Investment in Town Shoes Limited

12 Months Ended

Jan. 30, 2016

Equity Method Investments and Joint Ventures [Abstract]

Equity Method Investments and Joint Ventures Disclosure [Text Block]

INVESTMENT IN TOWN SHOES LIMITED

On May 12, 2014, DSW Inc. acquired a 49.2% interest in Town Shoes for $75.1 million Canadian dollars ("CAD") ($68.9 million USD) at the purchase date. As of January 30, 2016, DSW Inc.'s ownership percentage is 46.3%. The dilution of the Company's ownership is due to Town Shoes' employee exercise of stock options. DSW Inc.'s initial stake provides 50% voting control and board representation equal to the co-investor.

Additionally, the Town Shoe co-investor holds the option to sell the remaining portion of the company in fiscal 2017 to DSW Inc., and for the subsequent two years. DSW Inc. holds the option to purchase the remaining portion of the company in fiscal 2018, and for the subsequent two years, if the Town Shoe co-investor has not exercised their put option. DSW Inc. purchased $100 million CAD during the first quarter of fiscal 2015 (approximately $79 million USD at purchase date) to take advantage of the strength of the dollar and in anticipation of funding the future purchase of the remaining interest in Town Shoes. The funds are also available to fund other business opportunities or return to U.S. operations, if needed. As this was a cash transaction, the gains or losses related to the purchase of the CAD were recorded in the consolidated statement of operations. During the first quarter of fiscal 2015, the Company recorded $3.3 million in foreign currency exchange gains related to the purchase of CAD within non-operating income. The Company invested the CAD in available-for-sale securities in the second quarter of fiscal 2015. The foreign exchange gain or loss is recorded in the consolidated statement of comprehensive income. As of January 30, 2016, the foreign currency exchange loss of $10.8 million is recorded within other comprehensive income.

Presented below is activity related to DSW Inc.'s portion of Town Shoes included in DSW Inc.'s consolidated balance sheets, consolidated statements of operations and consolidated statements of comprehensive income for the periods presented:

	Fiscal year
	2015			2014
	(in thousands)
Investment in Town Shoes - beginning of period	$	25,887		$	—
Initial investment	—			22,339
Acquisition costs	(184		)	2,897
DSW Inc.'s portion of Town Shoes (loss) income	(5,250		)	178
Foreign currency translation adjustments included in "Other comprehensive (loss) income"	934			729
Amortization of purchase price adjustments	(199		)	(256		)
Investment in Town Shoes - end of period	$	21,188		$	25,887

	Fiscal year
	2015			2014
	(in thousands)
Note receivable from Town Shoes - beginning of period	$	43,304		$	—
Purchase of note receivable	—			46,596
Payment-in-kind interest earned	5,098			3,891
Foreign currency translation adjustments included in "Other comprehensive (loss) income"	(4,232		)	(7,183		)
Note receivable from Town Shoes - end of period	$	44,170		$	43,304

The note is an unsecured subordinated note issued on February 14, 2012 that earns payment-in-kind interest at 12% and matures on February 14, 2022.