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Designer Brands Inc. Reports Third Quarter 2024 Financial Results

Designer Brands Inc. (NYSE: DBI), recognized as one of the largest designers and retailers of footwear and accessories globally, shared its financial performance for the third quarter ending November 2, 2024. This quarter reflected both opportunities and challenges within the footwear market.

Market Overview

According to Circana’s research, sales for footwear in the U.S. retail segment were generally in line with market expectations. Despite a challenging environment, there were notable performances in specific categories, including athletic, casual, and formal footwear. However, the company faced difficulties, particularly with boots, which experienced a downturn.

Doug Howe, the CEO, shared that the quarter began positively, benefiting from back-to-school sales and strong demand for athletic and athleisure products. However, as the season transitioned to fall, unseasonably warm weather and economic uncertainties limited consumer spending, particularly affecting seasonal products. As a result, total comparable sales saw a decline of 3.1% for the quarter.

Despite these challenges, Howe expressed optimism, pointing out that the total footwear sales excluding boots remained stable compared to the previous year, while U.S. retail sales, specifically not including boots, rose by 8% year-over-year, indicating that strategic investments were being made in the right areas.

Financial Highlights

Key Metrics

• - Net Sales: Decreased by 1.2% to reach $777.2 million.
• - Comparable Sales: Dropped by 3.1% during the third quarter.
• - Gross Profit: Fell to $247.4 million, accounting for 31.8% of net sales, down from 32.6% the previous year.
• - Net Income: Reported at $13.0 million, translating to an adjusted diluted earnings per share (EPS) of $0.27.
• - Cash Position: Ended the quarter with $36.2 million in cash and equivalents, down from $54.6 million a year prior.

Shareholder Returns

During the reviewed quarter, Designer Brands repurchased 7.7 million shares at a cost of $50.6 million, maintaining a commitment to shareholder returns. Additionally, a dividend of $0.05 per share is set to be paid out on December 20, 2024, reinforcing the company's ongoing dedication to its investors.

Store Count and Strategic Changes

In terms of physical presence, the company closed three stores in the U.S. while opening two in Canada, resulting in a total of 496 U.S. stores and 179 in Canada by the end of the quarter. This strategic adjustment reflects the ongoing optimization of their retail footprint amidst changing market conditions.

Updated Guidance for 2024

Reflecting on the current market conditions, Designer Brands updated its guidance for 2024, projecting a decline in net sales growth contrasted with previous forecasts that anticipated flat to low single-digit growth. The adjusted diluted EPS expectations are now set between $0.10 and $0.30, highlighting the cautious outlook amid tougher market dynamics.

Conclusion

Despite facing a challenging quarter, Designer Brands Inc. remains focused on its strategic initiatives to adapt to market trends while optimizing operations. The company will pursue a refreshed approach to holiday marketing and merchandising, highlighting its commitment to long-term performance enhancement. As consumer preferences and economic conditions evolve, Designer Brands aims to leverage its extensive brand portfolio for future growth.

For more detailed information, Designer Brands will host a conference call today at 8:30 AM ET, inviting analysts and investors to join the discussion about the company’s strategy and performance projections moving forward.