Q3 2012 Earnings Call Transcript

Transcript Call Date 11/20/2012

Operator: Good morning and welcome to the DSW Inc. Third Quarter Earnings Conference Call. All participants will be in listen-only mode. Please note this event is being recorded.

I would now like to turn the conference over to Christina Cheng, Director of IR. Please go ahead ma'am.

Christina Cheng - Director, IR: Good morning and welcome to DSW's third quarter conference call. Please note that various remarks made about the future expectations, plans and prospects of the Company constitute forward-looking statements. 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 DSW's public filings with the SEC.

Joining us today are Mike MacDonald, President and CEO; Debbie Ferree, our Vice Chairman and Chief Merchandising Officer and Doug Probst, our Chief Financial Officer. Doug will start with prepared remarks with a short discussion of our reported results and then highlight the details of DSW's adjusted results for the third quarter. He will also provide some color on our outlook for the balance of the year. Mike will then elaborate on our ongoing strategic initiatives. After our prepared remarks we will open the call for Q&A.

But before we begin, we want to take a moment to express our sympathy and support to all those affected by Hurricane Sandy. Our hearts go out to the millions who have lost family, friends and property during the past few weeks. We are grateful for our associates in the North East and Mid-Atlantic regions, who have shown remarkable team work in securing our stores and facilities during the storm and are raising fund to support the Red Cross.

With that I turn the call over to Doug.

Douglas J. Probst - EVP and CFO: Thanks, Christina and good morning, everyone. Our reported net income for the third quarter ended October 27 was $50.1 million, which includes the net benefit of $3.5 million due from a favorable resolution litigation spending from the credit card data breach in 2005. Including the net benefit our reported earnings were $1.10 per share compared to last year's $0.75 per share. Excluding the one-time benefit and charges from the merger of RVI, our adjusted EPS was $1.02 per share compared to last year's $0.88 per share an increase of 15.9%.

You can find these items detailed in the consolidated statements of operations and reconciliation of adjusted results attached to our press release.

For the balance of our comments we'll focus on adjusted results for the third quarter which reflect the performance of our DSW operations. Sales to the third quarter increased by 11.7% to $593 million as comparable sales grew 6.3% on top of the 5.2% comp growth last year.

Comps for our DSW segment which included were up 6.6% all four of our store comp drivers, traffic, conversion, averaging of retail and units per transaction had increases for the quarter.

We recently renamed our former Leased Business Division to the Affiliated Business Group. We believe this better reflects the broad range of capabilities and formats we can offer to our potential partners. Comps for our Affiliated Business Group increased by 1.8% after growing by 4.9% last year, representing the 12th straight quarter of positive comp growth.

Read our Earnings Call Transcript disclaimer.
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