Dive Brief:
- Designer Brands Inc. saw a Q3 net sales decrease of 9.1% to $786.3 million from $865 million for the same period last year, the company announced Tuesday.
- The company’s DTC sales in the U.S. for the period dropped to $124 million from $153.3 million for the company’s owned brands, including Keds and Topo Athletic, as well as its licensed brands, including Lucky Brand, Crown Vintage, Vince Camuto, Jessica Simpson and Le Tigre, which it licensed earlier this year.
- As a result of the earnings, Designer Brands has revised its full year 2023 guidance, and said it expects net sales growth, excluding Keds, to be down “high-single digits” as compared to its previous guidance of a dip in the “mid- to high-single digits.” Incremental net sales from its Keds acquisition are also expected to be lower, at $60 million to $70 million versus the company’s previous guidance of $75 million to $85 million.
Dive Insight:
Designers Brands, which runs Designer Shoe Warehouse, Camuto Group and The Shoe Company, has had an eventful year, and its Q3 earnings reflect the company’s challenges to stabilize itself in the wake of executive changes and layoffs.
In January, Doug Howe, then-president of DSW and formerly an exec at Kohl’s, was announced as the firm’s new CEO, effective April 1, taking over from Roger Rawlins, who held the title since 2016.
The layoffs came in March, although the company declined to say how many employees were affected. During its Q4 earnings call that month, Designer Brands CFO Jared Poff said the company needed to “pare back every line of spending possible,” including labor costs and management incentive compensation.
In July, Laura Denk was named president of DSW and executive vice president of Designer Brands, joining the company from Michaels and tasked with leading DSW’s U.S. stores and e-commerce channel and directing the company’s owned and national brands.
Designer Brands president Bill Jordan also exited the company this month after 18 years. Jordan, who was also the president of Camuto, became president of Designer Brands in 2021.
This quarter’s earnings come after several previous quarterly slides.
This year in Q1, the company reported a net sales decrease of 10.7% to $742.1 million, and for Q2, net sales decreased 7.8% to $792.2 million. In Q4 of 2022, there was a net sales drop of 7.5% to $760.5 million.
"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," Howe said in the release.
He said that although the company “saw improved performance in casual and clearance categories” for the quarter, it wasn’t enough “to offset the broader lack of demand.”
Howe said that the company did not “anticipate pressures alleviating in the near-term” and added that Designer Brands would make adjustments accordingly.
“Our team is already executing several initiatives to address areas for improvement within our business,” he said. “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.”
