DSW Q2 Earnings Gain Surges Past Sales Growth…

DSW Inc. saw net income growth outpace sales gains for the second quarter ended July 29, thanks in part to an improvement in gross margins that came through higher initial mark-ups, a decrease in mark-downs, and a leveraging of distribution center costs. The 60 basis point GM improvement more than offset the 40 basis point decline in SG&A expenses.

Debbie Ferree, the retailer’s chief merchant and vice chair, said they were pleased with the performance of the spring season assortment. She said the women’s business had a strong overall season, driven by the dress and casual categories. The strong comps in women’s casual were driven by core basics and young attitude product such as canvas, flats, and streetwear. Casual sandals comped up in the mid-singles, but may have seen some trade-off from Q2 to Q1 this year. The men’s business was described as “flat” this year, but Ms. Ferree said they had “very strong” comps in men’s sandals and young men’s casual and sport. Athletic performance was said to be “slightly ahead” of last year, with women’s street fashion performing nicely. Fashion athletic makes up roughly 38% to 40% of the athletic business.