Footwear retailer beats Street in Q2; identifies cost savings

DSW Inc. on Tuesday posted better-than-expected results for its second quarter and reaffirmed its full-year outlook.



The company also said it expects to see $25 million of annualized savings in 2017 as a result of a restructuring program it launched earlier this year, with about $7 million of the total to be realized this year. The retailer said the savings would result “from organization realignment and improvements in procurement and other business processes.”



For the three months ended July 30, DSW reported a profit of $25 million, or 30 cents a share, down from $37.6 million, or 42 cents a share, in the year-ago period. The result include 5 cents a share in acquisition costs related to its acquisition of Ebuys Inc. and restructuring-related expenses.



Revenue rose 5.1% year-over-year to $659 million, beating expectations of $658 million.



Comparable store-sales fell 1.2%, not as bad as expected.



Last week, DSW announced it had signed an agreement with Apparel Group to open 40 stores in the Mideast. It also announced it was entering the children’s footwear business online and in some 200 U.S. stores.



"We are on track to deliver our outlook for the full year and we've made progress on a number of initiatives to drive sales and improve our financial trajectory,” said DSW CEO Roger Rawlins. “We've positioned fall inventories conservatively to chase the trend of the business and after conducting a comprehensive assessment of DSW's cost structure, we've identified actions, most of which will benefit 2017, with approximately $25 million in annualized cost savings. We are committed to getting back to sustained earnings growth while planting the seeds for long term success."





DSW reiterated its full-year earnings forecast of between $1.32 per share and $1.42 per share, compared to consensus estimates of $1.36 per share.