Why Footwear And Accessories Retailer Designer Brands' Shares Are Tumbling Today

Designer Brands Inc. DBI shares are trading lower Thursday morning after the company reported fourth-quarter FY23 results.

Sales declined by 0.8% Y/Y to $754.3 million, beating the analyst consensus of $747.35 million.

Comparable sales declined by 7.3% in the quarter. Gross profit decreased to $207.4 million from $222.0 million a year ago, with margins of 27.5% vs. 29.2% the prior year.

Adjusted EPS loss was $(0.44), beating the consensus of $(0.47). 

Cash and equivalents totaled $49.2 million at the end of 2023. Debt totaled $427.1 million at the end of 2023.

The company ended the quarter with inventories of $571.3 million compared to $605.7 million at the end of last year.

During the fourth quarter of 2023, the company opened one store and closed one store in the U.S. and closed one store in Canada, resulting in a total of 499 U.S. stores and 143 Canadian stores as of February 3, 2024.

As of February 3, 2024, the company had $87.7 million of Class A common shares for repurchase under the share repurchase program.

Dividend: The company will pay a dividend of $0.05 per share of Class A and Class B common shares on April 12, 2024, to shareholders of record at the close of business on March 29, 2024.

Outlook: Designer Brands expects FY24 EPS of $0.70 – $0.80 (vs. consensus of $0.81).

Designer Brands’ net sales growth is expected to be in low-single digits.

Doug Howe, Chief Executive Officer said, “Despite the results, 2023 was a difficult year as we were impacted by a softening footwear market, highly promotional retail environment, and the impact of unseasonably warm weather on our seasonal footwear business.”

“Looking ahead to 2024, we have an important transition year ahead as we plan to return to growth across our business.”  

Price Action: DBI shares are down 15.89% at $9.69 premarket on the last check Thursday.

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