The quarter reflected ongoing progress in the company’s transformation strategy, supported by improved consumer demand, better in-store execution, and disciplined cost control.
Designer Brands Inc has posted a mixed Q3, with net sales down 3.2 per cent and comparable sales lower, yet profitability strengthened as gross margin rose to 45.1 per cent.
Net income reached $18.2 million.
Cash improved, debt fell, and inventories eased.
The company remains confident as strategic progress continues, despite forecasting a 3–5 per cent sales decline for FY25.
The reported net income reached $18.2 million, or $0.35 per diluted share. Adjusted net income, excluding one-off items, stood at $19.6 million, or $0.38 per diluted share, underscoring improved margin management, Designer Brands said in a press release.
The company closed the quarter with $51.4 million in cash, up from $36.2 million in the prior year, while maintaining access to $166.9 million in borrowing capacity under its asset-based revolving credit facility. Total debt decreased meaningfully to $469.8 million from $536.3 million last year, reflecting improved leverage discipline.
Inventories ended the quarter at $620 million, slightly lower than $637 million last year, aligning with demand trends and demonstrating better inventory management across the group.
The company operated 672 stores across the US and Canada, compared with 675 a year earlier. US DSW stores remained stable at 497 locations. The Canada Retail segment saw minor adjustments, with The Shoe Co and Rubino stores slightly rationalised, resulting in a modest reduction in total square footage. Total retail space stood at 11.046 million square feet versus 11.082 million last year.
“Our third quarter performance represents another meaningful step forward in our transformation, as we demonstrated continued sequential improvement across multiple financial and operating metrics,” said Doug Howe, chief executive officer at Designer Brands Inc. “Stronger consumer demand and improved in-store execution drove improved comparable sales in the third quarter compared to the second quarter. Our team also delivered a meaningful increase in gross profit and diligently managed expenses, which helped drive an increase in operating income over last year.”
“I am 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. While macroeconomic pressures persist, we are confident in our ability to navigate the near-term environment and continue making progress on our long-term strategies,” added Howe.
Designer Brands expects net sales for FY25 to decline between 3–5 per cent, reflecting continued caution in consumer spending and planned repositioning efforts. Adjusted operating profit is projected between $50 million and $55 million, while adjusted income tax expense is estimated at $8–10 million.
Fibre2Fashion News Desk (SG)
