Form 8-K DSW Inc. For: Nov 25
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E-mailUNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): November 25, 2014 (November 25, 2014)
DSW Inc.
(Exact name of registrant as specified in its charter)
� | � | � | � | � |
Ohio | � | 001-32545 | � | 31-0746639 |
(State or other Jurisdiction of Incorporation) | � | (Commission File Number) | � | (IRS Employer Identification No.) |
� | � | � |
810 DSW Drive, Columbus, Ohio | � | 43219 |
(Address of Principal Executive Offices) | � | (Zip Code) |
Registrants telephone number, including area code: (614) 237-7100
� |
� |
(Former name or former address if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
ITEM�2.02 RESULTS OF OPERATIONS AND FINANCIAL CONDITION.
On November 25, 2014, the Company issued a press release regarding its consolidated financial results for the third quarter ended November 1, 2014. A copy of the press release announcing these financial results is attached as Exhibit 99.1 hereto and incorporated by reference herein.
Pursuant to General Instruction B.2 of Current Report on Form 8-K, the information in this Item 2.02 is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liability of that section. Furthermore, the information in this Item 2.02 shall not be deemed to be incorporated by reference into the filings of the Company under the Securities Act of 1933, as amended.
ITEM 7.01 REGULATION FD DISCLOSURE
The Company's November 25, 2014 press release also announced the increase of its $100 million share repurchase program to a total of $150 million by the Company's Board of Directors. Subject to the note relating to the press release contained in Item 2.02 of this Current Report on Form 8-K, the press release is attached as Exhibit 99.1 hereto and is incorporated by reference herein.
ITEM 8.01 OTHER EVENTS
The Company's November 25, 2014 press release further announced that the Company's Board of Directors declared a dividend of $0.1875 per share, to be paid on December 31, 2014 to shareholders of record at the close of business on December 19, 2014. Subject to the note relating to the press release contained in Item 2.02 of this Current Report on Form 8-K, the press release is attached as Exhibit 99.1 hereto and is incorporated by reference herein.
ITEM 9.01 FINANCIAL STATEMENTS AND EXHIBITS.
(d)�Exhibits.
� | � | � | |
Exhibit�Number | � | Description | |
� | � | � | |
99.1 | � | Press Release dated November 25, 2014 | |
Signature �
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. �
DSW Inc. | ||||
By: | �/s/ William L. Jordan | |||
William L. Jordan | ||||
Executive Vice President and General Counsel | ||||
Date: | November 25, 2014 | |||
DSW Inc. Reports Third Quarter 2014 Financial Results
" | Third quarter Reported sales increase 5.8% to $670 million |
" | Third quarter Adjusted sales increase 7.2% to $670 million; comparable sales increase 2.6% |
" | Third quarter Reported EPS totals $0.55 per share |
" | Third quarter Adjusted EPS totals $0.56 per share, including $0.03 charge for asset impairment |
" | Company updates full fiscal year outlook for Adjusted EPS in the range of $1.55 to $1.65 per share, with annual comparable sales expected to be slightly positive |
" | Board of Directors authorizes an additional $50 million in share repurchase and approves a quarterly dividend of $0.1875 per share |
COLUMBUS, Ohio, November 25, 2014 - DSW Inc. (NYSE: DSW), a leading branded footwear and accessories retailer, announced financial results for the thirteen week period ended November�1, 2014, which compare to the thirteen week period ended November�2, 2013.
Mike MacDonald, President and Chief Executive Officer stated, ''We were pleased with the progress we made in the quarter, particularly the improvements in top line performance. Sales in all major categories accelerated compared to first half performance. We are especially encouraged by the performance of women's footwear, which posted its first positive comparable sales increase since the second quarter of 2013. The merchandise initiatives we began to implement at the start of the year are gaining traction."
''Over the past twelve months, DSW has also made significant inroads in becoming even more customer centric in the way we operate. Customers now have visibility and access to our full assortment of choices regardless of how and where they are shopping. We have also launched new technologies that make it easier for online customers to shop and pay for their purchases. There are many more improvements to be made to create a seamless and relevant shopping experience for DSW customers, but we are pleased with our progress to date,'' Mr. MacDonald added.
Third Quarter Operating Results
" | Reported sales increased 5.8% to $670 million compared to last year's sales of $633 million. |
" | Adjusted sales increased 7.2% to $670 million compared to last year's sales of $625 million, which excluded sales from the Company's luxury test. |
" | Comparable sales increased by 2.6% compared to last year's decrease of 0.7%. |
" | Gross margin declined 100 bps, of which 55 bps was due to asset impairment. |
" | Reported net income was $49.6 million, or $0.55 per diluted share, on 90 million shares, which includes a RVI tax provision adjustment. This compares to Reported net income in the third quarter of 2013 of $55.0 million, or $0.60 per diluted share, on 92 million shares, which included a net after-tax income of $1.4 million, or $0.01 per share, from the Company's luxury test. |
" | Adjusted net income was $50.4 million, or $0.56 per diluted share, on 90 million shares, which includes a one-time charge of $0.03 per share from asset impairment. This compares to Adjusted net income for the same period last year of $53.6 million, or $0.58 per diluted share, on 92 million shares. |
Nine Months Ended November 1, 2014 Operating Results
" | Reported sales increased 3.3% to $1.86 billion compared to last year's sales of $1.80 billion. |
" | Adjusted sales increased 4.3% to $1.86 billion compared to last year's sales of $1.78 billion, which excluded sales from the Company's luxury test. |
" | Comparable sales decreased by 0.1% compared to last year's increase of 0.2%. |
" | Reported net income was $122.5 million, or $1.35 per diluted share, on 91 million shares. This compares to Reported net income in the same period last year of $123.2 million, or $1.34 per diluted share, on 92 million shares, which included a net after-tax loss of $20.9 million, or $0.23 per share, from the Company's luxury test and the termination of RVI's pension plan. |
" | Adjusted net income was $122.7 million, or $1.35 per diluted share, on 91 million shares. This compares to net income of $144.1 million, or $1.57 per diluted share, on 92 million shares, which excluded items related to our luxury test and the termination of RVI's pension plan. |
Third Quarter Balance Sheet Highlights
" | Cash, short term and long term investments totaled $427 million compared to $517 million in the third quarter last year. |
" | Inventories were $486 million compared to $424 million during the third quarter last year. On a cost per square foot basis, DSW inventories increased by 7.4% at the end of the quarter. A significant portion of this increase relates to opportunistic pre-buys to deliver strong brands and exceptional values to our customers in 2015. Excluding the increase in pre-buys, inventories on a cost per square foot increased by 3.8%. |
" | The Company repurchased one million shares for approximately $30 million during the quarter, for a total of three million shares for approximately $87 million since the authorization of the program. This leaves approximately $13 million available on the Company's previous $100 million share repurchase authorization. On November 21, 2014, the Board of Directors authorized an additional $50 million under the Company's share repurchase program. |
Regular Dividend
On November 25, 2014, DSW's Board of Directors declared a quarterly cash dividend payment of $0.1875 per share. The dividend will be paid on December 31, 2014 to shareholders of record at the close of business on December 19, 2014.
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 $1.55 to $1.65 per share compared to the previous guidance of $1.50 to $1.65 per share. This assumes slightly positive comparable annual sales growth and annual revenue growth in the mid-single digit range. This guidance includes a tax rate slightly below 39% and diluted shares outstanding of 90.5 million.
Webcast and Conference Call
To hear the Company's live earnings conference call, log on to http://www.dswinc.com/ today at 8:30 a.m. Eastern Time, or call 1-888-317-6003 in the U.S. or 1-412-317-6061 outside the U.S. using passcode 4979066 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 December 2, 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 using conference number 10056125. An audio replay of the conference call, as well as additional financial information, will also be available at http://www.dswinc.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 November 25, 2014, DSW operates 431 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 367 leased locations in the United States and operates three Yellow Box stores 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 Facebook at http://www.facebook.com/DSW.
DSW INC.
Q3 2014 SEGMENT RESULTS
Net sales by reportable segment | |||||||||||||||||||||
Thirteen weeks ended | Thirty-nine weeks ended | ||||||||||||||||||||
November�1, 2014 | November�2, 2013 | % change | November�1, 2014 | November�2, 2013 | % change | ||||||||||||||||
(in thousands) | (in thousands) | ||||||||||||||||||||
DSW | $ | 632,774 | $ | 597,274 | 5.9 | % | $ | 1,745,454 | $ | 1,691,119 | 3.2 | % | |||||||||
Affiliated Business Group | 37,098 | 35,702 | 3.9 | % | 110,461 | 105,282 | 4.9 | % | |||||||||||||
Reported DSW Inc. sales | $ | 669,872 | $ | 632,976 | 5.8 | % | $ | 1,855,915 | $ | 1,796,401 | 3.3 | % | |||||||||
Less: Luxury sales | 8,341 | 17,418 | |||||||||||||||||||
Adjusted DSW Inc. sales | $ | 669,872 | $ | 624,635 | 7.2 | % | $ | 1,855,915 | $ | 1,778,983 | 4.3 | % | |||||||||
Comparable sales change by reportable segment (excludes luxury) | |||||||
Thirteen weeks ended | Thirty-nine weeks ended | ||||||
November�1, 2014 | November�2, 2013 | November�1, 2014 | November�2, 2013 | ||||
DSW | 2.8% | (1.0)% | (0.1)% | 0.2% | |||
Affiliated Business Group | 0.3% | 3.6% | 1.2% | 1.8% | |||
Total DSW Inc. | 2.6% | (0.7)% | (0.1)% | 0.2% | |||
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; our success in executing our omni-channel initiative; maintaining strong relationships with our vendors; our ability to anticipate and respond to fashion trends; disruption of our distribution and/or 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 our electronic processing of sensitive and confidential customer and associate data; 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 branded 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)
November�1, 2014 | February�1, 2014 | November�2, 2013 | |||||||||
Assets | |||||||||||
Cash and equivalents | $ | 96,394 | $ | 112,021 | $ | 86,909 | |||||
Short-term investments | 128,381 | 224,098 | 195,248 | ||||||||
Accounts receivable, net | 26,610 | 26,646 | 23,853 | ||||||||
Inventories | 486,260 | 397,768 | 424,066 | ||||||||
Prepaid expenses and other current assets | 26,566 | 34,101 | 41,086 | ||||||||
Deferred income taxes | 23,486 | 18,130 | 24,343 | ||||||||
Total current assets | 787,697 | 812,764 | 795,505 | ||||||||
Property and equipment, net | 338,227 | 318,620 | 316,542 | ||||||||
Long-term investments | 202,259 | 243,188 | 234,748 | ||||||||
Goodwill | 25,899 | 25,899 | 25,899 | ||||||||
Deferred income taxes | 14,643 | 11,587 | 10,562 | ||||||||
Investment in Town Shoes | 24,838 | ||||||||||
Note receivable from Town Shoes | 47,819 | ||||||||||
Other assets | 8,850 | 9,186 | 8,518 | ||||||||
Total assets | $ | 1,450,232 | $ | 1,421,244 | $ | 1,391,774 | |||||
Liabilities and shareholders' equity | |||||||||||
Accounts payable | $ | 185,931 | $ | 168,705 | $ | 147,100 | |||||
Accrued expenses | 125,885 | 115,697 | 130,612 | ||||||||
Total current liabilities | 311,816 | 284,402 | 277,712 | ||||||||
Non-current liabilities | 142,540 | 138,298 | 132,844 | ||||||||
Total shareholders' equity | 995,876 | 998,544 | 981,218 | ||||||||
Total liabilities and shareholders' equity | $ | 1,450,232 | $ | 1,421,244 | $ | 1,391,774 | |||||
DSW INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
Thirteen weeks ended | Thirty-nine weeks ended | |||||||||||||||
November�1, 2014 | November�2, 2013 | November�1, 2014 | November�2, 2013 | |||||||||||||
Net sales | $ | 669,872 | $ | 632,976 | $ | 1,855,915 | $ | 1,796,401 | ||||||||
Cost of sales | (451,315 | ) | (420,106 | ) | (1,277,449 | ) | (1,217,092 | ) | ||||||||
Gross profit | 218,557 | 212,870 | 578,466 | 579,309 | ||||||||||||
Operating expenses | (138,860 | ) | (124,614 | ) | (384,208 | ) | (382,786 | ) | ||||||||
Operating profit | 79,697 | 88,256 | 194,258 | 196,523 | ||||||||||||
Interest income, net | 600 | 1,036 | 2,193 | 1,857 | ||||||||||||
Income from continuing operations before income taxes and income from Town Shoes | 80,297 | 89,292 | 196,451 | 198,380 | ||||||||||||
Income tax provision | (31,792 | ) | (34,331 | ) | (76,186 | ) | (75,184 | ) | ||||||||
Income from Town Shoes | 1,049 | 1,898 | ||||||||||||||
Income from continuing operations | 49,554 | 54,961 | 122,163 | 123,196 | ||||||||||||
Income from discontinued operations, net of tax | 358 | |||||||||||||||
Net income | $ | 49,554 | $ | 54,961 | $ | 122,521 | $ | 123,196 | ||||||||
Diluted shares used in per share calculations: | 89,810 | 92,090 | 91,014 | 91,813 | ||||||||||||
Diluted earnings per share: | ||||||||||||||||
Diluted earnings per share from continuing operations | $ | 0.55 | $ | 0.60 | $ | 1.34 | $ | 1.34 | ||||||||
Diluted earnings per share from discontinued operations | $ | 0.00 | ||||||||||||||
Diluted earnings per share | $ | 0.55 | $ | 0.60 | $ | 1.35 | $ | 1.34 | ||||||||
DSW INC.
RECONCILIATION OF ADJUSTED RESULTS
(In thousands, except per share amounts)
(Unaudited)
Thirteen weeks ended November 1, 2014 | Thirty-nine weeks ended November 1, 2014 | ||||||||||||||
Net Income | Diluted earnings per share | Net income | Diluted earnings per share | ||||||||||||
Reported Measure | $ | 49,554 | $ | 0.55 | $ | 122,521 | $ | 1.35 | |||||||
Less: RVI Operating expenses, net of tax | (1) | 377 | (1) | ||||||||||||
Less: Income from discontinued operations, net of tax | (1) | 358 | (1) | ||||||||||||
Add: Income taxes | (864 | ) | (2) | (0.01 | ) | (864 | ) | (2) | (0.01 | ) | |||||
Adjusted Measure | $ | 50,418 | $ | 0.56 | $ | 122,650 | $ | 1.35 | |||||||
(1) Relates to RVI's recovery from the Filene's Basement debtors' estates.
(2) Relates to RVI's income tax provision adjustment.
Thirteen weeks ended November 2, 2013 | Thirty-nine weeks ended November 2, 2013 | ||||||||||||||
Net Income | Diluted earnings per share | Net income | Diluted earnings per share | ||||||||||||
Reported Measure | $ | 54,961 | $ | 0.60 | $ | 123,196 | $ | 1.34 | |||||||
Less: Gross profit (loss), including valuation reserves on luxury test | 1,366 | (3) | 0.01 | (11,521 | ) | (3) | (0.13 | ) | |||||||
Less: RVI related expenses and RVI pension plan termination expense | (48 | ) | (4) | (9,355 | ) | (5) | (0.10 | ) | |||||||
Adjusted Measure | $ | 53,643 | $ | 0.58 | $ | 144,072 | $ | 1.57 | |||||||
(3) Relates to net after-tax income (loss) from the Company's luxury test.
(4) Relates to legacy charges from RVI.
(5) Relates to a net after-tax charge from the termination of the pension plan assumed in conjunction with the RVI merger.
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 companys operating performance, when reviewed in conjunction with the companys GAAP statements. These amounts are not determined in accordance with GAAP and therefore, should not be used exclusively in evaluating the companys business and operations.
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