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Warm weather impacts sales at Designer Brands, lowers outlook

By Prachi Singh

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Business

Designer Brands Inc. said total revenue for the third quarter increased by 12.4 percent, including 137.5 million dollars in revenue from the Brand Portfolio segment, which includes 25.6 million dollars in intersegment revenue that is eliminated in consolidation. Comparable sales increased 0.3 percent compared to a 7.3 percent increase in the third quarter of fiscal 2018. Reported net income was 43.5 million dollars or 60 cents per diluted share, and adjusted net income was 48.6 million dollars or 67 cents per diluted share. The company lowered its full year outlook for adjusted EPS in the range of 1.50 dollars to 1.55 dollars per diluted share, compared to its previous range of 1.87 dollars to 1.97 dollars per diluted share.

Commenting on the third quarter, Roger Rawlins, the company’s Chief Executive Officer, stated: “We faced several meaningful headwinds during the third quarter that impacted our results and will likely continue for the upcoming quarters. The near-record warm weather during our largest and most profitable quarter affected every segment of our business. We are continuously seeking ways to increase our market share, while reducing costs across our entire organization and mitigating tariffs.”

Review of Designer Brands’ nine months operating results Total revenue for the nine months increased by 14.3 percent, including 345 million dollars in revenue from the Brand Portfolio segment, which includes 53.8 million dollars in intersegment revenue that is eliminated in consolidation. Comparable sales increased 0.8 percent compared to last year’s 6.3 percent increase.

Reported gross profit, as a percent of net sales, decreased by 190 bps. Reported net income was 102.1 million dollars or 1.36 dollars per diluted share, including pre-tax charges totalling 19.3 million dollars or 21 cents per diluted share, while adjusted net income was 117.9 million dollars or 1.57 dollars per diluted share.

The company’s board of directors declared a quarterly cash dividend of 25 cents per share to be paid on January 3, 2020 to shareholders of record at the close of business on December 20, 2019.

The company expects full year revenue to increase in low double digits, and comparable sales to remain flat on the previous year.

Picture:DSW website

Designer Brands
DSW