Designer Brands, Inc (DBI) reported sales trends at DSW, its largest business, improved sequentially versus the 2025 first quarter, including in its athletics categories. Still, the star performer once again was the Topo Athletic (Topo) footwear brand, where sales jumped 45 percent year-over-year in the 2025 second quarter.

Overall, Designer Brands’ CEO Doug Howe noted Designer Brands’ sales improved sequentially, both at its DSW U.S. retail business and its Canadian retail operations, while improving gross margins and tight cost controls helped limit the profit decline in the period. He said, “Despite remaining volatility and uncertainty, we believe this reflects the effectiveness of our strategies and gradual improvement in consumer sentiment.”

Net sales in the quarter slid 4.2 percent to $739.8 million compared to an 8.0 percent decline in the first quarter. Total comparable sales fell 5.0 percent, improving from a 7.8 percent decline in the first quarter.

The sales decline in part reflects efforts to reduce a portion of digital sales that are unprofitable.

Adjusted net income eased 2.3 percent to $16.7 million, or $0.34, from $17.1 million, or 29 cents, a year earlier and handily topped analysts’ consensus estimate of 14 cents per share. Reported net income was $10.8 million, or 22 cents a share, down from $13.8 million, or 24 cents per share, in Q2 last year.

Consolidated gross margin of 43.7 percent of sales decreased 30 basis points year-over-year, primarily driven by lower initial mark-ups due to increased penetration of the athletic category but leveraged 70 basis points from the first quarter.

Operating expenses fell 5.1 percent to $297.4 million from $313.5 million a year ago, slightly leveraging by 20 basis points year over year. Adjusted operating income slid 6.8 percent to $30.3 million from $32.5 million last year.

U.S. Retail Segment
U.S. Retail operations, which consists of 493 DSW locations, 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, improving sequentially from a 7.3 decline in the first quarter. Operating profits fell 22.4 percent to $60.2 million.

Howe noted that the smaller sales decline reflects “slightly improved” consumer sentiment and sequential improvement in store traffic during each month of the quarter. He said, “While broader macroeconomic pressures persist, these trends offer encouraging signs that some headwinds may be starting to ease. Additionally, we know that the largest number of signups for our VIP rewards program happened in stores. As store traffic improves, it should have a positive impact on the program, whose members drive over 90 percent of our transactions.”

Store conversion at DSW was up 1 percent versus last year, as strong assortment and improved in-stock levels resonated with customers.

By category, Adult Athletic comps were a slightly negative comp of down 2 percent but improved from a 4 percent decline seen in the first quarter. Kids’ Athletic posted a flat comp, representing a 500-basis point improvement over the prior quarter, underpinned by a strong start to the back-to-school season.

Howe said, “We have been leaning more overtly into our back-to-school marketing to reinforce our position as a true destination and see this resonating as we continue to see positive momentum in August, with further sequential improvement in comps.”

The strongest performing category was Women’s Dress, which delivered a positive 5 percent comp for the quarter, a 900-basis point improvement from the first quarter. The Women’s Dress category represents almost 12 percent of total sales. Howe also noted that DSW’s top eight brands also continued to outperform the balance of chain with a positive 1 percent comp for the quarter. Penetration of its top eight brands grew 300 basis points over last year, accounting for 45 percent of total sales in the quarter.

Howe said, “We’re fortunate to have great partnerships with those key brands. We’re maintaining better in-stock levels with them, getting more access to product, and continue to be very encouraged by those top eight brands, of which Nike is obviously one of them.”

Canadian Retail Segment
In Canada, Designer Brands operates 175 stores, including 121 under The Shoe Co. banner, 28 under Rubino and 26 DSW locations.

DBI saw Canada segment revenues improve 0.4 percent to $75.1 million in Q2 from $74.8 million in Q2 2024. Comparable-store sales dipped 0.6 percent, improving notably from a 9.2 percent decline in the first quarter. Operating profits slid 6.1 percent to $8.5 million. Howe said, “The trajectory continued to sequentially improve throughout the quarter, with July turning to a positive comp. Overall, this steady progress gives us cautious optimism as we look ahead.”

Brand Portfolio Segment
DBI’s Wholesale segment, revenues totaled $73.2 million in Q2, down 23.8 percent from $96 million in Q2 last year. Comparable-store sales fell 29.2 percent year-over-year. The segment reported an operating loss of $3.6 million, compared to a loss of $2.05 million in the same period last year.

Howe said the decline in the Brand Portfolio segment was largely driven by lower internal sales as anticipated, or sales to Designer Brands’ retail operations. Sales to external wholesale partners were up 7 percent. Beyond the strong growth at Topo Athletic , Jessica Simpson (+12 percent) and Vince Camuto (+17 percent) also achieved strong sales growth to external wholesale partners.

Other brands within the Brand Portfolio segment include Keds, Kelly & Katie, Lucky Brand, Mix No. 6, and Crown Vintage.

See link at bottom for more details on Topo Athletic’s strong quarter.

DSW’s Improving Trends
Factors cited for improving retail performance sequentially by both U.S. and Canadian stores include an emphasis on reducing SKU count while increased depth in key styles to improve inventory productivity. DSW’s choice count for the back half of 2025 is planned down 25 percent versus last year, and its depth is planned up 15 percent. Howe said, “Looking ahead, we are adding depth in our core styles, including our top eight brands, ensuring we are focusing on the areas of highest demand.”

Howe said the positive conversion comps reflects efforts to prioritize in-store over online inventory. In-store stock levels of regular-priced products materially improved to approximately 70 percent.

Howe also said within stores, DSW benefited from the launch of several trend-driven campaigns with key national brands this summer. He particularly called out a Birkenstock front-of-store takeover across all locations that was fully integrated across all channels, reinforced by a revitalized digital storefront and VIP program integration.

A simplified pricing strategy for clearance, moving from a flat percent-off versus the multiple discount levels used in the past, helped drive clearance sales up 3 percent versus last year.

DSW also underwent a brand repositioning, including an updated DSW logo, a refreshed fall marketing campaign, gift cards, and evergreen signage. As part of the brand repositioning, DSW unveiled a new tagline, “Let Us Surprise You.”

“This marks a pivotal step in reinvigorating our DSW brand identity and leans back into what truly differentiates the DSW shoe buying experience,” said Howe. “We are actively bringing the campaign to life with an optimized marketing approach, which will help to balance spend between top-of-funnel and personalized activations, raise brand awareness, and deepen customer engagement.”

Looking ahead, Howe said the company is seeing “positive signs” in sell-throughs of regularly-priced boot sales, “which we believe may signal potential strength in our seasonal merchandise this fall.”

DSW also unveiled a new concept store Framingham, MA that integrates the new “Let Us Surprise You” branded positioning with “immersive, playful elements designed to drive deeper customer engagement and discovery within our curated assortment,” including Fitfinder technology, shoe protection services, and a dedicated try-on area with augmented reality-enabled try-on kiosks.

“A customization station further elevates the experience, enabling customers to personalize their purchases through embroidery, engraving, and digital printing,” Howe said. “We believe this initiative represents a meaningful step forward in our efforts to evolve the DSW brand, deepen customer loyalty, leverage our stores as differentiators, and unlock long-term value.”

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.

Howe said, “We are encouraged by the early signs of positive momentum and pleased with the sequential improvement we’ve delivered. We remain cautiously optimistic for the remainder of the year, as there is still a lot of macro uncertainty.”

Image courtesy DSW/Designer Brands, Inc.

See below for additional details on Topo’s strong Q2 from SGB Executive:

EXEC: Topo Athletic CEO Tony Post Details Another Strong Quarter for the Brand