On Nov. 29, 2006, shoe retailer DSW (NYSE:DSW) released its third-quarter earnings for the period ended Oct. 28, 2006.

  • Sales were up nicely at 10% and same-store sales increased 2.6%. But when margins expand as sales grow, that's when the real fun begins.

  • DSW is a spin-off from Retail Ventures (NYSE:RVI) as of last year, and is up 40% since that transaction. This is another example of how spin-offs can be lucrative investments.

  • Twenty-two of 27 investors think DSW will outperform the S&P 500 in our new ratings service CAPS. But that's not enough ratings. So if you have an opinion, bring it to Motley Fool CAPS.

(Figures in millions, except per-share data)

Income Statement Highlights

Q3 2007

Q3 2006

Change

Sales

$332.2

$302.2

9.9%

Net Profit

$16.0

$10.9

46.8%

EPS

$0.36

$0.25

44%

Diluted Shares

44.2

44.1

0.3%



Get back to basics with a look at the income statement.

Margin Checkup

Q3 2007

Q3 2006

Change*

Gross Margin

29.7%

27.5%

2.2

Operating Margin

7.6%

5.9%

1.7

Net Margin

4.8%

3.6%

1.2

*Expressed in percentage points.

Margins are the earnings engine. See how they work.

Balance Sheet Highlights

Assets

Q3 2007

Q3 2006

Change

Cash + ST Invest.

$172.5

$57.1

202.1%

Accounts Rec.

$9.6

$17.3

(44.4%)

Inventory

$235.0

$229.4

2.4%



Liabilities

Q3 2007

Q3 2006

Change

Accounts Payable

$95.2

$69.7

36.5%

Long-Term Debt

$0.0

$0.0

N/A



Learn the ways of the balance sheet.

Cash Flow Highlights

A cash flow statement wasn't in the press release. What a loafer. Get it? Loafer? ... Is this thing on?

Find out why Fools always follow the money.

Related Companies:

  • Baker's Footwear (NASDAQ:BKRS)
  • Payless ShoeSource (NYSE:PSS)
  • Shoe Carnival (NASDAQ:SCVL)

Related Foolishness:

Motley Fool Stock Advisor has recommended a number of fashion retailers. To see who they are, try a free trial of the newsletter.

Fool by Numbers is designed to give you the raw earnings information in a timely fashion, putting all the numbers you need in one easy-to-read place. But at The Motley Fool, we believe numbers tell only part of the story, so check Fool.com for more of our in-depth discussion of what the numbers mean.

At the time of publication, David Meier did not own shares in any of the companies mentioned. Fool rules for disclosure are here.