DSW Affirms Outlook After Completing Review
August 30 2016 - 9:00AM
Dow Jones News
DSW Inc. said earnings in its second quarter fell by a third as
the shoe retailer continues to try to reinvigorate sales and pare
down its cost structure.
Chief Executive Roger Rawlins said the discount shoe store
completed the review it launched earlier this year, identifying $25
million in annual cost savings "resulting from organization
realignment and improvements in procurement and other business
processes." He didn't say if such moves would result in store
closures or job cuts.
Mr. Rawlins also said DSW, during the quarter, made progress on
several initiatives to lift sales and that the company is on track
to meet full-year targets after reducing its outlook in May.
Shares in the company, up 9% this year through Monday's close,
rose 4.7% to $27.25 in premarket trading.
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. At the same time, retailers
across the board are struggling with falling foot traffic as
shoppers increasingly move online and to Amazon.com Inc. In a move
to beef up its e-commerce business, DSW in February stuck 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 1.2%—the first back-to-back quarterly decline since 2009
but less steep than the 2.6% decline analysts expected. A year
earlier, same-store sales rose 1.8%.
Over all for the three months ended July 30, the company
reported a profit of $25 million, or 30 cents a share, down from
$37.6 million, or 42 cents a share, a year earlier. The latest
quarter's result includes 5 cents a share in acquisition and
restructuring-related expenses.
Total revenue increased 5.1% to $658.9 million.
Analysts projected 30 cents in adjusted earnings per share on
$658.7 million in sales, according to Thomson Reuters.
For the full year, DSW still expects to post $1.32 to $1.42 in
adjusted per-share profit. Analysts have been looking for $1.36 a
share. The company said that of the $25 million in annual cost
savings it flagged during its review, about $7 million will be
realized this year and are reflected its outlook.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
August 30, 2016 08:45 ET (12:45 GMT)
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