On December 5, 2023, Designer Brands Inc. (DBI, Financial) released its 8-K filing, detailing the financial outcomes for the third quarter ended October 28, 2023. The company, a leading entity in the footwear and accessories market, faced significant challenges including a contraction in the footwear market and unseasonably warm weather, which led to a decrease in customer demand for shoes.
Financial Performance Overview
DBI's net sales saw a reduction of 9.1%, amounting to $786.3 million, with total comparable sales also decreasing by 9.3%. Gross profit declined to $256.4 million compared to $285.8 million in the previous year, and gross margin slightly decreased to 32.6%. The reported net income attributable to DBI was $10.1 million, or $0.17 per diluted share, which includes after-tax charges from restructuring and CEO transition costs. Adjusted for these items, the net income was $14.8 million, or $0.24 per adjusted diluted EPS.
Liquidity and Cash Flow
Cash and cash equivalents stood at $54.6 million at quarter's end, with $213.3 million available under the senior secured asset-based revolving credit facility and $85.0 million under the new term loan credit agreement. The company's debt decreased to $375.5 million from $415.5 million year-over-year. Notably, net cash provided by operating activities for the first nine months was $202.5 million, a significant increase from $37.9 million in the same period last year.
Shareholder Returns and Store Operations
DBI continued its commitment to shareholder returns, repurchasing 7.6 million shares for $79.7 million and announcing a dividend payment of $0.05 per share. Store operations saw the opening of one store in the U.S. and six in Canada, bringing the total to 499 U.S. stores and 144 Canadian stores.
Outlook and Strategic Initiatives
Despite the current pressures, CEO Doug Howe expressed a commitment to innovation and returning to the company's roots as a fashion footwear retailer. The company is executing several initiatives, including assortment refreshment and new marketing strategies, to reinforce its business. DBI is also making progress in positioning for long-term success while maintaining strong cash flow and liquidity.
Updated 2023 Financial Outlook
DBI reaffirmed its guidance for the full year 2023, with net sales growth, excluding Keds, expected to be down by high-single digits. The incremental net sales from the Keds acquisition are projected to be between $60.0 million and $70.0 million. Diluted EPS, excluding Keds, is anticipated to be between $0.40 and $0.70.
Conference Call and Webcast
The company hosted a conference call to discuss the results, providing investors and analysts with the opportunity to engage directly with DBI's management team. A live webcast was also available, with an archived version accessible until December 19, 2023.
Designer Brands Inc. (DBI, Financial) is navigating a challenging economic landscape with a focus on strategic initiatives and maintaining financial stability. As the company adapts to market conditions and consumer preferences, it remains committed to delivering value to its shareholders and positioning itself for future growth.
Explore the complete 8-K earnings release (here) from Designer Brands Inc for further details.
