Designer Brands Inc., the parent company of the DSW, The Shoe Co., and Rubino retail brands, and owner of the Topo Athletic, Keds, Le Tigre, Hush Puppies, and other footwear brands, ended the 2025 fiscal year with fourth quarter net sales coming in flat year-over-year. Impressive gross margin expansion drove full year Adjusted operating income that significantly surpassed the high end of the company’s guidance.

DBI shares were down in the high single digits in pre-market trading on Thursday, March 26 as comp store sales in the Retail segment, which includes the DSW, The Shoe Co., and Rubino retail banners, swung to a decline in the fourth quarter and greatly expand the decline for the full year. Still, the stock recovered quickly to improve in the mid-singles percentage following the obligatory quarterly conference call with analysts, most likely due in part to some cost rightsizing the company did in its Retail segment.

Company CEO Doug Howe  shared with the call participants that they recently brought the U.S. and Canada Retail businesses under a streamlined reporting structure. He said this will enable better collaboration and integration of operations across the three retail banners.

“As part of these changes, we have rightsized our shared services organization to appropriately support the business moving forward,” the CEO shared.

“Our fourth quarter and fiscal 2025 results reflect disciplined execution as we strengthened the business and delivered sequential improvement across key financial metrics throughout the year,” Howe said in the initial earnings release.

Comparable store sales were reported as follows:

Fourth Quarter Summary
The company reported net sales were $713.6 million for the fourth quarter ended January 31, 2026, essentially flat to the prior-year Q4 period level. Total comparable sales decreased by 1.9 percent year-over-year (y/y), cycling against a 0.5 percent comp sales increase in the prior-year Q4 period.

  • Retail net sales, which generated 88.3 percent of total segment sales, were down 0.1 percent y/y to $655.9 million in Q4 2025. Comparable sales down 1.7 percent y/y in Q4, which was described as an improvement from down 2.1 percent in the 2025 third quarter.
  • Brand Portfolio net sales were up 5.3 percent y/y to $91.9 million for the quarter, driven by a 42 percent increase in the Topo Athletic business and a 17 percent increase in the Jessica Simpson business. Howe said they remain encouraged by the underlying growth trajectory inherent in each of these brands.

Consolidated gross profit increased to $302.7 million, or 42.4 percent of net sales, in Q4 2025, compared to $282.6 million, or 39.6 percent of net sales, in the prior-year period. That a 280-basis-point improvement year-over-year was driven by stronger IMU (initial mark up), fewer markdowns and lower shipping costs, according to comments from the company’s new EVP & CFO, Sheamus Toal.

  • Retail segment gross margin expanded 140 basis points y/y to 41.9 percent of segment net sales in Q4, compared to 40.5 percent in the 2024 Q4 period.
  • Brand Portfolio segment gross margin improved 80 basis points y/y to 28.3 percent of net sales in Q4, compared to 27.5 percent in the prior-year Q4 period.

Consolidated operating loss for the quarter shrank $11.6 million, or 45.0 percent to a loss of $14.2 million, compared to an operating loss of $25.9 million in the prior-year period. Total segment operating profit was 4.5 percent of segment net sales, amounting to $33.6 million in Q4, compared to $20.0 million in the fiscal 2024 Q4 period. Adjusted operating loss was $11.0 million compared to a loss of $23.5 million in the prior-year period.

  • Retail segment operating profit grew 22.3 percent y/y to $29.9 million in Q4, compared to $24.5 million in Q4 2024. Retail operating margin checked in at 4.6 percent of sales in Q4, compared to 3.7 percent in the prior-year period, a 90 basis-point improvement year-over-year.
  • Brand Portfolio segment operating profit swung to the positive in the fourth quarter, from a segment operating loss of $4.4 million in fiscal Q4 2024 to $3.7 million in segment operating profit in the most recent quarter. Segment operating margins were 4.0 percent of segment net sales in Q4, compared to negative 5.1 percent in the prior-year period. This is the first profitable quarter for the Brand Portfolio segment.

Reported net loss attributable to Designer Brands Inc. was $20.0 million, or a loss per diluted share of 40 cents.

Adjusted net loss was $15.6 million, or 31 cents loss per diluted share.

Fiscal 2025 Full-Year Summary
For the full year, total company sales declined 3.9 percent compared to the prior year, coming in towards the high end of the company’s guidance range. Full-year comp sales were down 4.3 percent year-over-year, stacking on top of a 1.7 percent decrease in the 2024 fourth quarter.

“Notably, we delivered full year adjusted operating income of $65 million, significantly above our guidance range of $50 million to $55 million, driven by an improvement in fourth quarter sales trends, continued gross profit expansion and disciplined expense management that resulted in a $26 million reduction in adjusted operating expenses compared to last year,” Howe commented on the conference call.

For the full year, total sales declined 3.4 percent with comparable sales declining 3.9 percent y/y. Comp sales reportedly improved throughout the year, driven by positive in-store sales trends.

For the full year, Brand Portfolio sales were down 9 percent, reflecting headwinds in the first half of the year, with performance improving as the year progressed. A clear standout performance came from Topo, which Howes said continued to drive impressive growth, up 46 percent on the year and more than doubling the size of the business compared to two years ago.

Gross profit decreased to $1.26 billion in 2025, compared to $1.29 billion last year. Gross margin was 43.6 percent of net sales, compared to 42.7 percent last year. The 90-basis-point improvement year-over-year was driven by favorable merchandise margin and increased efficiency in the company’s digital order fulfillment operations, Toal noted.

Full year Adjusted operating profit was $65.2 million compared to $67.3 million last year.

“While full year Adjusted operating income declined slightly year-over-year, we were encouraged by the progress we made in the back half of 2025, delivering an increase in adjusted operating income of over $15 million versus 2024 across Q3 and Q4 collectively to come in at above the high end of our guidance range for the full year,” Toal elaborated.

Reported net loss attributable to Designer Brands Inc. was $8.4 million, or a loss per diluted share of 17 cents. Adjusted net income was $8.3 million, or Adjusted diluted earnings per share of 16 cents.

Balance Sheet Summary

  • Cash and cash equivalents totaled $50.9 million at the end of fiscal 2025, compared to $44.8 million at the end of fiscal 2024, with $101.1 million available for borrowings under our senior secured asset-based revolving credit facility.
  • Debt totaled $435.0 million at the end of fiscal 2025, compared to $491.0 million at the end of fiscal 2024.
  • Inventories totaled $563.5 million at the end of fiscal 2025, compared to $599.8 million at the end of fiscal 2024.

Stores
In addition to the momentum seen in existing stores, Howe said they were encouraged by the early learnings from new stores that opened in 2025.

“Over the course of the year, we opened 13 stores and remodeled four stores in total,” he detailed. “While not all of these projects included the full suite of experimental features, each incorporated enhancements to improve merchandise, customer flow and overall store experience. The initial customer reaction has been strong with notably higher conversion and traffic. We will continue refining these concepts as we move forward by leveraging data and customer feedback to scale what works to further elevate the DSW in-store experience across our footprint.”

Store Count

Outlook
The company has announced the following guidance for the full year 2026:

“As we enter fiscal 2026, we remain focused on our strategic priorities, executing the initiatives within our control, and building on the momentum we’ve established. We believe this focus will drive continued improvement in both sales and profitability over the long-term,” CEO Howe said.

“Our refreshed merchant leadership team has made incredible progress in shaping our 2026 assortment,” he said on the call. “We are doubling down in areas of strength and leaning into encouraging trends in fashion across dress, boots and affordable luxury. These categories are resonating with our customers. This will be supplemented by our efforts to build and scale our Brand Portfolio. We are also planning strong growth in categories adjacent to footwear such as beauty, wellness, hydration, socks and sunglasses.”

To further support the company’s initiative to add newness to its product offerings at retail, they are now working closely with a consumer-focused investment bank focused on emerging consumer brands called Consensus, which runs the Great Brands program, which Howe called “a preeminent platform for emerging consumer brands in North America.” He said the partnership enables DBI to thoughtfully identify and introduce new relevant brands within leading categories while also “expanding into adjacent non-footwear categories that encourage customer discovery and exploration.”

Howe continued, “Through this relationship, we gain early access to emerging brands that align closely with our customer and our brand vision. By infusing our assortment with this targeted newness, we reinforce our Let Us Surprise You brand positioning, strengthen differentiation and ensure our assortment remains dynamic and aligned with evolving customer preferences.”

He said these product strategies are enabled by a heightened focus on end-to-end inventory optimization across planning, allocations and digital order fulfillment. “These efforts are designed to drive healthier margins, improve in-stock rates, support store conversion and lower supply chain costs in 2026.” he noted.

“In 2026, we will continue to build and scale our [Brand] Portfolio, a strategy which will in turn, supplement our strategic priority of focusing on merchandise that matters,” Howe continued in his look ahead commentary. “We’re very excited about the renewed focus on our exclusive brands, which are only sold at DSW. These brands serve as a strategic tool for us to increase profitability via vertical integration and strengthen the DSW brand. We believe we are well positioned to deliver meaningful sales growth in 2026, highlighted by opportunities to amplify trends in the dress and boot categories.

“Topo’s sales trajectory continues to be strong as the brand executes against ambitious growth plans,” Howe said. “We’re confident this momentum will continue in 2026. Growth will be driven by core franchises as well as new product launches that further elevate Topo’s brand positioning. We expect to continue expansion of the brand’s footprint within existing partners as well as opening additional points of distribution with new customers, with a particular focus on specialty running.”

With Keds, he said 2025 was the year where they sharpened the product design to improve comfort and fit across the assortment while also focusing on building the profitability of the brand. “We’re now looking forward to accelerated growth in 2026,” Howe added. “We plan to drive this through expanded wholesale distribution with a focus on value as well as from our direct-to-consumer digital business where we are seeing positive signs so far this year.”

Jessica Simpson has apparently capitalized on the recent apparent resurgence of trends in the dress category. “Additionally, we have diversified into the boot category and lowered heel heights in key dress styles in an effort to strategically appeal to a larger audience. We are confident that this evolved product strategy will continue to drive momentum with this brand in 2026,” the CEO commented.

“Throughout the Brand Portfolio, we are pleased with the progress we’ve made in building a profitable foundation and are looking forward to advancing our efforts to drive sustainable growth in 2026 and beyond,” Howe concluded.

Data and tables courtesy Designer Brands Inc., Image courtesy Topo Athletic