Designer Brands(DBI) - 2026 Q2 - Quarterly Results

Executive Summary & Business Highlights Second Quarter 2025 Performance Highlights Designer Brands Inc. reported a sequential improvement in comparable sales for Q2 2025, achieving positive diluted EPS and adjusted diluted EPS with growth year-over-year, despite decreases in net sales, total comparable sales, and gross profit compared to the prior year - The company achieved a 280-basis point sequential improvement in comparable sales from the first quarter of 2025[2] Second Quarter 2025 Key Financial Highlights (vs. Q2 2024) | Metric | Q2 2025 (million USD) | Q2 2024 (million USD) | Change (million USD) | Change (%) | | :-------------------------- | :------ | :------ | :----- | :--------- | | Net Sales | $739.8 | $771.9 | $(32.1) | (4.2)% | | Total Comparable Sales | (5.0)% | (1.4)% | (3.6)% | - | | Gross Profit | $322.9 | $339.5 | $(16.6) | (4.9)% | | Gross Margin | 43.7% | 44.0% | (0.3)% | (30) bps | | Diluted EPS | $0.22 | $0.24 | $(0.02) | (8.3)% | | Adjusted Diluted EPS | $0.34 | $0.29 | $0.05 | 17.2% | CEO Commentary CEO Doug Howe highlighted the positive impact of targeted operational initiatives, leading to a strong start for the back-to-school season in U.S. Retail and improvements in traffic and conversion, while acknowledging ongoing macroeconomic volatility and uncertainty - Targeted operational initiatives supported a strong start to the back-to-school season within the U.S. Retail segment[2] - The company observed gradual improvements in traffic and a notable uptick in conversion[2] - Ongoing efforts include strengthening the brand, driving awareness through marketing investments, and optimizing the omni-channel model[2] - Management remains committed to disciplined execution amidst macroeconomic volatility, extended tariff increases, and caution in discretionary spending[2] Consolidated Financial Results Condensed Consolidated Statements of Operations For the second quarter of 2025, Designer Brands Inc. reported a decrease in net sales, gross profit, and net income attributable to Designer Brands Inc. compared to the prior year, with operating profit also declining and diluted EPS decreasing from $0.24 to $0.22 Condensed Consolidated Statements of Operations (Three Months Ended) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | Change (%) | | :------------------------------------------ | :------------- | :------------- | :----- | :--------- | | Net sales | $739,762 | $771,900 | $(32,138) | (4.2)% | | Gross profit | $322,933 | $339,549 | $(16,616) | (4.9)% | | Operating profit | $26,583 | $28,589 | $(2,006) | (7.0)% | | Net income (loss) attributable to Designer Brands Inc. | $10,827 | $13,824 | $(2,997) | (21.7)% | | Diluted earnings (loss) per share | $0.22 | $0.24 | $(0.02) | (8.3)% | Condensed Consolidated Statements of Operations (Six Months Ended) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | Change (%) | | :------------------------------------------ | :------------- | :------------- | :----- | :--------- | | Net sales | $1,426,671 | $1,518,496 | $(91,825) | (6.0)% | | Gross profit | $618,059 | $669,560 | $(51,501) | (7.7)% | | Operating profit | $19,321 | $37,971 | $(18,650) | (49.1)% | | Net income (loss) attributable to Designer Brands Inc. | $(6,597) | $14,607 | $(21,204) | (145.2)% | | Diluted earnings (loss) per share | $(0.14) | $0.25 | $(0.39) | (156.0)% | Segment Performance Segment performance for Q2 2025 showed mixed results, with U.S. Retail experiencing declines across key metrics, Canada Retail seeing a slight net sales increase but overall declines, and the Brand Portfolio segment facing significant decreases across all key metrics Net Sales by Segment Consolidated net sales decreased by 4.2% for the three months ended August 2, 2025, with declines in U.S. Retail and Brand Portfolio segments, partially offset by a slight increase in Canada Retail Segment Net Sales (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | Change (%) | | :---------------- | :------------- | :------------- | :----- | :--------- | | U.S. Retail | $610,926 | $641,694 | $(30,768) | (4.8)% | | Canada Retail | $75,077 | $74,797 | $280 | 0.4% | | Brand Portfolio | $73,157 | $95,993 | $(22,836) | (23.8)% | | Total Segment Net Sales | $759,160 | $812,484 | $(53,324) | (6.6)% | | Consolidated Net Sales | $739,762 | $771,900 | $(32,138) | (4.2)% | Comparable Sales by Segment Total comparable sales decreased by 5.0% for the three months ended August 2, 2025, with the Brand Portfolio segment's direct-to-consumer channel experiencing the most significant decline Change in Comparable Sales (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (%) | August 3, 2024 (%) | | :------------------------------------ | :------------- | :------------- | | U.S. Retail segment | (4.9)% | (1.1)% | | Canada Retail segment | (0.6)% | (3.1)% | | Brand Portfolio segment - direct-to-consumer channel | (29.2)% | (7.0)% | | Total | (5.0)% | (1.4)% | Gross Profit by Segment Consolidated gross profit decreased by 4.9% for the three months ended August 2, 2025, with a slight decline in gross margin, and all segments experiencing a decrease in gross profit, particularly the Brand Portfolio Segment Gross Profit (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (thousands USD) | August 2, 2025 (% of Segment Net Sales) | August 3, 2024 (thousands USD) | August 3, 2024 (% of Segment Net Sales) | Change (%) | Basis Points Change (bps) | | :-------------------- | :---------------------- | :------------------------------------- | :---------------------- | :------------------------------------- | :--------- | :------------------ | | U.S. Retail | $264,522 | 43.3% | $282,916 | 44.1% | (6.5)% | (80) | | Canada Retail | $34,950 | 46.6% | $35,087 | 46.9% | (0.4)% | (30) | | Brand Portfolio | $18,508 | 25.3% | $26,635 | 27.7% | (30.5)% | (240) | | Consolidated Gross Profit | $322,933 | 43.7% | $339,549 | 44.0% | (4.9)% | (30) | Operating Profit by Segment Consolidated operating profit decreased by 7.0% for the three months ended August 2, 2025, with all segments reporting a decline in operating profit, and the Brand Portfolio showing a significant increase in operating loss Segment Operating Profit (Three Months Ended August 2, 2025 vs. August 3, 2024) | Segment | August 2, 2025 (thousands USD) | August 2, 2025 (% of Segment Net Sales) | August 3, 2024 (thousands USD) | August 3, 2024 (% of Segment Net Sales) | Change (%) | Basis Points Change (bps) | | :-------------------- | :---------------------- | :------------------------------------- | :---------------------- | :------------------------------------- | :--------- | :------------------ | | U.S. Retail | $60,211 | 9.9% | $77,573 | 12.1% | (22.4)% | (220) | | Canada Retail | $8,498 | 11.3% | $9,052 | 12.1% | (6.1)% | (80) | | Brand Portfolio | $(3,606) | (4.9)% | $(2,053) | (2.1)% | 75.6% | (280) | | Consolidated Operating Profit | $26,583 | 3.6% | $28,589 | 3.7% | (7.0)% | (10) | Financial Position & Capital Structure Condensed Consolidated Balance Sheets As of August 2, 2025, Designer Brands Inc. reported an increase in cash and cash equivalents and a decrease in inventories compared to the prior year, with total assets slightly decreasing and total liabilities increasing Condensed Consolidated Balance Sheet Highlights (as of August 2, 2025 vs. August 3, 2024) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | | :-------------------------- | :------------- | :------------- | :----- | | Cash and cash equivalents | $44,937 | $38,834 | $6,103 | | Inventories | $610,876 | $642,783 | $(31,907) | | Total current assets | $751,925 | $798,048 | $(46,123) | | Total assets | $2,061,731 | $2,107,134 | $(45,403) | | Total current liabilities | $573,495 | $619,038 | $(45,543) | | Long-term debt | $509,593 | $458,974 | $50,619 | | Total liabilities | $1,777,720 | $1,748,070 | $29,650 | | Total shareholders' equity | $280,797 | $355,545 | $(74,748) | Liquidity The company's cash and cash equivalents increased year-over-year, and it maintained significant availability under its revolving credit facility, despite an increase in total debt compared to the prior year Liquidity Position (as of August 2, 2025 vs. August 3, 2024) | Metric | August 2, 2025 (million USD) | August 3, 2024 (million USD) | Change (million USD) | | :------------------------------------------------ | :------------- | :------------- | :----- | | Cash and cash equivalents | $44.9 | $38.8 | $6.1 | | Available for borrowings under credit facility | $104.3 | N/A | N/A | | Total Debt | $516.3 | $465.7 | $50.6 | | Inventories | $610.9 | $642.8 | $(31.9) | Store Count As of August 2, 2025, Designer Brands Inc. operated 668 stores across its U.S. Retail and Canada Retail segments, a slight decrease from the previous year, with a corresponding reduction in total square footage Store Count and Square Footage (as of August 2, 2025 vs. August 3, 2024) | Segment | Stores (count) | Square Footage (thousands sq ft) | Stores (count) | Square Footage (thousands sq ft) | | :---------------------- | :------------------- | :--------------------------- | :------------------- | :--------------------------- | | U.S. Retail - DSW stores | 493 | 9,686 | 499 | 9,879 | | Canada Retail - The Shoe Co. stores | 121 | 618 | 123 | 631 | | Canada Retail - Rubino stores | 28 | 147 | 28 | 149 | | Canada Retail - DSW stores | 26 | 511 | 26 | 511 | | Total number of stores | 668 | 10,962 | 676 | 11,170 | Financial Outlook & Non-GAAP Reconciliation 2025 Financial Outlook Due to ongoing macroeconomic uncertainty, particularly concerning global trade policies, Designer Brands Inc. has decided not to reinstate its full-year 2025 financial guidance - The Company has elected not to reinstate full year 2025 guidance due to macroeconomic uncertainty stemming primarily from global trade policies[6] Non-GAAP Reconciliation The company provides adjusted non-GAAP financial measures to offer a clearer view of its core operating performance by excluding certain one-time or non-recurring items, with adjusted diluted EPS for Q2 2025 at $0.34, higher than the GAAP diluted EPS of $0.22 Non-GAAP Adjusted Financial Results (Three Months Ended August 2, 2025 vs. August 3, 2024) | Metric | August 2, 2025 (thousands USD) | August 3, 2024 (thousands USD) | Change (thousands USD) | | :-------------------------- | :------------- | :------------- | :----- | | Adjusted operating expenses | $(295,250) | $(309,596) | $14,346 | | Adjusted operating profit | $30,261 | $32,524 | $(2,263) | | Adjusted net income | $16,716 | $17,071 | $(355) | | Adjusted diluted earnings per share | $0.34 | $0.29 | $0.05 | Non-GAAP Measures Explanation Designer Brands Inc. uses non-GAAP financial measures to supplement GAAP results by adjusting for items not indicative of core operations, such as restructuring costs, acquisition-related costs, impairment charges, and foreign currency transaction losses, to provide better comparability and insight into business trends - Non-GAAP measures adjust for restructuring and integration costs, acquisition-related costs, impairment charges, foreign currency transaction losses, and their net tax impact[24][25] - These measures are used to increase comparability to prior periods, identify business trends, and evaluate operating performance by adjusting for items not indicative of core operations[25] Comparable Sales Performance Metric Definition The company defines comparable sales as a key metric for its direct-to-consumer businesses, encompassing sales from stores open for at least 14 months and e-commerce sales, with Canada Retail specifically excluding foreign currency translation impact - Comparable sales include sales from stores in operation for at least 14 months at the beginning of the applicable year[26] - The metric includes e-commerce sales for U.S. Retail and Canada Retail segments, and direct-to-consumer e-commerce net sales for the Brand Portfolio segment[26] - Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation[26] Company Overview & Legal Disclosures About Designer Brands Designer Brands Inc. is a major global designer, producer, and retailer of footwear and accessories, operating through a diversified brand portfolio, a robust omni-channel infrastructure, and over 660 stores in North America, while also engaging in international distribution and private label product development with a commitment to corporate social responsibility - Designer Brands is one of the world's largest designers, producers, and retailers of footwear and accessories, with a mission of being shoe obsessed[10] - The company's portfolio includes brands such as Topo Athletic, Keds, Vince Camuto, Kelly & Katie, Jessica Simpson, Lucky Brand, Mix No. 6, and Crown Vintage[10] - Operations include a direct-to-consumer omni-channel infrastructure, national wholesale distribution, a billion-dollar digital commerce business, and over 660 DSW, The Shoe Co., and Rubino stores in North America[10] - Designer Brands supports the global community by donating over twelve million pairs of shoes to Soles4Souls since 2018[11] Safe Harbor Statement The report contains forward-looking statements subject to known and unknown risks, uncertainties, and other factors that could cause actual results to differ materially, including general economic conditions, consumer preferences, supply chain disruptions, and tariffs, with no undertaking by the company to update these statements - Forward-looking statements are based on current views and expectations and involve known and unknown risks and uncertainties[12] - Key risk factors include uncertain general economic and financial conditions, supply chain disruptions, tariffs, fluctuating interest rates, and impacts on consumer discretionary spending[12] - Other risks relate to changing consumer preferences, climate change, execution of business strategies, integration of acquisitions, supplier relationships, distribution systems, cybersecurity, and compliance with laws and regulations[12][13] Webcast and Conference Call Information Designer Brands Inc. hosted a conference call on September 9, 2025, to discuss its financial results, with details provided for live participation and an archived replay, and important information also disseminated via the company's investor website - A conference call was hosted on September 9, 2025, at 8:30 am Eastern Time[8] - Investors and analysts could participate via dial-in or live webcast, with an archived version available until September 23, 2025[8][9] - Important information may be disseminated initially or exclusively via the Company's investor website[9] Contact Information Contact information for investor relations inquiries is provided - Contact for investor relations: Stacy Turnof, DesignerBrandsIR@edelman.com[27]