June 18, 2012
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of footwear retailer DSW (NYSE: DSW ) sank 12% on Monday after its current-quarter guidance easily missed Wall Street expectations.
So what: DSW shares have rallied nicely in 2012 on improving growth prospects, but a disappointing outlook for the current quarter -- adjusted EPS of $0.60 to $0.64 versus the consensus of $0.75 -- is forcing Mr. Market to sober up a bit. Management cited a more normal mix of regular-priced and clearance-priced sales for the miss (versus last year, when full-priced purchases jumped), suggesting that the slowness isn't as worrisome as today's pullback indicates.
Now what: In fact, management maintained its full-year adjusted EPS guidance of $3.25 to $3.40 and still expects same-store sales to grow 3% to 5%. "Solid execution on our growth initiatives gives us confidence in our ability to achieve our objectives in 2012 as we expand our store footprint, grow our market share and gain additional recognition as a destination for great brands, fashion and value in the footwear industry," CEO Mike MacDonald reassured investors. Given the seemingly short-term nature of today's bad news, now might be an opportune time to buy into that bullishness.
Interested in more info on DSW? Add it to your watchlist.