Why DSW Shares Lost Their Footing

Don't let it get away!

Keep track of the stocks that matter to you.

Help yourself with the Fool's FREE and easy new watchlist service today.

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 and accessories retailer DSW (NYSE: DSW  ) sank as low as 10% today after its quarterly results and guidance missed Wall Street expectations.

So what: The stock has rallied steadily over the past year on strong sales momentum, but a fourth-quarter miss -- adjusted EPS of $0.59 on revenue of $594.3 million versus the consensus of $0.72 and $601.8 million, respectively -- coupled with downbeat full-year guidance is forcing analysts to recalibrate their growth estimates. In fact, same-store sales in the first six weeks of 2013 actually declined by 5%, snapping the company's recent 14-quarter streak of same-store sales increases.

Now what: DSW said that it's now managing inventories for the first half of the year assuming flat same-store sales, translating into full-year EPS of $3.30-$3.40 and well below the consensus of $3.85.

"We continue to make excellent progress on our strategic initiatives, all of which are designed to enhance our shopping experience, regardless of how and where the customer chooses to shop," CEO Mick MacDonald reassured investors.

With the stock still up more than 20% from its 52-week lows and trading at a 15-plus forward P/E, however, I'd wait for even more of a pullback before buying into that bull talk.

Interested in more info on DSW? Add it to your watchlist.

The retail space is in the midst of the biggest paradigm shift since mail order took off at the turn of last century. Only those most forward-looking and capable companies will survive, and they'll handsomely reward those investors who understand the landscape. You can read about the 3 Companies Ready to Rule Retail in The Motley Fool's special report. Uncovering these top picks is free today; just click here to read more.

Read/Post Comments (0) | Recommend This Article (0)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

Be the first one to comment on this article.

Compare Brokers

Fool Disclosure

Sponsored Links

Leaked: Apple's Next Smart Device
(Warning, it may shock you)
The secret is out... experts are predicting 458 million of these types of devices will be sold per year. 1 hyper-growth company stands to rake in maximum profit - and it's NOT Apple. Show me Apple's new smart gizmo!

DocumentId: 2320718, ~/Articles/ArticleHandler.aspx, 9/25/2016 3:27:44 AM

Report This Comment

Use this area to report a comment that you believe is in violation of the community guidelines. Our team will review the entry and take any appropriate action.

Sending report...

Today's Market

updated 1 day ago Sponsored by:
DOW 18,261.45 -131.01 -0.71%
S&P 500 2,164.69 -12.49 -0.57%
NASD 5,305.75 -33.78 -0.63%

Create My Watchlist

Go to My Watchlist

You don't seem to be following any stocks yet!

Better investing starts with a watchlist. Now you can create a personalized watchlist and get immediate access to the personalized information you need to make successful investing decisions.

Data delayed up to 5 minutes

Related Tickers

9/23/2016 4:00 PM
DSW $21.32 Down -0.07 -0.33%
DSW CAPS Rating: *****