DSW Sprints Ahead: Fool by Numbers

On Nov. 29, 2006, shoe retailer DSW (NYSE: DSW  ) released its third-quarter earnings for the period ended Oct. 28, 2006.

• Sales were up nicely at 10% and same-store sales increased 2.6%. But when margins expand as sales grow, that's when the real fun begins.
  
  
• DSW is a spin-off from Retail Ventures (NYSE: RVI  ) as of last year, and is up 40% since that transaction. This is another example of how spin-offs can be lucrative investments.
  
  
• Twenty-two of 27 investors think DSW will outperform the S&P 500 in our new ratings service CAPS. But that's not enough ratings. So if you have an opinion, bring it to Motley Fool CAPS.

(Figures in millions, except per-share data)

Income Statement Highlights

	Q3 2007	Q3 2006	Change
Sales	$332.2	$302.2	9.9%
Net Profit	$16.0	$10.9	46.8%
EPS	$0.36	$0.25	44%
Diluted Shares	44.2	44.1	0.3%

Get back to basics with a look at the income statement.

Margin Checkup

	Q3 2007	Q3 2006	Change*
Gross Margin	29.7%	27.5%	2.2
Operating Margin	7.6%	5.9%	1.7
Net Margin	4.8%	3.6%	1.2

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets	Q3 2007	Q3 2006	Change
Cash + ST Invest.	$172.5	$57.1	202.1%
Accounts Rec.	$9.6	$17.3	(44.4%)
Inventory	$235.0	$229.4	2.4%

Liabilities	Q3 2007	Q3 2006	Change
Accounts Payable	$95.2	$69.7	36.5%
Long-Term Debt	$0.0	$0.0	N/A

Learn the ways of the balance sheet.

Cash Flow Highlights

A cash flow statement wasn't in the press release. What a loafer. Get it? Loafer? ... Is this thing on?

Find out why Fools always follow the money.

Related Companies:

• Baker's Footwear (Nasdaq: BKRS  )
• Payless ShoeSource (NYSE: PSS  )
• Shoe Carnival (Nasdaq: SCVL  )

Related Foolishness:

• Fool on Call: A Model for Success
• 3 Stocks That Blew Away the Market
• DSW Alive and Kicking
• Foolish Forecast: Opening DSW's Shoe Box

Motley Fool Stock Advisor has recommended a number of fashion retailers. To see who they are, try a free trial of the newsletter.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, David Meier did not own shares in any of the companies mentioned. Fool rules for disclosure are here.