DSW Posts Smaller Profit, Slashes Outlook
May 24 2016 - 9:20AM
Dow Jones News
Disappointing shoes sales at DSW Inc. dragged earnings down by
more than a third in its first quarter, prompting the retailer to
slash its outlook for the year.
Shares slid 6.2% in premarket trading. Over the past 12 months,
through Monday's close, the stock has tumbled 38%.
Chief Executive Roger Rawlins said the company's reduced
earnings and sales guidance reflects "the current trend of our
business in a challenging retail environment."
Mr. Rawlins said that heavy investments over the past three
years in technology, stores, marketing and support services have
aided sales, "but we haven't grown our bottom line." As such, he
said DSW has launched a review of its cost structure to support
earnings "in a rapidly changing environment."
DSW's woes echo those of retailers across the spectrum. From
department stores such as Nordstrom Inc. and Macy's Inc. to
specialty shops to Target Corp., stores have seen traffic drop off
as shoppers increasingly move online and to fast-fashion chains.
The troubles have driven teen retailer Aé ropostale Inc. and Sports
Authority Inc. to bankruptcy this year, and struggling apparel
chain Gap Inc. had its credit rating cut to junk status this
month.
For its part, DSW in February stuck a deal to buy online shoe
retailer Ebuys Inc. for $62.5 million in an effort to grab more
online shoppers.
For the year, the Columbus, Ohio, based retailer said it expects
to report $1.32 to $1.42 in adjusted earnings per share, well short
of the $1.58 analysts have anticipated and down from an earlier
forecast of $1.54 to $1.64.
The company now sees a decline in sales at existing stores,
predicting a 1% to 2% fall after having projected growth in the
same range. It is also forecasting 7% to 8% in operating expense
growth this year, after having previously guided for such expenses
to be up in the low teens.
In its most-recent quarter, DSW posted a profit of $30 million,
or 36 cents a share, down from $47.4 million, or 53 cents a share,
a year earlier. Excluding acquisition-related charges, earnings per
share were 40 cents.
Revenue rose 3.9% to $681.3 million. Analysts predicted 45 cents
in adjusted earnings per share on $698.8 million in sales,
according to Thomson Reuters.
Comparable-store sales declined 1.6% after having risen 5.1% a
year earlier. Analysts were looking for a 0.2% increase in the
metric.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
May 24, 2016 09:05 ET (13:05 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Target (NYSE:TGT)
Historical Stock Chart
From Aug 2024 to Sep 2024
Target (NYSE:TGT)
Historical Stock Chart
From Sep 2023 to Sep 2024