DSW Inc. (NYSE:DSW) operates as a branded footwear and accessories retailer in the United States. The company operates in two segments, DSW and the Affiliated Business Group. It offers a range of brand name dresses, casual and athletic footwear, and accessories for women and men through its DSW stores and dsw.com. The company also provides kids shoes on dsw.com as well as handbags, hosiery, jewelry, and other accessories. As of April 17, 2014, it operated 408 stores in forty-two states, the District of Columbia, and Puerto Rico. But today the stock is getting hammered down to multi-year lows because the company reported a lackluster quarter and disappointing results. The question is can this stock be bought at current levels of $23.50?
DSW stock is getting hammered because the company reported that sales decreased 0.4 percent to $599 million compared to last year’s first quarter sales of $601 million. Comparable sales decreased by 3.7 percent year over year. Reported net income was $38.6 million, or $0.42 per diluted share on 92 million weighted average shares outstanding. This compares to reported net income in the first quarter of 2013 of $34.5 million, or $0.38 per diluted share, which included a net charge of $11.4 million, or $0.12 per share from a luxury test.This also compares to adjusted net income, excluding the impact of the luxury test, for the same period last year of $45.9 million, or $0.50 per diluted share, on 92 million weighted average shares outstanding.
Cash, short term and long term investments totaled $548 million compared to $430 million in the first quarter last year. Inventories were at $420 million compared to $395 million during the first quarter last year. On a cost per square foot basis, DSW segment inventories increased by 1.4 percent at the end of quarter, excluding the luxury inventory. It is not all bad news, because DSW’s Board of Directors approved a quarterly cash dividend payment of $0.1875 per share. The dividend will be paid on June 30, 2014, to shareholders of record at the close of business on June 20, 2014. But the fact is, this quarter was rough, there’s no easy way to put it.