• Total Sales Decline: 5% year-over-year decline in total sales for Q4 due to the 53-week comparison.
• Comparable Sales: Q4 comps up 1%; full-year comps down 1.7%.
• Adjusted EPS: $0.27 for the full year, at the upper end of guidance range.
• US Retail Comps: Up 1% in Q4; full-year comps down over 1%.
• Canada Retail Comps: Up 5% in Q4; full-year comps down 2%.
• Brand Portfolio Sales: Up 12% in Q4; up 14% for the full year.
• Gross Margin Expansion: Expanded by 100 basis points for the year.
• Operating Expenses Reduction: Reduced by nearly 700 basis points in the Brand Portfolio segment.
• Net Sales: $714 million in Q4; $3 billion for the full year.
• Consolidated Gross Profit: 39.6% in Q4, increased by 80 basis points.
• Adjusted Operating Loss: $23.5 million in Q4, improved from $30.2 million last year.
• Adjusted Net Income: $15 million for the full year.
• Inventory Levels: Up 5% at the end of Q4.
• Shareholder Returns: $79 million returned through dividends and share repurchases in 2024.
• Total Debt: $491 million at the end of the year.
• Cash and Liquidity: $44.8 million in cash; $172.1 million total liquidity.

• Warning! GuruFocus has detected 7 Warning Signs with DBI.

Release Date: March 20, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Designer Brands Inc (NYSE:DBI) returned to positive comps in the fourth quarter of fiscal 2024 for the first time in nine quarters, indicating a positive trend in sales performance.
• The company delivered full-year adjusted EPS of $0.27, which was at the upper end of their revised guidance range of $0.10 to $0.30.
• DBI made significant progress in revitalizing its assortment, increasing athleisure penetration by 5 percentage points and expanding relationships with top brand partners.
• The Brand Portfolio segment achieved operating profitability for the first time, with sales up approximately 12% in the fourth quarter and 14% for the full year.
• DBI returned $79 million to shareholders through dividends and share repurchases, demonstrating a commitment to shareholder value.

Negative Points

• Total sales for the fourth quarter were down 5% year-over-year due to the impact of the 53-week year in 2023.
• Full-year total company sales were down roughly 2% compared to the previous year, with comps down 1.7%.
• The company experienced a 900 basis point decrease in the boot category, highlighting challenges in certain seasonal product lines.
• DBI anticipates first-quarter performance in 2025 to be below last year's first quarter due to a slower-than-expected start and macroeconomic uncertainties.
• The company faces continued pressure on initial markup (IMU) due to growth in athletic and national brands, which could impact gross margins.

Q & A Highlights

Q: Could you elaborate on the athleisure growth in the fourth quarter and Nike's performance at DSW? Also, what are your expectations for first-quarter sales compared to last year? A: Douglas Howe, CEO, explained that athleisure saw a significant increase, driven by athletic brands, with top eight brands increasing by 25% for the year. Nike's return has been positive. However, the first quarter started slower than anticipated due to macroeconomic uncertainties, impacting discretionary income. Jared Poff, CFO, added that they expect first-quarter sales to be slightly below last year's, with improvements anticipated throughout the year.

Q: Can you provide insights on gross margin expectations and SG&A dollar growth for the year? Will you be more or less promotional? A: Jared Poff, CFO, stated that the promotional strategy is expected to leverage gross margin rates due to improved inventory availability. The plan is to maintain a flat gross profit rate, offsetting pressures from athletic and national brand growth. SG&A is expected to increase by about $50 million due to new logistics infrastructure, management incentives, and the Rubino acquisition.

Q: Does the midpoint of revenue guidance imply modest operating margin expansion? A: Jared Poff, CFO, confirmed that the midpoint of the revenue guidance does imply modest operating margin expansion.

Q: How are you addressing the slower start to the year and macroeconomic challenges? A: Douglas Howe, CEO, mentioned focusing on controllable factors and incorporating macroeconomic uncertainties into their 2025 guidance. They are emphasizing inventory management and promotional strategies to adapt to consumer behavior changes.

Q: What are the strategic focus areas for 2025 in the Retail segment? A: Douglas Howe, CEO, highlighted a customer-first approach, refining DSW brand identity, enhancing marketing tactics, and evolving the VIP rewards program. They plan to improve omnichannel experiences and expand store presence, aiming for profitable growth.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.