Designer Brands Q3 Earnings Miss As Warm Weather And Economic Woes Hurt Sales, Outlook Slashed

Designer Brands Inc. DBI shares are trading lower on Tuesday.

The company reported third-quarter adjusted earnings per share of 27 cents, missing the street view of 35 cents.

The company’s third-quarter net sales decreased by 1.2% to $777.2 million, while total comparable sales decreased by 3.1%. Sales missed the analyst consensus estimate of $802.14 million.

“We had a difficult transition into the fall season, with unseasonably warm weather and ongoing macroeconomic uncertainty placing pressure on consumer discretionary spending, specifically in our seasonal category”, said Doug Howe, Chief Executive Officer.

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Quarterly gross profit decreased to $247.4 million, down from $256.4 million last year. Gross margin contracted to 31.8%, compared to 32.6% last year.

In the third quarter of 2024, the company closed three stores in the U.S. and opened two stores in Canada. As of November 2, the company had 496 stores in the U.S. and 179 stores in Canada.

In the third quarter of 2024, the company repurchased 7.7 million Class A common shares for $50.6 million. As of November 2, $19.7 million of Class A shares remain available for repurchase.

A dividend of $0.05 per share will be paid on December 20. The dividend will go to shareholders of record on December 6.

Cash and equivalents totaled $36.2 million at the end of the third quarter, down from $54.6 million at the same time last year.

Debt stood at $536.3 million, while inventories reached $637.0 million at the end of the quarter, up from $601.5 million last year.

Outlook: For FY24, the company expects net sales growth to be down low single digits, compared with a prior view of flat to low-single digits.

The company sees adjusted diluted EPS of $0.10 – $0.30 versus the $0.50 estimate (prior view: $0.50 – $0.60).

Price Action: DBI shares are trading lower by 21.1% to $4.57 premarket at last check Tuesday.

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