Designer Brands(US:DBI)2020-03-17 15:08Financial Data and Key Metrics Changes - For the full year, net sales increased by 11.2% to $3.5 billion, excluding net sales of exited businesses from fiscal 2018 [22] - Fourth quarter net sales were $829.6 million, flat compared to the prior year after excluding net sales of exited businesses [22] - Total comps for the full year were up 0.8%, while fourth quarter comps were up 0.7%, bringing the two-year comp to 6.1% [23] Business Line Data and Key Metrics Changes - The kids' category reported a robust performance with comps up 27%, which is a strategic priority for the company [24] - Camuto's total net sales for the full year were $448.3 million, flat compared to last year, while fourth quarter sales were $103.3 million, up 3.5% [28][29] - Exclusive brands sales grew by 19% in the quarter, representing $102 million in sales [32] Market Data and Key Metrics Changes - In Canada, comps were up 7.2% for the full year and 10.1% for the quarter, driven by strong digital growth and loyalty member increases [25][26] - The U.S. retail segment saw comps up 0.3% for the full year, but down 0.3% in the fourth quarter [24] Company Strategy and Development Direction - The company aims to become the leading footwear and accessories company in North America by focusing on differentiated products and experiences [10] - The integration of Camuto is progressing as planned, with a focus on exclusive products and partnerships, such as with Jennifer Lopez [11] - The company is committed to enhancing its technological capabilities and omni-channel retailing [11] Management's Comments on Operating Environment and Future Outlook - Management expressed disappointment with 2019 performance but noted stabilization and improvement in key areas [9] - The impact of COVID-19 has led to temporary store closures and a focus on preserving long-term business health [5][7] - The company refrained from providing 2020 guidance due to uncertainties surrounding the coronavirus [16] Other Important Information - The company has reduced its quarterly dividend to $0.10 and significantly cut planned capital expenditures [7] - The tariff impact is now expected to be between $10 million to $15 million, down from previous estimates [15] Q&A Session Summary Question: What happens if store closures extend beyond two weeks? - Management emphasized the priority of employee health and long-term business viability, stating they will pay scheduled employees during the initial closure period [45] Question: How is inventory being managed with store closures? - The company plans to utilize stores as fulfillment centers and will cut future orders while managing existing inventory diligently [46] Question: What is the status of ABG stores? - Some Stein Mart locations have shut down, but there has not been a full chain shutdown [48] Question: How are expenses split between fixed and variable? - Store expenses are relatively flexible, allowing for adjustments in labor models, while home office expenses are more fixed [51] Question: What actions are being taken to support the balance sheet? - The company is reducing inventories, cutting back future orders, and evaluating SG&A expenses to manage long-term health [55] Question: Update on Camuto's integration and performance? - The integration is progressing well, with strong growth in direct-to-consumer capabilities and exclusive brands [64][67]