Designer Brands(US:DBI)2025-12-09 21:14Financial Performance - Net sales for the three months ended November 1, 2025, were $752,411,000, a decrease of 3.2% compared to $777,194,000 for the same period in 2024[11] - Gross profit for the three months ended November 1, 2025, was $339,619,000, slightly up from $333,815,000 in the prior year, resulting in a gross margin of 45.1%[11] - Net income attributable to Designer Brands Inc. for the three months ended November 1, 2025, was $18,215,000, representing a 40.0% increase from $13,012,000 in the same period of 2024[11] - Basic earnings per share for the three months ended November 1, 2025, increased to $0.37 from $0.25 in the prior year, reflecting a 48.0% growth[11] - Comprehensive income for the three months ended November 1, 2025, was $18,008,000, compared to $12,687,000 in the same period of 2024, reflecting a 42.0% increase[12] - Operating profit for the three months ended November 1, 2025, was $42,663,000, significantly higher than $22,816,000 in the prior year, indicating an increase of 87.0%[11] - For the nine months ended November 1, 2025, consolidated net sales were $2,179,082,000, compared to $2,295,690,000 for the same period last year, indicating a decline of approximately 5.1%[66][67] - Gross profit for the nine months ended November 1, 2025, was $957.7 million, a decrease of 4.6% compared to $1.00 billion last year[90] Assets and Liabilities - Total assets as of November 1, 2025, were $2,052,989,000, compared to $2,080,764,000 as of November 2, 2024, indicating a decrease of 1.3%[14] - Current liabilities totaled $610,261,000 as of November 1, 2025, up from $567,611,000 a year prior, marking a 7.5% increase[14] - Total debt decreased to $473,989,000 as of November 1, 2025, from $496,465,000 on February 1, 2025, reflecting a reduction of about 4.1%[55] - Total receivables as of November 1, 2025, were $64.4 million, an increase from $50.4 million at the end of the previous quarter[50] Cash Flow - Cash and cash equivalents increased to $51,352,000 as of November 1, 2025, from $36,227,000 a year earlier, showing a growth of 41.8%[14] - Net cash provided by operating activities increased significantly to $67,607,000 from $12,137,000 year-over-year[17] - Cash paid for operating lease liabilities was $145,517,000 for the nine months ended November 1, 2025, compared to $157,435,000 for the same period in the previous year[53] - The company recorded a net increase in cash and cash equivalents of $6.600 million for the nine months ended November 1, 2025, compared to a decrease of $12.946 million in the same period last year[98] Segment Performance - U.S. Retail segment net sales for the nine months ended November 1, 2025, were $1.79 billion, down 4.5% from $1.88 billion in the prior year[36] - Athletic footwear sales in the U.S. Retail segment for the three months ended November 1, 2025, increased to $188.6 million, up 1.4% from $185.3 million in the same period last year[36] - Comparable sales for the U.S. Retail segment decreased by 1.5%, while the Canada Retail segment saw a decline of 6.6% for the three months ended November 1, 2025[74] - The Brand Portfolio segment's net sales decreased by 8.6% to $101.9 million, with comparable sales down 21.5% due to a shift in timing of wholesale revenue[77][78] Expenses and Costs - Operating expenses as a percentage of net sales increased to 39.9% from 38.2% in the prior year, reflecting a rise in total operating expenses[81] - The company incurred severance costs of $7.3 million for the nine months ended November 1, 2025, compared to $5.5 million for the same period in 2024[24] - Interest expense for the third quarter of 2025 was $11,420,000, reflecting ongoing financial obligations[64] Tax and Impairment - The effective tax rate for the nine months ended November 1, 2025, was 50.0%, compared to a negative 7.9% for the same period in 2024[26] - The effective tax rate for the three months ended November 1, 2025, was 38.1%, compared to a negative 20.2% in the same period last year[86] - The company recorded impairment charges of $4.4 million during the nine months ended November 1, 2025, compared to $17.8 million for the same period in 2024[30] Shareholder Actions - The company declared a quarterly cash dividend of $0.05 per share for both Class A and Class B common shares, payable on December 19, 2025[49] - As of November 1, 2025, the company has $19.7 million remaining authorized for repurchase under its share repurchase program, with no shares repurchased during the nine months ended[117] Legal and Compliance - The company is involved in various legal proceedings, but potential liabilities are not expected to be material to financial results[61] - The company maintained compliance with all financial covenants in the ABL Revolver and Term Loan as of November 1, 2025[60] - The company has not made any changes to its internal control over financial reporting that materially affect its reporting[112] Market Conditions - The company is closely monitoring the impact of increased tariffs and macroeconomic conditions on its cost structure and future operations[71][72] - Recent changes to U.S. trade policy, including increased tariffs, could materially adversely affect the company's business and liquidity, particularly due to sourcing from Asia[116] - The company continues to monitor macroeconomic conditions and potential impacts from new tariffs or trade restrictions on financial performance and asset valuation[109]