DSW 2012 Annual Report Download - page 26

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23
The following table summarizes our net sales by reportable segment and in total:
Fiscal years ended
January 28, 2012 January 29, 2011
(in millions)
DSW segment $ 1,871.9 $ 1,680.9
Affiliated Business Group segment 152.4 141.5
Total DSW Inc. $ 2,024.3 $ 1,822.4
The following table summarizes our comparable sales change by reportable segment and in total:
Fiscal year ended January 28, 2012
DSW segment 8.6%
Affiliated Business Group segment 5.1%
Total DSW Inc. 8.3%
The increase in comparable sales was primarily a result of an increase in transactions and units per transaction, as more
customers visited our stores and dsw.com, and those customers purchased more items per transaction. For the DSW segment, all
merchandise categories had positive comparable sales. DSW segment comparable sales increased in women's footwear by 8%,
men's by 14%, athletic by 3% and accessories by 15%.
Gross Profit. Gross profit is defined as net sales less cost of sales. Gross profit increased as a percentage of net sales to 32.3%
in fiscal 2011 from 31.0% in fiscal 2010. By reportable segment and in total, gross profit as a percentage of net sales was:
Fiscal years ended
January 28, 2012 January 29, 2011
DSW segment 33.4% 31.9%
Affiliated Business Group segment 19.4% 21.4%
Total DSW Inc. 32.3% 31.0%
For the DSW segment, the reconciliation of components of gross profit as a percentage of net sales was:
Fiscal years ended
January 28, 2012 January 29, 2011
Gross profit 33.4% 31.9%
Store occupancy expense 10.2% 11.1%
Distribution and fulfillment expense 1.9% 1.7%
Merchandise margin 45.5% 44.7%
DSW segment merchandise margin, defined as gross profit excluding occupancy and distribution and fulfillment expenses, a
non-GAAP measure, was 45.5% and 44.7% as a percentage of net sales for fiscal 2011 and fiscal 2010, respectively, due to an
increase in initial markup and a decrease in markdown activity. The increase in initial markup was due to cost mitigation with
our vendors and selective price increases. The reduction in markdown activity was the result of the composition and mix of
sales. Store occupancy expense for the DSW segment decreased as a percentage of net sales to 10.2% for fiscal 2011 from
11.1% for fiscal 2010 primarily as a result of increased average store sales. Distribution and fulfillment expenses increased as a
percentage of net sales to 1.9% for fiscal 2011 from 1.7% for fiscal 2010 primarily to due to expenses related to size
replenishment and to support dsw.com sales growth.
Gross profit for the Affiliated Business Group decreased as a percentage of net sales for fiscal 2011 and was unfavorably
impacted by markdowns related to Filene’s Basement’s bankruptcy and subsequent liquidation. We incur occupancy expense of
approximately 20% of net sales for our Affiliated Business Group.
Operating Expenses. Operating expenses as a percentage of net sales were 22.2% and 21.7% for fiscal 2011 and fiscal 2010,
respectively. The deleverage in operating expenses was driven by DSW and RVI merger-related transaction costs and other
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