DSW 2013 Annual Report Download - page 51

Table of Contents
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Business Operations- DSW and its wholly owned subsidiaries are herein referred to collectively as DSW or the “Company”. DSW’s Class A Common
Shares are listed on the New York Stock Exchange under the ticker symbol “DSW”. DSW Class B Common Shares are not listed on a stock exchange but
are exchangeable for Class A Common Shares at the election of the shareholder.
DSW has two reportable segments: the DSW segment, which includes the DSW stores and dsw.com sales channels, and the Affiliated Business Group
segment. DSW offers a wide assortment of brand name dress, casual and athletic footwear and accessories for women and men. As of February 1, 2014,
DSW operated a total of 394 stores located in 42 states, the District of Columbia and Puerto Rico. During fiscal 2013, 2012 and 2011, DSW opened 30, 39
and 17 new DSW stores, respectively, and during fiscal 2012 and 2011, closed 1 and 2 DSW stores, respectively. In fiscal 2013, DSW conducted an
unsuccessful test of an expanded luxury assortment online, and DSW's future approach to luxury will depend on DSW's ability to buy products that will
allow DSW to at least break even.
DSW separates its merchandise into four primary categories: women's footwear; men's footwear; athletic footwear; and accessories and other. The following
table sets forth the approximate percentage of DSW segment sales attributable to each merchandise category for the periods presented:
Fiscal years ended
Category
February 1, 2014
February 2, 2013
January 28, 2012
Women's
62%
65%
66%
Men's
17%
16%
15%
Athletic
12%
12%
12%
Accessories and Other
9%
7%
7%
DSW also operates shoe departments for three retailers through its Affiliated Business Group segment. As of February 1, 2014, DSW supplied merchandise to
262 Stein Mart stores, 93 Gordmans stores and one Frugal Fannie’s store. During fiscal 2013, 2012 and 2011, DSW added 18, 19 and 20 new shoe
departments, respectively, and ceased operations in 6, 11 and 36 shoe departments, respectively. The increase in shoe department closures in fiscal 2011 was
due to the bankruptcy and subsequent closure of Filene's Basement and Syms stores in December 2011. In October 2013, DSW began supplying merchandise
to Stein Mart's e-commerce website. DSW owns the merchandise and the fixtures, records sales of merchandise, net of returns through period end and
excluding sales tax, and provides management oversight. The retailers provide the sales associates and retail space. DSW pays a percentage of net sales as
rent, which is included in cost of sales as occupancy expense. Affiliated Business Group segment sales represented 5.8%, 5.9% and 7.5% of total net sales
for fiscal 2013, 2012 and 2011, respectively.
In June 2013, DSW announced the completion of a joint agreement with Loehmann's Operating Company ("Loehmann's") to operate as the sole supplier for the
Loehmann's shoe departments in its stores located throughout the United States and e-commerce site, loehmanns.com. In December 2013, Loehmann's
announced that it had filed for Chapter 11 bankruptcy protection and began liquidating their inventory, including all DSW merchandise on hand, in January
2014. As of February 1, 2014, there were 9 Loehmann's locations selling DSW merchandise.
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Fiscal Year- DSW’s fiscal year ends on the Saturday nearest to January 31. The periods presented in these financial statements are the fiscal years ended
February 1, 2014 ("fiscal 2013"), February 2, 2013 ("fiscal 2012") and January 28, 2012 ("fiscal 2011"). Fiscal 2012 consisted of 53 weeks while fiscal
2013 and 2011 each consisted of 52 weeks. Unless otherwise stated, references to years in this report relate to fiscal years rather than calendar years.
Use of Estimates- The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America
("GAAP") requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent
assets and liabilities at the date of the financial statements and reported amounts of revenues and expenses during the reporting period. Significant estimates are
required as a part of inventory valuation, depreciation, amortization, customer loyalty program reserve, recoverability of long-lived assets and intangible
assets, litigation reserves, exit and disposal obligations and establishing reserves for self-insurance. Although these estimates
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Source: DSW Inc., 10-K, March 27, 2014 Powered by Morningstar® Document Research℠
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