Comps climbed 12.5% at its DSW business and 5.7% in its leased business. Healthy increases were seen in both traffic and conversion rates. Women's footwear was up 12%, men's climbed 15%, athletics increased 9% and handbag/accessories gained 6%. Key business drivers included sandals in women's, casual footwear in men's, and toning in athletics.


Merchandise margins increased 210 basis points to 45.2%, driven by significant regular price selling. Occupancy expense decreased sharply due to the reduction of non rent- related expenses in DSW stores.
The SG&A rate decreased 230 basis points due to the increased sales, cost-control efforts, and a shift of marketing expenses to the second half of the year.


Inventories climbed 17%. Given that inventory was down 12% at the close of the year-ago second quarter, its two-year inventory level is up 5%, reflecting the intentional decision to move up some delivery dates for the fall product.


On a conference call, Debbie Ferree, vice chairperson, chief merchandising officer, listed boots, fashion in women's, and toning and technical running in athletics as category drivers for fall.


She said toning – representing 2% to 2.5% of its overall business and 14% of athletic – has “calmed down just a bit” after showing outsized gains last spring and fall but remains a “very important part” of the mix for DSW. The category is also being helped by new brands and new styles.


“It's a strong category for us,” said Ferree. “I think it has added new energy to an athletic category that was really suffering from staleness and lack of freshness over the last couple of years.”


DSW also added Nike's mens product for the first time and has been “very, very pleased with our early results in that, which have been high single to low double-digit sell-throughs.”