DSW Sees a Strong Start to Fourth Quarter…

DSW Inc. said that third quarter comps were up across all regions for the third quarter ended October 29, with a “slightly higher performance” coming out of the West. The women’s business drove the total comp store sales increase for the period, posting a 5.7% gain on strength in boots and dress shoes. The men’s and athletic categories were also said to be positive, but the accessories business, which represents about 5% to 6% of DSW’s Q3 business, was down 9.0% for the period. The gains came from an improved product mix which drove gains in average unit retails and average ticket.

The retailer got a 150 basis point lift in the SG&A line, but was offset by a 200 basis point decline in gross margins, because the retailer last year skipped a scheduled rotation of clearance merchandise.

DSW President and Chief Merchant Debbie Ferree said the positive trend in women’s continued into a “very strong” November period. She said athletic comped up 1.0% for the third quarter after a “strong performance” in October offset the weakness in August and September. The positive trend here also continued into November, particularly in women’s fashion athletics. The men’s business also had a strong finish to the quarter, with fashion and core casual driving the momentum. The casual hosiery business was said to be “a little bit off” from last year.

The retailer opened 13 stores and added four leased shoe departments during the third quarter for a total of 5.0 million square feet at quarter-end, which is a 20% increase from the same time last year. DSW plans to open two more stores in Q4 for a total of 29 new stores for the year. They expect to open 30 stores next year. The stores opening next year are expected to deliver about $221 per square foot, compared to the $150/sf delivered by the stores opened in 2005.

Inventories were down 2% on a per square foot basis at quarter-end.