Footwear retailer’s sales rise, but fall short on expectations

DSW credits inventory management and more focused campaigns for its profit growth during the fourth quarter.



For the period ended January 28, 2017, the chain’s sales increased 0.4% to $674.6 million, including $27.9 million in revenues from Ebuys. This profit of 20 cents per share was four cents better than analysts were expecting for the quarter, however sales missed their estimates of $695.5 million.



Adjusted net income was $16.5 million, an increase of 43% over last year.



The footwear and accessories retailer’s same-store sales decreased 7%, compared to last year's 0.7% increase. Net income was $30.5 million, which included a net favorable adjustment of $0.18 per share related to the reduction of its contingent consideration liability, the amortization of acquired intangibles and inventory step-up costs related to Ebuys, and restructuring expenses.



"Our fourth quarter continued our return to year-over-year profitability growth, with top line results that met our comp guidance,” said Roger Rawlins, the chain’s CEO. “Inventory management and a product-focused campaign drove significantly higher gross margin, which, cou-pled with better expense control, resulted in a 22% increase in adjusted earnings per share this fall season."



For the year, sales increased 3.5% to $2.7 billion, including $83.9 million from the company's acquisition of Ebuys. Same-store sales decreased by 3% compared to last year's 0.8% increase, and adjusted net income was $120.1 million, or $1.46 per diluted share, a 5% decrease from last year.



"After making fundamental changes to our core business last year, we are laser focused on driving comp growth through our merchandise and allo-cation initiatives and the elevation of our customer's digital experience,” Rawlins added. “Furthermore, we are building a foundation to support the growth of Ebuys and Town Shoes and to leverage synergies across all of our retail brands.”