Ohio | 001-32545 | 31-0746639 | ||
(State or other Jurisdiction of Incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
810 DSW Drive, Columbus, Ohio | 43219 | |
(Address of Principal Executive Offices) | (Zip Code) |
(Former name or former address if changed since last report.) |
Exhibit Number | Description | ||
99.1 | Press Release dated November 22, 2016 |
DSW Inc. | ||||
By: | /s/ William L. Jordan | |||
William L. Jordan | ||||
Chief Administrative Officer, Executive Vice President and General Counsel | ||||
Date: | November 22, 2016 |
• | Third quarter sales increase 4.7% to $697 million; comparable sales decrease 2.0% |
• | Third quarter Reported EPS increases 7% to $0.47 per share, including acquisition and restructuring related costs of $0.03 per share |
• | Third quarter Adjusted EPS increases 16% to $0.51 per share |
• | Company increases its full year outlook for Adjusted EPS to $1.35 to $1.45 per share |
• | Repurchases 2.0 million shares for $42.7 million |
• | Board of Directors approves a quarterly dividend of $0.20 per share |
• | Sales increased 4.7% to $697 million, including $21.3 million from Ebuys. |
• | Comparable sales decreased by 2.0% compared to last year's decrease of 3.9%. |
• | Reported gross profit increased by 50 bps. |
• | Adjusted gross profit increased by 60 bps driven by lower clearance markdowns and last year's inventory valuation reserve offset by higher shipping costs and the lower gross profit rate from Ebuys, which we acquired in 2016. |
• | Reported operating expense rate increased by 80 bps. |
• | Adjusted operating expense rate increased by 40 bps, due to the accrual for incentive compensation reversed last year and the favorable timing of marketing expenses. Excluding the impact of incentive compensation, Adjusted operating expense rate improved by 110 bps. |
• | Reported tax rate increased by 30 bps to last year. |
• | Reported net income was $39.0 million, or $0.47 per diluted share, including pre-tax charges of $3.1 million, or $0.02 per share, from the acquisition of Ebuys and restructuring costs of $1.3 million, or $0.01 per share. |
• | Adjusted net income was $41.7 million, or $0.51 per diluted share, a 16% increase over last year. |
• | Sales increased 4.5% to $2.0 billion, including $56.0 million from Ebuys. |
• | Comparable sales decreased by 1.6% compared to last year's increase of 0.9%. |
• | Reported net income was $94.0 million, or $1.14 per diluted share, including pre-tax charges of $11.5 million, or $0.09 per share, from the Ebuys acquisition, and $4.1 million, or $0.03 per share, from restructuring costs. |
• | Adjusted net income was $103.6 million, or $1.26 per diluted share, excluding costs related to the Ebuys acquisition and the Company's restructuring costs. |
• | Cash, short-term and long-term investments totaled $216 million compared to $397 million in the third quarter last year. The lower cash balance reflects the Company's share repurchase activity totaling $159 million in the last four quarters, the funding of its acquisition of Ebuys totaling $59.5 million and capital spending totaling $94.7 million in the last twelve month period. |
• | The company repurchased 2.0 million shares for $42.7 million during the third quarter. |
• | Inventories were $563 million compared to $521 million last year, including Ebuys inventory of $35 million. On a cost per square foot basis, DSW inventories declined 3.5% reflecting lower clearance levels and opportunistic buys. |
Net sales by segment | |||||||||||||||||||||
Thirteen weeks ended | Thirty-nine weeks ended | ||||||||||||||||||||
October 29, 2016 | October 31, 2015 | % change | October 29, 2016 | October 31, 2015 | % change | ||||||||||||||||
(in thousands) | |||||||||||||||||||||
DSW segment | $ | 639,136 | $ | 628,778 | 1.6 | % | $ | 1,866,096 | $ | 1,833,572 | 1.8 | % | |||||||||
ABG segment | 36,154 | 36,742 | (1.6 | )% | 114,738 | 114,640 | 0.1 | % | |||||||||||||
Other | 21,326 | — | — | % | 55,993 | — | — | % | |||||||||||||
DSW Inc. | $ | 696,616 | $ | 665,520 | 4.7 | % | $ | 2,036,827 | $ | 1,948,212 | 4.5 | % |
Comparable sales change by reportable segment | |||||||
Thirteen weeks ended | Thirty-nine weeks ended | ||||||
October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | ||||
DSW segment | (1.8)% | (3.9)% | (1.5)% | 0.8% | |||
ABG segment | (4.6)% | (3.0)% | (3.1)% | 1.0% | |||
DSW Inc. | (2.0)% | (3.9)% | (1.6)% | 0.9% |
Reported gross profit by segment | |||||||||||
Thirteen weeks ended | Thirty-nine weeks ended | ||||||||||
October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | ||||||||
DSW segment | 31.9 | % | 30.4 | % | 30.7 | % | 31.6 | % | |||
ABG segment | 21.7 | % | 21.9 | % | 22.6 | % | 20.6 | % | |||
Other | (0.2 | )% | — | % | 6.8 | % | — | % | |||
DSW Inc. | 30.4 | % | 29.9 | % | 29.6 | % | 31.0 | % |
Stores and square footage data | |||||
As of | |||||
October 29, 2016 | October 31, 2015 | ||||
DSW stores open, end of period | 498 | 465 | |||
DSW stores total square footage (in thousands) | 10,273 | 9,785 |
Reported gross profit by segment | |||||||||||||||||||
Thirteen weeks ended | Thirty-nine weeks ended | ||||||||||||||||||
October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | ||||||||||||||||
DSW segment gross profit | 31.9 | % | 30.4 | % | 30.7 | % | 31.6 | % | |||||||||||
DSW segment merchandise margin | 45.0 | % | 43.3 | % | 44.0 | % | 44.5 | % | |||||||||||
Store occupancy expense | 10.8 | % | 10.7 | % | 11.1 | % | 10.8 | % | |||||||||||
Distribution and fulfillment expense | 2.3 | % | 2.2 | % | 2.2 | % | 2.1 | % | |||||||||||
ABG segment gross profit | 21.7 | % | 21.9 | % | 22.6 | % | 20.6 | % | |||||||||||
ABG segment merchandise margin | 43.5 | % | 43.3 | % | 44.1 | % | 43.3 | % | |||||||||||
Store occupancy expense | 20.7 | % | 20.3 | % | 20.4 | % | 21.6 | % | |||||||||||
Distribution and fulfillment expense | 1.1 | % | 1.1 | % | 1.1 | % | 1.1 | % | |||||||||||
Other gross profit(1) | (0.2 | )% | — | % | 6.8 | % | — | % | |||||||||||
Other merchandise margin | 27.7 | % | — | % | 31.6 | % | — | % | |||||||||||
Marketplace fees | 12.4 | % | — | % | 11.8 | % | — | % | |||||||||||
Distribution and fulfillment expense | 15.5 | % | — | % | 13.0 | % | — | % |
October 29, 2016 | January 30, 2016 | October 31, 2015 | |||||||||
Assets | |||||||||||
Cash and equivalents | $ | 60,962 | $ | 32,495 | $ | 90,019 | |||||
Short-term investments | 78,512 | 226,027 | — | ||||||||
Accounts receivable, net | 21,363 | 15,464 | 18,264 | ||||||||
Inventories | 562,701 | 484,236 | 521,243 | ||||||||
Prepaid expenses and other current assets | 24,579 | 37,446 | 22,209 | ||||||||
Total current assets | 748,117 | 795,668 | 651,735 | ||||||||
Property and equipment, net | 381,218 | 374,241 | 364,253 | ||||||||
Long-term investments | 76,126 | 71,953 | 306,483 | ||||||||
Goodwill | 77,208 | 25,899 | 25,899 | ||||||||
Deferred income taxes | 21,103 | 21,815 | 34,031 | ||||||||
Investment in Town Shoes | 17,996 | 21,188 | 21,229 | ||||||||
Note receivable from Town Shoes | 50,579 | 44,170 | 45,930 | ||||||||
Intangible assets | 38,243 | 46 | 46 | ||||||||
Other assets | 21,325 | 14,129 | 8,422 | ||||||||
Total assets | $ | 1,431,915 | $ | 1,369,109 | $ | 1,458,028 | |||||
Liabilities and shareholders' equity | |||||||||||
Accounts payable | $ | 161,262 | $ | 215,626 | $ | 169,166 | |||||
Accrued expenses | 143,653 | 107,800 | 117,895 | ||||||||
Total current liabilities | 304,915 | 323,426 | 287,061 | ||||||||
Non-current and contingent liabilities | 203,577 | 140,759 | 142,834 | ||||||||
Total shareholders' equity | 923,423 | 904,924 | 1,028,133 | ||||||||
Total liabilities and shareholders' equity | $ | 1,431,915 | $ | 1,369,109 | $ | 1,458,028 |
Thirteen weeks ended | Thirty-nine weeks ended | |||||||||||||||
October 29, 2016 | October 31, 2015 | October 29, 2016 | October 31, 2015 | |||||||||||||
Net sales | $ | 696,616 | $ | 665,520 | $ | 2,036,827 | $ | 1,948,212 | ||||||||
Cost of sales | (484,836 | ) | (466,554 | ) | (1,433,829 | ) | (1,344,886 | ) | ||||||||
Gross profit | 211,780 | 198,966 | 602,998 | 603,326 | ||||||||||||
Operating expenses | (147,412 | ) | (135,637 | ) | (446,696 | ) | (406,844 | ) | ||||||||
Change in fair value of contingent consideration | (1,469 | ) | — | (5,080 | ) | — | ||||||||||
Operating profit | 62,899 | 63,329 | 151,222 | 196,482 | ||||||||||||
Interest income, net | 482 | 952 | 1,626 | 2,624 | ||||||||||||
Non-operating income (expense) | 80 | (107 | ) | 344 | 3,198 | |||||||||||
Income before income taxes and income (loss) from Town Shoes | 63,461 | 64,174 | 153,192 | 202,304 | ||||||||||||
Income tax provision | (25,626 | ) | (25,575 | ) | (60,420 | ) | (77,157 | ) | ||||||||
Income (loss) from Town Shoes | 1,128 | 696 | 1,237 | (876 | ) | |||||||||||
Net income | $ | 38,963 | $ | 39,295 | $ | 94,009 | $ | 124,271 | ||||||||
Diluted shares used in per share calculations | 82,537 | 88,369 | 82,643 | 89,229 | ||||||||||||
Earnings per share | $ | 0.47 | $ | 0.44 | $ | 1.14 | $ | 1.39 |
Thirteen weeks ended October 29, 2016 | Thirty-nine weeks ended October 29, 2016 | ||||||||||||||||||||||
Pre-tax | Tax effected - net income | Diluted earnings per share | Pre-tax | Tax effected - net income | Diluted earnings per share | ||||||||||||||||||
Reported net income | $ | 38,963 | $ | 0.47 | $ | 94,009 | $ | 1.14 | |||||||||||||||
Adjustments: | |||||||||||||||||||||||
Inventory step-up | $ | 532 | 332 | (1) | 0.00 | $ | 1,225 | 764 | (1) | 0.01 | |||||||||||||
Transaction costs | 4 | 2 | (2) | 0.00 | 2,288 | 1,416 | (2) | 0.02 | |||||||||||||||
Amortization of intangible assets | 1,072 | 709 | (1) | 0.01 | 2,902 | 1,810 | (1) | 0.02 | |||||||||||||||
Restructuring fees | 1,349 | 833 | (4) | 0.01 | 4,075 | 2,522 | (4) | 0.03 | |||||||||||||||
Change in fair value of contingent consideration | 1,469 | 883 | (3) | 0.01 | 5,080 | 3,054 | (3) | 0.04 | |||||||||||||||
Adjusted net income | $ | 41,722 | $ | 0.51 | $ | 103,575 | $ | 1.26 |