Designer Brands(US:DBI) ZACKS·2025-12-10 19:11Core Insights - Designer Brands Inc. (DBI) reported third-quarter fiscal 2025 results with net sales declining year over year and missing estimates, while adjusted earnings surpassed expectations and increased compared to the previous year [1][4]. Financial Performance - Adjusted earnings were 38 cents per share, exceeding the Zacks Consensus Estimate of 18 cents, and up from 27 cents in the same quarter last year [4]. - Net sales totaled $752.4 million, a decrease of 3.2% year over year, missing the Zacks Consensus Estimate of $763 million [4]. - Comparable sales (comps) fell by 2.4% year over year, compared to the expected decline of 1.7% [4]. Margin and Expense Analysis - Gross profit reached $339.6 million, an increase of 1.7% from $273.4 million in the prior year, with gross margin rising by 210 basis points to 45.1% [5]. - Adjusted operating expenses rose by $2.5 million to $296.3 million, representing 39.4% of sales, reflecting a 160 basis points deleverage due to lower sales volume [6]. - Adjusted operating income was $46.5 million, up 6.6% from $43.6 million in the previous year, with an adjusted operating margin increase of 60 basis points to 6.2% [6]. Segment Performance - U.S. Retail segment sales decreased by 0.8% year over year to $610.5 million, slightly above the Zacks Consensus Estimate of $609 million, with comps down 1.5% [7]. - Canada Retail segment sales fell by 7.5% year over year to $77.3 million, missing the Zacks Consensus Estimate of $84 million, with comps down 6.6% [7]. - Brand Portfolio segment sales decreased by 8.6% year over year to $101.9 million, lagging behind the Zacks Consensus Estimate of $100 million, primarily due to a shift in external wholesale sales [8]. Strategic Initiatives - The company noted sequential progress driven by stronger traffic, improved in-store conversion, and disciplined expense and inventory management [2][9]. - DSW brand repositioning and refreshed marketing campaigns gained traction, supported by healthier assortments and improved in-stock levels [3][9]. Cash and Debt Overview - As of November 1, 2025, cash and cash equivalents were $51.4 million, up from $36.2 million a year ago, with $166.9 million available for borrowings [10]. - Total debt decreased to $469.8 million from $536.3 million in the previous year, while inventories were reported at $620 million, down from $637 million [11]. Store Operations - The company operated 672 stores as of November 1, 2025, a slight decrease from 675 stores a year earlier [12]. Future Guidance - For fiscal 2025, the company anticipates net sales to decline by 3-5%, with adjusted operating profit projected between $50 million and $55 million [13].