NEW YORK (AP) — The first part of the year was no walk in the park for shoe retailer DSW.
The company reported disappointing first-quarter results Wednesday and it slashed its earnings outlook for the year. Its shares lost nearly a third of their value after releasing the results, dropping to their lowest point in more than two years.
CEO Mike MacDonald blamed the "challenging quarter" on bad weather and an increase in promotions and price-cutting by retailers.
But rival Brown Shoe Co. had a better first quarter, despite the icy winter weather. The owner of Famous Footwear and Naturalizer stores said separately on Wednesday that sales heated up, along with temperatures, in the last two weeks of April. And the St. Louis company expects to see a bigger boost in sales in the second quarter from pent-up demand for spring shoes. Brown Shoe upped its earnings outlook for the year and its shares jumped to a seven-year high of $29.22.
DSW's first-quarter net income did rise 12 percent from a year ago, thanks to cost-cutting, but it still didn't meet Wall Street expectations. Net income rose to $38.6 million, or 42 cents per share, in the quarter that ended May 3, compared with $34.5 million, or 38 cents per share, in the same quarter a year ago. Analysts expected earnings of 48 cents per share, according to polling by FactSet. Revenue slipped to $599 million from $601.4 million, way below the $623.2 million analysts expected.
The company now expects adjusted full-year earnings between $1.45 and $1.60 per share, down from its previous forecast in March of earnings between $1.80 and $1.95 per share. Analysts expected earnings of $1.90 per share for 2014.
DSW now expects revenue to grow "in the low single digit range." In March, it said it expected full-year revenue to grow between 6 percent and 7 percent from 2013. Analysts expected 2014 revenue to rise 5.7 percent from the year before to $2.5 billion.
Columbus, Ohio-based DSW runs 410 stores around the country that sell footwear, bags and other accessories. In May, it bought a 49.2 percent stake in Canadian shoe seller Town Shoes for $68.7 million to expand into the country. MacDonald said the partnership could boost the company. "I am confident that we are taking the right steps to grow sales and bottom line in the long term," he said in a statement.
In afternoon trading, DSW shares fell $8.93, or 27.5 percent, to $23.59. Earlier, they fell as low as $23.50, the stock's lowest point since January 2012.