DSW Inc. joined a list of retailers lowering their 2007 forecasts due to sluggish sales. The shoe chain now expects to earn between $1.24 to $1.29 per share. Last month, it said earnings would be at least 10% below last year's earnings of $1.48 per share, implying earnings of $1.33 per share or lower.
Third quarter sales increased 11% to $367 million with comps ahead 3%. Regarding categories, men's and women's both saw negative comps in Q3, while athletic and accessories were positive. Unseasonably warm weather softened demand in boots while leading to double-digit positive comps in casual sandals and positive performance in athletics. Total casual comps did not meet expectations as demand softened in the junior area, specifically in flats and vulcanized.
Total Q3 gross margins declined 70 basis points to 29.0%, partly due to increased occupancy expense associated with the 102 additional Stein Mart stores added in January. SG&A decreased 250 basis points to 19.6% of sales due in part to the re-launch of its loyalty program last year and a reduction of its 2007 bonus accrual. Net income jumped 40.2% to $22.4 million, or 51 cents a share, from $16 million, or 36 cents, a year ago.