“This quarter, we further built on our track record of steady improvement as we continued to refine and refresh our strategic initiatives intended to accelerate our ongoing business transformation (...). We continue to believe that our investments across our retail and brand businesses will help us to accelerate growth moving forward as we sharpen our focus and optimize our assortment, our marketing, and our omnichannel customer experience. With shoppers becoming increasingly mindful of their discretionary spending, and trends rapidly evolving, we want to ensure that we remain top of mind as the destination for all their footwear needs”, commented Doug Howe, Chief Executive Officer at Designer Brands.

Second Quarter Results

Designer Brands’ net sales for the second quarter of fiscal 2024, which ended on the 3^rd of August, were 771.9 million US dollars, a decrease of 2.6%, as compared to the same period of fiscal 2023. 

In addition, gross profit decreased from 273.4 million US dollars last year to 252.9 in this year’s second quarter. Gross margin also followed a downward trend, contracting by 1.7 percentage points to 32.8%.

In the second quarter of the current year, net income attributable to the company was 13.8 million US dollars, or diluted earnings per share of 0.24 US dollars, as compared to 37.2 million US dollars, or diluted earnings per share of 0.56 US dollars, in the same period last year. 

Second quarter adjusted net income totalled 17.1 million US dollars or adjusted diluted earnings per share of 0.29 US dollars.

On a comparable basis to the second quarter of fiscal 2023, Designer Brands saw its debt rise by 40.7% and inventory grow by 5.9%, while cash and cash equivalents dropped by 16% to 38 million US dollars.

Throughout the second quarter of fiscal 2024, the company closed one store in the United States and opened two stores in Canada, bringing the total number of stores in these countries to 499 and 177, respectively.

Relatively to Designer Brands’ segments, Doug Howe commented: “We saw sustained pressure on challenged categories such as dress and seasonal in the second quarter, which we were able to partially mitigate through providing a greater selection of athletic and athleisure brands in our assortment”. Net sales in the company’s brand portfolio increased by 14.0% year-on-year to 95.9 million US dollars.

Updated 2024 Outlook

Designer Brands reported that its net sales growth should be around flat to low-single digits, which is a lower expectation than the company’s previous guidance. Adjusted diluted earnings per share are also expected to decrease to a range between 0.50 and 0.60 US dollars.