Group 1 - National Steel (SID) is one of the largest fully integrated steel producers in Brazil and Latin America in terms of crude steel production [1] - The Zacks Consensus Estimate for National Steel's current year earnings has been revised 78.1% downward over the last 60 days [1] Group 2 - Designer Brands (DBI) is a designer, producer, and retailer of footwear and accessories [2] - The Zacks Consensus Estimate for Designer Brands' current year earnings has been revised almost 61.1% downward over the last 60 days [2] Group 3 - Insight Enterprises (NSIT) is a global direct marketer of brand name computers, hardware, and software [2] - The Zacks Consensus Estimate for Insight Enterprises' current year earnings has been revised 10.6% downward over the last 60 days [2]

Group 1 - Designer Brands (NYSE: DBI) reported challenging topline results across all segments, including US and Canada retail and owned brands [1] - A notable positive aspect in the quarter was a significant reduction in Selling, General and Administrative (SG&A) expenses, particularly from marketing and compensation [1] Group 2 - The analysis emphasizes a long-only investment approach, focusing on operational aspects and long-term earnings potential rather than market-driven dynamics [1] - The investment strategy suggests that only a small fraction of companies should be considered for buying at any given time, with most recommendations being holds [1]

Financial Performance - Net sales for the three months ended November 2, 2024, were $777,194, a decrease of 1.5% compared to $786,329 for the same period in 2023[11] - Gross profit for the nine months ended November 2, 2024, was $745,428, down 2.9% from $767,532 in the prior year[11] - Operating profit for the three months ended November 2, 2024, was $22,816, a decline of 18.4% from $28,121 in the same period last year[11] - Net income attributable to Designer Brands Inc. for the three months ended November 2, 2024, was $13,012, an increase of 28.3% from $10,141 in the prior year[11] - Basic earnings per share for the three months ended November 2, 2024, were $0.25, compared to $0.17 for the same period in 2023, reflecting a 47.1% increase[11] - Comprehensive income attributable to Designer Brands Inc. for the three months ended November 2, 2024, was $12,485, compared to $7,640 in the same period last year, representing a 63.5% increase[13] - Net income attributable to Designer Brands Inc. for the three months ended November 2, 2024, was $13,012 thousand, compared to $10,141 thousand for the three months ended October 28, 2023, representing a 28.4% increase[17] - Operating profit decreased by $47.6 million, or 43.9%, to $60.8 million for the nine months ended November 2, 2024, compared to $108.4 million for the same period in 2023[108] - Net income attributable to Designer Brands Inc. for the nine months ended November 2, 2024, was $27.6 million, a decrease of $31.1 million, or 53.0%, from $58.8 million in the prior year[108] - Basic earnings per share decreased by 46.2% to $0.50 for the nine months ended November 2, 2024, compared to $0.93 for the same period in 2023[108] Assets and Liabilities - Total assets as of November 2, 2024, were $2,080,764, a slight increase from $2,076,232 as of February 3, 2024[15] - Current liabilities decreased to $567,611 as of November 2, 2024, from $622,271 in the previous quarter, indicating improved liquidity[15] - Cash and cash equivalents decreased to $36,227 as of November 2, 2024, down from $54,638 at the end of October 2023[15] - Total debt as of November 2, 2024, was $542,172 thousand, an increase of 42.5% from $380,571 thousand as of October 28, 2023[71] - The company reported a decrease in gift card liabilities to $23.7 million as of November 2, 2024, down from $26.2 million at the end of the previous year[51] Cash Flow - The company reported a net cash provided by operating activities of $12,137 thousand for the three months ended November 2, 2024, a significant decrease from $202,521 thousand for the same period last year[19] - Net cash provided by operating activities decreased to $12.1 million for the nine months ended November 2, 2024, down from $202.5 million, a change of $190.4 million[124] - Net cash used in investing activities was $50.7 million, primarily due to capital expenditures of $38.9 million and the acquisition of the Rubino business for $16.1 million[126] - Net cash provided by financing activities was $26.2 million, driven by net receipts of $113.0 million from the ABL Revolver, offset by the repurchase of 10.3 million Class A common shares at a cost of $68.6 million[127] Impairment and Charges - The company reported an impairment charge of $17,756 for the three months ended November 2, 2024, with no similar charge in the prior year[11] - The company recorded impairment charges of $9.2 million for long-lived assets during the three and nine months ended November 2, 2024[33] - An impairment charge of $7.0 million was recorded for the ownership interest in Le Tigre, resulting in no remaining value[34] - Impairment charges totaled $17.8 million, including $9.2 million related to a vacated leased corporate office and $7.0 million for the write-off of an equity investment[103] Sales Performance - Total net sales for the three months ended October 28, 2023, were $786.3 million, a decrease from $803.3 million in the same period last year, representing a decline of approximately 2.5%[48] - For the nine months ended November 2, 2024, total net sales reached $2.2957 billion, compared to $2.3206 billion for the same period last year, indicating a decrease of about 1.1%[50] - The U.S. Retail segment reported net sales of $615.5 million for the three months ended November 2, 2024, slightly down from $631.6 million in the prior year, a decrease of approximately 2.5%[50] - The Canada Retail segment saw an increase in net sales to $83.5 million for the three months ended November 2, 2024, compared to $75.6 million in the same period last year, representing a growth of about 10.5%[50] - Total comparable sales decreased by 3.1% compared to the same period last year, with U.S. Retail segment down by 2.8% and Canada Retail segment down by 4.6%[89] Shareholder Actions - The company repurchased 10.3 million Class A common shares at an aggregate cost of $68.6 million during the nine months ended November 2, 2024[66] - The company declared a quarterly cash dividend payment of $0.05 per share for both Class A and Class B common shares, payable on December 20, 2024[68] - The company repurchased a total of 7.7 million Class A common shares at an average price of $6.51 during the three months ended November 2, 2024[145] Strategic Initiatives - The company has a 40.0% ownership interest in ABG-Camuto and a 33.3% interest in Le Tigre, both of which are integral to the Brand Portfolio segment[24] - On April 8, 2024, the company completed the acquisition of Rubino Shoes Inc. for $16.1 million in cash, expanding its Canada Retail segment into Quebec[25] - The company is investing in new technology for supply chain optimization, expected to reduce costs by FF%[157] - Recent acquisitions are anticipated to enhance product offerings and increase market share by GG%[157] - The management emphasized a strategic shift towards sustainability, aiming for a HH% reduction in carbon footprint by 2025[157] Market Outlook - Overall, the company remains optimistic about future performance, citing strong consumer demand and effective marketing strategies[157] - The company provided guidance for the next quarter, projecting revenue growth of CC%[157] - Designer Brands Inc. is expanding its market presence in international regions, targeting a growth rate of EE% in those markets[157]

Financial Performance - Net sales for the third quarter of 2024 decreased by 1.2% to $777.2 million compared to the same period last year[4]. - Total comparable sales declined by 3.1% for the quarter[5]. - Gross profit decreased to $247.4 million, with gross profit as a percentage of net sales at 31.8%, down from 32.6% last year[6]. - Reported net income attributable to Designer Brands Inc. was $13.0 million, or diluted earnings per share (EPS) of $0.24[6]. - Adjusted net income was $14.5 million, or adjusted diluted EPS of $0.27[7]. - Total net sales for the three months ended November 2, 2024, reached $777,194,000, a decrease from $786,329,000 for the same period last year, reflecting a decline of 3.1%[21]. - For the nine months ended November 2, 2024, total net sales were $2,295,690,000, compared to $2,320,628,000 for the same period last year, a decrease of 1.1%[25]. - Net sales for the three months ended November 2, 2024, were $777.194 million, a decrease of 1.4% from $786.329 million for the same period last year[27]. - Gross profit for the three months ended November 2, 2024, was $247.445 million, down 3.4% from $256.406 million in the prior year[27]. - Operating profit decreased to $22.816 million for the three months ended November 2, 2024, compared to $28.121 million for the same period last year, representing a decline of 18.9%[27]. - Net income attributable to Designer Brands Inc. was $13.012 million for the three months ended November 2, 2024, an increase of 28.3% from $10.141 million in the prior year[27]. - Diluted earnings per share increased to $0.24 for the three months ended November 2, 2024, compared to $0.17 for the same period last year, reflecting a growth of 41.2%[27]. Inventory and Cash Position - Cash and cash equivalents totaled $36.2 million at the end of the third quarter, down from $54.6 million at the same time last year[8]. - The company ended the third quarter with inventories of $637.0 million, compared to $601.5 million last year[9]. - Total current assets as of November 2, 2024, were $800.673 million, an increase of 2.0% from $799.809 million as of October 28, 2023[29]. - The company reported impairment charges of $17.756 million for the three months ended November 2, 2024, compared to no impairment charges in the same period last year[27]. Store Operations - The company closed three stores in the U.S. and opened two stores in Canada, resulting in a total of 496 stores in the U.S. and 179 stores in Canada as of November 2, 2024[11]. - The total number of stores increased to 675 as of November 2, 2024, from 643 stores as of October 28, 2023, indicating a growth in physical retail presence[24]. Sales by Segment - Direct-to-consumer sales for owned brands amounted to $130,753,000 for the three months ended November 2, 2024, compared to $154,201,000 for the same period last year, representing a decrease of 15.1%[22]. - The U.S. Retail segment experienced a comparable sales decline of 2.8% for the three months ended November 2, 2024, compared to a decline of 9.8% for the same period last year[24]. - The Canada Retail segment reported a comparable sales decline of 4.6% for the three months ended November 2, 2024, compared to a decline of 7.7% for the same period last year[24]. - Owned brands' total sales for the nine months ended November 2, 2024, were $611,634,000, compared to $611,634,000 for the same period last year, indicating stable performance[21]. Financial Outlook - The updated financial outlook for 2024 indicates net sales growth is now expected to be down low single digits, and adjusted diluted EPS is projected to be between $0.10 and $0.30[12]. - Adjusted operating profit for the three months ended November 2, 2024, was $43.590 million, compared to $31.402 million in the prior year, marking a significant increase of 38.7%[31]. Other Financial Metrics - Total liabilities increased to $1.758986 billion as of November 2, 2024, compared to $1.713724 billion as of October 28, 2023, indicating a rise of 2.6%[29]. - The company’s total assets as of November 2, 2024, were $2.080764 billion, a slight increase from $2.076232 billion as of October 28, 2023[29]. Future Considerations - Comparable sales for the Canada Retail segment will exclude the impact of foreign currency translation and will be calculated using the prior year's exchange rate[34]. - Stores from the Rubino acquisition that have been operational for at least 14 months will be included in the comparable base starting Q2 2025[34]. - E-commerce net sales from the Brand Portfolio segment will be included in the calculation of comparable sales[34].

Company Overview - Designer Brands Inc. is one of the world's largest designers, producers, and retailers of footwear and accessories, with a mission to inspire self-expression [2] - The company has a diversified portfolio of brands including Crown Vintage, Hush Puppies, Jessica Simpson, Keds, and others, and operates a robust direct-to-consumer omni-channel infrastructure [2] - Designer Brands has a billion-dollar digital commerce business and operates 675 DSW Designer Shoe Warehouse, The Shoe Co., and Rubino stores in North America [2] Upcoming Earnings Announcement - Designer Brands will issue its third quarter 2024 earnings on December 10, 2024, with a conference call scheduled for 8:30 am E.T. [1] - A press release detailing the company's results will be issued prior to the call [1] Conference Call Participation - Investors and analysts can participate in the call by dialing 888-317-6003 or the international number 412-317-6061, referencing conference ID number 0882763 [2] - The conference call will be broadcast live over the internet, and an archived version will be available until December 17, 2024 [2] Corporate Social Responsibility - Designer Brands has donated more than nine million pairs of shoes to the global non-profit Soles4Souls since 2018, demonstrating its commitment to diversity, equity, and inclusion in the footwear industry [2]

Core Viewpoint - Designer Brands Inc. (NYSE:DBI) reported disappointing Q2 2024 earnings, with a non-GAAP EPS of $0.29, missing estimates by $0.24, and revenue falling short by $44.24 million [3][6]. Financial Performance - Q2 2024 non-GAAP EPS was $0.29, down from $0.59 year-over-year [19]. - Revenue for the quarter was $772 million, a decrease of 2.6% from the previous year [18]. - Adjusted net income fell to $17.1 million from $39.4 million [18]. - Gross margins decreased by 170 basis points to 32.8% due to lower mark-ups and increased promotions [18]. - Operating expenses rose to 28.9% of sales, up from 26.9% [18]. - Interest expenses increased to $11 million from $6.9 million [18]. Market Position and Strategy - Designer Brands operates over 640 stores across the U.S. and Canada, with a focus on footwear and accessories [7]. - The company has shifted its strategy towards athletic and athleisure products, which now represent 42% of its offerings, up from 32% in 2017 [13]. - Sales of the top eight athletic brands increased over 30%, contributing to overall athletic sales growth of 16% [13]. Consumer Trends - The athleisure market is projected to reach $456 billion by 2029, with a CAGR of over 6% from 2024 to 2029 [13]. - Consumer sentiment is affected by inflation, leading to reduced spending on non-essential items [11]. Future Outlook - The company expects positive EPS growth in the second half of 2024, driven by strength in athletic and casual segments [15]. - DBI lowered its full-year earnings outlook to $0.50-$0.60 EPS, down from $0.70-$0.80, due to a slower recovery [19]. Valuation and Debt - DBI's blended price-to-earnings ratio is 8.83x, lower than its usual 12.15x, indicating potential valuation concerns [16]. - The company has a total debt of $1.28 billion against a market cap of $297.11 million, leading to a high long-term debt-to-capital ratio of 68.2% [16]. - The EV/EBITDA ratio of 17.14 is significantly higher than the sector's 10.64, indicating higher leverage [16][17].

Core Insights - Designer Brands Inc. (DBI) reported second-quarter fiscal 2024 results that fell short of Zacks Consensus Estimates for both earnings and sales, with year-over-year declines noted [1][3][12] Financial Performance - Adjusted earnings were 29 cents per share, missing the Zacks Consensus Estimate of 56 cents, and down from 59 cents in the prior year [3] - Net sales totaled $771.9 million, a decrease of 2.6% year over year, and below the Zacks Consensus Estimate of $819 million [3] - Comparable sales (comps) decreased by 1.4% year over year, compared to an expected decline of nearly 3.7% [3] Margins and Expenses - Gross profit was $252.9 million, down 7.5% from $273.4 million in the previous year, with a gross margin decrease of 170 basis points to 32.8% [4] - The decline in gross margin was attributed to lower initial markups on athletic and athleisure products and the need for promotions to clear seasonal inventory [5] - Adjusted SG&A expenses as a percentage of net sales rose to 28.9%, up 200 basis points from 26.9% in the same quarter last year, primarily due to lower sales and higher fixed costs [6] Segment Performance - U.S. Retail segment sales decreased by 2.6% year over year to $641.7 million, missing the Zacks Consensus Estimate of $652 million [7] - Canada Retail segment sales increased by 6.4% year over year to $74.8 million, but fell short of the Zacks Consensus Estimate of $86 million [7] - Brand Portfolio segment sales were $96 million, up 14% year over year, but also lagged behind the Zacks Consensus Estimate of $121 million [8] Financial Snapshot - Cash and cash equivalents were reported at $38.8 million, down from $46.2 million a year ago, with $155.1 million available for borrowings under a senior secured asset-based revolving credit facility [8] - Debt levels rose significantly to $465.7 million, compared to $331 million in the previous year [9] - Inventories increased to $642.8 million from $606.8 million year over year [9] Shareholder Returns - The company repurchased 2.7 million Class A common shares for a total cost of $18 million during the second quarter, with $69.7 million remaining for future repurchases [10] Store Updates - One store was closed in the U.S. while two were opened in Canada, resulting in a total of 499 U.S. stores and 177 Canadian stores as of August 3, 2024 [11] Guidance - The company revised its financial outlook for fiscal 2024, now expecting flat to low-single-digit sales growth, down from initial projections of low-single-digit growth [12] - Adjusted earnings per share guidance was lowered to a range of 50-60 cents, down from the previous range of 70-80 cents [12]

Financial Performance - Net sales for the three months ended August 3, 2024, were $771.9 million, a decrease of 2.9% compared to $792.2 million for the same period in 2023[5]. - Gross profit for the six months ended August 3, 2024, was $497.983 million, down 2.5% from $511.126 million for the same period in 2023[5]. - Operating profit for the three months ended August 3, 2024, was $28.589 million, a decline of 52.9% compared to $60.687 million for the same period in 2023[5]. - Net income attributable to Designer Brands Inc. for the three months ended August 3, 2024, was $13.824 million, a decrease of 62.9% from $37.204 million for the same period in 2023[5]. - Basic earnings per share for the three months ended August 3, 2024, were $0.24, down from $0.57 for the same period in 2023[5]. - Comprehensive income attributable to Designer Brands Inc. for the three months ended August 3, 2024, was $12.847 million, down from $38.481 million for the same period in 2023[6]. - Net income for the six months ended August 3, 2024, was $14,967,000, a decrease of 69.2% compared to $48,628,000 for the same period in 2023[13]. - Net cash provided by operating activities decreased to $21,898,000 from $134,371,000, representing a decline of 83.7% year-over-year[13]. - Operating profit for the three months ended August 3, 2024, was $37.97 million, a decrease of $42.33 million, or 52.7%, compared to $80.30 million for the same period last year[84]. Assets and Liabilities - Total current assets increased to $798.048 million as of August 3, 2024, compared to $777.432 million as of February 3, 2024[8]. - Inventories rose to $642.783 million as of August 3, 2024, from $571.331 million as of February 3, 2024[8]. - Cash and cash equivalents decreased to $38.834 million as of August 3, 2024, from $49.173 million as of February 3, 2024[8]. - Total current liabilities decreased to $619,038 thousand from $622,271 thousand, a reduction of approximately 0.4%[9]. - Long-term debt increased to $458,974 thousand from $420,344 thousand, representing an increase of about 9.3%[9]. - Total liabilities rose to $1,748,070 thousand compared to $1,713,724 thousand, marking an increase of approximately 2.0%[9]. - Shareholders' equity decreased to $355,545 thousand from $359,220 thousand, a decline of about 1.9%[9]. - Total debt as of August 3, 2024, was $472.0 million, an increase from $434.2 million in February 2024 and $334.7 million in July 2023[55]. Cash Flow and Investments - Cash paid for business acquisitions was $16,352,000, significantly lower than $127,496,000 in the previous year, indicating a reduction of 87.2%[13]. - Net cash used in investing activities for the six months ended August 3, 2024, was $41.5 million, primarily due to the acquisition of the Rubino business for $16.4 million and capital expenditures of $29.5 million[97]. - Net cash provided by financing activities for the six months ended August 3, 2024, was $9.6 million, an increase of $3.9 million compared to $5.6 million for the same period in 2023[98]. - The company repurchased Class A common shares totaling 2,665 thousand, costing $17,969 thousand[11]. - The company repurchased 2.7 million Class A common shares at an aggregate cost of $18.0 million during the six months ended August 3, 2024, with $69.7 million remaining available for repurchase[51]. Segment Performance - U.S. Retail segment net sales for the three months ended August 3, 2024, were $641.7 million, compared to $658.5 million for the same period in 2023[39]. - The Canada Retail segment reported net sales of $74.8 million for the three months ended August 3, 2024, up from $70.3 million in the prior year[39]. - The Brand Portfolio segment generated net sales of $95.993 million for the three months ended August 3, 2024, compared to $84.217 million in the same period last year[39]. - For the three months ended August 3, 2024, total net sales reached $771.9 million, a decrease from $792.2 million in the prior year[39]. - The Brand Portfolio segment's net sales increased by 14.0% to $96.0 million, driven by a shift to a wholesale model for certain Owned Brands[76]. Tax and Expenses - The effective tax rate for the six months ended August 3, 2024, was 1.0%, a substantial decrease from 27.4% for the same period in 2023[25]. - The effective tax rate for the three months ended August 3, 2024, was 19.3%, a decrease from 31.4% for the same period in 2023[25]. - Interest expense increased by 59.2% to $11.0 million, compared to $6.9 million in the same quarter last year[74]. - Operating expenses increased by $12.4 million, or 2.6%, primarily due to a $4.2 million increase in marketing expenses and a $2.7 million increase in incentive compensation[80]. Acquisitions and Goodwill - The acquisition of Rubino Shoes Inc. on April 8, 2024, expanded the Canada Retail segment into Quebec, enhancing market presence[18]. - The company completed the acquisition of Keds for a cash consideration of $127,304,000, with the final purchase price allocation finalized as of February 3, 2024[29]. - The company acquired Rubino for $16.4 million in cash, with a contingent consideration of up to $1.5 million based on performance targets over 24 months[31]. - Goodwill from the Rubino acquisition is not expected to be deductible for income tax purposes[34]. - The goodwill from the Keds acquisition was primarily attributed to acquiring an established design and sourcing process for casual footwear, totaling $25.8 million[30]. Market Conditions - Ongoing economic uncertainty, including concerns about a potential recession and inflationary pressures, is impacting consumer spending and sales performance[68]. - The company experienced a decrease in comparable average sales amounts per transaction due to lower units per transaction amid economic uncertainty[68].

Core Viewpoint - Designer Brands experienced a significant decline in stock price following a disappointing second-quarter earnings report and a reduction in guidance for the year [1][4]. Financial Performance - Comparable sales decreased by 1.4%, leading to a 2.6% drop in revenue to $771.9 million, which was below the consensus estimate of $816.1 million [2]. - Gross margin fell from 34.5% to 32.8%, primarily due to weakness in the U.S. retail segment [2]. - Operating expenses increased by 6% to $226.9 million [2]. - Adjusted earnings per share (EPS) dropped from $0.59 to $0.29, missing the estimate of $0.53 [3]. Market Segments - CEO Doug Howe noted challenges in categories such as dress and seasonal footwear, but mentioned an 8% increase in athleisure sales during the quarter [3]. - The U.S. segment outperformed the overall footwear sector by one percentage point [3]. Future Outlook - The company revised its full-year revenue growth forecast to flat to low-single digits, down from an earlier expectation of low-single digits [4]. - Adjusted EPS guidance was cut from a range of $0.70-$0.80 to $0.50-$0.60 [4]. - Despite a forward price-to-earnings ratio of less than 10, the stock is considered not investable until revenue and earnings growth can be restored [5].

Designer Brands Inc. (NYSE:DBI) Q2 2024 Earnings Conference Call September 11, 2024 8:30 AM ET Company Participants Doug Howe - Chief Executive Officer Jared Poff - Executive Vice President, Chief Financial Officer Dustin Hauenstein - Senior Vice President, Finance Conference Call Participants Alex Faske - William Blair Mauricio Serna - UBS Dana Telsey - Telsey Advisory Group Operator Good morning and welcome to the Designer Brands second quarter 2024 results conference call. All participants will be in li ...