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Footwear and accessories retailer, DSW Inc. (DSW - Snapshot Report) recently announced the opening of a new store in Cordova Commons in Pensacola, Fla. Through its latest store, the company will offer a wide variety of designer shoes, sandals and boots and is slated to open on Apr 11.

Of late, DSW has been extensively using its cash flows to spread its reach throughout the United States. We believe that the company’s aggressive store expansion plans signify its strong demand for designer shoes and accessories. Moreover, its wedding shop collection provides exclusive assortments for bridal parties and occasions and sets it apart from its peers J. C. Penney Company Inc. (JCP - Analyst Report), Macy’s Inc. (M - Analyst Report) and Foot Locker, Inc. (FL - Snapshot Report).

Besides offering a wide range of designer shoes at discounted prices for both men and women, the company runs a free, award-winning loyalty program ‘DSW Rewards,’ which issues certificates to the customers for future purchases at DSW in order to attract buyers.

Including the Pensacola store, the company announced the opening of 7 stores in fiscal 2013. The company opened 39 new stores in fiscal 2012.

Despite these positives, DSW is witnessing soft sales trends. The company during the last reported quarter stated that its comparable store sales declined by 5% during the first 6 weeks of fiscal 2013.

The probable pressure on margins on account of increased inventory level is all the more alarming. At the end of fiscal 2012, inventories accounted for $393.8 million, up approximately 18% year over year, reflecting new store openings and growth at its .com business. However, with increased inventory level and softening sales, the company’s margins are likely to remain pressured.

Consequently, the Zacks Consensus Estimate for the first quarter and fiscal 2013 went down by 17.3% and 9% to 91 cents and $3.52 per share in the last 30 days. With the Zacks Consensus Estimate for 2013 going down, the company now has a Zacks Rank #5 (Strong Sell).

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