Earnings Call Excerpt
DSW, Inc. (DSW)
Q3 2007 Earnings Call
December 5, 2007, 8:00 am ET
Executives
Leslie Neville – Director, Investor Relations
Debbie Ferree – Vice Chairman and Chief Merchandising Officer
Peter Horvath – President
Doug Probst – CFO
Analysts
Christopher –Susquehanna International Group
David Mann – Johnson Rice
Jeff Black – Lehman Brothers
Roxanne Meyer – CIBC
Heather Boksen – Sidoti & Company
John Zolidis – Buckingham Research
R.J. Hottovy – Next Generation Equity Research
Jay [Inaudible] – Morgan Stanley
Brad Leonard – B&L Capital
Presentation
Operator
Welcome to the third quarter 2007 DSW, Inc. earnings conference call. [Operator Instructions] I would now like to turn the call over to Ms. Leslie Neville, Director, Investor Relations.
Leslie Neville
Good morning, with me today in Columbus today are Debbie Ferree our Vice Chairman and Chief Merchandising Officer, Peter Horvath our President and Doug Probst our CFO.
Earlier today we issued a press release detailing the results of operations for the quarter ended November 3, 2007. Before we proceed please note that various remarks we make about the future expectations, plans and prospects of the company constitute forward looking statements. The actual results may differ materially from those indicated by these forward looking statements as a result of various important factors, including those listed in today’s press release and in our public filings with the SEC.
With that I will turn it over to Doug.
Doug Probst
Good morning everyone. Today I will provide detail on some of the significant factors that impacted our financial performance in the third quarter of fiscal 2007 and review our targets for the remainder of the year. As previously released, net sales for the quarter increased 11% to $367 million. Same store sales decreased 3% for the comparable thirteen week period versus an increase of 2.6% last year. Same store sales for the year to date period decreased 0.5% compared to an increase of 3% last year. Our average unit retails increased due mainly to our clean inventory position entering the quarter. However, like many retailers we experienced a significant decrease of traffic, particularly in the month of September.
Gross profit rate for the quarter decreased 70 basis point to 29.0%, however, as expected the merchandise margin rate, which is margin excluding occupancy and warehouse expenses, increased 30 basis points. The decrease in gross profit was due equally to increased occupancy expense associated with the 102 additional Stein Mart stores added in January and the de leverage of DSW occupancy resulting from the negative comp store sales in the quarter.
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