Dive Brief:

• DSW Inc. on Tuesday reported first quarter sales rose 1.4% to $691.1 million, with $22.3 million of that coming in revenues from Ebuys, the online footwear and accessories retailer acquired last year. That was an increase from the $681.3 million in the year-ago quarter and beat FactSet consensus expectations for $685.3 million cited by MarketWatch.

• Same-store sales in the quarter fell 3%, worse than last year’s 1.6% decrease but better than analyst expectations of a 3.4% decline, according to a company press release. Same-store sales turned positive in April, the company said. 

• Q1 net income was $23 million, or 28 cents per diluted share (including pre-tax charges totaling $4.1 million, or $0.04 per share, related to the acquisition of Ebuys, restructuring costs and foreign exchange loss assumed in the process of pre-funding its upcoming acquisition of Canadian shoe retailer Town Shoes). Those earnings were down from $30 million, or 36 cents per share, in the year-ago period. Excluding non-recurring items, adjusted earnings were 32 cents per share, missing the FactSet consensus forecast for 34 cents. The company reiterated its full year outlook for adjusted earnings in the range of $1.45 to $1.55 per diluted share, while FactSet analysts anticipate the upper end of $1.55.

Dive Insight:

Dragging DSW’s results down was some inventory clearing as well as costs from its Ebuy and other acquisitions. Still, the retail environment didn’t help, especially in the start of the year, CEO Roger Rawlins said in his statement Tuesday.

"First quarter sales were challenging, but trends improved during the quarter with comps turning positive in April,” he said. “As expected, planned clearance activity and the addition of Ebuys drove lower gross margin and operating income. The investments we have made in our digital capabilities, such as our redesigned website and mobile app, drove robust growth in digital demand. We are intently focused on driving sequential top line improvements through key product and customer initiatives while balancing strategic investments with disciplined expense management.”

DSW is among the few retailers, along with off-price stores such as TJX companies and discount retailers like dollar stores, that have been expanding their physical store footprints. DSW now operates 508 stores in 43 states as well as its e-commerce site, and it also supplies footwear to 397 other leased locations in the U.S. Its Town Shoes investment has supplied it with cross-border opportunities and consumer intelligence.

The shoe retailer has also been working diligently to blur its brick-and-mortar and e-commerce businesses — and fulfillment has been a big piece in making that puzzle fit. The retailer has said that it’s shipping about half its e-commerce sales from its stores. The ship-from-store model has helped sales, though in the past the retailer said it has had to work to tamp down costs by working out the most efficient fulfillment strategy. In many cases, for example, proximity didn’t help keep down shipping costs. As a response, in recent years, the retailer switched to shipping from stores that have excess inventory. 

In an effort to ramp up its women’s fashion marketing, DSW last month tapped actor Olivia Culpo as its first-ever style ambassador. The former Miss USA’s formidable social media following was likely a major factor in the choice.