Designer Brands(US:DBI)2021-12-07 16:50Financial Data and Key Metrics Changes - Sales increased by 31% to $853.5 million compared to 2020, with total comps up 40.8% in Q3 compared to a decline of 30.4% last year [51] - Gross margin rose by 740 basis points to 36.7% in Q3 versus 29.3% in 2019, marking a significant improvement [45][74] - Adjusted operating profit reached an all-time record of $102.2 million in Q3, compared to a loss of $27.7 million last year [86] Business Line Data and Key Metrics Changes - U.S. Retail comp sales were up 43.9% in Q3, compared to a decline of 31.9% during the same quarter last year [52] - The athletic and athleisure categories saw comps up over 50% and 38% respectively compared to 2019 [12][55] - The women's dress category improved, with sales up 58% compared to 2020, while men's dress improved by 87% [20] Market Data and Key Metrics Changes - The company became a top destination for back-to-school shopping, with kids' sales growing 35 percentage points faster than the rest of the market [10] - Canadian stores saw a significant improvement, with comps down only 6% versus 2019, and digital sales gaining market share [42][43] - Digital demand in U.S. Retail was up 12% compared to 2019, indicating strong online performance [64] Company Strategy and Development Direction - The company is focused on narrowing its brand offerings to the top fifty brands, which now represent 77% of total sales, up from 65% in 2019 [16] - A strategic shift towards athleisure and casual products is expected to drive market share growth in non-fashion categories [9] - The company plans to continue investing in digital marketing and enhancing customer acquisition strategies [38] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating supply chain challenges due to proactive inventory management and strategic partnerships with key brands [41] - The company anticipates continued strong performance in Q4, with expectations for sales growth significantly exceeding Q3 levels [28][96] - Management highlighted the importance of maintaining a strong balance sheet and liquidity position to support future growth initiatives [90][93] Other Important Information - The company opened four new stores in the U.S. and one in Canada, while closing four in the U.S., resulting in a total of 515 U.S. stores and 144 Canadian stores [95] - The company reported a significant reduction in debt, down to $227.9 million from $337.1 million last year [94] Q&A Session Summary Question: Can you discuss the supply chain actions and how they are affecting the business? - Management noted that strategic decisions made in previous years to narrow brand offerings have positioned the company favorably in the supply chain, allowing for better inventory access [100][101] Question: What are the Camuto penetration goals for fiscal 2022? - Management expressed satisfaction with the progress made at Camuto but did not provide specific penetration goals for 2022 [104] Question: Can you elaborate on the back-to-school strategy for kids? - The company reported significant market share gains in the kids' business, with a notable increase in customer acquisition during the back-to-school season [108][109]