Shares for Designer Brands Inc. are plunging in Tuesday premarket trading on the heels of an earnings miss and slashed outlook for the full year.
The Columbus, Ohio-based firm saw its stock drop more than 18% to $13.88 as of 9:00 a.m. ET after posting third-quarter adjusted profits of $48.6 million, or 67 cents per share — well below analysts’ bets of 74 cents. On a reported basis, net income was $43.5 million, or 60 cents per share.
For the months ended Nov. 2, revenues rose 12.4% to $936.26 million, which topped Wall Street’s forecasts of $935.03 million. However, same-store sales increased 0.3% for the quarter, compared with a 7.3% jump in the prior year period.
In a statement, CEO Roger Rawlins emphasized the company’s continued progress on its strategic initiatives following the acquisition of Camuto Group, the continued expansion of Canada-based The Shoe Company, and the strength of its flagship brand, Designer Shoe Warehouse.
“At the same time, we faced several meaningful headwinds during the third quarter that impacted our results and will likely continue for the upcoming quarters,” he explained. “The near-record warm weather during our largest and most profitable quarter affected every segment of our business.”
Rawlins added, “And while we are extremely proud of the results we’ve achieved, substantially mitigating the very material footwear tariffs that were recently enacted, the mitigation effort itself has had repercussions which have weighed heavy on our results.”
The footwear group subsequently lowered its full-year guidance for adjusted earnings per share in the range of $1.50 to $1.55, versus the previous range of $1.87 to $1.97 per share. It continues to expect low double-digit revenue growth, but it predicts flat comps compared with its previous outlook of low single-digit gains.
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