Designer Brands Inc. DBI posted fourth-quarter of fiscal 2024 results, with the top line decreasing year over year and missing the Zacks Consensus Estimate. However, the bottom line was flat with the prior year and was narrower than the consensus mark.
The company saw positive comparable sales, marking its return to growth for the first time in nine quarters, driven by strategic initiatives, such as leadership changes, product revitalization, refined marketing and an enhanced omnichannel experience. These efforts helped strengthen its position despite ongoing consumer pressures.
Looking into fiscal 2025, the focus remains on a customer-first, product-driven approach, leveraging data insights and portfolio optimization. While inflation and reduced discretionary spending present challenges, continued investments in brand development and customer engagement are expected to drive financial improvement and long-term growth.
DBI’s Quarterly Performance: Key Metrics & Insights
Designer Brands reported an adjusted quarterly loss of 44 cents per share, which was narrower than the Zacks Consensus Estimate of a loss of 47 cents. However, the bottom line was flat with the year-ago reported figure.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Designer Brands Inc. Price, Consensus and EPS Surprise
Designer Brands Inc. price-consensus-eps-surprise-chart | Designer Brands Inc. Quote
Net sales were $713.6 million, down 5.4% year over year. The top line missed the Zacks Consensus Estimate of $723 million. Comparable sales (comps) increased 0.5% year over year compared with the Zacks Consensus Estimate of nearly 1% increase.
Insight Into DBI’s Margins & Expenses
Gross profit amounted to $282.6 million, down 3.4% from $292.6 million in the year-ago quarter. However, the gross margin increased 80 bps to 39.6% from the prior-year period’s level, driven by fewer promotional offers in the U.S. retail segment and lower direct-to-consumer shipping costs, benefiting from reduced rates and improved package efficiency per order.
Adjusted operating expense, as a percentage of net sales, rose to 43.5%, up 40 basis points from 43.1% in the same quarter last year. The rise was due to the impact of the 53rd week of sales in the previous year compared with a partially fixed cost base in the current period.
Adjusted operating loss was $23.5 million, an improvement from the prior-year loss of $30.2 million, which included $6.6 million in additional operating income from the 53rd week.
Designer Brands’ Segmental Performance
U.S. Retail: Segment sales decreased 6.9% year over year to $587.5 million compared with the Zacks Consensus Estimate of $586 million.
Canada Retail: Segment sales increased 7.5% year over year to $69.2 million compared with the Zacks Consensus Estimate of $69 million.
Brand Portfolio: Segment sales of $87.3 million increased 12.3% year over year. The metric lagged the Zacks Consensus Estimate of $103 million.
DBI’s Financial Snapshot: Cash, Debt & Equity Overview
At the end of fiscal 2024, the company reported cash and cash equivalents totaling $44.8 million compared with $49.2 million in 2023. DBI also had $127.3 million available for borrowings under its senior secured asset-based revolving credit facility.
Debt levels also rose significantly, reaching $491 million by the end of fiscal 2024 compared with $427.1 million in the year-ago period. In addition, the company ended fiscal 2024 with inventories of $599.8 million, which marked an increase from $571.3 million recorded at the end of 2023.
As part of its efforts to return value to shareholders, the company repurchased 10.3 million Class A common shares during fiscal 2024, with an aggregate cost of $68.6 million. As of Feb. 1, 2025, there remained $19.7 million worth of Class A common shares available for repurchase under the share repurchase program.
The company declared a dividend of 5 cents per share for Class A and Class B common stock, payable on April 11, to its shareholders of record as of the close of business on March 28, 2025.
Update on DBI's Stores
During the fiscal fourth quarter, the company closed two stores in the United States and four stores in Canada, resulting in a total of 494 U.S. stores and 175 Canadian stores as of Feb. 1, 2025.
Designer Brands’ FY25 Guidance
The company expects sales growth to be low-single digits compared with the decrease of 2.1% reported last fiscal year.
DBI expected adjusted earnings per share to be in the range of 30-50 cents compared with adjusted earnings of 27 cents reported in fiscal 2024.
Shares of this Zacks Rank #3 (Hold) company have lost 25% in the past three months compared with the industry's 22.7% decline.
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Key Picks
Nordstrom, Inc. JWN, a fashion retailer, provides apparels, shoes, beauty, accessories and home goods for women, men, young adults and children, currently sport a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Nordstrom’s current financial-year sales indicates a rise of 1.9% from the year-ago period’s levels. JWN delivered an earnings surprise of 22.2% in the last reported quarter.
Urban Outfitters URBN engages in the retail and wholesale of general consumer products. It presently flaunts a Zacks Rank of 1. URBN delivered an average earnings surprise of 28.4% in the trailing four quarters.
The consensus estimate for Urban Outfitters’ current financial-year sales and earnings indicates growth of 6% and 11.8%, respectively, from the year-ago figure.
Stitch Fix, Inc. SFIX sells a range of apparel, shoes and accessories for women's, petite, maternity, men's, plus and kids through its website and mobile application in the United States. The company currently has a Zacks Rank #2 (Buy). SFIX delivered an average earnings surprise of 48.9% in the trailing four quarters.
The Zacks Consensus Estimate for Stitch Fix’s current financial-year earnings indicates growth of 60.6% from the year-ago figure.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
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