DSW reported first quarter quarter sales increase 7.7 percent to $601.4 million while comparable sales decreased 2.4 percent. Net income, adjusted for the net charge from its test of luxury items, increased 4.1 percent to $45.9 million, or $1.00 per diluted share.

DSWs first quarter performance demonstrated remarkable execution flexibility in a time of unprecedented swings in weather patterns. Our merchandising and supply chain teams were able to adjust merchandise receipts in weather sensitive categories while continuing to support trending categories with fresh product flow. We were pleased with the strong sales rebound in the final four weeks of the quarter that allowed us to minimize our comparable sales decline and exit the quarter with well positioned inventories, stated Mike MacDonald, president and chief executive officer, DSW Inc.

MacDonald continued, We are confident in the long term growth potential of our business, which is reflected in our decision to raise our regular quarterly dividend by 39 percent from $0.18 per share to $0.25 per share. For the full year we expect same store sales to range from flat to 2 percent growth and Adjusted EPS to range from $3.40 to $3.60 per share.

First Quarter Operating Results

Sales increased 7.7 percent to $601.4 million compared to last years first quarter sales of $558.6 million.

For the thirteen week period ended May 4, 2013, comparable sales decreased by 2.4 percent. This follows an increase of 7.6 percent during the thirteen week period ended April 28, 2012.

Reported net income was $34.5 million, or $0.75 per diluted share on 45.8 million weighted average shares outstanding, which included a net charge of $11.4 million, or $0.25 per share from our luxury test, due mostly to an inventory valuation reserve.  This compares to Reported net income in the first quarter of 2012 of $39.9 million, which included a non-cash charge of $4.3 million related to legacy charges from RVI. Reported EPS for the first quarter last year was $0.89 per share.

Net income, adjusted for the net charge from our luxury test, was $45.9 million, or $1.00 per diluted share on 45.8 million weighted average shares outstanding. This compares to Adjusted net income for the same period last year of $44.1 million, or $0.98 per diluted share on 45.2 million weighted average shares outstanding.

First Quarter Balance Sheet Highlights

Cash, short term and long term investments totaled $430 million compared to $448 million in the first quarter last year.

Inventories were $395 million compared to $373 million during the first quarter last year, an increase of 6 percent, in line with expectations. On a cost per square foot basis, inventories supporting DSW stores decreased by 5 percent at the end of quarter.

Regular Dividend and Share Repurchase

DSWs Board of Directors approved an increase of the companys quarterly cash dividend by 39 percent to $0.25 per share. The dividend will be paid on June 28, 2013 to shareholders of record at the close of business on June 18, 2013. The Board also extended the companys existing $100 million share repurchase authorization.

Fiscal 2013 Annual Outlook

For the fifty-two week period ended February 1, 2014 the company now expects full year comparable sales to grow in the 0 percent to 2 percent range. Earnings per share, excluding luxury and one-time charges, are expected to range from $3.40 to $3.60 per share.  Please note that the companys guidance does not include any share repurchase activity under its $100 million share repurchase program.