DSW (NYSE:DSW) is about to release earnings. Ponder this Bear Case Scenario.
Customer switching costs are non-existent. DSW needs to stay in the low price space to stay relevant. This has margin implications over the long run as where is the growth coming from.
Department stores are promoting heavily. Zappos is taking a big chunk of the market. Many competitors are able to discount. DSW needs to continue being relevant to consumers and not become just another sloppy sleazy disorganized discounter.
One or two well capitalized competitors could easily upset the DSW apple cart. Eventually someone will try to do it. DSW needs to develop some strategic advantages before someone eats their lunch.
George Gutowski writes from a caveat emptor perspective.