MW DSW parent's stock tumbles as cash-strapped consumers spend less on winter footwear

By Ciara Linnane

Designer Brands misses profit estimates for a fourth straight quarter amid weakness in dress and seasonal categories

Designer Brands Inc.'s stock tumbled 20% early Tuesday, after the parent of DSW shoe stores' latest earnings fell short of estimates, as its cash-strapped consumer continued to curb spending and warmer-than-usual weather crimped sales of winter offerings.

It was the fourth straight profit miss and third straight sales miss for the troubled company, which has sought to offset weakness in seasonal and dress categories with a greater focus on athleisure offerings.

The stock is now headed for the lowest price since Nov. 2, 2020.

"The third quarter started strong, driven by back-to-school season and the success of our athletic and athleisure offerings, bolstering our confidence that we had reached a turning point in our business," Chief Executive Doug Howe said in prepared remarks.

"However, we had a difficult transition into the fall season, with unseasonably warm weather and ongoing macroeconomic uncertainty placing pressure on consumer discretionary spending, specifically in our seasonal category," he added.

The company posted net income of $13.0 million, or 24 cents a share, for the quarter to Nov. 2, up from $10.1 million, or 17 cents a share, in the year-earlier period. Adjusted per-share earnings came to 27 cents, below the 35-cent FactSet consensus.

Sales fell to $777.2 million from $786.3 million a year ago, also below the FactSet consensus of $802.0 million.

Same-store sales fell 3.1%, while FactSet expected a 1.5% gain.

Howe cited industry data that suggested footwear sales excluding boots remained flat in the quarter compared with the prior year, while U.S. retail segment sales excluding boots grew 8% to outpace the broader segment.

"This gives us further confidence that we are investing our time and resources into the right areas as we continue to transform our business," he said.

The company again lowered guidance for the full year and said it expects sales to be down in low-single-digits, compared with prior guidance for flat to up in low-single digits.

It expects adjusted EPS to range from 10 cents to 30 cents, down from prior guidance of 50 cents to 60 cents.

The stock $(DBI.AU)$ has fallen 35% in the year to date, while the S&P 500 SPX has gained 27%.

-Ciara Linnane

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December 10, 2024 07:44 ET (12:44 GMT)

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