Designer Brands Inc. Reports First Quarter 2024 Financial Results
Designer Brands Inc. (NYSE: DBI) reported its Q1 2024 financial results, showing a 0.6% increase in net sales to $746.6 million. Despite this, total comparable sales decreased by 2.5%. Gross profit grew to $245.1 million, with a gross margin of 32.8%, up from 32.0% last year. The company reported a net income of $0.8 million, or $0.01 EPS, influenced by restructuring and integration costs. Adjusted net income stood at $4.8 million, or $0.08 EPS. Cash and equivalents were $43.4 million, down from $50.6 million last year, while debt increased to $476.1 million from $390.3 million. Inventory levels decreased to $620.5 million. DBI opened one store in the U.S. and acquired 28 Rubino stores in Canada, bringing the total to 675 stores. The company reaffirmed its 2024 guidance of low-single-digit net sales growth and adjusted EPS of $0.70-$0.80.
- Net sales increased by 0.6% to $746.6 million.
- Gross profit rose to $245.1 million, up from $237.7 million.
- Gross margin improved to 32.8% from 32.0% last year.
- Adjusted net income was $4.8 million, or $0.08 adjusted EPS.
- Reaffirmed full-year 2024 guidance of low-single-digit net sales growth and adjusted EPS of $0.70-$0.80.
- Acquired 28 Rubino stores in Canada, expanding store footprint.
- Total comparable sales decreased by 2.5%.
- Reported net income was only $0.8 million, or $0.01 EPS.
- Cash and cash equivalents decreased to $43.4 million from $50.6 million.
- Total debt increased to $476.1 million from $390.3 million.
- Inventory levels decreased to $620.5 million from $637.4 million.
Designer Brands Inc.'s first quarter results present an interesting mix of positives and challenges. The 0.6% increase in net sales, reaching
The adjusted net income of
Investors should weigh the company’s optimism in reaffirming its full-year guidance against these mixed signals. The dividend payment remains a positive, showcasing confidence in cash flow stability.
The performance and leisure footwear market in the U.S. has shown resilience and Designer Brands Inc.'s outpacing this segment is a positive indicator. Their ability to outperform in the performance, leisure and kids categories reflects a strong alignment with current consumer trends. The company's strategic initiatives to revitalize its assortment and elevate marketing are steps in the right direction, which could enhance brand appeal and customer loyalty. However, the slight drop in comparable sales suggests that these strategies might still be in their early stages of impact.
Further, the rebranding efforts and digital enhancement initiatives are critical for capturing the evolving consumer base, which is increasingly blending online and offline shopping experiences. The integration of Rubino stores and new store openings signal an aggressive expansion strategy that, if managed well, could lift market share in the North American region.
Consolidated gross profit margin rose 80 basis points over the same period last year, driven by the Brand Portfolio Segment
Net sales growth in performance and leisure footwear in the
Company reaffirms full year 2024 guidance
"This quarter, we were pleased to deliver results in line with our expectations for this quarter, as we gain traction on our path to returning Designer Brands to growth," stated Doug Howe, Chief Executive Officer. "I am proud of the way our teams are embracing the strategic initiatives that we are implementing across the business as we work to transform into a more efficient and synergistic organization. According to Circana, we outperformed the overall market dollar sales in the performance, leisure, and kids categories, which we believe is a testament to the strength of our new strategy."
Howe continued, "Moving forward, we will continue to prioritize our strategic commitments to revitalize our assortment, elevate marketing, and enhance the in-store and digital experience, while exploring areas to further rationalize our cost base appropriately, streamline our operations, and drive greater efficiencies. We believe that we are on solid footing as we enter the summer months and are pleased to reaffirm our guidance for 2024."
First Quarter Operating Results (Unless otherwise stated, all comparisons are to the first quarter of 2023)
- Net sales increased
0.6% to$746.6 million - Total comparable sales decreased by
2.5% . - Gross profit increased to
$245.1 million $237.7 million 32.8% compared to32.0% for the same period last year. - Reported net income attributable to Designer Brands Inc. was
$0.8 million $0.01 $0.07 - Adjusted net income was
$4.8 million $0.08
Liquidity
- Cash and cash equivalents totaled
$43.4 million $50.6 million $187.8 million $476.1 million $390.3 million - The Company ended the first quarter with inventories of
$620.5 million $637.4 million
Dividend
On May 15, 2024, the Company's Board of Directors declared a quarterly cash dividend of
Store Openings and Closings
During the first quarter of 2024, in
Reaffirming 2024 Financial Outlook
The Company is reaffirming the following guidance for the full year 2024:
Metric | Guidance | |
Designer Brands Net Sales Growth | Low-single digits | |
Adjusted Diluted EPS |
Forward-looking adjusted diluted EPS for 2024 excludes potential charges or gains that may be recorded during the fiscal year, including among other things: (1) restructuring and integration costs, including severance charges; (2) acquisition-related costs; (3) impairment charges; (4) foreign currency transaction losses; (5) the net tax impact of such items; (6) the change in the valuation allowance on deferred tax assets; and (7) net income (loss) attributable to redeemable noncontrolling interest. A reconciliation of forward-looking non-GAAP earnings guidance to the comparable GAAP measure is not provided, as permitted by Item 10(e)(1)(i)(B) of Regulation S-K, because the impact and timing of these potential charges or gains is inherently uncertain and difficult to predict and is unavailable without unreasonable efforts. In addition, the Company believes that such reconciliations would imply a degree of precision and certainty that could be confusing to investors. Such items are uncertain and could have a substantial impact on GAAP measures of our financial performance.
Webcast and Conference Call
The Company is hosting a conference call today at 8:30 am Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-888-317-6003, or the international dial-in, 1-412-317-6061, and reference conference ID number 8115299 approximately ten minutes prior to the start of the conference call. The conference call will also be broadcast live over the internet and can be accessed through the following link, as well as through the Company's investor website at investors.designerbrands.com:
https://app.webinar.net/PDZrA5vkbE0
For those unable to listen to the live webcast, an archived version will be available on the Company's investor website until June 11, 2024. A replay of the teleconference will be available by dialing the following numbers:
International: 1-412-317-0088
Passcode: 9545499
Important information may be disseminated initially or exclusively via the Company's investor website; investors should consult the website to access this information.
About Designer Brands
Designer Brands is one of the world's largest designers, producers, and retailers of the most recognizable footwear brands and accessories, transforming and defining the footwear industry through a mission of inspiring self-expression. With a diversified, world-class portfolio of coveted brands, including Crown Vintage, Hush Puppies, Jessica Simpson, Keds, Kelly & Katie, Le TIGRE, Lucky Brand, Mix No. 6, Topo, Vince Camuto and others, Designer Brands designs and produces on-trend footwear and accessories for all of life's occasions, delivered to the consumer through a robust direct-to-consumer omni-channel infrastructure and powerful national wholesale distribution. Powered by a billion-dollar digital commerce business across multiple domains and 675 DSW Designer Shoe Warehouse, The Shoe Company, and Rubino stores in
Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995
Certain statements in this press release may constitute forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the use of forward-looking words such as "outlook," "could," "believes," "expects," "potential," "continues," "may," "will," "should," "would," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words. These statements are based on the Company's current views and expectations and involve known and unknown risks, uncertainties, and other factors that may cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to: uncertain general economic and financial conditions, including concerns of a potential recession in the
DESIGNER BRANDS INC. SEGMENT RESULTS (unaudited) | |||||||||||
Net Sales | |||||||||||
Three months ended | |||||||||||
(dollars in thousands) | May 4, 2024 | April 29, 2023 | Change | ||||||||
Amount | % of Segment | Amount | % of Segment | Amount | % | ||||||
Segment net sales: | |||||||||||
$ 621,367 | 79.6 % | $ 612,886 | 80.7 % | $ 8,481 | 1.4 % | ||||||
Canada Retail | 55,512 | 7.1 % | 53,955 | 7.1 % | 1,557 | 2.9 % | |||||
Brand Portfolio | 104,130 | 13.3 % | 92,983 | 12.2 % | 11,147 | 12.0 % | |||||
Total segment net sales | 781,009 | 100.0 % | 759,824 | 100.0 % | 21,185 | 2.8 % | |||||
Elimination of intersegment net sales | (34,413) | (17,742) | (16,671) | 94.0 % | |||||||
Consolidated net sales | $ 746,596 | $ 742,082 | $ 4,514 | 0.6 % | |||||||
Net Sales by Brand Categories | |||||||||||
(in thousands) | Canada Retail(2) | Brand Portfolio | Eliminations | Consolidated | |||||||
Three months ended May 4, 2024 | |||||||||||
Owned Brands:(1) | |||||||||||
Direct-to-consumer | $ 105,014 | $ 8,360 | $ 13,930 | $ — | $ 127,304 | ||||||
External customer wholesale, commission income, and other | — | — | 55,787 | — | 55,787 | ||||||
Intersegment wholesale | — | — | 34,413 | (34,413) | — | ||||||
Total Owned Brands | 105,014 | 8,360 | 104,130 | (34,413) | 183,091 | ||||||
National brands | 516,353 | 47,152 | — | — | 563,505 | ||||||
Total net sales | $ 621,367 | $ 55,512 | $ 104,130 | $ (34,413) | $ 746,596 | ||||||
Three months ended April 29, 2023 | |||||||||||
Owned Brands:(1) | |||||||||||
Direct-to-consumer | $ 123,209 | $ 7,872 | $ 10,624 | $ — | $ 141,705 | ||||||
External customer wholesale, commission income, and other | — | — | 64,617 | — | 64,617 | ||||||
Intersegment wholesale and commission income | — | — | 17,742 | (17,742) | — | ||||||
Total Owned Brands | 123,209 | 7,872 | 92,983 | (17,742) | 206,322 | ||||||
National brands | 489,677 | 46,083 | — | — | 535,760 | ||||||
Total net sales | $ 612,886 | $ 53,955 | $ 92,983 | $ (17,742) | $ 742,082 | ||||||
(1) | "Owned Brands" refers to those brands that we have rights to sell through ownership or license arrangements. |
(2) | Beginning with the 2023 Form 10-K, we are providing a breakout of Canada Retail segment net sales by brand categories and we have recast the three months ended April 29, 2023 on a consistent basis. |
Comparable Sales | |||
Three months ended | |||
May 4, 2024 | April 29, 2023 | ||
Change in comparable sales: | |||
(2.3) % | (11.6) % | ||
Canada Retail segment | (4.9) % | 2.9 % | |
Brand Portfolio segment - direct-to-consumer channel | (1.7) % | 8.3 % | |
Total | (2.5) % | (10.4) % | |
Store Count | |||||||
(square footage in thousands) | May 4, 2024 | April 29, 2023 | |||||
Number of | Square | Number of | Square | ||||
500 | 9,939 | 499 | 10,015 | ||||
Canada Retail segment: | |||||||
The Shoe Company stores | 122 | 626 | 114 | 601 | |||
DSW stores | 25 | 496 | 25 | 496 | |||
Rubino Stores | 28 | 149 | — | — | |||
175 | 1,271 | 139 | 1,097 | ||||
Total number of stores | 675 | 11,210 | 638 | 11,112 | |||
Gross Profit | |||||||||||||
Three months ended | |||||||||||||
(dollars in thousands) | May 4, 2024 | April 29, 2023 | Change | ||||||||||
Amount | % of Segment | Amount | % of Segment | Amount | % | Basis Points | |||||||
Segment gross profit: | |||||||||||||
$ 198,455 | 31.9 % | $ 196,814 | 32.1 % | $ 1,641 | 0.8 % | (20) | |||||||
Canada Retail | 17,385 | 31.3 % | 17,174 | 31.8 % | 211 | 1.2 % | (50) | ||||||
Brand Portfolio | 33,477 | 32.1 % | 22,085 | 23.8 % | 11,392 | 51.6 % | 830 | ||||||
Total segment gross profit | 249,317 | 31.9 % | 236,073 | 31.1 % | 13,244 | 5.6 % | 80 | ||||||
Net recognition (elimination) of intersegment gross profit | (4,248) | 1,666 | (5,914) | ||||||||||
Consolidated gross profit | $ 245,069 | 32.8 % | $ 237,739 | 32.0 % | $ 7,330 | 3.1 % |
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FAQ
What were Designer Brands' net sales for Q1 2024?
Designer Brands reported net sales of $746.6 million for Q1 2024, a 0.6% increase from the same period last year.
How did Designer Brands' gross profit margin change in Q1 2024?
Designer Brands' gross profit margin increased to 32.8% in Q1 2024, up 80 basis points from 32.0% in the same period last year.
What was Designer Brands' adjusted EPS for Q1 2024?
Designer Brands reported an adjusted EPS of $0.08 for Q1 2024.
Did Designer Brands reaffirm its 2024 guidance?
Yes, Designer Brands reaffirmed its guidance for 2024, expecting low-single-digit net sales growth and adjusted EPS of $0.70 to $0.80.
How did Designer Brands' total comparable sales perform in Q1 2024?
Total comparable sales for Designer Brands decreased by 2.5% in Q1 2024.
What were Designer Brands' cash and cash equivalents at the end of Q1 2024?
Designer Brands had $43.4 million in cash and cash equivalents at the end of Q1 2024, down from $50.6 million at the same time last year.
What was Designer Brands' debt level at the end of Q1 2024?
Designer Brands' total debt increased to $476.1 million at the end of Q1 2024, up from $390.3 million a year ago.
How many stores did Designer Brands open in Q1 2024?
Designer Brands opened one new store in the U.S. and acquired 28 Rubino stores in Canada during Q1 2024.
Designer Brands Inc.
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