DSW Expects to Get More from Less in 2006…

DSW Inc. is projecting higher sales per square foot as the retailer moves forward with new smaller format stores that are helping DSW get closer to its goal of $300 per square foot annually chain-wide. DSW generated about $217 per square foot in 2005, with stores opened during the year generating $151/sf on an annualized rate. Based on results from four stores already opened under the new formats in 2006, sales are averaging about $230/sf. The retailer expects to open 30 new stores in 2006. The sales per square foot target for the year is $221/sf. The new formats measure roughly 20,000 square feet, about 20% smaller than the stores opened in 2005, and half the size of their Bethesda, MD behemoth. They opened 29 stores in 2005 and ended the year with 199 doors. About half of the new stores in 2006 will be in the western part of the U.S. as DSW enters Portland, Seattle, and Salt Lake City for the first time.

DSW saw sales for the fourth quarter ended January 28 increase 3.1% to $238.8 million, compared to $231.7 million in the year-ago period. Comp stores sales jumped 11.3% on strong comps in women’s footwear, primarily in boots, dress shoes, and casual. Chief merchant Debbie Ferree also said they are seeing “exceptionally strong sales” in comfort and beach sandals. Women’s comps were up 15.9% for the quarter, with the boots business comping up more than 20%. Dress and casual were said to be up in mid-double-digits. Men’s and women’s athletics comps were up in mid-singles for the period. Fashion and core casuals were the primary sales driver in the men’s business, which grew “just north of 9%” in the fourth quarter. Socks were off 10% for the period.

Net income improved 13.6% to $10.0 million, or 23 cents per diluted share, for the quarter, compared to $8.8 million, or 32 cents per diluted share, in the year-ago period. Pro forma diluted EPS for Q4 last year were 20 cents after accounting for the retailer’s June IPO.