Designer Brands Inc. posted weaker-than-expected sales in the first quarter, but made headway its in owned-brand penetration.
Net sales for the DSW-parent company decreased 10.7 percent to $742.1 million, short of analysts’ expectations of $754.28 million. Comparable sales decreased by 10.4 percent and adjusted net income was $14.3 million, with an adjusted diluted EPS of $0.21, which also fell short of analysts’ expectations.
DBI CEO Doug Howe said in a statement that while results were below the company’s expectations, DBI made progress in its goal to double sales from owned brands and Camuto Group national owned and licensed brands to almost one-third of total sales by 2026. Owned Brand penetration in Q1 grew to 26.7%.
“We continue to lean further than ever before into our Owned Brands, harnessing key and exciting moments to showcase our brands with engaging events and customer experiences,” Howe said.
In early February, DBI acquired the Keds brand from Wolverine Worldwide, adding to its existing roster that includes Topo Athletic and Le Tigre, both of which were acquired recently as well.
DBI closed two stores in the U.S. in Q1 and opened one new store in Canada. DBI operates 499 U.S. stores and 139 Canadian stores as of the end of the quarter.
Given the weaker than expected results, DBI lowered its full-year 2023 outlook and now expects net sales growth, excluding contributions from Keds, to be down in the mid- to high-single digits for the year, compared to previously issued guidance of down in the mid-single digits. Diluted EPS is expected in the range of $1.20 to $1.50, compared to a previously issued guidance of between $1.65 and $1.75.
“As the consumer remains cautious, we are approaching the remainder of the year and the trajectory of the recovery in our business with heightened consideration,” Howe said. “We are confident in our ability to continue to optimize those factors over which we have control, providing compelling products from our Owned Brands and an ideal national brand assortment to our customers seeking a wide range of styles.”