Designer Brands Inc. (DBI) on Q1 2021 Results - Earnings Call Transcript

Operator: Good day and welcome to the Designer Brands Inc. 1Q 2021 Earnings Call. All participants will be listen-only mode. Please note, this event is being recorded. I would now like to turn the conference over to Stacy Turnof. Please go ahead. Stacy Turnof: Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week period ending May 1st, 2021 to the 13-week period ending May 2nd, 2020. Please note that remarks made about the future expectations, plans, and prospects of the company constitute forward-looking statements. Results may differ materially due to various factors listed in today's press release and the company's public filings with the SEC. The company assumes no obligation to update any forward-looking statements. Roger Rawlins: Good afternoon and thank you everyone for joining us today. We're particularly proud of our first quarter performance and energized by our continued progress. We'd like to thank our associates for giving their best to our company and customers, helping us achieve our near-term goals. A recent internal associate survey confirms we continue to have a very engaged associate base, which has been critically important to our success. We're seeing notable progress against the roadmap we laid out in the second half of last year and we are excited about what the future holds. Continued improvement, highlighted by a return to profitability for the first time since the onset of COVID, bolsters our confidence. Sales have exceeded our initial expectations, and we achieved an exceptional first quarter gross margin rate. Inventory turns are improving and we saw continued robust performance in the athleisure category, while beginning to see strengthening results in our seasonal business. We continue to optimize the factors in our control that will maintain our momentum as the market continues to rebound. We have positioned our assortment to capture market share in athleisure, an area where we have been historically underpenetrated to the market and we're gaining share. Although our overall dress business remained depressed, our seasonal product sales significantly outpaced our initial expectations and the improvement in sales relative to inventory was a major contributor to the upside in our gross margin in the quarter. We remain in chase mode and continue to leverage our scale with key vendors. More importantly, we leaned on our vertical capabilities with our Camuto segment to give us an advantage in these categories by selectively increasing production at Camuto to support the demand that materialized. Our vertically integrated capabilities are a strategic differentiator for us and will enable our company to be well-positioned as seasonal demand further rebounds. Although store traffic continues to be below historical trends, we're seeing a significant recovery, specifically in the US. There remains a considerable rebound opportunity for the second quarter and beyond. Our digital business continues to expand, and our stores remain crucial points of distribution and fulfilling orders received through our digital channels. As we discussed last quarter, we continue to refine our strategy and playbook given the realities of our day-to-day in a COVID-impacted world. There are numerous signs that the macro environment is improving, providing tailwinds to our DSW business. With vaccination rates rising and new optimistic CDC guidance, US adults are feeling more comfortable returning to social activities. Consumers are beginning to spend in categories that we have hit hard by the pandemic, including beauty, apparel and footwear. Jared Poff: Thank you, Roger, and good afternoon, everyone. Trends continued to improve in the first quarter across all metrics, and we are very pleased with our performance. As Roger mentioned, we are becoming more optimistic as the vaccine rollout continues, infection rates are decreasing, and our customers are coming back into our stores more frequently. Our targeted marketing campaigns are yielding stronger results and consumer demand is beginning to show signs of recovery in categories that were especially depressed during COVID, including seasonal. Please note, the financial results that we will reference during the remainder of today's call, excludes certain adjustments recorded under GAAP unless specified otherwise. For a complete reconciliation of GAAP to adjusted items, please reference our press release. We are continuing to execute against our near-term priorities outlined last year, and we are seeing success build each quarter. First quarter was exemplary, as we exceeded our expectations across the board. This quarter, we saw our best comp performance and gross margin rate since the start of COVID, and we are pleased that we were able to return to profitability this quarter. Turning to our results. For the first quarter, sales increased 45.6% to $703.2 million, which included $15.5 million in intersegment revenue that is eliminated in consolidation. This was the best quarterly sales performance since COVID-19 began. During the first quarter, total comps were up 52.2% versus last year's 42.3% decline. For US retail, comps were up 56.3% during the first quarter versus down 42.4% last year. Similarly, first quarter comps were the best we have seen since the onset of COVID-19, and were driven by our continued pivot to athleisure footwear, a category in which we are historically underpenetrated. While still below 2019 levels, we saw sequential improvement in store traffic throughout the quarter. You have heard us talk repeatedly about our pivot towards athleisure and kids footwear in our US Retail business, and our results clearly demonstrate this was the right move. Further details can be found in our first quarter infographic on our Investor Relations site. During the first quarter, we saw athletic comps up 87%, demonstrating our strength in the category, despite the impact of COVID-19. Similarly, kids comps were strong, up over 78% compared to the prior year. Athleisure, which includes athletic and casual, was up 92% versus last year. The athleisure category's penetration continues to increase and now represents 58% of our sales this year versus 47% in the same period last year. During the quarter, seasonal comps were up 56%, while dress was down 10%. Due to a lack of social gatherings and traveling, a continued trend of working from home as a result of the continuing impact of COVID-19 and our more conservative inventory positioning. As a reminder, the dress category remains significantly depressed during this time, accounting for only 10% of our sales in the first quarter compared to 22% in 2019 across the same period. We are excited that the seasonal business is showing signs of recovery, and look forward to the segment continuing to normalize throughout the year and beyond. We have seen customers continue to transition their spending preferences to online, and this quarter was no exception. We saw a strong performance in our e-commerce with digital demanded sales in US retail, up 13% for the quarter. Digital demand represented 35% of total demand during the first quarter versus 49% last year when the majority of our stores were closed, but well above first quarter 2019 level of 22%. Turning to Canada. Total comps were up 10% during the first quarter. On a store level, comps were soft as our stores continue to be impacted by COVID-19 lockdown to capacity restrictions that negatively impacted store performance, especially in Ontario, which represented approximately 40% of our store sales as of the end of 2019. Despite the results in stores, we saw strong digital growth of 202% during the quarter compared to 2019. Let's turn to our Camuto Group, which produces almost exclusively seasonal and dress product and has been in a difficult position. We have been cutting back our production over the last 12 months, given the sharp decline in demand for seasonal and dress products. As Roger mentioned, we planned production at Camuto down 15% for the quarter. However, following better-than-anticipated consumer demand early in the quarter, we were able to quickly turn on our production, a key competitive advantage to our US Retail business. Ultimately, we increased production throughout the quarter, much to the benefit of our own retail channels, and ended the quarter with production up 3% year-over-year. Looking forward, we are expecting second quarter production to be up 64% over last year. But remember that this is against the period when cancellations were in full swing, and we were cutting production significantly. When we compare our production to 2019, we were down 19% in the first quarter, which is largely due to us exiting a number of smaller, unprofitable brands. We will continue to plan Camuto production to build through the second half of the year, primarily driven by a recovery in seasonal footwear demand. Total net sales from Camuto, including sales to DSW were $57.4 million in the first quarter, down 30.1% compared to the same period last year. Wholesale sales were $48.6 million in the first quarter versus $67.5 million last year, including sales to our Retail segments, which totaled approximately $14.3 million versus $16.7 million last year. Our consolidated gross profit increased $242.6 million to $216.1 million in the first quarter versus a loss of $26.5 million in the prior year. We were particularly pleased with our gross margin story this quarter as we saw the best quarterly performance in over two years. Gross margin was better than our initial expectations given the improved sell-through of seasonal inventory, which, therefore, required fewer markdowns, coupled with strong full price selling of athletic and kids product. Our consolidated gross margin rate increased to 30.7% in the first quarter versus a loss of 5.5% in the prior year and a 100 basis point improvement over the first quarter of 2019. At our US Retail segment, similar to Q4, we delivered merchandise margins that were above both last year and 2019, demonstrating the success of the assortment pivots that we've made since the onset of COVID. We saw material leverage on our fixed occupancy and fixed cost lines versus last year, given our year-over-year sales improvement. And when you couple the sales improvement with the expense reduction work we've done since 2020 particularly on occupancy, we were actually flat to 2019 rates for occupancy and supply chain. The return of store demand provided leverage on shipping expense versus last year, but still provides deleverage versus 2019, given the continued shift to digital demand we are seeing from our customer. In the US, gross margin was 31.1% versus negative 8.7% last year and also improved 80 basis points to the first quarter of 2019. Similarly, we saw strength in our Canadian operations. Canada's gross margin in the first quarter was 26.7%, well above last year's negative 7.9%. The improvement year-over-year was due to improved product margins, leveraging occupancy and lower inventory reserves, partially offset by higher shipping and freight costs. Camuto's gross margin rate was up 383 basis points to 20.8% in the first quarter versus 16.9% last year due to liquidations and markdowns taken last year, substantially better sell-through and improved inventory position year-over-year. Gross margin was down 380 basis points from the first quarter of 2019 due to fixed royalty deleverage. However, excluding royalty, gross margin improved 160 basis points due to much cleaner inventory positions, resulting in higher release of inventory reserves. Our inventory levels are in excellent shape. We've been investing in our tried-and-true popular brands that perform well regardless of the macro environment. We have been managing our inventory levels exceptionally well, taking our cues from the customer. At the end of the quarter, our inventory was up 1% in total compared to last year, which was below our sales increase of 46%. On a unit basis, inventory was 25% lower to last year as a result of the material markdown reserves we had placed on our inventory at the start of COVID. Compared to the first quarter of 2019, inventory was down 16% in total and on a unit basis, down 19%. I want to briefly discuss our inventory strategy for the spring and summer. Given the improvement we saw in the first quarter, we are anticipating a continuing increase in demand for seasonal footwear, and we have been chasing this product through our own channels at Camuto and in the broader market. We remain flexible and nimble to follow the customer as they continue to increase their spending on apparel and footwear and begin to reengage in social occasions and events. Moving to operating expenses. In the first quarter, our adjusted SG&A was up 7.3% to $199.1 million versus last year and down 7.4% compared to 2019. Given the significantly lower sales base, our SG&A ratio for the first quarter was 28.3%, well below last year's level of 38.4% and slightly above first quarter 2019's level of 24.6%. During the quarter, we did make the strategic decision to repurpose some of our avoided promotional markdown dollars into digital marketing, which, as Roger mentioned, was highly productive, delivering the highest number of new member sign-ups to our loyalty program in our company history. As long as we continue to receive this type of productivity and are able to fund these investments with lower markdowns, I expect we will continue this approach for the foreseeable future. Depreciation and amortization totaled $20.6 million in the first quarter compared to $23.1 million in the same period last year. Adjusted operating profit for Designer Brands was a gain of $18.7 million in the first quarter versus a loss of $209.7 million last year, but below the $46.5 million gain in the first quarter of 2019. We had $8.8 million of interest expense during the first quarter compared to $2.2 million in the prior year. Moving on to taxes. Our effective tax rate on adjusted results was 4.7% in the first quarter versus 38.4% last year. The change in rate was largely impacted by the recording of net discrete tax benefits, including adjustments to our estimated fiscal 2020 return, reflecting implemented tax strategies. This benefit contributed to the increase in our income tax receivable from $149.8 million recorded at the end of 2020 to $158.9 million at the end of the quarter, which we anticipate receiving in the back half of fiscal 2021. It should be noted that this Q1 rate is not expected to continue for the balance of the year. And in fact, the following quarter's tax rates may be notably higher than prior years given tax treatment of certain expenses when taken against actual taxable income levels. Total weighted average diluted shares during the quarter were 77 million compared to 71.9 million last year. For the quarter, we reported a net gain of $17 million or $0.22 per diluted share, primarily impacted by the release of part of the tax valuation allowance with changes to our deferred tax assets versus a net loss of $215.9 million or $3 loss per diluted share last year. Excluding this release, adjusted EPS was $0.12 per diluted share for the quarter. Last year, we spent a great deal of time focusing on our liquidity position and increasing our flexibility given the volatile and uncertain conditions. We remain pleased with our balance sheet, ending the quarter with $49.3 million of cash versus $250.9 million last year and had $289.9 million available to draw on our revolving credit facility, bringing our total liquidity to just under $340 million. We ended the quarter with $337 million of debt versus $393 million last year. During the quarter, we closed five stores in the US and opened two new stores, resulting in a total of 516 US stores. In Canada, we closed one store and opened two new stores, ending the quarter with 145 stores. As discussed last quarter, we are closely evaluating our existing store infrastructure and have identified approximately 65 US stores that would make sense to close upon their natural lease expirations, primarily over the next four years, including approximately 25 stores that we currently view as eligible for closure in 2021. However, this number may change over time based on landlord negotiations and actual post-COVID store level performance versus current projections. We continue to plan to open six DSW stores in the US in 2021 that we're contractually committed to prior to COVID. In Canada, we are currently planning to close three stores and open three stores in 2021. Similar to the US, we continue to evaluate our store fleet in Canada as well and could see additional stores close even in 2021 as leases come up for renewal. Given the environment, we believe it is still too uncertain to provide guidance for 2021. However, we wanted to provide some broad commentary on the direction of our business. We expect that the second quarter at DSW will show continued improvement. Canada will see improvement, but given the government shutdowns, the recovery will be slower than in the US. And lastly, Camuto production has been increasing each quarter as we continue to see increased demand for seasonal products, especially at DSW-exclusive brands and our Camuto owned and licensed brands. We are confident that our business is recovering, and we should start to normalize in the second half of the year. We are still planning our inventory conservatively, but we are prepared to make the necessary inventory investments and increase production as demand returns. First quarter marked our return to profitability, and we believe that, that trend will continue going forward driven by the strength in our athleisure and kids business, coupled with a recovery in our seasonal business. With that, we will open the call for questions. Operator? Operator: Thank you. We will now begin the question-and-answer session. Our first question comes from Steve Marotta with C.L. King & Associates. Please go ahead. Steve Marotta: Good afternoon. Roger and Jared, congratulations on the accelerating trends. Roger Rawlins: Thank you. Steve Marotta: I want to talk to you a little bit about and focus on Camuto. I think, Roger, you mentioned that 15 of the 25 best selling brands during the period were the exclusive nature or vertical, if you said the penetration, please forgive me, I missed it. Can you talk a little bit about where that is right now? And where without giving -- I know you're not giving guidance for the balance of the year, but where you think that penetration could go through the balance of the year, again, specific to Camuto and the benefits of the gross margin there? Thanks Roger Rawlins: Thanks, Steve. And it was 15 of our top 25 items. To make certain I was clear on that. And we're still in the high single-digit to low double-digit penetration around our owned brands. And we have aspirations, as you know, when we bought the business to take that to be closer to 30%. And that's the direction we're headed. And again, we're really excited about the progress and how we were able to chase business during the quarter and drive margins through the Camuto organization. So it's working as we had planned. It's now time that the business has recovered to turn it on in a bigger way. Steve Marotta: One additional question there. Has anything occurred during COVID to shorten your turnaround times specific to Camuto inside of DSW stores? Roger Rawlins: It is -- I would say, there have been some things. The material changes are things we have on our road map where we can leverage some facilities that we have in Brazil and to test and learn and then go in a much bigger way and accelerate production. But those are things we're working on for the back half of the year. Those are not in place in a big way today. But that is the intent is speed, speed, speed is going to win. And that is what we've got to leverage Camuto -- leverage the DSW consumer to better, better inform our Camuto decisions. Steve Marotta: That's really helpful. I’ll take the balance of my questions offline. Thank you. Roger Rawlins: Yes. Thank you. Operator: Our next question comes from Gaby Carbone with Deutsche Bank. Please go ahead. Gaby Carbone: Hi. Good afternoon. Thanks for taking my question. So I was wondering if you could dig into store traffic levels, maybe a little bit more on how that progressed through the quarter, maybe what you're seeing here in May. And then maybe how do you view the opportunity for store productivity to get back to 2019 levels? Thanks. Roger Rawlins: Thanks, Gaby. And I would say what we saw and what we've been talking about is the sequential improvement, and that happened in the first quarter, and it happened throughout the quarter as we progressed. And our expectation is that that will continue through Q2 and the fall. So again, good progress. What I'm really excited about is, we knew we would not be getting after some of our, let's just say, consumers that we knew historically had shopped their stores that shots and arms had not taken place. So we've not really pushed a lot of our marketing campaigns targeting that consumer. And we've turned some of those things on in first quarter, and we love the response we're getting. So those are weapons that, frankly, we've not been able to deploy to date because we knew it would not be worth the spend. But those are all, I think, opportunities as we go through the back half of the year. Gaby Carbone: Got you. Thanks for that. And just a quick follow up. Are you dealing with any supply chain issues due to these like the ways of the ports that many retailers have been talking about? Roger Rawlins: I think our merchant and sourcing teams have done an amazing job of sort of managing around it. I would tell you, it is not easy. But our team has done a great job of opening up windows earlier, so that goods that perhaps might have been planned for later are hitting now. We're doing everything we can to manage it. It is more than a full-time job for many people. But I feel good about our inventory position versus the sales we have planned. And we'll do everything we can to keep working with our vendor partners. And this really is a big benefit of our organization is because you are a large player. You move up closer or to the top of the line as goods do come in and get allocated. So again, I feel pretty about our inventory position. Gaby Carbone: Great. Thank you so much for the color. Roger Rawlins: Yeah. Thanks, Gaby. Operator: Our next question comes from Mauricio Serna with UBS. Please go ahead. Mauricio Serna: Hi. Good afternoon. And thanks for taking my question. I had a question, if you could maybe talk about the second quarter. I mean, you mentioned that you expect an improvement. How should we think about that considering compared to a 2019 basis, first quarter sales were down around 19%. I mean how should we think about that for the second quarter? And also, if you could talk a little bit more about the puts and takes into the gross margin expansion versus 2019? How much came from merchandise margins compared to occupancy and other cost inputs? Thank you. Roger Rawlins: Yes. Mauricio, I think, again, we're not providing future guidance, but we anticipate continued improvement in the business, just like what we have seen, the acceleration in Q1 and what we experienced in Q4 as well. So that's sort of the stair-step approach that we're envisioning for the balance of the year. As it relates to margins, there are a couple of things that I'm really proud of that we've done, leaning into these top 50 brands and having product that you know the consumer demands that you do not have to take markdowns on. That has been a big win for us, getting after the owned brands in a meaningful way. And those things, again, margin, about 1,500 basis points better for us as an organization. So continuing to drive that is going to improve the business. And it's really been exciting to be in a chase mode, which is sitting here looking at Jared and knowing what we went through last year, where it was the complete opposite of that. This is a lot more fun and creates much more margin opportunity on an upside. Jared Poff: Yes. One thing I will mention, Mauricio, is if you just look at our history and we're looking at the full year, fall tends to be a couple of hundred basis points lower, merchandise margins in general than spring, just given the categories and the promotional environment of the holiday time period. So again, we aren't giving guidance, but I do just point you to what history is for kind of our business model. Roger Rawlins: And Mauricio, I think it's important, too, that when you look at the assortment pivot we've made, and we have an athletic business that has historically run gross margin rates significantly below nonathletic footwear. We grew athletic by 87%. We are playing in a kids space that has historically had gross margin rates materially below nonathletic and athletic. And despite the fact that those have grown at 87% and 78%, as an organization, we still grew gross margin rates. And that is a huge -- I can't applaud enough, our design team, our merchant team, our planning team, our allocation team, our store team, our marketing team, for all working together to get the customer what they want, when they want it, and you can avoid markdowns. It's something I'm really, really proud of for our team. Mauricio Serna: Got it. Thanks a lot. Congratulations. Roger Rawlins: Thank you. Operator: Our next question comes from Dylan Carden with William Blair. Please go ahead. Dylan Carden: Yeah. Hi. Thank you very much. Just curious as you're sort of thinking about getting Camuto more a part of the assortment here. Are there any changes to the strategy as it relates to the categories that you're going to move more into the assortment, or just sort of how you're thinking about the integration of that business kind of coming out of the pandemic? Roger Rawlins: Well, I think it's a great question. And yes, there is opportunity, especially when a certain brand decides to take their talents elsewhere. And we're going to look at how do we continue to be more at leisure like in the brands that we own and operate. And I think that's upside for us as an organization. There's open to buy to be had in that space. So that's an area in particular where we think we know we can do better. And then I would say the growth potential that we have with the Jennifer Lopez brand that we're going to relaunch later this year. We think there's -- from a fashion perspective, we think there's significant upside there. And Vince is still a very small part of the DSW brand. And doing things like what we're doing to create shop-in-shops for the big brands. Those are the kind of things we're thinking about that can help us grow Vince, like Jessica, JLO, Crown Vintage, Mix No. 6, all of those brands. Dylan Carden: Excellent. Thank you very much. Roger Rawlins: Thanks, Dylan. Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Roger Rawlins for any closing remarks. Roger Rawlins: Thanks, everybody, for listening in today. And if you get a chance as a DSW consumer, please check out your emails. There's a great e-mail today, featuring our own CFO, Jared Poff, a great set of sneakers. So please go check out your e-mail from DSW, and really appreciate everybody listening. Have a great day. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
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Designer Brands Inc. (DBI) Faces Financial Challenges in Recent Quarter

  • Earnings per share (EPS) of $0.236 missed the estimated target, alongside revenue falling short of expectations.
  • DBI's stock price declined following the announcement, highlighting the market's reaction to financial underperformance.
  • The company's financial metrics, including a high debt-to-equity (D/E) ratio of approximately 3.59, indicate significant challenges ahead.

Designer Brands Inc. (NYSE:DBI), a prominent player in the retail apparel and shoes industry, faced a challenging financial quarter as reported on Wednesday, September 11, 2024. The company, known for owning popular brands like DSW and Keds, reported earnings per share (EPS) of $0.236, missing the estimated target of $0.56. Additionally, its revenue for the period was $771.9 million, falling short of the expected $816.14 million. This performance indicates a significant downturn from the company's previous year's achievements and forecasts, raising concerns among investors and market analysts.

Following the announcement of these disappointing financial results, DBI experienced a notable decline in its stock price. This reaction from the market underscores the importance of meeting or exceeding analyst expectations, as these figures often serve as benchmarks for the company's financial health and future prospects. The downward revision of the company's financial guidance for the year further exacerbated investor concerns, signaling potential challenges ahead for the retailer. This development was widely covered by financial news outlets, including The Motley Fool and Barrons, highlighting the impact of the earnings miss on the company's market valuation.

The reported earnings surprise of -48.21% for the quarter, alongside a revenue shortfall of 5.72% compared to the Zacks Consensus Estimate, marks a continuation of the company's struggle to meet expectations. This trend is alarming, considering that over the last four quarters, Designer Brands has only surpassed consensus revenue estimates once. Such a pattern of underperformance could indicate deeper issues within the company or the sector it operates in, potentially affecting its long-term growth and profitability.

Financial metrics further illustrate the challenges faced by Designer Brands. With a price-to-earnings (P/E) ratio of approximately -59.36, the company is currently not profitable based on its trailing twelve months (TTM) earnings. The price-to-sales (P/S) ratio, at about 0.097, and the enterprise value to sales (EV/Sales) ratio of approximately 0.501, suggest that the stock is trading at a low value relative to its sales, which could be seen as an opportunity or a sign of undervaluation due to the company's recent performance issues. Additionally, the high debt-to-equity (D/E) ratio of approximately 3.59 indicates a significant level of debt relative to equity, which could pose risks to the company's financial stability.

In summary, Designer Brands Inc. faces a critical period as it navigates through financial underperformance and market skepticism. The company's ability to address these challenges, improve its financial metrics, and restore investor confidence will be crucial for its recovery and future growth within the competitive retail apparel and shoes industry.

Designer Brands Inc. Q1 Earnings: A Mixed Bag with Optimistic Undertones

  • Designer Brands Inc. reported a Q1 EPS of $0.01317, missing the expected $0.15, but slightly exceeding revenue forecasts with $746.6 million.
  • The company's stock experienced a downturn following the earnings announcement, attributed to a decrease in adjusted profits.
  • Despite the EPS shortfall, DBI maintains its full-year guidance, reflecting confidence in its strategic direction and future growth prospects.

Designer Brands Inc. (NYSE:DBI), a prominent player in the footwear and accessories retail sector, recently disclosed its first-quarter earnings for 2024, revealing mixed results that have stirred the market. On June 4, 2024, DBI reported earnings per share (EPS) of $0.01317, falling short of the anticipated $0.15. Despite this, the company managed to slightly exceed revenue expectations, posting $746.6 million against an estimate of $741.63 million. This performance has led to a significant reaction from investors and analysts alike as they assess the implications for DBI's market position and future prospects.

The earnings report was closely followed by a notable decline in DBI's stock price, as highlighted by The Motley Fool. This downturn was attributed to the sharp decrease in adjusted profits for the quarter. However, DBI has chosen to maintain its full-year guidance, projecting a modest increase in top-line growth. This decision reflects the company's confidence in its business strategy and its ability to navigate the challenges ahead. The financial community is now keenly observing how these developments will influence DBI's standing in the competitive retail landscape.

During the earnings conference call, key figures such as CEO Doug Howe and CFO Jared Poff discussed the quarter's results and fielded questions from participants, including analysts from prestigious firms like UBS. This interaction provided valuable insights into the company's financial health and strategic direction. The call, detailed by Seeking Alpha, was an opportunity for DBI to address concerns and outline its plans for recovery and growth in the coming months.

Despite the disappointing EPS, DBI's financial metrics offer a mixed picture. With a price-to-earnings (P/E) ratio of approximately 27.44, investors seem willing to pay a premium for DBI's earnings, suggesting optimism about the company's future profitability. The price-to-sales (P/S) ratio of about 0.17, on the other hand, indicates that the market values each dollar of DBI's sales relatively low, which could point to potential undervaluation. These ratios, along with the company's debt-to-equity (D/E) ratio of approximately 1.78, provide a comprehensive view of DBI's financial position and risk profile.

In conclusion, Designer Brands Inc.'s latest earnings report has elicited a mixed response from the market. While the company's revenue slightly exceeded expectations, the shortfall in EPS and the subsequent stock price drop reflect the challenges DBI faces. Nonetheless, the company's decision to maintain its full-year guidance, coupled with its financial ratios, suggests a cautious optimism about its ability to navigate the competitive retail environment and improve its financial performance in the future.

Designer Brands Lost more than 10% Despite Q1 Beat

Designer Brands Inc. (NYSE:DBI) share prices dropped more than 10% today, despite the Q1 beat. The company posted Q1 EPS of $0.12, better than the analyst estimate of a loss of $0.18 per share. Revenue stands at $703.2 million, again higher than the Street estimate of $651 million.

The report implied that the company has likely completely recovered from the impact of the pandemic, however, the stock saw a sharp decline today following the results, which according to Jon Quast from Fool.com, makes no sense.

During the conference call, Roger Rawlins, the Chief Executive Officer of the company said that the strong start of fiscal 2021 was driven by green shoots in the business areas previously affected by COVID-19, synergies from the company’s vertical capabilities becoming active, which allowed the company to take advantage of positive trends faster.