DSW shares fall on holiday gloom

NEW YORK (AP) -- Shares of DSW Inc. fell Monday after an analyst cut her rating on the stock because of a weak holiday industrywide and the effects of Superstorm Sandy.

THE SPARK: Brean Capital analyst Danielle McCoy said in a note to investors that expectations were too upbeat about the holiday season, which other retailers have said was weak. Also, the effects of Superstorm Sandy lasted longer than expected, putting pressure on store sales. About 27 percent of DSW's stores are in the Northeast, and half of those were in areas affected by the storm.

THE BIG PICTURE: DSW offers discounted brand-name shoes and accessories at 364 stores in 41 states, the District of Columbia and Puerto Rico. In its most recent quarter, which ended Oct. 27, its net income fell 7 percent because of higher expenses, but beat expectations. Revenue rose 12 percent to $592.7 million.

THE ANALYSIS: McCoy cut her rating on the stock to "Hold" from "Buy." But she remained more optimistic in the longer-term. She expects 2014 to have more growth opportunities for DSW than 2013, as the company opens more stores and tests online sales of luxury goods.

SHARE ACTION: Shares of DSW fell $2.43, or 3.6 percent, to $65 during morning trading. That's closer to the stock's 52-week high of $72, which it reached Dec. 4, than its 52-week low of $42.18, reached Jan. 9.