DSW Inc. recorded net income of only $1.1 million for the thirteen-week fourth quarter ended February 2, 2008, down sharply from the year-ago net income of $16.6 million for that fourteen-week period. The net income decline came on a 1.0% increase in net sales to $332.5 million for the quarter from $329.1 million last year, but on a same store sales decrease of 1.7%. Comps for the year-ago quarter increased 1.0%.  
Diluted earnings per share were 2 cents for the thirteen-week fourth quarter this year compared with 37 cents for last year's fourteen-week fourth quarter.


Fiscal Year Results


For the fifty-two week fiscal year ended February 2, 2008, net income was $53.8 million on net sales of $1.41 billion, compared with net income of $65.5 million on net sales of $1.28 billion for the fifty-three week fiscal year ended February 3, 2007. On a comparable fifty-two week basis, same store sales decreased 0.8% versus an increase of 2.5% last year.


Diluted earnings per share for the fifty-two week fiscal year ended February 2, 2008 were $1.21 compared with $1.48 for the fifty-three week fiscal year ended February 3, 2007.


2008 Outlook


Given the current economic uncertainty, at this time the company will not provide full-year guidance for 2008. For the first half of 2008, comparable store sales are anticipated to be negative and earnings per diluted share are anticipated to be significantly below the 68 cents per diluted share reported for the first half of last year. The company maintains its plans to open at least 30 DSW stores during the year and to launch its online business, DSW.com.

                                   DSW INC.

                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME

                   (In thousands, except per share amounts)

                                 (Unaudited)


                Thirteen weeks  Fourteen weeks  Fifty two    Fifty three

                    ended            ended     weeks ended   weeks ended

                  February 2,     February 3,   February 2,  February 3,

                     2008            2007          2008         2007


    Net sales     $ 332,520       $ 329,052     $ 1,405,615  $ 1,279,060

    Cost of sales  (259,651)       (239,765)     (1,035,480)    (912,709)

    Gross profit     72,869          89,287         370,135      366,351

    Operating

     expenses       (71,897)        (64,783)       (288,814)    (265,637)

    Operating

     profit             972          24,504          81,321      100,714

    Interest

     income, net        770           2,051           5,970        6,913

    Earnings before

     income taxes     1,742          26,555          87,291      107,627

    Income tax

     provision         (664)         (9,952)        (33,516)     (42,163)

    Net income      $ 1,078        $ 16,603        $ 53,775     $ 65,464


    Basic and diluted

     earnings per share:

      Basic          $ 0.02          $ 0.38          $ 1.22       $ 1.49

      Diluted        $ 0.02          $ 0.37          $ 1.21       $ 1.48


    Shares used in per

     share calculations:

      Basic          43,959          43,929          43,953       43,914

      Diluted        44,118          44,309          44,273       44,222