DSW Inc. reported fourth quarter sales increase 15.7 percent to $594.3 million on a comparable sales increase of 3.6 percent.
Other highlights of the quarter:
- Including a net loss of $0.10 per share of legacy charges from RVI, Reported EPS totals $0.59
- Fourth quarter Adjusted EPS rises to $0.69 per share, an increase of 35.3 percent per share
- Full year sales increase 11.5 percent to $2,257.8 million; comparable sales increase 5.5 percent
- Full year Reported EPS totals $3.23 including $0.12 per share in one time net charges
- Adjusted EPS rises to $3.35 per share for the full year, up from $3.00 per share in 2011
“I am proud of what we have accomplished as a team. We delivered solid sales and earnings growth this quarter, which represented our 14th consecutive quarter of positive comparable sales growth,” stated Mike MacDonald, President and Chief Executive Officer, DSW Inc.
Mr. MacDonald continued, “This quarter concluded a very strong year for the Company in which we grew total sales by 12 percent, generated a two year comparable store gain of 13.8 percent and increased earnings per share by 12 percent. We continue to make excellent progress on our strategic initiatives, all of which are designed to enhance our shopping experience, regardless of how and where the customer chooses to shop. We also rewarded our shareholders with dividends totaling $128 million in 2012.”
Fourth Quarter Operating Results
Sales increased 15.7 percent to $594.3 million compared to last year’s fourth quarter sales of $513.7 million. The increase includes an incremental sales benefit of $32.3 million for the 53rd week.
For the thirteen week period, comparable sales increased by 3.6 percent. This follows an increase of 5.6 percent during the fourth quarter of 2011.
Reported net income was $27.1 million, or $0.59 per diluted share on 45.7 million weighted average shares outstanding, which included $4.2 million in legacy charges from RVI. This compares to Reported net income in the fourth quarter of 2011 of $19.4 million, which included a non-cash charge of $3.7 million related to the merger with RVI. Reported EPS for the fourth quarter last year was $0.37 per share.
Net income, adjusted for one-time items was $31.4 million, or $0.69 per diluted share on 45.7 million weighted average shares outstanding. This compares to Adjusted net income for the same period last year of $23.1 million, or $0.51 per diluted share on 45.3 million weighted average shares outstanding.
Full Year Operating Results
Fiscal 2012 sales increased 11.5 percent to $2,257.8 million from $2,024.3 million for fiscal 2011.
On a fifty-two week basis, comparable sales for fiscal 2012 increased 5.5 percent which came on top of an increase of 8.3 percent for fiscal 2011.
Reported net income in 2012 was $146.4 million, or $3.23 per diluted share on 45.3 million weighted average shares outstanding, which included $9.4 million in after-tax non-cash charges related to RVI and a $3.6 million after-tax award from credit card litigation. This compares to Reported net income in 2011 of $174.8 million, which included a non-cash benefit of $38.6 million related to the merger with RVI. Reported EPS last year was $4.54.
Fiscal 2012 net income, adjusted for one-time items, was $152.2 million or $3.35 per diluted share on 45.5 million weighted average shares outstanding. This compares to Adjusted net income for last year of $136.1 million, or $3.00 per diluted share on 45.3 million weighted average shares outstanding.
Fourth Quarter Balance Sheet Highlights
Cash, short term and long term investments totaled $410 million compared to $430 million last year.
Inventories were $394 million compared to $334 million last year, an increase of 17.8 percent, in line with expectations. On a cost per square foot basis, inventories supporting DSW stores increased by 1.0 percent at the end of quarter.
The company did not repurchase any shares under its $100 million share buyback program this quarter.
The company closed on the acquisition of its corporate headquarters and distribution center in Columbus, OH during the fourth quarter for $72 million.
Fiscal 2013 Annual Outlook
The company’s sales trend has softened in the first six weeks of the 2013 fiscal year with comparable sales declining by 5 percent over that period. Given this weak start, which is markedly different from DSW’s consistent record of solid comparable sales growth over the last fourteen quarters, it is difficult to project full year sales and profit performance with confidence. Internally, the company is now managing merchandise receipts and inventories assuming flat comparable sales performance in the first half of the year. If comparable sales for the full year were to be flat, the company estimates diluted earnings per share of $3.30 to $3.40, excluding any impact from the merger with RVI and the company’s luxury initiative.