It’s been a rough ride for Camuto Group, but parent company Designer Brands Inc. is confident its new plan for the business will work as pandemic recovery takes hold.
Camuto — which has been heavily impacted by the decline in dress shoe sales — saw total sales, including those to sister company DSW, decrease 49.5% to $52.2 million in the fourth-quarter. The company said it cut production by 40% in the fourth quarter, compared to 30% in the third quarter. There are signs of improvement, however: In the first quarter, it expects Camuto production to be down by about 15% compared with Q1 2020.
“Not surprisingly, the business remains challenged as a result of customers not needing or buying dress shoes,” said CEO Roger Rawlins in the call. “Given the casualization of America throughout the pandemic, we have seen dramatically reduced demand for dress brands and footwear. This persisted through the fourth quarter, but we planned our inventory to align with our anticipated demand, and we will continue to manage our inventory appropriately going forward.”
As consumer shifts continue to occur, Camuto is also seeing its wholesale business shrink, and is being asked to take on bigger inventory risks as department stores struggle with their own traffic. “Given these trends, our focus will be on servicing our largest wholesale customers with DSW being the largest. We need to think and act like a vertical retailer and control our own destiny,” Rawlins said.
The CEO said that while DBI continues to ramp up its focus on athletic, kids and athleisure, Camuto’s focus will be key once dress bounces back.
At the core of the company’s plan is an emphasis on three key brands within the Camuto portfolio: Vince Camuto, Lucky and Jessica Simpson.
To start, Vince Camuto is slated to relaunch in fall ’21 with a focus on elevated design and materials. “We want to remind the customer that Vince Camuto is known for European inspiration and attention to detail and fit and comfort,” Rawlins said. “We plan to grow its presence through all our channels.”
The JLo line — which debuted last February — will also relaunch. And the company is rolling out more exclusive-to-DSW brands, including men’s labels, Crown Vintage and Mix No. 6.
While it’s eyeing expansion in key areas, Camuto is also trimming its brand roster and cutting its workforce.
In a statement, DBI told FN it will no longer produce exclusive brands for Dillard’s, in line with the parent firm’s focus on its top 50 brands.
In the fourth quarter, Camuto decreased headcount across three geographies within the organization, reducing overall head count by 25%. “This reorganization is reflective of that focus [on top brands]. As we see business pick up, this organization is structured to allow for us to grow with increased demand,” Rawlins said.
Overall, Designer Brands Inc. ended the fiscal year with a mixed fourth quarter. For the three months ended Feb. 1, the Columbus, Ohio-based company reported an adjusted net loss of $38.6 million, or loss of 53 cents per share. Market watchers had predicted a wider loss of 68 cents per share.
Overall revenues declined 26.6% to $609.4 million, which fell short of analysts’ estimates of $623.77 million. Comps declined by 20.1%, compared with last year’s 0.7% gain.