DSW invests in omnichannel following challenging Q1

DSW may have had a challenging first quarter, driven by unseasonal weather and an aggressively promotional retail environment, but the company is looking to strengthen its competitive advantage by investing in omnichannel and assortment planning.

The company reported a sales decrease of 0.4% to $599 million for the first quarter ended May 3, compared to last year's first quarter sales of $601 million. Comparable sales decreased by 3.7%.

"We sharpened our prices for key items while proactively managing our clearance levels during the quarter. Monthly sales trends were weak but improved sequentially during the quarter. Our team is working hard to deliver an effective assortment with a compelling value message and we expect these initiatives to gain traction in the back half of the year,” said president and CEO Mike MacDonald.

Although MacDonald did confirm the company’s intentions to invest in omnichannel and assortment planning, he stopped short of offering details. However, he did discuss the company’s investment in growing its market share outside the U.S., starting with its partnership with Town Shoes in Canada.

On May 12, DSW closed on its initial acquisition of Town Shoes, touted as the largest footwear and accessories retailer in Canada, for $68.7 million in cash. DSW acquired a 49.2% interest in Town Shoes from the Alberta Investment Management Corporation and other minority shareholders. DSW Inc.'s initial stake provides 50% voting control and board representation equal to the primary remaining shareholder, Callisto Capital.

Based on comparable sales decline in the low single digits, the company has adjusted its EPS guidance of $1.45 to $1.60 per share for the full year. This guidance includes omnichannel-related expenses of $10 million or approximately $0.07 per share, a tax rate slightly above 39% and diluted shares outstanding of 92.5 million.

DSW operates 410 stores in 42 states, the District of Columbia and Puerto Rico.



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