$250 million of new debt
COLUMBUS, Ohio, Sept. 3, 2020 /CNW/ — Designer Brands Inc. (NYSE: DBI) (the “Company”), one of North America’s largest designers, producers and retailers of footwear and accessories, announced financial results for the three months ended August 1, 2020, compared to the three months ended August 3, 2019.
Roger Rawlins, Chief Executive Officer, stated, “Although the COVID-19 pandemic continues to impact consumer behavior and our business, I am confident in Designer Brands’ playbook to navigate this ever-changing environment. We believe our recent actions to right size our expense structure and obtain additional liquidity, our strategic digital investments, flexible business model, and strong vendor partnerships as well as our status as one of the largest footwear retailers have firmly positioned Designer Brands to weather the road ahead.”
Mr. Rawlins continued, “Given that we have further strengthened our balance sheet, we are well prepared to focus on growing our business’ profitability. In order to serve our customers in the near-term, we are flexing fall inventory receipts away from seasonal and dress products and towards our highest performing category, athleisure, with an emphasis on comfortable and cozy products. We have the unique ability to pivot inventory quickly and follow the customer as needs and preferences change in the future. We are confident that we know what the customer wants, and we know how to deliver it to them, be it digitally or in-person and socially distanced, and we will be prepared in any situation.”
As of the date of this release, the Company has successfully reopened nearly all of its total store base. The Company has implemented a number of measures to protect the health and safety of its customers and associates as stores are re-opened.
March 17, 2020, the Company is not issuing guidance for fiscal 2020 given continued uncertainty surrounding the impacts of COVID-19. The Company is not providing an update at this time.
8:30 am Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-888-317-6003, or the international dial in, 1-412-317-6061, and reference conference ID number 9992953 approximately ten minutes prior to the start of the call. The conference call will also be broadcast live over the internet and can be accessed through the following link:
https://www.webcaster4.com/Webcast/Page/1213/36616 ” data-reactid=”40″>https://www.webcaster4.com/Webcast/Page/1213/36616
September 17, 2020. A replay of the teleconference will be available by dialing the following numbers:
Canada: 1-855-669-9658
International: 1-412-317-0088
Passcode: 10147286
www.designerbrands.com.” data-reactid=”44″>Designer Brands Inc. is one of North America’s largest designers, producers and retailers of footwear and accessories. The Company operates a portfolio of retail concepts in nearly 700 locations under the DSW Designer Shoe Warehouse®, The Shoe Company®, and Shoe Warehouse® banners. The Company designs and produces footwear and accessories through Camuto Group, a leading 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® and Max Studio®. In partnership with a joint venture with Authentic Brands Group, the Company also owns a stake in Vince Camuto®, Louise et Cie®, CC Corso Como®, and others. More information can be found at www.designerbrands.com.
Canada; and uncertainty related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation. Additional factors that could cause our actual results to differ materially from our expectations are described in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended, our Form 10-Q for the fiscal quarter ended May 2, 2020, and risk factors identified in the Company’s other filings with the Securities and Exchange Commission. All forward-looking statements speak only as of the time when made. The Company undertakes no obligation to revise the forward-looking statements included in this press release to reflect any future events or circumstances, except as may be required by law.
|
DESIGNER BRANDS INC. |
||||||||||||||||
|
Net Sales |
||||||||||||||||
|
Three months ended |
Change |
|||||||||||||||
|
(dollars in thousands) |
August 1, |
August 3, |
Amount |
% |
Comparable Sales % |
|||||||||||
|
Segment net sales: |
||||||||||||||||
|
U.S. Retail |
$ |
393,977 |
$ |
677,920 |
$ |
(283,943) |
(41.9) |
% |
(44.9)% |
|||||||
|
Canada Retail |
49,582 |
63,306 |
(13,724) |
(21.7) |
% |
(27.9)% |
||||||||||
|
Brand Portfolio |
30,458 |
102,947 |
(72,489) |
(70.4) |
% |
120.5% |
||||||||||
|
Other |
22,266 |
29,480 |
(7,214) |
(24.5) |
% |
(36.2)% |
||||||||||
|
Total segment net sales |
496,283 |
873,653 |
(377,370) |
(43.2) |
% |
(42.7)% |
||||||||||
|
Elimination of intersegment net sales |
(6,569) |
(17,701) |
11,132 |
(62.9) |
% |
|||||||||||
|
Net sales |
$ |
489,714 |
$ |
855,952 |
$ |
(366,238) |
(42.8) |
% |
||||||||
|
Six months ended |
Change |
|||||||||||||||
|
(dollars in thousands) |
August 1, |
August 3, |
Amount |
% |
Comparable Sales % |
|||||||||||
|
Segment net sales: |
||||||||||||||||
|
U.S. Retail |
$ |
771,050 |
$ |
1,369,760 |
$ |
(598,710) |
(43.7) |
% |
(43.7)% |
|||||||
|
Canada Retail |
78,911 |
115,122 |
(36,211) |
(31.5) |
% |
(29.9)% |
||||||||||
|
Brand Portfolio |
112,571 |
207,493 |
(94,922) |
(45.7) |
% |
106.5% |
||||||||||
|
Other |
35,889 |
65,087 |
(29,198) |
(44.9) |
% |
(50.4)% |
||||||||||
|
Total segment net sales |
998,421 |
1,757,462 |
(759,041) |
(43.2) |
% |
(42.5)% |
||||||||||
|
Elimination of intersegment net sales |
(25,924) |
(28,221) |
2,297 |
(8.1) |
% |
|||||||||||
|
Net sales |
$ |
972,497 |
$ |
1,729,241 |
$ |
(756,744) |
(43.8) |
% |
||||||||
|
Store Data |
|||||||||||
|
August 1, 2020 |
August 3, 2019 |
||||||||||
|
(square footage in thousands) |
Number of |
Square |
Number of |
Square |
|||||||
|
U.S. Retail segment – DSW Designer Shoe Warehouse |
522 |
10,578 |
518 |
10,543 |
|||||||
|
Canada Retail segment: |
|||||||||||
|
The Shoe Company / Shoe Warehouse |
117 |
623 |
112 |
611 |
|||||||
|
DSW Designer Shoe Warehouse |
27 |
536 |
27 |
534 |
|||||||
|
144 |
1,159 |
139 |
1,145 |
||||||||
|
Total operating stores |
666 |
11,737 |
657 |
11,688 |
|||||||
|
ABG stores serviced |
280 |
284 |
|||||||||
|
Gross Profit (Loss) |
|||||||||||||||||||||||
|
Three months ended |
|||||||||||||||||||||||
|
August 1, 2020 |
August 3, 2019 |
Change |
|||||||||||||||||||||
|
(dollars in thousands) |
Amount |
% of |
Amount |
% of |
Amount |
% |
Basis |
||||||||||||||||
|
Segment gross profit (loss): |
|||||||||||||||||||||||
|
U.S. Retail |
$ |
40,097 |
10.2 |
% |
$ |
208,056 |
30.7 |
% |
$ |
(167,959) |
(80.7) |
% |
(2,050) |
||||||||||
|
Canada Retail |
5,650 |
11.4 |
% |
21,939 |
34.7 |
% |
$ |
(16,289) |
(74.2) |
% |
(2,330) |
||||||||||||
|
Brand Portfolio |
(11,440) |
(37.6) |
% |
26,786 |
26.0 |
% |
$ |
(38,226) |
NM |
NM |
|||||||||||||
|
Other |
118 |
0.5 |
% |
6,041 |
20.5 |
% |
$ |
(5,923) |
(98.0) |
% |
(2,000) |
||||||||||||
|
34,425 |
262,822 |
||||||||||||||||||||||
|
Elimination of intersegment gross loss (profit) |
2,617 |
(1,649) |
|||||||||||||||||||||
|
Gross profit |
$ |
37,042 |
7.6 |
% |
$ |
261,173 |
30.5 |
% |
$ |
(224,131) |
(85.8) |
% |
(2,290) |
||||||||||
|
Six months ended |
|||||||||||||||||||||||
|
August 1, 2020 |
August 3, 2019 |
Change |
|||||||||||||||||||||
|
(dollars in thousands) |
Amount |
% of |
Amount |
% of |
Amount |
% |
Basis |
||||||||||||||||
|
Segment gross profit (loss): |
|||||||||||||||||||||||
|
U.S. Retail |
$ |
7,127 |
0.9 |
% |
$ |
417,947 |
30.5 |
% |
$ |
(410,820) |
(98.3) |
% |
(2,960) |
||||||||||
|
Canada Retail |
3,339 |
4.2 |
% |
37,686 |
32.7 |
% |
$ |
(34,347) |
(91.1) |
% |
(2,850) |
||||||||||||
|
Brand Portfolio |
2,464 |
2.2 |
% |
52,459 |
25.3 |
% |
$ |
(49,995) |
(95.3) |
% |
(2,310) |
||||||||||||
|
Other |
(5,310) |
(14.8) |
% |
15,352 |
23.6 |
% |
$ |
(20,662) |
NM |
NM |
|||||||||||||
|
7,620 |
523,444 |
||||||||||||||||||||||
|
Elimination of intersegment gross loss (profit) |
2,962 |
(2,938) |
|||||||||||||||||||||
|
Gross profit |
$ |
10,582 |
1.1 |
% |
$ |
520,506 |
30.1 |
% |
$ |
(509,924) |
(98.0) |
% |
(2,900) |
||||||||||
|
Intersegment Eliminations |
|||||||
|
Three months ended |
|||||||
|
(in thousands) |
August 1, 2020 |
August 3, 2019 |
|||||
|
Elimination of intersegment activity: |
|||||||
|
Net sales recognized by Brand Portfolio segment |
$ |
(6,569) |
$ |
(17,701) |
|||
|
Cost of sales: |
|||||||
|
Cost of sales recognized by Brand Portfolio segment |
4,827 |
14,311 |
|||||
|
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period |
4,359 |
1,741 |
|||||
|
Gross loss (profit) |
$ |
2,617 |
$ |
(1,649) |
|||
|
Six months ended |
|||||||
|
(in thousands) |
August 1, 2020 |
August 3, 2019 |
|||||
|
Elimination of intersegment activity: |
|||||||
|
Net sales recognized by Brand Portfolio segment |
$ |
(25,924) |
$ |
(28,221) |
|||
|
Cost of sales: |
|||||||
|
Cost of sales recognized by Brand Portfolio segment |
16,961 |
21,918 |
|||||
|
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period |
11,925 |
3,365 |
|||||
|
Gross loss (profit) |
$ |
2,962 |
$ |
(2,938) |
|||
|
DESIGNER BRANDS INC. |
|||||||||||||||
|
Three months ended |
Six months ended |
||||||||||||||
|
August 1, 2020 |
August 3, 2019 |
August 1, 2020 |
August 3, 2019 |
||||||||||||
|
Net sales |
$ |
489,714 |
$ |
855,952 |
$ |
972,497 |
$ |
1,729,241 |
|||||||
|
Cost of sales |
(452,672) |
(594,779) |
(961,915) |
(1,208,735) |
|||||||||||
|
Operating expenses |
(168,424) |
(222,370) |
(355,645) |
(439,950) |
|||||||||||
|
Income from equity investment |
2,153 |
2,464 |
4,423 |
4,692 |
|||||||||||
|
Impairment charges |
(6,735) |
— |
(119,282) |
— |
|||||||||||
|
Operating profit (loss) |
(135,964) |
41,267 |
(459,922) |
85,248 |
|||||||||||
|
Interest expense, net |
(3,788) |
(1,972) |
(5,946) |
(3,773) |
|||||||||||
|
Non-operating income (expenses), net |
743 |
199 |
656 |
(143) |
|||||||||||
|
Income (loss) before income taxes |
(139,009) |
39,494 |
(465,212) |
81,332 |
|||||||||||
|
Income tax benefit (provision) |
40,795 |
(12,087) |
151,140 |
(22,731) |
|||||||||||
|
Net income (loss) |
$ |
(98,214) |
$ |
27,407 |
$ |
(314,072) |
$ |
58,601 |
|||||||
|
Diluted earnings (loss) per share |
$ |
(1.36) |
$ |
0.37 |
$ |
(4.36) |
$ |
0.77 |
|||||||
|
Weighted average diluted shares |
72,142 |
74,316 |
72,028 |
76,281 |
|||||||||||
|
DESIGNER BRANDS INC. |
|||||||||||
|
August 1, 2020 |
February 1, 2020 |
August 3, 2019 |
|||||||||
|
Assets |
|||||||||||
|
Cash and cash equivalents |
$ |
206,720 |
$ |
86,564 |
$ |
51,762 |
|||||
|
Investments |
— |
24,974 |
25,504 |
||||||||
|
Accounts receivable, net |
49,240 |
89,151 |
85,162 |
||||||||
|
Inventories |
445,044 |
632,587 |
706,168 |
||||||||
|
Prepaid expenses and other current assets |
69,456 |
67,534 |
55,561 |
||||||||
|
Total current assets |
770,460 |
900,810 |
924,157 |
||||||||
|
Property and equipment, net |
332,730 |
395,009 |
402,779 |
||||||||
|
Operating lease assets |
797,413 |
918,801 |
975,963 |
||||||||
|
Goodwill |
93,655 |
113,644 |
116,280 |
||||||||
|
Intangible assets |
15,663 |
22,846 |
21,112 |
||||||||
|
Deferred tax assets |
182,866 |
31,863 |
29,515 |
||||||||
|
Equity investment |
56,690 |
57,760 |
55,033 |
||||||||
|
Other assets |
23,780 |
24,337 |
32,407 |
||||||||
|
Total assets |
$ |
2,273,257 |
$ |
2,465,070 |
$ |
2,557,246 |
|||||
|
Liabilities and shareholders’ equity |
|||||||||||
|
Accounts payable |
$ |
224,693 |
$ |
299,072 |
$ |
289,457 |
|||||
|
Accrued expenses |
202,831 |
194,264 |
173,437 |
||||||||
|
Current operating lease liabilities |
241,694 |
186,695 |
185,969 |
||||||||
|
Total current liabilities |
669,218 |
680,031 |
648,863 |
||||||||
|
Debt |
393,000 |
190,000 |
235,000 |
||||||||
|
Non-current operating lease liabilities |
778,826 |
846,584 |
905,546 |
||||||||
|
Other non-current liabilities |
25,586 |
27,541 |
38,590 |
||||||||
|
Total liabilities |
1,866,630 |
1,744,156 |
1,827,999 |
||||||||
|
Total shareholders’ equity |
406,627 |
720,914 |
729,247 |
||||||||
|
Total liabilities and shareholders’ equity |
$ |
2,273,257 |
$ |
2,465,070 |
$ |
2,557,246 |
|||||
|
DESIGNER BRANDS INC. |
|||||||||||||||
|
Three months ended |
Six months ended |
||||||||||||||
|
August 1, 2020 |
August 3, 2019 |
August 1, 2020 |
August 3, 2019 |
||||||||||||
|
Reported net income (loss) |
$ |
(98,214) |
$ |
27,407 |
$ |
(314,072) |
$ |
58,601 |
|||||||
|
Pre-tax adjustments: |
|||||||||||||||
|
Included in cost of sales: |
|||||||||||||||
|
COVID-19 incremental costs |
3,257 |
— |
3,676 |
— |
|||||||||||
|
Included in operating expenses: |
|||||||||||||||
|
COVID-19 incremental costs (credits), net |
(306) |
— |
(3,468) |
— |
|||||||||||
|
Integration and restructuring expenses |
8,455 |
9,621 |
10,203 |
12,109 |
|||||||||||
|
Amortization of intangible assets |
110 |
(271) |
469 |
47 |
|||||||||||
|
Impairment charges |
6,735 |
— |
119,282 |
— |
|||||||||||
|
Gain on settlement |
(8,990) |
— |
(8,990) |
— |
|||||||||||
|
Included in non-operating expenses, net: |
|||||||||||||||
|
Foreign currency transaction losses |
(743) |
(223) |
(343) |
207 |
|||||||||||
|
Total pre-tax adjustments |
8,518 |
9,127 |
120,829 |
12,363 |
|||||||||||
|
Tax effect of adjustments |
(2,295) |
(780) |
(30,518) |
(1,605) |
|||||||||||
|
Total adjustments, after tax |
6,223 |
8,347 |
90,311 |
10,758 |
|||||||||||
|
Adjusted net income (loss) |
$ |
(91,991) |
$ |
35,754 |
$ |
(223,761) |
$ |
69,359 |
|||||||
|
Reported diluted earnings (loss) per share |
$ |
(1.36) |
$ |
0.37 |
$ |
(4.36) |
$ |
0.77 |
|||||||
|
Adjusted diluted earnings (loss) per share |
$ |
(1.28) |
$ |
0.48 |
$ |
(3.11) |
$ |
0.91 |
|||||||
the United States (“GAAP”), the Company uses adjusted diluted earnings (loss) per share and adjusted net income (loss), which adjust for the effects of: (1) COVID-19 incremental costs and credits; (2) integration and restructuring expenses; (3) amortization expense of intangible assets; (4) impairment charges; (5) gain on settlement; (6) foreign currency transaction losses; and (7) the net tax expense impact of such items. The unaudited reconciliation of adjusted results should not be construed as an alternative to the reported results determined in accordance with GAAP. These financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures presented by other companies. The Company believes these non-GAAP measures provide useful information to both management and investors to increase comparability to the prior periods by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company on a comparable basis, when reviewed in conjunction with the Company’s GAAP statements. These amounts are not determined in accordance with GAAP and therefore should not be used exclusively in evaluating the Company’s business and operations.
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SOURCE Designer Brands Inc.
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