DSW 2009 Annual Report Download - page 28

(8) Comparable DSW stores and comparable leased departments are those units that have been in operation for at
least 14 months at the beginning of the fiscal year. Stores or leased departments, as the case may be, are added
to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter
that they are closed.
(9) DSW total square footage represents the total amount of square footage for DSW stores only; it does not
reflect square footage of leased departments.
(10) Average gross square footage represents the monthly average of square feet for DSW stores only for each
period presented and consequently reflects the effect of opening stores in different months throughout the
period.
(11) Net sales per average gross square foot is the result of dividing net sales for DSW stores only for the period
presented, by average gross square footage calculated as described in note 10 above.
ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.
This management’s discussion and analysis of financial condition and results of operations contains forward-
looking statements that involve risks and uncertainties. Please see “Cautionary Statement” on page 1 for a
discussion of the uncertainties, risks and assumptions associated with these statements. You should read the
following discussion in conjunction with our historical consolidated financial statements and the notes thereto
appearing elsewhere in this Annual Report on Form 10-K. The results of operations for the periods reflected herein
are not necessarily indicative of results that may be expected for future periods, and our actual results may differ
materially from those discussed in the forward-looking statements as a result of various factors, including but not
limited to those listed under “Risk Factors” and included elsewhere in this Annual Report on Form 10-K.
Overview
Key Financial Measures
In evaluating our results of operations, we refer to a number of key financial and non-financial measures
relating to the performance of our business. Among our key financial measures are net sales, operating profit and net
income. Other measures that we use in evaluating our performance include number of DSW stores and leased
departments, net sales per average gross square foot for DSW stores and change in comparable stores sales.
The following describes certain line items set forth in our consolidated statement of income:
Net Sales. We record net sales exclusive of sales tax and net of returns. For comparison purposes, we
define stores and leased departments as comparable or non-comparable. A store’s or leased department’s sales
are included in comparable store sales if the store or leased department has been in operation at least 14 months
at the beginning of the fiscal year. Stores and leased departments are excluded from the comparison in the
quarter that they close. Stores that are remodeled or relocated are excluded from the comparison if there is a
material change in the size of the store or the location.
Cost of Sales. Our cost of sales includes the cost of merchandise, which includes markdowns and
shrinkage. Cost of sales also includes distribution and warehousing expenses (including depreciation) and
store occupancy expenses (excluding depreciation and including impairments).
Operating Expenses. Operating expenses include expenses related to store management and store
payroll costs, advertising, leased department operations, store depreciation and amortization, new store
advertising and other new store costs (which are expensed as incurred) and corporate expenses. Corporate
expenses include expenses related to buying, information technology, depreciation expense for corporate cost
centers, marketing, legal, finance, outside professional services, customer service center expenses, allocable
costs to and from Retail Ventures, payroll and benefits for associates and payroll taxes. Corporate level
expenses are primarily attributable to operations at our corporate offices in Columbus, Ohio.
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