DSW's Store Expansion Strategies


Leading footwear and accessories retailer, DSW Inc. (DSW) has been utilizing its resources extensively in order to expand its store base that clearly defines its strong cash position. The company intends to open as many as 39 new stores in fiscal 2012.

On October 18, 2012, the company announced the opening of three new stores, destined at different locations - Syosset, New York, Charlotte, North Carolina and Fairview Heights, Illinois. Including these stores, the company has inaugurated 33 new stores since it entered fiscal 2012.

DSW, as policy, prefers to open more number of new stores during the higher volume periods i.e. in the first and the third quarter of a particular fiscal. During its second-quarter conference call, the company communicated that it opened 12 new stores in the first half 2012 and anticipates opening 26 new stores in the third quarter and one in the fourth quarter. These will include seven stores in new markets and 20 in existing markets.

Washington D.C. seems one of the favorite spots for DSW as the company has opened fifteen stores in the region. Management believes that this store opening will make the city a coveted destination for shoe lovers.

DSW’s store expansion strategy signifies the strong demand for its designer shoes and is expected to be accretive to its top-line growth. DSW’s wedding shop collection provides exclusive assortments for bridal parties and occasions.

In order to attract more customers, DSW offers a wide range of designer shoes at discounted prices for both men and women. The company also runs a free, award-winning loyalty program ‘DSW Rewards,’ which issues certificates to the customers for future purchases at DSW. Moreover, customers receive member-only offers through this loyalty program.

Columbus, Ohio-based DSW Inc. operates 359 stores in 41 states as of October 18, 2012 and supplies footwear to 344 leased locations in the U.S. It also runs an e-commerce site www.dsw.com and a mobile website m.dsw.com. The company’s fiscal third-quarter results are expected to release on November 19, 2012. The major competitors of the company are J. C. Penney Company Inc. (JCP) and Macys Inc. (M).

DSW currently carries a Zacks #2 Rank, implying short term Buy rating on the stock for the next 1-3 months, on the back of rising earnings momentum over the last four quarters.

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