Designer Brands Inc., the parent of DSW, returned to profitability for the first time since the onset of COVID-19. Sales improved 45.6 percent against pandemic-depressed year-ago levels and the gross margin rate improved over the rate from the first quarter of 2019. Athleisure comparable sales in the U.S. Retail segment, or DSW, were up 92 percent in the first quarter year-over-year.

Roger Rawlins, CEO, stated, “Designer Brands is off to a strong start in fiscal 2021, highlighted by our return to profitability for the first time since the onset of COVID-19 and a positive comparable sales increase of 52 percent for the first quarter. Our success was driven by green shoots in areas of the business that had been previously affected by the pandemic, synergies from our vertical capabilities coming to life, which allowed us to capitalize on positive trends faster than ever before, and our assortment strategy focused on athleisure, kids and seasonal products.

“We remain focused on leveraging the flexibility of our business model, pivoting our assortment to athleisure to better match the purchasing habits of our customers, enhancing our digital capabilities, and strategically managing costs. Looking forward, we are optimistic that the positive trends will continue as the market recovers.”

First Quarter Results

  • Net sales increased 45.6 percent to $703.2 million in the first quarter of fiscal 2021 compared to the same period last year.
  • Comparable sales increased 52.2 percent for the first quarter of fiscal 2021 versus the 42.3 percent decrease for the same period last year.
  • Gross profit increased to $216.1 million in the first quarter of fiscal 2021 versus a gross loss of $26.5 million last year, and gross margin, as a percentage of net sales, was 30.7 percent as compared to negative 5.5 percent last year and 29.7 percent for the first quarter of fiscal 2019.
  • Reported net income in the first quarter of fiscal 2021 was $17.0 million, or $0.22 per diluted share, including net benefits of $0.10 per diluted share from adjusted items, primarily the change in the valuation allowance on deferred tax assets.
  • Adjusted net income in the first quarter of fiscal 2021 was $9.5 million, or $0.12 per diluted share.

Liquidity Highlights

  • Cash and cash equivalents totaled $49.3 million at the end of the first quarter of fiscal 2021 compared to $250.9 million for the same period last year, with $289.9 million available for borrowings under our senior secured asset-based revolving credit facility (“ABL Revolver”). Debt totaled $337.4 million at the end of the first quarter of fiscal 2021 compared to $393.0 million debt outstanding for the same period last year.
  • The company ended the quarter with inventories of $540.1 million compared to $533.6 million for the same period last year. Due to strong inventory controls, the company ended the quarter with total units on hand down 25 percent as compared to the same period last year.

Store Openings and Closings
During the first quarter of fiscal 2021, the retailer opened two stores and closed five in the U.S., resulting in a total of 516 U.S. stores. In Canada, it opened two stores with one closure resulting in a total of 145 Canadian stores.

Photo courtesy Designer Brands