(Updates with closing share price in second paragraph.)
Aug. 26 (Bloomberg) -- DSW Inc. shares had the biggest rally in two years after the discount-shoe chain reported better-than-estimated earnings and Goldman Sachs Group Inc. recommended the shares.
The stock gained 9.2 percent to $30.99 at 4 p.m. in New York, for the largest advance since May 2012. All of the company’s major categories reported higher sales in the second quarter, compared with the first, according to a statement from the Columbus, Ohio-based company today.
DSW reported earnings of 37 cents a share in the three months ended Aug. 2 excluding some items, exceeding the 32-cent estimate from a Bloomberg survey of 15 analysts. Net income fell 25 percent to $33.6 million, DSW said.
“A combination of increased focus, new leadership within women’s and a strong balance sheet give DSW the tools to improve fundamentals in the coming quarters,” Taposh Bari, an analyst at Goldman Sachs, wrote today in a note to clients.
DSW has struggled this year with steadily declining profit and the shares are still down almost 30 percent in 2014. In May, it blamed an unusually cold winter and steep discounts for weak results in the first quarter and cut its profit forecast.
DSW said today that annual earnings will be between $1.50 and $1.65 per share. That compares with an average forecast of $1.53 a share from analysts.