DBI - Earnings call transcript Q4 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good morning ladies and gentlemen, thank you for standing by, at this time all participants are in a listen-only mode.

As a reminder, today's conference is being recorded.

Now I would like to turn the conference over to Christina Cheng, Senior Director of Investor Relations. Please go ahead.

Christina Cheng

Thank you. to Quarter welcome Call. and morning DSW's Conference Fourth Good X, detailing a of XXrd Earlier February issued release week the ended and today, we XX-week press results the operations period XXXX. for made about note prospects the constitute Company various Please statements. the of that forward-looking expectations, plans future and remarks statements SEC. press Results our release materially forward-looking public indicated factors various filings by those differ to listed the and may these with from due in today's assume no update to We any forward-looking statements. obligation

and Jared Roger are Rawlins, Officer; Officer. Chief today Chief us Poff, Executive Joining Financial

Let me call the turn over now to Roger.

Roger Rawlins

I'd Thanks, good what to and Most today first Christina call in since by achieved a morning. importantly, of like highlights growth start our delivered earnings few our we XXXX. sharing XXXX. we

billion. for positive Shoe last expanded our in Our over at Designer X third comp the strongest We demand We had row. set total growth of company revenues We Warehouse footwear the years. in a fleet. on half quarter the a new We digital built delivered of store team innovation our a to with Power in lead $X.X kids of positive a delivered of in-store inspire a in fall. which focused comp number group this design mission and demand and we We've to milestones self-expressions offerings. reached revitalized new multiple service pilot DSW's XX DSW's high

infrastructure lower optimize Warehouse. we mobile-first multi-channel Our we've made to sales strong expected how expectations the with investments guidance sales at out we've laid fourth proud Designer year than productivity a the quarter I'm results achieve at despite enabled of us on revised to exceed better Shoe from and and our capitalized of beginning Ebuys. the

we as and businesses, Gordmans team Ebuys. focused Our non-core stayed transitioned even

share to initiatives solid progressive we've growth. foundation, deliver market XXXX and we're Now the a further established accelerate drive these prepared improvement throughout that that

turn Jared? financial me discuss the of Jared to to floor results. details let over Now our

Jared Poff

good and Thanks, morning Roger everyone.

includes for earnings to enabled provisional following; related million new pleased inventory, $X.XX that We totaling of the at XXXX. the Fourth the beat to results exchange Ebuys, Please reconciliation $XX.X net of our of refer the a will of and comments with intangibles deferred on offset share rest of fixed per exit solid are to refer very since our net deliver last to expectations exit contingent first and the non-GAAP the the quarter results, from $XX.X pre-tax the foreign of at benefit foreign $X.XX restructuring tax consideration net Ebuys earnings growth write-off charges $X.XX after-tax Full offset by business. the the our Town of applying to The by in per partially reported year million report the us net related share expense gains. tax time exchange decision per charges to of U.S. assets the rate to the following the press balance for transaction reported quarter fourth or fiscal reform. income month tax of from charges enactment $XX.X million partly re-measurement to year assets, $X.XX in of the the adjusted implementation of costs and remaining impact our expenses and Shoes including impacts, tax results. reduction to pertains restructuring reform. acquisition release share earnings expenses,

expected GAAP share gross per earnings these by to adjusted driven Excluding fourth $X.XX items, XX% by increased quarter margin. than better

the XX-week gains our would the management share happy have of from obviously earlier sourcing enterprise. lower with week. Revenues to earnings full by at Ebuys the of share $X.XX lost stronger from ground up drove and The for with allowed across earnings year projected quarter to without included increased DSW incremental from we these division. per the share, This by benefit The operating share. X% the over sales the by unplanned growth achieve $XXX per of approximately at million year were per profit than margin first which that Ebuys increased gross $XX healthy the extra year the adjusted inventory fourth of expectation DSW sharper the the make segment much of the to us our XXrd and XX%. segment includes last from performance XXXX, at most since the per resulted $X.XX X% up in quarter of the growth earnings absorbing from increased the Excluding from loss year. $X.XX to beginning approximately quarter million week revenues We contributed which XX%. The improvement

me more business. our on color core Let provide

execution comp we this For opened XX results, holiday certain warehouses and areas contributed quarter, X the demand levels across X% closed the fourth a current. Better year. of growth locations strong year week at the total successfully the this keeping Shoe of leading growth drove for and full to increase. posted Warehouse extra Designer for year. XXX the categories X% We for segment while several to quarter X.X% end and This inventory a lean the chased the revenue DSW

maximized and seasonal boot of strategy demand use strong footwear for through pre-buys receipt management. Our effective the

and drove new frequency highest Our engaged exciting customers holiday no-wrong among year. and increase purchase to way campaign repeat the this customers in

ever mobile to Cyber business continues most. previous website records smashed our our conversions, growing the customer where Monday is holiday devices traffic our boost digital redesigned particularly and digital biggest Our including this on

on downloads convenience we that experience to its love mobile of DSW significantly transaction and greater increased X.X product multi-channel spend online close monthly Xx a shows in warehouses critical app drive active online role activity the pick leverage million up shopping and our to more top for trial demand ready network one warehouses. engagement demand digital over first our with seamless warehouse going holiday Furthermore, Data will during year. stay mind. Our in users fulfilling and digital this increased having at quarter. XX% of local of with the surge of the played while this Customers

plan market low growth. comp gains comps with digits which Despite quarter. by share the the this the late single increased digit encouraged posted category the led single start, Footwear women's low early are We in a seasonal higher business buy items demand digit to and enabled selling cold open this boots. and to exceeded increase for comp liquidity fast single weather posted also particularly chase low a us quarter. its Pre-buy

with We the taking athleisure also in set-in direction men's business in experienced business and single are temperatures healthy XXXX. in comped casual digit the before footwear. athleisure we The seasonal colder demand validating down the range growth low for

with expect posting their comp Kids fleet business We presence this best a a will national DSW We've expand second We with determined X growth continued have men's drive the how year. our and improvement equally pleased phase with year. stores a the on by rest reset of assortment our we which establish kids back-to-school season. this to spring for differentiated to were

SKU We're quarter our Finally, our accessories we our this digits continue the and we to single mix grow complete and to the rationalization comp merchandise in the category. this as category business new optimize business. will footwear down see respond to to starting in complimentary high arrival of offering

a of more selling UPT. mid-single in lower digits while offset AUR single than terms increase in digit increased by the was metrics, In transactions

in-the-season enabled us Our at available sale. goods of the and for which chase to relatively seasonal positioning boots conservative inventory start flat year for demand the

revenues difficult the drove quarter improved with As higher a XX% X% digit Stage last and XX% statement sourcing and end. last the increase year. XXX strong million decline marketing ABG a full optimization full improvements. result spring sold on The sales at basis included increase quarter year mix, at markdown penetration inventory Ebuys driven environment price Gordmans year's a in of Favorable dollars by increase than execution. Fourth margin and margin XX% gross turned DSW in merchandising to to result, posted locations Group net closing and $XX from rate XX increase business XX delivered and year. over Stores an strong which a a seasonal last point through fourth a in quarter, single in After for other top the this comp remaining we locations a

are channel. ABG we managing committed remain regarding business highly partners, for with and we value While relationships business the cautious we outlook the to longstanding this our fully have this

approximately expect a evaluation difficult for in comprehensive share and business the We made sales per we other lower contribute alternatives Ebuys the Separately, conducting to after go-forward strategic of earnings. post $X.XX exit sustainable way at a merchandise the year the the and near-term. business sourcing the to end. in the to decision right The business scale challenge economics requirements of in unacceptable entail

to are remaining the mid-XXXX. of liquidating operations down this and We expect complete and by process winding process Ebuys its inventories in

retail leveraging models. Although we decisions insight into enormous ownership to brief compete marketplaces potential traditional are inform our with outcome, has our will given by direct-to-consumer industry-leading digital platforms future online us and around which this disappointed

basis planned, clearance drove financial year full significantly me more gross than points share more for percentage offset lower rate and a selling increased QX Full came and than SG&A technology full quarter leverage improvements and and sourcing of bps management promotions. X%. the Fourth the good details XXX marketing expenses; margin in this and overhead by quarter. better Effective the year. in drove occupancy year our operating our shipping fourth about in along X% increase of flat expenses costs with expenses expenses, portion Fourth this Let quarter and was performance. a as leverage; operating sales, XX up

the expense second enabled a year Our fewer store us growth cost in openings saving row. initiatives and moderate for to

year margin grew operating XXX Town XXXX. points bringing this fourth our full by year. margin Division, $XXX,XXX a Canadian for a quarter bringing million At gain full equal total basis As to company contributed in last year to $X result, the operating quarter income equity Shoes

fourth reform. points the quarter XX.X% of our income XX to increased by tax excluding impact Finally, tax rate basis

million Moving of we compared $XXX with investments on the last ended million and to year. sheet; cash to balance quarter $XXX the

Ebuys Excluding balance goods inventories the by for the and with increased arrived accounting increase quarters inventory of per on-hand inventory. this square from foot just in and representing productive increase, X% three Gordmans,

square two-year and X%. this basis, the to normalized funding in by a receipt of declined to $XX brings are level XXXX the million, such, accelerated chain to for quarter we foot supply spring. inventory key also positioning the below On certain XX% as year $XX investments. the full to store while Capital of to our of out more a million fewer CapEx We products expenditures roll openings Kids due inventory your remainder of planned last categories fleet; originally per return

of DSW's to the CapEx X opening to increase locations $XX new DSW Kids, locations, X million and the expansion the store final maintenance. XXXX rollout with to of to other expect test store X We new higher design of

have at update time Since share the not include year or repurchase for we'll we after the activity we shares. in repurchase $XXX share $XXX the share million shareholders brought Shoes CapEx outstanding. XXXX remained For initiating back and complete million requirements we which XX.X million being, representing shares to first XX% XXXX, dividends X.X Town this for our million repurchases. $X transaction. program returned does in our of Total Since million shares

us future share balance opportunistic tax to share would remaining the rate. attractive strong on like an of impact enables U.S. reform and while effective maintaining dividend Our repurchases. tax for sheet to I in invest our future the

historical $X.XX regulatory the you demonstrates subject rate to the rate, to federal the new as many Company. or around direction investors the belief the per tax by to into growth much XX%. approximately XX%. reinvesting by new our future increase This and initiatives. dividend strong As rate board of will in reduction provisions and law offset our other in the our know, our our proceeds rate quarterly partly dividend our the and of tax The benefit of be tax tax The law this has best management tax to aspects estimate remaining bring evaluate We've the and share by chosen we represents change in raising tax XX% averaged return new updates. effective

merchandising As talent to success well and to transition we DSW gives capture Kids fiscal share turnaround industry. confidence; in the we our a XXXX, XX, initiatives Power growth, consolidating are and we digital infrastructure the platform have began from positioned of right us to

base. inventory deliberate new With and sales increasing the accelerate the base customer of initiatives existing in million current on labor, marketing productivity members and driving acquisition store greater rewards we will existing XX and consequently wallet comp sales will and investments focus drive growth. DSW's share Our among out

Importantly, deliver future. revenue platform with us allow not we the drive expect into to us well sales investments XXXX at provide to only these but sustained a will growth, growth

floor to will provide guidance. who turn to XXXX me Roger about details Let more over

Roger Rawlins

Jared. Thanks,

defense progress opportunities to our areas we with XXXX. DSW of the shifting As our mindset I've I said behind had and provide to share earlier, brand key the the investment I'm with with capitalize details ride happy ship offense all the the position team industry. conversations you from to on in in of the some consolidating I to on market made a wanted and share

time can labor people. We through First, experience changes it's studies about the recently in we understand how customer to improve performed better scheduling.

this As towards a will a associate in with coverage allocating key improve close result and changes periods work, million selling and are to traffic hours engagement store of customer matching conversion. expect we we better labor

behind Additionally, plan goals. our compensation and all we've business organization the excited our strategic entire our these in. presented expanded financial associate We to incentive goals associates align report our to are key and I'm across

right seeing more last results to impacted product. brands of position and increased taken of localized We content. categories comps chain fund our in the ability directly in Second, Part are freshness, inventory pulled it's our is some Power in Kids successful improvements related to can about most of rest with positioning believe two XX the the similar produce back our and to in defensive the right an the by we years, where the inventory In emerging we've consumer been trends. have Athletic. a improved to respond we

it our business. Kids this share and ability Athletic areas, the us of in has While to handicapped to grow allowed rest our capture the

Given continue to returns we to position last experienced position out seasonal we also to the a the year, category categories fund growth are key our results strength. of of but to

distorting the our and appropriate categories availability We buys business. strategically are and our across in size depth maintaining growth

roughly mid-single two-thirds increase we to course digits the for in positioning Athleisure the of the with support such, in available growth of increase are year sale As and Kids. the during goods the to

attracting business, footwear rates. addition is is Kids child, half the in retention younger comprised one more category an a for is point our our customer attachment base of consumers. entry providing This and than driving Regarding households affectively customers at with research of rewards and least increase also of shows kid's different new and

tactically levels in this As shop kids we established many of inventory We're kids for in adding long-term online our improve makes [ph] Kids adopt in vehicles after national first to a presence most success in-stock we year, growth. kids our both products. this started getting our and important market we're just of category opened one kids; years share

we where investments reduced making is seasonal operated on during area two years. inventory Another year-over-year past which inventory the levels business are the

with the our less product, planned QX both able and intend successfully chase table recapture the been transitional to we the into that during we've While seasonal inventory in right QX, initial sales period. inventory on to

we brands assortment further we As the this elevate management to including exclusive expect performance our of and most over-distributed even our greater customers, and accountability will some we vendor right mix our weight emphasis brands. ensure resonate and our underperforming buys differentiate our an value our for and truly landscape, behind In proposition, on our objectives. proactive with of we have place to to business achieve put resources that reduce brands changing

of spring. to new address wide and launching exclusive new expected brand with we refreshed our a modern in receipts fashion the and space number comfort this are within Finally, portfolio brands

will of appeal. exclusive strong but content differentiation Our brands and point brand strong a DSW for assortment our with complementing deliver emotional relevant

of healthy brands our team portfolio and a business. developed Some the is part following, our the of this long-term have growth in strategy developing for our

customer spend, from acquisition. increase Third, year in marketing. investing efforts After the last various retention we average strategically are initiatives customer new results to marketing seeing and

relaunch VIP beyond for our This family. such exclusive friends points repairs, deepen catering will the birthday become give the with and shoe On in most of rewards for transaction lifestyle our this needs customer's the give which and program benefits first list even special aims model. access, of and top returns. more going the will is loyalty to new shipping preferential brand point to to go and donations DSW customers easy program and rewards to loyal as program work perks We're and to events preferences. offers

with returns productive share digital invest greater positive our customers results customers in value. marketing Additionally, will from seen we increase wallet to performance marketing We've on are to investing most acquiring activities new and pilots attractive while marketing in lifetime investment. continue in our with

the to customer customer Given to our data markdown wealth management how artificial re-targeting, understand with working we optimize intelligence. and are from and new technology such product program loyalty pricing as of

players willing seen with which like mobile Customers to pickup, develop to new at our that a will store, location. we services seamless and Las the market a a also experiences technology repair experience response has lift customer new last Strip creating shoe avail of embrace excited design robust on need. initial by among our integrate unique package proves customer a to of interface. expanding where more unmet up sale summer. to getting and we'll and our services databases XX will innovation. this store life debut Vegas bringing an its these system The inventory tests central this are We're comp and results operational variety will open lap platform customers and new an this from concierge a themselves We're a returns loyalty to relevant service new today speed in warehouse further working that that strides new we're repair to future tapping Lastly, a elevated this a stores significant and bring will on associate locations exchanges nail location can location pilot continue four We're engagement these rewards provide proposition, point of order these a will we're made year assortment with of with this a a and year innovation to retailers and We've months. customers. shoe at fixture value a DSW dramatic inspire in brought several services; salon like emotional the expansion new

technology We expect pilot this year. this to

the Town opportunities years, Town's two be few about me say excited values, our for ahead. Now to grown our reason we growth customer appreciate us with Spring are Clear to spring things and to In preparation give we've a Shoes. integration let Town's centricity In co-owners active this in more for Capital. discussion mission, shared last

First, room there of is for DSW Canada. growth the continued in brand

Second, we growth. our help drive and Town's infrastructure expertise leverage to will digital

province from expertise. scale operate resides. nearly Canadian synergies anticipate where currently a not of the the quarter Third, population Town entire in combined of our we And leveraging finally, does better Quebec and

that third-party change around off and want of To Given Town Town's year, the the planned comments loan within needs any costly additional liquidity fees, facility funded on bank to acquisitions. down which pay avoid them refinancing both with were transition and to Town help immediately outstanding following outlook come the for during we debt we decided DSW. their amount business will their be this address terminated and replaced hold DSW transaction, we more by the until efficiently to close obligations

and share XXXX expect our to market to Turning outlook; growth. earnings we drive

of a X% for the expected the are the Excluding comp week, to exit locations DSW single low increase in revenues net assumes XX segment. and non-core of digit to businesses range; total X% X in to new this impact the X the

rate excluding Guidance tax to business shares goal to a approximately ended is growth $X.XX exit and achieved assumes income does to not of of to note. include range full from XXXX our related on X% Town nominal our projected summary, effective and the XX% high Shoes share the to equity XXrd we've earnings an In week. XX% investment. Assuming year $X.XX and charges reposition representing Ebuys the per adjusted XX million outstanding, between

evolve floor America. and We our shares opportunities we the to the are for customer market experience. leading retailer confident With that, open DSW strategy expand Inc's move and accelerate in I the energized as forward will the advance Q&A. us comp North footwear growth I'm position DSW's by

Operator

question Camilo Canaccord Please [Operator Instructions] first go Genuity. from ahead. Lyon Our comes of

Camilo Lyon

Thanks I lot the you spend test little seeing for on, customer a that could think the of response. services and was mentioned update, about have the stores the of performance gave about the I in details. time bit you you you're hoping that excited a talking that you're

so the spend If services of your understand store It around seems one have you maybe to how those what just services you're in available to has understand just you us probably this of incremental it; unfold? and picture kind store help more seeing those think each importantly, an trying should services multiple like the initiative. base ability the from profit from to could response or of to kind

Roger Rawlins

directional store put in we comp. question. That’s lab comp was day Polaris a the we digit was there months in store negative and testing in services nails, double in now range, digit have other great are X the day call out; what we double [demand] and and experienced our is We [ph] things a so repairs, trending since it that because just

retail a I often, think a to story we have that that's for come hear know new around us been all store while very of re-modeling introducing a you services. not and

that can't not. led get on a us to we this to say to judgment pass say working this you test take isn't thing So because to store or lab

is So have, additional think design services with your we're way vice program when and all we're you we on nail a nails relaunch going or to in of these of that larger group rewards footwear key versa. the repairs be earn will and stores done elements an purchases where -- then of four we're pushing as going to all of going getting the larger A I can that's the be our be then in around into that testing integrating well. and for a the you're so that of concept part stores this store points rewards

will had stores the where I of from we and it hopefully that to results XXXX. but can the go really to store one -- So goal in is our be validate then our getting to is more we there applied focus is in think doors next group

Camilo Lyon

to back, understand seems to SG&A Jared investment provided. you've year relates just that step you could And decent the gross - It help then, maybe margin got of components a like was guide if this a the the and take fourth initiatives that well, tailoring more quarter; unfolding. DSW story selling and what on relative buys is the in actually segment inventory is uplift margin on there seems on the there nice positive the to a like gross front gross is us a

help If That be us the to too. will helpful pertains just gross year as this and you maybe SG&A of margin the understand guide. contribution could magnitude it

Jared Poff

about you little positioning Sure, a for color took 'XX 'XX. I'll that bit the talk in guidance on then we of give and

the As QX was markdowns you merchants primarily from led by mentioned 'XX community. more margin were came favorable into lower what take go or And that part also clearance driven as we quarter, clearance. letters into looking unit and good, that our what in doing the we are the our that of well call then the in units positioning in to than off and need work at very our favorability anticipated, percentage primarily the fourth with vendor things chase various putting moving by -- mode [indiscernible] we as had clearance that's inventory originally lower into

which that an offset that to up in call that going marketing on QX. nice the So with there; markdowns last more actually had case than piece all a increase was of we be the rolled mentioned to

at So those planned, better came the right we in overall expecting rate margin. QX touch up just a mentioned SG&A, a net-net I much perspective On but as script for pretty that. from I pretty think in came positive for slightly were where much

that changes that in of is many the doing, quarters with an will. as we're about; to so certainly now not noise optimization chase and that I did the what around years couple is investments lines what work throughout about gross if parts that between puts inventory, obviously multiple well and able that's be back our but that over abilities, as ability with right P&L the in I lot moving flexible, expecting are necessary. the the confident talked because holding exactly with you have you the should like to very you confident we making look marketing, be there merchants give the with SG&A, of going at in past and done SG&A. we've can on the margin deliver able flexibility feel as want shown middle do and we order our line we've last that very as Roger we feel vendors, and really guidance noticed, year-over-year those both confident guidance, bottom here adjust, massive we We are with be to that's feel into a we of that For aren't tell and but our routing margin to between to

Roger Rawlins

I Camilo, add. to just want

that was on I from think the last our our when you we community, an we've as in several with That a it more ago head expectation been could was -- holding guide turning helps us quarter, margin a to organization of that's store margin. routing on which which working investment obviously, look clearance digitally in locations, which actually fulfill clearance that we of out made expectation we of XXXX. at was higher into fourth years them orders getting so this the the really was you all improvement the success store the had with that of of order to vendor had higher things combination the has the years; merchants couple much standard a aggressive

of that ultimately direction are and our quarter for progress in a excited so all last I do XXXX. the that and things So part think been made the of that's those can what for for they fourth we three have why worked, us years about and we're

Camilo Lyon

the clarification adjusted question write-down that to also led that to Was inventory $X.XX? through one QX an that for gross flowed number Just there margin. the

Jared Poff

And Ebuys, that GAAP no, be adjusted, clear. was only. the just in for Not to was that

Camilo Lyon

Yes.

So that Ebuys inventory write down did not flow through to the adjusted?

Jared Poff

correct. That's

Operator

King go ahead. Associates. Our & of Marotta next Please from Steven question C.L. comes

Steven Marotta

X Vegas, about talking the you will bit of the reformatting the about a format? all, first new can layout the to count in -- Las And increase the in talk as will those bit be store? locations the any design associated of format more; little Roger, also as expenditures store little with new X new a a new new besides capital well

Roger Rawlins

as essentially well they will half X So thinking have already in be the have in done a read. are is the opening new planned be we the happen the I'm we'll of stories so back remodel that as will XXXX package, would to spring, a -- able have we that that the fixture

look increase, warehouse. they SKU choices walk inventory, the only which available and digitally that not our taking the center pushing to at and are we've was doing we've consumer you it out As been to when the our more really more the into -- so fulfillment what there players more buying of physically available is product locations been

building So store have spent say, in the we different like around sorry, would other than that it from -- -- turn, a it be first for no challenges any that store I'm that that because inventory routing, demand. picked with that if order with chain so is were I warehouse all years digital tools the to should when some warehouse we've treated

new front of and you higher So can we've fixturing more AUR. get to conversion more the also package can demand the which in nice really a lift in where and consumer been which using out a that's product you we're get putting with seeing product obviously in help

concept. to not cost sort now that the we're a but see to get four it direction for will been happy prepared we do a new I to feel like the tell when detail with why what you From other these good look CapEx about that's it's right any yet doors So to don't now in I think far that. think with give we're so we're at lab; it of what like we've of it's trying standpoint, might I

Steven Marotta

would leverage you as have And occupancy -- bit you pertains fourth on follow-up; just comp, talk Jared would little in to be a than X% about say something comp is it to can why that that expect the the have can to I that X.X% that would we comp continue needed that. quarter a one least? thought occupancy to And at on levered occurred? have X% that higher

Jared Poff

numbers, in It's out to when in not it's XXrd total were line; was the comp really answer; number, week occupancy certainly topline so it you your that leverage doing XXrd a that calculation. you've the simple pretty so week, that comp pulled help our our did however, was

and past comp we've change huge leverage I XXXX. a really -- would point say in where So been change not or the from our I that really would in expect point wasn't to our

Steven Marotta

X% a And that's greater? or

Jared Poff

Yes, right yes. there, around

Operator

[ph] Our Paul go Please Bank. comes from next question Deutsche ahead. of

Unidentified Analyst

business? quick any longer discuss you bigger decided question not can have share exit term did have your opportunities? Ebuys; should market the you view EPS store closings? on business competitor a impact the these store just to Thanks. change your on question; Then Just And have from what you picture on seen a been closings on would impact

Jared Poff

actually The is flowed to was our the the release. of asset of their But take adjusted their is The out, question. of write operating cost is $X.XX that inventory adjusted actually impact fee I'll which our adjusted in GAAP so for downs about that's in all loss included through downs, as part earnings. that, flow is and operating their the and operating first press earnings; what loss, is fixed through reconciliation the included write did entire there. that Ebuys exiting the in

Roger Rawlins

people our a people Athlesia, we receipts from exit opportunities heavily a incredible we back GenZ, in we're going boomers, out as creating industry, not it's an all that and that that platform not going acquire take that share brand; why we're as comments, playing said opportunity, we're market our our boomers that's look to and and new attract work invest the ways industry, categories, continue are can and leaving, time especially the that's our to customer. competitive new for their why market we can customers, when in the and opening which offense, the for penetrating again, as a get share we're people doing standpoint. to so how we us believe and in to it's is offense to to going play us new pull in of the seasonal people continue Kids millennial, great we folks We it where at let's go and attracts go that's come finding -- that's And why to we're I because we have know those play to to the GenX, customer defense. invest I to just do use the have

Operator

of Kate Please Citi Research. question next ahead. Our go from comes McShane

Kate McShane

to form tax the in But you tax you're centered shareholders. how highlighted investment? and your around to it question benefit; your I accelerating the some returning of and My spending that if has any reform response agenda changed you're wondered of investment

Jared Poff

reform piece had the Kate say Roger highlighted. would tax I What used certainly a investments is, of the of growth we fund some to help initiatives that and

we've inventory marketing, across but a and around board. mentioned, So especially increased strategic then very into adding million overall store targeted digital the hours we -- a increase inventory are as he base, our

CapEx having things $XXX Net-net, there is did but standpoint so to end a continue from not investment a really some not flexibility sitting that the result of were that isn't are change CapEx liquidity, make these that not strategic of there So year us a sense we was this overall, standpoint, to as that. of significant in the of from piece a around appetite a fund the that's in initiatives. at that we so use doing we tax there we of to going our million help growth cash, investment

Kate McShane

second my on your any comment is then into play you wages; if guidance? how XXXX with And just have that's coming question on

Jared Poff

and We feeling we have of the a else. all are obviously everyone are pressure working we where like areas always that at workforce

very our into competitive I package build think we've got and compensation a guidance. that's

free and it's As added I to feel have mentioned, we that we that's but hours do important. not

with benefits full-time for also helping are initiative. our and to us the this of some them looking able in be broadening growth Additionally, participate at we employees

our new at level, something that's we're a to extended and the that for down all us, organization everyone down employment to way do. full-time program excited bonus something participates we've the So to in

Operator

Riley FBR. next B. from Van of Our ahead. Please comes go question Jeff Sinderen

Jeff Van Sinderen

seasonal questions. thinking potential business thinking the how inventory can assortment you're update downside then you and had product increased when penetration mix guess and by bets then for any and kind Can overall add I with the on And of of couple by about sort around you bigger of of on that you're shift color evolving you other managing sneaker a Athleisure you category, 'XX? about follow-up just see I how seasonal how And of making could particularly buys there? and/or prepare add us the how any color for that women's? segment more thinking you're in you guess, I

Roger Rawlins

mix, our it general for year; it us to shift was were increased -- the we Athleisure versus roughly XX% so was pretty So XX% was where around I and last think it going, to do where we that's But this then range. if is -- some we've whenever the example; seasonal entered those we down with give pulled categories I'll categories, And go best position boot was third after we left in that we meaningful in and category, that ourselves around what our to seasonal have that's where we for put a it but the during the we're assortment. planned with fall created back the on where chase a challenges quarter you August XX% going to take table she's comment so in material in know we volume way. us on

we but as when know So can out the in we going can she's get Athleisure we not continue well. how we're walker boot invest business where that also to figuring space

and had because I in we in in because the dip about in day the we see haven't our just box think day box. product the conversion out a significant opportunity physical we're excited that

where couple and make community nimble vendor that is and that's our it's have for you accountability of years demonstrated they've partners a have investment; on of also when investments, back making we can merchant I with you and to we're we team over kind think the we've partner great mitigate the great think I we have and XX risk the a that last to been continue So you these them. team years how planning be putting

then that. at people with right opening Designer I said it's earn able you the as and -- team think and Warehouse, you I of for inventory doing XXX to that the brand-slash us. floor would in bear I at shouldn't them to offset the risk to are the Shoe Debbie I and out and to looking call with be on think us to where do of -- you on also So how that equation, do we a great comments, take And need that the labels be floor roughly be carry job

working with hard partners Debbie our so and that risk. And share team are to

I ways will So we are those of which think challenges. mitigate some those in all

Jeff Van Sinderen

likely elements terms to been guess and you seeing you're broadly? that they're that's in at it on And then out then lab in this some be things of that of nail repair, fair successful just rolled have you heading Okay, of to storage, to kind more think say the more the success helpful. story. other store be point follow-up of where Is on any elaborate could a salons those and I any

Roger Rawlins

Neal and we're in no, is the and data excited getting their for done, we figure I we've one -- general I what nails have have the my in called of have we're can that points lift with of come a immaterial point business W rewards of Columbus can go to earned got will see here then couple doors say in The we doors our expectations, more it there Columbus, do new achieved share given it it's we we But where the our all amount out I and is more to wife that go from has having success. daughter How would Warehouse in footprint actually bar this Shoe nail-bar next. embedded. do we so more which take Designer to say market

we the out going, good we're repairs, first As other we to to roll helping direction new start about later that, our set this us that our that's ourselves so larger back out it; that's to some storage, the trying like room changes excited it we in able how put going up quarter facilities capabilities have now relates figure be more grow partner of work going testing we operationally even; of piece some in have that to to and we're program. as with a storage we're rewards in of to the year to we're doors

and charitable be betting that any all program of that things time of that the impact we things have end the a standpoint design. as to other to thinks of think do not we ability those we we want All shoes things the this or see brand; with just think we're to of give new that is can huge your at rewards are relationship DSW their that relaunch our elements it's of DSW a someone so away those you're your on into want to life going them going weaving and footwear, to from

Jared Poff

defense rate that's services has an the the The mean we've were added rate excited attachment about one to thing meaningful; of Roger it with -- attachment very sales. what want long-term would add could and very for that evolved seeing and where here we're we're that but that services success only out seeing but themselves. about mentioned to and them of different from they've got that excited And of about how we in works read a meaningful them so single which team Buy conversations with offense so so I'm lot Best a we've why a about at it what could. a from this had on team to that our attached between one talk model also again within of going cited all I we're the we gone it's very, have to was -- services the how footwear roll evolved store, monitor we and every about our of their happy lot

Operator

ahead. of Chris Svezia Our Please next from Wedbush. comes question go

Chris Svezia

kind for I EBIT a at the XX earnings outlook walk midpoint to points if range. sales call moment I so the of it outlook. XXXX; when just of be down, for would guidance looks basis your the for want go the It through margins as roughly and

momentum significantly the margin; gross particular Thanks margin, my and have there it's me rank you the first be curious questionings. whether walk are. it's if that areas compression you business, that fourth the Also, me, those on look investments to some So in of of some would of just make just can reasons what would more whether correct labor, the why you and or why That's Terry make maybe that area the of you in at through XXXX. some quarter

Roger Rawlins

theirs that investments truly we're the for teasing Sure, for here hit slight your is that into biggest think Chris, our I is there piece say expected is I driving that it the in is do to I did of the opportunity I. would this the already that what's EBIT investment to we're some is we personally piece what head funded; do digital growth; merchants I alluded pre-tax. to million that's and when from so we investments isn't erosion all on Roger on funded margin primarily then surprised with continued year that. it not more the you -- hours, future account this marketing believe that's take some out. We are the of what will the He that line one continue. full making momentum mentioned that the that as have of that making so and a model standpoint; are take as a with investment of it I out as that year savings see vendors working aggressively rolling as the but And the well.

and be making right P&L that so investment is standpoint. to not as are every make thing However, from inventory wanted we to an single good we we as protected the markdown is going and are, a sure

it feel positioned altogether So P&L very well feel we in and we confident a that is very that bottom-line. delivering

Chris Svezia

Ebuys $X.XX you -- P&L that's related in said think of no impact component longer 'XX no XXXX, to I that as XXXX? is Ebuys -- in Rogers The longer it in no was

Roger Rawlins

That's correct.

Chris Svezia

supposed making of and you lift up going And through rewards of just just maybe anything your factored hit? outlook or when to getting And it any in running cost are for aside to in. that's and the assumption from comp program, on the the walk you're you doing terms timing lastly, in revamp; can happen that's when to the initiatives there just then the all

Roger Rawlins

a relaunch, think significant detail So will making we early with comp comp prospective, roll market this great creates us. opportunity yes, second get into don't going also quarter kind From believe will we're share new the out we our but but -- program. we to is we a to are increase for it we what to a investments as of it targeting be want it's we probably

income go business; and from being more about program, it driver, them, an net-net, perspective big grab I it's the is our So how them consumers, see grow retain about. a op do we more get what this really that's all relaunch in don't and and

Chris Svezia

Okay, thank Roger final that? offset new about, just just thing, out that's you. on fixturing just the -- to you're willing test fourth or And clarify in just talking you the the remodels fixturing

Roger Rawlins

and or know new that exact new we've fixturing The don't package. also opened we three stores then that four happen package directionally will in I the are fixturing four fall but have number the fall. the will doing

in be 'XX this something So see store. again, lags position the we're design that is a by the end going to of has seeing lab that the to we're in

Chris Svezia

see. I

Okay, you all very and best. much thank the

Operator

Our Carden comes question ahead. from of Dylan William go next Please Blair.

Dylan Carden

Just more but context a of closures? of increase share. sort How generally recent market curious and the in having pricing, also much you've of compete to and near-term fourth been consolidating compete see on sort you do some incrementally quarter, these of or both more that market promotional in open having about past moving to for the

Roger Rawlins

us would what would not pressures extreme I for you have pricing been say. the I tell that is

properly. it certain think we're have that that way helps of it in And That described in you many haven't luxury said, being those protect the that XX with and things. I million and items have looking mean and we of engage at WN done we Team because doesn't think rewards out we I day to have do differentiate that think to the not seen the that assortment, being day some our are like again done members I it. making work people able positioned from them, same

when specific some have team that challenges. at think are place that pressure with those a brand; pricing an we us and that our of do in when So DSW start has things against some that promotional done see. brand goods protecting But only environment us of I are you job a you from of to protect again, those fantastic available and putting all or exclusive through we're

Operator

McKeever go Please Partners. ahead. MKM Patrick from comes question next Our of

Patrick McKeever

there? be progression then the from read in XXXX; look the I just lift share if what the of it you're or lift Just quarter also is And how Thanks. weeks and just earlier on on then done earnings, question the the from phase standpoint and -- Easter wondering comparison willing a versus a if so given weather I'm you'd just the the assortment also year. is give question from on comments of specifics your earnings the or sales of wonder and standpoint on you've already SKU just early And it's and on that able two comp evolving still there, warmer kids, any especially to too markets next sandal second how will some trends the any to easiest assortment wondering any far. anything initiative first

Jared Poff

is This Jared.

volatility front to been same not we say moving again XX-XX extent remains read lot be in I what have there, contributions are stone, again we we see volatility may we between quarters would so within but a a earnings guidance, year, believe a know right or shipped so much we I don't give same the little starting never a have nature the piece, where I won't volatility that's in margin can't of aren't Overall, there. half stepping the to XX-XX you year that last whether but and this will a that now of that and anticipating some to of don't, of there's react, some just quarterly more that's half-back XX seen For you parts towards tilt I we speak had back earnings obviously but to say towards not historically to more saw our does reason guidance. is to it we of cause the and rates flexibility know the again back it's bit we lot really

Roger Rawlins

I'll take on question kids given. the

directionally able had a to has us comp worth in so measure it's roughly power a and for it that of now, kids to be colonial half and year has a added what Given day kind kids given really the paints say our the the day could you couple business. out, ability about to is brick-and-mortar chain

with big entire is in went So we know advertise, recall yes to kids, engage getting market everything it you a not keep went the child we DSW a walking way but members win; we adult kids get dad in do mom we can really footwear were their competitions that but consumer with having we to I for customer and we rewards chain which actually into by when of and kid this back to in to in half were we shopping and having by their include so and our every kids in we and that DSW their to our knew household, footwear. the probably when the went they share

we that fact that there getting the love attachment adult a is we're we see an So and lift to footwear. comp can

I get our key and better, margins was items more our a positioned that to much to about was -- think they had a in-stocks one and and our to them our but it's better, it. we've done team I a data incredible assortment us our out aggressive keep is than of done this we lot what's get made we executing based competitive a crazy; job where with Kids are than we it I'm today grow -- year that When better, ago, was get job where got the great team, help it business. are better are try been next than I driving So are -- has we've is you it and to think know decision on again information Kids --

Operator

from of Group. Krasik Research ahead. Buckingham last Scott Our Please go question comes

Scott Krasik

Most answered, a of my questions just couple. been have

just First, the wondering just there? that said the and you expected timing that; men's the had on you again, turnaround business reset

Roger Rawlins

there's business, look look it's if of much tough the into On non-athletic men's men's it you that has athleisure play. that come so area at at again the just to we because piece --

the last out the overall, which -- challenge seasonal go how years don't we challenged obviously dress the most for the as historical that more and anytime do been immediately footwear but the in as turn why for couple trend has category to soon. after aggressively has think is has been men's that's categories, I figuring which that we're a been going we the category we see dress, see anything casual men's don't that of changing athleisure us well around

Scott Krasik

are sales? And recognizing if are then did sales quarter on inventory. the you wrote know the those finish And -- fourth you Ebuys; I you down recognize just And so, from the where? that up to Where inventory?

Roger Rawlins

So, sales we that and EBITDA the went our quarter that actually happened earnings. in recognize adjusted that through fourth

at our So as period. loss during $X.XX we the a that helped full mentioned, net-net so those there drag contribute on sold to and EPS

liquidation inventory we down with just wouldn't GAAP wouldn't the on-hand, it business -- to is adjusted, our our but value down have we exit and we flow we through inventory wrote think is coming that However, process being write now, not liquidated, with be. sales, going what one-way, to through to And see go that was see adjusted. a that liquidation coming was not associated as would the that through sales that the associated we to regular into we process that that

Scott Krasik

that point this at be positive a since COGS in will terms they contributor no have of… So value

Roger Rawlins

didn't it write it we're we'd right coming we we it and what we Well, nothing, that. thought liquidate down to able wrote to down to in be around

Operator

for over concludes the remarks. would to like conference back to question-and-answer any session. our Roger Rawlins turn This I closing

Roger Rawlins

keep XXXX. your into our quarter team, for let's and call, we day. Everybody just to have fourth rolling know the again, co-ops And great everyone listening I as questions. of it go a great Thanks

Operator

you today's attending for The has now concluded. conference presentation. Thank

lines. disconnect You your now may

Designer Brands (DBI) 13 Mar 182017 Q4 Earnings call transcript