Dsw Inc. has a market cap of $1.04 billion; its shares were traded at around $23.75 with a P/E ratio of 13.7 and P/S ratio of 0.7. DSW is in the portfolios of Jim Simons of Renaissance Technologies LLC, Chuck Royce of Royce& Associates.
Highlight of Business Operations:We have continued making investments in our business that are critical to long-term growth. During the six months ended July 31, 2010, we invested $18.1 million in capital expenditures primarily related to opening new stores, remodeling existing stores and improving our information technology systems. As of July 31, 2010, our cash and short-term investments balance was $272.0 million. We also have $19.3 million in long-term investments and no long-term debt.
Net Working Capital. Net working capital increased $39.4 million to $421.6 million as of July 31, 2010 from $382.3 million as of January 30, 2010, primarily due to the seasonal inventory increase, which was partially offset by a corresponding increase in accounts payable. As of July 31, 2010 and January 30, 2010, the current ratio was 2.9 and 2.7, respectively.
Operating Cash Flows. For the six months ended July 31, 2010, our net cash provided by operations was $18.4 million, compared to $36.4 million for the six months ended August 1, 2009. The decrease in cash provided by operations was primarily a result of increased inventory purchases and reductions in accrued expenses as compared to the prior year, offsetting the $38.9 million increase in net income.
Investing Cash Flows. For the six months ended July 31, 2010, our net cash used in investing activities was $71.1 million compared to $51.9 million for the six months ended August 1, 2009. During the six months ended July 31, 2010, we incurred $18.1 million in capital expenditures, of which $10.7 million related to stores, $4.0 million related to information technology and infrastructure and $3.4 million related to supply chain projects and warehouses.
We expect to spend approximately $50 million for capital expenditures in fiscal 2010. Our future investments will depend primarily on the number of stores we open and remodel, infrastructure and information technology programs that we undertake and the timing of these expenditures. We plan to open nine stores in fiscal 2010. During fiscal 2009, the average investment required to open a typical new DSW store was approximately $1.4 million, prior to construction and tenant allowances. Of this amount, gross inventory typically accounted for $0.5 million, fixtures and leasehold improvements typically accounted for $0.7 million and new store advertising and other new store expenses typically accounted for $0.2 million.
$100 Million Credit Facility. On June 30, 2010, the Company entered into a $100 million secured revolving credit facility (the “Credit Facility”) with a term of four years that will expire on June 30, 2014. Under this facility, the Company and its subsidiary, DSW Shoe Warehouse, Inc. (“DSWSW”), are named as co-borrowers, with all other subsidiaries listed as guarantors. The Credit Facility may be increased by up to $75 million upon the Company s request and approval by increasing lenders and subject to customary conditions. The Credit Facility provides for swing loans of up to $10 million and the issuance of letters of credit up to $50 million. The Credit Facility is secured by a lien on substantially all of the personal property assets of the Company and its subsidiaries with certain exclusions and will be used to provide funds for general corporate purposes, to refinance existing letters of credit outstanding under the Company s previous credit arrangement and to provide for the ongoing working capital requirements of the Company. Revolving credit loans bear interest under the Credit Facility at the Company s option under: (A) a base rate option at a rate per annum equal to the highest of (i) the Federal Funds Open Rate (as defined in the Credit Agreement), plus 0.5%, (ii) the Agent s prime rate, and (iii) the Daily LIBOR Rate (as defined in the Credit Agreement) plus 1.0%, plus in each instance an applicable margin based upon the Company s revolving credit availability; or (B) a LIBOR option at rates equal to the one, two, three, or six month LIBOR rates, plus an applicable margin based upon the Company s revolving credit availability. Swing loans bear interest under the base rate option. The Company s right to obtain advances under the credit facility is limited by a borrowing base. In addition, the Credit Facility contains usual and customary restrictive covenants relating to our management and the operation of our business. These covenants, among other things, limit or restrict our ability to grant liens on our assets, incur additional indebtedness, enter into transactions with affiliates, merge or consolidate with another entity, redeem our stock and pay cash dividends up to the aggregate amount of 50% of the previous year s net income, for a maximum of $50.0 million.
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