Financial Highlights Designer Brands Inc. Unveils Q4 and Fiscal Year 2023 Performance

Designer Brands Inc. (NYSE: DBI), a prominent player in the global footwear and accessories market, has released its financial performance for the quarter and fiscal year ending February 3, 2024.

Doug Howe, the Chief Executive Officer, commented on the company’s robust end to the year, exceeding the upper limit of their revised EPS guidance range. This success was primarily driven by the strength in the brand portfolio segment, fueled by strategic acquisitions and new launches. However, despite this positive outcome, 2023 posed challenges due to market softening, a highly promotional retail landscape, and adverse weather conditions affecting seasonal sales.

Looking forward to 2024, the company anticipates a pivotal transition period focused on reigniting growth across all business segments. Their strategy encompasses curating a fresh and trend-oriented product assortment, enhancing the shopping experience for customers across various channels, and implementing operational enhancements, supported by new talent acquisitions. These initiatives are expected to drive improved financial performance throughout the year, coupled with prudent cost-saving measures aimed at sustaining robust cash flow generation.

Here are the key highlights from the fourth quarter:

  • Net sales saw a slight decrease of 0.8% to $754.3 million.
  • Total comparable sales experienced a decline of 7.3%.
  • Gross profit amounted to $207.4 million, with a gross margin of 27.5%, down from 29.2% compared to the same period last year.
  • Reported net loss attributable to Designer Brands Inc. stood at $29.7 million, or a loss per diluted share of $0.52, including after-tax adjustments primarily related to impairment charges.
  • Adjusted net loss was $25.3 million, or $0.44 loss per diluted share.

For the full fiscal year 2023:

  • Net sales dropped by 7.3% to $3.1 billion.
  • Total comparable sales decreased by 9.0%.
  • Gross profit was $1.0 billion, with a gross margin of 31.7%, down from 32.6% compared to the previous year.
  • Reported net income attributable to Designer Brands Inc. was $29.1 million, or diluted earnings per share (“EPS”) of $0.46, including after-tax adjustments primarily related to restructuring and integration costs.
  • Adjusted net income stood at $43.2 million, or adjusted diluted EPS of $0.68.

In terms of liquidity:

  • Cash and cash equivalents totaled $49.2 million at the end of 2023, with $160.9 million available for borrowings under their credit facility.
  • Net cash provided by operating activities was $162.4 million for 2023.
  • Inventories amounted to $571.3 million at the end of 2023.

Return to shareholders:

  • The company repurchased 9.7 million Class A common shares during 2023, totaling $102.2 million.
  • A dividend of $0.05 per share of Class A and Class B common shares will be paid on April 12, 2024.

Regarding store operations:

  • In the fourth quarter of 2023, one store was opened, one was closed in the U.S., and one was closed in Canada, resulting in a total of 499 stores in the U.S. and 143 stores in Canada as of February 3, 2024.

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