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In a bid to boost shareholders’ confidence in an uncertain economy, DSW Inc. (DSW - Snapshot Report) recently announced a special dividend of $2.00 per share sanctioned by its Board of Directors. This specialty retailer of branded footwear and accessories will deploy $91 million for this purpose, demonstrating its strong cash position and the ability to generate healthy cash flow.

The shareholders of DSW will receive special dividend over and above the regular dividend of 18 cents per share, which was announced on August 22, 2012. The special dividend will be paid on October 26, 2012 to the stakeholders of record as of October 16, 2012, whereas the regular dividend is to be paid on September 28, 2012, to the stakeholders of record as of September 18, 2012.

Management believes that this move exhibits the company’s commitment to return excess cash to its investors and enhance shareholders’ value. The announcement of special dividend is in sync with a 16.0% rise in cash and investments to $485.0 million in the second-quarter of 2012.

DSW also announced that it has appointed James O'Donnell, the former CEO of American Eagle Outfitters Inc. (AEO - Analyst Report), to its Board of Directors. Management remains confident on Mr. Donnell’s efficiency and eligibility, since he has sufficient experience and a remarkable track record.

Moreover, DSW announced that it has received an amount of $7.2 million from litigation with its insurance carrier due to the infringement of credit card data in 2005. This receipt will be accounted as a one-time gain of about 8 cents per share. DSW will recognize this gain as a non-recurring item that will no way impact the adjusted earnings of the third-quarter 2012. Consequently, management kept its previously provided earnings projection intact.

DSW, headquartered in Columbus, Ohio is a specialty retailer focused on branded footwear. The company operates 342 stores in 41 states and also supplies footwear to 342 leased locations in the United States. The company also runs an e-commerce site www.dsw.com and a mobile website m.dsw.com.

DSW has topped the Zacks Consensus Estimate in the last four quarters, and we expect the company to sustain its momentum in the coming quarters as well. Based on its 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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