Designer Brands Investor Center

Designer Brands is one of North America’s largest designers, producers and retailers of footwear and accessories. Our business segments include world-class design and sourcing operations, a robust wholesaling business, and more than 1,000 points of distribution.

Designer Brands Inc. Reports First Quarter 2021 Financial Results

Returned to profitability for the first time since the onset of COVID-19

Total gross margin rate improved over the rate from the first quarter of fiscal 2019

Athleisure comparable sales in the U.S. Retail segment were up 92% in the first quarter of fiscal 2021

COLUMBUS, Ohio, May 26, 2021 /PRNewswire/ -- Designer Brands Inc. (NYSE: DBI) (the "Company" and "Designer Brands"), one of North America's largest designers, producers and retailers of footwear and accessories, announced financial results for the three months ended May 1, 2021, compared to the three months ended May 2, 2020.

Roger Rawlins, Chief Executive Officer, stated, "Designer Brands is off to a strong start in fiscal 2021, highlighted by our return to profitability for the first time since the onset of COVID-19 and a positive comparable sales increase of 52% for the first quarter. Our success was driven by green shoots in areas of the business that had been previously affected by the pandemic, synergies from our vertical capabilities coming to life, which allowed us to capitalize on positive trends faster than ever before, and our assortment strategy focused on athleisure, kids and seasonal products.

"We remain focused on leveraging the flexibility of our business model, pivoting our assortment to athleisure to better match the purchasing habits of our customers, enhancing our digital capabilities, and strategically managing costs.  Looking forward, we are optimistic that the positive trends will continue as the market recovers."

First Quarter Results

  • Net sales increased 45.6% to $703.2 million in the first quarter of fiscal 2021 compared to the same period last year.
  • Comparable sales increased 52.2% for the first quarter of fiscal 2021 versus the 42.3% decrease for the same period last year.
  • Gross profit increased to $216.1 million in the first quarter of fiscal 2021 versus a gross loss of $26.5 million last year, and gross margin as a percentage of net sales was 30.7% as compared to negative 5.5% last year and 29.7% for the first quarter of fiscal 2019.
  • Reported net income in the first quarter of fiscal 2021 was $17.0 million, or $0.22 per diluted share, including net benefits of $0.10 per diluted share from adjusted items, primarily the change in the valuation allowance on deferred tax assets.
  • Adjusted net income in the first quarter of fiscal 2021 was $9.5 million, or $0.12 per diluted share.

Liquidity Highlights

  • Cash and cash equivalents totaled $49.3 million at the end of the first quarter of fiscal 2021 compared to $250.9 million for the same period last year, with $289.9 million available for borrowings under our senior secured asset-based revolving credit facility ("ABL Revolver"). Debt totaled $337.4 million at the end of the first quarter of fiscal 2021 compared to $393.0 million debt outstanding for the same period last year.
  • The Company ended the quarter with inventories of $540.1 million compared to $533.6 million for the same period last year. Due to strong inventory controls, the Company ended the quarter with total units on hand down 25% as compared to the same period last year.

Store Openings and Closings

During the first quarter of fiscal 2021, we opened two stores and closed five in the U.S., resulting in a total of 516 U.S. stores. In Canada, we opened two stores with one closure resulting in a total of 145 Canadian stores.   

Webcast and Conference Call

The Company is hosting a conference call today at 4:30 pm 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 7184143 approximately ten minutes prior to the start of the call. The conference call will also be broadcast live over the internet and can be accessed through the following link:

https://www.webcaster4.com/Webcast/Page/1213/41070

For those unable to listen to the live webcast, an archived version will be available via the same website address until June 9, 2021. 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: 10155781

About Designer Brands

Designer Brands is one of North America's largest designers, producers and retailers of footwear and accessories. The Company operates a portfolio of retail concepts in nearly 700 locations under the DSW Designer Shoe Warehouse®, The Shoe Company® and Shoe Warehouse® banners. The Company designs and produces footwear and accessories through Camuto Group, a leading manufacturer selling in more than 5,400 stores worldwide. Camuto Group owns licensing rights for the Jessica Simpson® footwear business and footwear and handbag licenses for Lucky Brand®. In partnership with a joint venture with Authentic Brands Group, the Company also owns a stake in Vince Camuto®, Louise et Cie®, and others. More information can be found at 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 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: risks and uncertainty related to the continued outbreak of the coronavirus ("COVID-19"), any future COVID-19 resurgence, and any other adverse public health developments; risks related to losses or disruptions associated with our distribution systems, including our distribution and fulfillment centers and our stores, whether as a result of COVID-19, reliance on third-party providers, cyber-related attacks, or otherwise; our ability to protect the health and safety of our associates and our customers, which may be affected by current or future government regulations related to stay-at-home orders and orders related to the operation of non-essential businesses; 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; maintaining strong relationships with our vendors, manufacturers, licensors, and retailer customers; our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations; risks related to restrictions on our ABL Revolver and senior secured term loan that could limit our ability to fund operations; our reliance on our loyalty programs and marketing to drive traffic, sales and customer loyalty; failure to retain our key executives or attract qualified new personnel; risks related to the loss or disruption of our information systems and data and our ability to prevent or mitigate breaches of our information security and the compromise of sensitive and confidential data; our ability to comply with privacy laws and regulations, as well as other legal obligations; our ability to protect our reputation and to maintain the brands we license; uncertain general economic, political and social conditions and the related impacts to consumer discretionary spending; our competitiveness with respect to style, price, brand availability and customer service; our ability to provide customers cost-effective shopping platforms; and uncertainty 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 expectations are described in the Company's Annual Report on Form 10-K for the fiscal year ended January 30, 2021, and risk factors identified in the Company's other filings 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


Change

(dollars in thousands)

May 1, 2021


May 2, 2020


Amount


%

Segment net sales:








U.S. Retail

$

620,658



$

377,073



$

243,585



64.6

%

Canada Retail

40,604



29,329



11,275



38.4

%

Brand Portfolio

57,427



82,113



(24,686)



(30.1)

%

Other



13,623



(13,623)



(100.0)

%

Total segment net sales

718,689



502,138



216,551



43.1

%

Elimination of intersegment net sales

(15,534)



(19,355)



3,821



(19.7)

%

Consolidated net sales

$

703,155



$

482,783



$

220,372



45.6

%

 

Comparable Sales


Three months ended


May 1, 2021


May 2, 2020

Comparable sales:




U.S. Retail segment

56.3

%


(42.4)

%

Canada Retail segment

10.0

%


(32.4)

%

Brand Portfolio segment - direct-to-consumer channel

6.8

%


92.8

%

Other

NA



(62.0)

%

Total comparable sales

52.2

%


(42.3)

%


NA - Not applicable


Store Count


May 1, 2021


May 2, 2020

U.S. Retail segment - DSW stores

516



521


Canada Retail segment:




The Shoe Company / Shoe Warehouse stores

118



118


DSW stores

27



27



145



145


Total number of stores

661



666



 

Gross Profit (Loss)


Three months ended




May 1, 2021


May 2, 2020



(dollars in thousands)

Amount


% of
Segment
Net Sales


Amount


% of
Segment
Net Sales


Change

Segment gross profit (loss):










U.S. Retail

$

193,113



31.1

%


$

(32,970)



(8.7)

%


$

226,083


Canada Retail

10,835



26.7

%


(2,311)



(7.9)

%


$

13,146


Brand Portfolio

11,926



20.8

%


13,904



16.9

%


$

(1,978)


Other



%


(5,428)



(39.8)

%


$

5,428



215,874





(26,805)






Elimination of intersegment gross profit

237





345






Gross profit (loss)

$

216,111



30.7

%


$

(26,460)



(5.5)

%


$

242,571


 

Intersegment Eliminations


Three months ended

(in thousands)

May 1, 2021


May 2, 2020

Elimination of intersegment activity:




Net sales recognized by Brand Portfolio segment

$

(15,534)



$

(19,355)


Cost of sales:




Cost of sales recognized by Brand Portfolio segment

10,935



12,134


Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period

4,836



7,566


Gross profit

$

237



$

345


 

 

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)

 



Three months ended


May 1, 2021


May 2, 2020

Net sales

$

703,155



$

482,783


Cost of sales

(487,044)



(509,243)


Gross profit (loss)

216,111



(26,460)


Operating expenses

(200,814)



(187,221)


Income from equity investment

1,708



2,270


Impairment charges



(112,547)


Operating profit (loss)

17,005



(323,958)


Interest expense, net

(8,814)



(2,158)


Non-operating income (expenses), net

806



(87)


Income (loss) before income taxes

8,997



(326,203)


Income tax benefit

8,029



110,345


Net income (loss)

$

17,026



$

(215,858)


Diluted earnings (loss) per share

$

0.22



$

(3.00)


Weighted average diluted shares

76,976



71,914


 

 

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

 



May 1, 2021


January 30, 2021


May 2, 2020

Assets






Cash and cash equivalents

$

49,301



$

59,581



$

250,874


Receivables, net

213,447



196,049



81,953


Inventories

540,088



473,183



533,638


Prepaid expenses and other current assets

60,461



51,772



82,742


Total current assets

863,297



780,585



949,207


Property and equipment, net

284,823



296,469



359,841


Operating lease assets

686,704



700,481



799,482


Goodwill

93,655



93,655



93,655


Intangible assets, net

16,131



15,635



13,908


Deferred tax assets





139,269


Equity investment

57,012



58,598



57,538


Other assets

30,843



31,172



24,941


Total assets

$

2,032,465



$

1,976,595



$

2,437,841


Liabilities and shareholders' equity






Accounts payable

$

341,819



$

245,071



$

283,054


Accrued expenses

195,237



200,326



231,359


Current maturities of long-term debt

62,500



62,500




Current operating lease liabilities

200,666



244,786



218,313


Total current liabilities

800,222



752,683



732,726


Long-term debt

274,887



272,319



393,000


Non-current operating lease liabilities

663,018



677,735



788,704


Other non-current liabilities

31,526



30,841



25,305


Total liabilities

1,769,653



1,733,578



1,939,735


Total shareholders' equity

262,812



243,017



498,106


Total liabilities and shareholders' equity

$

2,032,465



$

1,976,595



$

2,437,841


 

 

DESIGNER BRANDS INC.

NON-GAAP RECONCILIATIONS

(unaudited and in thousands, except per share amounts)

 




Three months ended


May 1, 2021


May 2, 2020

Operating expenses

$

(200,814)



$

(187,221)


Non-GAAP Adjustments-




Integration and restructuring expenses

1,742



1,748


Adjusted operating expenses

$

(199,072)



$

(185,473)


Operating profit (loss)

$

17,005



$

(323,958)


Non-GAAP Adjustments:




Integration and restructuring expenses

1,742



1,748


Impairment charges



112,547


Total non-GAAP Adjustments

1,742



114,295


Adjusted operating profit (loss)

$

18,747



$

(209,663)


Net income (loss)

$

17,026



$

(215,858)


Non-GAAP adjustments:




Integration and restructuring expenses

1,742



1,748


Impairment charges



112,547


Foreign currency transaction losses (gains)

(806)



400


Total non-GAAP Adjustments before tax effect

936



114,695


Tax effect of non-GAAP adjustments

(308)



(29,138)


Valuation allowance change on deferred tax assets

(8,182)




Total adjustments, after tax

(7,554)



85,557


Adjusted net income (loss)

$

9,472



$

(130,301)


Diluted earnings (loss) per share

$

0.22



$

(3.00)


Adjusted diluted earnings (loss) per share

$

0.12



$

(1.81)


 

Non-GAAP Measures

To supplement amounts presented in our unaudited condensed 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 (1) adjusted operating expenses, (2) adjusted operating profit (loss), (3) adjusted net income (loss), and (4) adjusted diluted earnings (loss) per share. The unaudited reconciliation of 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 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 on a comparable basis, 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.

Revised Non-GAAP Measures

Beginning with the fourth quarter of fiscal 2020, the Company revised its determination of adjusted financial results by eliminating the immaterial adjustments related to COVID-19 incremental costs (credits), net, and amortization of intangible assets. These revisions align with how management currently evaluates the performance of the business. The Company has recast its first quarter of fiscal 2020 non-GAAP financial measures to conform to the revised presentation as set forth in the table above.

SOURCE Designer Brands Inc.

For further information: Stacy Turnof, DesignerBrandsIR@edelman.com
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