Designer Brands(US:DBI)2022-08-30 16:00Financial Performance - Net sales for the three months ended July 30, 2022, were $859,319, an increase of 5.2% compared to $817,335 for the same period in 2021[11]. - Gross profit for the six months ended July 30, 2022, was $571,415, representing a 14.1% increase from $500,792 for the same period in 2021[11]. - Operating profit for the three months ended July 30, 2022, was $67,599, up 10.7% from $61,412 in the same period last year[11]. - Net income for the six months ended July 30, 2022, was $72,395, a 20.8% increase compared to $59,886 for the same period in 2021[13]. - Basic earnings per share for the three months ended July 30, 2022, were $0.66, compared to $0.59 for the same period in 2021, reflecting an increase of 11.9%[11]. - Total net sales for the six months ended July 30, 2022, were $1.689862 billion, compared to $1.520490 billion for the same period in 2021, indicating an increase of approximately 11.1%[47]. - Net income for the three months ended July 30, 2022, was $46.2 million, or $0.62 per diluted share, compared to $42.9 million, or $0.55 per diluted share, in the same period last year, reflecting a 7.8% increase in net income[87]. - Operating profit increased by 54.0% to $120,791 thousand, compared to $78,417 thousand in the previous year[96]. - Net income rose to $72,395 thousand, a 20.9% increase from $59,886 thousand in the same period last year[96]. Assets and Liabilities - Total current assets increased to $1,001,247 as of July 30, 2022, from $803,761 as of July 31, 2021, marking a growth of 24.5%[15]. - Total assets as of July 30, 2022, were $2,102,439, up from $1,946,049 as of July 31, 2021, indicating an increase of 8.0%[15]. - Total liabilities increased to $1,741,491 as of July 30, 2022, compared to $1,634,937 as of July 31, 2021, reflecting a rise of 6.5%[16]. - Shareholders' equity decreased to $360,948 as of July 30, 2022, from $311,112 as of July 31, 2021, representing an increase of 15.9%[16]. - Total debt as of July 30, 2022, was $387.4 million, an increase from $231.3 million on January 29, 2022[69]. Cash Flow and Investments - Cash flows from operating activities provided $10,864 thousand, a significant decrease of 88.7% from $96,229 thousand in the prior year[24]. - Net cash used in investing activities was $40,234 thousand, compared to $13,189 thousand in the prior year, indicating increased investment outflows[24]. - The company incurred severance costs of $1,000 thousand for the six months ended July 30, 2022, down from $2,600 thousand in the same period in 2021[34]. - The company reported impairment charges of $2,888 thousand, up from $1,174 thousand in the same period last year, reflecting a 146.5% increase[24]. - Net cash provided by financing activities was $7,398 million, significantly improved from $(94,955) million in the prior year, a change of $102,353 million[112]. Sales and Revenue Segments - Direct-to-consumer sales for the U.S. Retail segment were $147.877 million for the three months ended July 30, 2022, compared to $102.152 million in the same period of 2021, reflecting a growth of approximately 44.7%[45]. - The U.S. Retail segment's net sales for women's footwear were $475.079 million for the three months ended July 30, 2022, compared to $467.518 million in the same period of 2021[49]. - The Brand Portfolio segment generated total net sales of $878.698 million for the three months ended July 30, 2022, up from $831.207 million in the same period of 2021[49]. - Net sales from Owned Brands increased by 40.4% year-over-year, representing 22.7% of consolidated net sales compared to 17.0% in the same period last year[79]. - Canada Retail segment net sales increased by 37.1% to $134,599 thousand, representing 7.8% of total segment net sales[96]. Expenses and Costs - Operating expenses increased by $4.3 million year-over-year, but as a percentage of sales improved to 26.6% from 27.5%[92]. - Interest expense, net, decreased by $5.3 million compared to the same period last year due to the termination of a higher-interest Term Loan[93]. - The increase in consolidated gross profit was primarily driven by increased sales, despite higher freight costs impacting all segments[90]. - Gross profit as a percentage of net sales was 34.4%, slightly down from 34.8% in the previous year[87]. - Operating expenses increased by $26.9 million, but as a percentage of sales improved to 26.8% from 28.0% in the prior year[100]. Shareholder Actions - The company declared a quarterly cash dividend payment of $0.05 per share for both Class A and Class B common shares on August 25, 2022[64]. - The company repurchased 9.4 million Class A common shares at an aggregate cost of $128.5 million during the six months ended July 30, 2022[66]. - The company issued $15,569,000 in gift cards during the three months ended July 30, 2022, compared to $17,092,000 in the same period of the previous year[50]. Tax and Compliance - The effective tax rate for the six months ended July 30, 2022, was 29.2%, significantly higher than 3.6% for the same period in 2021[36]. - The effective tax rate for the three months ended July 30, 2022, was 28.8%, up from 19.3% in the same period last year[94]. - As of July 30, 2022, the company was in compliance with all financial covenants associated with the 2022 ABL Revolver[73]. - The company remains in compliance with all financial covenants as of July 30, 2022[114]. Market Conditions - The COVID-19 pandemic continues to create supply chain disruptions and inflationary pressures, impacting the company's operations[80].