DSW Inc. Reports First Quarter 2014 Financial Results

            DSW Inc. Reports First Quarter 2014 Financial Results

-- First quarter Reported sales decrease 0.4% to $599 million; comparable
sales decrease 3.7%

-- First quarter Reported and Adjusted EPS totals $0.42 per share

-- Full year Adjusted EPS guidance of $1.45 to $1.60 per share, based on
comparable sales decline in the low single digits

-- Board of Directors approve a quarterly dividend of $0.1875 per share

PR Newswire

COLUMBUS, Ohio, May 28, 2014

COLUMBUS, Ohio, May 28, 2014 /PRNewswire/ --DSW Inc. (NYSE: DSW), a leading
branded footwear and accessories retailer, announced financial results for the
thirteen week period ended May3, 2014, which compare to the thirteen week
period ended May4, 2013.

Mike MacDonald, President and Chief Executive Officer stated, "We had a
challenging quarter due to unseasonal weather and an aggressively promotional
retail environment. We sharpened our prices for key items while proactively
managing our clearance levels during the quarter. Monthly sales trends were
weak but improved sequentially during the quarter. Our team is working hard to
deliver an effective assortment with a compelling value message and we expect
these initiatives to gain traction in the back half of the year.

"Our investments in omni-channel and assortment planning will strengthen our
competitive advantages as we elevate our ability to meet the evolving needs
our customers. At the same time, we are investing to grow our market share
outside our core DSW, starting with our partnership with Town Shoes of Canada.
I am confident that we are taking the right steps to grow sales and bottom
line in the long term," Mr. MacDonald added.

First Quarter Operating Results

  oReported sales decreased 0.4% to $599 million compared to last year's
    first quarter sales of $601 million.
  oFor the thirteen week period ended May 3, 2014, comparable sales decreased
    by 3.7%.
  oReported 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 our luxury test. This also compares to Adjusted net income, excluding
    the impact of our 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.

First Quarter Balance Sheet Highlights

  oCash, short term and long term investments totaled $548 million compared
    to $430 million in the first quarter last year.
  oInventories 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% at the end of quarter, excluding our luxury
    inventory.

Regular Dividend
On May 27, 2014, 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.

Acquisition of Equity Interest in Town Shoes
On May 12, 2014, DSW announced the closing of its initial acquisition of Town
Shoes Limited, the largest footwear and accessories retailer in Canada, for
CAD$75.5 million (USD$68.7 million) in cash. DSW Inc. acquired a 49.2%
interest in Town Shoes from the Alberta Investment Management Corporation and
other minority shareholders. DSW Inc.'s initial stake provides 50% voting
control and board representation equal to the primary remaining shareholder,
Callisto Capital.

Fiscal 2014 Annual Outlook
For the fifty-two week fiscal year ending January 31, 2015, the Company
expects Adjusted earnings per share to range from $1.45 to $1.60 per share.
This assumes low single digit comparable sales decline and Adjusted sales
growth in the low single digit range. This guidance includes omni-channel
related expenses of $10 million or approximately $0.07 per share, a tax rate
slightly above 39% and diluted shares outstanding of 92.5 million.

Webcast and Conference Call
To hear the Company's live earnings conference call, log on to
http://dswinc.investorroom.com today at 8:30 AM Eastern, or call
1-888-317-6003 in the U.S. or 1-412-317-6061 outside the U.S and using the
conference number 6100425 approximately ten minutes prior to the start of the
call. A telephone replay of this call will be available until 9:00 a.m.
Eastern Time on June 4, 2014 and can be accessed by dialing 1-877-344-7529 in
the U.S. or 1-412-317-0088 outside the U.S. and entering conference number
10045789. An audio replay of the conference call, as well as additional
financial information, will also be available at
http://dswinc.investorroom.com.

About DSW Inc.
DSW Inc. is a leading branded footwear and accessories retailer that offers a
wide selection of brand name and designer dress, casual and athletic footwear
and accessories for women, men and kids.As of May28, 2014, DSW operates 410
stores in 42 states, the District of Columbia and Puerto Rico, and operates an
e-commerce site, http://www.dsw.com, and a mobile website, http://m.dsw.com.
DSW also supplies footwear to 360 leased locations in the United States under
the Affiliated Business Group.For store locations and additional information
about DSW, visit http://www.dswinc.com. Follow DSW on Twitter at
http://twitter.com/DSWShoeLovers and "like" DSW on Facebook at
http://www.facebook.com/DSW.



DSW INC.
Q1 2014 SEGMENT RESULTS
Net sales by reportable segment
                              Thirteen weeks ended
                              
                                           May 4, 2013  % change
                              May 3, 2014
                              (in thousands)
DSW                           $  558,866   $  562,924   (0.7)  %
Affiliated Business Group     40,081       38,438       4.3    %
Total DSW Inc.                $  598,947   $  601,362   (0.4)  %
Less: Luxury test sales       —            (5,255)
Total Adjusted DSW Inc. sales $  598,947   $  596,107   0.5    %



Comparable sales change by reportable segment (excludes luxury)
                             Thirteen weeks ended
                             
                                                May 4, 2013
                             May 3, 2014
DSW                          (4.0)     %        (2.4)     %
Affiliated Business Group    0.9       %        (1.7)     %
Total DSW Inc.               (3.7)     %        (2.4)     %



Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995
Any statements in this release that are not historical facts, including the
statements made in our "Fiscal 2014 Annual Outlook," are forward-looking
statements and are made pursuant to the safe harbor provisions of the Private
Securities Litigation Reform Act of 1995. These statements are based on the
Company's current expectations and involve known and unknown risks,
uncertainties and other factors that may cause actual results, performance or
achievements to be materially different from any future results, performance
or achievements expressed or implied by the forward-looking statements. These
factors include, but are not limited to: our success in opening and operating
new stores on a timely and profitable basis; maintaining strong relationships
with our vendors; our ability to anticipate and respond to fashion trends;
disruption of our distribution and fulfillment operations; continuation of
supply agreements and the financial condition of our affiliated business
partners; fluctuation of our comparable sales and quarterly financial
performance; risks related to our information systems and 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 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 the realization of
benefits related to our acquisition of an equity interest in Town Shoes, a
leading shoe retailer in Canada; foreign currency exchange risk; risks related
to our cash and investments; and the realization of risks related to the
merger with Retail Ventures, Inc., including risks related to pre-merger RVI
guarantees of certain Filene's Basement leases. Additional factors that could
cause our actual results to differ materially from our expectations are
described in the Company's latest annual or quarterly report, as filed with
the SEC. All forward-looking statements speak only as of the time when made.
The Company undertakes no obligation to revise the forward-looking statements
included in this press release to reflect any future events or circumstances.





DSW INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
                                  As of         As of             As of
                                  May 3, 2014   February 1, 2014  May 4, 2013
Assets
Cash and equivalents              $ 132,900     $   112,021       $ 82,405
Short-term investments            179,877       224,098           213,210
Accounts receivable, net          22,776        26,646            19,686
Inventories                       419,983       397,768           395,310
Prepaid expenses and other        45,377        34,101            37,179
current assets
Deferred income taxes             20,394        18,130            51,884
Total current assets              821,307       812,764           799,674
Property and equipment, net       326,396       318,620           303,854
Long-term investments             235,411       243,188           134,127
Goodwill                          25,899        25,899            25,899
Deferred income taxes             11,598        11,587            13,393
Other assets                      10,734        9,186             7,827
Total assets                      $ 1,431,345   $   1,421,244     $ 1,284,774
Liabilities and shareholders'
equity
Accounts payable                  $ 150,161     $   168,705       $ 134,746
Accrued expenses                  120,483       115,697           129,418
Total current liabilities         270,644       284,402           264,164
Non-current liabilities           137,413       138,298           127,234
Total shareholders' equity        1,023,288     998,544           893,376
Total liabilities and             $ 1,431,345   $   1,421,244     $ 1,284,774
shareholders' equity





DSW INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
                                                Thirteen weeks ended
                                                May 3, 2014  May 4, 2013
Net sales                                       $  598,947   $  601,362
Cost of sales                                   (410,942)    (418,365)
Gross profit                                    188,005      182,997
Operating expenses                              (126,754)    (128,711)
Operating profit                                61,251       54,286
Interest income, net                            958          340
Income before income taxes                      62,209       54,626
Income tax provision                            (23,570)     (20,111)
Net income                                      $  38,639    $  34,515
Diluted shares used in per share calculations:  92,107       91,556
Diluted earnings per share:
Diluted earnings per share                      $  0.42      $  0.38





DSW INC.
RECONCILIATION OF ADJUSTED RESULTS
(In thousands, except per share amounts)
(Unaudited)
For thirteen weeks ended May 3, 2014, there are no adjustments to the reported
results.
The table below presents the adjustments for the prior period:
          Thirteen weeks ended May 4, 2013
                                                                         Diluted
          Net sales   Cost of       Gross       Operating     Net        earnings
                      Sales         profit      expenses      income     per
                                                                         share
Reported  $ 601,362   $ (418,365)   $ 182,997   $ (128,711)   $ 34,515   $  0.38
Measure
Less: luxury test
Net sales 5,255
Cost of               (21,762)
sales
Gross
profit
(loss),
including

valuation
reserves                            (16,507)    (1,888)       (11,355)   (0.12)
on
remaining

inventory
&
operating
expenses
Adjusted  $ 596,107   $ (396,603)   $ 199,504   $ (126,823)   $ 45,870   $  0.50
Measure



Non-GAAP Measures
The unaudited reconciliation of adjusted results should not be construed as an
alternative to the reported results determined in accordance with generally
accepted accounting principles ("GAAP"). These financial measures are not
based on any standardized methodology and are not necessarily comparable to
similar measures presented by other companies. The company believes that this
non-GAAP information is useful as an additional means for investors to
evaluate the company's operating performance, when reviewed in conjunction
with the company's GAAP statements. These amounts are not determined in
accordance with GAAP and therefore, should not be used exclusively in
evaluating the company's business and operations.

SOURCE DSW Inc.

Website: http://www.dswinc.com
Contact: Christina Cheng, CFA (855) 893-5691, Senior Director of Investor
Relations
 
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