Reporting sequential improvement in sales and
gross margin over the first quarter 2023
Reaffirming 2023 guidance
COLUMBUS, Ohio, Sept. 7,
2023 /PRNewswire/ -- Designer Brands Inc. (NYSE: DBI)
(the "Company" and "Designer Brands"), one of the world's largest
designers, producers, and retailers of footwear and accessories,
announced financial results for the second quarter ended
July 29, 2023.
Doug Howe, Chief Executive
Officer, stated, "I am proud of the sequential improvement in both
sales and profitability in the second quarter as well as the
progress that has been made on our strategic initiatives, with
several exciting milestones in the quarter – including new
collaborations and celebrity partnerships. Our portfolio of Owned
Brands and National Brand partners remains strong and we are
excited to be rolling out our new athletic and athleisure offerings
from Le Tigre and Keds while
continuing to elevate our relationship with Nike during a time that
athletic and athleisure demand continues to grow.
"The unique synergies between our legacy retail business and our
brand portfolio are putting us on a path to being more resilient
than ever and we will continue to build out our leadership and
structure our teams accordingly. As we look ahead, we do anticipate
near-term headwinds will persist, but we are confident in our plans
to continue optimizing and spotlighting our unparalleled
assortment."
Second Quarter Operating Results (Unless
otherwise stated, all comparisons are to the second quarter of
2022)
- Net sales decreased 7.8% to $792.2
million.
- Total comparable sales decreased by 8.9%.
- Gross profit decreased to $273.4
million versus $295.7 million
last year, and gross margin was 34.5% compared to 34.4% for the
same period last year.
- Reported net income attributable to Designer Brands Inc. was
$37.2 million, or diluted earnings
per share ("EPS") of $0.56, including
net after-tax charges of $0.03 per
diluted share from adjusted items, primarily related to CEO
transition, restructuring, and integration costs.
- Adjusted net income was $39.4
million, or adjusted diluted EPS of $0.59.
Liquidity
- Cash and cash equivalents totaled $46.2
million at the end of the second quarter of 2023, compared
to $50.8 million at the end of the
same period last year, with $233.7
million available for borrowings under our senior secured
asset-based revolving credit facility and $85.0 million available for borrowings by
September 21, 2023 under our new
senior secured term loan credit agreement ("Term Loan"). Debt
totaled $331.0 million at the end of
the second quarter of 2023 compared to $387.4 million at the end of the same period last
year.
- The Company ended the second quarter with inventories of
$606.8 million compared to
$694.0 million at the end of the same
period last year.
Capital Allocation
- During the second quarter, the Company repurchased an aggregate
2.1 million Class A common shares, including open market purchases
and purchases under our previously-disclosed Dutch auction tender
offer. As of July 29, 2023,
$166.5 million of Class A common
shares remained available for future repurchase under the share
repurchase program.
- During the third quarter through September 5, 2023, the Company has repurchased an
additional $58.3 million Class A
common shares through open market purchases at an average price of
$10.18 per share. As of September 5, 2023, the Company maintains
$102.8 million authorized for future
repurchases under its share repurchase program.
- The Company anticipates drawing an additional $85.0 million under the Term Loan throughout the
remainder of 2023. As of September 5,
2023, our outstanding debt balance was $341.4 million.
Store Openings and Closings
During the second quarter of 2023, we closed one store in the
U.S. and one store in Canada,
resulting in a total of 498 U.S. stores and 138 Canadian stores as
of July 29, 2023.
Updated 2023 Financial Outlook
The Company is reaffirming the following guidance for the full
year 2023:
Metric
|
|
Guidance
|
Net Sales:
|
|
|
Designer Brands
net sales growth, excluding Keds
|
|
Down mid- to
high-single digits
|
Incremental net
sales from Keds acquisition
|
|
$75.0 million to $85.0
million
|
Diluted EPS:
|
|
|
Designer Brands,
excluding Keds
|
|
$1.20 -
$1.50
|
Contribution from
Keds acquisition
|
|
~$0.00
|
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 7689007 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/5xmnwoEQVrJ
For those unable to listen to the live webcast, an archived
version will be available at the same location until September 21, 2023. 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: 4386380
Important information may be disseminated initially or
exclusively via the Company's investor website; investors should
consult the site 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 inspiring self-expression. With a diversified,
world-class portfolio of coveted brands, including Keds, Lucky
Brand, Crown Vintage, Vince Camuto,
Topo Athletic, Jessica Simpson,
Le Tigre 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 nearly 640
DSW Designer Shoe Warehouse and The Shoe Company 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
product for national retailers. Designer Brands is committed to
being a difference maker in the world, taking steps forward to
advance diversity, equity, and inclusion in the footwear industry
and supporting a global community and the health of the planet by
donating more than seven million pairs of shoes to the global
non-profit Soles4Souls. 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 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
conditions, including recession concerns, inflationary pressures
and rising interest rates, and the related impacts to consumer
discretionary spending; supply chain challenges; risks
related to adverse public health developments; our ability to
anticipate and respond to fashion trends, consumer preferences and
changing customer expectations; our ability to maintain strong
relationships with our vendors, manufacturers, 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; our ability to retain our
existing management team, and continue to attract qualified new
personnel; risks related to cyber security threats and privacy or
data security breaches or the potential loss or disruption of our
information technology ("IT") systems; risks related to the
implementation of an enterprise resource planning system software
solution and other IT systems; our reliance on our loyalty programs
and marketing to drive traffic, sales, and customer loyalty; our
ability to protect our reputation and to maintain the brands we
license; our competitiveness with respect to style, price, brand
availability, and customer service; risks related to our
international operations, including international trade, our
reliance on foreign sources for merchandise, exposure to political,
economic, operational, compliance and other risks, and fluctuations
in foreign currency exchange rates; our ability to comply with
privacy laws and regulations, as well as other legal obligations;
domestic and global political and social conditions; geopolitical
tensions; 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 latest
Annual Report on Form 10-K or other reports made or filed with the
Securities and Exchange Commission. All forward-looking statements
speak only as of the time when made. 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)
|
July 29,
2023
|
|
July 30,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of Total
Segment
Net Sales
|
|
Amount
|
|
%
|
Segment net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
658,542
|
|
81.0 %
|
|
$
734,063
|
|
83.5 %
|
|
$ (75,521)
|
|
(10.3) %
|
Canada
Retail
|
70,266
|
|
8.6 %
|
|
78,284
|
|
8.9 %
|
|
(8,018)
|
|
(10.2) %
|
Brand
Portfolio
|
84,217
|
|
10.4 %
|
|
66,351
|
|
7.6 %
|
|
17,866
|
|
26.9 %
|
Total segment net
sales
|
813,025
|
|
100.0 %
|
|
878,698
|
|
100.0 %
|
|
(65,673)
|
|
(7.5) %
|
Elimination of
intersegment net sales
|
(20,808)
|
|
|
|
(19,379)
|
|
|
|
(1,429)
|
|
7.4 %
|
Consolidated net
sales
|
$
792,217
|
|
|
|
$
859,319
|
|
|
|
$ (67,102)
|
|
(7.8) %
|
|
Six months
ended
|
|
|
(dollars in
thousands)
|
July 29,
2023
|
|
July 30,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of Total
Segment
Net Sales
|
|
Amount
|
|
%
|
Segment net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$
1,271,428
|
|
80.8 %
|
|
$
1,436,808
|
|
82.8 %
|
|
$
(165,380)
|
|
(11.5) %
|
Canada
Retail
|
124,221
|
|
7.9 %
|
|
134,599
|
|
7.8 %
|
|
(10,378)
|
|
(7.7) %
|
Brand
Portfolio
|
177,200
|
|
11.3 %
|
|
163,807
|
|
9.4 %
|
|
13,393
|
|
8.2 %
|
Total segment net
sales
|
1,572,849
|
|
100.0 %
|
|
1,735,214
|
|
100.0 %
|
|
(162,365)
|
|
(9.4) %
|
Elimination of
intersegment net sales
|
(38,550)
|
|
|
|
(45,352)
|
|
|
|
6,802
|
|
(15.0) %
|
Consolidated net
sales
|
$
1,534,299
|
|
|
|
$
1,689,862
|
|
|
|
$
(155,563)
|
|
(9.2) %
|
Net Sales by Brand
Categories
|
(in
thousands)
|
U.S. Retail
|
|
Canada
Retail
|
|
Brand
Portfolio
|
|
Eliminations
|
|
Consolidated
|
Three months ended
July 29, 2023
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
115,749
|
|
$
—
|
|
$
15,776
|
|
$
—
|
|
$
131,525
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
47,633
|
|
—
|
|
47,633
|
Intersegment
wholesale and commission income
|
—
|
|
—
|
|
20,808
|
|
(20,808)
|
|
—
|
Total Owned
Brands
|
115,749
|
|
—
|
|
84,217
|
|
(20,808)
|
|
179,158
|
National
brands
|
542,793
|
|
—
|
|
—
|
|
—
|
|
542,793
|
Canada
Retail(2)
|
—
|
|
70,266
|
|
—
|
|
—
|
|
70,266
|
Total net
sales
|
$
658,542
|
|
$
70,266
|
|
$
84,217
|
|
$
(20,808)
|
|
$
792,217
|
Three months ended July
30, 2022
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
147,877
|
|
$
—
|
|
$
7,793
|
|
$
—
|
|
$
155,670
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
39,179
|
|
—
|
|
39,179
|
Intersegment
wholesale and commission income
|
—
|
|
—
|
|
19,379
|
|
(19,379)
|
|
—
|
Total Owned
Brands
|
147,877
|
|
—
|
|
66,351
|
|
(19,379)
|
|
194,849
|
National
brands
|
586,186
|
|
—
|
|
—
|
|
—
|
|
586,186
|
Canada
Retail(2)
|
—
|
|
78,284
|
|
—
|
|
—
|
|
78,284
|
Total net
sales
|
$
734,063
|
|
$
78,284
|
|
$
66,351
|
|
$
(19,379)
|
|
$
859,319
|
Six months ended
July 29, 2023
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
238,958
|
|
$
—
|
|
$
26,400
|
|
$
—
|
|
$
265,358
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
112,250
|
|
—
|
|
112,250
|
Intersegment
wholesale and commission income
|
—
|
|
—
|
|
38,550
|
|
(38,550)
|
|
—
|
Total Owned
Brands
|
238,958
|
|
—
|
|
177,200
|
|
(38,550)
|
|
377,608
|
National
brands
|
1,032,470
|
|
—
|
|
—
|
|
—
|
|
1,032,470
|
Canada
Retail(2)
|
—
|
|
124,221
|
|
—
|
|
—
|
|
124,221
|
Total net
sales
|
$
1,271,428
|
|
$
124,221
|
|
$
177,200
|
|
$
(38,550)
|
|
$
1,534,299
|
Six months ended July
30, 2022
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
287,032
|
|
$
—
|
|
$
14,320
|
|
$
—
|
|
$
301,352
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
104,135
|
|
—
|
|
104,135
|
Intersegment
wholesale and commission income
|
—
|
|
—
|
|
45,352
|
|
(45,352)
|
|
—
|
Total Owned
Brands
|
287,032
|
|
—
|
|
163,807
|
|
(45,352)
|
|
405,487
|
National
brands
|
1,149,776
|
|
—
|
|
—
|
|
—
|
|
1,149,776
|
Canada
Retail(2)
|
—
|
|
134,599
|
|
—
|
|
—
|
|
134,599
|
Total net
sales
|
$
1,436,808
|
|
$ 134,599
|
|
$
163,807
|
|
$
(45,352)
|
|
$
1,689,862
|
|
|
|
|
|
|
|
|
|
|
(1)
|
"Owned Brands" refers
to those brands we have rights to sell through ownership or license
arrangements. Beginning in the first quarter of 2023, sales of the
Keds brand are included in Owned Brands as a result of our
acquisition of the Keds business. Sales of the Keds brand in
periods prior to the first quarter of 2023 are not restated, as
this brand was considered a national brand during those
periods.
|
(2)
|
We currently do not
report the Canada Retail segment net sales by brand
categories.
|
Comparable
Sales
|
|
Three months
ended
|
|
Six months
ended
|
|
July 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Change in comparable
sales:
|
|
|
|
|
|
|
|
U.S. Retail
segment
|
(9.2) %
|
|
2.7 %
|
|
(10.4) %
|
|
7.8 %
|
Canada Retail
segment
|
(7.3) %
|
|
47.3 %
|
|
(3.0) %
|
|
44.8 %
|
Brand Portfolio
segment - direct-to-consumer
channel
|
0.5 %
|
|
43.3 %
|
|
5.3 %
|
|
31.5 %
|
Total
|
(8.9) %
|
|
6.2 %
|
|
(9.6) %
|
|
10.4 %
|
Store
Count
|
(square footage in
thousands)
|
July 29,
2023
|
|
July 30,
2022
|
|
Number of
Stores
|
|
Square
Footage
|
|
Number of
Stores
|
|
Square
Footage
|
U.S. Retail segment -
DSW stores
|
498
|
|
9,978
|
|
506
|
|
10,237
|
Canada Retail
segment:
|
|
|
|
|
|
|
|
The Shoe Company
stores
|
113
|
|
594
|
|
113
|
|
596
|
DSW
stores
|
25
|
|
496
|
|
25
|
|
496
|
|
138
|
|
1,090
|
|
138
|
|
1,092
|
Total number of
stores
|
636
|
|
11,068
|
|
644
|
|
11,329
|
Gross
Profit
|
|
Three months
ended
|
|
|
|
|
|
|
(dollars in
thousands)
|
July 29,
2023
|
|
July 30,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
|
Basis
Points
|
Segment gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$ 225,768
|
|
34.3 %
|
|
$ 251,143
|
|
34.2 %
|
|
$ (25,375)
|
|
(10.1) %
|
|
10
|
Canada
Retail
|
23,811
|
|
33.9 %
|
|
30,974
|
|
39.6 %
|
|
(7,163)
|
|
(23.1) %
|
|
(570)
|
Brand
Portfolio
|
24,298
|
|
28.9 %
|
|
12,294
|
|
18.5 %
|
|
12,004
|
|
97.6 %
|
|
1,040
|
Total segment gross
profit
|
273,877
|
|
33.7 %
|
|
294,411
|
|
33.5 %
|
|
(20,534)
|
|
(7.0) %
|
|
20
|
Net recognition
(elimination) of
intersegment gross profit
|
(490)
|
|
|
|
1,259
|
|
|
|
(1,749)
|
|
|
|
|
Consolidated gross
profit
|
$ 273,387
|
|
34.5 %
|
|
$ 295,670
|
|
34.4 %
|
|
$ (22,283)
|
|
(7.5) %
|
|
10
|
|
Six months
ended
|
|
|
(dollars in
thousands)
|
July 29,
2023
|
|
July 30,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
|
Basis
Points
|
Segment gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
Retail
|
$ 422,582
|
|
33.2 %
|
|
$ 484,210
|
|
33.7 %
|
|
$ (61,628)
|
|
(12.7) %
|
|
(50)
|
Canada
Retail
|
40,985
|
|
33.0 %
|
|
49,847
|
|
37.0 %
|
|
(8,862)
|
|
(17.8) %
|
|
(400)
|
Brand
Portfolio
|
46,383
|
|
26.2 %
|
|
36,136
|
|
22.1 %
|
|
10,247
|
|
28.4 %
|
|
410
|
Total segment gross
profit
|
509,950
|
|
32.4 %
|
|
570,193
|
|
32.9 %
|
|
(60,243)
|
|
(10.6) %
|
|
(50)
|
Net recognition of
intersegment
gross profit
|
1,176
|
|
|
|
1,222
|
|
|
|
(46)
|
|
|
|
|
Consolidated gross
profit
|
$ 511,126
|
|
33.3 %
|
|
$ 571,415
|
|
33.8 %
|
|
$ (60,289)
|
|
(10.6) %
|
|
(50)
|
Intersegment
Eliminations
|
|
Three months
ended
|
(in
thousands)
|
July 29,
2023
|
|
July 30,
2022
|
Intersegment
recognition and elimination activity:
|
|
|
|
Net sales
recognized by Brand Portfolio segment
|
$
(20,808)
|
|
$
(19,379)
|
Cost of
sales:
|
|
|
|
Cost of sales
recognized by Brand Portfolio segment
|
15,066
|
|
12,554
|
Recognition of
intersegment gross profit for inventory previously purchased
that
was subsequently sold to external customers during the
current period
|
5,252
|
|
8,084
|
|
$
(490)
|
|
$
1,259
|
|
Six months
ended
|
(in
thousands)
|
July 29,
2023
|
|
July 30,
2022
|
Intersegment
recognition and elimination activity:
|
|
|
|
Net sales
recognized by Brand Portfolio segment
|
$
(38,550)
|
|
$
(45,352)
|
Cost of
sales:
|
|
|
|
Cost of sales
recognized by Brand Portfolio segment
|
28,277
|
|
30,723
|
Recognition of
intersegment gross profit for inventory previously purchased
that
was subsequently sold to external customers during the
current period
|
11,449
|
|
15,851
|
|
$
1,176
|
|
$
1,222
|
DESIGNER BRANDS
INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited and in thousands, except per share
amounts)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
July 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Net sales
|
$
792,217
|
|
$
859,319
|
|
$ 1,534,299
|
|
$ 1,689,862
|
Cost of
sales
|
(518,830)
|
|
(563,649)
|
|
(1,023,173)
|
|
(1,118,447)
|
Gross profit
|
273,387
|
|
295,670
|
|
511,126
|
|
571,415
|
Operating
expenses
|
(214,530)
|
|
(228,690)
|
|
(434,649)
|
|
(452,116)
|
Income from equity
investments
|
2,138
|
|
2,435
|
|
4,469
|
|
4,380
|
Impairment
charges
|
(308)
|
|
(1,816)
|
|
(649)
|
|
(2,888)
|
Operating
profit
|
60,687
|
|
67,599
|
|
80,297
|
|
120,791
|
Interest expense,
net
|
(6,932)
|
|
(2,752)
|
|
(13,529)
|
|
(5,704)
|
Loss on extinguishment
of debt and write-off of debt issuance
costs
|
—
|
|
—
|
|
—
|
|
(12,862)
|
Non-operating income,
net
|
579
|
|
37
|
|
245
|
|
43
|
Income before income
taxes
|
54,334
|
|
64,884
|
|
67,013
|
|
102,268
|
Income tax
provision
|
(17,079)
|
|
(18,671)
|
|
(18,385)
|
|
(29,873)
|
Net income
|
37,255
|
|
46,213
|
|
48,628
|
|
72,395
|
Net income attributable
to redeemable noncontrolling interest
|
(51)
|
|
—
|
|
(9)
|
|
—
|
Net income attributable
to Designer Brands Inc.
|
$
37,204
|
|
$
46,213
|
|
$
48,619
|
|
$
72,395
|
Diluted earnings per
share attributable to Designer Brands
Inc.
|
$
0.56
|
|
$
0.62
|
|
$
0.73
|
|
$
0.96
|
Weighted average
diluted shares
|
66,997
|
|
73,942
|
|
66,863
|
|
75,369
|
DESIGNER BRANDS
INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited and in thousands)
|
|
|
July 29,
2023
|
|
January 28,
2023
|
|
July 30,
2022
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
46,187
|
|
$
58,766
|
|
$
50,799
|
Receivables,
net
|
97,364
|
|
77,763
|
|
204,880
|
Inventories
|
606,841
|
|
605,652
|
|
694,010
|
Prepaid
expenses and other current assets
|
50,308
|
|
47,750
|
|
51,558
|
Total current
assets
|
800,700
|
|
789,931
|
|
1,001,247
|
Property and
equipment, net
|
226,634
|
|
235,430
|
|
242,147
|
Operating lease
assets
|
751,637
|
|
700,373
|
|
646,062
|
Goodwill
|
135,259
|
|
97,115
|
|
93,655
|
Intangible
assets, net
|
72,640
|
|
31,866
|
|
20,237
|
Deferred tax
assets
|
48,100
|
|
48,285
|
|
—
|
Equity
investments
|
62,938
|
|
63,820
|
|
61,957
|
Other
assets
|
49,430
|
|
42,798
|
|
37,134
|
Total assets
|
$
2,147,338
|
|
$
2,009,618
|
|
$
2,102,439
|
LIABILITIES, REDEEMABLE
NONCONTROLLING
INTEREST AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
294,724
|
|
$
255,364
|
|
$
337,543
|
Accrued
expenses
|
172,130
|
|
190,676
|
|
210,469
|
Current
maturities of long-term debt
|
2,500
|
|
—
|
|
—
|
Current
operating lease liabilities
|
181,484
|
|
190,086
|
|
192,130
|
Total current
liabilities
|
650,838
|
|
636,126
|
|
740,142
|
Long-term
debt
|
328,506
|
|
281,035
|
|
387,441
|
Non-current
operating lease liabilities
|
682,248
|
|
631,412
|
|
588,064
|
Other non-current
liabilities
|
22,784
|
|
24,989
|
|
25,844
|
Total
liabilities
|
1,684,376
|
|
1,573,562
|
|
1,741,491
|
Redeemable
noncontrolling interest
|
3,144
|
|
3,155
|
|
—
|
Total
shareholders' equity
|
459,818
|
|
432,901
|
|
360,948
|
Total liabilities,
redeemable noncontrolling interest, and
shareholders' equity
|
$
2,147,338
|
|
$
2,009,618
|
|
$
2,102,439
|
DESIGNER BRANDS
INC. NON-GAAP RECONCILIATION (unaudited and
in thousands, except per share amounts)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
July 29,
2023
|
|
July 30,
2022
|
|
July 29,
2023
|
|
July 30,
2022
|
Operating
expenses
|
$
(214,530)
|
|
$ (228,690)
|
|
$
(434,649)
|
|
$ (452,116)
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
CEO transition
costs
|
744
|
|
—
|
|
2,954
|
|
—
|
Restructuring and
integration costs
|
818
|
|
992
|
|
2,938
|
|
1,606
|
Acquisition-related costs
|
90
|
|
—
|
|
1,597
|
|
—
|
Total non-GAAP
adjustments
|
1,652
|
|
992
|
|
7,489
|
|
1,606
|
Adjusted operating
expenses
|
$
(212,878)
|
|
$ (227,698)
|
|
$
(427,160)
|
|
$ (450,510)
|
Operating
profit
|
$
60,687
|
|
$
67,599
|
|
$
80,297
|
|
$
120,791
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
CEO transition
costs
|
744
|
|
—
|
|
2,954
|
|
—
|
Restructuring and
integration costs
|
818
|
|
992
|
|
2,938
|
|
1,606
|
Acquisition-related costs
|
90
|
|
—
|
|
1,597
|
|
—
|
Impairment
charges
|
308
|
|
1,816
|
|
649
|
|
2,888
|
Total non-GAAP
adjustments
|
1,960
|
|
2,808
|
|
8,138
|
|
4,494
|
Adjusted operating
profit
|
$
62,647
|
|
$
70,407
|
|
$
88,435
|
|
$
125,285
|
Net income attributable
to Designer Brands Inc.
|
$
37,204
|
|
$
46,213
|
|
$
48,619
|
|
$
72,395
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
CEO transition
costs
|
744
|
|
—
|
|
2,954
|
|
—
|
Restructuring and
integration costs
|
818
|
|
992
|
|
2,938
|
|
1,606
|
Acquisition-related costs
|
90
|
|
—
|
|
1,597
|
|
—
|
Impairment
charges
|
308
|
|
1,816
|
|
649
|
|
2,888
|
Loss on
extinguishment of debt and write-off of debt
issuance costs
|
—
|
|
—
|
|
—
|
|
12,862
|
Foreign currency
transaction gains
|
(579)
|
|
(37)
|
|
(245)
|
|
(43)
|
Total non-GAAP
adjustments before tax effect
|
1,381
|
|
2,771
|
|
7,893
|
|
17,313
|
Tax effect on
above non-GAAP adjustments
|
(377)
|
|
(735)
|
|
(2,032)
|
|
(4,374)
|
Discrete and
permanent tax on non-deductible CEO
transition costs
|
1,750
|
|
—
|
|
1,897
|
|
—
|
Valuation
allowance change on deferred tax assets
|
(607)
|
|
(2,135)
|
|
(2,724)
|
|
(2,495)
|
Total non-GAAP
adjustments, after tax
|
2,147
|
|
(99)
|
|
5,034
|
|
10,444
|
Net income
attributable to redeemable noncontrolling
interest
|
51
|
|
—
|
|
9
|
|
—
|
Adjusted net
income
|
$
39,402
|
|
$
46,114
|
|
$
53,662
|
|
$
82,839
|
Diluted earnings per
share
|
$
0.56
|
|
$
0.62
|
|
$
0.73
|
|
$
0.96
|
Adjusted diluted
earnings per share
|
$
0.59
|
|
$
0.62
|
|
$
0.80
|
|
$
1.10
|
Non-GAAP Measures
To supplement amounts presented in our consolidated financial
statements determined in accordance with accounting principles
generally accepted in the United
States ("GAAP"), the Company uses certain non-GAAP financial
measures, including adjusted operating expenses, adjusted operating
profit, adjusted net income, and adjusted diluted earnings per
share as shown in the table above. These measures adjust for the
effects of: (1) CEO transition costs; (2) restructuring and
integration costs, including severance charges other than those
included in CEO transition costs; (3) acquisition-related costs;
(4) impairment charges; (5) loss on extinguishment of debt and
write-off of debt issuance costs; (6) foreign currency transaction
gains; (7) the net tax impact of such items, including discrete and
permanent tax on non-deductible CEO transition costs; (8) the
change in the valuation allowance on deferred tax assets; and (9)
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 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. Comparable sales for the Brand
Portfolio segment include the direct-to-consumer e-commerce sales
of www.vincecamuto.com. The e-commerce sales for Topo Athletic and
the Keds business will be added to the comparable base for the
Brand Portfolio segment beginning with the first quarter of 2024
and the second quarter of 2024, respectively. 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.
CONTACT: Stacy Turnof,
DesignerBrandsIR@edelman.com
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SOURCE Designer Brands Inc.