Designer Brands stock falls 10% on Q4 loss despite revenue beat By

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COLUMBUS, Ohio – Designer Brands Inc. (NYSE:) reported a fourth-quarter loss that was narrower than analysts had expected, even as the company’s revenue slightly exceeded market estimates.

The footwear and accessories retailer posted an adjusted net loss of $25.3 million, or -$0.44 per diluted share, for the quarter, which was less than the consensus estimate of a -$0.50 per share loss. Revenue for the quarter was $754.3 million, surpassing the analyst forecast of $745.6 million.

Despite the revenue beat, the company’s stock plunged over 10% in premarket trading, signaling investor concerns. The fourth quarter saw a 0.8% decrease in net sales compared to the same period last year, with total comparable sales declining by 7.3%. Gross profit also fell to $207.4 million from $222.0 million in the previous year, with gross margin dropping from 29.2% to 27.5%.

CEO Doug Howe commented on the company’s performance, stating, “We ended the year strong, with a solid finish to the fourth quarter above the top end of our revised EPS guidance range.” Howe attributed the quarterly results to the strength in their brand portfolio segment, citing recent acquisitions and launches. However, he acknowledged the challenges faced in 2023, including a softening footwear market and unseasonably warm weather affecting seasonal footwear sales.

Looking ahead to fiscal 2025, Designer Brands expects a return to growth and has issued guidance for diluted EPS in the range of $0.70 to $0.80, which is above the analyst consensus of $0.66. The company’s focus for the upcoming year includes refreshing its product assortment, enhancing the shopping experience across channels, and executing operational improvements.

The company’s full-year performance also reflected the challenging environment, with net sales decreasing by 7.3% to $3.1 billion and total comparable sales down by 9.0%. The reported net income for the year was $29.1 million, or $0.46 per diluted share, including adjustments primarily related to restructuring and integration costs, impairment charges, and CEO transition costs.

In addition to its financial results, Designer Brands announced it repurchased 9.7 million Class A common shares for $102.2 million during 2023 and declared a dividend of $0.05 per share to be paid on April 12, 2024, to shareholders of record as of March 29, 2024. The company ended the year with cash and cash equivalents totaling $49.2 million and debt totaling $427.1 million.

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