Not All Footwear Stores Are Struggling: DSW Steps Into A Buy Rating After Q2 Beat

Not all footwear stores are struggling.

DSW Inc. DSW delivered a clean beat from top to bottom in the second quarter, where comps turned positive for the first time since Q4 2015. After the results hit, DSW's stock had its best gain in its 12-year history.

All the metrics looked good for DSW, according to a note from B Riley analyst Jeff Van Sinderen. In a generally clearance dominated quarter, regular price product comps increased while clearance comp decreased in the high-teens.

The footwear retailer's redesigned e-commerce platform is driving improved conversion and increased mobile traffic; digital/e-commerce sales grew 27 percent.

DSW management still expects to gain market share "after being underpenetrated historically," especially in the casual athletic/athleisure category. Stores continue to add new brands and exclusive product to this segment.

Speed to market has been one of the most critical factors for apparel and shoe retailers to generate any kind of success in the current environment.

DSW noted that it continues to work with vendors to improve its speed-to-market that was "previously identified as the most critical factor in getting women’s to turn positive," said Jeff Van Sinderen.

Van Sinderen said he was "warming up" to DSW, after upgrading the stock from a Neutral to a Buy rating and raising its price target from $18.50 to $22.

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