DSW 2008 Annual Report Download - page 10

400
d
omest
i
can
df
ore
i
gn ven
d
ors, pr
i
mar
il
y
i
n-season
f
ootwear
f
oun
di
n spec
i
a
l
ty an
dd
epartment stores an
d
branded make-ups (shoes made exclusivel
y
for a retailer), with selection at each store
g
eared toward the particular
demographics of the location. A typical DSW store carries approximately 27,000 pairs of shoes in over 2,000 style
s
c
ompare
d
to a s
i
gn
ifi
cant
l
y sma
ll
er pro
d
uct o
ff
er
i
ng at typ
i
ca
ld
epartment stores. We a
l
so o
ff
er a comp
l
ementar
y
s
election of handba
g
s, hosier
y
and other accessories which appeal to our brand- and fashion-conscious customers.
Our Distinctive and Convenient Store Layou
t
We prov
id
e our customers w
i
t
h
t
h
e
hi
g
h
est
l
eve
l
o
f
conven
i
ence
b
ase
d
on our
b
e
li
e
f
t
h
at customers s
h
ou
ld be
e
mpowere
d
to contro
l
an
d
persona
li
ze t
h
e
i
rs
h
opp
i
ng exper
i
ences. Our merc
h
an
di
se
i
s
di
sp
l
aye
d
on t
h
ese
lli
ng
fl
oor
w
i
t
h
se
lf
-serv
i
ce
fi
xtures to ena
bl
e customers to v
i
ew an
d
touc
h
t
h
e merc
h
an
di
se. Our stores are
l
a
id
out
i
na
l
o
gi
ca
l
m
anner that groups together similar styles such as dress, casual, seasonal and athletic merchandise. We believe this
s
elf-service aspect provides our customers with maximum convenience as they are able to browse and try on the
m
erc
h
an
di
se w
i
t
h
out
f
ee
li
n
g
rus
h
e
d
or pressure
di
nto ma
ki
n
g
a
d
ec
i
s
i
on too qu
i
c
kly
.
Th
eVa
l
ue Pro
p
osition O
ff
ere
d
to Our Customers
T
hrou
g
h our bu
y
in
g
or
g
anization, we are able to provide our customers with hi
g
h qualit
y
, in-season fashions a
t
p
r
i
ces t
h
at we
b
e
li
eve are compet
i
t
i
ve w
i
t
h
t
h
e typ
i
ca
l
sa
l
epr
i
ce
f
oun
d
at spec
i
a
l
ty reta
il
ers an
dd
epartment stores
.
W
e
g
enera
lly
emp
l
o
y
a cons
i
stent pr
i
c
i
n
g
strate
gy
t
h
at t
y
p
i
ca
lly
prov
id
es our customers w
i
t
h
t
h
e same pr
i
ce on our
m
erchandise from the da
y
it is received until it
g
oes into our planned clearance rotation. Our pricin
g
strate
gy
differentiates us from our competitors who usually price and promote merchandise at discounts available only for
li
m
i
te
d
t
i
me per
i
o
d
s. We
fi
n
d
t
h
at customers apprec
i
ate
h
av
i
n
g
t
h
e power to s
h
op
f
or va
l
ue w
h
en
i
t
i
s mos
t
c
onven
i
ent
f
or t
h
em, rat
h
er t
h
an wa
i
t
i
n
gf
or a
d
epartment store or spec
i
a
l
t
y
reta
il
er to
h
ave a sa
l
e event.
I
nor
d
er to prov
id
ea
ddi
t
i
ona
l
va
l
ue to our regu
l
ar customers, we ma
i
nta
i
n a customer
l
oya
l
ty program
f
o
r
D
SW stores and dsw.com in which pro
g
ram members earn reward certificates that result in discounts on future
p
urchases. This pro
g
ram offers additional savin
g
s to frequent shoppers and encoura
g
es repeat sales. Upon reachin
g
th
e target-earne
d
t
h
res
h
o
ld
, our mem
b
ers rece
i
ve cert
ifi
cates
f
or t
h
ese
di
scounts w
hi
c
h
must
b
ere
d
eeme
d
w
i
t
hi
ns
i
x
m
ont
h
s. We tar
g
et
di
rect mar
k
et
i
n
g
to “DSW Rewar
d
s” mem
b
ers t
h
rou
gh
out t
h
e
y
ear. We c
l
ass
ify
t
h
ese mem
b
er
s
by f
requenc
y
an
d
spen
d
an
d
use
di
rect ma
il
an
d
ema
il
commun
i
cat
i
on to st
i
mu
l
ate
f
urt
h
er sa
l
es an
d
tra
ffi
c. As o
f
January 31, 2009, over 10.4 million members enrolled in the “DSW Rewards” loyalty program have made at least
one purchase over the course of the last two fiscal
y
ears, up from approximatel
y
8.
6
million members as o
f
Februar
y
2, 2008. In fiscal 2008, approximatel
y
7
6
% of DSW store and dsw.com net sales were
g
enerated b
y
s
hoppers in the lo
y
alt
y
pro
g
ram, up from approximatel
y
69% of DSW store net sales in fiscal 2007.
D
emonstrated Ability to Consistently Deliver Growth
Our operat
i
ng mo
d
e
li
s
f
ocuse
d
on se
l
ect
i
on, conven
i
ence an
d
va
l
ue. We
b
e
li
eve t
h
at t
h
e growt
h
we
h
av
e
ac
hi
eve
di
nt
h
e past
i
s attr
ib
uta
bl
e to our operat
i
n
g
mo
d
e
l
an
d
mana
g
ement’s
f
ocus on store-
l
eve
l
pro
fi
ta
bili
t
y
an
d
e
conomic pa
y
back. Over the five fiscal
y
ears ended Januar
y
31, 2009, our net sales have
g
rown at a compound
annual growth rate of 13.1%. We intend to continue our focus on net sales, operating profit and operating cash flow
s
as we pursue our
g
rowt
h
strate
gy.
We
b
e
li
eve cas
h
generate
df
rom DSW operat
i
ons, toget
h
er w
i
t
h
our current
l
eve
l
so
f
cas
h
an
di
nvestments o
f
$
157.5 million, should be sufficient to maintain our ongoing operations, support seasonal working capita
l
r
equ
i
rements an
df
un
d
cap
i
ta
l
expen
di
tures re
l
ate
d
to pro
j
ecte
db
us
i
ness
g
rowt
h
.Ina
ddi
t
i
on to our cas
h
an
d
i
nvestments, DSW has no long-term debt, however, DSW does have significant long-term obligations under its
leases.
Growth Strate
g
y
Our
g
rowt
h
strate
gy i
s to cont
i
nue to stren
g
t
h
en our pos
i
t
i
on as a
l
ea
di
n
gb
etter-
b
ran
d
e
df
ootwear reta
il
er
by
p
ursu
i
n
g
t
h
e
f
o
ll
ow
i
n
g
t
h
ree pr
i
mar
y
strate
gi
es
f
or
g
rowt
hi
nsa
l
es an
d
pro
fi
ta
bili
t
y
: expan
di
n
g
our store
b
ase an
d
dsw.com, driving sales through enhanced merchandising and investment in our infrastructure.
6