PSS/BWS/DSW: BWS Read Through

 

BWS preannounced Q1 due to weak comps at Famous (-2-4% from its prior a outlook for +LSD). We’re not worried about it as it relates to other names in the space. Here’s why.

  • A miss is a miss – and we won’t ignore that, but not all percentages are created equal. BWS’ results do not include the critical sales weeks preceding Easter. In the Family footwear channel, Easter is one of the most important selling periods of the year. The -7% decline reported quarter-to-date captures only the first nine-weeks through April 2.
  • We know that March came in soft and we’ve sized the Easter shift (see our 4/15 post “Athletic Footwear & Apparel – The Egg Effect”), which accounts for a +12-16% shift in sales growth from March into April this year.
  • With at least 40% of Q1 sales coming in April this year, BWS’ guidance of down -2%-4% implies April comp expectations of flat to up +6%.
  • If we assume the low-end of the range accounting for the shift in holiday sales and normalize it over the March-April months comps should come in up approximately +2-3%. There’s clearly a disconnect here between BWS’ performance and what we’re seeing across the rest of the channel from peers.

According to industry trends through March, family channel sales are down -4.2% quarter-to-date, which suggests other retailers reporting into the monthly NPD data (i.e. DSW and SCVL) are outperforming. In addition, as we’ve noted since year-end results came out, we expect the comp diversion that has been present between PSS and the rest of its peers to continue to converge again here over the next 2-3 quarters – turning a headwind into a tailwind.

 

PSS/BWS/DSW: BWS Read Through   - MonthlyFW SalesByChanl 4 11

 

PSS/BWS/DSW: BWS Read Through   - FamFWComp Chart 4 11

 

Casey Flavin

Director


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