Financial Statement Analysis: Dsw Shoes & Payless Shoes
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FINANCIAL STATEMENT ANALYSIS
DSW SHOES INC. & PAYLESS SHOESOURCE
BY: EULALIA RAMIREZ
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TABLE OF CONTENTS
SECTION PAGE
Executive Summary………………………………………………………. ……… 3
Firm Background and Competitive Environment………………………. 4
Significant Risks…………………………………………………………………… 5
Financial Statements…………………………………………………………….. 6
Profitability………………………………………………………………………….. 19
Liquidity……………………………………………………………………………… 22
Asset Management……………………………………………………………… 26
References…………………………………………………………………………. 28
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I. EXECUTIVE SUMMARY
The shoe retail business is a competitive field. According to the Annual Retail
Trade Survey conducted by the Bureau of Census, shoe retail trade registered sales of
21,627 billion in 2003 in the United States from about 28,457 shoe stores across the country. The shoe retail industry is segmented across the product lines of children’s shoes, men’s shoes, women’s shoes and athletic shoes. Both the men and women s market segments are growing. Price-wise, however, men’s shoes are more expensive than women s shoes. On the other hand, the demand for shoes is driven by price, demographics, income, weather, fashion trends, target markets, and economic factors.
Competition in the industry is strong. There are a number of established players in the shoe industry with established market positions, brands and reputations. A mall often houses several shoe stores, mostly the major players. Major players in this industry have numerous retail outlets throughout the US, while smaller players are generally independently owned and operated in one or two locations. Competition also comes from department store with well-appointed shoe departments. The Internet is also emerging as a source of competition as a growing number of users are becoming more comfortable shopping shoes online.
The focus of this project is to examine two of the largest footwear specialty retailer stores in the United States. An introduction of the subject company’s market
FINANCIAL STATEMENT ANALYSIS
DSW SHOES INC. & PAYLESS SHOESOURCE
BY: EULALIA RAMIREZ
Page 2 of 28
TABLE OF CONTENTS
SECTION PAGE
Executive Summary………………………………………………………. ……… 3
Firm Background and Competitive Environment………………………. 4
Significant Risks…………………………………………………………………… 5
Financial Statements…………………………………………………………….. 6
Profitability………………………………………………………………………….. 19
Liquidity……………………………………………………………………………… 22
Asset Management……………………………………………………………… 26
References…………………………………………………………………………. 28
Page 3 of 28
I. EXECUTIVE SUMMARY
The shoe retail business is a competitive field. According to the Annual Retail
Trade Survey conducted by the Bureau of Census, shoe retail trade registered sales of
21,627 billion in 2003 in the United States from about 28,457 shoe stores across the country. The shoe retail industry is segmented across the product lines of children’s shoes, men’s shoes, women’s shoes and athletic shoes. Both the men and women s market segments are growing. Price-wise, however, men’s shoes are more expensive than women s shoes. On the other hand, the demand for shoes is driven by price, demographics, income, weather, fashion trends, target markets, and economic factors.
Competition in the industry is strong. There are a number of established players in the shoe industry with established market positions, brands and reputations. A mall often houses several shoe stores, mostly the major players. Major players in this industry have numerous retail outlets throughout the US, while smaller players are generally independently owned and operated in one or two locations. Competition also comes from department store with well-appointed shoe departments. The Internet is also emerging as a source of competition as a growing number of users are becoming more comfortable shopping shoes online.
The focus of this project is to examine two of the largest footwear specialty retailer stores in the United States. An introduction of the subject company’s market
References: company operates in two segments: DSW stores and leased departments. As of February 3, 2007, DSW operated a total of 223 stores located throughout the United States. During the fiscal year ended February 3, 2007, DWS opened 29, DSW stores. Leading competitor, Payless Shoesource Incorporated as of February 3, 2007, has 4,572 retail stores in 15 countries and territories February 3, 2007. Besides shoes, it sells accessories such as handbags and hosiery. 29, 2007, and the numbers are enough to make the most skeptical person stand up and notice K, 2006 annual report.