Designer Brands Inc. Reports First Quarter 2025 Financial Results

Rhea-AI Summary

Designer Brands Inc. (NYSE: DBI) reported challenging Q1 2025 results with net sales declining 8.0% to $686.9M and comparable sales down 7.8%. The company posted a net loss of $17.4M ($0.36 per share) compared to a profit in Q1 2024. Gross margin contracted to 43.0% from 44.2%. Due to macroeconomic uncertainty, DBI withdrew its 2025 guidance but announced cost-saving initiatives targeting $20-30M in savings. The company maintained its dividend of $0.05 per share and ended Q1 with $46.0M in cash and $522.9M in debt. Store count decreased to 669 locations from 675 year-over-year, while inventory levels remained relatively stable at $623.6M.

Positive

• Implementing cost-saving measures expected to deliver $20-30M in savings during 2025
• Maintained quarterly dividend of $0.05 per share
• Slight improvement in cash position to $46.0M from $43.4M year-over-year
• Stable inventory management with only minor increase to $623.6M from $620.5M

Negative

• Net sales decreased 8.0% to $686.9M
• Comparable sales declined 7.8%
• Net loss of $17.4M compared to profit last year
• Gross margin contracted to 43.0% from 44.2%
• Withdrew full year 2025 guidance due to macroeconomic uncertainty
• Debt increased to $522.9M from $476.1M year-over-year

Insights

Financial Analyst

Designer Brands reports disappointing Q1 with 8% revenue decline, net loss, and withdrawal of 2025 guidance amid consumer weakness.

Designer Brands' Q1 2025 results reveal significant challenges as the footwear retailer grapples with deteriorating consumer sentiment. Net sales decreased 8.0% to $686.9 million, with comparable sales declining 7.8% across channels. The company reported a net loss of $17.4 million ($0.36 loss per share), compared to a small profit in the same period last year.

Gross margin contracted 120 basis points to 43.0% from 44.2%, indicating pricing pressure and promotional activity in a competitive retail environment. This margin compression, combined with the sales decline, led to a 10.6% drop in gross profit to $295.1 million.

Particularly concerning is the performance across segments. The U.S. Retail segment, which represents nearly 80% of total sales, saw a 7.7% revenue decline and a substantial 340 basis point drop in operating margin to 6.9%. The Brand Portfolio's direct-to-consumer channel experienced an alarming 27% comparable sales decline, suggesting significant weakness in their owned brands strategy.

In response to these challenges, management has withdrawn their full-year 2025 guidance—a clear sign of uncertainty—while implementing cost-cutting measures targeting $20-30 million in savings. The company's debt position has increased to $522.9 million from $476.1 million a year ago, while cash remains relatively flat at $46.0 million.

Despite these headwinds, Designer Brands is maintaining its dividend of $0.05 per share, suggesting management believes the current challenges are manageable with their liquidity position. The inventory level of $623.6 million is essentially flat year-over-year, indicating the company has avoided a significant inventory buildup despite the sales slowdown—a positive sign for future margin management.

COLUMBUS, Ohio, June 10, 2025 /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		Square Footage		Number of Stores		Square Footage
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 Segment Net 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 Segment Net Sales		Amount		% of Segment Net 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 that was 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 Segment Net 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

NM - Not meaningful

 

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.

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SOURCE Designer Brands Inc.

FAQ

What were Designer Brands (DBI) key financial results for Q1 2025?

DBI reported net sales of $686.9M (down 8.0%), comparable sales declined 7.8%, and posted a net loss of $17.4M ($0.36 per share), with gross margin contracting to 43.0%.

Why did Designer Brands withdraw its 2025 guidance?

DBI withdrew guidance due to macroeconomic uncertainty stemming primarily from global trade policies and deteriorating consumer sentiment.

How much cost savings does DBI expect to achieve in 2025?

Designer Brands expects to deliver between $20 million to $30 million in cost savings over the course of 2025.

What is Designer Brands (DBI) current dividend payment?

DBI maintains a quarterly dividend of $0.05 per share for both Class A and Class B common shares.

How many stores does Designer Brands operate as of Q1 2025?

Designer Brands operates 669 stores across its DSW Designer Shoe Warehouse, The Shoe Co., and Rubino brands in North America.