Designer Brands Posts Q4 Loss After ‘Difficult’ 2023, Shares Fall

Shares of Designer Brands Inc. (DBI) dropped more than 10 percent on Thursday morning in pre-market trading after the retailer reported a decline in comparable sales for the fourth quarter and year.

Net sales for the DSW parent company decreased 0.8 percent to $754.3 million in the fourth quarter of 2023. Comparable sales also decreased by 7.3 percent in the period while adjusted net loss was $25.3 million, with loss per diluted share of 44 cents. The results beat analysts’ expectations that targeted a net loss of 47 cents and sales of $747.35 million.

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In a statement, DBI chief executive officer Doug Howe described 2023 as “a difficult year” due to a “softening footwear market, highly promotional retail environment, and the impact of unseasonably warm weather on our seasonal footwear business.” He added that DBI’s portfolio of owned brands, including Keds, Topo, Le Tigre, helped guide the company’s Q4 performance.

Net sales for the year were down 7.3 percent to $3.1 billion, in line with the company’s guidance issued in Q3. Adjusted net income was $43.2 million, with an adjusted diluted EPS of 68 cents. Diluted earnings per share was 46 cents, short of the anticipated range outlined by the company last quarter.

Despite the challenges, Howe said the company plans to return to growth in 2024 during what he described as a “transition year.”

“We are laser focused on assembling a fresher and more trend-right assortment for our customers, providing an increasingly convenient shopping experience across our channels and executing on operational improvements in our brands business bolstered by our new hires,” Howe said. “We expect these initiatives will underpin improved financial performance throughout the year, and combined with disciplined cost savings, will lead to continued strong cash flow generation.”

For fiscal year 2024, DBI expects to see net sales growth in the low-single digits. Diluted EPS is expected to be between 70 cents and 80 cents.

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