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DSW Inc. shares soared in pre-market trading this morning as the company released earnings that beat revenue and sales expectations.
The retailer announced for the period ending Aug. 2 that net income was $34.3 million, or 38 cents per diluted share. It was a major beat over the analyst-predicted 32 cents per share, and a 1.8 percent increase from the year-ago period of $33.7 million, or 37 cents per share.
The company also made major strides in its net sales, announcing it grossed $587.1 million in the second quarter. Analysts had predicted only $564.8 million for the period. It was again a 4 percent increase over second quarter 2013's net sales of $562.1 million.
"In the quarter, we accomplished our goal of achieving improvement in the underlying sales trends and eliminating any inventory imbalances," Mike MacDonald, president and CEO, said in a release. "All major categories recorded improved sales performance in the second quarter compared to the first quarter. In addition, we were encouraged by the sequential improvement in sales trends as the quarter progressed."
Comps also increased across the board for the brand, which had invested in Town Shoes in Canada and the Affiliated Business Group, which launched several new retail stores for Yellow Box Shoes in the second quarter. At DSW, Mary Meixelsperger, CFO, said in a conference call that comparable store sales increased 4.4 percent over last year.
In the first quarter of 2014, the company had struggled with a highly promotional environment and a sluggish start to the year due to the polar vortex that impacted much of the country. The women's category especially was challenged due to weather and the lack of clear trends in the marketplace.
Accessories excelled in the second quarter as the strongest category for DSW. Men's and athletic categories were up, as was women's dress, though the company still struggled to hit a positive stride with women's casual and sandals.
"Our performance in women's footwear, we are encouraged by the progress we've seen, but we still have much more to do before we declare mission accomplished," said MacDonald, referring to the company's moves to bring in new brands and more quickly move poor-performing looks into clearance.
The company raised guidance for 2014. It now expects $1.50 to $1.65 per share and predicts revenue growth in the mid single digits. It also expects flattish comparative store sales.