Designer Brands pivots to athletic as sales continue to fall
Columbus, Ohio-based footwear and accessories group Designer Brands Inc. reported a 30.1% decline in sales on Wednesday, as it attempts to adapt to the effects of the Covid-19 pandemic by shifting focus to athletic products.
In the third quarter ended October 31, 2020, the company achieved $652.9 million, down from $933.8 million in the same period in the previous year. Comparable sales decreased 30.4%, compared to a 0.3% rise in the third quarter of 2019.
Athletic comparable sales in the company’s U.S. retail segment increased 5%, outpacing results for seasonal products at the company.
Designer Brands, which owns the DSW Designer Shoe Warehouse, The Shoe Company, and Shoe Warehouse retail chains, as well as the Camuto manufacturing group, is best known for its offering of dress and seasonal footwear. With many consumers working from home and avoiding large social events, these segments have been hit hard by the coronavirus crisis, leading Designer Brands to adjust the weighting of its offering.
“We have been shifting our assortment to include more athletic and kids product, as well as items from the Top 10 brands in footwear, and see further opportunity to meaningfully grow these categories,” explained Designer Brands CEO Roger Rawlins in a release.
Due to these initiatives, athletic penetration in the company’s U.S. retail business was 26% at the end of Q3, increasing from 17% at the same time last year, while kids penetration increased to 10%, up from 7%.
Quarterly net loss at the company was $40.6 million, or a loss of $0.56 per diluted share, compared to net income of $43.5 million, or $0.60 per diluted share, in the prior-year period.
Year to date, Designer Brands’ net sales decreased 39.0% year over year, from $2.7 billion to $1.6 billion. Net loss for the nine-month period was $345.7 million, or $4.92 per diluted share, compared to net income of $102.1 million, or $1.36 per diluted share, in the previous year.
Due to ongoing uncertainty surrounding the Covid-19 pandemic, Designer Brands has not provided financial guidance for the fourth quarter or the full fiscal year.
“We are pleased to see that a vaccine may be on the horizon, but widespread adoption will take time and our business will continue to feel pressure in the near-term,” commented Rawlins. “We have confidence there will be a day our customers feel comfortable going out again, and, when that time comes, we will reap the benefits of the combination of our legacy command of the dress and seasonal market coupled with recent gains we are making in athletic and kids.”
As of October, Designer Brands operates 669 stores across the U.S. and Canada.
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