DSW Shares Tumble on Weak Outlook

DSW, which operates more than 200 stores and supplies footwear to hundreds of more locations, said earlier its fourth-quarter profit slid nearly 94 percent.

The company also declined to issue specific full-year earnings guidance, saying only its profit for the first six months of the year will be "significantly below" the 68 cents per share it earned in the comparable year-ago period.

Jeff Mintz of Wedbush Morgan Securities said in a client note the Columbus, Ohio, company missed its own implied guidance due to higher markdowns and charges.

The analyst is also concerned that the retailer plans to sell more "deeply valued" merchandise, potentially driving down margins at the same time it faces higher costs from vendors, due to rising material and production costs.

"The company's change in its normal pattern of giving annual guidance along with its expectation that first-half earnings per share will be "significantly below" 2007 levels suggest that business continues to be weak, and that the company's visibility into its own business is limited," the analyst wrote. "Although these issues are undoubtedly due to the difficult macro environment in part, we believe some of the recent changes in the company's business model may also be contributing to poor results."

Mintz reduced his 2008 profit estimate to $1.07 per share from $1.36 and introduced a 2009 target of $1.35 per share. He also reduced his price target on the stock $4 to $14.

Analysts polled by Thomson Financial, on average, now expect DSW to post a profit of $1.25 per share for 2008, and $1.37 per share for 2009.

In afternoon trading, DSW shares tumbled $4.17, or 23.8 percent, to $13.38. The stock, which had traded in a 52-week range of $14.72 to $44.05, dropped to $12.95 earlier in the session, its lowest point at since its debut in June 2005.