GICS Sector : Consumer Cyclical
Designer Brands Inc., together with its subsidiaries, designs, manufactures, and retails footwear and accessories for women, men, and kids primarily in North America.The company operates through three segments: U.S. Retail, Canada Retail, and Brand Portfolio.It provides dress, casual, and athletic footwear; and handbags.
The company reported a total sales decline of 3% year over year, with comparable sales down 2.4%. However, the sequential improvement from the second quarter was significant, with a 260 basis point improvement in comparable sales. The adjusted diluted earnings per share was $0.38, significantly beating the estimated $0.18. The gross margin improved by 210 basis points to 45.1% driven by fewer markdowns in the U.S. Retail segment. Adjusted operating income was $46.5 million, up from $43.6 million last year.
Publication Date: Dec -20
The U.S. Retail segment saw sales decline 0.8% year over year, with comp sales down 1.5%, reflecting another quarter of sequential improvements. The Canada retail segment sales declined 7.5% due to warmer weather affecting demand for seasonal products. The DSW stores saw positive momentum driven by improved in-stock levels and rising demand across key categories.
The company ended the quarter with total inventories down 2.7% year over year, and adjusted operating expenses were up $2.5 million, representing 39.4% of sales. The Let Us Surprise You brand campaign generated 2 billion earned media impressions as of October, and the top eight brands continued to outperform, posting a positive 4% comp for the quarter.
The company expects total net sales for the year to be down in the range of 3% to 5% and adjusted operating income in the range of $50 million to $55 million. Doug Howe mentioned that the sequential improvement seen in Q3 has continued into Q4, with key categories and brands showing momentum. The affordable luxury business is almost double what it was last year, and the boot category was strong in October and continued into Q4.
With a P/E Ratio of 171.92, the stock appears to be priced for high growth expectations. Analysts estimate next year's revenue growth at -3.9%. The company's current valuation metrics, including a P/S Ratio of 0.13 and EV/EBITDA of 19.44, suggest that the market is pricing in significant improvement in profitability. The actual EPS beat estimates, and the guidance for adjusted operating income is in the range of $50 million to $55 million, indicating a positive outlook for the company.
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Designer Brands Inc. (DBI) Q3 2026 Earnings Call Transcript
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The 2% growth in United States Retail from Designer Brands Inc. is driven by increasing demand for affordable luxury footwear, successful brand revamps, and strategic store remodels. Additionally, the company's focus on omnichannel retailing and loyalty programs has enhanced customer engagement, contributing to the segment's growth.
Designer Brands Inc.'s 3% brand portfolio growth is driven by strategic acquisitions, expanding e-commerce presence, and effective marketing campaigns. The company's focus on omnichannel retailing, product innovation, and strong relationships with suppliers also contribute to its growth. Additionally, the increasing demand for affordable luxury and athleisure products benefits the company's portfolio of brands, including Vince Camuto and DSW.
Canada Retail segment of Designer Brands Inc. growth driven by increasing demand for affordable luxury footwear, successful marketing campaigns, and strategic store expansions in high-traffic locations, resulting in a 1% growth rate.
A leading footwear retailer offering a wide selection of brand-name and designer shoes for men, women, and kids.
A Canadian footwear retailer offering a wide selection of brand-name shoes for men, women, and kids.
A footwear retailer offering a wide selection of brand-name shoes for men, women, and kids, with a focus on value and convenience.
A footwear brand offering comfortable and stylish shoes for people with disabilities or special needs.
A portfolio of private footwear brands, including Audrey Brooke, Kelly & Katie, and others.
A leading footwear design, development, and sourcing company, offering private label and branded footwear solutions.
Designer Brands Inc. faces moderate threat from substitutes as customers have limited alternatives for branded footwear and accessories. However, the rise of online shopping and changing consumer preferences may lead to increased competition from new entrants.
Designer Brands Inc. has a high bargaining power of customers due to the presence of online retailers and changing consumer preferences, which gives customers more options and bargaining power.
Designer Brands Inc. has a low bargaining power of suppliers due to its large scale of operations and diversified supplier base, which gives it more negotiating power.
Designer Brands Inc. faces a moderate threat from new entrants due to the presence of online platforms and changing consumer preferences, which makes it easier for new entrants to enter the market.
Designer Brands Inc. operates in a highly competitive industry with many established players, leading to a high intensity of rivalry among competitors.
| Value | |
|---|---|
| Debt Weight | 62.30% |
| Debt Cost | 3.95% |
| Equity Weight | 37.70% |
| Equity Cost | 14.39% |
| WACC | 7.88% |
| Leverage | 165.25% |
Value: 8.8
Growth: 4.0
Quality: 6.0
Yield: 2.0
Momentum: 1.0
Volatility: 4.3
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Value: 6.7
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Value: 8.0
Growth: 3.9
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Volatility: 1.3
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