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DSW Inc. Reports Operating Results (10-Q)
Posted by: gurufocus (IP Logged)
Date: June 1, 2012 04:22PM

DSW Inc. (DSW) filed Quarterly Report for the period ended 2012-04-28. Dsw Inc Cl-a has a market cap of $2.68 billion; its shares were traded at around $57.25 with a P/E ratio of 19.4 and P/S ratio of 1.3. The dividend yield of Dsw Inc Cl-a stocks is 1%. Dsw Inc Cl-a had an annual average earning growth of 17.1% over the past 5 years.



Highlight of Business Operations:

In the first quarter of fiscal 2012, DSW Inc.'s merchandise margin rate remained relatively flat as a percentage of net sales over the first quarter of fiscal 2011 as both our initial markup and markdown rates also remained relatively flat compared to last year. DSW Inc.'s gross profit improved 30 basis points over the comparable period last year primarily driven by occupancy leverage offset by incremental distribution center labor to support business growth initiatives surrounding the reconfiguration of the Columbus distribution center and the expansion of the dsw.com fulfillment center.

DSW segment merchandise margin, defined as gross profit excluding occupancy and warehousing expenses, a non-GAAP measure, decreased as a percentage of net sales to 47.0% for the first quarter of fiscal 2012 from 47.2% for the first quarter of fiscal 2011. Both our initial markup and markdown rates remained relatively flat compared to last year. Store occupancy expense for the DSW segment decreased as a percentage of net sales to 9.8% for the first quarter of fiscal 2012 from 10.3% for the first quarter of fiscal 2011 primarily as a result of increased average store sales. Warehousing expense increased to 2.0% for the first quarter of fiscal 2012 from 1.7% for the first quarter of fiscal 2011 primarily due to incremental distribution center labor to support business growth initiatives surrounding the reconfiguration of the Columbus distribution center and the expansion of the dsw.com fulfillment center.

Operating Expenses. Operating expenses as a percentage of net sales were 21.8% and 22.4% for the first quarter of fiscal 2012 and the first quarter of fiscal 2011, respectively. Excluding the impact of DSW and RVI merger-related transaction costs and other RVI-related expenses of $5.2 million in the first quarter of fiscal 2011, operating expenses as a percentage of net sales were 21.3% in the first quarter of 2011. This 50 basis point increase as a percentage of net sales over the comparable period for the prior year is primarily due to new store opening costs to support our plan to open approximately 35 to 40 stores in fiscal 2012 as well as a planned shift in marketing expenses from the fall to the spring season. For the first quarter of fiscal 2012, costs related to RVI were $0.3 million.

Net Working Capital. Net working capital is defined as current assets less current liabilities. Net working capital increased to $619.0 million as of April 28, 2012 from $560.5 million as of January 28, 2012, primarily due to an increase in inventory to support new stores and planned sales increases, a decrease in warrant liability due to an exercise and the payment of fiscal 2011 incentive compensation. As of April 28, 2012 and January 28, 2012, the current ratio was 3.2 and 2.8, respectively.

Read the The complete Report



Stocks Discussed: DSW,
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