DSW Looks to Cross-Channeling for Future Growth; Sees Price Inflation Building

 

Speaking briefly on the merger during his introduction, DSW President and CEO Mike MacDonald said the best thing about the development was that it would simplify the companys corporate structure.

Regarding growth initiatives, MacDonald said DSW would continue to focus on the off-mall marketplace — power strips and lifestyle centers. MacDonald said pending the results of three test stores in smaller markets, DSW could open up at least 50 markets for expansion in the near-future.

McDonald also said DSW would continue to grow its online presence, which is the fastest growing part of the DSW business. MacDonald estimated that DSW had twice as many SKUs online than it did a year ago. DSW will also incorporate kids footwear within its dot-com channel during the back-half of July for back-to-school, which he sees as a nice source of incremental volume.

MacDonald noted that DSW would also be refining its rewards program, which has added an average of 100,000 new members per week in recent months.

In-store, DSW will be incorporating a new stock-locator system that allows customers to find sizes via the online channel. We are really fostering cross-channel purchasing by our customers, MacDonald said.
Regarding raw material costs, MacDonald said inflation is real, not speculative – its happening, noting that DSWs Q3 orders came in with an average unit cost about 3 percent higher than last year.

 

MacDonald said the cost on goods in Q4 could be as high as 6 percent more than the year-ago period. He added that the company is doing its best to mitigate higher costs by working with vendor partners on production schedules to pursue more key item programs. He also said DSW is trying to be smart when it comes to passing the costs along to the consumer. He said price hikes would probably be applied to more fashion-forward impulse purchase products.