QUOTE AND NEWS
Motley Fool  Aug 28  Comment 
DSW is rising this week after delivering impressive quarterly results. But what catalysts exist to move the stock higher from here?
SeekingAlpha  Aug 28  Comment 
By The Value Investor: Investors in DSW (NYSE:DSW) have been preparing for the worst ahead of the second quarter results as the company posted relatively strong sales and earnings. This triggered a big jump in the share price at the start of the...
SeekingAlpha  Aug 27  Comment 
By Leigh Drogen: DSW (NYSE:DSW) beat Wall Street earnings expectations by a wide margin on Tuesday, and to many investors, it came as a shock. Shares of DSW had been trading just shy of $30, only two thirds of their 52 week high ($47.55). Tuesday...
Benzinga  Aug 27  Comment 
CNBC Fast Money's Guy Adami said on the show that there is a lot of news in the biotech space and ISIS Pharmaceuticals (NASDAQ: ISIS) is right in the middle of it. He added that the short interest in the stock is decent and it could go a lot...
SeekingAlpha  Aug 26  Comment 
By SA Transcripts: Start Time: 08:30 End Time: 09:27 DSW Inc. (NYSE:DSW) Q2 2014 Earnings Conference Call August 26, 2014, 08:30 AM ET Executives Michael R. MacDonald - President and CEO Mary Meixelsperger - CFO Deborah L....
TheStreet.com  Aug 26  Comment 
NEW YORK (TheStreet) -- Shares of DSW are up almost 10% following the footwear retailer's top- and bottom-line earnings beat.a "This was a terrific quarter!" TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said on CNBC's...
Benzinga  Aug 26  Comment 
Digital Ally (NASDAQ: DGLY) shares surged 27.60% to $15.95. On Monday, Digital Ally's CEO said that the company has been receiving buyout offers. Digital Ally's CEO told Benzinga that strength in the company's shares are “due not only to...
TheStreet.com  Aug 26  Comment 
NEW YORK (TheStreet) -- Shares of DSW Inc. are higher by 12.62% to $31.95 in pre-market trading on Tuesday after the company reported an increase in net income for the 2014 second quarter to $34.3 million, or 38 cents per diluted share, compared...
Wall Street Journal  Aug 26  Comment 
DSW Inc. said fiscal second-quarter profit edged up, with results outpacing market expectations as net sales and same-store sales increased across its segments.




 

DSW (Designer Shoe Warehouse) is a U.S. discount shoe retailer. Unlike conventional shoe stores and department stores that pay sales associates to go to the back of the store to retrieve shoes for the customer, DSW displays its merchandise directly on the sales floor and cuts costs by eliminating the need for sales people. The company operated about 305 DSW stores in 29 states across the United States as of December 31, 2009.[1] In addition to selling shoes through its own retail stores and its website, DSW also runs the shoe departments in several discount department store chains.

Retail Ventures (RVI), owns 60% of DSW's common shares, and controls 90% of the voting rights. Until it disposed of most of its ownership stake in 2007, RVI also owned Value City Department Stores. Under this arrangement, DSW was able to share its fixed expenses with Value City. With RVI's sale of most of its stake in Value City, DSW's fixed expenses increased significantly. Moreover, since DSW lacks an international presence; as such its fortunes are closely tied to general U.S. economic conditions, as all of its stores are located in the U.S. Falling discretionary spending in the U.S. as a result of the 2007 Credit Crunch and 2008 Financial Crisis forced the company to sell its already discounted merchandise at lower than usual prices.

DSW has a single primary distribution center, which is a 700,000 square foot facility in Columbus, Ohio. The design of the distribution center facilitates the prompt delivery of priority purchases and fast-selling footwear so we can take full advantage of each selling season.

Company Overview

DSW sells branded footware in large retail stores, through leased departments in other retailers, and online at dsw.com. The stores themselves are typically very large (25,000 sq ft on average), located in shopping strips, and use most of their space (about 85%) for selling.

DSW leases shoe departments in 4 other retailers: 266Stein Mart (SMRT) stores, 66 Gordman's stores, 23 Filene's Basement (BSMTQ) stores (Filene's Basement is entirely owned by DSW's parent company, Retail Ventures (RVI), and one Frugal Fannie's store. Typically, DSW owns the merchandise and fixtures, and pays a percentage of sales to the lessor as rent.

Total net sales in fiscal 2009 increased 9.5% as a result of positive comparable store sales of 3.2%, new DSW stores and increased sales from its restaurant. The increase in comparable store sales were mostly due to increases in women's shoes and accessories. [2] This metric is significant considering the tough economic climate in the United States during 2009. In 2009, total sales were $1.46 billion, allowing it to post a net income of $26.9 million.

Trends and Forces

Drop in U.S. consumer spending forces discount

All of DSW's 305 stores are located in the United States. As a result, the company's sales are highly sensitive to general economic conditions. The subprime lending crisis and the attendant housing slump and credit crunch led to a slow down in consumer spending. Since shoes are in many cases discretionary purchases, DSW was forced to discount its prices even more in order to move its merchandise. However, in 2009 DSW had an increase in comparable store sales, perhaps signaling that consumer spending confidence has recovered.

DSW loyalty program drives incremental sales

Customers in the loyalty program tend to spend more than other customers, and each year more and more customers become members of the loyalty program. Furthermore, DSW has traditionally had over 60% of its customers who were in the loyal program. DSW has over 8 million enrolled customers in the loyalty program, giving it a large base of potential repeat customers.

Competition

According to NPD Fashionworld, the adult footwear market is over $36.6 billion industry. DSW competes mainly against departments stores. DSW also competes with single-brand company stores and specialty retailers, as well as with independent shoe retailers and national chains.

DSW's main non-department store competitors are:

  • Collective Brands, Inc. (PSS) (formerly Payless ShoeSource) is a brand-name shoe discounter with 3,954 domestic stores[3] (DSW only has 305), but these tend to be in shopping malls and are much smaller (3,200 sq ft versus DSW’s 25,000 sq ft). Still, Payless stores, in aggregate, occupy roughly twice as much total area as DSW stores. Payless has expanded internationally - they currently have 598 stores outside of the United States - while DSW continues to grow only domestically. Collective Brands, Inc. (PSS) has also purchased Stride Rite (SRR) and thus expanded into the children's footwear market, whereas DSW only sells adult shoes.[4]
  • Shoe Carnival (SCVL) operates 291 stores in the Midwest and South. Stores are generally smaller than DSW’s (11,300 sq ft) but contain a similar number of shoes (29,000 compared to DSW’s 30,000).[5]
  • Shoe Pavilion (SHOE) operates 115 stores in the West and Southwest. Stores are smaller than DSW’s – 13,800 sq ft on average.[6]

References

  1. DSW 10-K 2009 Item 1 Pg. 2
  2. DSW 10-K 2009 Item 7 Pg. 23
  3. Collective Brands 10-K, 4/1/08
  4. Reuter's Collective Brands Company Profile
  5. Reuter's Shoe Carnival Company Profile
  6. Reuter's Shoe Pavillion Company Profile
Wikinvest © 2006, 2007, 2008, 2009, 2010, 2011, 2012. Use of this site is subject to express Terms of Service, Privacy Policy, and Disclaimer. By continuing past this page, you agree to abide by these terms. Any information provided by Wikinvest, including but not limited to company data, competitors, business analysis, market share, sales revenues and other operating metrics, earnings call analysis, conference call transcripts, industry information, or price targets should not be construed as research, trading tips or recommendations, or investment advice and is provided with no warrants as to its accuracy. Stock market data, including US and International equity symbols, stock quotes, share prices, earnings ratios, and other fundamental data is provided by data partners. Stock market quotes delayed at least 15 minutes for NASDAQ, 20 mins for NYSE and AMEX. Market data by Xignite. See data providers for more details. Company names, products, services and branding cited herein may be trademarks or registered trademarks of their respective owners. The use of trademarks or service marks of another is not a representation that the other is affiliated with, sponsors, is sponsored by, endorses, or is endorsed by Wikinvest.
Powered by MediaWiki