DSW reported a 9.4 percent increase in sales to $655 million in the first quarter ended May 2, as compared to the prior year's quarter. Comparable store sales went up by 5.1 percent and the overall store traffic improved by 7 percent. The American discount-oriented retailer for designer shoes and accessories said that all major categories posted solid increases.
Casual shoe styles started to grow again, posting a tiny one percent increase on a same-store basis thanks to new brands and stronger collections by existing brands, but fashion athletic shoes enjoyed the strongest growth in the quarter. On a comparable basis, sales of women's styles enjoyed a sales increase of 4 percent.
The gross profit margin rose by 1.1 percentage points to 32.5 percent, mostly driven by an increase of 85 basis points in the merchandise margin, thanks to a higher proportion of regularly priced sales and lower inventory clearance than last year. Net income grew by 22.6 percent compared with a year earlier to $47.4 million.
The quarterly results were better than expected, and they lifted DSW's share price by 4 per,cent. For the full 52-week fiscal year ending Jan. 30, 2016, the company confirmed its earnings outlook. Revenues are expected to increase in the 7-to-8 percent range, with low- to mid-single- digit growth in comparable sales.
DSW is still testing an “endless aisle” service model, using touch screens and mobile applications to complement the regular brick-and-mortar business at 13 small-format stores. They are generating a higher level of in-store omnichannel revenues than DSW's regular large stores. Click-and-collect functions will follow.
The goal of DSW's omnichannel strategy is to expand the customer's access from 2,500 choices for styles, colors and sizes in an individual store to more than 15,000 choices across the chain.
The company plans to open a total of 35 to 40 new stores this year, including nine small-format units. Eighteen new stores were opened in the first quarter. As of April 30, the chain operated 449 stores in 42 states, in addition to its e-commerce operations.