PSS Collective Brands, Inc.

Furthering its store expansion plans, footwear retailer DSW Inc. (DSW) recently announced the opening of two new stores – one at Potomac Town Center in Woodbridge, Virginia and the other at Villaggio Shopping Center in Fresno, California. The new stores will offer a wide range of designer footwear and accessories to woo customers.

The company’s store expansion strategy is expected to be accretive to its top-line growth, as DSW offers a wide range of designer shoes at discounted prices for men and women. DSW’s wedding shop collection provides exclusive assortments for bridal parties and occasions.

With an objective of attracting customers, DSW runs a free, award-winning loyalty program ‘DSW Rewards,’ which issues certificates to the customers for future purchases at DSW. Moreover, customers receive member-only offers through this loyalty program.

DSW, as a policy, prefers to open new stores in the higher volume periods of the first and third quarter. However, against this long-standing strategy, the company opened two larger-than-average downtown stores during the second quarter of fiscal 2012. Additionally, the company relocated two stores in the second quarter. This brings the company’s total new store activity to 12 new stores and four relocations for the first six months of fiscal 2012.

Looking ahead, the company total store opening plans for fiscal 2012 include 39 new stores, with about 26 stores slated to open in the third quarter and one in the fourth quarter. Of the planned new store openings through the rest of the year, the company plans to open 7 stores in new markets, while 20 stores are lined up to open in the existing markets. The company’s store plans for fiscal 2012 cover all major geographic regions in the U.S. with little focus on the northeast.

Columbus, Ohio-based DSW currently operates 344 stores in 41 states and also supplies footwear to 342 leased locations in the United States. The company also runs an e-commerce site www.dsw.com and a mobile website m.dsw.com. The company competes head-to-head with Collective Brands Inc. (PSS) and J. C. Penney Company Inc. (JCP).

Based on better-than-expected second quarter results and rising earnings momentum, offset by higher preopening expenses related to the fiscal 2012 store plans and increased pressure for a better merchandise margin performance, DSW currently has a Zacks #3 Rank, implying a short-term Hold rating.

 
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