Footwear and accessories retailer, DSW Inc. (DSW) recently announced the opening of a new store at South Shore Plaza in Braintree, Mass. Through its latest store, the company will offer a wide variety of designer shoes, sandals and boots.
Of late, DSW has been extensively using its cash flow to expand its reach throughout the United States. We believe that the company’s aggressive store expansion plans signify that its designer shoes and accessories are fast gaining popularity among consumers. Moreover, its wedding shop collection provides exclusive assortments for bridal parties and occasions and sets it apart from peers, Foot Locker, Inc. (FL), J. C. Penney Company Inc. (JCP) and Macy’s Inc. (M).
Including the Braintree store, the company announced 13 store openings in fiscal 2013. The company opened 39 new stores in fiscal 2012.
Besides offering a wide range of designer shoes at discounted prices for both men and women, DSW runs a free, award-winning loyalty program ‘DSW Rewards,’ which issues certificates to customers for future purchases at DSW. This initiative not only helps in retaining customers but also attracts new buyers.
Despite these positives, we remain apprehensive regarding the near-term prospects of the company as DSW is witnessing soft sales trends and the probable pressure on margins on account of increased inventory level is all the more alarming. Consequently, the company carries a Zacks Rank #3 (Hold).
DSW is slated to report its first-quarter fiscal 2013 earnings on May 29, 2013. The current Zacks Consensus Estimate for the quarter stands at 90 cents per share, indicating an estimated year-over-year decline of about 8.6%. Revenue, as per the Zacks Consensus Estimate, is $598 million.
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