DSW Inc. presented the company’s three-year strategic priorities designed to leverage its business model to unlock value and deliver 2021 adjusted earnings per share in the range of $2.65 to $2.75. The company also unveiled its new corporate name – Designer Brands Inc. – which supports its new vision for the future following its acquisition of Camuto Group.
“The long-term plan we announced today represents a new chapter for our company as we take greater control of our destiny in today’s changing retail landscape. Over the next three years and beyond, we will leverage our integrated enterprise to continue delivering differentiated products and experiences while significantly expanding our gross margin by bringing the production of our private brands in-house through our industry-leading Camuto Group and increasing the sales penetration of all of our produced brands across our retail channels,” stated Roger Rawlins, chief executive officer of Designer Brands, in a statement. “We look forward to continuing to drive innovation and increase market share by delivering positive comp sales while also growing complementary categories and markets.”
Rawlins continued, “With DSW’s world-class omni-channel capabilities and loyal customer base, combined with Camuto Group’s leading design and sourcing capabilities and The Shoe Company’s powerful last-mile solution, Designer Brands has a strong platform to grow and lead the footwear market.”
As outlined in today’s presentations, Designer Brands’ strategic priorities over the next three years include:
Controlling Designer Brands’ Destiny through Differentiated Products and Experiences
- Build exclusive brands and products for DSW¡ and The Shoe Company through Camuto Group’s design and sourcing capabilities;
- Expand services including DSW’s partnership with the W Nail Bar, as well as custom insoles, shoe repair and shoe concierge, while exploring new opportunities;
- Enhance and build upon DSW’s award-winning VIP loyalty program with new features; and
- Leverage DSW’s loyalty expertise and infrastructure to launch a new loyalty program for The Shoe Company.
Grow Market Share through Positive Comparable Store Sales, New Direct-to-Consumer Opportunities and Continued Partnership with Other Retailers
- Leverage Designer Brands’ business model to continue participating in 5 percent of all footwear transactions in North America;
- Deliver consistent low single-digit comparable retail sales collectively across the enterprise;
- Grow the Kids business at DSW;
- Leverage DSW’s digital expertise and infrastructure to meaningfully increase digital sales penetration for The Shoe
- Company and Camuto Group’s direct-to-consumer business; and
- Strengthen relationships with and enhance performance of Camuto Group’s retail partners.
Leveraging the Scale of the Designer Brands Enterprise
- Capitalize on increased buying power, leverage and production cost insights with vendors;
- Optimize inventory management, including pursuing cross-border and inter-segment opportunities; and
- Drive operational excellence and efficiencies through shared best practices.
Fiscal 2021 Financial Objectives and Fiscal 2019 Outlook
The company provided its financial expectations for 2021, as follows:
- Achieve adjusted earnings per share in the range of $2.65 to $2.75
- Achieve approximately 5.5% revenue CAGR
- Generate consistent low single-digit comparable store sales growth
- Improve gross profit by 240 basis points from 2018 level
- Target $800 million cumulative cash flow over the next three years
- Drive improved operating income across its three segments over the next three years, including:
- 13% operating income CAGR at DSW
- 19% operating income CAGR at The Shoe Company
- $26 million operating income growth at Camuto Group
For fiscal 2019, which is the 52-week period ending February 1, 2020, the Company expects to achieve low double-digit revenue growth as compared to fiscal 2018 revenue of $3.2 billion, which included a $189 million contribution from the Canada Retail segment and a $96 million contribution from the new Brand Portfolio segment. The Company anticipates increasing comparable store sales in the low single-digit range.
Fiscal 2019 adjusted earnings per share is expected to range between $1.80 to $1.90. This represents year-over-year earnings growth of 5% to 11% excluding fiscal 2018 losses from the wind-down of operations of exited business and including fiscal 2018 estimated losses for the first quarter of the Canada Retail segment and three quarters of the Branded Portfolio segment. The Company’s outlook assumes a tax rate of approximately 27% and approximately 81 million shares outstanding.
New Corporate Name
Effective today, the parent company, DSW Inc. becomes Designer Brands. In conjunction with its corporate name change, Designer Brands will change the Company’s ticker symbol from “DSW” to “DBI,” effective at the start of trading on April 2, 2019, which has been approved by the New York Stock Exchange. As of that date, the “DSW” trading symbol will no longer be active. No action is needed from the Company’s current shareholders relative to the ticker symbol change.