Designer Brands, Inc., the parent of the DSW chain, reported sales grew 35.0 percent in the fourth quarter and 43.0 percent in the year.

Roger Rawlins, CEO, stated, “I am incredibly proud of all Designer Brands’ accomplishments this year. Our flexible business model supported by our dedicated and hardworking associates has allowed us to emerge from this unprecedented operating environment in a position of strength both strategically and financially. We now have the ability to quickly shift our assortment to match the product our consumer is demanding, and the infrastructure to meet that consumer wherever they are, which is powered by our best-in-class omnichannel capabilities.

“Looking forward, our growth strategy is centered around increasingly establishing ourselves as a builder and grower of brands, including our four major national brands, our premier quality exclusive brands and the rest of the top 50 brands in footwear. We are seeing aggressive growth in the sales of our owned brands in our direct-to-consumer channels of DSW, Shoe company and vincecamuto.com, which were up 98 percent in the fourth quarter versus the same period in 2020. In fact, one out of every four pairs of shoes that Designer Brands sold as an enterprise during 2021 was designed and sourced by our own team. We are constantly focused on going narrower and deeper with our inventory investments as we strive to continue to mitigate supply chain pressures, which we anticipate will further strengthen gross margin, speed to the customer and assortment differentiation. This strategy is anchored by our Customer, Brand and Speed initiatives, and we look forward to sharing additional details at our Investor Day on April 8, 2022.”

Fourth Quarter Operating Results
(unless otherwise indicated, all comparisons are to the fourth quarter of 2020)

  • Net sales increased 35.0 percent to $822.6 million.
  • Comparable sales increased by 36.9 percent.
  • Gross profit increased to $254.2 million in the fourth quarter of 2021 versus $135.0 million last year, and gross margin as a percentage of net sales was 30.9 percent as compared to 22.2 percent for 2020 and 24.8 percent for the fourth quarter of 2019.
  • Reported net income was $14.4 million, or diluted earnings per share (EPS) of $0.19, including net benefits of $0.04 per diluted share from adjusted items, primarily related to the change in the valuation allowance on deferred tax assets.
  • Adjusted net income was $11.7 million, or diluted EPS of $0.15.

Sales of  $822.6 million came in below Wall Street’s consensus estimate of $837.2 million. Adjusted earnings of 15 cents were below Wall Street’s consensus estimate of 16 cents. 

Full Year Operating Results
(unless otherwise indicated, all comparisons are to the full year 2020)

  • Net sales increased 43.0 percent to $3.2 billion.
  • Comparable sales increased by 51.6 percent.
  • Gross profit increased to $1.1 billion compared to $311.2 million in 2020, representing an over 240 percent increase year-over-year, and gross margin as a percentage of net sales was 33.4 percent as compared to 13.9 percent last year and 28.6 percent in 2019.
  • Reported net income was $154.5 million, or diluted EPS of $2.00, including net benefits of $0.30 per diluted share from adjusted items, primarily related to the change in the valuation allowance on deferred tax assets.
  • Adjusted net income was $131.2 million, or diluted EPS of $1.70.

Liquidity Highlights

  • Cash and cash equivalents totaled $72.7 million at the end of 2021, compared to $59.6 million at the end of 2020, with $395.1 million available for borrowings under its senior secured asset-based revolving credit facility (“ABL Revolver”). Debt totaled $225.5 million at the end of 2021 compared to $334.8 million at the end of 2020.
  • On February 8, 2022, we voluntarily settled in full the $231.3 million principal amount outstanding under its senior secured term loan (Term Loan). The settlement of the Term Loan and a $6.9 million prepayment premium were made primarily from proceeds from borrowings under the ABL Revolver.
  • The company ended the year with inventories of $586.4 million compared to $473.2 million at the end of 2020.

Store Openings and Closings
During the fourth quarter of 2021, the company closed seven stores in the U.S. and four stores in Canada with no new stores opened, resulting in a total of 508 U.S. stores and 140 Canadian stores as of the end of 2021.

Outlook for 2022
The company has announced the following guidance for the full year 2022:

  • Comparable sales growth in the high-single-digits; and
  • Diluted EPS in the range of $1.75 to $1.85

Designer Brands is a portfolio of retail concepts in nearly 650 locations under the DSW Designer Shoe Warehouse and The Shoe Company banners. The company designs and produces footwear and accessories through Camuto Group, a manufacturer selling in more than 5,400 stores worldwide. Camuto Group owns licensing rights for the Jessica Simpson footwear business and footwear and handbag licenses for Lucky Brand. In partnership with a joint venture with Authentic Brands Group (ABG), the company also owns a stake in Vince Camuto, Louise et Cie and other brands.

Photo courtesy DSW/Lucky Brands