DBI - Earnings call transcript Q1 2024

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Operator

Good morning, and welcome to the Designer Brands Inc.

First Quarter 2023 Earnings Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Justin Fischer, Director of Investor Relations. Please go ahead.

Justin Fischer

morning. Good XX, company XX-week release XXXX, period XX-week ended the operation results to a period the for ending April issued today, comparing press of the Earlier XXXX. April XX, results Please note remainder today's unless excludes call we GAAP reference adjustments under otherwise. during of recorded that certain specified that the will financial the

For a release. to GAAP please earnings, complete adjusted reconciliation of press reference our

materially statements. prospects remarks to differ please the and with filings company about company update listed to that factors the today's due no forward-looking The assumes plans made release of note Results statements. constitute in forward-looking Additionally, expectations, future the the and SEC. any obligation may public various press company's

Officer. today are Howe, us Officer; Doug Financial and Executive Joining Chief Chief Jared Poff,

turn over Doug. to me call the let Now

Douglas Howe

for begin hard I by continued the team our thanking their quarter. to throughout work want

quarter the quarter than said, this coupled year, was difficult last we which our was broad-based fashion, slightly the we expected. year's our of pressure consumer, Given by of That with more being strong face the headwinds. anticipated strength return first environment the propelled would on first

environment was manage at Brand how pleased stepped promotional team to the and our I segment. react appropriately increasingly an same our read time, across level our to and inventory up both with and, Retail

year. quarter, the last to compared quarter first Designer first In Brands net XX.X% sales the declined

we saw sales the just mentioned, net first quarter period of a I where a of As was XX.X% XXXX growth year-over-year. robust

fourth we been in and was trend the quarter to of the casual the demand of outpacing February, market. negative in the increased customer store continuing since that well trend the Additionally, this segment significantly April down as our has Despite industry U.S. up year, see March XX% offerings. as our traffic year, are last sequential retail retail the experiencing

season. most to significant selling decreases and dress in within the businesses our not increase were sales important offset seasonal However, enough the casual Marpril our in

sharp in quarter X% pullback in saw a sandals, prior women's up within on saw leaning and the drivers men's impact consumer the our and our were Retail we to compared we down to mitigate products, and changing in more overall move casual through altered year, in our quarter want. To and strength particularly the category offer segment. we to promotional we the casual the which are our in Men's X% quarter. brands preferences, we course, Specifically, in up seasonal DBI with women's in X% our increasing pivot ability even XX% down quickly of the assortment they of as flex Conversely,

As clearance we've the value able back leverage been lower year, price our customer mentioned options inventory building the further during offering, this we quarter. past frequently strategically segment to at have we points, and providing our were over

XXXX to were clearance doubling top the to of brand our year. business on quarter, brands X% the softness XXXX, by net we Despite against the encouraged our Our we comps with from basis last own editing long-term the of amplifying to U.S. be a during continued making sales our strategy up partners. quarter are and progress while compared in national

quarter, acquisitions we We have casual net pleased XX% penetration the very integrating to in in growing are sales. owned of excited continue spots to brand We're and new our the progress to brands, bright DBI own with see category, in brand continue our particularly made into the portfolio.

that seasonal to which Topo our to long dress growth last over will acquired will the As diversified year, for all benefit total TIGR Le continue fuel help to for over of term. anticipate a brands powerhouse we a DBI and Athletic, reminder, Keds, we and have the provide us and complement

like into dive briefly to these. of each I'd Now

Keds. on update an with start Let's

of performance We line with Keds brand through versus optimistic recently on in ownership are continuing performing today. the refresh expression style. its is performance honoring our focused a the pleased with expectations. Keds Wolverine's year saw playful to and last integrate Keds under wholesale acquisition and growth individual positive launched are brand

collection with on Keds sneaker that Champion recently, tennis the silhouettes, style to Court, success anticipate just unique athletic opportunity pays has summer, price offerings as individual and our category. forward new style, a Our celebrating both distribution Keds, another provides planned the celebrates our to rich approach, self-expression recent keds.com. Le reach brand within with our experiencing the for a well launched online customers time strong with points season. excited in-line footwear late this of sell-through see power. is Champion and very own be brand TIGRE offers staying with fashion stores. is history. versatility well different into that a been in reasonable icon. Keds in and is point collaboration the focused homage a heritage recreational as and product and us heritage athletic habits, our we with at as lifestyle and multiple collection first to back-to-school and Much like offer will in furthers versatility on it's launch original to which great and reinterpreted is brand iconic It Sneaker Sneaker, The This as in

fashion of weather while our this category the positioning less brands related the lean penetration brand our to We X into remain distribution. and already trends. specialty and acquisition in gives we These potential are track to athletic will plans channels Topo's athletic intend DTC brand. integration us creating across international meaningful from Designer and wholesale This strengthen Brands Topo. to draft on season, moderating Lastly, to about and that excited volatility a with

in the and athletic saw dress quarter, to In relative fact, seasonal our brands during owned first strength we category.

categories to casual in and brand of addition U.S. these In become Puppies to stellar we to Hush an the exclusive brands. Canada, are the owned a closing our agreement licensee working we excited are X, the announce to in and that addition on comfort

as first for been this with product our and robust brings in comfort at years now, sixth which growth XXX%. Hush of our our opens in and well specifically Our in agreement Puppies e-commerce brand operate outlet hushpuppies.com, portfolio. Canada be the the X business up brand the over model, also own casual into segment to owned as for wholesale to also sourcing DSW site. The of in of showcased now has us opportunity growth upside legacy has performance quarter brands, for brand design category. up independent DSW our the exclusive the want Hush Puppies for retail the casual This which several I will U.S., touch on the meaningful

standout we we April. the women's year. Crown sandals Vintage X-day XX% up and impressions are curated The for demand celebrity of in the DSW and momentum are latest spring Emma to collaboration be DTC motivated includes resurgence with a channel with This First, her prior partnership pleased seeing performed to drove continue We've storytelling seen specially sales well, we X% last up denim also Lucky a year. period in Western over to drove and X.X our media around collection. styles as with Roberts, Lucky at which style. in continues the million the first trend-driven our the quarter by more compared

casual and our assortment space, beyond We and customer a assortment. our made dress across meaningful male in progress expanding hybrid serving the expanding with focus categories men's the on

both Men's casual within We our Vince are results this Camuto's QX. business. Vince Crown is for up with Camuto category seeing and Vintage DTC encouraging XX%

our of manner. offering XXX as the brand new our Several step are Vince technology. expanded include breadth We assortment construction types styles beginning in with of our a Camuto FLY in across is casuals him versatile of customer introduction technical a of and different is sporter construction, important This the of an journey it dress male engaging an hybrids. for

to Vintage. Crown Turning

a the chambray last materials up over the year, approach men's focus driven natural-based focus business brand similar Vince to with grow in materials. by Camuto is vintage canvas, casual with a Crown hybrid XX% Crown overall for as on casuals. QX is DSW. growth Crown such brand currently way has men's to dress our at for the in to Our cotton-based been other Vintage #X the and assortment the In and our

our year, e-commerce compared Our growth performance an solid comp. X.X% strength our collective of brand.com in last delivering across brands and vincecamuto.com owned showed continued with to DTC many

meaningful topoatheletic.com to sales addition, brands. and both new DTC designer In keds.com delivered

brand-building reflecting celebrated at guests, including the As in festival several efforts, and which handbags event, the dressed were Lucky events, find to exclusive featured the Brand during influencers customization quarter stores Vince treating of that celebrities from mirage and in end The vibe online. Lucky trucker our own and we continue to station featuring and bella Spring natural to for we festival focus crochet desert leathers, to influencers buzz to with generated giveaways Coachella of including fashion a collection, footwear jackets. engaging moment. Vince performances moments excitement for from the hosting that traffic of surprise and showcase VIP themed brands at a culture Brands toe Camuto and our drove festival their head Coachella homage in created and attendance experience, Calbella. Coachella, cool styles an guests, festival titled campaign Camuto

look of all things collection Simpson slides to and Additionally, in metallics shoe mid-April, our Jessica sure love this amazing silhouettes. launch was and apparel and colors devoted of of celebrated platforms, spring/summer and to bright XXXX season. denim fabrics, features their complement our by the The collection Jessica inspired Simpson customers Jessica's wedges hot and inspire

to relationships own that the we retail committed base. and these to brands with to relevant Complementary largest strong our brands are our strategy national most initiatives, national growing brand are customer

point for our and amplifying top We on national as are editing distribution brands consumers. of a acting focused our

space. This and build we excited partnership As plan the athletic on part position Nike, and are strengthens with footwear as in will this edit year. leader of a elevate which our our our amplify October to in strategy,

customers physical Our digital across with an Nike allow premium athletic will and assortment. provide offering to our gives men's, a kids us partnership that women's and

to hand in to Jared, that minutes. discuss over it touch I I guidance more our upon want in quickly will few a detail he Before

than top year. quite cautious am the proud first several mindful With start quarter we've to about in had the am slightly this I still in mind, of market-leading on outsized more year we of While of of the a growth of and anticipated, I dynamics. the the last quarter year challenging balance delivered

anticipated. consumer impactful to a macroeconomic we originally by now be pressured is to expected that more than a see a factor First, continue environment,

business the timeframe our of is first for the X selling biggest quarter our a of Marpril is X Second, periods year. as critical

our into to weakness we lean clearance that Given strategy the quarter. original increased promotional seen the and in consumer second continuing with continue expectations, across to value, will and we coupled have leverage

Jared? That are to expect and that, do see we As a Jared. XXXX. I'll result of year. With lowering it these earnings later and are believe improvements elements, our guidance the temporary trends sales over said, being we for pass these to in

Jared Poff

to and reiterate everyone. to as Doug, have path to echo how capabilities, of am the brand-building journey We model the are evolve power progress the on our proud morning, you, I the our we demonstrate organization's of good comments Thank pleased we macroeconomic through current on want challenging this business remain and date. we ability and with to Doug's our manage I environment. made

a below our expectations As our top you it Doug, and from on came first was adjusted at particularly $X.XX. the line, slightly challenging EPS heard quarter, in

that first bottom most strong most coupled had year-over-year quarter far environment, in and quarter would by difficult our comparison on segments, communicated retail our year be the likely a the challenges and the of performance the the with But both top current line. both from wholesale last we first

is this We case. continue that feel to the

However, materializing QX as is anticipated into originally challenging the QX was and change not projected. more trajectory slightly than

From saw react most of across the promotional to retail an increasingly peers. constrained our and consumer continue retail environment to perspective, a we discretionary

March a over-penetrate. weather pressured is all-important our support not seasonal Additionally, especially category peak we in we as had dominate This a product, Marpril which did for expectations. an holiday and

down to From adjustments. to stance assuming expectations, many of partners retail due with wholesale perspective, we our a were near-term inventory which a year conservative met last

detail let a me provide more Now our financial on bit results.

a environment. XXXX, compared of across For highly pressures the as promotional and a the the on first to to consumers, result aforementioned million tightening retail $XXX.X decreased primarily quarter, inventory XX.X% sales industry

quarter, quarter, were of U.S. the on XX% strong a comp the top pressures. the total the driven XX% For quarter of comps for in same retail by were retail specifically first down down XXXX. comps XX%

a up on However, XX% posting gain stacked comp on quarter, of a robust had top up comps X-year year. Canada last X%. comps were X% a basis, strong

particularly basis was a Finally, year's vincecamuto.com XXX positive compared first of last performance continued noteworthy which gross comps XX%. be year, of to of margin XX% points. with the was Consolidated X%, in comp last given the decrease to up gain XX.X% quarter

work saw the fixed quarter had rebuilding and deleverage deleverage While our in planned was environment also given store the of of last been we of some this doing decrease given cost. much promotional the business, fall year clearance since occupancy we our

gross margin consolidated the XXX gross compared than quarter with points to be importantly, robust More prepandemic to structurally of up more continues first XXXX. margins basis

to adjusted XXXX. ratio the first SG&A compared quarter the XX.X% for of sales in Our XX.X% first of quarter was

we a across find base in significant from Although continue have decrease business. opportunities deleveraged have to entire the our SG&A a trim we cut expense in to we sales, with costs XXXX as recognized

For the first prior X.X% was quarter, operating year. of X.X% to the compared profit adjusted sales in

$X.X million and XX.X% results net our XX.X% compared rate of For was year. expense the first on to effective we our interest quarter, had last tax adjusted

year. million diluted Our first or versus net million last or $XX.X income $X.XX $XX.X per $X.XX EPS quarter adjusted was

square year. $XXX.X compared first last basis, versus for ended we the acquisitions Topo year. adjusted retail quarter XXXX. have been the inventories ended last Wholesale and quarter We a $XXX.X first of million ended quarter to of XX% inventory. inventories the On down down would Keds, up first million the to quarter but inventory X% XX%, to footage Turning with the of

$XX.X of into availability which the $XXX.X the includes position liquidity, our with this our second quarter. We our feel million and total through manage we the good uncertainties we about As under was ended cash and cash heading of revolver million. year, inventory quarter

we draw available facility. As of had revolving on $XXX.X of the our the end million credit quarter, to

to $XX us of reminder, which CARES million the audits a years soon tax as continue the from of tax expect we due the to as Act IRS, As refund we remaining the applicable standard our receipt prior of await our conclude.

Before few I to share remarks updated I want conclude, a on our guidance.

the quarter quarter, with guidance spending the to our first pullback third soft discussed modest return in we growth and in year a the landing a a quarter. consumer original fourth the in half last assumed As through of

consumer slightly first be believe that the the With delayed. may performing in quarter linger, expectations we and uncertainty recovery our below continuing to spending discretionary

As we lowering a guidance. our are result,

managing We have tightening factors under the our inventories taken our the those appropriate prudently including manage steps to and expenses across control, board. up

this widening result, to a with squarely to lies guiding Accordingly, share. the the we $X.XX As are of largest reflect uncertainty our adjusted range guidance to an consumer. the of discretionary uncertainty and $X.XX are per EPS now

the QX. slightly we of end of slower As the year. slower-than-anticipated largest you expect, starts for might the segment the the balance consideration sales to In uncertainty Retail in start into contemplating U.S. remained taken high we year the to guidance, recovery experienced have our and in our that in QX

still last return Brands, that year U.S. this growth assumes Designer However, Keds, excluding mid-single fall versus digits sales year. More as at fall down in the patterns specifically, well. our to down buying in the a of range with the at to are when sales Retail digits to top last last result consolidated segment increasingly mid-single end sales comparables and the year, coupled the returns in normalized more easier to that, consumer net assumes a

the much our spring. given year closeout newly spring the comparables secured, experienced week the over elevated fiscal than we assumed doesn't This last we recover sales quickly. On delivering lower of have than relationship, comp guidance, calendar extra end lower consumer fall buys improved Nike performance in that have in would last our as result albeit in year, slightly and still the to the easier we opportunistic

range digits year. segment in end The down high single our sales in excluding also year, of consolidated sales retail the to Brands, low Keds, Designer to at our high assumes last last the at single digits U.S. down

business Canadian of business, continued the retail range. scenarios single made low that experiencing. is to within will to other sales recovery down digits we we've last flat our Regardless guidance be relatively the our post-COVID on the for touch now within year, I expect our to of the parts assumptions geography given

Additionally, anticipate Keds, vincecamuto.com external XX% approximately year, DTC wholesale, now conservative revising the entered expect Brands we our the flat which excluding relatively down given in and last fiscal our by are in our posture original XX% the XX% we our We still year. to to site segment, to guidance we be versus XXXX be with much. guidance down to to not

reminder, we the say international on Since has been Keds expect million fiscal a at acquisition the sales the acquisition, expected, as DTC, $XX continue of net and that Keds the to year. closed to multiple Canada. we million to including are Keds As of and pleased wholesale, beginning delivering add $XX approximately we to channels, across

result and that revised we highlighted should anticipating we these the a rate investments noted related $X.XX as weighted XX.X% EPS in million and an from profitability previously, the it acquisition sales, material at will range arrived are incremental As excited to guidance our for I not integration average sales these shares current and impact $X.XX the about recognize process. With estimated year are to be while of to a we of XX share. cost of tax year, approximately per this

of offer of impact just anticipated thoughtful with and discussed of Dutch the a earlier discussion discuss. After auction debt the that now tender announced related will excludes I the which represents in We and Dutch consideration expect and today management raise, we All our allow guidance that Board value launch effectively significant will shareholders. later increase auction today, us offer. and to Directors, our a own believe to efficiently for investment this stock our a we tender

in found common value prior our million The the details finalize price to loan of can share tender authorization. the the upon be intend release. offer. The a We share tender to up obtaining conditioned expiration agreement financing, to the between with of $XXX $XXX accompanying a at press term which of we repurchase per to offer look anticipated to our $X repurchase offer under million is A $X repurchase Class stock in and existing

continue support in we forward value and both as questions. growing will diversify be have wholesale our continuing of on to investments to emphasis operate challenging base excited to for with open our inventory our we retail acquisitions managing and our these I'm focus momentum that, call on As Operator? the we made a for about an times, looking segments. expense to revenue will up brand I these in navigate and the portfolio, well the as and continue uncertain and streams. With our levels we latest customers our

Operator

first question Instructions] Our from [Operator from Sole Jay UBS. comes

Jay Sole

elaborate of this little sales, can about sales, back a us on detail X% to if to of are _ Great. it Nike with off, to can have bit Nike? be Can of little that around came start I maybe X% mean bit Maybe you Nike? partnership I of going just full just tell together? you sales interested give I'm before a we how that some think level reversal with And elevation and maybe that, you of And helpful. if a go us would sort was

Douglas Howe

Doug. they've changes the be been in is -- we're great about months. Nike relationship in dialogue had to able Hey happen thanks very just for And women's them. It portfolio, men's, and that making QX. we're excited overall Obviously, ongoing to the back super among several the This are really the kids. excited That for obviously partners. with came will past across We've bring Jay, product teams that question. our the is elevating

the So customer. kind available of November to

been partners. So great again, they've

Big and evolve with focusing both of continue But partners business We're other excited with like obviously, build about in I that our to be that will opportunity, think, to to customer back. come, we'll given the just women's. their us, going excited #X men's, penetration kids. be well. digital. across them women's vote market And portfolio to obviously as on, and very able our that. that for I and partnership, said, We'll stores offer We're thoughtfully, share

Jay Sole

going maybe follow then just that. And on it. up Got to

about on guidance to -- a You just touch talked you the little bit. want

kind that the for happened? are and the talk of what increase also hasn't mentioned you there's the seeing said talk trajectory been in you hasn't You sort Can you've like where seeing what sort most then And just categories when perhaps like you in noticing you of about And you're that QX yet change business that anticipating of promotional environment, an promotions? materialized. what maybe increasingly in? about are

Douglas Howe

she's mean Doug is across spread seeing This with equally Jay. strength we're Thanks, That buoyancy right? men's, kids And trend points being casualization to I casual in it's very, their Yes. more us be just continues. It's fairly income, definitely much honest discretionary categories, really broad all very which in similar, with women's, again. pretty And based. the just area. you. the to to

on promotions, known of news to our obviously, there's like obviously, I we We've thoughtful to are control, manage for being when that rebounds. think able that, good our that very be that in We're been about value. feel the is through that. always parts

we [indiscernible] demand. want certainly that But a a believe rebalancing leaning the have to for as we're we competency. of both reasons on a had move lean as Teams the core back to bit just half done an inventory, So the think and lot into brand into We seeing on that of amazing I little of the casualization. of through year. job side retail side, the

Nike about So the own there. as in an launch then the about back TIGRE. be going able are our into space half fall with campaign. for of we really as excited time feel exciting the Le said, with relationship be move the really launching And elevating to marketing the doing teams we excited first to year. to brand Obviously, good athletic the an We're work

Operator

conference questions over to would [Operator the Instructions] queue. any concludes session. to no closing the in are back like There turn for Doug This remarks. more I our Howe question-and-answer

Douglas Howe

brand we through focused you Consistently, national you. continue Well, our relationship elevate obviously the through excited Thank with to on heard to We're Nike. product. are portfolio hopefully, our remarks.

forward I Le As we're said, launching TIGRE. looking to

forward you partners, athletic in dedication. hard brand thank I'll known just to next all our and of to and thanking progress updating also you us joining to began we brand space our August look of we've this that quarter. for thanks want And amazing I and for work their today, by I time where First close continued team year. in a launched our

Operator

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

You disconnect. now may

Designer Brands (DBI) 8 Jun 232024 Q1 Earnings call transcript