Designer Brands Inc. (DBI) on Q4 2024 Results - Earnings Call Transcript
Operator: Good day, and welcome to the Designer Brands Inc. Fourth Quarter 2024 Earnings Conference Call. [Operator Instructions] Please note, this event is being recorded. I'd now like to turn the conference over to Dustin Hauenstein, Senior Vice President of Finance. Please go ahead. Dustin Hauenstein: Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week and 52-week periods ended February 1, 2025, to the 14-week and 53-week period ended February 3, 2024. Please note, that the financial results that we will be referencing during the remainder of today's call excludes certain adjustments recorded under GAAP unless specified otherwise. For a complete reconciliation of GAAP to adjusted earnings, please reference our press release. Additionally, please note that remarks made about future expectations, plans and prospects of the company constitute forward-looking statements. Results may differ materially due to the 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. Joining us today are Doug Howe, Chief Executive Officer; and Jared Poff, Chief Financial Officer. Now, let me turn the call over to Doug. Doug Howe: Good morning, and thank you everyone for joining us. I'd like to begin by saying a special thank you to our associates for their continued hard work and dedication to Designer Brands throughout the year. We were pleased to return to positive comps in the fourth quarter of fiscal 2024 for the first time in nine quarters as results improved throughout the year with our transformation taking a greater hold. In the fourth quarter given the inclusion of the 53rd week last year, we saw a 5% year-over-year decline in total sales. Excluding the 53rd week, our comps were up 1%. For the full year, total company sales were down roughly 2% to last year and comps were down 1.7% in line with our revised guidance. We also delivered full year adjusted EPS of $0.27 at the upper end of our revised guidance range of $0.10 to $0.30. As I reflect upon our performance this year, the improvement we saw was a direct result of our commitment to executing on those initiatives within our control. This included decisive actions to refresh our leadership team, revitalize and modernize our assortment, optimize our marketing, right size our Brand Portfolio organization and continuously improve our customers omnichannel experience. Over the last 1.5 year, we've updated our leadership team, naming a new President of DSW, a new Brand's President, a new Chief Marketing Officer, and a new Head of Merchandising to reinvigorate our teams, implement new ways of working and bring in expertise we were previously lacking. We've also made considerable progress in revitalizing our assortment. We ended 2024 with a more relevant and balanced assortment that includes more athleisure than ever before, increasing our penetration by five percentage points and grabbing market share. We also rekindled and expanded our relationship with our top brand partners, deepening the number of styles offered with key brands to build an eye catching in-store and online selection. Our top eight brands remain a primary driver of positive performance with sales of those brands up 25% on a full year basis. On the marketing front, this year we leaned into the holiday season more than ever, focusing on giftable items. Black Friday, Cyber Monday and a well-timed post-holiday sale helped generate buzz, capture consumer interest and maintain strong momentum beyond the season. Additionally, we enhanced the customer experience leading with overt holiday messaging and strategic collaborations allowed us to establish our stores as a gifting destination. A holiday assortment had an impactful visual presence with impressive and attention grabbing gift giving collateral. Within our Brand Portfolio organization, we remain focused on cost reduction, brand optimization, higher product margins and improved SKU productivity through streamlined operations. I'm pleased to share that we successfully delivered on these goals, driving top line growth and margin expansion. Let's quickly review some of the financial highlights from the fourth quarter and full year. Starting with our retail businesses. In U.S. Retail, we were pleased to post comps up 1% in the fourth quarter, reflecting a return to positive comps for the first time since the third quarter of 2022, driven by strength in athletic, women's dress and luxury, accessories and kids. According to Circana data, DSW sales growth versus last year outpaced the footwear market in the fourth quarter, resulting in a 10 basis point gain of footwear market share versus last year for DSW. Sales for the quarter were down 7%, primarily due to the impact of the 53rd week last year. For the full year, U.S. Retail comps were down a little over 1% driven by weaknesses in seasonal. We saw strength in a number of categories throughout the year such as athletic, women's, affordable luxury and kids. Sales for the year were down roughly 3% driven by the impact of the 53rd week and the decline in comps. In Canada, fourth quarter comps were up 5% driven by strong performance in most categories led by athletic and kids. Sales were up over 7% last year. For the full year, comps were down 2% due to similar trends we saw in the U.S., strong athletic, casual and kids performance, which was offset by weakness in seasonal and dress. Sales were up 7% to last year, primarily as a result of adding Rubino to our store footprint. Turning to our Brand Portfolio segment for the fourth quarter, sales were up approximately 12%. For the full year, sales were up roughly 14%. In 2024, we were able to reach operating profitability in this segment for the first time as our Brand's President, Andrea's initiative to reset the business have proven successful and we believe have set this business up for continued profitable growth into the future. For the year, we expanded our gross margins by 100 basis points and reduced our segment operating expenses by nearly 700 basis points. The combination of the two has led to a significant improvement in operating margin. Operationally, our adoption rate of design proposals has increased from roughly 20% historically to 50% for our fall 2025 collection. We expect for this to continue to increase over time. On the product side, we are excited to have seen continued growth in Topo Athletic and Jessica Simpson. Both brands have been significantly outperforming expectations throughout the year. For the year, Topo was up nearly 80%, and Jessica was up over 20% in wholesale sales. As we move forward in 2025, we believe our ongoing business transformation will drive continued stabilization and improvement of sales and profitability, with expectations to significantly increase our adjusted EPS compared to 2024 results. Let me spend a few minutes discussing our strategic focus areas for 2025. In our retail segment, we will use the pillars of customer and product to guide our focus. First and foremost, we are placing an even more deliberate focus on being customer first in everything we do, leveraging insights and advanced analytics to refine the DSW brand identity and positioning, update our target customer segmentation and enhance marketing tactic effectiveness. We've executed both qualitative and quantitative research and are embedding the focus into the organization in real time. In 2025, we'll be able to better understand what drives our most valuable customers and where and how we can acquire more of them. We will continue to evolve our brand positioning throughout 2025 which we believe will be exciting for our loyal customers as well as newcomers. We will also be revisiting our robust VIP rewards program which represents roughly 90% of our transactions. We'll be transforming VIP rewards and perks with an aim to relaunch the program in early 2026. Additionally, we intend to continue evolving our approach to promotions and discounts to help serve customers searching for value. To this end, our semiannual sale will continue to evolve as it becomes a more important promotional event to DSW. We will also continue to evolve our omnichannel customer experience in ways that are intended to drive both value for consumers and improve financial results. We will continue to enhance our in-store selection and displays, a key differentiator when it comes to the in-person shopping experience that drives over 70% of our sales. We'll also be adding DSW net new stores to our fleet for the first time since 2019, expanding access to product and aligning with population migration. In addition, we are rolling out simple tech enabled shoe fitting services and post purchase protective shoe cleaning which we believe will provide points of differentiation for our brand and incremental margin in 2025. We look forward to sharing updates on these and other initiatives across the course of the year that we expect to drive profitable omni channel growth. Our next strategic pillar for 2025 is a continuation of our assortment revitalization journey. This year we are further enhancing our product offering through a data driven approach that we expect to drive improved inventory availability and productivity. We are rationalizing unproductive product which will allow us to amplify our investments in key items and top selling products. We are also optimizing our inventory allocation and digital order management to improve product availability across our network. We expect these enhancements to directly drive increases to in stock rates, improve conversion on store traffic and lower fulfillment costs for digital orders. These efficiencies are expected to build over the course of the year. As we look to our brand segment for 2025, we have outlined a number of ways we expect to deliver growth, notably reestablishing our private label brands as margin drivers and building a more profitable wholesale business which includes investing in core names like Keds and Topo to drive top line revenue. Our private label brands are those only sold at DSW including Kelly & Katie, Mix No. 6 and Crown Vintage. All have a position of strength within key DSW women's categories and we plan to leverage these strengths to grow our top line and drive margins for the business. Given our control over the design and production of these brands, we deliver over 1500 basis points of incremental margin rate above our national brands which drives our overall margin. Private label brands currently penetrate at less than 20% of DSW sales and we believe this has the opportunity to expand in the future. As Andrea mentioned last year, we are also in the process of advancing our brand and product strategies for our wholesale brands such as Vince Camuto, Lucky and Jessica Simpson. Additionally, we will continue to invest in Topo and Keds, two well positioned brands with strong heritage, growth potential and solid distribution. In the short term, we are focused on rebuilding the foundation of Vince Camuto and Lucky. We have a number of initiatives in place which include a new marketplace strategy, growing new channels of distribution, diversifying product assortment and leaning into growing categories like casual for Lucky and dress for Vince Camuto. Jessica Simpson is another brand that is well positioned to continue to capitalize on the resurgence of dress in the marketplace, which we aim to leverage by offering a strong assortment and delivering great value to consumers in this growing category. We plan to continue to invest in fueling growth in our Topo Athletic and Keds brands. Both brands are uniquely positioned within the portfolio, have compelling heritage and are situated in growing categories. They already have access to excellent distribution and are delivering strong operational income contribution to the segment. At Topo specifically, we remain energized by the outsized growth potential the brand represents today. Today, Topo represents over 10% of our total brand portfolio sales and grew over 70% in 2024. We anticipate another year of growth in 2025 driven by a strategic approach to distribution within the core specialty running area, strong product launches and increasing investment in marketing to establish key franchise items, drive volume and overall build a brand with a strong reputation. Our strategy to reposition the Keds brand for growth in 2025 is critical to building a healthy and sustainable brand. We will work to reposition ourselves in the comfort casual category, target the Gen X and above customer who already know and trust the brand, and add new technology infused at leisure offerings powered by our exclusive blitzwalk technology. We are seeing positive results from this evolved product already and are excited about expanding this approach in 2025. We believe that we will see double digit growth over time with gross margin improvement as well. Before I conclude, I want to share a few thoughts on our 2025 guidance. While we do not expect a material impact on our business from currently anticipated tariff policies, we have seen our consumers being more cautious starting in the back half of January as a result of ongoing inflation, rising prices and less discretionary income. This was a marked change from the trends we were seeing exiting December and we recognize that uncertainty remains as they continue to be selective with their discretionary income. As such, we are leaning into initiatives to drive demand and value. On balance, we expect to post positive comps for the full year as well as meaningful operating income growth for the year. We anticipate quarterly performance will improve gradually as we move through the year. Jared will discuss this more in a moment. I want to reiterate how pleased I am with our team's execution and unwavering dedication as we continue our transformational journey. I'm confident the strategies we are employing are the right ones to support long term value creation for DBI. With that, I'll turn it over to Jared. Jared? Jared Poff: Thank you, Doug and good morning everyone. We were pleased with the results from the fourth quarter reporting positive comps for the first time since Q3 of 2022 and continued to focus on our financial improvement throughout the year. As noted in our earnings press release, we changed our financial statement presentation related to expenses associated with distribution and fulfillment and store occupancy for the U.S. Retail and Canada Retail segments. These expenses were previously included within cost of sales and are now included within operating expenses in order to present all of our operating segments on a consistent basis. Included in our earnings press release are schedules showing the impact of these reclassifications for each quarter for fiscal 2023 and 2024. We also changed the presentation of segment performance by including an operating profit measurement in addition to the previously reported gross margin measurement for our reportable segments. We have restated quarterly and annual historical results to be on a comparable basis and our remarks will be based on this restated basis. Let me provide a bit more detail on our fourth quarter and full year financial results. For the fourth quarter of fiscal 2024, net sales of $714 million were up 0.5% on a 13-week comp basis and due to the 53rd week in the fourth quarter of 2023, net sales were down 5.4% versus the prior period as reported. For the full year of fiscal 2024, net sales of $3 billion were down 1.7% on a 52-week comp basis and down 2.1% versus last year inclusive of the 53rd week. In our U.S. Retail segment, comps were up 0.7% in the fourth quarter. We saw positive comps across the majority of our footwear categories with the strongest performance in kids, athletic, accessories, namely socks and women's dress. Our Canada retail segment comps were up 4.7% in the fourth quarter primarily due to strength in athletic and kids and the reintroduction of Nike women's casual and dress and boots as we became more promotional in the quarter to help clear through our seasonal product. Finally, in our brand portfolio segment, sales were up 12.3% in the fourth quarter. From a segment perspective, full year net sales versus last year ended at down 2.7% for our U.S. Retail segment, up 7.1% in our Canada Retail segment and up 14.3% in our brands portfolio segment. As a reminder, starting in fiscal 2024 we have harmonized our approach to how we transact business between our brand portfolio segment and our retail segments. This change resulted in approximately $21 million of year-over-year additional sales for our brand segment in the fourth quarter that were eliminated in consolidation. The brand portfolio segment also benefited from notable sales growth in Topo athletic which was up 57% versus last year driven by both our wholesale and DTC channels. Consolidated gross profit of 39.6% in the fourth quarter increased 80 basis points versus the prior year primarily driven by U.S. retail segment with less promotional offers as well as decreased DTC shipping associated with lower rates and an improvement in packages per order. Full year consolidated gross margin of 42.7% in 2024 deleveraged 40 basis points versus the prior year primarily driven by lower IMU in our U.S. Retail segment as a result of our continued penetration shift into more athletic footwear. For the fourth quarter, adjusted operating expense was 43.5% of sales, a 40 basis point deleverage from the fourth quarter last year. Although operating expense was down from last year, the deleverage was mostly driven by the inclusion of the 53rd week of sales last year against a partial fixed cost base. For the full year 2024, adjusted operating expense was 40.9% of sales, a 50 basis point deleverage from last year. Similar to the fourth quarter, full year operating expense experienced deleverage that was primarily driven by the inclusion of the 53rd week of sales last year against a partial fixed cost base. Deleverage was in both retail segments as well as the corporate costs related to incremental technology expense associated with cloud based service cost. This was partially offset by leverage in our brand portfolio segment operating expense related to cost savings efficiency measures. Recall that we said last quarter we now have a detailed expense savings roadmap for 2025, which we expect to aid in reducing our cost of sales through things like fewer promotions in 2025. For the fourth quarter, adjusted operating loss was $23.5 million, an improvement versus an operating loss of $30.2 million last year inclusive of the 53rd week, which included $6.6 million of additional operating income. It was the second consecutive quarterly year-over-year improvement. For the full year, adjusted operating profit was $67.3 million versus $89.6 million last year, which again included operating income generated in the 53rd week as previously noted. In the fourth quarter of 2024, we had $11.1 million of net interest expense compared to $9.9 million last year. Higher interest expense is a direct result of the term loan we installed last year as well as higher interest rates on our ABL. For the full year of 2024, we had $45.3 million of net interest expense compared to $32.2 million last year. Our effective tax rate in the fourth quarter on our adjusted results was 38.6% compared to 37% last year. For the year, our effective tax rate on our adjusted results was 31.6% compared to 24.8% last year. Our fourth quarter adjusted net loss was $21.3 million versus $25.3 million last year, or a loss of $0.44 in diluted earnings per share for both years. Finally, our full year adjusted net income was $15 million or $0.27 earnings per diluted share compared to $43.2 million or $0.68 earnings per share in fiscal 2023. Turning to our inventory, we ended the fourth quarter with total inventories up 5% versus the prior year as we continue to emphasize a clean inventory position and prioritize placement of our newest product. We feel good about our inventory levels heading into the new fiscal year and our flexibility to continue to chase and take actions on opportunistic buys. In fiscal 2024, I'm pleased to report that Designer Brands returned $79 million to shareholders through a combination of dividends and share repurchases. During the year, we repurchased an aggregate 10.3 million Class A common shares at an aggregate cost of $68.6 million and paid $10.5 million in dividends. As of February 1, 2025, $19.7 million of Class A common shares remained available under our share repurchase program, which as a reminder has no set expiration date. We have also once again reaffirmed our commitment to returning cash to shareholders, declaring a $0.05 per share dividend for the first quarter of 2025. For the full year we again generated positive cash flow and ended 2024 with $44.8 million of cash and our total liquidity, which includes cash and availability under our revolver was $172.1 million. Total debt outstanding was $491 million as of the end of the year. Before I conclude, I want to share a few thoughts on our 2025 guidance. As Doug mentioned, our guidance incorporates continued macro uncertainty that may impact our consumers spending habits. On a consolidated basis, we expect sales to be up low single digits for the year. The midpoint of our guidance suggests a nice improvement compared to 2024, but given the soft start to the year, we do anticipate first quarter performance to be below last year. We expect performance will gradually improve as we move through the year. For the U.S. Retail segment in 2025 we expect net sales growth in the low single digits versus last year. We also expect comparable sales to be up low single digits. The comp growth is expected to be driven by our focus on improving our inventory availability, productivity and assortment strategy as well as optimizing marketing to drive DSW awareness. In our Canada Retail segment for 2025, we expect a mid to high single digit growth versus last year. The majority of this increase is expected through the addition of Rubino, modest comp growth driven by web enhancements and strategic initiatives to grow our base business. We anticipate sales in our brand portfolio segment for 2025 will increase mid single digits driven by strong growth in Topo Athletic, Keds, Jessica and a return to growth of our private label brands at DSW. A critical foundation to our transformation is a focus on driving profitable growth. As a continuation of efforts that we initiated last year, we are evaluating expenses across the company and executing on roadmaps to drive efficiencies across all of the business. Some of these work streams are straightforward with benefits contemplated in our 2025 guidance, primarily in sourcing costs which will drive improvement in our gross margins. Others are more complex efforts with benefits that will be realized over a multi-year period unlocked by some technology advancements and/or process changes. The inventory productivity work that Doug mentioned earlier is a great example of where we expect to see notable impacts this year and we anticipate even more opportunity beyond 2025. To help accelerate this benefit, we opened a distribution center in Arizona dedicated to store fulfillment which came online this month. This 3PL facility will reduce time to service our Western stores which currently can take up to 10 days longer to service than other stores within the fleet. For 2025, this is adding approximately $12 million of operating expense to our expense base. Additionally, this guidance takes into consideration that we are returning to a normalized level of incentive based compensation in 2025, which will be an impact of roughly $30 million, and our Rubino operations in Quebec will add approximately $5 million of incremental SG&A as we annualize that acquisition. We anticipate the effective tax rate of roughly 30% for fiscal 2025 and expect earnings per share to be in the range of $0.30 to $0.50, representing nearly a 50% increase at the midpoint when compared to our 2024 results. We expect capital expenditures to be in the range of $45 million to $55 million for this year. I want to echo Doug's comments and express my gratitude for the hard work of our DBI associates. We believe we are on a clear path to returning to more consistent top and bottom line growth over the long term and I am excited for what we are set to accomplish this year. With that, we will open the call for questions. Operator? Operator: [Operator Instructions] Our first question comes from Mauricio Serna with UBS. Please go ahead. Mauricio Serna: Great. Good morning, and thanks for taking my question. Just wanted to hear, could you tell us a little bit more on the quarter, the fourth quarter? How much did you see athleisure growth, and maybe comment a little bit what you saw in terms of Nike's performance and DSW as you lapped, the brand's return at this point. And then maybe, could you elaborate on I think you, I mean, you mentioned that you expect first quarter sales to be down versus last year. Any details on what you're seeing quarter-to-date, then what does that imply for your like expectation of the ranging of how much they can be down in the first quarter? Thank you. Doug Howe: Yes, thanks for your question, Mauricio. I'll start and then I'll ask Jared, to elaborate on the second part of the question. As it relates to athleisure, I mean as you heard, we saw a significant increase in the penetration of that business. A lot of that is driven obviously through the athletic brands. We were really pleased in particular with the top eight brands, which as we said, had a 25% increase on the full year basis. So that trend that we've seen continuing, is definitely a tailwind for us. We feel really good about that. Part of that is to offset some of the reliance on the seasonal businesses. We had a 900 basis points decrease in the boot category as an example. So again, the team's done a really nice job of kind of balancing that. I would say as it relates to Q1, we don't comment specifically in the quarter that we're in. But as we said, we have started out the year, a little slower than anticipated. We're focusing on controlling what we could control. I think there's certainly a lot of uncertainty out there in the macro environment just given rising prices, less discretionary income in the lots of tariff conversation on the overall kind of sentiment. So that is incorporated into our guidance that we provided for '25. But I'll let Jared elaborate. Jared Poff: Yes, I mean the only thing I would add to that, Mauricio, is that while our initial budget, and what we were seeing coming out of Q4, certainly showed year-over-year growth. As I mentioned in my comments, given what we've seen so far, we are now seeing a trending towards probably Q1, being a bit below last year's Q1. And so that's kind of what we've put in there, when we put our guidance together. What we are anticipating is that that continues to improve, as we move throughout the year. But certainly Q1, has started off more challenging than what we thought it would be. Mauricio Serna: Understood. And then, just could you give us a sense of how you're thinking about gross margin for the year, and SG&A dollar growth? I'm particularly interested, could you maybe explain a little bit more too about, the promotional strategy look, so I'm having a little bit of a hard time understanding like, if you're going to be more promotional, or less promotional. Just trying to understand that. And again, the implications for gross margin and SG&A dollar growth? Thank you. Jared Poff: Yes, yes I'll say, just from the financial mechanics, our current guide and the way we built the budget, has our promotional activity actually giving us good news, or leverage in the year to our gross margin rate. And that's primarily driven, by the efforts that we talked about on inventory availability. A lot of the work that we did with the help of McKinsey and our own analysis. Showed us where we had opportunities even on existing traffic patterns, to drive higher conversion just given store availability and kind of what had happened with our digital orders being pulled out of stores, so on and so forth. So we had planned the year relatively flattish, from a gross profit rate standpoint, but that's helping to offset some continued pressure on our IMU, from continued growth in athletic and national brands, being offset by a reduction in promotions. All that being said, we are certainly starting off Q1, a bit more challenging. We don't want to end with excess inventory, so we'll always be measuring that, but that's kind of how we've positioned that. To answer your second question on the SG&A, there's about $50 million being added over last year's SG&A, primarily anchored on those three items that, I talked about in my remarks. The West Coast Logistics Center, which is brand new to the infrastructure, but really necessary to support that initiative. The bonus or management incentive plan, and then annualizing Rubino. Mauricio Serna: Got it. So I guess like, if I take that into consideration, like it seems like the midpoint of the revenue guidance, kind of like maybe just modest operating margin expansion. Is that the right way to think about it? Jared Poff: Yes. I think that's spot on. Mauricio Serna: Understood. Thank you so much. Jared Poff: Thank you. Operator: [Operator Instructions] This concludes our question-and-answer session. I would like to turn the conference back over to Doug, for any closing remarks. Doug Howe: I'd like to end where I started, by again just expressing gratitude to the DBI team, for their continued hard work and dedication, and thanks to all of you who joined us today. We look forward to continuing to update you on our progress, as we advance through the year. Thank you. Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.
Designer Brands Inc. (NYSE: DBI) Faces Financial Challenges Amid Retail Sector Turmoil
- Earnings per share (EPS) of -$0.26, missing the estimated EPS of $0.01, indicating a significant deviation from the previous year's $0.08 EPS.
- Revenue for the quarter was approximately $686.9 million, falling short of the estimated $736 million, marking a 6.67% miss from the Zacks Consensus Estimate.
- DBI's financial struggles are highlighted by a negative price-to-earnings (P/E) ratio of -13.85 and a high debt-to-equity ratio of 4.62, indicating significant reliance on debt financing.
Designer Brands Inc. (NYSE:DBI) is a prominent player in the global footwear and accessories market. The company designs, produces, and retails a wide range of products. However, DBI is currently navigating a challenging financial landscape. On June 10, 2025, DBI reported an earnings per share (EPS) of -$0.26, missing the estimated EPS of $0.01. This marks a significant deviation from the $0.08 EPS reported in the same quarter last year.
The company's revenue for the quarter was approximately $686.9 million, falling short of the estimated $736 million. This represents a 6.67% miss from the Zacks Consensus Estimate and a decrease from the $746.6 million reported in the same quarter the previous year. Over the past four quarters, DBI has consistently failed to meet revenue expectations, highlighting ongoing challenges in the retail sector.
DBI's financial struggles are further underscored by its negative price-to-earnings (P/E) ratio of -13.85, indicating current losses. The company's price-to-sales ratio is 0.05, suggesting that its stock is undervalued relative to sales. Despite these challenges, DBI is focusing on enhancing value in its retail channels and controlling costs to mitigate the impact of tariffs and preserve margins.
CEO Doug Howe attributes the company's difficulties to an unpredictable macroeconomic environment and declining consumer sentiment. In response, DBI aims to achieve cost savings of $20 million to $30 million throughout 2025. The company has also temporarily withdrawn its 2025 guidance due to ongoing instability and pressure on consumer discretionary spending.
DBI's financial metrics reveal a high debt-to-equity ratio of 4.62, indicating significant reliance on debt financing. However, the current ratio of 1.24 suggests that the company has a reasonable level of liquidity to cover short-term liabilities. As DBI navigates these challenges, it remains focused on strategic initiatives to improve its financial performance.
Designer Brands Plunges 20% After Disappointing Q1 and Pulled Guidance
Designer Brands (NYSE:DBI) shares nosedived over 20% intra-day today after the company delivered a weak first-quarter performance and withdrew its full-year forecast due to growing economic and geopolitical headwinds.
The company reported an adjusted loss of $0.26 per share for the quarter, sharply missing Wall Street’s expected loss of $0.08. Revenue came in at $686.9 million, down 8% year-over-year and falling well short of the $736 million analysts had projected. Comparable sales dropped 7.8%, signaling weakening demand.
In a notable shift, the company scrapped its prior full-year 2025 guidance, citing significant macroeconomic uncertainty, particularly around global trade policies. In response, Designer Brands announced plans to implement $20 million to $30 million in cost reductions throughout the fiscal year.
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. (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.
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.
