COLUMBUS, Ohio, Dec. 5, 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 third quarter ended October 28, 2023.
"This quarter, we were impacted by a footwear market that
contracted for the first time since COVID coupled with unseasonably
warm weather, which significantly reduced customer demand for shoes
and pressured our heavily seasonal assortment," stated Doug Howe, Chief Executive Officer. "We saw
improved performance in casual and clearance categories this
quarter, but this was not enough to offset the broader lack of
demand. While macro pressures notably impacted our business, we
clearly recognize the need to operate with even greater speed and
increase the level of innovation, newness, and fashion into our
assortments, returning to our roots as a merchant organization and
a fashion footwear retailer."
Howe continued, "As we look ahead, we do not anticipate
pressures alleviating in the near-term, and we will continue to
adjust accordingly. Our team is already executing several
initiatives to address areas for improvement within our business.
Ongoing refreshment of our assortment, including new specialty
sizes, and new marketing initiatives are two ways we are actively
reinforcing our business as the best in shoes. We have also made
some difficult decisions regarding leadership across our
organization and believe that we are making progress in positioning
our business well for the long-term while continuing to generate
strong cash flow and ample liquidity."
Third Quarter Operating Results (Unless otherwise
stated, all comparisons are to the third quarter of 2022)
- Net sales decreased 9.1% to $786.3
million.
- Total comparable sales decreased by 9.3%.
- Gross profit decreased to $256.4
million versus $285.8 million
last year, and gross margin was 32.6% compared to 33.0% for the
same period last year.
- Reported net income attributable to Designer Brands Inc. was
$10.1 million, or diluted earnings
per share ("EPS") of $0.17, including
net after-tax charges of $0.07 per
diluted share from adjusted items, primarily related to
restructuring, integration, and Chief Executive Officer ("CEO")
transition costs as well as valuation allowance change on deferred
tax assets.
- Adjusted net income was $14.8
million, or adjusted diluted EPS of $0.24.
Liquidity
- Cash and cash equivalents totaled $54.6
million at the end of the third quarter of 2023, compared to
$62.5 million at the end of the same
period last year, with $213.3 million
available for borrowings under our senior secured asset-based
revolving credit facility and $85.0
million available for borrowings under our new senior
secured term loan credit agreement ("Term Loan"). On October 31, 2023, we borrowed an additional
$25.0 million under the Term Loan
with any remaining borrowings to be taken by January 31, 2024. Debt totaled $375.5 million at the end of the third quarter of
2023 compared to $415.5 million at
the end of the same period last year.
- Net cash provided by operating activities was $202.5 million for the first nine months of 2023
compared to $37.9 million during the
same period last year.
- The Company ended the third quarter with inventories of
$601.5 million compared to
$681.8 million at the end of the same
period last year.
Return to Shareholders
- During the third quarter of 2023, the Company repurchased an
aggregate 7.6 million Class A common shares at an aggregate cost of
$79.7 million, including transaction
costs and excise tax. As of October 28,
2023, $87.7 million of Class A
common shares remained available for repurchase under the share
repurchase program.
- A dividend of $0.05 per share of
Class A and Class B common shares will be paid on December 14, 2023 to shareholders of record at
the close of business on November 30,
2023.
Store Openings and Closings
During the third quarter of 2023, we opened one store in the
U.S. and six stores in Canada,
resulting in a total of 499 U.S. stores and 144 Canadian stores as
of October 28, 2023.
Updated 2023 Financial Outlook
The Company is reaffirming the following guidance for the full
year 2023:
Metric
|
|
Previous
Guidance
|
|
Current
Guidance
|
Net Sales:
|
|
|
|
|
Designer Brands net
sales growth, excluding Keds
|
|
Down mid- to
high-single digits
|
|
Down high-single
digits
|
Incremental net sales
from Keds acquisition
|
|
$75.0 million to $85.0
million
|
|
$60.0 million to $70.0
million
|
Diluted EPS:
|
|
|
|
|
Designer Brands,
excluding Keds
|
|
$1.20 -
$1.50
|
|
$0.40 -
$0.70
|
Contribution from Keds
acquisition
|
|
~$0.00
|
|
~$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 7417878 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/06YrEpem8ZW
For those unable to listen to the live webcast, an archived
version will be available at the same location until December 19, 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: 1276880
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 over 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 approximately nine 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,
including relating to the ongoing war in Ukraine and the Israel-Hamas war; 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)
|
October 28,
2023
|
|
October 29,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
Segment net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail
|
$
631,610
|
|
78.8 %
|
|
$
706,391
|
|
78.8 %
|
|
$ (74,781)
|
|
(10.6) %
|
Canada
Retail
|
75,610
|
|
9.5 %
|
|
82,289
|
|
9.2 %
|
|
(6,679)
|
|
(8.1) %
|
Brand
Portfolio
|
94,057
|
|
11.7 %
|
|
107,458
|
|
12.0 %
|
|
(13,401)
|
|
(12.5) %
|
Total segment net
sales
|
801,277
|
|
100.0 %
|
|
896,138
|
|
100.0 %
|
|
(94,861)
|
|
(10.6) %
|
Elimination of
intersegment net sales
|
(14,948)
|
|
|
|
(31,118)
|
|
|
|
16,170
|
|
(52.0) %
|
Consolidated net
sales
|
$
786,329
|
|
|
|
$
865,020
|
|
|
|
$ (78,691)
|
|
(9.1) %
|
|
|
|
Nine months
ended
|
|
|
(dollars in
thousands)
|
October 28,
2023
|
|
October 29,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
Segment net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail
|
$
1,903,038
|
|
80.2 %
|
|
$
2,143,199
|
|
81.5 %
|
|
$
(240,161)
|
|
(11.2) %
|
Canada
Retail
|
199,831
|
|
8.4 %
|
|
216,888
|
|
8.2 %
|
|
(17,057)
|
|
(7.9) %
|
Brand
Portfolio
|
271,257
|
|
11.4 %
|
|
271,265
|
|
10.3 %
|
|
(8)
|
|
— %
|
Total segment net
sales
|
2,374,126
|
|
100.0 %
|
|
2,631,352
|
|
100.0 %
|
|
(257,226)
|
|
(9.8) %
|
Elimination of
intersegment net sales
|
(53,498)
|
|
|
|
(76,470)
|
|
|
|
22,972
|
|
(30.0) %
|
Consolidated net
sales
|
$
2,320,628
|
|
|
|
$
2,554,882
|
|
|
|
$
(234,254)
|
|
(9.2) %
|
Net Sales by Brand
Categories
|
(in
thousands)
|
U.S. Retail
|
|
Canada
Retail
|
|
Brand
Portfolio
|
|
Eliminations
|
|
Consolidated
|
Three months ended
October 28, 2023
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
123,973
|
|
$
—
|
|
$
17,204
|
|
$
—
|
|
$
141,177
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
61,905
|
|
—
|
|
61,905
|
Intersegment wholesale
and commission income
|
—
|
|
—
|
|
14,948
|
|
(14,948)
|
|
—
|
Total Owned
Brands
|
123,973
|
|
—
|
|
94,057
|
|
(14,948)
|
|
203,082
|
National
brands
|
507,637
|
|
—
|
|
—
|
|
—
|
|
507,637
|
Canada
Retail(2)
|
—
|
|
75,610
|
|
—
|
|
—
|
|
75,610
|
Total net
sales
|
$
631,610
|
|
$
75,610
|
|
$
94,057
|
|
$
(14,948)
|
|
$
786,329
|
Three months ended
October 29, 2022
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
153,311
|
|
$
—
|
|
$
9,810
|
|
$
—
|
|
$
163,121
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
66,530
|
|
—
|
|
66,530
|
Intersegment wholesale
and commission income
|
—
|
|
—
|
|
31,118
|
|
(31,118)
|
|
—
|
Total Owned
Brands
|
153,311
|
|
—
|
|
107,458
|
|
(31,118)
|
|
229,651
|
National
brands
|
553,080
|
|
—
|
|
—
|
|
—
|
|
553,080
|
Canada
Retail(2)
|
—
|
|
82,289
|
|
—
|
|
—
|
|
82,289
|
Total net
sales
|
$
706,391
|
|
$
82,289
|
|
$
107,458
|
|
$
(31,118)
|
|
$
865,020
|
Nine months ended
October 28, 2023
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
362,931
|
|
$
—
|
|
$
43,604
|
|
$
—
|
|
$
406,535
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
174,155
|
|
—
|
|
174,155
|
Intersegment wholesale
and commission income
|
—
|
|
—
|
|
53,498
|
|
(53,498)
|
|
—
|
Total Owned
Brands
|
362,931
|
|
—
|
|
271,257
|
|
(53,498)
|
|
580,690
|
National
brands
|
1,540,107
|
|
—
|
|
—
|
|
—
|
|
1,540,107
|
Canada
Retail(2)
|
—
|
|
199,831
|
|
—
|
|
—
|
|
199,831
|
Total net
sales
|
$
1,903,038
|
|
$
199,831
|
|
$
271,257
|
|
$
(53,498)
|
|
$
2,320,628
|
Nine months ended
October 29, 2022
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
440,343
|
|
$
—
|
|
$
24,130
|
|
$
—
|
|
$
464,473
|
External customer
wholesale, commission
income, and other
|
—
|
|
—
|
|
170,665
|
|
—
|
|
170,665
|
Intersegment wholesale
and commission income
|
—
|
|
—
|
|
76,470
|
|
(76,470)
|
|
—
|
Total Owned
Brands
|
440,343
|
|
—
|
|
271,265
|
|
(76,470)
|
|
635,138
|
National
brands
|
1,702,856
|
|
—
|
|
—
|
|
—
|
|
1,702,856
|
Canada
Retail(2)
|
—
|
|
216,888
|
|
—
|
|
—
|
|
216,888
|
Total net
sales
|
$
2,143,199
|
|
$ 216,888
|
|
$
271,265
|
|
$
(76,470)
|
|
$
2,554,882
|
|
|
|
|
|
|
|
|
|
|
(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 Keds. 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
|
|
Nine months
ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Change in comparable
sales:
|
|
|
|
|
|
|
|
U.S. Retail
segment
|
(9.8) %
|
|
1.1 %
|
|
(10.2) %
|
|
5.5 %
|
Canada Retail
segment
|
(7.7) %
|
|
18.8 %
|
|
(4.8) %
|
|
33.5 %
|
Brand Portfolio segment
- direct-to-
consumer channel
|
7.0 %
|
|
27.0 %
|
|
6.0 %
|
|
29.6 %
|
Total
|
(9.3) %
|
|
3.0 %
|
|
(9.5) %
|
|
7.8 %
|
Store
Count
|
(square footage in
thousands)
|
October 28,
2023
|
|
October 29,
2022
|
|
Number of
Stores
|
|
Square
Footage
|
|
Number of
Stores
|
|
Square
Footage
|
U.S. Retail segment -
DSW stores
|
499
|
|
9,966
|
|
504
|
|
10,188
|
Canada Retail
segment:
|
|
|
|
|
|
|
|
The Shoe Company
stores
|
119
|
|
622
|
|
113
|
|
596
|
DSW stores
|
25
|
|
496
|
|
25
|
|
496
|
|
144
|
|
1,118
|
|
138
|
|
1,092
|
Total number of
stores
|
643
|
|
11,084
|
|
642
|
|
11,280
|
Gross
Profit
|
|
Three months
ended
|
|
|
|
|
|
|
(dollars in
thousands)
|
October 28,
2023
|
|
October 29,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
|
Basis
Points
|
Segment gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail
|
$ 200,268
|
|
31.7 %
|
|
$ 232,058
|
|
32.9 %
|
|
$ (31,790)
|
|
(13.7) %
|
|
(120)
|
Canada
Retail
|
26,606
|
|
35.2 %
|
|
31,298
|
|
38.0 %
|
|
(4,692)
|
|
(15.0) %
|
|
(280)
|
Brand
Portfolio
|
28,654
|
|
30.5 %
|
|
23,839
|
|
22.2 %
|
|
4,815
|
|
20.2 %
|
|
830
|
Total segment gross
profit
|
255,528
|
|
31.9 %
|
|
287,195
|
|
32.0 %
|
|
(31,667)
|
|
(11.0) %
|
|
(10)
|
Net recognition
(elimination) of
intersegment gross profit
|
878
|
|
|
|
(1,376)
|
|
|
|
2,254
|
|
|
|
|
Consolidated gross
profit
|
$ 256,406
|
|
32.6 %
|
|
$ 285,819
|
|
33.0 %
|
|
$ (29,413)
|
|
(10.3) %
|
|
(40)
|
|
|
|
Nine months
ended
|
|
|
(dollars in
thousands)
|
October 28,
2023
|
|
October 29,
2022
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
|
Basis
Points
|
Segment gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail
|
$ 622,850
|
|
32.7 %
|
|
$ 716,268
|
|
33.4 %
|
|
$ (93,418)
|
|
(13.0) %
|
|
(70)
|
Canada
Retail
|
67,591
|
|
33.8 %
|
|
81,145
|
|
37.4 %
|
|
(13,554)
|
|
(16.7) %
|
|
(360)
|
Brand
Portfolio
|
75,037
|
|
27.7 %
|
|
59,975
|
|
22.1 %
|
|
15,062
|
|
25.1 %
|
|
560
|
Total segment gross
profit
|
765,478
|
|
32.2 %
|
|
857,388
|
|
32.6 %
|
|
(91,910)
|
|
(10.7) %
|
|
(40)
|
Net recognition
(elimination) of
intersegment gross profit
|
2,054
|
|
|
|
(154)
|
|
|
|
2,208
|
|
|
|
|
Consolidated gross
profit
|
$ 767,532
|
|
33.1 %
|
|
$ 857,234
|
|
33.6 %
|
|
$ (89,702)
|
|
(10.5) %
|
|
(50)
|
Intersegment
Eliminations
|
|
Three months
ended
|
(in
thousands)
|
October 28,
2023
|
|
October 29,
2022
|
Intersegment
recognition and elimination activity:
|
|
|
|
Net sales recognized by
Brand Portfolio segment
|
$
(14,948)
|
|
$
(31,118)
|
Cost of
sales:
|
|
|
|
Cost of sales
recognized by Brand Portfolio segment
|
9,857
|
|
21,426
|
Recognition of
intersegment gross profit for inventory previously purchased
that
was subsequently sold to external customers during the current
period
|
5,969
|
|
8,316
|
|
$
878
|
|
$
(1,376)
|
|
|
|
Nine months
ended
|
(in
thousands)
|
October 28,
2023
|
|
October 29,
2022
|
Intersegment
recognition and elimination activity:
|
|
|
|
Net sales recognized by
Brand Portfolio segment
|
$
(53,498)
|
|
$
(76,470)
|
Cost of
sales:
|
|
|
|
Cost of sales
recognized by Brand Portfolio segment
|
38,134
|
|
52,149
|
Recognition of
intersegment gross profit for inventory previously purchased
that
was subsequently sold to external customers during the current
period
|
17,418
|
|
24,167
|
|
$
2,054
|
|
$
(154)
|
DESIGNER BRANDS
INC. CONDENSED CONSOLIDATED STATEMENTS OF
OPERATIONS (unaudited and in thousands, except per share
amounts)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Net sales
|
$
786,329
|
|
$
865,020
|
|
$ 2,320,628
|
|
$ 2,554,882
|
Cost of
sales
|
(529,923)
|
|
(579,201)
|
|
(1,553,096)
|
|
(1,697,648)
|
Gross profit
|
256,406
|
|
285,819
|
|
767,532
|
|
857,234
|
Operating
expenses
|
(230,788)
|
|
(222,232)
|
|
(665,437)
|
|
(674,348)
|
Income from equity
investments
|
2,503
|
|
2,290
|
|
6,972
|
|
6,670
|
Impairment
charges
|
—
|
|
(1,349)
|
|
(649)
|
|
(4,237)
|
Operating
profit
|
28,121
|
|
64,528
|
|
108,418
|
|
185,319
|
Interest expense,
net
|
(8,767)
|
|
(4,826)
|
|
(22,296)
|
|
(10,530)
|
Loss on extinguishment
of debt and write-off of debt issuance
costs
|
—
|
|
—
|
|
—
|
|
(12,862)
|
Non-operating income
(expense), net
|
(162)
|
|
(152)
|
|
83
|
|
(109)
|
Income before income
taxes
|
19,192
|
|
59,550
|
|
86,205
|
|
161,818
|
Income tax
provision
|
(8,987)
|
|
(14,379)
|
|
(27,372)
|
|
(44,252)
|
Net income
|
10,205
|
|
45,171
|
|
58,833
|
|
117,566
|
Net income attributable
to redeemable noncontrolling interest
|
(64)
|
|
—
|
|
(73)
|
|
—
|
Net income attributable
to Designer Brands Inc.
|
$
10,141
|
|
$
45,171
|
|
$
58,760
|
|
$
117,566
|
Diluted earnings per
share attributable to Designer Brands
Inc.
|
$
0.17
|
|
$
0.65
|
|
$
0.90
|
|
$
1.60
|
Weighted average
diluted shares
|
61,405
|
|
69,140
|
|
65,292
|
|
73,287
|
DESIGNER BRANDS
INC. CONDENSED CONSOLIDATED BALANCE
SHEETS (unaudited and in thousands)
|
|
|
October 28,
2023
|
|
January 28,
2023
|
|
October 29,
2022
|
ASSETS
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
54,638
|
|
$
58,766
|
|
$
62,507
|
Receivables,
net
|
106,916
|
|
77,763
|
|
228,746
|
Inventories
|
601,470
|
|
605,652
|
|
681,843
|
Prepaid expenses and
other current assets
|
36,785
|
|
47,750
|
|
53,950
|
Total current
assets
|
799,809
|
|
789,931
|
|
1,027,046
|
Property and equipment,
net
|
224,638
|
|
235,430
|
|
233,515
|
Operating lease
assets
|
742,384
|
|
700,373
|
|
691,032
|
Goodwill
|
123,759
|
|
97,115
|
|
93,655
|
Intangible assets,
net
|
83,032
|
|
31,866
|
|
19,273
|
Deferred tax
assets
|
47,199
|
|
48,285
|
|
—
|
Equity
investments
|
62,239
|
|
63,820
|
|
64,246
|
Other assets
|
49,518
|
|
42,798
|
|
42,611
|
Total assets
|
$
2,132,578
|
|
$
2,009,618
|
|
$
2,171,378
|
LIABILITIES, REDEEMABLE
NONCONTROLLING
INTEREST AND SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
310,113
|
|
$
255,364
|
|
$
315,996
|
Accrued
expenses
|
183,383
|
|
190,676
|
|
213,905
|
Current maturities of
long-term debt
|
2,500
|
|
—
|
|
—
|
Current operating
lease liabilities
|
182,259
|
|
190,086
|
|
187,619
|
Total current
liabilities
|
678,255
|
|
636,126
|
|
717,520
|
Long-term
debt
|
372,965
|
|
281,035
|
|
415,467
|
Non-current operating
lease liabilities
|
669,494
|
|
631,412
|
|
628,820
|
Other non-current
liabilities
|
21,072
|
|
24,989
|
|
26,059
|
Total
liabilities
|
1,741,786
|
|
1,573,562
|
|
1,787,866
|
Redeemable
noncontrolling interest
|
3,208
|
|
3,155
|
|
—
|
Total shareholders'
equity
|
387,584
|
|
432,901
|
|
383,512
|
Total liabilities,
redeemable noncontrolling interest, and
shareholders' equity
|
$
2,132,578
|
|
$
2,009,618
|
|
$
2,171,378
|
DESIGNER BRANDS
INC. NON-GAAP RECONCILIATION (unaudited and
in thousands, except per share amounts)
|
|
|
Three months
ended
|
|
Nine months
ended
|
|
October 28,
2023
|
|
October 29,
2022
|
|
October 28,
2023
|
|
October 29,
2022
|
Operating
expenses
|
$
(230,788)
|
|
$
(222,232)
|
|
$
(665,437)
|
|
$
(674,348)
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
CEO transition
costs
|
1,029
|
|
—
|
|
3,983
|
|
—
|
Restructuring and
integration costs
|
2,252
|
|
850
|
|
5,190
|
|
2,456
|
Acquisition-related
costs
|
—
|
|
400
|
|
1,597
|
|
400
|
Total non-GAAP
adjustments
|
3,281
|
|
1,250
|
|
10,770
|
|
2,856
|
Adjusted operating
expenses
|
$
(227,507)
|
|
$
(220,982)
|
|
$
(654,667)
|
|
$
(671,492)
|
Operating
profit
|
$
28,121
|
|
$
64,528
|
|
$
108,418
|
|
$
185,319
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
CEO transition
costs
|
1,029
|
|
—
|
|
3,983
|
|
—
|
Restructuring and
integration costs
|
2,252
|
|
850
|
|
5,190
|
|
2,456
|
Acquisition-related
costs
|
—
|
|
400
|
|
1,597
|
|
400
|
Impairment
charges
|
—
|
|
1,349
|
|
649
|
|
4,237
|
Total non-GAAP
adjustments
|
3,281
|
|
2,599
|
|
11,419
|
|
7,093
|
Adjusted operating
profit
|
$
31,402
|
|
$
67,127
|
|
$
119,837
|
|
$
192,412
|
Net income attributable
to Designer Brands
Inc.
|
$
10,141
|
|
$
45,171
|
|
$
58,760
|
|
$
117,566
|
Non-GAAP
adjustments:
|
|
|
|
|
|
|
|
CEO transition
costs
|
1,029
|
|
—
|
|
3,983
|
|
—
|
Restructuring and
integration costs
|
2,252
|
|
850
|
|
5,190
|
|
2,456
|
Acquisition-related
costs
|
—
|
|
400
|
|
1,597
|
|
400
|
Impairment
charges
|
—
|
|
1,349
|
|
649
|
|
4,237
|
Loss on extinguishment
of debt and write-
off of debt issuance costs
|
—
|
|
—
|
|
—
|
|
12,862
|
Foreign currency
transaction losses (gains)
|
162
|
|
152
|
|
(83)
|
|
109
|
Total non-GAAP
adjustments before tax effect
|
3,443
|
|
2,751
|
|
11,336
|
|
20,064
|
Tax effect on above
non-GAAP adjustments
|
(853)
|
|
(711)
|
|
(2,885)
|
|
(5,085)
|
Discrete and permanent
tax on non-
deductible CEO transition costs
|
907
|
|
—
|
|
2,804
|
|
—
|
Valuation allowance
change on deferred tax
assets
|
1,109
|
|
(1,070)
|
|
(1,615)
|
|
(3,565)
|
Total non-GAAP
adjustments, after tax
|
4,606
|
|
970
|
|
9,640
|
|
11,414
|
Net income attributable
to redeemable
noncontrolling interest
|
64
|
|
—
|
|
73
|
|
—
|
Adjusted net
income
|
$
14,811
|
|
$
46,141
|
|
$
68,473
|
|
$
128,980
|
Diluted earnings per
share
|
$
0.17
|
|
$
0.65
|
|
$
0.90
|
|
$
1.60
|
Adjusted diluted
earnings per share
|
$
0.24
|
|
$
0.67
|
|
$
1.05
|
|
$
1.76
|
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
losses (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 include the
e-commerce sales of the Brand Portfolio segment from the
direct-to-consumer e-commerce site for the Vince Camuto brand. The
e-commerce sales for Topo, Keds, and Hush Puppies will be added to
the comparable base for the Brand Portfolio segment beginning with
the first quarter of 2024, the second quarter of 2024, and the
third 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.