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2022-06-02 20:33

Designer Brands Inc on Thursday reported adjusted EPS for fiscal Q1 that topped analysts’ forecast by 100%. The New York listed company is one of the largest shoe retailers in North America and is also the parent of the DSW (Designer Shoe Warehouse).

Designer Brands Q1 fiscal highlights

The following results are compared to the first quarter of fiscal 2021

• Net income saw a 54% increase to $26.2 million or 34 cents a share

• Net sales were up 18.1% year-on-year to $830.5 million

• Adjusted EPS of 48 cents was much better than last year’s 12 cents

• 15.35% increase in same-stores sales missed expectations for a 18.5% growth

FactSet consensus was for 24 cents of adjusted per-share earnings on $815.4 million in revenue. In the earnings press release, CEO Roger Rawlings said:

“We saw robust growth in our Owned Brands in the quarter, both through our direct-to-consumer and wholesale channels, and believe we are on a great trajectory to achieve our goal of doubling our Owned Brand sales by 2026.”

What else was noteworthy?

Cost of sales went up 13.9% in the recent financial quarter, resulting in a lift in gross margin to 33.2% versus last year’s 30.7%. The footwear and accessories retailer relaunched its Vince Camuto brand in Q1 that noted an 80% YoY growth in sales.

Designer Brands concluded the first quarter with $54.8 million in cash and equivalents. The stock is roughly flat on Thursday,

What Designer Brands' expects for the future

For the full financial year, Designer Brands now forecasts its per-share earnings to fall between $1.90 and $2.00. It, however, slashed its expectation for comparable sales growth this year to roughly 5.0% versus high-single-digits it had guided for earlier. CEO Rawlins added:

“In an increasingly direct-to-consumer world, we continue to acquire opportunities to meet customers at a range of touchpoints. Most recently, this includes our partnership with Wolverine and the Hush Puppies brand, our partnership with ABG and the Reebok brand, and our purchase of the 'shoes.com' digital domain.”

As of May 27th, Designer Brands has spent $47.5 million this fiscal year to repurchase 3.5 million of its own shares. It still has another $287.4 million authorized for stock buybacks. In April, the Board also reinstated 5 cents of per-share quarterly dividend. The $1.12 billion company, which trades at a PE multiple of 7.77, is currently up roughly 5.0% for the year.