Shares of Designer Brands Inc. dropped in pre-market trading on Tuesday after the shoe retailer reaffirmed its guidance for the year, which falls below analysts’ expectations.
According to the DSW parent company, net sales in the first quarter of fiscal 2026 increased 1.4 percent to $696.35 million, up from $686.91 million the same time last year. Net income in Q1 was $1.2 million, or 2 cents per share. Earnings, adjusted for one-time gains and costs, came to $3.8 million, or 7 cents per share. The modest gain was tempered by a comparable sales decline of 1.1 percent.
This performance was in-line with analysts’ expectations, which called for net sales in the quarter to be between $695 million to $698.63 million, with earnings per share between 2 cents and 5 cents, according to Yahoo Finance.
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By segment, the company’s brand portfolio jumped 19.4 percent in the quarter to $114.5 million, up from $95.9 million the same time last year. However, the company’s retail division reported net sales dipped 0.1 percent to $626.68 million, down from $627.15 million the prior year period.
As of May 2, the company ended the first quarter of 2026 with 663 stores, or 518 DSW locations, 118 The Shoe Co. doors and 27 Rubino stores.
Doug Howe, chief executive officer of Designer Brands Inc., said in a statement that the company had a “strong start” to the year, which was underscored by double-digit sales growth in the brand portfolio segment and “encouraging stabilization” in the retail segment.
“In addition to top-line strength, we delivered meaningful profitability gains, with gross margin expanding 240 basis points, reflecting the structural improvements we have made across inventory management, pricing discipline, sourcing, and channel profitability,” Howe noted.
Looking ahead, the company is reaffirming its guidance for fiscal 2026 with net sales expected to be in the range of down 1 percent to up 1 percent, with diluted earnings per share at between 28 cents to 38 cents.
Analysts are expecting earnings per share for the year at between 35 cents to 45 cents, according to Yahoo Finance, which set the company’s stock down over 16 percent in pre-market trading on Tuesday.
“Following our encouraging start to the year, we believe in our ability to achieve the high end of our fiscal 2026 EPS guidance range, even amidst ongoing uncertainty in the macroeconomic environment,” Howe added. “We believe our strategic actions will continue to strengthen our foundation of the business and position us well for long-term profitable growth.”
