DSW 1Q16 Earnings Call Notes

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DSW’s (DSW) CEO Roger Rawlins on Q1 2016 Results

Expense growth has outpaced sales growth

” Over the past several years we have invested heavily in technology, new stores, marketing and support services, while we’ve seen top-line growth from these investments our expense growth has outpaced sales and we haven’t grown our bottom-line. ”

We are still happy with the results we’re getting with new stores

“We are viewing 2017 to be in the net 15 to 20 doors in that range. We are still working on a thought on what it looks like beyond 2017 as it relates to some of the new stores. We have actually been very happy with the results we are getting. We are achieving the ROI targets we had set for the doors we opened in 2015 and obviously so far in 2016.”

We still do believe in new stores

“So we still believe in new stores, I mean I think they create an incredible place for our customer to touch and feel the product, they make our digital platform more competitive and ultimately they create brand awareness. I think we have opportunities to leverage them perhaps differently than we do today to create different and unique experiences”

Thoughts on general environment

“As far as general softness in retail and our belief what is happening. I will tell you everything we see says that traffic in general in the industry was down roughly in the 6%, 7% range for the quarter our traffic was down about 2%, so I feel like we did a lot to drive consumers into our store. I think obviously there are some folks having some success whether it’s the restaurant industry, the services, autos, those kind of folks which ultimately put pressure on our area, the discretionary spending. ”

Mary E. Meixelsperge

Challenging Q1

Thank you, Roger. Q1 was a challenging quarter for DSW. After a strong early start, sales weakened measurably in late March through the balance of the quarter. Total sales increased 3.9%, for $681 million with the 1.6% comparable sales decline compared to last year’s 5.1% comp increase. Comp for the DSW segment decrease 1.4%.

Deborah L. Ferree