Designer Brands' H1 To Be Pressured Before Recovering In H2, Analyst Says

Telsey Advisory Group analyst Dana Telsey reiterated a Market Perform rating on the shares of Designer Brands Inc DBI with a price target of $12.
The company reported solid Q4 results after reiterating guidance in early January with the announcement of the CEO transition.
While sales were a bit below expectations for the period, a healthier gross margin and unexpected expense leverage drove an operating margin and bottom line beat for the period, noted the analyst.
However, the FY23 outlook came in below expectations on both the top- and bottom-lines, as the macro environment in the footwear space remains volatile and uncertain.
While near-term pressures continue to impact DBI's business, the long-range plan detailed at April 2022's Investor Day remains intact and adds visibility to management's strategic and financial framework beyond this year, said the analyst.
The analyst added that the plan is almost entirely leveraged to somewhat consistent and rapid growth in the Camuto Group, particularly in light of the secular headwinds to the national brand business.
With a decline on both the top- and bottom-line planned for FY23, management expects the pressure to persist through 1H23 before recovering in H2, noted the analyst.
The bulk of the decline is expected to hit in Q1, with the rest of the year expected to be flat to up slightly YoY.
The Owned Brands category continues to grow, and management believes that DBI will reach one-third of total sales by 2026.
The analyst also reduced FY23 and FY24 EPS estimates, incorporating the Q4 results and ongoing macro headwinds.
Price Action: DBI shares are trading lower by 0.80% at $9.24 on the last check Friday.
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