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Why is DSW (DSW) Stock Tanking Today?

On Tuesday, shares of specialty branded shoe retailer DSW Inc. DSW are tanking, down almost 12% in mid-morning trading after the company reported disappointing first quarter financial results.

DSW posted adjusted earnings per share of $0.40, missing the Zacks Consensus Estimate of $0.46 per share. Sales came in at $681 million for the quarter, lagging behind our estimate of $697 million but increasing 3.9% year-over-year; however, comparable sales decreased 1.6%.

Roger Rawlins, Chief Executive Officer stated, "We have reduced our sales and earnings guidance to reflect the current trend of our business in a challenging retail environment.  This is the prudent action to take so that inventory, expenses and capital investments are aligned to maximize profitability and positioned to expand earnings as our trend improves."

As a result, DSW cut its full year earnings guidance to fall in the range of $1.32-1.42 per share, reflecting expectations for softer sales in a challenging retail environment. Revenues are expected to grow 6-7%, down from previous guidance of 8-10% growth. Comps are now expected to decline 1-2% in comparison to previous guidance of 1-2% growth.

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