"I am proud of the sequential improvement in both sales and profitability in the second quarter as well as the progress that has been made on our strategic initiatives, with several exciting milestones in the quarter – including new collaborations and celebrity partnerships. Our portfolio of Owned Brands and National Brand partners remains strong, and we are excited to be rolling out our new athletic and athleisure offerings from Le Tigre and Keds while continuing to elevate our relationship with Nike during a time that athletic and athleisure demand continues to grow”, commented Doug Howe, Chief Executive Officer of Designer Brands. “As we look ahead, we do anticipate near-term headwinds will persist, but we are confident in our plans to continue optimizing and spotlighting our unparalleled assortment”, he concluded.

Second Quarter Results

In the second quarter of fiscal 2023, the company's net sales amounted to 792.2 million US dollars, which reflects a decline of 7.8%, as compared to the same period of last fiscal year. Designer Brands added that its comparable sales decreased by 8.9% year-over-year this quarter.

Breaking down by segment. In the three months to the 29^th of July, the US retail segment and the US Canada segment posted a net sales decline of 10.3% and 10.2%, respectively, to 658.5 million US dollars and 70.3 million US dollars, on a comparable basis to a similar period of fiscal 2022. Meanwhile, net sales in the company's brand portfolio grew by 26.9% year-over-year, reaching 84.2 million US dollars.

Designer Brands' second quarter gross profit totalled 273.4 million US dollars, as compared to 295.7 million US dollars in the same period of the prior year, with its gross margin increasing very slightly to 34.5% from 34.4%.

In the second quarter of the current fiscal year, the reported net income attributable to the company was 37.2 million US dollars, or diluted earnings per share of 0.56 US dollars, on a comparable basis to a net income of 46.2 million US dollars, or 0.62 US dollars, recorded in the same period of last year.

Full Year Outlook

For fiscal 2023, Designer Brands is expecting a mid-to-high single-digit decline in net sales (excluding Keds), as compared to the previous fiscal 2023; Keds should add between 75.0 million US dollars to 85.0 million US dollars. In addition, diluted earnings per share are anticipated in the range of 1.20 US dollars to 85.0 million US dollars.