Shares of DSW Inc. rose more than 20 percent on Tuesday after the company posted strong quarterly earnings that topped analyst expectations.
The footwear retailer reported adjusted fiscal second-quarter earnings of 63 cents a share on revenue of $795.3 million. Analysts polled by Reuters expected a profit of 46 cents a share on sales of $689.4 million. Earnings grew by 65.8 percent from the year-earlier period and revenue increased by 16 percent.
The 10.5 million shares traded was more than six times the daily average. The results sent DSW's stock up 20.2 percent, its best day since its 2005 IPO. That day, the stock rose 26.8 percent.
“As we laid out our strategy for fiscal 2018, we decided to return to main offense, by investing in talent, inventory and marketing,” Chief Executive Roger Rawlins told analysts on the company’s earnings call. He also expressed that the results was the company’s best same-store reading since 2011.
The launch of DSW’s new VIP rewards program this spring accelerated investments in digital markets and drove traffic increases at the company’s warehouses and online.
"Our merchandise strategy and marketing investment fueled strong customer engagement, traffic and transaction activity," he said. "The strong results we've had this spring demonstrate we're successfully activating customers and increasing lifetime value."
DSW also said it would close its 38 Town Shoes stores, which are based in Canada, to focus on its three largest retail banners: Shoe Company, Shoe Warehouse and DSW Designer Shoe Warehouse. The company said the consolidation would be "slightly accretive" this year.
CFO Jared Poff said the company now has two reporting segments, the U.S. retail segment and the Canadian retail segment. “Our priorities this year are to align the DSW Canada banner closer with our U.S. business and strengthen inventory businesses,” he said on the earnings call.
DSW’s stock has been bullish this year, up 27 percent from 2018.