Designer Brands, Inc., the parent of DSW, reported that earnings on an adjusted basis fell 2.3 percent in the second quarter ended August 2 as comparable store sales declined 5.0 percent. Earnings and sales still topped analyst targets, benefiting from higher gross margins and a sequential improvement in comparable store performance.

Earnings on an adjusted basis were $0.34 a share against analysts’ consensus target of $0.14. Revenue came in at $739.8 million, ahead of the $730.6 million consensus.

“Our second quarter results were highlighted by a 280-basis point sequential improvement in comparable sales from the first quarter, underscoring the impact of our targeted operational initiatives,” stated CEO Doug Howe. “These initiatives supported a strong start to the back-to-school season within the U.S. Retail segment as well as gradual improvements in traffic and a notable uptick in conversion. We anticipate our ongoing efforts to strengthen our brand, drive awareness through investments in marketing, and optimize our omni-channel model will continue to support our transformation.”

Howe continued, “While consumer sentiment has ticked up slightly, given the ongoing macroeconomic volatility with recent extended tariff increases and caution in discretionary spending, there is still a notable amount of uncertainty. That said, we remain committed to disciplined execution in those areas within our control as we navigate the near-term environment while continuing to build a stronger, more sustainable business for the future.”

Second Quarter Operating Results
(Unless otherwise stated, all comparisons are to the second quarter of 2024)

  • Net sales decreased 4.2 percent to $739.8 million.
  • Total comparable sales decreased by 5.0 percent, improving from a 7.8 percent decline in the first quarter.
  • Gross profit decreased to $322.9 million versus $339.5 million last year, and gross margin was 43.7 percent compared to 44.0 percent last year.
  • Reported net income attributable to Designer Brands Inc. was $10.8 million, or 22 cents a share, down from $13.8 million, or 24 cents, a year ago.
  • Adjusted net income was $16.7 million, or 34 cents, compared with $17.1 million, or 29 cents, a year earlier.

Second Quarter Segment Performance

  • U.S. Retail sales declined 4.8 percent to $610.9 million from $641.7 million in the same period a year ago. Comparable-store sales dropped 4.9 percent. Operating profits fell 22.4 percent to $60.2 million.
  • Canada Retail revenues improved 0.4 percent to $75.1 million from $74.8 million. Comparable-store sales dipped 0.6 percent. Operating profits slid 6.1 percent to $8.5 million.
  • Brand Portfolio revenues totaled $73.2 million, down 23.8 percent from $96 million a year ago. Comparable-store sales fell 29.2 percent. The segment reported an operating loss of $3.6 million, compared to a loss of $2.05 million in the same period last year. The Brand Portfolio wholesale segment includes Topo Athletic, Keds, Vince Camuto, Kelly & Katie, Jessica Simpson, Lucky Brand, Mix No. 6, and Crown Vintage.

Liquidity

  • Cash and cash equivalents totaled $44.9 million at the end of the second quarter of 2025, compared to $38.8 million at the end of the same period last year, with $104.3 million available for borrowings under the company’s senior secured asset-based revolving credit facility. Debt totaled $516.3 million at the end of the second quarter of 2025, compared to $465.7 million at the end of the same period last year.
  • The company ended the second quarter with inventories of $610.9 million compared to $642.8 million at the end of the same period last year.

 Store Count

Outlook
Designer Brands reported that due to macroeconomic uncertainty stemming primarily from global trade policies, the company has elected not to reinstate full-year 2025 guidance and withdrew its outlook when reporting first-quarter results.

Image courtesy Designer Brands/Topo Athletic