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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Dsw Inc. | NYSE:DSW | NYSE | Ordinary Share |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 22.51 | 0.00 | 01:00:00 |
þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
o
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
For the transition period from
|
|
to
|
|
DSW INC.
|
(Exact name of registrant as specified in its charter)
|
Ohio
|
|
31-0746639
|
(State or other jurisdiction of incorporation or organization)
|
|
(I.R.S. Employer Identification No.)
|
|
|
|
810 DSW Drive, Columbus, Ohio
|
|
43219
|
(Address of principal executive offices)
|
|
(Zip Code)
|
Not Applicable
|
(Former name, former address and former fiscal year, if changed since last report)
|
|
|
Page
|
PART I. FINANCIAL INFORMATION
|
|
|
Item 1. Financial Statements
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
||
Part II. OTHER INFORMATION
|
|
|
|
||
|
||
|
||
|
||
|
||
|
||
|
||
|
PART I.
|
FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Net sales
|
$
|
708,308
|
|
|
$
|
696,616
|
|
|
$
|
2,079,819
|
|
|
$
|
2,036,827
|
|
Cost of sales
|
(501,591
|
)
|
|
(484,836
|
)
|
|
(1,480,901
|
)
|
|
(1,433,829
|
)
|
||||
Operating expenses
|
(151,772
|
)
|
|
(147,412
|
)
|
|
(454,093
|
)
|
|
(446,696
|
)
|
||||
Goodwill and intangible assets impairment charges
|
(82,701
|
)
|
|
—
|
|
|
(82,701
|
)
|
|
—
|
|
||||
Change in fair value of contingent consideration liability
|
31,178
|
|
|
(1,469
|
)
|
|
28,926
|
|
|
(5,080
|
)
|
||||
Operating profit
|
3,422
|
|
|
62,899
|
|
|
91,050
|
|
|
151,222
|
|
||||
Interest expense
|
(166
|
)
|
|
(57
|
)
|
|
(260
|
)
|
|
(156
|
)
|
||||
Interest income
|
768
|
|
|
539
|
|
|
2,084
|
|
|
1,782
|
|
||||
Interest income, net
|
602
|
|
|
482
|
|
|
1,824
|
|
|
1,626
|
|
||||
Non-operating income (expense)
|
(121
|
)
|
|
80
|
|
|
(2,304
|
)
|
|
344
|
|
||||
Income before income taxes and income from Town Shoes
|
3,903
|
|
|
63,461
|
|
|
90,570
|
|
|
153,192
|
|
||||
Income tax provision
|
(1,496
|
)
|
|
(25,626
|
)
|
|
(35,510
|
)
|
|
(60,420
|
)
|
||||
Income from Town Shoes
|
1,630
|
|
|
1,128
|
|
|
543
|
|
|
1,237
|
|
||||
Net income
|
$
|
4,037
|
|
|
$
|
38,963
|
|
|
$
|
55,603
|
|
|
$
|
94,009
|
|
Basic and diluted earnings per share:
|
|
|
|
|
|
|
|
||||||||
Basic earnings per share
|
$
|
0.05
|
|
|
$
|
0.48
|
|
|
$
|
0.69
|
|
|
$
|
1.15
|
|
Diluted earnings per share
|
$
|
0.05
|
|
|
$
|
0.47
|
|
|
$
|
0.69
|
|
|
$
|
1.14
|
|
Weighted average shares used in per share calculations:
|
|
|
|
|
|
|
|
||||||||
Basic shares
|
80,112
|
|
|
82,026
|
|
|
80,215
|
|
|
82,011
|
|
||||
Diluted shares
|
80,647
|
|
|
82,537
|
|
|
80,699
|
|
|
82,643
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
Net income
|
$
|
4,037
|
|
|
$
|
38,963
|
|
|
$
|
55,603
|
|
|
$
|
94,009
|
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation gain (loss)
|
(7,343
|
)
|
|
(2,537
|
)
|
|
(806
|
)
|
|
4,709
|
|
||||
Unrealized net gain (loss) on available-for-sale securities
|
(182
|
)
|
|
(173
|
)
|
|
(149
|
)
|
|
103
|
|
||||
Reclassification adjustment for net losses realized in net income
|
(26
|
)
|
|
—
|
|
|
2,081
|
|
|
—
|
|
||||
Total other comprehensive income (loss), net of income taxes
|
(7,551
|
)
|
|
(2,710
|
)
|
|
1,126
|
|
|
4,812
|
|
||||
Total comprehensive income (loss)
|
$
|
(3,514
|
)
|
|
$
|
36,253
|
|
|
$
|
56,729
|
|
|
$
|
98,821
|
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
149,485
|
|
|
$
|
110,657
|
|
|
$
|
60,962
|
|
Short-term investments
|
180,066
|
|
|
98,530
|
|
|
78,512
|
|
|||
Accounts receivable
|
19,102
|
|
|
18,456
|
|
|
20,334
|
|
|||
Accounts receivable from related parties
|
1,315
|
|
|
550
|
|
|
1,029
|
|
|||
Inventories
|
546,553
|
|
|
499,995
|
|
|
562,701
|
|
|||
Prepaid expenses and other current assets
|
25,445
|
|
|
31,074
|
|
|
24,566
|
|
|||
Prepaid rent to related parties
|
—
|
|
|
4
|
|
|
13
|
|
|||
Total current assets
|
921,966
|
|
|
759,266
|
|
|
748,117
|
|
|||
Property and equipment, net
|
358,154
|
|
|
375,251
|
|
|
381,218
|
|
|||
Long-term investments
|
—
|
|
|
77,904
|
|
|
76,126
|
|
|||
Goodwill
|
25,899
|
|
|
79,689
|
|
|
77,208
|
|
|||
Deferred income taxes
|
35,284
|
|
|
14,934
|
|
|
21,103
|
|
|||
Long-term prepaid rent to related parties
|
688
|
|
|
768
|
|
|
795
|
|
|||
Equity investment in Town Shoes
|
7,180
|
|
|
15,830
|
|
|
17,996
|
|
|||
Note receivable from Town Shoes
|
60,249
|
|
|
53,121
|
|
|
50,579
|
|
|||
Intangible assets
|
3,135
|
|
|
35,108
|
|
|
38,243
|
|
|||
Other assets
|
19,023
|
|
|
16,605
|
|
|
20,530
|
|
|||
Total assets
|
$
|
1,431,578
|
|
|
$
|
1,428,476
|
|
|
$
|
1,431,915
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
193,607
|
|
|
$
|
185,497
|
|
|
$
|
160,621
|
|
Accounts payable to related parties
|
706
|
|
|
774
|
|
|
641
|
|
|||
Accrued expenses
|
141,990
|
|
|
130,334
|
|
|
143,653
|
|
|||
Total current liabilities
|
336,303
|
|
|
316,605
|
|
|
304,915
|
|
|||
Non-current liabilities
|
141,752
|
|
|
141,179
|
|
|
144,654
|
|
|||
Contingent consideration liability
|
4,962
|
|
|
33,204
|
|
|
58,923
|
|
|||
Total liabilities
|
483,017
|
|
|
490,988
|
|
|
508,492
|
|
|||
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|||
Shareholders' equity:
|
|
|
|
|
|
||||||
Common shares paid-in capital, no par value; 250,000 Class A Common Shares authorized; 85,346, 85,038 and 84,875 issued, respectively; 72,255, 72,447 and 72,635 outstanding, respectively; 100,000 Class B Common Shares authorized, 7,733 issued and outstanding
|
957,960
|
|
|
946,351
|
|
|
941,485
|
|
|||
Preferred shares, no par value; 100,000 authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Treasury shares, at cost, 13,091, 12,591 and 12,240 outstanding, respectively
|
(325,906
|
)
|
|
(316,531
|
)
|
|
(309,229
|
)
|
|||
Retained earnings
|
354,315
|
|
|
346,602
|
|
|
332,051
|
|
|||
Basis difference related to acquisition of commonly controlled entity
|
(24,993
|
)
|
|
(24,993
|
)
|
|
(24,993
|
)
|
|||
Accumulated other comprehensive loss
|
(12,815
|
)
|
|
(13,941
|
)
|
|
(15,891
|
)
|
|||
Total shareholders' equity
|
948,561
|
|
|
937,488
|
|
|
923,423
|
|
|||
Total liabilities and shareholders' equity
|
$
|
1,431,578
|
|
|
$
|
1,428,476
|
|
|
$
|
1,431,915
|
|
|
Nine months ended
|
||||||
|
October 28, 2017
|
|
October 29, 2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
55,603
|
|
|
$
|
94,009
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
61,444
|
|
|
61,029
|
|
||
Stock-based compensation expense
|
11,339
|
|
|
10,156
|
|
||
Deferred income taxes
|
(20,381
|
)
|
|
712
|
|
||
Income from Town Shoes
|
(543
|
)
|
|
(1,237
|
)
|
||
Goodwill and intangible assets impairment charges
|
82,701
|
|
|
—
|
|
||
Change in fair value of contingent consideration liability
|
(28,926
|
)
|
|
5,080
|
|
||
Loss on disposal of long-lived assets
|
1,050
|
|
|
699
|
|
||
Loss on foreign currency transactions
|
2,186
|
|
|
—
|
|
||
Amortization of investment discounts and premiums
|
481
|
|
|
992
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
(1,411
|
)
|
|
(4,276
|
)
|
||
Inventories
|
(46,558
|
)
|
|
(48,313
|
)
|
||
Prepaid expenses and other current assets
|
979
|
|
|
11,318
|
|
||
Accounts payable
|
8,790
|
|
|
(55,572
|
)
|
||
Accrued expenses
|
10,598
|
|
|
32,570
|
|
||
Other
|
1,224
|
|
|
3,592
|
|
||
Net cash provided by operating activities
|
138,576
|
|
|
110,759
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Cash paid for property and equipment
|
(39,552
|
)
|
|
(73,157
|
)
|
||
Purchases of available-for-sale investments
|
(98,855
|
)
|
|
(69,960
|
)
|
||
Sales of available-for-sale investments
|
96,649
|
|
|
215,524
|
|
||
Additional borrowings by Town Shoes
|
(5,689
|
)
|
|
(7,023
|
)
|
||
Acquisition of Ebuys
|
—
|
|
|
(59,481
|
)
|
||
Net cash provided by (used in) investing activities
|
(47,447
|
)
|
|
5,903
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of stock options
|
1,133
|
|
|
3,615
|
|
||
Net change in vendor payment program
|
1,058
|
|
|
—
|
|
||
Payment of credit facility costs
|
(1,018
|
)
|
|
—
|
|
||
Cash paid for income taxes for stock-based compensation shares withheld
|
(863
|
)
|
|
(2,421
|
)
|
||
Cash paid for treasury shares
|
(9,375
|
)
|
|
(42,698
|
)
|
||
Dividends paid
|
(47,890
|
)
|
|
(49,098
|
)
|
||
Net cash used in financing activities
|
(56,955
|
)
|
|
(90,602
|
)
|
||
Net increase in cash, cash equivalents, and restricted cash
|
34,174
|
|
|
26,060
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
115,311
|
|
|
40,171
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
149,485
|
|
|
$
|
66,231
|
|
Supplemental disclosures of cash flow information -
|
|
|
|
||||
Cash paid during the period for income taxes
|
$
|
64,441
|
|
|
$
|
40,057
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Property and equipment purchases not yet paid
|
$
|
7,138
|
|
|
$
|
4,829
|
|
Ebuys contingent purchase price
|
$
|
—
|
|
|
$
|
53,843
|
|
|
Preliminary
Purchase Price
as of March 4, 2016
|
|
Adjustments
|
|
Final
Purchase Price
as of January 28, 2017
|
||||||
|
(in thousands)
|
||||||||||
Purchase price:
|
|
|
|
|
|
||||||
Cash consideration
|
$
|
60,411
|
|
|
$
|
(635
|
)
|
|
$
|
59,776
|
|
Contingent consideration
|
56,000
|
|
|
(2,645
|
)
|
|
53,355
|
|
|||
|
$
|
116,411
|
|
|
$
|
(3,280
|
)
|
|
$
|
113,131
|
|
Fair value of assets and liabilities acquired:
|
|
|
|
|
|
||||||
Accounts and other receivables
|
$
|
1,623
|
|
|
$
|
(287
|
)
|
|
$
|
1,336
|
|
Inventory
|
30,152
|
|
|
18
|
|
|
30,170
|
|
|||
Other current assets
|
191
|
|
|
335
|
|
|
526
|
|
|||
Property and equipment
|
1,221
|
|
|
22
|
|
|
1,243
|
|
|||
Goodwill
|
54,785
|
|
|
(995
|
)
|
|
53,790
|
|
|||
Intangible assets
|
41,301
|
|
|
(2,600
|
)
|
|
38,701
|
|
|||
Accounts payable and other long-term liabilities
|
(12,862
|
)
|
|
227
|
|
|
(12,635
|
)
|
|||
|
$
|
116,411
|
|
|
$
|
(3,280
|
)
|
|
$
|
113,131
|
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
149,485
|
|
|
$
|
110,657
|
|
|
$
|
60,962
|
|
Restricted cash, included in prepaid expenses and other current assets
|
—
|
|
|
4,654
|
|
|
5,269
|
|
|||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows
|
$
|
149,485
|
|
|
$
|
115,311
|
|
|
$
|
66,231
|
|
•
|
Level 1 - Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.
|
•
|
Level 3 - Unobservable inputs in which little or no market activity exists.
|
|
Nine months ended
|
||||||||||||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
||||||||||||||||||||
|
Foreign Currency Translation
|
|
Available-for-Sale Securities
|
|
Total
|
|
Foreign Currency Translation
|
|
Available-for-Sale Securities
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Accumulated other comprehensive loss - beginning of period
|
$
|
(13,699
|
)
|
|
$
|
(242
|
)
|
|
$
|
(13,941
|
)
|
|
$
|
(20,530
|
)
|
|
$
|
(173
|
)
|
|
$
|
(20,703
|
)
|
Other comprehensive income (loss) before reclassifications
|
(806
|
)
|
|
(149
|
)
|
|
(955
|
)
|
|
4,709
|
|
|
103
|
|
|
4,812
|
|
||||||
Amounts reclassified to non-operating income
|
2,186
|
|
|
(105
|
)
|
|
2,081
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
1,380
|
|
|
(254
|
)
|
|
1,126
|
|
|
4,709
|
|
|
103
|
|
|
4,812
|
|
||||||
Accumulated other comprehensive loss - end of period
|
$
|
(12,319
|
)
|
|
$
|
(496
|
)
|
|
$
|
(12,815
|
)
|
|
$
|
(15,821
|
)
|
|
$
|
(70
|
)
|
|
$
|
(15,891
|
)
|
|
Nine Months Ended
October 29, 2016 |
||
|
(in thousands)
|
||
Net cash provided by operating activities, as previously reported
|
$
|
110,635
|
|
Eliminated the excess tax benefits related to stock-based compensation
|
124
|
|
|
Net cash provided by operating activities, as adjusted
|
$
|
110,759
|
|
Net cash provided by investing activities, as previously reported
|
$
|
8,310
|
|
Eliminated the decrease in restricted cash
|
(2,407
|
)
|
|
Net cash provided by investing activities, as adjusted
|
$
|
5,903
|
|
Net cash used in financing activities, as previously reported
|
$
|
(90,478
|
)
|
Eliminated the excess tax benefits related to stock-based compensation
|
(124
|
)
|
|
Net cash used in financing activities, as adjusted
|
$
|
(90,602
|
)
|
Net increase in cash and cash equivalents, as previously reported
|
$
|
28,467
|
|
Eliminated the impact of the decrease in restricted cash
|
(2,407
|
)
|
|
Net increase in cash, cash equivalents, and restricted cash, as adjusted
|
$
|
26,060
|
|
Cash and cash equivalents, beginning of period, as previously reported
|
$
|
32,495
|
|
Included restricted cash
|
7,676
|
|
|
Cash, cash equivalents, and restricted cash, beginning of period, as adjusted
|
$
|
40,171
|
|
Cash and cash equivalents, end of period, as previously reported
|
$
|
60,962
|
|
Included restricted cash
|
5,269
|
|
|
Cash, cash equivalents, and restricted cash, end of period, as adjusted
|
$
|
66,231
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||
|
(in thousands)
|
||||||||||
Weighted average shares outstanding - Basic shares
|
80,112
|
|
|
82,026
|
|
|
80,215
|
|
|
82,011
|
|
Dilutive effect of stock-based compensation awards
|
535
|
|
|
511
|
|
|
484
|
|
|
632
|
|
Weighted average shares outstanding - Diluted shares
|
80,647
|
|
|
82,537
|
|
|
80,699
|
|
|
82,643
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||||||
|
(in thousands)
|
||||||||||||||
Stock options
|
$
|
1,467
|
|
|
$
|
1,313
|
|
|
$
|
4,804
|
|
|
$
|
4,538
|
|
Restricted stock units
|
809
|
|
|
782
|
|
|
2,294
|
|
|
2,651
|
|
||||
Performance-based restricted stock units
|
1,022
|
|
|
547
|
|
|
2,969
|
|
|
1,779
|
|
||||
Director stock units ("DSUs")
|
190
|
|
|
198
|
|
|
1,272
|
|
|
1,188
|
|
||||
|
$
|
3,488
|
|
|
$
|
2,840
|
|
|
$
|
11,339
|
|
|
$
|
10,156
|
|
|
Nine months ended
|
||
|
October 28, 2017
|
|
October 29, 2016
|
Assumptions:
|
|
|
|
Risk-free interest rate
|
1.9%
|
|
1.5%
|
Expected volatility
|
34.4%
|
|
36.0%
|
Expected option term
|
5.5 years
|
|
5.4 years
|
Dividend yield
|
3.9%
|
|
3.0%
|
Other data:
|
|
|
|
Weighted average grant date fair value
|
$4.17
|
|
$6.59
|
|
Nine months ended October 28, 2017
|
||||||||||
|
Stock Options
|
|
RSUs
|
|
PSUs
|
|
DSUs
|
||||
|
(in thousands)
|
||||||||||
Outstanding - beginning of period
|
3,799
|
|
|
351
|
|
|
250
|
|
|
311
|
|
Granted
|
1,756
|
|
|
292
|
|
|
263
|
|
|
85
|
|
Exercised / vested
|
(151
|
)
|
|
(82
|
)
|
|
(50
|
)
|
|
(46
|
)
|
Forfeited / expired
|
(426
|
)
|
|
(85
|
)
|
|
(5
|
)
|
|
—
|
|
Outstanding - end of period
|
4,978
|
|
|
476
|
|
|
458
|
|
|
350
|
|
|
Short-term Investments
|
|
Long-term Investments
|
||||||||||||||||||||
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Carrying value
|
$
|
180,531
|
|
|
$
|
98,793
|
|
|
$
|
78,497
|
|
|
$
|
—
|
|
|
$
|
77,882
|
|
|
$
|
76,206
|
|
Unrealized gains included in accumulated other comprehensive loss
|
47
|
|
|
101
|
|
|
156
|
|
|
—
|
|
|
133
|
|
|
29
|
|
||||||
Unrealized losses included in accumulated other comprehensive loss
|
(512
|
)
|
|
(364
|
)
|
|
(141
|
)
|
|
—
|
|
|
(111
|
)
|
|
(109
|
)
|
||||||
Total investments
|
$
|
180,066
|
|
|
$
|
98,530
|
|
|
$
|
78,512
|
|
|
$
|
—
|
|
|
$
|
77,904
|
|
|
$
|
76,126
|
|
|
October 28, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
149,485
|
|
|
$
|
149,485
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
180,066
|
|
|
527
|
|
|
179,539
|
|
|
—
|
|
||||
|
$
|
329,551
|
|
|
$
|
150,012
|
|
|
$
|
179,539
|
|
|
$
|
—
|
|
Financial liabilities -
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
4,962
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,962
|
|
|
$
|
4,962
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,962
|
|
|
January 28, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
110,657
|
|
|
$
|
110,657
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
98,530
|
|
|
2,446
|
|
|
96,084
|
|
|
—
|
|
||||
Long-term investments
|
77,904
|
|
|
431
|
|
|
77,473
|
|
|
—
|
|
||||
|
$
|
287,091
|
|
|
$
|
113,534
|
|
|
$
|
173,557
|
|
|
$
|
—
|
|
Financial liabilities -
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
33,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,204
|
|
|
$
|
33,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,204
|
|
|
October 29, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
60,962
|
|
|
$
|
60,962
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Short-term investments
|
78,512
|
|
|
2,547
|
|
|
75,965
|
|
|
—
|
|
||||
Long-term investments
|
76,126
|
|
|
405
|
|
|
75,721
|
|
|
—
|
|
||||
|
$
|
215,600
|
|
|
$
|
63,914
|
|
|
$
|
151,686
|
|
|
$
|
—
|
|
Financial liabilities -
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
58,923
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58,923
|
|
|
$
|
58,923
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58,923
|
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
|
(in thousands)
|
||||||||||
Land
|
$
|
1,110
|
|
|
$
|
1,110
|
|
|
$
|
1,110
|
|
Buildings
|
12,485
|
|
|
12,485
|
|
|
12,485
|
|
|||
Building and leasehold improvements
|
399,905
|
|
|
393,505
|
|
|
388,085
|
|
|||
Furniture, fixtures and equipment
|
418,432
|
|
|
408,653
|
|
|
403,632
|
|
|||
Software
|
136,295
|
|
|
123,460
|
|
|
122,946
|
|
|||
Construction in progress
(1)
|
33,169
|
|
|
27,456
|
|
|
25,021
|
|
|||
Total property and equipment
|
1,001,396
|
|
|
966,669
|
|
|
953,279
|
|
|||
Accumulated depreciation and amortization
|
(643,242
|
)
|
|
(591,418
|
)
|
|
(572,061
|
)
|
|||
Property and equipment, net
|
$
|
358,154
|
|
|
$
|
375,251
|
|
|
$
|
381,218
|
|
(1)
|
Construction in progress is comprised primarily of the construction of leasehold improvements and furniture and fixtures related to unopened stores and internal-use software under development.
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
|
(in thousands)
|
||||||||||
Gift cards and merchandise credits
|
$
|
38,423
|
|
|
$
|
45,743
|
|
|
$
|
36,455
|
|
Compensation
|
22,390
|
|
|
17,132
|
|
|
23,872
|
|
|||
Taxes
|
20,361
|
|
|
21,764
|
|
|
29,658
|
|
|||
Customer loyalty program
|
12,659
|
|
|
11,502
|
|
|
11,914
|
|
|||
Other
(1)
|
48,157
|
|
|
34,193
|
|
|
41,754
|
|
|||
|
$
|
141,990
|
|
|
$
|
130,334
|
|
|
$
|
143,653
|
|
(1)
|
Other is comprised of deferred revenue, sales return allowance, and various other accrued expenses, including amounts owed under our vendor payment program described below.
|
|
October 28, 2017
|
|
January 28, 2017
|
|
October 29, 2016
|
||||||
|
(in thousands)
|
||||||||||
Construction and tenant allowances
|
$
|
82,135
|
|
|
$
|
87,886
|
|
|
$
|
90,359
|
|
Deferred rent
|
37,820
|
|
|
37,779
|
|
|
38,218
|
|
|||
Accrual for lease obligations
|
8,310
|
|
|
7,283
|
|
|
8,237
|
|
|||
Other
(1)
|
13,487
|
|
|
8,231
|
|
|
7,840
|
|
|||
|
$
|
141,752
|
|
|
$
|
141,179
|
|
|
$
|
144,654
|
|
(1)
|
Other is comprised of various other accrued expenses that we expect will settle beyond one year from the end of the applicable period.
|
|
Nine months ended
|
||||||
|
October 28, 2017
|
|
October 29, 2016
|
||||
|
(in thousands)
|
||||||
Contingent consideration liability - beginning of period
|
$
|
33,204
|
|
|
$
|
—
|
|
Preliminary purchase price
|
—
|
|
|
56,000
|
|
||
Accretion in value
|
3,506
|
|
|
5,080
|
|
||
Fair value adjustment
(1)
|
(32,432
|
)
|
|
—
|
|
||
Purchase price and other adjustments
|
684
|
|
|
(2,157
|
)
|
||
Contingent consideration liability - end of period
|
$
|
4,962
|
|
|
$
|
58,923
|
|
(1)
|
Fair value was determined using an income valuation approach, primarily based on discounted cash flows related to the projected earnings performance measure with a discount rate of approximately
13.0%
. The categorization of the fair value framework used to price the liability is considered Level 3 due to the subjective nature of the unobservable inputs used to determine fair value.
|
|
DSW segment
|
|
ABG segment
|
|
Other
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||||
Three months ended October 28, 2017
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
654,587
|
|
|
31,059
|
|
|
22,662
|
|
|
$
|
708,308
|
|
Gross profit
|
$
|
202,267
|
|
|
7,130
|
|
|
(2,680
|
)
|
|
$
|
206,717
|
|
Three months ended October 29, 2016
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
639,136
|
|
|
36,154
|
|
|
21,326
|
|
|
$
|
696,616
|
|
Gross profit
|
$
|
203,978
|
|
|
7,850
|
|
|
(48
|
)
|
|
$
|
211,780
|
|
Nine months ended October 28, 2017
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
1,907,753
|
|
|
106,377
|
|
|
65,689
|
|
|
$
|
2,079,819
|
|
Gross profit
|
$
|
579,455
|
|
|
24,066
|
|
|
(4,603
|
)
|
|
$
|
598,918
|
|
Nine months ended October 29, 2016
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
1,866,096
|
|
|
114,738
|
|
|
55,993
|
|
|
$
|
2,036,827
|
|
Gross profit
|
$
|
573,283
|
|
|
25,880
|
|
|
3,835
|
|
|
$
|
602,998
|
|
•
|
our success in growing our store base and digital demand;
|
•
|
our ability to protect our reputation;
|
•
|
maintaining strong relationships with our vendors;
|
•
|
our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations;
|
•
|
risks related to the planned acquisition of Town Shoes;
|
•
|
risks related to the loss or disruption of our distribution and/or fulfillment operations;
|
•
|
continuation of agreements with and our reliance on the financial condition of our affiliated business and international partners;
|
•
|
our ability to successfully integrate Ebuys, Inc.;
|
•
|
fluctuation of our comparable sales and quarterly financial performance;
|
•
|
risks related to the loss or disruption of our information systems and data;
|
•
|
our ability to prevent breaches of our information security and the compromise of sensitive and confidential data;
|
•
|
failure to retain our key executives or attract qualified new personnel;
|
•
|
our competitiveness with respect to style, price, brand availability and customer service;
|
•
|
our reliance on our DSW Rewards program and marketing to drive traffic, sales and customer loyalty;
|
•
|
uncertain general economic conditions;
|
•
|
our reliance on foreign sources for merchandise and risks inherent to international trade;
|
•
|
risks related to leases of our properties;
|
•
|
risks related to prior and current acquisitions;
|
•
|
risks related to future legislation, regulatory reform or policy changes;
|
•
|
fluctuations in foreign currency exchange rates; and
|
•
|
risks related to holdings of cash and investments and access to liquidity.
|
(1)
|
A store or affiliated shoe department is considered comparable when in operation for at least 14 months at the beginning of the fiscal year. Stores or affiliated business departments, as the case may be, are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter they are closed. Comparable sales includes sales from dsw.com and currently excludes sales from Gordmans and Ebuys. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||
Net sales
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
|
100.0
|
%
|
Cost of sales
|
(70.8
|
)
|
|
(69.6
|
)
|
|
(71.2
|
)
|
|
(70.4
|
)
|
Gross profit
|
29.2
|
|
|
30.4
|
|
|
28.8
|
|
|
29.6
|
|
Operating expenses
|
(21.4
|
)
|
|
(21.2
|
)
|
|
(21.8
|
)
|
|
(21.9
|
)
|
Goodwill and intangible assets impairment charges
|
(11.7
|
)
|
|
—
|
|
|
(4.0
|
)
|
|
—
|
|
Change in fair value of contingent consideration liability
|
4.4
|
|
|
(0.2
|
)
|
|
1.4
|
|
|
(0.3
|
)
|
Operating profit
|
0.5
|
|
|
9.0
|
|
|
4.4
|
|
|
7.4
|
|
Interest income, net
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
|
0.1
|
|
Non-operating income (expense)
|
0.0
|
|
|
0.0
|
|
|
(0.1
|
)
|
|
0.0
|
|
Income before income taxes and income from Town Shoes
|
0.6
|
|
|
9.1
|
|
|
4.4
|
|
|
7.5
|
|
Income tax provision
|
(0.2
|
)
|
|
(3.7
|
)
|
|
(1.7
|
)
|
|
(3.0
|
)
|
Income from Town Shoes
|
0.2
|
|
|
0.2
|
|
|
0.0
|
|
|
0.1
|
|
Net income
|
0.6
|
%
|
|
5.6
|
%
|
|
2.7
|
%
|
|
4.6
|
%
|
|
Three months ended October 28, 2017
|
|
Nine months ended October 28, 2017
|
||||
|
(in thousands)
|
||||||
Net sales for the same period last year
|
$
|
696,616
|
|
|
$
|
2,036,827
|
|
Decrease in comparable sales
|
(2,513
|
)
|
|
(18,385
|
)
|
||
Net increase from non-comparable store sales, Gordmans, Ebuys and other changes
|
14,205
|
|
|
61,377
|
|
||
Total net sales
|
$
|
708,308
|
|
|
$
|
2,079,819
|
|
|
Three months ended
|
|
Nine months ended
|
||||||||||||||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
Change
|
|
October 28, 2017
|
|
October 29, 2016
|
|
Change
|
||||||||||||
|
(in thousands)
|
|
|
||||||||||||||||||||
DSW segment
|
$
|
654,587
|
|
|
$
|
639,136
|
|
|
$
|
15,451
|
|
|
$
|
1,907,753
|
|
|
$
|
1,866,096
|
|
|
$
|
41,657
|
|
ABG segment
|
31,059
|
|
|
36,154
|
|
|
(5,095
|
)
|
|
106,377
|
|
|
114,738
|
|
|
(8,361
|
)
|
||||||
Other
(1)
|
22,662
|
|
|
21,326
|
|
|
1,336
|
|
|
65,689
|
|
|
55,993
|
|
|
9,696
|
|
||||||
Total net sales
|
$
|
708,308
|
|
|
$
|
696,616
|
|
|
$
|
11,692
|
|
|
$
|
2,079,819
|
|
|
$
|
2,036,827
|
|
|
$
|
42,992
|
|
(1)
|
Other represents net sales for Ebuys and franchise activity with the Apparel Group.
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||
DSW segment
|
(0.4
|
)%
|
|
(1.8
|
)%
|
|
(1.0
|
)%
|
|
(1.5
|
)%
|
ABG segment
|
0.5
|
%
|
|
(4.6
|
)%
|
|
(0.5
|
)%
|
|
(3.1
|
)%
|
Total Company
|
(0.4
|
)%
|
|
(2.0
|
)%
|
|
(1.0
|
)%
|
|
(1.6
|
)%
|
|
Three months ended
|
|
Nine months ended
|
||||||||
|
October 28, 2017
|
|
October 29, 2016
|
|
October 28, 2017
|
|
October 29, 2016
|
||||
DSW segment merchandise margin
|
44.0
|
%
|
|
45.0
|
%
|
|
43.7
|
%
|
|
44.0
|
%
|
Store occupancy expenses
|
(10.9
|
)
|
|
(10.8
|
)
|
|
(11.1
|
)
|
|
(11.1
|
)
|
Distribution and fulfillment expenses
|
(2.2
|
)
|
|
(2.3
|
)
|
|
(2.2
|
)
|
|
(2.2
|
)
|
DSW segment gross profit
|
30.9
|
%
|
|
31.9
|
%
|
|
30.4
|
%
|
|
30.7
|
%
|
ABG segment merchandise margin
|
44.3
|
%
|
|
43.5
|
%
|
|
44.3
|
%
|
|
44.1
|
%
|
Occupancy expenses
|
(20.2
|
)
|
|
(20.7
|
)
|
|
(20.6
|
)
|
|
(20.4
|
)
|
Distribution and fulfillment expenses
|
(1.1
|
)
|
|
(1.1
|
)
|
|
(1.1
|
)
|
|
(1.1
|
)
|
ABG segment gross profit
|
23.0
|
%
|
|
21.7
|
%
|
|
22.6
|
%
|
|
22.6
|
%
|
Other segment merchandise margin - Ebuys
|
18.1
|
%
|
|
27.7
|
%
|
|
22.7
|
%
|
|
31.6
|
%
|
Marketplace fees
|
(12.9
|
)
|
|
(12.4
|
)
|
|
(12.2
|
)
|
|
(11.8
|
)
|
Fulfillment expenses
|
(17.0
|
)
|
|
(15.5
|
)
|
|
(17.5
|
)
|
|
(13.0
|
)
|
Other segment gross profit - Ebuys
|
(11.8
|
)%
|
|
(0.2
|
)%
|
|
(7.0
|
)%
|
|
6.8
|
%
|
Total Company gross profit
|
29.2
|
%
|
|
30.4
|
%
|
|
28.8
|
%
|
|
29.6
|
%
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(1)
|
The total number of shares repurchased includes shares repurchased as part of publicly announced programs (the average price paid per share includes any broker commissions) and shares withheld in connection with tax payments due upon vesting of employee restricted stock awards.
|
Exhibit No.
|
|
Description
|
3.1
|
|
|
3.2
|
|
|
4.1
|
|
|
10.1
|
|
|
31.1*
|
|
|
31.2*
|
|
|
32.1*
|
|
|
32.2*
|
|
|
101*
|
|
XBRL Instance Documents
|
Date:
|
November 22, 2017
|
|
By:
|
/s/ Jared Poff
|
|
|
|
|
Jared Poff
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer and duly authorized officer)
|
1 Year Dsw Chart |
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