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New DSW Stores in Texas, California

DSW JCP

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In a bid to expand its business, footwear retailer DSW Inc. (DSW - Snapshot Report) recently announced the opening of new stores in Mesquite, Texas and West Covina, California. The new stores will offer a wide range of designer footwear and accessories to attract customers.

The company’s store expansion strategy is expected to be accretive to its top-line growth, as DSW offers a wide range of designer shoes at discounted prices for men and women. DSW’s wedding shop collection provides exclusive assortments for bridal parties and occasions.

With a view to attract customers, DSW runs a free, award-winning loyalty program ‘DSW Rewards,’ which entitles certificates to the customers in relation to future DSW purchases. Moreover, customers receive member-only offers through this loyalty program.

DSW, which competes with J. C. Penney Company Inc. (JCP - Analyst Report), recently posted second-quarter 2012 earnings of 66 cents per share, which beat the Zacks Consensus Estimate of 62 cents. However, the quarterly earnings fell 10.8% year-over-year from 74 cents reported in the comparable prior-year quarter.

Net sales jumped 7.2% to $512.2 million from $476.3 million in the prior-year quarter and also surpassed the Zacks Consensus Estimate of $511 million. Comps for the quarter grew 4.2%.

DSW maintains its fiscal 2012 outlook with full-year earnings in the range of $3.25-$3.40 per share. Moreover, comps are anticipated to increase in mid-single-digits for the fiscal 2012.

DSW, headquartered in Columbus, Ohio, operates 338 stores in 41 states and also supplies footwear to 344 leased locations in the United States. The company also runs an e-commerce site and a mobile website.

DSW has topped the Zacks Consensus Estimate over the last four quarters, and we expect the company to sustain its momentum in the coming quarters as well. Based on better-than-expected second quarter results and rising earnings momentum, DSW carries a Zacks #2 Rank for the next 1-3 months, implying a short-term Buy rating.

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