COLUMBUS, Ohio (AP) — Shares of DSW Inc. fell sharply in premarket trading Wednesday after the shoe retailer reported disappointing first-quarter results and slashed its earnings outlook for the year.
CEO Mike MacDonald blamed the "challenging quarter" on bad weather and an increase in promotions and price-cutting by retailers.
Net income rose, thanks to cost-cutting, to $38.6 million, or 42 cents per share, in the quarter that ended May 3. That compares with $34.5 million, or 38 cents per share, in the same quarter a year ago. Revenue slipped to $599 million from $601.4 million. Analysts expected earnings of 48 cents per share and revenue of $623.2 million, according to polling by FactSet.
The company now expects adjusted full-year earnings between $1.45 and $1.60 per share, down from its previous forecast in March of earnings between $1.80 and $1.95 per share. Analysts expected earnings of $1.90 per share for 2014.
DSW now expects revenue to grow "in the low single digit range." In March, it said it expected full-year revenue to grow between 6 percent and 7 percent from 2013. Analysts expected 2014 revenue to rise 5.7 percent from the year before to $2.5 billion.
Columbus, Ohio-based DSW runs 410 stores around the country that sell footwear, bags and other accessories. In May, it bought a 49.2 percent stake in Canadian shoe seller Town Shoes for $68.7 million to expand into the country. MacDonald said the partnership could boost the company. "I am confident that we are taking the right steps to grow sales and bottom line in the long term," he said in a statement.
DSW shares fell 18.2 percent to $26.60 in trading before the market opened Wednesday. If those losses hold after the market opens, it would be a nearly two-year low for the stock.