Designer Brands Inc. Achieves Sequential Growth in Q2 2024

Incremental Success for Designer Brands Inc. in Q2 2024

Designer Brands Inc. (NYSE: DBI) keeps the momentum going with its third consecutive quarter of sequential comparable sales improvement. In the ever-evolving retail landscape, particularly in the athleisure category, Designer Brands has shown performance that outpaced the market by over 4 percentage points.

CEO Doug Howe's Insights

CEO Doug Howe remarked, "This quarter, we capitalized on our steady improvement trend. We've refined our strategic initiatives to accelerate our business transformation. Although categories like dress and seasonal footwear faced challenges, our expanded selection of athletic and athleisure brands mitigated some of those impacts. The second quarter saw an impressive 8% growth in athleisure sales in the U.S. Retail segment, surpassing overall market growth significantly, especially as we strategically positioned ourselves for the back-to-school season."

Operating Results Highlights

The following are key highlights from the second quarter of 2024, all compared to last year:

• Net sales dipped by 2.6% to $771.9 million.
• Total comparable sales fell 1.4%.
• Gross profit saw a decrease to $252.9 million with a gross margin of 32.8%.
• Net income attributable to Designer Brands Inc. was recorded at $13.8 million.
• Adjusted net income stood at $17.1 million with an adjusted diluted earnings per share of $0.29.

Liquidity and Financial Management

As of the second quarter's end, cash and cash equivalents reported a total of $38.8 million, reflecting a decrease compared to last year's $46.2 million. Notably, Designer Brands has $155.1 million available for borrowing. Debt rose to $465.7 million from $331.0 million last year.

Shareholder Returns and Repurchase Activity

During this quarter, Designer Brands repurchased 2.7 million Class A common shares at a total cost of $18.0 million. The board-approved share repurchase program still holds $69.7 million of Class A common shares available for repurchase.

Store Count Adjustments

In this quarter, one store closure in the U.S. was offset by the opening of two new stores in Canada. This brings the total to 499 U.S. stores and 177 in Canada.

Updated 2024 Financial Outlook

Looking ahead, Designer Brands has revised its guidance for the full year 2024:

• Net Sales Growth is now forecasted to be flat to low-single digits.
• Adjusted Diluted EPS previously guided at $0.70 - $0.80 has been adjusted to $0.50 - $0.60.

These adjustments reflect the company’s commitment to aligning its strategic focus in a dynamic market.

Engagement with Stakeholders

The company engaged with stakeholders through a conference call, inviting analysts and investors to discuss the results. Further, an archived version will be available on the company's investor site for those who could not attend live.

About Designer Brands

Designer Brands is a leading designer, producer, and retailer of some of the most well-known footwear and accessory brands, such as Crown Vintage and Vince Camuto. The company aims to inspire self-expression through its diversified portfolio and by promoting community engagement, including its commitment to donate over ten million shoes since 2018.

Frequently Asked Questions

What were the key financial highlights for Designer Brands in Q2 2024?

Key highlights include a 2.6% decrease in net sales to $771.9 million and adjusted diluted earnings per share of $0.29.

How did Designer Brands perform in the athleisure category?

The company reported an impressive 8% growth in the athleisure segment, outpacing overall market growth by more than 4 percentage points.

What is the current status of Designer Brands' cash reserves?

Cash and cash equivalents totaled $38.8 million, down from $46.2 million at the same time last year.

What share repurchase activity did Designer Brands engage in this quarter?

Designer Brands repurchased 2.7 million shares at an aggregate cost of $18.0 million.

How does Designer Brands plan to address its financial outlook for 2024?

The company updated its guidance for flat to low-single digits growth in net sales and adjusted diluted EPS projections.

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