Shoe seller DSW Inc. said Monday that it plans to ask for permission to split its stock, a move that would slash the voting power of a certain set of shareholders.
DSW, based in Columbus, Ohio, said it will hold a shareholder meeting so investors can vote on whether to let the company go through with a 2-for-1 stock split. Usually when a company does a 2-for-1 stock split, investors find themselves holding twice as many shares, each worth half the previous price. For example, an investor who held a $100 stock would get two $50 stocks in return.
Often when companies split a stock in that way, it’s because they’re hoping the psychological change will juice the stock’s price: For example, investors might feel more comfortable buying two shares of a $50 stock rather than one $100 stock.
DSW’s stock split, though, seemed designed to reduce the voting power of Class B shareholders.
Under DSW’s proposal, the company would issue one Class A share in exchange for each Class A or Class B share. The Class A shares are worth one vote per share in shareholder votes, but the Class B shares are worth eight votes per share. If the split goes through, Class B shareholders would be knocked down from holding 65 percent of the voting power to 46 percent.
DSW didn’t give a reason for proposing the stock split. It also did not announce a date for the shareholder meeting. It said it expected shareholders of record on Aug. 16 would be entitled to vote at the meeting.
The company said in the same news release that its second-quarter sales rose 9 percent, to $558 million from $512 million a year ago. However, that is less than the $570 million that analysts polled by FactSet had been predicting.
Same-store sales, which are often seen as a more reliable gauge of revenue because they exclude the impact of newly opened or closed stores, were up 4.3 percent. Those numbers also excluded sales from the company’s new foray into offering luxury brands.
DSW raised its prediction for annual earnings to between $3.60 and $3.80 per share, after previously predicting $3.40 to $3.60. Those numbers exclude one-time charges. Analysts were expecting $3.59 a share.
The company will issue full results from the second quarter on August 27.
Its shares were up nearly 2 percent in after-hours trading, rising $1.51 to $79.07.