QUOTE AND NEWS
Forbes  5 hrs ago  Comment 
Shareholders of DSW Inc (NYSE: DSW) looking to boost their income beyond the stock's 0.7% annualized dividend yield can sell the January 2015 covered call at the $30 strike and collect the premium based on the 95 cents bid, which annualizes to an...
TheStreet.com  Jul 28  Comment 
NEW YORK (TheStreet) -- Sterne Agee downgraded shares of DSW Inc. from hold to sell, while issuing a $23 price target.  On CNBC's "Cramer's Stop Trading" segment, TheStreet's Jim Cramer, co-manager of the Action Alerts PLUS portfolio, said the...
TheStreet.com  Jul 28  Comment 
NEW YORK (TheStreet) -- DSW Inc. was downgraded to "underperform" from "neutral" at Sterne Agee on Monday. The firm said it lowered its rating on the footwear and accessories retailer as it believes DSW will continue to lower its...
Benzinga  Jul 28  Comment 
Benzinga  Jul 17  Comment 
Below are the top mid-cap apparel stores stocks on the NYSE and the NASDAQ in terms of earnings per share. The trailing-twelve-month earnings per share at The Buckle (NYSE: BKE) is $3.39. Buckle's ROE for the same period is 44.40%. The...
Motley Fool  Jul 10  Comment 
Let's see what the numbers say about DSW.
SeekingAlpha  Jul 1  Comment 
By Zacks Investment Research: While DSW (DSW) stores might be a fashionable place to pick up a new pair of shoes, the stock probably doesn’t look great in your portfolio. The company has been under severe competitive pressure this year, while...
Motley Fool  Jun 25  Comment 
Mr. Market wasn't too pleased with footwear retailer DSW's latest financial report, judging by the company's subsequent stock price action. Is it time for bottom fishers to buy in?
SeekingAlpha  Jun 20  Comment 
By Dan Strack: Being a value investor, I'm always looking for stocks that have experienced dramatic drops due to temporary weakness. Over the past few weeks, there have been several retail stocks that saw sharp declines due to poor 1Q2014 earnings...
StreetInsider.com  Jun 17  Comment 
UPGRADES Keefe, Bruyette & Woods lifts Apollo Investment (Nasdaq: AINV) from Market Perform to Outperform with a price target of $9.50. Goldman Sachs boosts DSW Inc. (NYSE: DSW) from Neutral to Buy and moves its price target from $27 up to $35. ...
TheStreet.com  Jun 17  Comment 
NEW YORK (TheStreet) -- Shares of DSW Inc. are up 2.26% to $28.00 in pre-market trade after Goldman Sachs upgraded the specialty retailer to "buy" from "neutral." "On attractive risk/reward following a rare dislocation following 1Q earnings,...




 

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
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