DSW Inc. reported sales increased 7.5 percent in the second quarter, to $512.2 million compared to last year's second quarter sales of $476.3 million. Comparable sales for the second quarter 2012 increased by 4.2 percent. This follows an increase of 12.3 percent in comparable sales in the second quarter of 2011.
Reported net income was $29.3 million, or 65 cents per diluted share on 45.3 million weighted average shares outstanding, which included a $700,000 after-tax net charge related to RVI. This compares to reported net income in the second quarter of 2011 of $139.9 million, or $3.96 per diluted share on 35.4 million weighted average shares outstanding, which included a net benefit of $106.2 million related to the merger with RVI.
Net income, adjusted for the impact of items related to RVI was $30.1 million, or 66 cents per diluted share on 45.4 million weighted average shares outstanding. This compares to Adjusted net income for the same period last year of $33.7 million, or 74 cents per diluted share on 45.3 million weighted average shares outstanding.
“Our second quarter results surpassed our updated guidance and our performance for the first six months of the year is on track with our annual earnings target,” stated Mike MacDonald, president and CEO, DSW Inc. “During the spring season, we reported solid comp sales increases across all categories of our business, reflecting our ongoing ability to identify and interpret trends that resonate with our customers. We ended the season with inventory in good shape in terms of level, content and currency. We remain excited about our business as we begin the second half of the year, during which we will open another 27 new stores. Consumers continue to favor our consistent value proposition, our strong selection of brands and our unique service model. We are well positioned for solid growth in fiscal 2012 and beyond.”
Six-Month Operating Results
Sales increased 9.3 percent to $1.07 billion from $979.9 million for the first six months of 2011.
Comparable sales for the first six months increased 6.0 percent. This follows an increase of 11.5 percent in comparable sales for the first six months of 2011.
Reported net income was $69.2 million, or $1.54 per diluted share on 45.0 million weighted average shares outstanding, which included a $5.0 million after-tax net charge related to RVI. This compares to Reported net income in the first six months of 2011 of $101.7 million, or $3.54 per diluted share on 28.7 million weighted average shares outstanding, which included a net benefit of $28.5 million related to the merger with RVI.
Net income, adjusted for the impact of items related to RVI was $74.2 million, or $1.64 per diluted share on 45.3 million weighted average shares outstanding. This compares to Adjusted net income for the same period last year of $73.3 million, or $1.62 per diluted share on 45.3 million weighted average shares outstanding.
Second Quarter Balance Sheet Highlights
Cash and investments totaled $485 million compared to $418 million at the end of the second quarter 2011, an increase of 16.0 percent.
Inventories were $367 million compared to $318 million at the end of the second quarter of 2011, an increase of 15.4 percent, in line with expectations. On a cost per square foot basis, inventories in DSW stores increased by 6.5 percent at the end of quarter. Adjusting for our 27 new store openings and the earlier arrival of last year's fall receipts, inventories per square foot are flat over last year.
The company did not repurchase any shares under its $100 million share buyback program this quarter.
Fiscal 2012 Annual Outlook
The company is reiterating its annual 2012 earnings and comparable sales guidance. The company continues to expect Adjusted diluted earnings per share in the range of $3.25 to $3.40 for the 53-week year ending Feb. 2, 2013 compared to adjusted diluted earnings per share of $3.00 for the 52-week year ended Jan. 28, 2012. The
The company continues to expect a mid-single digit comparable sales increase for the year. Please note that the company's guidance does not include any share repurchase activity under its $100 million share repurchase program nor the impact of the mark-to-market adjustment on the warrants and one-time items related to RVI. Only the minimal ongoing operating expenses related to RVI are included in the Adjusted earnings guidance for Fiscal 2012.
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Three months ended |
Adjustments |
Three months ended |
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|
July 28, 2012 |
July 28, 2012 |
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|
Reported |
Adjusted |
||||||||||||
|
Net sales |
$ |
512,218 |
$ |
512,218 |
|||||||||
|
Cost of sales |
(351,973) |
(351,973) |
|||||||||||
|
Operating expenses |
(112,118) |
(1) |
$ |
(67) |
(112,185) |
||||||||
|
Change in fair value of derivative instruments |
(779) |
(2) |
779 |
||||||||||
|
Operating profit |
47,348 |
712 |
48,060 |
||||||||||
|
Interest income, net |
496 |
496 |
|||||||||||
|
Income from continuing operations before income taxes |
47,844 |
712 |
48,556 |
||||||||||
|
Income tax provision |
(18,526) |
(3) |
28 |
(18,498) |
|||||||||
|
Net income |
$ |
29,318 |
$ |
740 |
$ |
30,058 |
|||||||
|
Diluted shares used in per share calculations: |
45,256 |
(4) |
45,376 |
||||||||||
|
Diluted earnings per share: |
|||||||||||||
|
Diluted earnings per share from continuing operations |
$ |
0.65 |
$ |
0.66 |
|||||||||
|
Diluted earnings per share |
$ |
0.65 |
$ |
0.66 |
|||||||||
