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Why Shares of DSW Tumbled Today

By Timothy Green - Updated Apr 14, 2019 at 11:33AM

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A mixed fourth quarter did not please investors.

What happened

Shares of footwear retailer DSW (DBI -1.63%) slumped on Tuesday after a mixed fourth-quarter report. The company reported an unexpected loss as gross margin declined substantially from the prior-year period. The stock was down about 14.8% at 11 a.m. EDT today.

So what

DSW reported fourth-quarter revenue of $843.4 million, up 16.4% year over year and in line with analyst expectations. That growth was entirely due to revenue from the Canada retail and brand portfolio segments, both of which were added via acquisitions. The U.S. retail segment suffered a 1.8% revenue decline. Total comparable sales grew 5.4%, but this number includes e-commerce sales.

A DSW store.

Image source: DSW.

Non-GAAP earnings per share came in at a loss of $0.07, down from a profit of $0.38 in the prior-year period and $0.12 lower than the average analyst estimate. Total gross margin tumbled 2.4 percentage points year over year to 24.4%, while gross margin in the U.S. retail business dropped 3.3 percentage points to 26.3%.

Check out the latest earnings call transcript for DSW.

Now what

DSW planned to provide its outlook for 2019 as well as a three-year plan at its Investor Day event this morning. The company also declared a $0.25 per share quarterly dividend, payable on April 12 to shareholders of record on April 1.

While DSW's fourth quarter came up short of expectations, CEO Roger Rawlins is optimistic, saying, "...we strategically positioned our Company to grow share and enhance profitability through transformative acquisitions, creating an infrastructure that positions us to be a significant force in the footwear industry for years to come."

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