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Designer Brands announces cautious outlook for fiscal 2023

Mar 21, 2023 United States
Designer Brands announces cautious outlook for fiscal 2023
Following a slower fourth quarter, the North-American company is expecting a decline in earnings and sales for fiscal 2023, accounting for the volatile macroeconomic environment
“Our 2022 results clearly showcase the power and success of our brand-building strategy with our Owned Brands growing over 32% to last year while delivering gross margins 400 basis points higher than those we saw in 2019. These results showcase the successful execution of our strategy. I am incredibly proud of our team and their tireless efforts, and I am excited about what lies ahead for Designer Brands”, commented Roger Rawlins, Chief Executive Officer.

Fourth Quarter Results

In the three months to the 28th of January, the company's net sales totalled 760.6 million US dollars, reflecting a decline of 7.5%, as compared to the same period of fiscal 2021. In this period, comparable sales were down by 5.5%.

Designer Brands reported that, in the last quarter of fiscal 2022, net sales in the US retail segment decreased by 9.5% to 648.3 million US dollars, whilst the brand portfolio segment recorded a decline of 56.45 million US dollars, on a comparable basis to a similar period of the prior fiscal year. Sales in the Canada retail segment, instead, grew by 7.3%, reaching 66.35 million US dollars, year-over-year.

In the fourth quarter of last fiscal year, the company's gross profit amounted to 222.0 million US dollars and the gross margin was 29.2%, as compared to a gross profit of 254.2 million US dollars and gross margin of 30.9% registered in the same quarter of fiscal 2021.

Reported net income attributable to Designer Brands in this quarter was 45.1 million US dollars, or diluted earnings per share of 0.66 US dollars, on a comparable basis to the net income of 14.41 million US dollars, or 0.19 US dollars per diluted share, reported for the same period of the previous fiscal year. Adjusted net income in the period was 4.7 million US dollars, or adjusted diluted earnings per share of 0.07 US dollars.

Full Year Results

Over fiscal 2022, Designer Brands' net sales reached 3.3 billion US dollars, up by 3.7% as compared to the prior fiscal year. Comparable sales in this period rose by 4.4%.

In the twelve months to the 28th of January, the company's net sales in the brand portfolio segment grew by 14.6%, amounting to 327.7 million US dollars, on a comparable basis to fiscal 2021. Net sales in the US retail segment increased very slightly by 0.8% to 2.79 billion US dollars, while the Canada retail segment posted a net sales growth of 20.6% to 283.2 million US dollars, year-over-year.

Designer Brands reported that gross profit was flat last year at 1.1 billion US dollars, and that gross margin dropped to 32.6% over fiscal 2022, as compared to 33.4% in the previous year.

Reported net income attributable to the company last year was 162.7 million US dollars, or diluted earnings per share of 2.26 US dollars, on a comparable basis to a net income of 154.4 million US dollars, or 2.00 US dollars per diluted share, registered over fiscal 2021. Accordingly, adjusted net income last year totalled 133.7 million US dollars, or adjusted diluted earnings per share of 1.85 US dollars.

Fiscal 2023 Outlook

For fiscal 2023, the company is expecting a net sales decline by mid-single digits, while its incremental net sales from the Keds acquisition should reach 75 to 85 million US dollars. Diluted earnings per share are anticipated between 1.65 US dollars to 1.75 US dollars, down from the diluted earnings per share of 2.26 US dollars just reported.

“Although we are navigating through a volatile environment, we are well-positioned to offer great value and a diverse assortment of product to our customers as we head into 2023. We will continue to be prudent in managing our expenses and inventory and drive growth in our portfolio of increasingly diversified Owned Brands”, concluded Doug Howe, President of DSW and incoming Chief Executive Officer.


Image Credits: drapersonline.com

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