On Sept. 6, DSW
- Promotional events led to a strong 5.9% increase in comps and a 15.7% rise in total sales.
- Management blamed falling margins on aggressive inventory management. However, its strategy was not effective, as inventory levels ballooned 16.3% on the balance sheet.
- The company is confident that improvement is on its way, so it reiterated its previous yearly guidance of $1.63-$1.68 on 0%-3% comps.
- Despite the unfashionable results this quarter, the Motley Fool CAPS community gives the shoe company a four-star rating (out of five). Fellow competitor Collective Brands
(NYSE:PSS) receives three stars, while Macy's(NYSE:M) isn't faring as well, at only two stars.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q2 2007 |
Q2 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$348.7 |
$301.3 |
15.7% |
|
Net Profit |
$6.5 |
$15.3 |
(57.5%) |
|
EPS |
$0.15 |
$0.35 |
(57.1%) |
|
Diluted Shares |
44.3 |
44.2 |
0.3% |
Get back to basics with the income statement.
Margin Checkup
|
Q2 2007 |
Q2 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
23.3% |
28.2% |
(4.9) |
|
Operating Margin |
2.4% |
7.7% |
(5.3) |
|
Net Margin |
1.9% |
5.1% |
(3.2) |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$175.3 |
$151.3 |
15.9% |
|
Accounts Rec. |
$12.5 |
$6.8 |
84.5% |
|
Inventory |
$258.1 |
$222.0 |
16.3% |
|
Liabilities |
Q2 2007 |
Q2 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$134.0 |
$86.7 |
54.5% |
The balance sheet reflects the company's health.
Cash Flow Highlights
Not posting a cash flow statement is a major fashion don't.
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