Designer Brands Inc. Reports First Quarter 2025 Financial Results

, /PRNewswire/ -- Designer Brands Inc. (NYSE: DBI) (the "Company," "we," "us," "our," and "Designer Brands"), one of the world's largest designers, producers, and retailers of footwear and accessories, today announced financial results for the first quarter ended May 3, 2025. "We experienced a soft start to 2025 amid an unpredictable macro environment and deteriorating consumer sentiment," stated Doug Howe, Chief Executive Officer. "We have shifted our near-term focus to amplifying value in our retail channels, preserving margins, controlling costs, and mitigating the impact of tariffs as part of our response to this volatility. Thanks to our team's focus and discipline, we expect to deliver between $20 million to $30 million in cost savings over the course of 2025." Howe continued, "Given the persistent instability and pressure on consumer discretionary spend, we've made the decision to withdraw our 2025 guidance for the time being. Moving forward, our efforts remain focused on disciplined execution of the initiatives within our control to build a business rooted in the strength of our brand, centered on the customer, and positioned for long-term value creation." First Quarter Operating Results (Unless otherwise stated, all comparisons are to the first quarter of 2024) Net sales decreased 8.0% to $686.9 million. Total comparable sales decreased by 7.8%. Gross profit decreased to $295.1 million versus $330.0 million last year, and gross margin was 43.0% compared to 44.2% last year. Reported net loss attributable to Designer Brands Inc. was $17.4 million, or diluted loss per share of $0.36. Adjusted net loss was $12.5 million, or adjusted diluted loss per share of $0.26. Liquidity Cash and cash equivalents totaled $46.0 million at the end of the first quarter of 2025, compared to $43.4 million at the end of the same period last year, with $125.5 million available for borrowings under our senior secured asset-based revolving credit facility. Debt totaled $522.9 million at the end of the first quarter of 2025 compared to $476.1 million at the end of the same period last year. The Company ended the first quarter with inventories of $623.6 million compared to $620.5 million at the end of the same period last year. Return to Shareholders A dividend of $0.05 per share for both Class A and Class B common shares will be paid on June 18, 2025 to shareholders of record at the close of business on June 5, 2025. Store Count (square footage in thousands) May 3, 2025 May 4, 2024 Number of Stores SquareFootage Number of Stores SquareFootage U.S. Retail segment - DSW stores 494 9,726 500 9,939 Canada Retail segment: The Shoe Co. stores 121 620 122 626 Rubino stores 28 149 28 149 DSW Stores 26 511 25 496 175 1,280 175 1,271 Total number of stores 669 11,006 675 11,210 2025 Financial Outlook Due to macroeconomic uncertainty stemming primarily from global trade policies, the Company is withdrawing its full year 2025 guidance that was provided on March 20, 2025, and is not providing a full year outlook at this time. Webcast and Conference Call The Company is hosting a conference call today at 8:30 am Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-888-317-6003, or the international dial-in, 1-412-317-6061, and reference conference ID number 6422376 approximately ten minutes prior to the start of the conference call. The conference call will also be broadcast live over the internet and can be accessed through the following link, as well as through the Company's investor website at investors.designerbrands.com: https://app.webinar.net/B3PDzwdlqVL For those unable to listen to the live webcast, an archived version will be available on the Company's investor website until June 24, 2025. A replay of the teleconference will be available by dialing the following numbers: U.S.: 1-877-344-7529 Canada: 1-855-669-9658 International: 1-412-317-0088 Passcode: 6036167 Important information may be disseminated initially or exclusively via the Company's investor website; investors should consult the website to access this information. About Designer Brands Designer Brands is one of the world's largest designers, producers, and retailers of the most recognizable footwear brands and accessories, transforming and defining the footwear industry through a mission of being shoe obsessed. With a diversified, world-class portfolio of coveted brands, including Topo Athletic, Keds, Vince Camuto, Kelly & Katie, Jessica Simpson, Lucky Brand, Mix No. 6, Crown Vintage and others, Designer Brands designs and produces on-trend footwear and accessories for all of life's occasions delivered to the consumer through a robust direct-to-consumer omni-channel infrastructure and powerful national wholesale distribution. Powered by a billion-dollar digital commerce business across multiple domains and 669 DSW Designer Shoe Warehouse, The Shoe Co., and Rubino stores in North America, Designer Brands delivers current, in-line footwear and accessories from the largest national brands in the industry and holds leading market share positions in key product categories across women's, men's, and kids'. Designer Brands also distributes its brands internationally through select wholesale and distributor relationships while also leveraging design and sourcing expertise to build private label products for national retailers. Designer Brands is committed to being a difference maker in the world and the footwear industry. By leading with our corporate values of We Belong and We Do What's Right, Designer Brands supports the global community and the health of the planet by donating more than eleven million pairs of shoes to the global non-profit Soles4Souls since 2018. To learn more, visit www.designerbrands.com. Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Certain statements in this press release may constitute forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by the use of forward-looking words such as "outlook," "could," "believes," "expects," "potential," "continues," "may," "will," "should," "would," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words. These statements are based on the Company's current views and expectations and involve known and unknown risks, uncertainties, and other factors, many of which are outside of the Company's control, that may cause actual results, performance, or achievements to be materially different from any future results, performance, or achievements expressed or implied by the forward-looking statements. These factors include, but are not limited to: uncertain general economic and financial conditions, including economic volatility and potential downturn or recession, supply chain disruptions, new or increased tariffs and other barriers to trade, fluctuating interest rates, unemployment rates and inflationary pressures, and the related impacts to consumer discretionary spending, as well as our ability to plan for and respond to the impact of these conditions; our ability to anticipate and respond to rapidly changing consumer preferences, seasonality, customer expectations, and fashion trends; the impact on our consumer traffic and demand, our business operations, and the operations of our suppliers, as we experience unseasonable weather, climate change evolves, and the frequency and severity of weather events increases; our ability to execute on our business strategies, including growing our Brand Portfolio segment, enhancing in-store and digital shopping experiences, and meeting consumer demands; our ability to successfully and efficiently integrate acquisitions in a manner that does not impede growth; our ability to maintain strong relationships with our suppliers, vendors, licensors, and retailer customers; risks related to losses or disruptions associated with our distribution systems, including our distribution centers and stores, whether as a result of reliance on third-party providers or otherwise; risks related to cyber security threats and privacy or data security breaches or the potential loss or disruption of our information technology ("IT") systems, or those of our vendors; risks related to the implementation of new or updated IT systems; our ability to protect our reputation and to maintain the brands we license; our reliance on our reward programs and marketing to drive traffic, sales, and customer loyalty; our ability to successfully integrate new hires or changes in leadership and retain our existing management team, and to continue to attract qualified new personnel; risks related to restrictions imposed by our senior secured asset-based revolving credit facility, as amended, and our senior secured term loan credit agreement, as amended, that could limit our ability to fund our operations; our competitiveness with respect to style, price, brand availability, shopping platforms, and customer service; risks related to our international operations and our reliance on foreign sources for merchandise; our ability to comply with laws and regulations, as well as other legal obligations; risks associated with climate change and other corporate responsibility issues; and uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation. Risks and other factors that could cause our actual results to differ materially from our forward-looking statements are described in the Company's Annual Report on Form 10-K for the fiscal year ended February 1, 2025 or our other reports made or filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the time when made. Except as may be required by applicable law, the Company undertakes no obligation to update or revise the forward looking statements included in this press release to reflect any future events or circumstances. DESIGNER BRANDS INC. SEGMENT RESULTS (unaudited) Net Sales Three months ended (dollars in thousands) May 3, 2025 May 4, 2024 Change Amount % of SegmentNet Sales Amount % of Segment Net Sales Amount % Segment net sales: U.S. Retail $ 573,240 79.3 % $ 621,367 79.6 % $ (48,127) (7.7) % Canada Retail 53,905 7.4 % 55,512 7.1 % (1,607) (2.9) % Brand Portfolio 95,898 13.3 % 104,130 13.3 % (8,232) (7.9) % Total segment net sales 723,043 100.0 % 781,009 100.0 % (57,966) (7.4) % Elimination of intersegment net sales (36,134) (34,413) (1,721) 5.0 % Consolidated net sales $ 686,909 $ 746,596 $ (59,687) (8.0) % Comparable Sales Three months ended May 3, 2025 May 4, 2024 Change in comparable sales: U.S. Retail segment (7.3) % (2.3) % Canada Retail segment (9.2) % (4.9) % Brand Portfolio segment - direct-to-consumer channel (27.0) % (1.7) % Total (7.8) % (2.5) % Gross Profit Three months ended (dollars in thousands) May 3, 2025 May 4, 2024 Change Amount % of SegmentNet Sales Amount % of SegmentNet Sales Amount % Basis Points Segment gross profit: U.S. Retail $ 242,796 42.4 % $ 274,408 44.2 % $ (31,612) (11.5) % (180) Canada Retail 25,404 47.1 % 26,374 47.5 % (970) (3.7) % (40) Brand Portfolio 26,671 27.8 % 33,477 32.1 % (6,806) (20.3) % (430) Total segment gross profit 294,871 40.8 % 334,259 42.8 % (39,388) (11.8) % (200) Net recognition (elimination) of intersegment gross profit 255 (4,248) 4,503 Consolidated gross profit $ 295,126 43.0 % $ 330,011 44.2 % $ (34,885) (10.6) % (120) Intersegment Eliminations Three months ended (in thousands) May 3, 2025 May 4, 2024 Intersegment recognition and elimination activity: Elimination of net sales recognized by Brand Portfolio segment $ (36,134) $ (34,413) Cost of sales: Elimination of cost of sales recognized by Brand Portfolio segment 25,814 24,093 Recognition of intersegment gross profit for inventory previously purchased thatwas subsequently sold to external customers during the current period 10,575 6,072 $ 255 $ (4,248) Operating Profit (Loss) Three months ended (dollars in thousands) May 3, 2025 May 4, 2024 Change Amount % of Segment Net Sales Amount % of SegmentNet Sales Amount % Basis Points Segment operating profit: U.S. Retail $ 39,608 6.9 % $ 64,201 10.3 % $ (24,593) (38.3) % (340) Canada Retail 365 0.7 % 3,168 5.7 % (2,803) (88.5) % (500) Brand Portfolio 2,591 2.7 % 1,956 1.9 % 635 32.5 % 80 Total segment operating profit 42,564 5.9 % 69,325 8.9 % (26,761) (38.6) % (300) Corporate/eliminations (49,826) (59,943) 10,117 (16.9) % Consolidated operating profit (loss) $ (7,262) (1.1) % $ 9,382 1.3 % $ (16,644) NM NM DESIGNER BRANDS INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (unaudited and in thousands, except per share amounts) Three months ended May 3, 2025 May 4, 2024 Net sales $ 686,909 $ 746,596 Cost of sales (391,783) (416,585) Gross profit 295,126 330,011 Operating expenses (301,862) (323,493) Income from equity investments 2,427 2,864 Impairment charges (2,953) — Operating profit (loss) (7,262) 9,382 Interest expense, net (11,868) (11,561) Non-operating income (expenses), net 8 (143) Loss before income taxes (19,122) (2,322) Income tax benefit 1,986 3,207 Net income (loss) (17,136) 885 Net income attributable to redeemable noncontrolling interest (288) (102) Net income (loss) attributable to Designer Brands Inc. $ (17,424) $ 783 Diluted earnings (loss) per share attributable to Designer Brands Inc. $ (0.36) $ 0.01 Weighted average diluted shares 48,243 59,470 DESIGNER BRANDS INC. CONDENSED CONSOLIDATED BALANCE SHEETS (unaudited and in thousands) May 3, 2025 February 1, 2025 May 4, 2024 ASSETS Current assets: Cash and cash equivalents $ 46,025 $ 44,752 $ 43,434 Receivables, net 56,159 50,371 96,712 Inventories 623,584 599,751 620,493 Prepaid expenses and other current assets 47,975 39,950 78,224 Total current assets 773,743 734,824 838,863 Property and equipment, net 230,559 208,199 223,205 Operating lease assets 719,749 701,621 728,346 Goodwill 130,714 130,386 133,666 Intangible assets, net 85,062 84,639 85,252 Deferred tax assets 50,801 43,324 40,868 Equity investments 54,862 56,761 62,863 Other assets 46,046 49,470 50,540 Total assets $ 2,091,536 $ 2,009,224 $ 2,163,603 LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND SHAREHOLDERS' EQUITY Current liabilities: Accounts payable $ 261,787 $ 271,524 $ 298,968 Accrued expenses 181,207 152,153 182,767 Current maturities of long-term debt 6,750 6,750 6,750 Current operating lease liabilities 158,171 159,924 161,050 Total current liabilities 607,915 590,351 649,535 Long-term debt 516,192 484,285 469,328 Non-current operating lease liabilities 650,438 635,076 657,625 Other non-current liabilities 46,478 17,737 25,253 Total liabilities 1,821,023 1,727,449 1,801,741 Redeemable noncontrolling interest 3,573 3,284 3,390 Total shareholders' equity 266,940 278,491 358,472 Total liabilities, redeemable noncontrolling interest, and shareholders' equity $ 2,091,536 $ 2,009,224 $ 2,163,603 DESIGNER BRANDS INC. NON-GAAP RECONCILIATION (unaudited and in thousands, except per share amounts) Three months ended May 3, 2025 May 4, 2024 Operating expenses $ (301,862) $ (323,493) Non-GAAP adjustments: Restructuring and integration costs 3,875 4,829 Acquisition-related costs — 486 Total non-GAAP adjustments 3,875 5,315 Adjusted operating expenses $ (297,987) $ (318,178) Operating profit (loss) $ (7,262) $ 9,382 Non-GAAP adjustments: Restructuring and integration costs 3,875 4,829 Acquisition-related costs — 486 Impairment charges 2,953 — Total non-GAAP adjustments 6,828 5,315 Adjusted operating profit (loss) $ (434) $ 14,697 Net income (loss) attributable to Designer Brands Inc. $ (17,424) $ 783 Non-GAAP adjustments: Restructuring and integration costs 3,875 4,829 Acquisition-related costs — 486 Impairment charges 2,953 — Foreign currency transaction losses (gains) (8) 143 Total non-GAAP adjustments before tax effect 6,820 5,458 Tax effect on above non-GAAP adjustments (1,664) (1,398) Valuation allowance change on deferred tax assets (528) (136) Total non-GAAP adjustments, after tax 4,628 3,924 Net income attributable to redeemable noncontrolling interest 288 102 Adjusted net income (loss) $ (12,508) $ 4,809 Diluted earnings (loss) per share $ (0.36) $ 0.01 Adjusted diluted earnings (loss) per share $ (0.26) $ 0.08 Non-GAAP Measures To supplement amounts presented in our consolidated financial statements determined in accordance with accounting principles generally accepted in the U.S. ("GAAP"), the Company uses certain non-GAAP financial measures, including adjusted operating expenses, adjusted operating profit (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share as shown in the table above. These measures adjust for the effects of: (1) restructuring and integration costs, including severance charges; (2) acquisition-related costs; (3) impairment charges; (4) foreign currency transaction losses (gains); (5) the net tax impact of such items; (6) the change in the valuation allowance on deferred tax assets; and (7) net income attributable to redeemable noncontrolling interest. The unaudited adjusted results should not be construed as an alternative to the reported results determined in accordance with GAAP. These financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures presented by other companies. The Company believes that these non-GAAP financial measures provide useful information to both management and investors to increase comparability to prior periods by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company compared to prior periods, when reviewed in conjunction with the Company's GAAP statements. These amounts are not determined in accordance with GAAP and therefore should not be used exclusively in evaluating the Company's business and operations. Comparable Sales Performance Metric We consider the percent change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important measurement for management and investors of the performance of our direct-to-consumer businesses. We include in our comparable sales metric sales from stores in operation for at least 14 months at the beginning of the applicable year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales include the e-commerce sales of the U.S. Retail and Canada Retail segments. Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Stores added as a result of the Rubino acquisition that will have been in operation for at least 14 months at the beginning of 2025, along with its e-commerce sales, will be added to the comparable base for the Canada Retail segment beginning with the second quarter of 2025. Comparable sales include the e-commerce net sales of the Brand Portfolio segment from the direct-to-consumer e-commerce sites. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation. SOURCE Designer Brands Inc. 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Designer Brands Inc. Reports First Quarter 2025 Financial Results

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