þ
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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o
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
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to
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DSW INC.
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(Exact name of registrant as specified in its charter)
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Ohio
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31-0746639
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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810 DSW Drive, Columbus, Ohio
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43219
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(Address of principal executive offices)
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(Zip Code)
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Not Applicable
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(Former name, former address and former fiscal year, if changed since last report)
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Page
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PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
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Part II. OTHER INFORMATION
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PART I.
|
FINANCIAL INFORMATION
|
Item 1.
|
Financial Statements
|
|
Three months ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Net sales
|
$
|
691,102
|
|
|
$
|
681,267
|
|
Cost of sales
|
(495,873
|
)
|
|
(476,910
|
)
|
||
Operating expenses
|
(153,264
|
)
|
|
(154,196
|
)
|
||
Change in fair value of contingent consideration liability
|
(1,084
|
)
|
|
(1,445
|
)
|
||
Operating profit
|
40,881
|
|
|
48,716
|
|
||
Interest expense
|
(47
|
)
|
|
(49
|
)
|
||
Interest income
|
608
|
|
|
570
|
|
||
Interest income, net
|
561
|
|
|
521
|
|
||
Non-operating income (expense)
|
(1,504
|
)
|
|
164
|
|
||
Income before income taxes and loss from Town Shoes
|
39,938
|
|
|
49,401
|
|
||
Income tax provision
|
(15,665
|
)
|
|
(19,078
|
)
|
||
Loss from Town Shoes
|
(1,306
|
)
|
|
(309
|
)
|
||
Net income
|
$
|
22,967
|
|
|
$
|
30,014
|
|
Basic and diluted earnings per share:
|
|
|
|
||||
Basic earnings per share
|
$
|
0.29
|
|
|
$
|
0.37
|
|
Diluted earnings per share
|
$
|
0.28
|
|
|
$
|
0.36
|
|
Weighted average shares used in per share calculations:
|
|
|
|
||||
Basic shares
|
80,217
|
|
|
81,953
|
|
||
Diluted shares
|
80,732
|
|
|
82,705
|
|
|
Three months ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Net income
|
$
|
22,967
|
|
|
$
|
30,014
|
|
Other comprehensive income (loss), net of income taxes:
|
|
|
|
||||
Foreign currency translation gain (loss)
|
(4,120
|
)
|
|
12,149
|
|
||
Unrealized net gain on available-for-sale securities (net of tax expense (benefit) of ($55) and $117, respectively)
|
56
|
|
|
126
|
|
||
Reclassification adjustment for net losses realized in net income (net of tax benefit of $65)
|
1,580
|
|
|
—
|
|
||
Total other comprehensive income (loss), net of income taxes
|
(2,484
|
)
|
|
12,275
|
|
||
Total comprehensive income
|
$
|
20,483
|
|
|
$
|
42,289
|
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
||||||
ASSETS
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
79,673
|
|
|
$
|
110,657
|
|
|
$
|
59,462
|
|
Short-term investments
|
174,193
|
|
|
98,530
|
|
|
97,612
|
|
|||
Accounts receivable
|
15,545
|
|
|
18,456
|
|
|
15,239
|
|
|||
Accounts receivable from related parties
|
1,320
|
|
|
550
|
|
|
58
|
|
|||
Inventories
|
575,171
|
|
|
499,995
|
|
|
563,317
|
|
|||
Prepaid expenses and other current assets
|
36,226
|
|
|
31,074
|
|
|
32,165
|
|
|||
Prepaid rent to related parties
|
4
|
|
|
4
|
|
|
1
|
|
|||
Total current assets
|
882,132
|
|
|
759,266
|
|
|
767,854
|
|
|||
Property and equipment, net
|
374,320
|
|
|
375,251
|
|
|
373,979
|
|
|||
Long-term investments
|
—
|
|
|
77,904
|
|
|
80,456
|
|
|||
Goodwill
|
79,689
|
|
|
79,689
|
|
|
80,684
|
|
|||
Deferred income taxes
|
16,287
|
|
|
14,934
|
|
|
21,217
|
|
|||
Long-term prepaid rent to related parties
|
741
|
|
|
768
|
|
|
848
|
|
|||
Equity investment in Town Shoes
|
13,705
|
|
|
15,830
|
|
|
18,389
|
|
|||
Note receivable from Town Shoes
|
52,928
|
|
|
53,121
|
|
|
50,618
|
|
|||
Intangible assets
|
34,044
|
|
|
35,108
|
|
|
40,614
|
|
|||
Other assets
|
17,618
|
|
|
16,605
|
|
|
22,331
|
|
|||
Total assets
|
$
|
1,471,464
|
|
|
$
|
1,428,476
|
|
|
$
|
1,456,990
|
|
LIABILITIES AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
||||||
Accounts payable
|
$
|
212,821
|
|
|
$
|
185,497
|
|
|
$
|
196,698
|
|
Accounts payable to related parties
|
790
|
|
|
774
|
|
|
821
|
|
|||
Accrued expenses
|
135,758
|
|
|
130,334
|
|
|
125,766
|
|
|||
Total current liabilities
|
349,369
|
|
|
316,605
|
|
|
323,285
|
|
|||
Non-current liabilities
|
142,519
|
|
|
141,179
|
|
|
142,693
|
|
|||
Contingent consideration liability
|
34,288
|
|
|
33,204
|
|
|
57,445
|
|
|||
Total liabilities
|
526,176
|
|
|
490,988
|
|
|
523,423
|
|
|||
Commitments and contingencies
|
—
|
|
|
—
|
|
|
—
|
|
|||
Shareholders' equity:
|
|
|
|
|
|
||||||
Common shares paid-in capital, no par value; 250,000 Class A Common Shares authorized; 85,126, 85,038 and 84,493 issued, respectively; 72,535, 72,447 and 74,282 outstanding, respectively; 100,000 Class B Common Shares authorized, 7,733 issued and outstanding
|
949,645
|
|
|
946,351
|
|
|
932,702
|
|
|||
Preferred shares, no par value; 100,000 authorized; no shares issued or outstanding
|
—
|
|
|
—
|
|
|
—
|
|
|||
Treasury shares, at cost, 12,591, 12,591 and 10,211 outstanding, respectively
|
(316,531
|
)
|
|
(316,531
|
)
|
|
(266,531
|
)
|
|||
Retained earnings
|
353,592
|
|
|
346,602
|
|
|
300,817
|
|
|||
Basis difference related to acquisition of commonly controlled entity
|
(24,993
|
)
|
|
(24,993
|
)
|
|
(24,993
|
)
|
|||
Accumulated other comprehensive loss
|
(16,425
|
)
|
|
(13,941
|
)
|
|
(8,428
|
)
|
|||
Total shareholders' equity
|
945,288
|
|
|
937,488
|
|
|
933,567
|
|
|||
Total liabilities and shareholders' equity
|
$
|
1,471,464
|
|
|
$
|
1,428,476
|
|
|
$
|
1,456,990
|
|
|
Three months ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
Cash flows from operating activities:
|
|
|
|
||||
Net income
|
$
|
22,967
|
|
|
$
|
30,014
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
||||
Depreciation and amortization
|
20,872
|
|
|
19,753
|
|
||
Stock-based compensation expense
|
3,609
|
|
|
3,657
|
|
||
Deferred income taxes
|
(1,232
|
)
|
|
598
|
|
||
Loss from Town Shoes
|
1,306
|
|
|
309
|
|
||
Change in fair value of contingent consideration liability
|
1,084
|
|
|
1,445
|
|
||
Loss on disposal of long-lived assets
|
63
|
|
|
160
|
|
||
Loss on foreign currency transactions
|
1,462
|
|
|
—
|
|
||
Amortization of investment discounts and premiums
|
133
|
|
|
536
|
|
||
Change in operating assets and liabilities:
|
|
|
|
||||
Accounts receivable
|
2,141
|
|
|
1,790
|
|
||
Inventories
|
(75,176
|
)
|
|
(48,929
|
)
|
||
Prepaid expenses and other current assets
|
(6,833
|
)
|
|
5,886
|
|
||
Accounts payable
|
26,786
|
|
|
(18,653
|
)
|
||
Accrued expenses
|
4,428
|
|
|
13,742
|
|
||
Other
|
5,708
|
|
|
(494
|
)
|
||
Net cash provided by operating activities
|
7,318
|
|
|
9,814
|
|
||
Cash flows from investing activities:
|
|
|
|
||||
Cash paid for property and equipment
|
(18,314
|
)
|
|
(26,039
|
)
|
||
Purchases of available-for-sale investments
|
(54,700
|
)
|
|
(24,024
|
)
|
||
Sales of available-for-sale investments
|
54,036
|
|
|
151,793
|
|
||
Additional borrowings by Town Shoes
|
(5,689
|
)
|
|
(6,641
|
)
|
||
Acquisition of Ebuys
|
—
|
|
|
(60,411
|
)
|
||
Net cash provided by (used in) investing activities
|
(24,667
|
)
|
|
34,678
|
|
||
Cash flows from financing activities:
|
|
|
|
||||
Proceeds from exercise of stock options
|
328
|
|
|
243
|
|
||
Net change in vendor payment program
|
898
|
|
|
—
|
|
||
Cash paid for income taxes for stock-based compensation shares withheld
|
(643
|
)
|
|
(1,042
|
)
|
||
Dividends paid
|
(15,977
|
)
|
|
(16,337
|
)
|
||
Net cash used in financing activities
|
(15,394
|
)
|
|
(17,136
|
)
|
||
Net increase (decrease) in cash, cash equivalents, and restricted cash
|
(32,743
|
)
|
|
27,356
|
|
||
Cash, cash equivalents, and restricted cash, beginning of period
|
115,311
|
|
|
40,171
|
|
||
Cash, cash equivalents, and restricted cash, end of period
|
$
|
82,568
|
|
|
$
|
67,527
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
||||
Cash paid during the period for income taxes
|
$
|
23,947
|
|
|
$
|
12,739
|
|
Non-cash investing and financing activities:
|
|
|
|
||||
Property and equipment purchases not yet paid
|
$
|
5,092
|
|
|
$
|
4,817
|
|
Ebuys contingent purchase price
|
$
|
—
|
|
|
$
|
56,000
|
|
|
Preliminary
Purchase Price
as of March 4, 2016
|
|
Adjustments
|
|
Final
Purchase Price
as of January 28, 2017
|
||||||
|
(in thousands)
|
||||||||||
Purchase price:
|
|
|
|
|
|
||||||
Cash consideration
|
$
|
60,411
|
|
|
$
|
(635
|
)
|
|
$
|
59,776
|
|
Contingent consideration
|
56,000
|
|
|
(2,645
|
)
|
|
53,355
|
|
|||
|
$
|
116,411
|
|
|
$
|
(3,280
|
)
|
|
$
|
113,131
|
|
Fair value of assets and liabilities acquired:
|
|
|
|
|
|
||||||
Accounts and other receivables
|
$
|
1,623
|
|
|
$
|
(287
|
)
|
|
$
|
1,336
|
|
Inventory
|
30,152
|
|
|
18
|
|
|
30,170
|
|
|||
Other current assets
|
191
|
|
|
335
|
|
|
526
|
|
|||
Property and equipment
|
1,221
|
|
|
22
|
|
|
1,243
|
|
|||
Goodwill
|
54,785
|
|
|
(995
|
)
|
|
53,790
|
|
|||
Intangible assets
|
41,301
|
|
|
(2,600
|
)
|
|
38,701
|
|
|||
Accounts payable and other long-term liabilities
|
(12,862
|
)
|
|
227
|
|
|
(12,635
|
)
|
|||
|
$
|
116,411
|
|
|
$
|
(3,280
|
)
|
|
$
|
113,131
|
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
||||||
|
(in thousands)
|
||||||||||
Cash and cash equivalents
|
$
|
79,673
|
|
|
$
|
110,657
|
|
|
$
|
59,462
|
|
Restricted cash, included in prepaid expenses and other current assets
|
2,895
|
|
|
4,654
|
|
|
8,065
|
|
|||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows
|
$
|
82,568
|
|
|
$
|
115,311
|
|
|
$
|
67,527
|
|
•
|
Level 1 - Quoted prices in active markets for identical assets or liabilities.
|
•
|
Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.
|
•
|
Level 3 - Unobservable inputs in which little or no market activity exists.
|
|
Three months ended
|
||||||||||||||||||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||||||||||||||||||
|
Foreign Currency Translation
|
|
Available-for-Sale Securities
|
|
Total
|
|
Foreign Currency Translation
|
|
Available-for-Sale Securities
|
|
Total
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Accumulated other comprehensive loss - beginning of period
|
$
|
(13,699
|
)
|
|
$
|
(242
|
)
|
|
$
|
(13,941
|
)
|
|
$
|
(20,530
|
)
|
|
$
|
(173
|
)
|
|
$
|
(20,703
|
)
|
Other comprehensive income (loss) before reclassifications
|
(4,120
|
)
|
|
56
|
|
|
(4,064
|
)
|
|
12,149
|
|
|
126
|
|
|
12,275
|
|
||||||
Amounts reclassified to non-operating income
|
1,462
|
|
|
118
|
|
|
1,580
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Other comprehensive income (loss)
|
(2,658
|
)
|
|
174
|
|
|
(2,484
|
)
|
|
12,149
|
|
|
126
|
|
|
12,275
|
|
||||||
Accumulated other comprehensive loss - end of period
|
$
|
(16,357
|
)
|
|
$
|
(68
|
)
|
|
$
|
(16,425
|
)
|
|
$
|
(8,381
|
)
|
|
$
|
(47
|
)
|
|
$
|
(8,428
|
)
|
|
Three months ended
|
||
|
April 30, 2016
|
||
|
(in thousands)
|
||
Net cash provided by investing activities, as previously reported
|
$
|
34,289
|
|
Eliminated the impact of the increase in restricted cash
|
389
|
|
|
Net cash provided by investing activities, as adjusted
|
$
|
34,678
|
|
Net increase in cash and cash equivalents, as previously reported
|
$
|
26,967
|
|
Eliminated the impact of the increase in restricted cash
|
389
|
|
|
Net increase in cash, cash equivalents, and restricted cash, as adjusted
|
$
|
27,356
|
|
Cash and cash equivalents, beginning of period, as previously reported
|
$
|
32,495
|
|
Included restricted cash
|
7,676
|
|
|
Cash, cash equivalents, and restricted cash, beginning of period, as adjusted
|
$
|
40,171
|
|
Cash and cash equivalents, end of period, as previously reported
|
$
|
59,462
|
|
Included restricted cash
|
8,065
|
|
|
Cash, cash equivalents, and restricted cash, end of period, as adjusted
|
$
|
67,527
|
|
|
Three months ended
|
||||
|
April 29, 2017
|
|
April 30, 2016
|
||
|
(in thousands)
|
||||
Weighted average shares outstanding - Basic shares
|
80,217
|
|
|
81,953
|
|
Dilutive effect of stock-based compensation awards
|
515
|
|
|
752
|
|
Weighted average shares outstanding - Diluted shares
|
80,732
|
|
|
82,705
|
|
|
Three months ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
|
(in thousands)
|
||||||
Stock options
|
$
|
1,751
|
|
|
$
|
1,677
|
|
Restricted stock units
|
830
|
|
|
1,230
|
|
||
Performance-based restricted stock units
|
977
|
|
|
682
|
|
||
Director stock units ("DSUs")
|
51
|
|
|
68
|
|
||
|
$
|
3,609
|
|
|
$
|
3,657
|
|
|
Three months ended
|
||
|
April 29, 2017
|
|
April 30, 2016
|
Assumptions:
|
|
|
|
Risk-free interest rate
|
1.9%
|
|
1.5%
|
Expected volatility
|
34.4%
|
|
36.0%
|
Expected option term
|
5.5 years
|
|
5.4 years
|
Dividend yield
|
3.9%
|
|
3.0%
|
Other data:
|
|
|
|
Weighted average grant date fair value
|
$4.20
|
|
$6.59
|
|
Three months ended April 29, 2017
|
||||||||||
|
Stock Options
|
|
RSUs
|
|
PSUs
|
|
DSUs
|
||||
|
(in thousands)
|
||||||||||
Outstanding - beginning of period
|
3,799
|
|
|
351
|
|
|
250
|
|
|
311
|
|
Granted
|
1,606
|
|
|
258
|
|
|
236
|
|
|
5
|
|
Exercised / vested
|
(29
|
)
|
|
(53
|
)
|
|
(34
|
)
|
|
(1
|
)
|
Forfeited / expired
|
(193
|
)
|
|
(33
|
)
|
|
(3
|
)
|
|
—
|
|
Outstanding - end of period
|
5,183
|
|
|
523
|
|
|
449
|
|
|
315
|
|
|
Short-term investments
|
|
Long-term investments
|
||||||||||||||||||||
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
||||||||||||
|
(in thousands)
|
||||||||||||||||||||||
Available-for-sale investments:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Carrying value
|
$
|
174,381
|
|
|
$
|
98,793
|
|
|
$
|
97,236
|
|
|
$
|
—
|
|
|
$
|
77,882
|
|
|
$
|
80,748
|
|
Unrealized gains included in accumulated other comprehensive loss
|
87
|
|
|
101
|
|
|
411
|
|
|
—
|
|
|
133
|
|
|
22
|
|
||||||
Unrealized losses included in accumulated other comprehensive loss
|
(275
|
)
|
|
(364
|
)
|
|
(35
|
)
|
|
—
|
|
|
(111
|
)
|
|
(314
|
)
|
||||||
Total investments
|
$
|
174,193
|
|
|
$
|
98,530
|
|
|
$
|
97,612
|
|
|
$
|
—
|
|
|
$
|
77,904
|
|
|
$
|
80,456
|
|
|
April 29, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
79,673
|
|
|
$
|
79,673
|
|
|
—
|
|
|
—
|
|
||
Short-term investments
|
174,193
|
|
|
934
|
|
|
$
|
173,259
|
|
|
—
|
|
|||
|
$
|
253,866
|
|
|
$
|
80,607
|
|
|
$
|
173,259
|
|
|
$
|
—
|
|
Financial liabilities -
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
34,288
|
|
|
—
|
|
|
—
|
|
|
$
|
34,288
|
|
||
|
$
|
34,288
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
34,288
|
|
|
January 28, 2017
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
110,657
|
|
|
$
|
110,657
|
|
|
—
|
|
|
—
|
|
||
Short-term investments
|
98,530
|
|
|
2,446
|
|
|
$
|
96,084
|
|
|
—
|
|
|||
Long-term investments
|
77,904
|
|
|
431
|
|
|
77,473
|
|
|
—
|
|
||||
|
$
|
287,091
|
|
|
$
|
113,534
|
|
|
$
|
173,557
|
|
|
$
|
—
|
|
Financial liabilities -
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
33,204
|
|
|
—
|
|
|
—
|
|
|
$
|
33,204
|
|
||
|
$
|
33,204
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
33,204
|
|
|
April 30, 2016
|
||||||||||||||
|
Total
|
|
Level 1
|
|
Level 2
|
|
Level 3
|
||||||||
|
(in thousands)
|
||||||||||||||
Financial assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
59,462
|
|
|
$
|
59,462
|
|
|
—
|
|
|
|
|||
Short-term investments
|
97,612
|
|
|
5,676
|
|
|
$
|
91,936
|
|
|
|
||||
Long-term investments
|
80,456
|
|
|
286
|
|
|
80,170
|
|
|
|
|||||
|
$
|
237,530
|
|
|
$
|
65,424
|
|
|
$
|
172,106
|
|
|
$
|
—
|
|
Financial liabilities -
|
|
|
|
|
|
|
|
||||||||
Contingent consideration liability
|
$
|
57,445
|
|
|
—
|
|
|
—
|
|
|
$
|
57,445
|
|
||
|
$
|
57,445
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
57,445
|
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
||||||
|
(in thousands)
|
||||||||||
Land
|
$
|
1,110
|
|
|
$
|
1,110
|
|
|
$
|
1,110
|
|
Buildings
|
12,485
|
|
|
12,485
|
|
|
12,485
|
|
|||
Building and leasehold improvements
|
395,576
|
|
|
393,505
|
|
|
375,969
|
|
|||
Furniture, fixtures and equipment
|
414,179
|
|
|
408,653
|
|
|
373,863
|
|
|||
Software
|
134,656
|
|
|
123,460
|
|
|
120,372
|
|
|||
Construction in progress
|
25,420
|
|
|
27,456
|
|
|
26,739
|
|
|||
Total property and equipment
|
983,426
|
|
|
966,669
|
|
|
910,538
|
|
|||
Accumulated depreciation and amortization
|
(609,106
|
)
|
|
(591,418
|
)
|
|
(536,559
|
)
|
|||
Property and equipment, net
|
$
|
374,320
|
|
|
$
|
375,251
|
|
|
$
|
373,979
|
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
||||||
|
(in thousands)
|
||||||||||
Gift cards and merchandise credits
|
$
|
43,106
|
|
|
$
|
45,743
|
|
|
$
|
39,385
|
|
Compensation
|
18,762
|
|
|
17,132
|
|
|
18,145
|
|
|||
Taxes
|
19,656
|
|
|
21,764
|
|
|
20,944
|
|
|||
Customer loyalty program
|
12,227
|
|
|
11,502
|
|
|
10,987
|
|
|||
Other
(1)
|
42,007
|
|
|
34,193
|
|
|
36,305
|
|
|||
|
$
|
135,758
|
|
|
$
|
130,334
|
|
|
$
|
125,766
|
|
(1)
|
Other is comprised of deferred revenue, sales return allowance, and various other accrued expenses, including amounts owed under our vendor payment program described below.
|
|
April 29, 2017
|
|
January 28, 2017
|
|
April 30, 2016
|
||||||
|
(in thousands)
|
||||||||||
Construction and tenant allowances
|
$
|
86,803
|
|
|
$
|
87,886
|
|
|
$
|
87,002
|
|
Deferred rent
|
38,176
|
|
|
37,779
|
|
|
37,931
|
|
|||
Other
|
17,540
|
|
|
15,514
|
|
|
17,760
|
|
|||
|
$
|
142,519
|
|
|
$
|
141,179
|
|
|
$
|
142,693
|
|
|
Three months ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
|
(in thousands)
|
||||||
Contingent consideration liability - beginning of period
|
$
|
33,204
|
|
|
$
|
—
|
|
Preliminary purchase price
|
—
|
|
|
56,000
|
|
||
Accretion in value
|
1,084
|
|
|
1,445
|
|
||
Contingent consideration liability - end of period
|
$
|
34,288
|
|
|
$
|
57,445
|
|
|
DSW segment
|
|
ABG segment
|
|
Other
|
|
Total
|
||||||
|
(in thousands)
|
||||||||||||
Three months ended April 29, 2017
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
624,787
|
|
|
43,988
|
|
|
22,327
|
|
|
$
|
691,102
|
|
Gross profit
|
$
|
184,650
|
|
|
10,498
|
|
|
81
|
|
|
$
|
195,229
|
|
Three months ended April 30, 2016
|
|
|
|
|
|
|
|
||||||
Net sales
|
$
|
623,032
|
|
|
43,139
|
|
|
15,096
|
|
|
$
|
681,267
|
|
Gross profit
|
$
|
191,419
|
|
|
10,813
|
|
|
2,125
|
|
|
$
|
204,357
|
|
•
|
our success in growing our store base and digital demand;
|
•
|
our ability to protect our reputation;
|
•
|
maintaining strong relationships with our vendors;
|
•
|
our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations;
|
•
|
risks related to the loss or disruption of our distribution and/or fulfillment operations;
|
•
|
continuation of agreements with and our reliance on the financial condition of our affiliated business and international partners;
|
•
|
our ability to successfully integrate Ebuys, Inc.;
|
•
|
fluctuation of our comparable sales and quarterly financial performance;
|
•
|
risks related to the loss or disruption of our information systems and data;
|
•
|
our ability to prevent breaches of our information security and the compromise of sensitive and confidential 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 and marketing 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 leases of our properties;
|
•
|
risks related to prior and current acquisitions;
|
•
|
risks related to future legislation, regulatory reform or policy changes;
|
•
|
foreign currency exchange risk; and
|
•
|
risks related to holdings of cash and investments and access to liquidity.
|
(1)
|
A store or affiliated shoe department is considered comparable when in operation for at least 14 months at the beginning of the fiscal year. Stores or affiliated business departments, as the case may be, are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter they are closed. Comparable sales includes sales from dsw.com and currently excludes sales from Gordmans and Ebuys. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.
|
|
Three months ended
|
||
|
April 29, 2017
|
|
April 30, 2016
|
Net sales
|
100.0%
|
|
100.0%
|
Cost of sales
|
(71.8)
|
|
(70.0)
|
Gross profit
|
28.2
|
|
30.0
|
Operating expenses
|
(22.2)
|
|
(22.6)
|
Change in fair value of contingent consideration liability
|
(0.1)
|
|
(0.2)
|
Operating profit
|
5.9
|
|
7.2
|
Interest income, net
|
0.1
|
|
0.1
|
Non-operating income (expense)
|
(0.2)
|
|
0.0
|
Income before income taxes and loss from Town Shoes
|
5.8
|
|
7.3
|
Income tax provision
|
(2.3)
|
|
(2.8)
|
Loss from Town Shoes
|
(0.2)
|
|
(0.0)
|
Net income
|
3.3%
|
|
4.5%
|
|
Three months ended
|
||
|
April 29, 2017
|
||
|
(in thousands)
|
||
Net sales for the same period last year
|
$
|
681,267
|
|
Decrease in comparable sales
|
(19,462
|
)
|
|
Net increase from non-comparable store sales, Gordmans, Ebuys and other changes
|
29,297
|
|
|
Total net sales
|
$
|
691,102
|
|
|
Three months ended
|
||||||
|
April 29, 2017
|
|
April 30, 2016
|
||||
|
(in thousands)
|
||||||
DSW segment
|
$
|
624,787
|
|
|
$
|
623,032
|
|
ABG segment
|
43,988
|
|
|
43,139
|
|
||
Other
(1)
|
22,327
|
|
|
15,096
|
|
||
Total net sales
|
$
|
691,102
|
|
|
$
|
681,267
|
|
(1)
|
Other represents net sales for Ebuys.
|
|
Three months ended
|
||||
|
April 29, 2017
|
|
April 30, 2016
|
||
DSW segment merchandise margin
|
42.8
|
%
|
|
43.9
|
%
|
Store occupancy expenses
|
(10.9
|
)
|
|
(10.9
|
)
|
Distribution and fulfillment expenses
|
(2.3
|
)
|
|
(2.3
|
)
|
DSW segment gross profit
|
29.6
|
%
|
|
30.7
|
%
|
ABG segment merchandise margin
|
45.7
|
%
|
|
46.6
|
%
|
Occupancy expenses
|
(20.7
|
)
|
|
(20.4
|
)
|
Distribution and fulfillment expenses
|
(1.1
|
)
|
|
(1.1
|
)
|
ABG segment gross profit
|
23.9
|
%
|
|
25.1
|
%
|
Other segment merchandise margin - Ebuys
|
30.2
|
%
|
|
34.6
|
%
|
Marketplace fees
|
(12.4
|
)
|
|
(11.0
|
)
|
Fulfillment expenses
|
(17.4
|
)
|
|
(9.5
|
)
|
Other segment gross profit - Ebuys
|
0.4
|
%
|
|
14.1
|
%
|
Total Company gross profit
|
28.2
|
%
|
|
30.0
|
%
|
Item 2.
|
Unregistered Sales of Equity Securities and Use of Proceeds
|
(1)
|
The total number of shares repurchased relates to shares withheld in connection with tax payments due upon vesting of employee restricted stock awards.
|
Item 6.
|
Exhibits
|
Date:
|
May 25, 2017
|
|
By:
|
/s/ Jared Poff
|
|
|
|
|
Jared Poff
|
|
|
|
|
Senior Vice President and Chief Financial Officer
|
|
|
|
|
(Principal Financial and Accounting Officer and duly authorized officer)
|
Exhibit No.
|
|
Description
|
3.1
|
|
Amended and Restated Articles of Incorporation of DSW Inc. dated November 1, 2013. Incorporated by reference to Exhibit 3.1 to DSW's Form 8-K (file no. 001-32545) filed November 4, 2013.
|
3.2
|
|
Amended and Restated Code of Regulations of the registrant. Incorporated by reference to Exhibit 3.2 to Form 10-K (file no. 001-32545) filed April 13, 2006.
|
4.1
|
|
Specimen Class A Common Shares Certificate. Incorporated by reference to the same exhibit to Form 10-K (file no. 001-32545) filed April 13, 2006.
|
10.1*
|
|
Employment agreement, dated May 1, 2017, between Michele Love and DSW Inc.
|
31.1*
|
|
Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer.
|
31.2*
|
|
Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Officer.
|
32.1*
|
|
Section 1350 Certification - Principal Executive Officer.
|
32.2*
|
|
Section 1350 Certification - Principal Financial Officer.
|
101*
|
|
XBRL Instance Documents
|
[b]
|
Executive may exercise any outstanding Awards that are vested on the effective date of Involuntary Termination Without Cause.
|
[c]
|
With respect to Awards that would vest solely upon the passage of time and such vesting date would occur within the 12 month period following the effective date of Involuntary Termination Without Cause, such Award shall vest and, if applicable, be awarded to Executive as of the date of termination Without Cause.
|
[d]
|
With respect to Awards that would vest upon the satisfaction of a specified requirement, or upon satisfaction of the passage of time and satisfaction of a specified requirement; in the event that all such requirements are satisfied prior to the expiration of the 12 month period following the date of
|
Date:
|
May 1, 2017
|
By:
|
/s/ Michele Love
|
|
|
|
Michele Love
|
|
|
|
Executive
|
|
|
|
|
|
|
By:
|
/s/ Thomas Jessep
|
|
|
|
Thomas Jessep
|
|
|
|
SVP Human Resources
|
May 25, 2017
|
By:
|
/s/ Roger Rawlins
|
|
|
Roger Rawlins
|
|
|
Chief Executive Officer
|
May 25, 2017
|
By:
|
/s/ Jared Poff
|
|
|
Jared Poff
|
|
|
Senior Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
May 25, 2017
|
By:
|
/s/ Roger Rawlins
|
|
|
Roger Rawlins
|
|
|
Chief Executive Officer
|
*
|
This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.
|
(1)
|
The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
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(2)
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The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
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May 25, 2017
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By:
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/s/ Jared Poff
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Jared Poff
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Senior Vice President and Chief Financial Officer
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*
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This Certification is being furnished as required by Rule 13a-14(b) under the Securities Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.
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