Designer Brands Inc. is showing sequential improvement again, and investors are thrilled.
Shares of Designer Brands, which reported earnings before the markets opened, spiked up 31.1 percent, or $1.51, to $6.36 in Tuesday’s mid-morning trading session.
“Our third quarter performance represents another meaningful step forward in our transformation, as we demonstrated continued sequential improvement across multiple financial and operating metrics,” Designer Brands’ CEO Doug Howe said.
Howe noted that stronger consumer demand and improved in-store execution helped to drive “improved comparable sales in the third quarter compared to the second quarter.”
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Second quarter results also represented sequential improvement from the first quarter.
“I’m encouraged that this positive momentum has extended into the early part of the fourth quarter, reinforcing the progress of our strategic initiatives and positioning us well as we close out the year,” Howe said.
The CEO noted that while macroeconomic pressures continue, the company is confident in its ability to “navigate the near-term environment and continue making progress on our long-term strategies.”
For the third quarter ended Nov. 1, net income jumped up 40 percent to $18.2 million, or 35 cents a diluted share, from $13.0 million, or 24 cents, a year ago. On an adjusted basis, net income was $19.6 million and the adjusted diluted earnings per share (EPS) was 38 cents. Net sales fell 3.2 percent to $752.4 million from $777.2 million. Total comparable sales were down 2.4 percent.
Wall Street was expecting adjusted diluted EPS of 18 cents on revenue of $763.4 million.
For the quarter, gross profit rose to $339.6 million from $333.8 million in the same year-ago quarter, while gross margin was 45.1 percent versus 43.0 percent a year ago.
For the nine months, net income fell 57.9 percent to $11.6 million, or 23 cents a diluted share, from $27.6 million, or 48 cents, a year ago. Net sales were down 5.1 percent to $2.18 billion from $2.3 billion.
The company provided an update to its fiscal 2025 outlook and now expects net sales to be down 3 percent to 5 percent, with adjusting operating profit at between $50 million to $55 million.
The company eded the quarter with a total of 672 stores. There were 497 DSW locations across the U.S. The Canadian retail business operated 175 stores, with 27 under the DSW banner, 120 under The Shoe Co. nameplate and 28 Rubino stores.
A number of initiatives at the DSW banner include a repositioning of the brand, partnering with DoorDash and improving in-stocks at stores. The repositioning also included DSW’s new “Let Us Surprise You” campaign.
