DSW Shares Tank As Q1 Results Fail To Meet Expectations

DSW Inc. DSW announced 36.6 percent drop in profit for the first quarter despite 3.9 percent growth in the top line as adjusted gross profit fell 250 basis points due to higher markdowns and the addition of Ebuys. However, its comparable sales witnessed a fall of 1.6 percent on a year-over-year basis. As a result, the stock tanked more than 7 percent in pre-market trading.

DSW reported net income of $30.0 million, down 36.6 percent from $47.37 million in the previous year quarter. Similarly, its earnings dipped 32.1 percent to $0.36 a share from $0.53 a share in the prior year quarter. On an adjusted basis, it would have earned $0.40 a share.

The company's sales rose 3.9 percent to $681.27 million from $655.49 million in the year-ago quarter, which was also lower than the Zack's analyst estimations of $697.23 million.

CEO Roger Rawlins reacted to the results and said, "We have reduced our sales and earnings guidance to reflect the current trend of our business in a challenging retail environment. This is the prudent action to take so that inventory, expenses and capital investments are aligned to maximize profitability and positioned to expand earnings as our trend improves."

Rawlins continued to state, "Over the past three years, we have invested heavily in technology, stores, marketing and support services. These investments have driven sales, but we haven't grown our bottom line. We have begun an assessment of our cost structure to improve earnings and reinforce our competitive position in a rapidly changing environment."

DSW said that its board declared a quarterly cash dividend of $0.20 a share. This would be paid on June 30 to all shareholders, whose name appears on the record date of June 16.

Moving ahead, the Company revised its full year earnings forecast to $1.32 - $1.42 per share, reflecting expectations for softer sales for the remainder period of the year in a challenging retail environment. The company also said that this assumed about 6% revenue growth driven by a comparable sales drop in the 1–2 percent range.

Posted In: EarningsNewsGuidance
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!

Loading...