Shares of DSW Rise on Better-than-Expected Q4 Earnings - Analyst Blog
Shares of DSW Inc. DSW rose 4% following better-than-expected fourth-quarter fiscal 2014 results. Adjusted earnings from continuing operations of 35 cents per share beat the Zacks Consensus Estimate of 27 cents and grew 13% year over year. On a GAAP basis, earnings per share climbed 13.3% year over year to 34 cents.
DSW Inc. - Earnings Surprise | FindTheCompany
Buoyed by improvement across all key categories and 7.6% growth in comparable-store sales, the quarter’s adjusted top line advanced 12.1% year over year to $640 million, cruising far ahead of the Zacks Consensus Estimate of $608 million.
Meanwhile, gross profit increased 10.4% to $176.6 million while gross margin fell 40 basis points (bps) to 27.6%. Operating profit also grew 6.7% to $47.9 million, while operating margin decreased nearly 30 bps to 7.5%.
For the fiscal, DSW’s adjusted earnings from continuing operations fell 10.1% year over year to $1.69 per share but outdid the Zacks Consensus Estimate of $1.62. Adjusted net sales grew 6.2% to roughly $2,496 million and beat the Zacks Consensus Estimate of $2,464 million.
Financials & Store Update
DSW ended the quarter with cash, and short as well as long-term investments of nearly $447 million, compared with $579 million in the year-ago quarter due to higher capital expenditure and dividend and share buyback activity along with the acquisition of Town Shoes. Inventories came in at approximately $450.8 million, up 13.3% year over year.
Further, management hiked its quarterly cash dividend by 6.7% to 20 cents a share, payable on Mar 31, 2015, to shareholders of record as on Mar 20, 2015. Also, the company bought back shares worth $85 million during the quarter.
Further, the company incurred $93 million of capital expenditure during the fiscal, allocated toward new store openings, store renovations, along with development of distribution and fulfillment centers as well as technology projects. Going forward, the company plans to maintain its focus on these areas, incurring an estimated $115 million as capital expenditure in fiscal 2015.
During the fiscal, DSW introduced 37 new stores, taking its total operating store count to 431 by the year-end. It plans to open another 35 locations in fiscal 2015.
Guidance for Fiscal 2015
Taking cue from the encouraging developments, the footwear retailer expects adjusted earnings in fiscal 2015 to be in the range of $1.80-$1.90 per share, up 10% year over year. The Zacks Consensus Estimate for the fiscal is currently pegged at $1.62 a share, which is likely to be revised upwardly.
Additionally, the company anticipates comps to grow in the low to mid-single digit range year on year, while it envisions sales to improve 7—8%.
Other Stocks to Consider
This OH-based retailer currently holds a Zacks Rank #2 (Buy). Other stocks in the same industry worth considering include Citi Trends, Inc. CTRN, American Eagle Outfitters, Inc. AEO and Urban Outfitters Inc. URBN. All carry the same rank as DSW.
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