DSW (NYSE:DSW) has just reported third-quarter earnings. The results disappointed Wall Street and sent the stock falling more than 8% at the open of trading. Let's take a look and see if this weakness has provided a buying opportunity or if DSW should be placed in the penalty box for the next three months.

The shoe warehouse 
DSW, or the Designer Shoe Warehouse, is a footwear and accessories specialty retailer in the United States. Its products include all types of shoes, boots, and sandals, as well as handbags and accessories like hosiery. The company was founded in 1917 and went public in June 2005.

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The report
On Nov. 26, DSW reported third-quarter results that did not impress analysts. Here's an overview of the key metrics:

MetricReportedExpected
Earnings Per Share $0.58 $0.58
Revenue $633.00 million $647.59 million

Earnings per share increased 14% and revenue rose 6.8% year over year, but same-store sales declined 0.7%. The company opened 16 new stores during the quarter, which is sure to help sales going forward. DSW's president and CEO, Mike MacDonald, gave a positive note on the quarter when he said, "We were encouraged by the improvement in traffic and sales at the end of the quarter, as the fall selling season got off to a delayed start." I think we can believe what MacDonald says and maybe the delayed start to the spending season means the next quarter will be a blowout for the retail giant. 

Company outlook
DSW raised its outlook for the full year and now expects to earn $1.80 to $1.90 per share; this would represent 7.1% to 13.1% growth from 2012. These earnings estimates assume comparable-store sales remain flat and the company achieves adjusted sales growth of about 4% to 5%. Even with the raised earnings guidance, these projections do little to entice investors. However, the decline of more than 8% means the stock is heading toward value-play territory. 

Competitor results

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Brown Shoe Co. (NYSE:CAL), the owner and operator of Famous Footwear, reported third-quarter results on Nov. 26 as well. Here's a summary of its report:

MetricReportedExpected
Earnings Per Share $0.63 $0.59
Revenue $702.80 million $705.53 million

The mixed results left Brown Shoe relatively unchanged an hour into the trading session, after an initial pop of more than 3%. The best aspect of its report was the company's raised earnings guidance for the full year; Brown Shoe now expects to earn $1.36 to $1.40 per share versus previous estimates of $1.27 to $1.32 per share. If the company earns $1.38 per share, this would represent 22.1% growth from last year. It also narrowed its 2013 sales guidance to $2.53 billion to $2.54 billion, which was in line with the consensus analyst estimate of $2.54 billion. Compared to DSW, Brown Shoe had a much better quarter, and the guidance points toward a brighter annual report as well.

The Foolish bottom line
DSW is a great American company, but its earnings and outlook have done little to make it a great American investment today. Brown Shoe, on the other hand, reported mixed results and solid guidance for the rest of the year. I believe that if investors are looking for an investment in the shoe retail industry today, Brown Shoe is their best bet, but if DSW continues to fall, it would be the better value play.

Fool contributor Joseph Solitro has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.