DSW 2011 Annual Report Download - page 7

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Table of Contents
General
DSW is a leading U.S. branded footwear and accessories specialty retailer operating 326 shoe stores in 40 states as of January 28, 2012
, and
dsw.com. We offer a wide assortment of brand name and designer dress, casual and athletic footwear for women and men, as well as accessories
through our DSW stores and dsw.com. We also offer kids' shoes exclusively on dsw.com. In addition, we operate 336 leased departments for
three
other retailers as of January 28, 2012
. Our typical DSW customers are brand, value, quality and style conscious shoppers who have a passion for
fashionable footwear and accessories. Our core focus is to create a distinctive shopping experience that satisfies both the rational and emotional
shopping needs of our DSW customers by offering them a vast, exciting assortment of in-
season styles combined with the convenience and value they
desire. Our DSW stores average approximately 22,000 square feet and carry approximately 24,000
pairs of shoes. We believe this combination of
assortment, convenience and value differentiates us from our competitors and appeals to consumers from a broad range of socioeconomic and
demographic backgrounds.
Please see our consolidated financial statements and the notes thereto in Item 8 of this Annual Report on Form 10-
K for financial information
about our two segments: the DSW segment, which includes DSW stores and dsw.com, and the leased business division segment, as well as
information regarding our merger with our former parent, RVI.
We follow a 52/53-week fiscal year that ends on the Saturday nearest to January 31 in each year. Fiscal 2011 , 2010 and 2009
each consisted of 52
weeks. Fiscal 2012 will consist of 53 weeks.
Corporate History
We were incorporated in the state of Ohio on January 20, 1969 and opened our first DSW store in Dublin, Ohio in 1991. In 1998, a predecessor of
RVI purchased DSW and affiliated shoe businesses from Schottenstein Stores Corporation (“SSC”)
and Nacht Management, Inc. In July 2005, we
completed an initial public offering of our Class A Common Shares, selling approximately 16.2 million shares at an offering price of $19.00 per share.
On May 26, 2011, RVI merged with and into DSW MS LLC (“Merger Sub”),
with Merger Sub surviving the Merger and continuing as a wholly
owned subsidiary of DSW. Upon the closing of the Merger, each outstanding RVI common share was converted into 0.435 DSW Class A Common
Shares, unless the holder properly and timely elected to receive a like amount of DSW Class B Common Shares.
The Merger was accounted for as a reverse merger with RVI as the accounting acquirer and DSW as the accounting acquiree (which is the
surviving entity for legal purposes). As this was a common control transaction under Accounting Standard Codification (“ASC”) 805,
Business
Combinations , the Merger was accounted for as an equity transaction in accordance with ASC 810, Consolidation
as the acquisition of a
noncontrolling interest, and purchase accounting was not applied. As a result, there was no adjustment to RVI's historical cost carrying amounts of
assets and liabilities reflected in the accompanying balance sheet.
Pre-
merger financial information presented in the DSW consolidated financial statements represents consolidated RVI financial information.
References to Retail Ventures or RVI refer to the pre-merger entity. The pre-
merger financial information has been retrospectively recast for the
following matters:
2
ITEM 1.
BUSINESS.
• Share and per share information -
DSW recast all RVI historical share and per share information, including earnings per share, to
reflect the exchange ratio of 0.435 for all periods presented.
• Segment presentation -
DSW maintained its historical segment presentation. DSW sells products through three channels: DSW stores,
dsw.com and the leased business division.
The reportable segments are the DSW segment, which includes the DSW stores and
dsw.com sales channels, and the leased business division segment.
In order to reconcile to the consolidated financial statements, DSW
includes other, which consists of assets, liabilities and expenses that are not attributable to the two reportable segments. The pre-
merger or prior period consolidated financial statements and notes have been recast to reflect the two reportable segments and other.
• Cost of sales- DSW conformed RVI's accounting policies and recast RVI's pre-
merger or prior period financial statements and notes
for warehousing and store occupancy costs historically reported by RVI within operating expenses to be consistent with DSW's
historical classification of these costs within cost of sales.