluted share, on 90
million shares, which includes a one-time charge of $0.03 per share from
asset impairment. This compares to Adjusted net income for the same
period last year of $53.6 million, or $0.58 per diluted share, on 92
million shares.
Nine Months Ended November 1, 2014 Operating Results
-- Reported sales increased 3.3% to $1.86 billion compared to last year's
sales of $1.80 billion.
-- Adjusted sales increased 4.3% to $1.86 billion compared to last year's
sales of $1.78 billion, which excluded sales from the Company's luxury
test.
-- Comparable sales decreased by 0.1% compared to last year's increase of
0.2%.
-- Reported net income was $122.5 million, or $1.35 per diluted share, on
91 million shares. This compares to Reported net income in the same
period last year of $123.2 million, or $1.34 per diluted share, on 92
million shares, which included a net after-tax loss of $20.9 million, or
$0.23 per share, from the Company's luxury test and the termination of
RVI's pension plan.
-- Adjusted net income was $122.7 million, or $1.35 per diluted share, on
91 million shares. This compares to net income of $144.1 million, or
$1.57 per diluted share, on 92 million shares, which excluded items
related to our luxury test and the termination of RVI's pension plan.
Third Quarter Balance Sheet Highlights
-- Cash, short term and long term investments totaled $427 million compared
to $517 million in the third quarter last year.
-- Inventories were $486 million compared to $424 million during the third
quarter last year. On a cost per square foot basis, DSW inventories
increased by 7.4% at the end of the quarter. A significant portion of
this increase relates to opportunistic pre-buys to deliver strong brands
and exceptional values to our customers in 2015. Excluding the increase
in pre-buys, inventories on a cost per square foot increased by 3.8%.
-- The Company repurchased one million shares for approximately $30 million
during the quarter, for a total of three million shares for
approximately $87 million since the authorization of the program. This
leaves approximately $13 million available on the Company's previous
$100 million share repurchase authorization. On November 21, 2014, the
Board of Directors authorized an additional $50 million under the
Company's share repurchase program.
Regular Dividend
On November 25, 2014, DSW's Board of Directors declared a quarterly cash dividend payment of $0.1875 per share. The dividend will be paid on December 31, 2014 to shareholders of record at the close of business on December 19, 2014.
Fiscal 2014 Annual Outlook
For the fifty-two week fiscal year ending January 31, 2015, the Company expects Adjusted earnings per share to range from $1.55 to $1.65 per share compared to the previous guidance of $1.50 to $1.65 per share. This assumes slightly positive comparable annual sales growth and annual revenue growth in the mid-single digit range. This guidance includes a tax rate slightly below 39% and diluted shares outstanding of 90.5 million.
Webcast and Conference Call
To hear the Company's live earnings conference call, log on to http://www.dswinc.com/ today at 8:30 a.m. Eastern Time, or call 1-888-317-6003 in the U.S. or 1-412-317-6061 outside the U.S. using passcode 4979066 approximately ten minutes prior to the start of the call. A telephone replay of this call will be available until 9:00 a.m. Eastern Time on December 2, 2014 and can be accessed by dialing 1-877-344-7529 in the U.S. or 1-412-317-0088 outside the U.S. and using conference number 10056125. An audio replay of the conference call, as well as additional financial information, will also be available at http://www.dswinc.com.
About DSW Inc.
DSW Inc. is a leading branded footwear and accessories retailer that offers a wide selection of brand name and designer dress, casual and athletic footwear and accessories for women, men and kids. As of November 25, 2014, DSW operates 431 stores in 42 states, the District of Columbia and Puerto Rico, and operates an e-commerce site, http://www.dsw.com, and a mobile website, http://m.dsw.com. DSW also supplies footwear to 367 leased locations in the United States and operates three Yellow Box stores under the Affiliated Business Group. For store locations and additional information about DSW, visit http://www.dswinc.com. Follow DSW on Twitter at http://twitter.com/DSWShoeLovers and Facebook at http://www.facebook.com/DSW.
DSW INC.
Q3 2014 SEGMENT RESULTS
Net sales by reportable segment
Thirteen weeks ended Thirty-nine weeks ended
-------------------- -----------------------
November 1, 2014 November 2, 2013 % change November 1, November 2, % change
2014 2013
---
(in thousands) (in thousands)
DSW $632,774 $597,274 5.9% $1,745,454 $1,691,119 3.2%
Affiliated Business Group 37,098 35,702 3.9% 110,461 105,282 4.9%
------ ------- -------
Reported DSW Inc. sales $669,872 $632,976 5.8% $1,855,915 $1,796,401 3.3%
Less: Luxury sales - 8,341 - 17,418
--- --- ------
Adjusted DSW Inc. sales $669,872 $624,635 7.2% $1,855,915 $1,778,983 4.3%
-------- -------- ---------- ----------
Comparable sales change by reportable segment (excludes luxury)
Thirteen weeks ended Thirty-nine weeks ended
-------------------- -----------------------
November 1, 2014 November 2, 2013 November 1, 2014 November 2, 2013
---------------- ---------------- ---------------- ----------------
DSW 2.8% (1.0)% (0.1)% 0.2%
Affiliated Business Group 0.3% 3.6% 1.2% 1.8%
Total DSW Inc. 2.6% (0.7)% (0.1)% 0.2%
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Any statements in this release that are not historical facts, including the statements made in our "Fiscal 2014 Annual Outlook," are forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on the Company's current expectations and involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to: our success in opening and operating new stores on a timely and profitable basis; our success in executing our omni-channel initiative; maintaining strong relationships with our vendors; our ability to anticipate and respond to fashion trends; disruption of our distribution and/or fulfillment operations; continuation of supply agreements and the financial condition of our affiliated business partners; fluctuation of our comparable sales and quarterly financial performance; risks related to our information systems and data; failure to retain our key executives or attract qualified new personnel; our competitiveness with respect to style, price, brand availability and customer service; our reliance on our "DSW Rewards" program to drive traffic, sales and customer loyalty; uncertain general economic conditions; our reliance on foreign sources for merchandise and risks inherent to international trade; risks related to our electronic processing of sensitive and confidential customer and associate data; risks related to leases of our properties; risks related to the realization of benefits related to our acquisition of an equity interest in Town Shoes, a leading branded shoe retailer in Canada; foreign currency exchange risk; risks related to our cash and investments; and the realization of risks related to the Merger with Retail Ventures, Inc., including risks related to pre-merger RVI guarantees of certain Filene's Basement leases. Additional factors that could cause our actual results to differ materially from our expectations are described in the Company's latest annual or quarterly report, as filed with the SEC. All forward-looking statements speak only as of the time when made. The Company undertakes no obligation to revise the forward-looking statements included in this press release to reflect any future events or circumstances.
DSW INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
November 1, 2014 February 1, 2014 November 2, 2013
---------------- ---------------- ----------------
Assets
Cash and equivalents $96,394 $112,021 $86,909
Short-term investments 128,381 224,098 195,248
Accounts receivable, net 26,610 26,646 23,853
Inventories 486,260 397,768 424,066
Prepaid expenses and other current assets 26,566 34,101 41,086
Deferred income taxes 23,486 18,130 24,343
------ ------ ------
Total current assets 787,697 812,764 795,505
------- ------- -------
Property and equipment, net 338,227 318,620 316,542
Long-term investments 202,259 243,188 234,748
Goodwill 25,899 25,899 25,899
Deferred income taxes 14,643 11,587 10,562
Investment in Town Shoes 24,838 - -
Note receivable from Town Shoes 47,819 - -
Other assets 8,850 9,186 8,518
----- ----- -----
Total assets $1,450,232 $1,421,244 $1,391,774
========== ========== ==========
Liabilities and shareholders' equity
Accounts payable $185,931 $168,705 $147,100
Accrued expenses 125,885 115,697 130,612
------- ------- -------
Total current liabilities 311,816 284,402 277,712
------- ------- -------
Non-current liabilities 142,540 138,298 132,844
Total shareholders' equity 995,876 998,544 981,218
------- ------- -------
Total liabilities and shareholders' equity $1,450,232 $1,421,244 $1,391,774
========== ========== ==========
DSW INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Thirteen weeks ended Thirty-nine weeks ended
-------------------- -----------------------
November 1, November 2, November 1, November 2,
2014 2013 2014 2013
---- ---- ---- ----
Net sales $669,872 $632,976 $1,855,915 $1,796,401
Cost of sales (451,315) (420,106) (1,277,449) (1,217,092)
-------- -------- ---------- ----------
Gross profit 218,557 212,870 578,466 579,309
Operating expenses (138,860) (124,614) (384,208) (382,786)
-------- --------
Operating profit 79,697 88,256 194,258 196,523
Interest income, net 600 1,036 2,193 1,857
----- -----
Income from continuing operations before income taxes 80,297 89,292 196,451 198,380
and income from Town Shoes
Income tax provision (31,792) (34,331) (76,186) (75,184)
Income from Town Shoes 1,049 - 1,898 -
----- --- -----
Income from continuing operations 49,554 54,961 122,163 123,196
Income from discontinued operations, net of tax - - 358 -
--- --- --- ---
Net income $49,554 $54,961 $122,521 $123,196
======= ======= ======== ========
Diluted shares used in per share calculations: 89,810 92,090 91,014 91,813
Diluted earnings per share:
Diluted earnings per share from continuing operations $0.55 $0.60 $1.34 $1.34
Diluted earnings per share from discontinued operations - - $0.00 -
Diluted earnings per share $0.55 $0.60 $1.35 $1.34
DSW INC.
RECONCILIATION OF ADJUSTED RESULTS
(In thousands, except per share amounts)
(Unaudited)
Thirteen weeks ended Thirty-nine weeks ended
November 1, 2014 November 1, 2014
---------------- ----------------
Net Income Diluted Net income Diluted
earnings per earnings per
share share
---------- ------------ ---------- ------------
Reported Measure $49,554 $0.55 $122,521 $1.35
Less: RVI Operating expenses, net of tax - (1) - 377 (1) -
Less: Income from discontinued operations, net of tax - (1) - 358 (1) -
Add: Income taxes (864) (2) (0.01) (864) (2) (0.01)
Adjusted Measure $50,418 $0.56 $122,650 $1.35
======= ===== ======== =====
(1) Relates to RVI's recovery from the Filene's Basement debtors' estates.
(2) Relates to RVI's income tax provision adjustment.
Thirteen weeks ended Thirty-nine weeks ended
November 2, 2013 November 2, 2013
---------------- ----------------
Net Income Diluted Net income Diluted
earnings per earnings per
share share
---------- ------------ ---------- ------------
Reported Measure $54,961 $0.60 $123,196 $1.34
Less: Gross profit (loss), including valuation reserves 1,366 (3) 0.01 (11,521) (3) (0.13)
on luxury test
Less: RVI related expenses and RVI pension plan termination expense (48) (4) - (9,355) (5) (0.10)
Adjusted Measure $53,643 $0.58 $144,072 $1.57
======= ===== ======== =====
(3) Relates to net after-tax income (loss) from the Company's luxury test.
(4) Relates to legacy charges from RVI.
(5) Relates to a net after-tax charge from the termination of the pension plan assumed in conjunction with the RVI merger.
Non-GAAP Measures
The unaudited reconciliation of adjusted results should not be construed as an alternative to the reported results determined in accordance with generally accepted accounting principles ("GAAP"). These financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures presented by other companies. The company believes that this non-GAAP information is useful as an additional means for investors to evaluate the company's operating performance, when reviewed in conjunction with the company's GAAP statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the company's business and operations.
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SOURCE DSW Inc.
