Management at Retail Ventures, Inc. appear to like the way their investments in their DSW Shoe Warehouse division are paying off and look for more upside from improvements in the supply chain and other changes to offset any challenges they have going forward as they start to comp against healthier quarters for the balance of the year.

DSW pointed to an “extremely great boot season” in the fall/winter season that enabled them to clear seasonal product and get spring goods on the floor and out the door earlier this year.

They said the increase in full price sales helped both the top-line and gross margin, which netted a 400% increase in operating profits for the division to $13 million in the first quarter ended May 1, versus $2.6 million in the year-ago period. Gross margin jumped 490 basis points in the quarter to 43.5% of sales versus 38.6% of sales in Q1 last year. SG&A was up 50 basis points to 37.8%.

Total sales at DSW increased 24.2% to $227.3 million in the quarter. Comp stores sales increased 10.6% and DSW added nine stores in the quarter and had a net gain of 22 stores since Q1 last year. DSW called out women’s dress, casual, and sandals as key performers in the quarter. The division plans to open 35 new stores in 2004.

DSW was the only RVI division posting an operating profit for the quarter, helping RVI narrow its net loss for the quarter to $1.5 million, or five cents per diluted share, compared to a net loss of $13.2 million, or 39 cents per share on a diluted basis, last year.

Total RVI sales were up 9.8% for the quarter to $646.3 million from $588.5 million for Q1 2003.