Net sales up 18.1% over the first quarter of
2021
Relaunched Vince Camuto brand and grew sales
by 80% over the first quarter of 2021
Gross margin expansion of 250 basis points
over the first quarter of 2021
Operating profit growth of approximately 200%
over the first quarter of 2021
Full year 2022 diluted EPS guidance raised to
a range of $1.90 to $2.00
COLUMBUS, Ohio, June 2, 2022
/CNW/ -- Designer Brands Inc. (NYSE: DBI) (the "Company" and
"Designer Brands"), one of North
America's largest designers, producers, and retailers of
footwear and accessories, announced financial results for the three
months ended April 30, 2022.
Roger Rawlins, Chief Executive
Officer, stated, "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. Our strong first
quarter 2022 results demonstrate the progress we are making towards
our long-range plan that we outlined at our recent Investor Day. In
addition, we are further building our relationships with our top
National Brands, and our new prototype Warehouse Reimagined store,
which opened in May, brings to bear a wealth of capabilities and
opportunities that will help us to strengthen these relationships
and provide a more seamless omnichannel experience for our
customers. 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. These are just a few ways Designer Brands is reaching new
customers, partnering differently with our National Brand partners
and leveraging new distribution channels that will enable us to
deliver long-term shareholder growth."
First Quarter Operating Results (all comparisons are
to the first quarter of 2021)
- Net sales increased 18.1% to $830.5
million.
- Comparable sales increased 15.3%.
- Gross profit increased to $275.7
million versus $216.1 million
last year, and gross margin as a percentage of net sales was 33.2%
as compared to 30.7% last year.
- Reported net income was $26.2
million, or diluted earnings per share ("EPS") of
$0.34, including net charges of
$0.14 per diluted share from adjusted
items, primarily related to the loss on extinguishment of debt and
write-off of debt issuance costs.
- Adjusted net income was $36.7
million, or diluted EPS of $0.48.
Liquidity Highlights
- Cash and cash equivalents totaled $54.8
million at the end of the first quarter of 2022 compared to
$49.3 million at the end of the same
period last year, with $238.2 million
remaining available for borrowings under our senior secured
asset-based revolving credit facility ("ABL Revolver"). Debt
totaled $306.9 million at the end of
the first quarter of 2022 compared to $337.4
million at the end of the same period last year. We
anticipate receiving approximately $160
million in the near future from the Internal Revenue Service
as a result of the Coronavirus Aid, Relief, and Economic Security
Act.
- On March 30, 2022, we replaced
our previous $400.0 million senior
secured asset-based revolving credit facility with our current
$550.0 million ABL Revolver, which
matures in March 2027. Also, we
settled in full our senior secured term loan during the
quarter.
- The Company ended the quarter with inventories of $672.5 million compared to $540.1 million at the same period last year.
Return to Shareholders
- During the first quarter of 2022, Designer Brands repurchased
1.7 million Class A common shares at an aggregate cost of
$22.7 million under its share
repurchase program. During the second quarter of 2022 through
May 27, 2022, the Company has
repurchased another 1.8 million of Class A common shares at an
aggregate cost of $24.8 million. As
of May 27, 2022, $287.4 million of Class A common shares remain
authorized for repurchases under the share repurchase program.
- On April 8, 2022, the Company
announced that the Company's Board of Directors approved the
reinstatement of the regular quarterly cash dividend to
shareholders. A dividend of $0.05 per
share of Class A and Class B common shares was paid on May 6, 2022 to shareholders of record at the
close of business on April 22, 2022.
In addition, a dividend of $0.05 per
share of Class A and Class B common shares will be paid on
July 6, 2022 to shareholders of
record at the close of business on June 22,
2022.
Store Openings and Closings
During the first quarter of 2022, we opened two new stores in
the U.S. and no new stores in Canada with no stores closed, resulting in a
total of 510 U.S. stores and 140 Canadian stores as of
April 30, 2022. During May 2022,
we opened our new "Warehouse Reimagined" format at a Houston-area DSW store.
Updated Fiscal 2022 Financial Outlook
The Company is updating the following guidance for the full year
2022:
Metric
|
|
Previous
Guidance
|
|
Current
Guidance
|
Designer Brands
Comparable Sales Growth
|
|
High-single
digits
|
|
Mid-single
digits
|
Diluted EPS
|
|
$1.80 -
$1.90
|
|
$1.90 -
$2.00
|
Webcast and Conference Call
The Company is hosting a conference call today at 8:30 a.m. Eastern Time. Investors and analysts
interested in participating in the call are invited to dial
1-888-317-6003, or the international dial-in, 1-412-317-6061, and
reference conference ID number 2325226 approximately ten minutes
prior to the start of the conference call. The conference call will
also be broadcast live over the internet and can be accessed
through the following link:
https://app.webinar.net/YP94Bw3BKJj
For those unable to listen to the live webcast, an archived
version will be available via the same website address until
June 16, 2022. A replay of the
teleconference will be available by dialing the following
numbers:
U.S.: 1-877-344-7529
Canada: 1-855-669-9658
International: 1-412-317-0088
Passcode: 4754037
About Designer Brands
Designer Brands is one of the world's largest designers,
producers and retailers of the most recognizable footwear brands
and accessories, transforming and defining the footwear industry by
inspiring self-expression across every facet of its enterprise.
Through its portfolio of world-class owned brands, led by the
industry-setting Vince Camuto brand, Designer Brands delivers
on-trend footwear and accessories through its robust
direct-to-consumer omni-channel infrastructure, featuring a
billion-dollar digital commerce business and nearly 650 stores
across the U.S. and Canada. Its
retailing operations under the DSW Designer Shoe Warehouse and The
Shoe Company banners deliver current, in-line footwear and
accessories from most of the largest national brands in the
industry and hold leading market share positions in key product
categories across Women's, Men's and Kid's in the U.S. and
Canada. Designer Brands also
distributes its owned brands through select wholesale relationships
while leveraging its design and sourcing expertise to build private
label product for national retailers. Designer Brands is also
committed to being a difference maker in the world, taking steps
forward to advance diversity, equity, and inclusion in the footwear
industry and supporting our global community and the health of our
planet through donating more than six million pairs of shoes to the
global non-profit Soles4Souls. More information can be found at
www.designerbrands.com.
Safe Harbor Statement under the Private Securities Litigation
Reform Act of 1995
Certain statements in this press release may constitute
forward-looking statements and are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
You can identify these forward-looking statements by the use of
forward-looking words such as "outlook," "could," "believes,"
"expects," "potential," "continues," "may," "will," "should,"
"would," "seeks," "approximately," "predicts," "intends," "plans,"
"estimates," "anticipates," or the negative version of those words
or other comparable words. These statements are based on the
Company's current views and expectations and involve known and
unknown risks, uncertainties, and other factors that may cause
actual results, performance, or achievements to be materially
different from any future results, performance, or achievements
expressed or implied by the forward-looking statements. These
factors include, but are not limited to: risks and uncertainties
related to the ongoing coronavirus ("COVID-19") pandemic, any
future COVID-19 resurgence, and any other adverse public health
developments; uncertain general economic conditions, including
inflation and supply chain pressures, domestic and global political
and social conditions and the potential impact of geopolitical
turmoil or conflict, including the ongoing war in Ukraine, and the related impacts to consumer
discretionary spending; our ability to anticipate and respond to
fashion trends, consumer preferences, and changing customer
expectations; maintaining strong relationships with our vendors,
manufacturers, licensors, and retailer customers; risks related to
losses or disruptions associated with our distribution systems,
including our distribution centers and fulfillment center and
stores, whether as a result of the COVID-19 pandemic, reliance on
third-party providers, or otherwise; our reliance on our loyalty
programs and marketing to drive traffic, sales, and customer
loyalty; failure to retain our key executives or attract qualified
new personnel; risks related to the loss or disruption of our
information systems and data and our ability to prevent or mitigate
breaches of our information security and the compromise of
sensitive and confidential data; our ability to protect our
reputation and to maintain the brands we license; risks related to
restrictions imposed by our ABL Revolver that could limit our
ability to fund operations; our competitiveness with respect to
style, price, brand availability, and customer service; our ability
to provide customers with cost-effective shopping platforms; risks
related to our international operations, including international
trade, our reliance on foreign sources for merchandise, exposure to
political, economic, operational, and compliance and other risks,
and fluctuations in foreign currency exchange rates; our ability to
protect the health and safety of our associates and our customers,
which may be affected by current or future government regulations
related to stay-at-home orders and/or orders related to the
operation of non-essential businesses; our ability to comply with
privacy laws and regulations, as well as other legal obligations;
and uncertainties related to future legislation, regulatory reform,
policy changes, or interpretive guidance on existing legislation.
Risks and other factors that could cause our actual results to
differ materially from our forward-looking statements are described
in the Company's Annual Report on Form 10-K for the fiscal year
ended January 29, 2022 and in our
other filings with the Securities and Exchange Commission. All
forward-looking statements speak only as of the time when made.
Except as may be required by law, the Company undertakes no
obligation to update or revise the forward-looking statements
included in this press release to reflect any future events or
circumstances.
DESIGNER BRANDS
INC.
|
SEGMENT
RESULTS
|
(unaudited)
|
|
Net Sales
|
|
Three months ended
|
|
|
|
|
(dollars in
thousands)
|
April 30, 2022
|
|
May 1,
2021
|
|
Change
|
|
Amount
|
|
% of Total
Segment
Net Sales
|
|
Amount
|
|
% of Total
Segment
Net Sales
|
|
Amount
|
|
%
|
Segment net
sales:
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail
|
$
702,745
|
|
82.0%
|
|
$
620,658
|
|
86.4%
|
|
$
82,087
|
|
13.2%
|
Canada Retail
|
56,315
|
|
6.6%
|
|
40,604
|
|
5.6%
|
|
15,711
|
|
38.7%
|
Brand Portfolio
|
97,456
|
|
11.4%
|
|
57,427
|
|
8.0%
|
|
40,029
|
|
69.7%
|
Total segment net sales
|
856,516
|
|
100.0%
|
|
718,689
|
|
100.0%
|
|
137,827
|
|
19.2%
|
Elimination of
intersegment
net sales
|
(25,973)
|
|
|
|
(15,534)
|
|
|
|
(10,439)
|
|
67.2%
|
Consolidated net
sales
|
$
830,543
|
|
|
|
$
703,155
|
|
|
|
$
127,388
|
|
18.1%
|
|
|
|
Net Sales by Brand Category
|
(in thousands)
|
U.S.
Retail
|
|
Canada
Retail
|
|
Brand
Portfolio
|
|
Eliminations
|
|
Consolidated
|
Three months ended April 30,
2022
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
139,155
|
|
$
—
|
|
$
6,527
|
|
$
—
|
|
$
145,682
|
External customer wholesale and
commission income
|
—
|
|
—
|
|
64,956
|
|
—
|
|
64,956
|
Intersegment wholesale and
commission income
|
—
|
|
—
|
|
25,973
|
|
(25,973)
|
|
—
|
Total Owned Brands
|
139,155
|
|
—
|
|
97,456
|
|
(25,973)
|
|
210,638
|
National
Brands
|
563,590
|
|
—
|
|
—
|
|
—
|
|
563,590
|
Canada
Retail(2)
|
—
|
|
56,315
|
|
—
|
|
—
|
|
56,315
|
Total Net
Sales
|
$
702,745
|
|
$
56,315
|
|
$
97,456
|
|
$
(25,973)
|
|
$
830,543
|
Three months ended May
1, 2021
|
|
|
|
|
|
|
|
|
|
Owned
Brands:(1)
|
|
|
|
|
|
|
|
|
|
Direct-to-consumer
|
$
83,266
|
|
$
—
|
|
$
5,453
|
|
$
—
|
|
$
88,719
|
External customer wholesale and
commission income
|
—
|
|
—
|
|
36,440
|
|
—
|
|
36,440
|
Intersegment wholesale and
commission income
|
—
|
|
—
|
|
15,534
|
|
(15,534)
|
|
—
|
Total Owned Brands
|
83,266
|
|
—
|
|
57,427
|
|
(15,534)
|
|
125,159
|
National
Brands
|
537,392
|
|
—
|
|
—
|
|
—
|
|
537,392
|
Canada
Retail(2)
|
—
|
|
40,604
|
|
—
|
|
—
|
|
40,604
|
Total Net
Sales
|
$
620,658
|
|
$
40,604
|
|
$
57,427
|
|
$
(15,534)
|
|
$
703,155
|
|
(1) Owned Brands
include those brands we have rights to sell through ownership or
license arrangements.
|
|
(2) We
currently do not report the Canada Retail segment net sales by
brand categories.
|
Comparable Sales
|
|
Three months ended
|
|
April 30, 2022
|
|
May 1,
2021
|
Change in comparable
sales:
|
|
|
|
U.S. Retail segment
|
13.6%
|
|
56.3%
|
Canada Retail segment
|
41.4%
|
|
10.0%
|
Brand Portfolio segment - direct-to-consumer
channel
|
19.7%
|
|
6.8%
|
Total
|
15.3%
|
|
52.2%
|
Store Count
|
(square footage in thousands)
|
April 30, 2022
|
|
May 1,
2021
|
|
Number of
Stores
|
|
Square
Footage
|
|
Number of
Stores
|
|
Square
Footage
|
U.S. Retail segment -
DSW stores
|
510
|
|
10,322
|
|
516
|
|
10,510
|
Canada Retail
segment:
|
|
|
|
|
|
|
|
The
Shoe Company stores
|
115
|
|
607
|
|
118
|
|
623
|
DSW
stores
|
25
|
|
496
|
|
27
|
|
536
|
|
140
|
|
1,103
|
|
145
|
|
1,159
|
Total number of
stores
|
650
|
|
11,425
|
|
661
|
|
11,669
|
Gross Profit
|
|
Three months ended
|
|
|
|
|
|
|
(dollars in thousands)
|
April 30, 2022
|
|
May 1,
2021
|
|
Change
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
% of
Segment
Net Sales
|
|
Amount
|
|
%
|
|
Basis
Points
|
Segment gross
profit:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. Retail
|
$ 233,067
|
|
33.2%
|
|
$
193,113
|
|
31.1%
|
|
$ 39,954
|
|
20.7%
|
|
210
|
Canada Retail
|
18,873
|
|
33.5%
|
|
10,835
|
|
26.7%
|
|
8,038
|
|
74.2%
|
|
680
|
Brand Portfolio
|
23,842
|
|
24.5%
|
|
11,926
|
|
20.8%
|
|
11,916
|
|
99.9%
|
|
370
|
Total segment gross
profit
|
275,782
|
|
32.2%
|
|
215,874
|
|
30.0%
|
|
59,908
|
|
27.8%
|
|
220
|
Elimination of
intersegment
gross profit
|
(37)
|
|
|
|
237
|
|
|
|
(274)
|
|
|
|
|
Consolidated gross
profit
|
$ 275,745
|
|
33.2%
|
|
$
216,111
|
|
30.7%
|
|
$ 59,634
|
|
27.6%
|
|
250
|
Intersegment Eliminations
|
|
Three months ended
|
(in thousands)
|
April 30, 2022
|
|
May 1,
2021
|
Elimination of
intersegment activity:
|
|
|
|
Net
sales recognized by Brand Portfolio segment
|
$
(25,973)
|
|
$
(15,534)
|
Cost of sales:
|
|
|
|
Cost of sales recognized by
Brand Portfolio segment
|
18,169
|
|
10,935
|
Recognition of intersegment
gross profit for inventory previously purchased that
was subsequently
sold to external customers during the current period
|
7,767
|
|
4,836
|
|
$
(37)
|
|
$
237
|
DESIGNER BRANDS
INC.
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(unaudited and in
thousands, except per share amounts)
|
|
|
Three months ended
|
|
April 30, 2022
|
|
May 1,
2021
|
Net sales
|
$
830,543
|
|
$
703,155
|
Cost of
sales
|
(554,798)
|
|
(487,044)
|
Gross profit
|
275,745
|
|
216,111
|
Operating
expenses
|
(223,426)
|
|
(200,814)
|
Income from equity
investment
|
1,945
|
|
1,708
|
Impairment
charges
|
(1,072)
|
|
—
|
Operating
profit
|
53,192
|
|
17,005
|
Interest expense,
net
|
(2,952)
|
|
(8,814)
|
Loss on extinguishment
of debt and write-off of debt issuance costs
|
(12,862)
|
|
—
|
Non-operating income,
net
|
6
|
|
806
|
Income before income
taxes
|
37,384
|
|
8,997
|
Income tax benefit
(provision)
|
(11,202)
|
|
8,029
|
Net income
|
$
26,182
|
|
$
17,026
|
Diluted earnings per
share
|
$
0.34
|
|
$
0.22
|
Weighted average
diluted shares
|
76,924
|
|
76,976
|
DESIGNER BRANDS
INC.
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
(unaudited and in
thousands)
|
|
|
April 30, 2022
|
|
January 29,
2022
|
|
May 1,
2021
|
ASSETS
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
54,802
|
|
$
72,691
|
|
$
49,301
|
Receivables, net
|
222,297
|
|
199,826
|
|
213,447
|
Inventories
|
672,490
|
|
586,429
|
|
540,088
|
Prepaid expenses and other
current assets
|
49,836
|
|
55,270
|
|
60,461
|
Total current assets
|
999,425
|
|
914,216
|
|
863,297
|
Property and equipment, net
|
250,123
|
|
256,786
|
|
284,823
|
Operating lease assets
|
635,334
|
|
647,221
|
|
686,704
|
Goodwill
|
93,655
|
|
93,655
|
|
93,655
|
Intangible assets, net
|
20,355
|
|
15,527
|
|
16,131
|
Equity investment
|
55,118
|
|
55,578
|
|
57,012
|
Other assets
|
33,734
|
|
31,651
|
|
30,843
|
Total assets
|
$
2,087,744
|
|
$
2,014,634
|
|
$
2,032,465
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable
|
$
369,147
|
|
$
340,877
|
|
$
341,819
|
Accrued expenses
|
208,282
|
|
215,812
|
|
195,237
|
Current maturities of long-term
debt
|
—
|
|
—
|
|
62,500
|
Current operating lease
liabilities
|
179,870
|
|
202,228
|
|
200,666
|
Total current liabilities
|
757,299
|
|
758,917
|
|
800,222
|
Long-term debt
|
306,861
|
|
225,536
|
|
274,887
|
Non-current operating lease liabilities
|
579,839
|
|
593,429
|
|
663,018
|
Other non-current liabilities
|
26,952
|
|
24,356
|
|
31,526
|
Total shareholders' equity
|
416,793
|
|
412,396
|
|
262,812
|
Total liabilities and
shareholders' equity
|
$
2,087,744
|
|
$
2,014,634
|
|
$
2,032,465
|
DESIGNER BRANDS
INC.
|
NON-GAAP RECONCILIATIONS
|
(unaudited and in
thousands, except per share amounts)
|
|
|
Three months ended
|
|
April 30, 2022
|
|
May 1,
2021
|
Operating
expenses
|
$
(223,426)
|
|
$
(200,814)
|
Non-GAAP
adjustments-
|
|
|
|
Restructuring expenses
|
614
|
|
1,742
|
Adjusted operating
expenses
|
$
(222,812)
|
|
$
(199,072)
|
Operating
profit
|
$
53,192
|
|
$
17,005
|
Non-GAAP
adjustments:
|
|
|
|
Restructuring expenses
|
614
|
|
1,742
|
Impairment charges
|
1,072
|
|
—
|
Total non-GAAP adjustments
|
1,686
|
|
1,742
|
Adjusted operating
profit
|
$
54,878
|
|
$
18,747
|
Net income
|
$
26,182
|
|
$
17,026
|
Non-GAAP
adjustments:
|
|
|
|
Restructuring expenses
|
614
|
|
1,742
|
Impairment charges
|
1,072
|
|
—
|
Loss on extinguishment of debt and write-off of debt issuance
costs
|
12,862
|
|
—
|
Foreign currency transaction gains
|
(6)
|
|
(806)
|
Total non-GAAP adjustments before tax effect
|
14,542
|
|
936
|
Tax
effect of non-GAAP adjustments
|
(3,639)
|
|
(308)
|
Valuation allowance change on deferred tax assets
|
(360)
|
|
(8,182)
|
Total adjustments, after tax
|
10,543
|
|
(7,554)
|
Adjusted net
income
|
$
36,725
|
|
$
9,472
|
Diluted earnings per
share
|
$
0.34
|
|
$
0.22
|
Adjusted diluted
earnings per share
|
$
0.48
|
|
$
0.12
|
Non-GAAP Measures
To supplement amounts presented in our unaudited condensed
consolidated financial statements determined in accordance with
accounting principles generally accepted in the United States ("GAAP"), the Company uses
certain non-GAAP financial measures, including adjusted operating
expenses, adjusted operating profit, adjusted net income, and
adjusted diluted earnings per share as shown in the table above.
These measures adjust for the effects of: (1) restructuring
expenses, primarily severance charges; (2) impairment charges; (3)
loss on extinguishment of debt and write-off of debt issuance
costs; (4) foreign currency transaction gains; (5) the net tax
impact of such items; and (6) the change in the valuation allowance
on deferred tax assets. The unaudited reconciliation of adjusted
results should not be construed as an alternative to the reported
results determined in accordance with GAAP. These financial
measures are not based on any standardized methodology and are not
necessarily comparable to similar measures presented by other
companies. The Company believes these non-GAAP measures provide
useful information to both management and investors to increase
comparability to prior periods by adjusting for certain items that
may not be indicative of core operating measures and to better
identify trends in our business. The adjusted financial results are
used by management to, and allow investors to, evaluate the
operating performance of the Company on a comparable basis, when
reviewed in conjunction with the Company's GAAP statements. These
amounts are not determined in accordance with GAAP and therefore
should not be used exclusively in evaluating the Company's business
and operations.
Comparable Sales Performance Metric
We consider the change in comparable sales from the same
previous year period, a primary metric commonly used throughout the
retail industry, to be an important indicator of the performance of
our retail and direct-to-consumer businesses. We include in our
comparable sales metric stores in operation for at least 14 months
at the beginning of the fiscal year. Stores are added to the
comparable base at the beginning of the year and are dropped for
comparative purposes in the quarter in which they are closed.
Comparable sales include stores temporarily closed as a result of
the COVID-19 pandemic as management continues to believe that this
metric is meaningful to monitor our performance. Comparable sales
also include e-commerce sales. Comparable sales for the Canada
Retail segment exclude the impact of foreign currency translation
and are calculated by translating current period results at the
foreign currency exchange rate used in the comparable period of the
prior year. Comparable sales for the Brand Portfolio segment
include the direct-to-consumer e-commerce site www.vincecamuto.com.
The calculation of comparable sales varies across the retail
industry and, as a result, the calculations of other retail
companies may not be consistent with our calculation.
CONTACT: Stacy Turnof,
DesignerBrandsIR@edelman.com
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content:https://www.prnewswire.com/news-releases/designer-brands-inc-reports-first-quarter-2022-financial-results-301559681.html
SOURCE Designer Brands Inc.