Designer Brands Inc. Reports Fourth Quarter and Fiscal Year 2023 Financial Results

Rhea-AI Summary

Designer Brands Inc. reported full year 2023 EPS at the high end of guidance, with a strong fourth quarter performance driven by brand portfolio strength. The company issued fiscal 2024 guidance aiming for a return to growth amidst challenges faced in 2023.

Positive

• Full year 2023 EPS met the high end of guidance range.
• Fourth quarter performance showed sequential improvement in comparable sales.
• Acquisition of Keds, Topo, and launching Le Tigre contributed to brand portfolio strength.
• Plans for 2024 focus on returning to growth with fresher assortments and operational improvements.
• Cash and cash equivalents totaled $49.2 million at the end of 2023.
• Company repurchased 9.7 million Class A common shares during 2023.
• Dividend of $0.05 per share to be paid on April 12, 2024.
• One store opened and two closed in the U.S. and Canada during the fourth quarter of 2023.
• 2024 guidance includes low-single digits net sales growth and diluted EPS of $0.70 - $0.80.

Negative

• Net sales decreased by 7.3% in full year 2023.
• Total comparable sales decreased by 9.0% in 2023.
• Gross profit decreased to $1.0 billion in 2023.
• Reported net loss of $29.7 million in the fourth quarter of 2023.
• Debt increased to $427.1 million at the end of 2023 compared to the previous year.
• Inventories decreased to $571.3 million at the end of 2023.
• Net cash provided by operating activities decreased to $162.4 million in 2023.
• Store closures in the U.S. and Canada during the fourth quarter of 2023.
• 2024 diluted EPS guidance of $0.70 - $0.80.

Insights

Financial Analyst

The report from Designer Brands Inc. shows a mixed financial performance with a full-year EPS at the high end of guidance but overall declining sales and gross margin. The decrease in net sales by 7.3% year-over-year and a total comparable sales drop of 9.0% reflect a challenging retail environment, particularly for footwear. Additionally, a gross margin contraction from 32.6% to 31.7% may indicate rising costs or increased discounting to move inventory.

Despite the reported net income, the company's increased debt from $281.0 million to $427.1 million raises concerns about its leverage, especially in a softening market. However, the company's cash flow generation remains strong with $162.4 million from operating activities. The share repurchase program, with $87.7 million remaining, signals confidence from management in the company's intrinsic value, although it also suggests a focus on shareholder returns over debt reduction.

Retail Industry Analyst

Designer Brands' strategic moves, including the acquisition of Keds and Topo, as well as the launch of Le Tigre, indicate a pivot towards diversifying their brand portfolio. The focus on offering a fresher and trend-right assortment aligns with consumer demand for newness and could be pivotal in driving future growth.

The company's plans to improve the shopping experience and operational efficiencies are essential in the current retail landscape, where customer experience and omnichannel strategies are key differentiators. However, the inventory levels, which have decreased slightly from $605.7 million to $571.3 million, will need to be managed carefully to avoid additional markdowns that could further erode margins.

Market Research Analyst

The guidance for low-single-digit net sales growth in 2024 suggests cautious optimism from Designer Brands, considering the challenging year they've had. The projected diluted EPS of $0.70 - $0.80 for the next year seems to be a conservative estimate, likely factoring in the uncertain retail environment and the company's initiatives to revamp its operations.

Investors should note the potential for a turnaround if the company's strategic initiatives take hold, but also remain aware of the risks associated with the competitive landscape and consumer spending trends, which have recently shown volatility.

Delivered full year 2023 EPS at the high end of guidance range

Fourth quarter performance driven by sequential improvement in comparable sales

Issues fiscal 2024 guidance reflecting expectations for return to growth

COLUMBUS, Ohio, March 21, 2024 /PRNewswire/ -- Designer Brands Inc. (NYSE: DBI) (the "Company" and "Designer Brands"), one of the world's largest designers, producers, and retailers of footwear and accessories, announced financial results for the three months and year ended February 3, 2024.

"We ended the year strong, with a solid finish to the fourth quarter above the top end of our revised EPS guidance range, led by strength in our brand portfolio segment as a result of acquiring Keds, Topo, and launching Le Tigre," stated Doug Howe, Chief Executive Officer. "Despite the results, 2023 was a difficult year as we were impacted by a softening footwear market, highly promotional retail environment, and the impact of unseasonably warm weather on our seasonal footwear business."

Howe continued, "Looking ahead to 2024, we have an important transition year ahead as we plan to return to growth across our business. We are laser focused on assembling a fresher and more trend-right assortment for our customers, providing an increasingly convenient shopping experience across our channels and executing on operational improvements in our brands business bolstered by our new hires. We expect these initiatives will underpin improved financial performance throughout the year, and combined with disciplined cost savings, will lead to continued strong cash flow generation."

Fourth Quarter Operating Results (Unless otherwise stated, all comparisons are to the fourth quarter of 2022)

• Net sales decreased 0.8% to $754.3 million.
• Total comparable sales decreased by 7.3%.
• Gross profit decreased to $207.4 million versus $222.0 million last year, and gross margin was 27.5% compared to 29.2% for the same period last year.
• Reported net loss attributable to Designer Brands Inc. was $29.7 million, or loss per diluted share of $0.52. This includes net after-tax adjustments of $4.4 million, or $0.08 per diluted share, primarily related to impairment charges.
• Adjusted net loss was $25.3 million, or $0.44 loss per diluted share.

Full Year Operating Results (Unless otherwise stated, all comparisons are to full year 2022)

• Net sales decreased 7.3% to $3.1 billion.
• Total comparable sales decreased by 9.0%.
• Gross profit decreased to $1.0 billion versus $1.1 billion last year, and gross margin was 31.7% compared to 32.6% last year.
• Reported net income attributable to Designer Brands Inc. was $29.1 million, or diluted earnings per share ("EPS") of $0.46. This includes net after-tax adjustments of $14.1 million, or $0.22 per diluted share, primarily related to restructuring and integration costs, impairment charges, and CEO transition costs.
• Adjusted net income was $43.2 million, or adjusted diluted EPS of $0.68.

Liquidity

• Cash and cash equivalents totaled $49.2 million at the end of 2023, compared to $58.8 million at the end of 2022, with $160.9 million available for borrowings under our senior secured asset-based revolving credit facility, as amended. Debt totaled $427.1 million at the end of 2023 compared to $281.0 million at the end of 2022.
• Net cash provided by operating activities was $162.4 million for 2023 compared to $201.4 million last year.
• Inventories totaled $571.3 million at the end of 2023, compared to $605.7 million at the end of 2022.

Return to Shareholders

• During 2023, the Company repurchased an aggregate 9.7 million Class A common shares at an aggregate cost of $102.2 million, including transaction costs and excise tax. As of February 3, 2024, $87.7 million of Class A common shares remained available for future repurchase under the share repurchase program.
• A dividend of $0.05 per share of Class A and Class B common shares will be paid on April 12, 2024 to shareholders of record at the close of business on March 29, 2024.

Store Openings and Closings

During the fourth quarter of 2023, we opened one store and closed one store in the U.S. and closed one store in Canada, resulting in a total of 499 stores in the U.S. and 143 stores in Canada as of February 3, 2024.

2024 Financial Outlook

The Company has announced the following guidance for the full year 2024:

Metric			2024 Guidance
Designer Brands Net Sales Growth			Low-single digits
Diluted EPS			$0.70 - $0.80

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 9110312 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/jEep4LnmvQD

For those unable to listen to the live webcast, an archived version will be available at the same location until April 4, 2024. A replay of the teleconference will be available by dialing the following numbers:

U.S.: 1-877-344-7529

Canada: 1-855-669-9658

International: 1-412-317-0088

Passcode: 4043827

Important information may be disseminated initially or exclusively via the Company's investor website; investors should consult the site 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 over 640 DSW Designer Shoe Warehouse and The Shoe Company stores in North America, Designer Brands delivers current, in-line footwear and accessories from the largest national brands in the industry and holds leading market share positions in key product categories across Women's, Men's, and Kids'. Designer Brands also distributes its brands internationally through select wholesale and distributor relationships while also leveraging design and sourcing expertise to build private label product for national retailers. Designer Brands is committed to being a difference maker in the world, taking steps forward to advance diversity, equity, and inclusion in the footwear industry and supporting a global community and the health of the planet by donating more than nine million pairs of shoes to the global non-profit Soles4Souls. To learn more, visit www.designerbrands.com.

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 conditions, including recession concerns, rising interest rates, inflationary pressures, and the related impacts to consumer discretionary spending; our ability to anticipate and respond to rapidly changing consumer preferences, customer expectations, and fashion trends; our ability to maintain strong relationships with our vendors, manufacturers, licensors, and retailer customers; risks related to losses or disruptions associated with our distribution systems, including our distribution centers and stores, whether as a result of reliance on third-party providers, or otherwise; risks related to cyber security threats and privacy or data security breaches or the potential loss or disruption of our information technology ("IT") systems; risks related to the implementation of new or updated IT systems; our ability to protect our reputation and to maintain the brands we license; our reliance on our loyalty programs and marketing to drive traffic, sales, and customer loyalty; our ability to retain our existing management team, and to continue to attract qualified new personnel; risks related to restrictions imposed by our senior secured asset-based revolving credit facility, as amended, and our senior secured term loan credit agreement, as amended, that could limit our ability to fund our operations; our competitiveness with respect to style, price, brand availability, shopping platforms, and customer service; risks related to our international operations and our reliance on foreign sources for merchandise; our ability to comply with privacy laws and regulations, as well as other legal obligations; risks associated with climate change and other corporate responsibility issues; and uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation. Risks and other factors that could cause our actual results to differ materially from our forward-looking statements are described in the Company's latest Annual Report on Form 10-K or other reports made or filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the time when made. The Company undertakes no obligation to update or revise the forward-looking statements included in this press release to reflect any future events or circumstances.

DESIGNER BRANDS INC. SEGMENT RESULTS (unaudited)
Net Sales
	Three months ended
(dollars in thousands)	February 3, 2024				January 28, 2023				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%
Segment net sales:
U.S. Retail	$                630,811		81.6 %		$                648,314		84.1 %		$     (17,503)		(2.7) %
Canada Retail	64,398		8.3 %		66,353		8.6 %		(1,955)		(2.9) %
Brand Portfolio	77,719		10.1 %		56,450		7.3 %		21,269		37.7 %
Total segment net sales	772,928		100.0 %		771,117		100.0 %		1,811		0.2 %
Elimination of intersegment net sales	(18,580)				(10,571)				(8,009)		75.8 %
Consolidated net sales	$                754,348				$                760,546				$       (6,198)		(0.8) %

 

	Twelve months ended
(dollars in thousands)	February 3, 2024				January 28, 2023				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%
Segment net sales:
U.S. Retail	$             2,533,849		80.5 %		$             2,791,513		82.0 %		$   (257,664)		(9.2) %
Canada Retail	264,229		8.4 %		283,241		8.3 %		(19,012)		(6.7) %
Brand Portfolio	348,976		11.1 %		327,715		9.7 %		21,261		6.5 %
Total segment net sales	3,147,054		100.0 %		3,402,469		100.0 %		(255,415)		(7.5) %
Elimination of intersegment net sales	(72,078)				(87,041)				14,963		(17.2) %
Consolidated net sales	$             3,074,976				$             3,315,428				$   (240,452)		(7.3) %

 

Net Sales by Brand Categories
(in thousands)	U.S. Retail		Canada Retail(2)		Brand Portfolio		Eliminations		Consolidated
Three months ended February 3, 2024
Owned Brands:(1)
Direct-to-consumer	$       108,266		$        14,081		$         22,120		$                 —		$       144,467
External customer wholesale, commission income and other	—		—		37,019		—		37,019
Intersegment wholesale and commission income	—		—		18,580		(18,580)		—
Total Owned Brands	108,266		14,081		77,719		(18,580)		181,486
National brands	522,545		50,317		—		—		572,862
Total net sales	$       630,811		$        64,398		$         77,719		$       (18,580)		$       754,348
Three months ended January 28, 2023
Owned Brands:(1)
Direct-to-consumer	$       129,398		$          9,678		$         13,710		$                 —		$       152,786
External customer wholesale, commission income and other	—		—		32,169		—		32,169
Intersegment wholesale and commission income	—		—		10,571		(10,571)		—
Total Owned Brands	129,398		9,678		56,450		(10,571)		184,955
National brands	518,916		56,675		—		—		575,591
Total net sales	$       648,314		$        66,353		$         56,450		$       (10,571)		$       760,546
Twelve months ended February 3, 2024
Owned Brands:(1)
Direct-to-consumer	$       471,197		$        45,025		$         65,724		$                 —		$       581,946
External customer wholesale, commission income and other	—		—		211,174		—		211,174
Intersegment wholesale and commission income	—		—		72,078		(72,078)		—
Total Owned Brands	471,197		45,025		348,976		(72,078)		793,120
National brands	2,062,652		219,204		—		—		2,281,856
Total net sales	$   2,533,849		$      264,229		$       348,976		$       (72,078)		$   3,074,976
Twelve months ended January 28, 2023
Owned Brands:(1)
Direct-to-consumer	$       569,741		$        34,734		$         37,840		$                 —		$       642,315
External customer wholesale, commission income and other	—		—		202,834		—		202,834
Intersegment wholesale and commission income	—		—		87,041		(87,041)		—
Total Owned Brands	569,741		34,734		327,715		(87,041)		845,149
National brands	2,221,772		248,507		—		—		2,470,279
Total net sales	$   2,791,513		$      283,241		$       327,715		$       (87,041)		$   3,315,428

(1)	"Owned Brands" refers to those brands we have rights to sell through ownership or license arrangements. Beginning in the first quarter of 2023, sales of the Keds brand are included in Owned Brands as a result of our acquisition of Keds. Sales of the Keds brand in periods prior to the first quarter of 2023 are not recast as this brand was considered a national brand during those periods.
(2)	Beginning with the fourth quarter of 2023, we are providing a breakout of Canada Retail segment net sales by brand categories and we have recast 2022 on a consistent basis.

 

Comparable Sales
	Three months ended				Twelve months ended
	February 3, 2024		January 28, 2023		February 3, 2024		January 28, 2023
Change in comparable sales:
U.S. Retail segment	(7.4) %		(8.1) %		(9.5) %		2.0 %
Canada Retail segment	(9.2) %		15.9 %		(5.9) %		28.8 %
Brand Portfolio segment - direct-to-consumer channel	5.9 %		44.4 %		6.0 %		34.5 %
Total	(7.3) %		(5.5) %		(9.0) %		4.4 %

 

Store Count
(square footage in thousands)	February 3, 2024				January 28, 2023
	Number of Stores		Square Footage		Number of Stores		Square Footage
U.S. Retail segment - DSW stores	499		9,958		501		10,092
Canada Retail segment:
The Shoe Company stores	118		618		113		596
DSW stores	25		496		25		496
	143		1,114		138		1,092
Total number of stores	642		11,072		639		11,184

 

Gross Profit
	Three months ended
(dollars in thousands)	February 3, 2024				January 28, 2023				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment gross profit:
U.S. Retail	$     171,416		27.2 %		$     188,315		29.0 %		$     (16,899)		(9.0) %		(180)
Canada Retail	17,203		26.7 %		17,976		27.1 %		(773)		(4.3) %		(40)
Brand Portfolio	17,508		22.5 %		12,031		21.3 %		5,477		45.5 %		120
Total segment gross profit	206,127		26.7 %		218,322		28.3 %		(12,195)		(5.6) %		(160)
Net recognition of intersegment gross profit	1,227				3,669				(2,442)
Consolidated gross profit	$     207,354		27.5 %		$     221,991		29.2 %		$     (14,637)		(6.6) %		(170)

 

	Twelve months ended
(dollars in thousands)	February 3, 2024				January 28, 2023				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment gross profit:
U.S. Retail	$     794,266		31.3 %		$     904,583		32.4 %		$   (110,317)		(12.2) %		(110)
Canada Retail	84,794		32.1 %		99,121		35.0 %		(14,327)		(14.5) %		(290)
Brand Portfolio	92,545		26.5 %		72,006		22.0 %		20,539		28.5 %		450
Total segment gross profit	971,605		30.9 %		1,075,710		31.6 %		(104,105)		(9.7) %		(70)
Net recognition of intersegment gross profit	3,281				3,515				(234)
Consolidated gross profit	$     974,886		31.7 %		$ 1,079,225		32.6 %		$   (104,339)		(9.7) %		(90)

 

Intersegment Eliminations
	Three months ended
(in thousands)	February 3, 2024		January 28, 2023
Intersegment recognition and elimination activity:
Net sales recognized by Brand Portfolio segment	$                (18,580)		$                (10,571)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment	13,079		6,085
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period	6,728		8,155
	$                    1,227		$                    3,669

 

	Twelve months ended
(in thousands)	February 3, 2024		January 28, 2023
Intersegment recognition and elimination activity:
Net sales recognized by Brand Portfolio segment	$                (72,078)		$                (87,041)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment	51,213		58,234
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period	24,146		32,322
	$                    3,281		$                    3,515

 

DESIGNER BRANDS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share amounts)
	Three months ended				Twelve months ended
	February 3, 2024		January 28, 2023		February 3, 2024		January 28, 2023
Net sales	$        754,348		$        760,546		$     3,074,976		$     3,315,428
Cost of sales	(546,994)		(538,555)		(2,100,090)		(2,236,203)
Gross profit	207,354		221,991		974,886		1,079,225
Operating expenses	(241,604)		(222,034)		(907,041)		(896,382)
Income from equity investments	2,418		2,194		9,390		8,864
Impairment charges	(4,185)		(80)		(4,834)		(4,317)
Operating profit (loss)	(36,017)		2,071		72,401		187,390
Interest expense, net	(9,875)		(4,344)		(32,171)		(14,874)
Loss on extinguishment of debt and write-off of debt issuance costs	—		—		—		(12,862)
Non-operating expenses, net	(116)		(21)		(33)		(130)
Income (loss) before income taxes	(46,008)		(2,294)		40,197		159,524
Income tax benefit (provision)	16,391		47,394		(10,981)		3,142
Net income (loss)	(29,617)		45,100		29,216		162,666
Net loss (income) attributable to redeemable noncontrolling interest	(81)		10		(154)		10
Net income (loss) attributable to Designer Brands Inc.	$        (29,698)		$          45,110		$          29,062		$        162,676
Diluted earnings (loss) per share attributable to Designer Brands Inc.	$             (0.52)		$               0.66		$               0.46		$               2.26
Weighted average diluted shares	56,939		67,922		63,375		72,101

 

DESIGNER BRANDS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in thousands)
	February 3, 2024		January 28, 2023
ASSETS
Current assets:
Cash and cash equivalents	$                  49,173		$                  58,766
Receivables, net	83,590		77,763
Inventories	571,331		605,652
Prepaid expenses and other current assets	73,338		47,750
Total current assets	777,432		789,931
Property and equipment, net	219,939		235,430
Operating lease assets	721,335		700,373
Goodwill	123,759		97,115
Intangible assets, net	82,827		31,866
Deferred tax assets	39,067		48,285
Equity investments	62,857		63,820
Other assets	49,016		42,798
Total assets	$             2,076,232		$             2,009,618
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$                289,368		$                255,364
Accrued expenses	159,622		190,676
Current maturities of long-term debt	6,750		—
Current operating lease liabilities	166,531		190,086
Total current liabilities	622,271		636,126
Long-term debt	420,344		281,035
Non-current operating lease liabilities	646,161		631,412
Other non-current liabilities	24,948		24,989
Total liabilities	1,713,724		1,573,562
Redeemable noncontrolling interest	3,288		3,155
Total shareholders' equity	359,220		432,901
Total liabilities, redeemable noncontrolling interest, and shareholders' equity	$             2,076,232		$             2,009,618

 

DESIGNER BRANDS INC. NON-GAAP RECONCILIATION (unaudited and in thousands, except per share amounts)
	Three months ended				Twelve months ended
	February 3, 2024		January 28, 2023		February 3, 2024		January 28, 2023
Operating expenses	$      (241,604)		$      (222,034)		$      (907,041)		$      (896,382)
Non-GAAP adjustments:
CEO transition costs	369		3,750		4,352		3,750
Restructuring and integration costs	1,188		6,989		6,378		9,445
Acquisition-related costs	36		2,247		1,633		2,647
Total non-GAAP adjustments	1,593		12,986		12,363		15,842
Adjusted operating expenses	$      (240,011)		$      (209,048)		$      (894,678)		$      (880,540)
Operating profit (loss)	$        (36,017)		$           2,071		$          72,401		$       187,390
Non-GAAP adjustments:
CEO transition costs	369		3,750		4,352		3,750
Restructuring and integration costs	1,188		6,989		6,378		9,445
Acquisition-related costs	36		2,247		1,633		2,647
Impairment charges	4,185		80		4,834		4,317
Total non-GAAP adjustments	5,778		13,066		17,197		20,159
Adjusted operating profit (loss)	$        (30,239)		$          15,137		$          89,598		$        207,549
Net income (loss) attributable to Designer Brands Inc.	$        (29,698)		$          45,110		$          29,062		$        162,676
Non-GAAP adjustments:
CEO transition costs	369		3,750		4,352		3,750
Restructuring and integration costs	1,188		6,989		6,378		9,445
Acquisition-related costs	36		2,247		1,633		2,647
Impairment charges	4,185		80		4,834		4,317
Loss on extinguishment of debt and write-off of debt issuance costs	—		—		—		12,862
Foreign currency transaction losses	115		21		32		130
Total non-GAAP adjustments before tax effect	5,893		13,087		17,229		33,151
Tax effect on above non-GAAP adjustments	(1,577)		(1,428)		(4,462)		(6,513)
Discrete and permanent tax on non-deductible CEO transition costs	(936)		—		1,868		—
Valuation allowance change on deferred tax assets	949		(52,089)		(666)		(55,654)
Total non-GAAP adjustments, after tax	4,329		(40,430)		13,969		(29,016)
Net loss (income) attributable to redeemable noncontrolling interest	81		(10)		154		(10)
Adjusted net income (loss)	$        (25,288)		$            4,670		$          43,185		$        133,650
Diluted earnings (loss) per share	$            (0.52)		$              0.66		$              0.46		$              2.26
Adjusted diluted earnings (loss) per share	$            (0.44)		$              0.07		$              0.68		$              1.85

 

Non-GAAP Measures

To supplement amounts presented in our consolidated financial statements determined in accordance with accounting principles generally accepted in the United States ("GAAP"), the Company uses certain non-GAAP financial measures, including adjusted operating expenses, adjusted operating profit (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share as shown in the table above. These measures adjust for the effects of: (1) CEO transition costs; (2) restructuring and integration costs, including severance charges other than those included in CEO transition costs; (3) acquisition-related costs; (4) impairment charges; (5) loss on extinguishment of debt and write-off of debt issuance costs; (6) foreign currency transaction losses; (7) the net tax impact of such items, including discrete and permanent tax on non-deductible CEO transition costs; (8) the change in the valuation allowance on deferred tax assets; and (9) net loss (income) attributable to redeemable noncontrolling interest. The unaudited adjusted results should not be construed as an alternative to the reported results determined in accordance with GAAP. These financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures presented by other companies. The Company believes these non-GAAP financial measures provide useful information to both management and investors to increase comparability to prior periods by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company compared to prior periods, when reviewed in conjunction with the Company's GAAP statements. These amounts are not determined in accordance with GAAP and therefore should not be used exclusively in evaluating the Company's business and operations.

Comparable Sales Performance Metric

We consider the percent change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important measurement for management and investors of the performance of our direct-to-consumer businesses. We include in our comparable sales metric sales from stores in operation for at least 14 months at the beginning of the applicable year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales include the e-commerce sales of the U.S. Retail and Canada Retail segments. Comparable sales exclude the 53^rd week of sales in 2023 and, specifically for the Canada Retail segment, the impact of foreign currency translation, which is calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Comparable sales include the e-commerce sales of the Brand Portfolio segment from the direct-to-consumer e-commerce site for the Vince Camuto brand. The e-commerce sales for Topo, Keds, and Hush Puppies will be added to the comparable base for the Brand Portfolio segment beginning with the first quarter of 2024, the second quarter of 2024, and the third quarter of 2024, respectively. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.

CONTACT: Stacy Turnof, DesignerBrandsIR@edelman.com

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SOURCE Designer Brands Inc.

FAQ

What was Designer Brands Inc.'s full year 2023 EPS performance?

Designer Brands Inc. reported full year 2023 EPS at the high end of the guidance range.

What impacted Designer Brands Inc.'s 2023 financial results?

Designer Brands Inc. was impacted by a softening footwear market, highly promotional retail environment, and unseasonably warm weather in 2023.

What is Designer Brands Inc.'s 2024 financial outlook?

Designer Brands Inc. issued guidance for 2024, including low-single digits net sales growth and diluted EPS of $0.70 - $0.80.

How did Designer Brands Inc.'s net sales perform in full year 2023?

Designer Brands Inc.'s net sales decreased by 7.3% in full year 2023.

What was the reported net loss for Designer Brands Inc. in the fourth quarter of 2023?

Designer Brands Inc. reported a net loss of $29.7 million in the fourth quarter of 2023.

How many stores did Designer Brands Inc. open and close in the U.S. and Canada in the fourth quarter of 2023?

Designer Brands Inc. opened one store and closed two stores in the U.S. and Canada during the fourth quarter of 2023.