Designer Shoe Warehouse steps into Canada

Discount retailer popular with cross-border shoppers inks deal with Town Shoes

U.S. discount retailer Designer Shoe Warehouse Inc. is coming to Canada in a $62-million deal with Town Shoes Limited, the companies announced Tuesday.

The deal will see DSW Inc. purchase a 44-per-cent interest in Town Shoes, the largest footwear and accessories retailer in Canada.

Town Shoes operates 182 locations across Canada under banners including The Shoe Company, Shoe Warehouse and Town Shoes. It is owned predominantly by Alberta In- vestment Management Corporation (AIMCo), on behalf of certain clients and Callisto Capital, a Canadian private equity firm.

DSW stores are a popular destination for Canadian cross-border shoppers. They feature designer footwear in large, brightly lit, selfserve environments, with samples perched on shoe boxes stacked by size. DSW operates 407 stores in 42 states, the District of Columbia and Puerto Rico and operates an e-commerce site.

It also supplies footwear to 357 leased locations in the U.S. under the Affiliated Business Group.

Town Shoes and DSW declined to provide further details on Tuesday, including locations and a timeline.

But Town Shoes has been shopping for big box locations around the GTA since at least November, said Don Gregor, chief operating officer of Aurora Realty Consultants. Gregor represented a Canadian company competing for one of the locations — a recently closed Future Shop in Newmarket, owned by Condor Properties. It went to Town Shoes. Gregor said there are several Future Shop, Petcetera and Solutions locations coming back to the market in power centres around the GTA in the 20-25,000 square foot range that would permit DWS and Town Shoes to open five or six stores in 2014 and early 2015. Town Shoes referred media requests to DSW, which is headquartered in Columbus, Ohio. DSW de- clined to provide comment in addition to the press release. The market for women’s footwear was $2.6 billion in Canada for the 12 months ending in February, according to statistics from the consumer market research firm NPD Group. While the category declined by 4 per cent over the previous year, the market for men’s footwear was up four per cent to $2.1 billion and children’s footwear was up 15 per cent to $593.1 million, according to NPD. There was a slight decline in average purchase price for a pair of women’s shoes — it dropped from $45.48 in 2013 to $45.29 in February 2014, perhaps reflecting an increase in markdowns, said Sandy Silva, a director of client development at NPD. There is already a lot of strength in the Canadian shoe market, including Aldo Shoes and Calderone, said retail analyst Wendy Evans. Clothing retailers like J. Crew also sell shoes, as do department stores including The Bay, which recently opened the biggest shoe department in Canada.

Evans said the acquisition reflects the fact that U.S. retailers believe there is still tremendous opportunity in the Canadian marketplace.

But for some people, there is always room for another pair of shoes.

“Shoes are an easier way into people’s pockets,” says Anita Clarke, founder of the fashion and tech blog iwantigot.geekigirl.com.

“They’re easier to fit in than a dress or a shirt or a pair of pants. If your feet are a size eight, you’re not embarrassed by that.”