DSW Inc. reported earnings excluding special charges reached $25.7 million, or 32 cents per share, a decline of 14.3 percent versus a year ago.

Adjusted earnings exclude pre-tax charges totaling $4.1 million, or 4 cents per share, related to the acquisition of Ebuys, restructuring costs and foreign exchange loss assumed in the process of pre-funding the upcoming Town Shoes acquisition. Net earnings fell 23.5 percent to $23 million, or 28 cents a share, from $30 million, or 36 cents, a year ago.

Sales increased 1.4 percent to $691.1 million, including $22.3 million of revenues from Ebuys. Comparable sales decreased 3 percent compared to last year’s 1.6 percent decrease.

Reported gross profit decreased by 180 bps, driven by planned clearance activity and the addition of Ebuys, offset by disciplined markdown management and favorable sourcing costs. Reported operating expenses improved by 40 bps, due to tighter expense management.

Wall Street on average was expected earnings of 35 cents a share on revenues of $684.9 million.

Roger Rawlins, chief executive officer stated, “First quarter sales were challenging, but trends improved during the quarter with comps turning positive in April. As expected, planned clearance activity and the addition of Ebuys drove lower gross margin and operating income. The investments we have made in our digital capabilities, such as our redesigned website and mobile app, drove robust growth in digital demand. We are intently focused on driving sequential top line improvements through key product and customer initiatives while balancing strategic investments with disciplined expense management.”

First Quarter Balance Sheet Highlights
• Cash, short-term and long-term investments totaled $254 million compared to $238 million in the first quarter last year.
• Inventories were $575 million compared to $563 million for the same period last year. On a cost per square foot basis, inventories declined by 2.6 percent.

Fiscal 2017 Annual Outlook
The company reiterated its full year outlook for adjusted earnings in the range of $1.45 to $1.55 per diluted share.

Photo courtesy DSW