DSW Affirms Outlook After Completing Review

DSW Inc. said earnings in its second quarter fell by a third as the shoe retailer continues to try to reinvigorate sales and pare down its cost structure.

Chief Executive Roger Rawlins said the discount shoe store completed the review it launched earlier this year, identifying $25 million in annual cost savings "resulting from organization realignment and improvements in procurement and other business processes." He didn't say if such moves would result in store closures or job cuts.

Mr. Rawlins also said DSW, during the quarter, made progress on several initiatives to lift sales and that the company is on track to meet full-year targets after reducing its outlook in May.

Shares in the company, up 9% this year through Monday's close, rose 4.7% to $27.25 in premarket trading.

Ohio-based DSW has in recent years spent heavily on technology, stores, marketing and support services, efforts that have helped sales but cut into the bottom line. At the same time, retailers across the board are struggling with falling foot traffic as shoppers increasingly move online and to Amazon.com Inc. In a move to beef up its e-commerce business, DSW in February stuck a deal to buy online shoe retailer Ebuys Inc. for $62.5 million.

In its latest period, DSW said sales at stores open at least a year fell 1.2%—the first back-to-back quarterly decline since 2009 but less steep than the 2.6% decline analysts expected. A year earlier, same-store sales rose 1.8%.

Over all for the three months ended July 30, the company reported a profit of $25 million, or 30 cents a share, down from $37.6 million, or 42 cents a share, a year earlier. The latest quarter's result includes 5 cents a share in acquisition and restructuring-related expenses.

Total revenue increased 5.1% to $658.9 million.

Analysts projected 30 cents in adjusted earnings per share on $658.7 million in sales, according to Thomson Reuters.

For the full year, DSW still expects to post $1.32 to $1.42 in adjusted per-share profit. Analysts have been looking for $1.36 a share. The company said that of the $25 million in annual cost savings it flagged during its review, about $7 million will be realized this year and are reflected its outlook.

Write to Lisa Beilfuss at [e-mail]

(END) Dow Jones Newswires

August 30, 2016 08:45 ET (12:45 GMT)

Copyright (c) 2016 Dow Jones & Company, Inc.