DSW Inc., as expected, reported earnings in the fourth quarter plunged 61.8 percent to $11.8 million, or 14 cents a share. Results came in ahead of Wall Street's average estimate of 8 cents a share. Comps inched up 0.8 percent in the period. The off-price shoe chain forecast a slight gain in earnings for 2016.
Roger Rawlins, Chief Executive Officer stated, "During the fourth quarter, we acted quickly to drive sales and gain market share, in the face of a challenging retail environment. While these actions negatively impacted operating margin in the near term, we believe they were the right steps to expand our customer base and exit the year with a clean inventory position. In 2016, we will move decisively to improve our execution, intensify our focus on delivering value to our customers and drive additional growth by entering new categories, markets and digital channels. We recognize there is much more we need to accomplish and we are committed to returning DSW to sustainable and profitable growth while delivering strong shareholder returns."
The company achieved several important milestones in 2015:
Opened 40 new DSW stores in the United States; Expanded DSW's presence in Canada with the opening of 11 new DSW locations by Town Shoes; Grew digital demand by 22 percent in the full year, aided by the roll-out of Buy Online Pick-Up In Store and Buy Online Ship to Store; Re-platformed DSW.com with significant enhancements to search engine optimization and new personalization capabilities; Returned close to $250 million to shareholders, including $69.7 million in dividends and $179.6 million in share repurchases, with $83.5 million remaining under existing share repurchase authorization.Fourth Quarter Operating Results
Sales increased 5.0 percent to $672 million. Comparable sales increased 0.7 percent. Gross profit decreased 300 bps due to higher promotions. Net income was $11.8 million, or $0.14 per diluted share.Full Year Operating Results
Sales increased 5.0 percent to $2.6 billion. Comparable sales increased 0.8 percent. Gross profit declined 90 bps. Net income was $136.0 million, or $1.54 per diluted share.Fourth Quarter Balance Sheet Highlights
Cash, short term and long term investments totaled $330 million compared to $447 million in the fourth quarter last year. On a cost per square foot basis, DSW inventories increased by 1.5 percent at the end of quarter. Excluding pre-buys, inventory cost per square foot increased by 0.9 percent.Regular Dividend
DSW Inc.'s Board of Directors declared a quarterly cash dividend of $0.20 per share. The dividend will be paid on April 15, 2016 to shareholders of record at the close of business on April 1, 2016.
Fiscal 2016 Annual Outlook
For the full year ending January 28, 2017, the company expects revenue growth of 8 percent to 10 percent, with comparable sales growth in the 1 percent to 2 percent range. The company expects to open 34 stores and close 2 stores.
On Mar. 4, 2016, the company completed the previously announced acquisition of Ebuys, Inc., a leading e-commerce off price footwear and accessories retailer operating in digital marketplaces in North America, Europe, Australia and Asia. The initial purchase payment of $61 million was funded using cash on hand. In fiscal 2016, Ebuys, Inc. is expected to contribute approximately $100 million in sales.
Assuming a tax rate of 39 percent and 83 million shares outstanding, full year adjusted earnings per share is expected to range between $1.54 to $1.64 per diluted share, including $0.04 to $0.06 per share from Ebuys, Inc. Guidance does not include the impact of purchase price accounting, transaction costs and fair market value accounting for deferred contingent consideration of approximately $0.10 to $0.12 per diluted share.
As of Mar. 15, DSW operates 470 stores in 42 states, the District of Columbia and Puerto Rico, and operates an e-commerce site, http://www.dsw.com, and a mobile website, http://m.dsw.com.
