While you don't have to watch out for trees in this jungle, you may want to watch your back. DSW (short for Designer Shoe Warehouse) sells discounted brand-name footwear for style-conscious men, women, and kids through some 430 stores in 40-plus US states and Puerto Rico, as well as online at dsw.com. DSW stores average 21,500 square feet and stock about 22,000 pair of dress, casual, and athletic shoes, as well as a complementary array of handbags, hosiery, and accessories. The company also operates about 370 leased departments inside stores operated by other retailers. The discount footwear giant is dipping its toe in the luxury shoe market. DSW was founded in 1969.
Fast-growing DSW operates shoe stores in 42 US states, the District of Columbia, and Puerto Rico. Its two largest markets are California and Texas, home to nearly 20% of its stores.
In addition to its historically-fast-growing retail operation, DSW operates leased departments inside more than 260 stores operated by Stein Mart, 90-plus Gordmans stores, and one Frugal Fannie's Fashion Warehouse store. Leased departments accounted for 6% of DSW's fiscal 2014 (ended January) sales.
Sales and Marketing
DSW's marketing expenses totaled $59.9 million, $56.2 million, $55.9 million, in fiscal years 2015, 2014, and 2013, respectively. The company sells through its stores and online website.
DSW's fiscal 2015 (ended January) revenue was $2.4 billion. That was an increase of 5% compared to the previous fiscal period. The company's net income was $153.2 million in fiscal 2015. That was an increase of 1% compared to fiscal 2014.
The historically fast-growing company has returned to a more aggressive growth strategy after a hiatus during the deep recession and its aftermath. (DSW was a relatively-strong performer throughout the recession, which left many other retailers struggling with falling sales.) In fiscal 2014, the chain opened 30 new stores, including its first in Canada, with an ultimate goal of 450 to 500 stores. The company entered the Canadian market in spring 2014 with the purchase of a minority stake in that country's largest footwear retailer, Town Shoes, for about $62 million. Under the terms of the deal, DSW has the right to purchase the rest of Town Shoes after four years.
The discount shoe retailer is also testing the luxury waters, with a test (characterized by the company as "unsuccessful") of an expaned luxury assortment online. DSW's future approach to luxury sales will depend on its ability to buy products that will allow it to at least break even.
To further grow its online business the shoe seller will offer styles, sizes, and widths not available in local stores. DSW is also looking for new partner retailers for its leased department business. The company targets fashion-focused men and women from wide-ranging socioeconomic and demographic backgrounds. It looks to capture these shoppers by offering a broad selection of in-season styles at prices that rival the sales deals found in department stores.
Mergers and Acquisitions
In May 2014, DSW entered Canada with the purchase of a 44% stake in that country's largest footwear retailer, Town Shoes, for about $62 million. Under the terms of the deal, DSW has the right to purchase the rest of Town Shoes after four years. Town Shoes operates 182 locations across Canada and reported sales of C$291 million. DSW's initial stake provides 50% voting control and board representation.