DSW Inc. reported earnings on an adjusted basis rose 13 percent to $30.9 million, or 35 cents a share, exceeding its guidance calling for earnings between 21 and 31 cents a share. Comparable sales increased 7.6 percent.
Highlights:
- Fourth quarter Adjusted sales increase 12 percent to $640 million; comparable sales increase 7.6 percent
- Fourth quarter Adjusted EPS is $0.35 per share, up 13 percent from the prior year
- Full year Adjusted sales increase 6.2 percent to $2.5 billion; comparable sales increase 1.8 percent
- Full year Reported EPS is $1.69 per share, an increase of 2.4 percent from the prior year
- Full year Adjusted EPS is $1.69 per share, a decline of 10 percent from the prior year
- Fiscal 2015 EPS guidance of $1.80 to $1.90 per share
- Board of Directors increases quarterly dividend to 20 cents per share
Mike MacDonald, president and chief executive officer, stated, "We were gratified to report strong sales and profit growth in the fourth quarter. Our decisive actions earlier in the year in the areas of leadership, value, and marketing produced strong results. These actions produced the strongest comp performance in almost three years, with traffic gains in both store and digital channels. Further, we continue to invest in long term strategies that are making DSW more customer-centric and channel agnostic. We are excited to embark on the 2015 fiscal year with considerable momentum."
Fourth Quarter Operating Results
- Reported sales increased 11.9 percent to $640 million compared to last year's sales of $572 million.
- Adjusted sales increased 12.1 percent to $640 million compared to last year's sales of $571 million, excluding sales from the company's luxury test.
- Comparable sales increased 7.6 percent compared to last year's flat comparable sales.
- Reported net income was $30.8 million, or 34 cents per diluted share, which included an expense related to RVI of $0.1 million. This compares to last year's $28.1 million, or 30 cents per diluted share, which included $0.6 million of net charges related to RVI and the company's luxury test.
- Adjusted net income was $30.9 million, or 35 cents per diluted share, an increase of 13 percent over last year's $28.7 million, or 31 cents per diluted share.
Full Year Operating Results
- Reported sales increased 5.4 percent to $2.5 billion compared to last year's sales of $2.4 billion. Last year's sales included $18 million from the company's luxury test.
- Adjusted sales increased 6.2 percent to $2.5 billion compared to last year's sales of $2.4 billion.
- Comparable sales increased by 1.8 percent compared to last year's increase of 0.2 percent.
- Reported net income was $153.3 million, or $1.69 per diluted share, an increase of 2.4 percent over last year's Reported earnings per share of $1.65 per diluted share. Last year's Reported earnings per share includes $0.23 per share in charges related to RVI and the company's luxury test.
- Adjusted net income was $153.5 million, or $1.69 per diluted share, a decrease of 10 percent from last year's $1.88 per diluted share.
- Fourth Quarter Balance Sheet Highlights
Cash, short term and long term investments totaled $447 million compared to $579 million in the fourth quarter last year.
On a cost per square foot basis, DSW inventories increased by 6.5 percent at the end of quarter. Excluding pre-buys, inventory cost per square foot increased by 2.8 percent.
Regular Dividend
On February 17, 2015, DSW's Board of Directors increased the company's quarterly cash dividend from $0.1875 per share to $0.20 per share. The dividend will be paid on March 31, 2015 to shareholders of record at the close of business on March 20, 2015.
Fiscal 2015 Annual Outlook
For the full year, the company expects revenue growth of 7 percent to 8 percent, with comparable sales growth in the low to mid-single digit range. The company expects to open 35 new stores, including 8-10 small format stores. Full year earnings per share is expected to range between $1.80 to $1.90 per share, representing approximately 10 percent earnings growth at the midpoint of the range. This guidance assumes a tax rate of 39 percent and 90 million shares outstanding.
