DSW 2009 Annual Report Download - page 34

The following table summarizes our comparable store sales change by segment and in total:
Fiscal Year Ended
January 30, 2010
DSW .......................................................... 4.0%
Leased departments................................................ (3.6)%
Total DSW Inc. .................................................. 3.2%
The increase in comparable store sales was primarily a result of an increase in traffic and average unit retail.
DSW segment comparable sales increased in women’s footwear by 4.9%, athletic footwear by 1.8% and accessories
by 12.6% and decreased in men’s footwear by 3.8%.
Gross Profit. Gross profit is defined as net sales less cost of sales. Gross profit increased as a percentage of
net sales from 25.9% in fiscal 2008 to 29.2% in fiscal 2009. By segment and in total, gross profit as a percentage of
net sales was:
January 30,
2010
January 31,
2009
For the Fiscal Years Ended
DSW .................................................... 30.2% 27.1%
Leased departments ......................................... 19.1% 16.6%
Total DSW Inc. ............................................ 29.2% 25.9%
The increase in DSW segment gross profit was primarily a result of an increase of 190 basis points in
merchandise margin and a decrease of 120 basis points in store occupancy expense. DSW segment merchandise
margin, gross profit excluding warehousing and store occupancy, for fiscal 2009 increased as a percentage of net
sales to 44.7% from 42.8% for fiscal 2008 as the result of a decrease in markdown activity. Store occupancy expense
for the DSW segment as a percentage of net sales decreased to 12.9% for fiscal 2009 from 14.1% for fiscal 2008 as a
result of increased average store sales, a reduction in store impairments and disposals of property and equipment
and rent concessions from landlords.
As a percentage of net sales, gross profit for the leased departments increased to 19.1% for fiscal 2009 from
16.6% for fiscal 2008 due to decreased markdowns. The decrease in markdowns was a result of continued
enhancements to the clearance markdown process and aligning our inventory position to sales demand.
Operating Expenses. Operating expenses as a percentage of net sales were 23.4% and 23.0% for fiscal 2009
and 2008, respectively. Improved operating results increased bonus expense as a percentage of net sales by 110 basis
points. The increase in bonus expense was partially offset by 70 basis points of leverage in other operating expenses
as a percentage of net sales. Further, decreases in store, new store and overhead expenses as a percentage of net sales
were offset by a 60 basis point increase in marketing expense and a 40 basis point increase in depreciation expense.
Store expenses decreased as a percentage of net sales by 60 basis points. New store expenses as a percentage of net
sales decreased by 30 basis points due to DSW opening 32 fewer stores in fiscal 2009 compared to fiscal 2008.
Overhead expenses, excluding bonus expense, decreased as a percentage of net sales by 80 basis points.
Operating Profit. Operating profit increased as a percentage of net sales to 5.8% for fiscal 2009 from 2.9%
for fiscal 2008. As a percentage of net sales, this increase was primarily the result of an increase in gross profit
partially offset by an increase in operating expenses.
Interest Income, Net. Interest income, net of interest expense, was 0.1% and 0.2%, respectively, as a
percentage of net sales for fiscal 2009 and 2008. While cash and short-term investments increased as compared to
fiscal 2008, the increase was offset by a decrease in interest rates.
Non-operating Expense, Net. Non-operating expense, net for fiscal 2009 represents other-than-temporary
impairments on our auction rate securities net of realized gains related to the sale of preferred shares, which were
the underlying assets of two auction rate securities. Non-operating expense, net for fiscal 2008 represents
other-than-temporary impairments of our auction rate securities.
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