Flat fourth-quarter same-store sales didn’t deter DSW from elevating its outlook for physical store locations while also increasing investments related to omnichannel capabilities.
The company increased its store count by 30 units last year and ended the year with 394 locations. This year, DSW said it plans to open 35 stores and said the build out potential for its large format, self-service, warehouse style stores is now estimated to be in the range of 500 to 550 units. The increased outlook for physical stores came as the company announced fourth quarter results and said it envisioned spending $10 million this year to enhance its omnichannel capabilities. The company did not elaborate on the nature of its omnichannel investments.
"We marked our fifth consecutive year of double digit earnings growth in 2013, with adjusted earnings per share of $1.88 compared to the prior year's results of $1.67,” said DSW president and CEO Mike MacDonald. “Effective inventory management and our new systems enabled us to expand full year merchandise margin to 45.1%, which is just 10 (basis points) shy of our record margin in 2011. We were also able to improve on our (selling, general and administrative) rate by 80 (basis points) to 20.4%, which led to our highest ever operating margin of 11.7%.”
The company achieved improved rates of profitability despite the flat fourth quarter comp increased and total sales which grew only 3.8% to $572 million even when excluding an extra week from the prior year reporting period. Full-year same-store sales grew only 0.2%.
Fourth quarter net income was $28.1 million, or 30 cents a share, compared to profits of $27.1 million, or 30 cents a share in the prior year period which included the benefit of an additional week.