Designer Brands(DBI)2021-08-31 16:12Financial Data and Key Metrics Changes - Total sales increased by 66.9% to $817.3 million compared to 2020, with total comparable sales up 84.9% in Q2 [41] - Consolidated gross profit increased by $247.6 million to $284.7 million in Q2 versus $37 million in the prior year, with gross margin improving to 34.8% [54] - Adjusted operating profit for Designer Brands was $69 million in Q2 versus $50.9 million in Q2 2019 [60] Business Line Data and Key Metrics Changes - U.S. retail comparable sales were up 94.3% during Q2 versus the prior-year period, driven by improving store traffic [42] - Athletic comparable sales were up 90% compared to Q2 2020, with athleisure sales comps up 107% [44] - Sales of Camuto-produced brands were up 88% on inventory down 13%, indicating strong performance in this segment [25][79] Market Data and Key Metrics Changes - Canadian operations saw total comparable sales up 14.6% in Q2, with store traffic improving from down 66% in the first five weeks to down 29% in the last eight weeks [48] - Digital sales in Canada were up 146%, reflecting a strong shift towards online shopping [21] Company Strategy and Development Direction - The company is focusing on three strategic pillars: customer, brand, and speed, aiming to enhance customer experience and control brand destiny [23][30] - The partnership with Hush Puppies as an exclusive in-store distributor is expected to enhance brand awareness and customer loyalty [15][113] - The company is working on optimizing its fulfillment capabilities and reducing delivery times from 5-7 days to 2-3 days [31] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about continued improvement in business as vaccination rates increase, despite challenges from COVID-19 variants and supply chain issues [40][35] - The company is prepared for potential volatility in sales due to variant outbreaks and global supply chain pressures, but expects to meet or exceed pre-COVID profitability performance [64] Other Important Information - The company ended the quarter with $410.5 million in liquidity, significantly up from $208.7 million last year [63] - Inventory levels were $504 million, up from $445 million last year, but down in units by 16% compared to 2019 [57] Q&A Session Summary Question: Can you go over the inventory position again? - The inventory is up in dollars but down slightly in units, with a focus on athletic products to mitigate potential delays [67][68] Question: Can you tease out the gross margin improvement in Q2? - The improvement was primarily due to full-price selling and reduced promotions, with some deleveraging on shipping costs [74][75] Question: How should we think about increased freight expenses? - Increased freight costs are projected to be roughly $5 to $6 million in the first half, with expectations for the second half to be more than double that [81] Question: Any updates on store closures? - The initial projections for store closures are being reassessed due to better-than-expected store performance [84][88] Question: How is the back-to-school season performing? - The back-to-school season is showing strong sales, particularly in kids' footwear, with expectations for continued growth [101][104]