DSW reported net income from continuing operations of $39.3 million for the third quarter ended Oct. 31, down by 20.7 percent but in line with its most recent projections. Sales decreased by 0.6 percent to $666 million while same-store sales dropped by 3.9 percent. The disappointing performance was attributed to unseasonably warm temperatures, cautious consumer spending and slower tourism in a difficult retail environment. The company said it took actions to manage inventories in response to these challenges and canceled orders both within the quarter and for future periods, ending the quarter with total inventories almost flat to the prior year on a cost-per-square-foot basis. The gross margin decreased by 0.27 percentage points due to markdown activity and a valuation reserve on a special inventory purchase.
Despite the challenging retail environment, the company said it continued to make progress on its omni-channel initiatives. During the quarter it implemented, with good response by consumers, Buy Online Pick-up in Store and Buy Online Ship to Store, which offer customers the option of stopping by a store to pick up their on-line footwear purchases.
For the full year the company reiterated its earnings guidance, assuming sales growth of around 4 percent and flat comparable store sales for the year. In view of a highly promotional holiday season in the fourth quarter, the company said it is intensifying its merchandising and marketing efforts to capture market share and drive traffic, while continuing to rigorously manage expenses.
DSW's board of directors confirmed a new $200 million share repurchase authorization. The company also confirmed that Roger Rawlins, its current chief innovation officer and executive vice president, will replace the retiring Mike MacDonald as DSW's chief executive, effective Jan. 1, 2016,.