DSW Inc. reported third quarter earnings, adjusted for the impact of its merger with its largest shareholder, Retail Ventures Inc., and related items, reached $39.8 million, or 88 cents per share, representing a gain of 12.1 percent compared with adjusted earnings of $35.5 million, or 79 cents, in the year-ago quarter. Sales rose 8.5 percent to $530.7 million with same-store sales ahead 5.2 percent.

The off-price family shoe chain also further increased its annual earnings expectations. DSW now expects adjusted EPS of between $2.90 and $2.95 for the year ending in January, up from its previous-guidance of $2.70 to $2.85 per share.  DSW sees same-store sales growth of 7 to 8 percent for the year, up from forecasts in the “mid-single-digit” range previously.

On a conference call with analysts, company CEO Mike MacDonald said the comp increase in the quarter follows two years of double-digit gains and was driven by growth in traffic count with more modest gains in AUR and UPTs. On a trailing four quarter basis, DSW's sales per square foot now totals $240 compared to just $196 per square foot in fiscal 2008, representing a 22 percent increase.

Comps at the DSW segment were positive for all major categories and included a strong double-digit comp performance in boots for both women and men. Its largest category, women’s footwear, grew 4.3 percent, led by a positive response to boots. Particularly strong growth was seen in dress shoes, especially pumps and glitter designs.

Men’s, a focus of expansion, recorded a comp increase of 13.5 percent. Men’s boot sales outpaced women’s.

Athletic footwear eked out a 0.3 percent increase with technical athletic footwear leading the performance. Excluding the toning category from both this year and last year, athletic grew by 13 percent over the prior year. Accessories grew 4.8 percent, with particular strength in hosiery.

E-commerce “remained strong” in the period, benefiting from refinements to its stock locator system, a mobile website launch, and the addition of kids shoes. Its leased business saw a 4.9 percent comp increase.

MacDonald said the company continues to expect low-single comps for fourth quarter given a challenging 14.9 percent comp generated in the year-ago fourth quarter. He added, “However, given our flexible business model, we are well-positioned to chase upside opportunities as they present themselves.”