DSW profit, sales miss in tough Q1

Despite improved net sales, DSW Inc. saw net earnings decline substantially during the first quarter of fiscal 2017.



The footwear retailer reported net income of $30.01 million, down 37% from $47.37 million in the prior year quarter. Growing cost of sales and operating expenses, as well as a pretax expense from the February purchase of online footwear retailer Ebuys Inc., cut into profit even as net sales rose 4% to $681.27 million, from $655.47 million. Ebuys contributed $15.1 million in net sales.



Same-store sales, however, fell 1.6%. Profit and revenue totals both missed analyst expectations.



“Over the past three years, we have invested heavily in technology, stores, marketing and support services,” said Roger Rawlins, CEO of DSW. “These investments have driven sales, but we haven't grown our bottom line. We have begun an assessment of our cost structure to improve earnings and reinforce our competitive position in a rapidly changing environment."



DSW revised its earnings guidance downward, reflecting expectations for softer sales for the balance of the year in a challenging retail environment. Revenues are expected to grow 6%-7%, down from 8-10%, while same-store sales are now expected to decline 1%-2% instead of rising 1%-2%.