- Full year reported net loss for fiscal 2018 was $0.26 loss per diluted share, including net
after-tax charges of $1.92 per
diluted share from adjusted items
- Full year Adjusted EPS for fiscal 2018 was $1.66 per diluted share, which included
$0.12 per diluted share from the wind
down of operations of exited businesses; Adjusted EPS at mid-point
of guidance, which excluded the wind down of operations of exited
businesses
- Repurchased two million of Company shares during the fourth
quarter; including dividends, returned over $127 million to shareholders in fiscal 2018
- Board of Directors declared quarterly dividend of $0.25 per share
COLUMBUS, Ohio, March 19,
2019 /PRNewswire/ -- DSW Inc. (NYSE: DSW), one of North America's largest designers, producers
and retailers of footwear and accessories, announced financial
results for the thirteen week and fifty-two week periods ended
February 2, 2019, compared to the fourteen week and
fifty-three week periods ended February 3, 2018.
Chief Executive Officer, Roger
Rawlins, stated, "Fiscal 2018 was one of the best years in
our Company's history from a comparable sales and earnings growth
standpoint. We crossed the $3 billion
revenue threshold for the first time and drove a +6% increase in
comparable sales as we strengthened connections with our customers.
We built a compelling product assortment, including the expansion
of DSW Kids, a differentiated services offering with our W Nail Bar
partnership, and the relaunch of our award-winning loyalty program.
At the same time, we strategically positioned our Company to grow
share and enhance profitability through transformative
acquisitions, creating an infrastructure that positions us to be a
significant force in the footwear industry for years to come."
The Company achieved several important milestones in fiscal
2018:
- Total Company revenues hit a new high of $3.2 billion;
- Strongest Adjusted EPS growth since 2013 and best
year-over-year comparable sales performance since 2011;
- Continued momentum in the core business with five consecutive
quarters of positive comparable sales and seven consecutive
quarters of positive footwear comparable sales;
- DSW Kids expanded to every store and is a significant growth
driver;
- Digital demand grew over 30%;
- Relaunched the VIP Program, which was named a Top Ten 2018 Most
Innovative Loyalty Program by Shopify, in the company of well
regarded programs such as Sephora, Amazon Prime and Starbucks. Our
new program drove significant enrollment increases and contributed
to higher brand engagement and retention rates and transactions per
member;
- Completed two major acquisitions that added two new segments,
Canada Retail and Brand Portfolio, to the business; and
- Further differentiated our in-store customer experience with
the introduction of the W Nail Bar concept store, which generated
significant revenues in its first year.
Full Year Operating Results
- Total revenue increased 13.3% to $3.2
billion, including $310.0
million from the acquisitions of the Canadian business
(Canada Retail Segment) and Camuto Group (Brand Portfolio
Segment).
- For the fifty-two week period, comparable sales increased by
6.1% compared to last year's 0.4% decrease.
- Reported gross profit, as a percent of sales, increased 100 bps
due to lower product costs and occupancy leverage.
- Reported operating expenses, as a percent of sales, increased
380 bps driven by increased marketing investments, higher incentive
compensation, and the impact of acquisition-related costs, lease
exit and restructuring charges.
- Reported net loss was $20.5
million, or $0.26 loss per
diluted share.
- Adjusted net income was $134.9 million,
or $1.66 per diluted share, which included a loss of
$0.12 per diluted share from the wind
down of operations for the exited businesses, which were not
reflected in the Company's guidance.
- Excluding the additional 53rd week in fiscal 2017,
fiscal 2018 Adjusted net income grew 14.3% and Adjusted EPS grew
13.7% compared to the prior year.
Balance Sheet Highlights
- Cash and investments totaled $169
million at year-end 2018 compared to $301 million the prior year, and debt totaled
$160 million at the end of fiscal
2018 compared to no debt outstanding at the end of the prior year
reflecting the funding of two acquisitions and share repurchase
activity in fiscal 2018.
- The Company ended the year with inventories of $645
million compared to $502 million at the end of
fiscal 2017. Excluding inventories from the acquisitions,
inventories per square foot increased by 5.9% year-over-year.
- For the full year, the Company repurchased a total of two
million shares for a total of $47.5
million and has $476.6 million
remaining under its share repurchase program. Since 2013, the
Company has returned $753 million to
shareholders through dividends and share repurchases.
Regular Dividend
DSW Inc.'s Board of Directors
declared a quarterly cash dividend of $0.25 per share. The dividend will be paid on
April 12, 2019 to shareholders of record at the close of
business on April 1, 2019.
Long-Range Plan
The
Company also announced a 3-year Long-Range
Plan, which the Company will discuss in detail at its
Investor Day today. The Company will also provide its outlook for
Fiscal 2019 at the Investor Day.
Webcast
The Company intends to present its fourth
quarter and fiscal year 2018 financial results, its outlook for
fiscal year 2019 and its Long Range
Plan and strategic vision for growth at its Investor Day
later today. The presentation will be broadcast live over the
internet beginning at 8:30 AM ET and
can be accessed at
https://www.webcaster4.com/Webcast/Page/1213/29255. For those
unable to listen to the live webcast, an archived version will be
available at the same location until March
19, 2020.
About DSW Inc.
DSW Inc. is one of North America's largest designers, producers
and retailers of footwear and accessories. The Company operates a
portfolio of retail concepts in nearly 1,000 locations under the
DSW Designer Shoe Warehouse®, The Shoe Company® and Shoe Warehouse®
banners and services footwear departments in the U.S. through its
Affiliated Business Group. DSW Inc. designs and produces footwear
and accessories through Camuto Group, a leading manufacturer
selling in more than 5,400 doors worldwide. The Camuto Group owns
licensing rights for the Jessica Simpson® footwear business, and
footwear and handbag licenses for Lucky Brand® and Max Studio®. In
partnership with a joint venture with Authentic Brands Group, DSW
Inc. also owns a stake in Vince Camuto®, Louise et Cie®, Sole
Society®, CC Corso Como®, Enzo Angiolini® and others. More
information can be found at www.dswinc.com.
Cautionary Statement Regarding Forward-Looking Information
for Purposes of the "Safe Harbor" Provisions of the Private
Securities Litigation Reform Act of 1995
Certain statements
in this press release may constitute forward-looking statements and
are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. You can identify these
forward-looking statements by the use of forward-looking words such
as "outlook," "believes," "expects," "potential," "continues,"
"may," "will," "should," "would," "seeks," "approximately,"
"predicts," "intends," "plans," "estimates," "anticipates," or the
negative version of those words or other comparable words.
These statements are based on the Company's current views and
expectations and involve known and unknown risks, uncertainties and
other factors that may cause actual results, performance or
achievements to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. These factors include, but are not
limited to: our success in growing our store base and digital
demand; risks related to our acquisitions of Camuto Group and TSL,
including the possibility that the anticipated benefits of the
acquisitions are not realized when expected or at all; our ability
to protect our reputation and to maintain the brands we license;
maintaining strong relationships with our vendors, manufacturers
and wholesale customers; our ability to anticipate and respond to
fashion trends, consumer preferences and changing customer
expectations; risks related to the loss or disruption of our
distribution and/or fulfillment operations; continuation of
agreements with and our reliance on the financial condition of
Stein Mart; our ability to execute
our strategies; fluctuation of our comparable sales and quarterly
financial performance; risks related to the loss or disruption of
our information systems and data; our ability to prevent or
mitigate breaches of our information security and the compromise of
sensitive and confidential data; failure to retain our key
executives or attract qualified new personnel; our reliance on our
loyalty program and marketing to drive traffic, sales and customer
loyalty; risks related to leases of our properties; our
competitiveness with respect to style, price, brand availability
and customer service; our reliance on foreign sources for
merchandise and risks inherent to international trade, including
escalating trade tensions between the U.S. and other countries, as
well as U.S. laws affecting the importation of goods, such as
recent tariffs imposed on Chinese goods imported to the U.S.;
uncertainty related to future legislation, regulatory reform,
policy changes, or interpretive guidance on existing legislation,
including the impact of the Tax Cuts and Jobs Act; uncertain
general economic conditions; risks related to holdings of cash and
investments and access to liquidity; and fluctuations in foreign
currency exchange rates. Risks and other factors that could cause
our actual results to differ materially from our forward-looking
statemenets are described in the Company's latest Annual Report on
Form 10-K or other reports filed with the Securities and Exchange
Commission. All forward-looking statements speak only as of the
time when made. The Company undertakes no obligation to update or
revise the forward-looking statements included in this press
release to reflect any future events or circumstances.
DSW
Inc.
|
Segment
Results
|
(unaudited)
|
|
Net sales by
segment and total revenue
|
|
Three months
ended
|
|
Twelve months
ended
|
(dollars in
thousands)
|
February 2,
2019
|
|
February 3,
2018
|
|
%
change
|
|
February 2,
2019
|
|
February 3,
2018
|
|
%
change
|
Net sales by
segment:
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
|
655,702
|
|
$
|
667,586
|
|
(1.8)
|
%
|
|
$
|
2,738,989
|
|
$
|
2,577,711
|
|
6.3
|
%
|
Canada
Retail
|
67,721
|
|
—
|
|
—
|
%
|
|
220,325
|
|
—
|
|
—
|
%
|
Brand
Portfolio(1)
|
86,138
|
|
—
|
|
—
|
%
|
|
86,138
|
|
—
|
|
—
|
%
|
Other(2)
|
29,018
|
|
55,778
|
|
(48.0)
|
%
|
|
128,968
|
|
227,844
|
|
(43.4)
|
%
|
Total net
sales
|
838,579
|
|
723,364
|
|
15.9
|
%
|
|
3,174,420
|
|
2,805,555
|
|
13.1
|
%
|
Commission, franchise
and other revenue
|
4,786
|
|
1,314
|
|
264.2
|
%
|
|
9,318
|
|
5,165
|
|
80.4
|
%
|
Total
revenue
|
$
|
843,365
|
|
$
|
724,678
|
|
16.4
|
%
|
|
$
|
3,183,738
|
|
$
|
2,810,720
|
|
13.3
|
%
|
|
|
(1)
|
Excludes intersegment
net sales in fiscal 2018 of $9.8 million, which is eliminated in
consolidation.
|
(2)
|
Other represents net
sales for ABG and Ebuys.
|
Comparable sales
change(1)
|
|
Three months
ended
|
|
Twelve months
ended
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
U.S. Retail
segment
|
5.3%
|
|
1.0%
|
|
6.0%
|
|
(0.5)%
|
Other -
ABG
|
6.8%
|
|
9.8%
|
|
7.4%
|
|
1.8%
|
Total
Company
|
5.4%
|
|
1.3%
|
|
6.1%
|
|
(0.4)%
|
|
|
(1)
|
A store is considered
comparable when in operation for at least 14 months at the
beginning of the fiscal year. Stores are added to the comparable
base at the beginning of the year and are dropped for comparative
purposes in the quarter they are closed. Comparable sales includes
e-commerce sales. Stores added due to the TSL acquisition that are
in operation for at least 14 months at the beginning of fiscal
2019, along with its e-commerce sales, will be added to the
comparable base beginning with the second quarter of fiscal 2019.
The calculation of comparable sales varies across the retail
industry and, as a result, the calculations of other retail
companies may not be consistent with our calculation.
|
Reported gross
profit(1) by segment
|
|
Three months
ended
|
|
Twelve months
ended
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
Segment:
|
|
|
|
|
|
|
|
U.S.
Retail
|
26.3
|
%
|
|
29.6
|
%
|
|
30.7
|
%
|
|
30.4
|
%
|
Canada
Retail
|
18.9
|
%
|
|
—
|
%
|
|
25.4
|
%
|
|
—
|
%
|
Brand
Portfolio
|
15.7
|
%
|
|
—
|
%
|
|
15.7
|
%
|
|
—
|
%
|
Other
|
19.4
|
%
|
|
(6.7)
|
%
|
|
19.6
|
%
|
|
6.9
|
%
|
Total Company gross
profit
|
24.4
|
%
|
|
26.8
|
%
|
|
29.5
|
%
|
|
28.5
|
%
|
|
|
(1)
|
Gross profit is
defined as net sales, which excludes commission, franchise and
other revenue, less cost of sales.
|
Number of
stores
|
|
February 2,
2019
|
|
February 3,
2018
|
U.S. Retail segment -
DSW Designer Shoe Warehouse
|
516
|
|
512
|
Canada Retail
segment:
|
|
|
|
The Shoe Company /
Shoe Warehouse
|
112
|
|
—
|
DSW Designer Shoe
Warehouse
|
27
|
|
—
|
|
139
|
|
—
|
Total operating
stores
|
655
|
|
512
|
ABG stores
serviced
|
287
|
|
293
|
|
|
Square footage
data
|
(in
thousands)
|
February 2,
2019
|
|
February 3,
2018
|
U.S. Retail
segment
|
10,529
|
|
10,485
|
Canada Retail
segment
|
1,150
|
|
—
|
Total square
footage
|
11,679
|
|
10,485
|
DSW
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(unaudited and in
thousands)
|
|
|
February 2,
2019
|
|
February 3,
2018
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
99,369
|
|
$
|
175,932
|
Investments
|
69,718
|
|
124,605
|
Accounts receivable,
net
|
68,870
|
|
19,236
|
Inventories
|
645,317
|
|
501,903
|
Prepaid expenses and
other current assets
|
71,945
|
|
49,197
|
Total current
assets
|
955,219
|
|
870,873
|
Property and
equipment, net
|
409,576
|
|
355,199
|
Goodwill
|
89,513
|
|
25,899
|
Intangible
assets
|
46,129
|
|
135
|
Deferred tax
assets
|
30,283
|
|
27,711
|
Equity
investments
|
58,125
|
|
6,096
|
Notes receivable from
TSL
|
—
|
|
115,895
|
Other
assets
|
31,739
|
|
19,709
|
Total
assets
|
$
|
1,620,584
|
|
$
|
1,421,517
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Accounts
payable
|
$
|
261,625
|
|
$
|
179,308
|
Accrued
expenses
|
201,535
|
|
148,226
|
Total current
liabilities
|
463,160
|
|
327,534
|
Debt
|
160,000
|
|
—
|
Non-current
liabilities
|
165,047
|
|
138,732
|
Total shareholders'
equity
|
832,377
|
|
955,251
|
Total liabilities and
shareholders' equity
|
$
|
1,620,584
|
|
$
|
1,421,517
|
DSW
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited and in
thousands, except per share amounts)
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
Revenue:
|
|
|
|
|
|
|
|
Net sales
|
$
|
838,579
|
|
$
|
723,364
|
|
$
|
3,174,420
|
|
$
|
2,805,555
|
Commission, franchise
and other revenue
|
4,786
|
|
1,314
|
|
9,318
|
|
5,165
|
Total
revenue
|
843,365
|
|
724,678
|
|
3,183,738
|
|
2,810,720
|
Cost of
sales
|
(634,191)
|
|
(529,341)
|
|
(2,239,229)
|
|
(2,006,423)
|
Operating
expenses
|
(235,812)
|
|
(158,249)
|
|
(826,042)
|
|
(622,546)
|
Income from equity
investment in ABG-Camuto
|
1,298
|
|
—
|
|
1,298
|
|
—
|
Impairment
charges
|
(31,683)
|
|
(6,739)
|
|
(60,760)
|
|
(89,440)
|
Change in fair value
of contingent consideration liability
|
—
|
|
3,821
|
|
—
|
|
32,747
|
Operating profit
(loss)
|
(57,023)
|
|
34,170
|
|
59,005
|
|
125,058
|
Interest income
(expense), net
|
(1,050)
|
|
965
|
|
1,288
|
|
2,789
|
Non-operating income
(expenses), net
|
(23)
|
|
419
|
|
(49,616)
|
|
(1,885)
|
Income before income
taxes and income (loss) from equity investment in TSL
|
(58,096)
|
|
35,554
|
|
10,677
|
|
125,962
|
Income tax benefit
(provision)
|
12,370
|
|
(24,116)
|
|
(29,833)
|
|
(59,567)
|
Income (loss) from
equity investment in TSL
|
—
|
|
514
|
|
(1,310)
|
|
1,057
|
Net income
(loss)
|
$
|
(45,726)
|
|
$
|
11,952
|
|
$
|
(20,466)
|
|
$
|
67,452
|
Diluted earnings
(loss) per share
|
$
|
(0.58)
|
|
$
|
0.15
|
|
$
|
(0.26)
|
|
$
|
0.84
|
Weighted average
diluted shares
|
79,413
|
|
80,647
|
|
80,026
|
|
80,687
|
DSW
INC.
|
NON-GAAP
RECONCILIATION
|
(unaudited and in
thousands, except per share amounts)
|
|
|
Three months
ended
|
|
Twelve months
ended
|
|
February 2,
2019
|
|
February 3,
2018
|
|
February 2,
2019
|
|
February 3,
2018
|
Reported net income
(loss)
|
$
|
(45,726)
|
|
$
|
11,952
|
|
$
|
(20,466)
|
|
$
|
67,452
|
Pre-tax
Adjustments:
|
|
|
|
|
|
|
|
Included in cost of
sales:
|
|
|
|
|
|
|
|
Camuto Group
inventory step-up
|
5,300
|
|
—
|
|
5,300
|
|
—
|
Ebuys inventory
write-downs
|
—
|
|
9,257
|
|
—
|
|
9,257
|
Included in operating
expenses:
|
|
|
|
|
|
|
|
Lease exit and other
termination costs
|
2,337
|
|
—
|
|
23,041
|
|
—
|
Impairment
charges
|
31,683
|
|
6,739
|
|
60,760
|
|
89,440
|
Acquisition-related
costs and target acquisition costs
|
9,335
|
|
600
|
|
27,929
|
|
677
|
Amortization of
intangible assets
|
788
|
|
39
|
|
1,017
|
|
3,093
|
Change in fair value
of Ebuys contingent consideration liability
|
—
|
|
(3,821)
|
|
—
|
|
(32,747)
|
Restructuring
expenses
|
2,342
|
|
346
|
|
5,613
|
|
1,176
|
Included in
non-operating expenses, net:
|
|
|
|
|
|
|
|
Fair value
adjustments of TSL's previously held assets
|
—
|
|
—
|
|
33,988
|
|
—
|
Foreign currency
transaction losses (gains)
|
(1)
|
|
(1,102)
|
|
15,389
|
|
1,106
|
Total pre-tax
adjustments
|
51,784
|
|
12,058
|
|
173,037
|
|
72,002
|
Tax effect of
adjustments
|
(13,650)
|
|
(3,321)
|
|
(22,125)
|
|
(26,630)
|
Tax expense impact as
a result of Ebuys exit
|
—
|
|
—
|
|
2,265
|
|
—
|
Net tax expense
impact of implementing the U.S. Tax Reform
|
2,144
|
|
10,079
|
|
2,144
|
|
10,079
|
Total adjustments,
after tax
|
40,278
|
|
18,816
|
|
155,321
|
|
55,451
|
Adjusted net income
(loss)
|
$
|
(5,448)
|
|
$
|
30,768
|
|
$
|
134,855
|
|
$
|
122,903
|
Reported diluted
earnings (loss) per share
|
$
|
(0.58)
|
|
$
|
0.15
|
|
$
|
(0.26)
|
|
$
|
0.84
|
Adjusted diluted
earnings (loss) per share
|
$
|
(0.07)
|
|
$
|
0.38
|
|
$
|
1.66
|
|
$
|
1.52
|
Non-GAAP Measures
In addition to earnings (loss) per share and net income (loss)
determined in accordance with accounting principles generally
accepted in the United States
("GAAP"), the Company uses adjusted earnings (loss) per share and
net income (loss), which adjust for (i) the effects of the lease
exit and other termination costs; (ii) costs and charges associated
with acquisition-related activity, including target acquisition
efforts; (iii) impairment charges; (iv) restructuring expenses; (v)
amortization expense of intangible assets; (vi) inventory
write-downs, the change in fair value of contingent consideration
liability and tax expense impact related to the Ebuys exit; (vii)
foreign currency losses, including the reclassification from
accumulated other comprehensive loss as a result of the TSL
acquisition; and (viii) the net tax expense impact of implementing
the U.S. Tax Reform. The unaudited reconciliation of adjusted
results should not be construed as an alternative to the reported
results determined in accordance with GAAP. These financial
measures are not based on any standardized methodology and are not
necessarily comparable to similar measures presented by other
companies. The Company believes these non-GAAP measures provide
useful information to both management and investors to increase
comparability to the prior periods by adjusting for certain items
that may not be indicative of core operating measures and to better
identify trends in our business. The adjusted financial results are
used by management to, and allow investors to, evaluate the
operating performance of the Company on a comparable basis, when
reviewed in conjunction with the Company's GAAP statements. These
amounts are not determined in accordance with GAAP and therefore
should not be used exclusively in evaluating the Company's business
and operations.
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content:http://www.prnewswire.com/news-releases/dsw-inc-reports-fourth-quarter-and-fiscal-year-2018-financial-results-300814389.html
SOURCE DSW Inc.