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DSW Expansion Plans Bode Well, Store Openings Lined Up

Zacks Equity Research

There is no looking back for footwear and accessories retailer DSW Inc. DSW as the company is forging full steam ahead with its store expansion plans. The company recently announced plans of opening a new store in Richmond, VA on Apr 7, 2016.

The new store will sprawl across an area of 15,000 square feet and accommodate 21,000 pairs of men and women shoes along with handbags and accessories like jewelry, scarves, fashion socks and the like.

Of late, DSW has been widening its reach in the U.S. as well through the inauguration of stores under the company's expansion strategy, which was devised in February. Moreover, DSW intends to open 14 additional stores this spring. These store launches reflect the company’s commitment toward widening its network to drive revenues. As of Apr 7, 2016, DSW had 473 stores in 42 states. The company also supplies footwear to 384 locations in the U.S.

Last month, the company launched new DSW stores at Holly Springs, NC; Visalia, CA; Westminster, MD; and Chesterfield, MI. We believe that the 15.8% stock price appreciation of the company this year has been largely driven by its extensive store openings.

Meanwhile, the Zacks Rank #3 (Hold) company unveiled its fiscal 2016 guidance wherein revenues are projected to increase in the range of 8% to 10% while comparable store sales growth is estimated between 1% and 2%. The company expects adjusted earnings per share in the range of $1.54 to $1.64, including 4 cents to 6 cents per share contribution from the recently-acquired Ebuys.

Stocks to Consider

Some better-ranked stocks in this sector include Express Inc. EXPR, American Eagle Outfitters, Inc. AEO and Destination XL Group, Inc. DXLG. All these stocks sport a Zacks Rank #1 (Strong Buy).

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