Designer Brands Reaffirms Outlook After Sales and Earnings Beat in Q2
Designer Brands Inc. (DBI) reaffirmed its outlook for the year on Thursday after posting better-than-expected sales and earnings in the second quarter.
Net sales for the DSW-parent company decreased 7.8 percent to $792.2 million, ahead of analysts’ expectations of $785.7 million, according to Yahoo Finance. Comparable sales decreased by 8.9 percent and adjusted net income was $39.4 million, with an adjusted diluted EPS of 59 cents, which also beat analysts’ expectations of 44 cents.
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DBI CEO Doug Howe said in a statement that he anticipates that “near-term headwinds will persist” for the company moving forward, though he maintained confidence in DBI’s growth trajectory, particularly in its owned-brand business and partnerships.
“I am proud of the sequential improvement in both sales and profitability in the second quarter, as well as the progress that has been made on our strategic initiatives, with several exciting milestones in the quarter — including new collaborations and celebrity partnerships,” Howe said in a statement. “Our portfolio of owned brands and national brand partners remains strong and we are excited to be rolling out our new athletic and athleisure offerings from Le Tigre and Keds while continuing to elevate our relationship with Nike during a time that athletic and athleisure demand continues to grow.”
In April 2022, DBI announced a goal to double sales from owned brands and Camuto Group national owned and licensed brands to almost one-third of total sales by 2026. In Q1, owned brand penetration grew to 26.7 percent. DBI did not immediately release owned-brand penetration numbers for Q2.
In early February, DBI acquired the Keds brand from Wolverine Worldwide, adding to its existing roster that includes Topo Athletic and Le Tigre, both of which were acquired recently as well.
DBI is beefing up its portfolio of national brands as well. In June, the retailer said it would reenter into a partnership with Nike to sell footwear at DSW stores, following a halt to the partnership in 2022, when Nike accelerated its shift toward direct channels.
DBI maintained its full-year 2023 outlook and expects net sales growth, excluding contributions from Keds, to be down in the mid- to high-single digits for the year. Diluted EPS is expected in the range of $1.20 to $1.50.
Recently, DBI has seen a slew of leadership changes under Howe, who previously served as DSW president until being promoted to CEO in April. Just last week, the company announced that the president of Designer Brands Inc. and Camuto LLC, Bill Jordan, would step down from both positions, effective Dec. 1. And in July, DBI tapped Laura Denk as president of DSW Designer Shoe Warehouse and EVP of Designer Brands.
“The unique synergies between our legacy retail business and our brand portfolio are putting us on a path to being more resilient than ever and we will continue to build out our leadership and structure our teams accordingly,” Howe said. “As we look ahead, we do anticipate near-term headwinds will persist, but we are confident in our plans to continue optimizing and spotlighting our unparalleled assortment.”
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