While the focus on DSW is inevitably the company’s merger with holding company RVI, the 4Q same store sales increase of 14.9% should not be ignored. The overall strength was broad based, but below the surface there are some interesting trends to note:
- Strength was pretty consistent across the board. Every single category had comp increases reflecting a continuation of the momentum seen in 3Q.
- No major fluctuations month to month, with consistency throughout the quarter.
- Cost increases remain consistent with prior views coming out of the NY Shoe Show. Expect impact at end of 3Q, early 4Q. 7-12% increase in general with fluctuations between categories. Getting “nice” results from early spring.
- Boots were very strong once again, up 16% in 4Q and 57% on a two year basis. Positive comp increases in December and January for cold-weather product but fashion boots drove the strength. Strength continues into 1Q. Expect that 2011 could actually be another strong boot year based on what was shown at Shoe Show.
- Not expecting much of an uptick in in-season opportunistic closeouts. Company did do some pre-buying of inventory to hold for next year. Management expects this strategy to enable a greater value proposition next year in the rising cost environment.
- Flat clearance levels year over year in 4Q.
- Men’s business up 14% in 4Q.
- DSW will look to hold price on more commodity-like items responsible for bigger volumes overall. Fashion items will see increases where the value is warranted.
Eric Levine
Director
