U.S. Markets close in 2 hrs 59 mins

Does DSW Still Exist in Your Portfolio?

Zacks Equity Research

It seems that investors are losing confidence in DSW Inc. (DSW), after this branded footwear retailer posted a dismal first-quarter fiscal 2014 performance. Shares of this Zacks Rank #5 (Strong Sell) company have dropped roughly 13% since the earnings announcement on May 28, whereas year to date, the stock has fallen about 34%.

Estimates for DSW have been portraying a downtrend since the company delivered first-quarter results. It seems that analysts have become less constructive on the stock's future performance. This is evidenced by the Zacks Consensus Estimate that tumbled 20.1% to $1.51 for fiscal 2014 and 14.7% to $1.85 per share for fiscal 2015 in the past 30 days.

Keeping the stock in your portfolio any longer does not seem to be a good idea, unless you are willing to wait for it to pick up steam. A look at the company’s performance in the last concluded quarter should remove any further doubts.  

The quarterly earnings of 42 cents a share fell short of the Zacks Consensus Estimate of 48 cents and slumped 16% from the year-ago period.

Owing to an intense promotional retail environment and an erratic weather, the top line slipped 0.4% to 598.9 million, with comparable-store sales (comps) declining 3.7% year over year. Sales also lagged the Zacks Consensus Estimate of $636.0 million.

This branded footwear retailer envisions earnings for fiscal 2014 to lie in the band of $1.45–$1.60 per share. Additionally, the company anticipates comps to decline by a low single-digit rate while expecting adjusted sales to improve at the same rate.

Other Stocks Worth Considering

Other better-ranked retail stocks that look promising and are expected to continue with their upbeat performance include Citi Trends, Inc. (CTRN) sporting a Zacks Rank #1 (Strong Buy), and Foot Locker, Inc. (FL) and The Men's Wearhouse, Inc. (MW), both carrying a Zacks Rank #2 (Buy).

Read the Full Research Report on FL
Read the Full Research Report on DSW
Read the Full Research Report on CTRN
Read the Full Research Report on MW

Zacks Investment Research