DSW Parent Returns to Profitability for First Time Since Onset of Pandemic

Designer Brands Inc. has returned to profitability.

For the three months ended May 1, the DSW parent reported a better-than-expected first quarter: It logged adjusted profits of $9.5 million, or adjusted earnings of 12 per share, compared with the prior year’s adjusted loss of $130.3 million, or adjusted loss of $1.81 per share. Wall Street had predicted a loss of 18 cents per share.

Similarly, revenues rose 45.6% to $703.2 million — handily topping market watchers’ estimates of $651 million.

In a statement, CEO Roger Rawlins remarked that the company was “off to a strong start” to the 2021 fiscal year as it marked its first profitable quarter since the onset of the COVID-19 health crisis.

“Our success was driven by green shoots in areas of the business that had been previously affected by the pandemic; synergies from our vertical capabilities coming to life, which allowed us to capitalize on positive trends faster than ever before; and our assortment strategy focused on athleisure, kids and seasonal products,” he added.

According to the company, same-store sales increased 52.2%, compared with a 42.3% decline in the prior year period. It touted the performance of its athleisure business, whose comps in the United States retail segment shot up 92% in the first quarter.

While its near-term focus is on the athletic and kids’ markets, Rawlins has repeatedly indicated that the Columbus, Ohio-based chain was still dedicated to dress and special-occasion products in the long run — particularly as a rapid vaccine rollout, fiscal stimulus and continued reopenings usher in a return to the new normal.

At the end of the quarter, Designer Brands had $49.3 million in cash and equivalents, with $289.9 million available for borrowings under its senior secured asset-based revolving credit facility. Its debt totaled $337.4 million, and it had inventories of $540.1 million.

“We remain focused on leveraging the flexibility of our business model, pivoting our assortment to athleisure to better match the purchasing habits of our customers, enhancing our digital capabilities and strategically managing costs,” Rawlins continued. “Looking forward, we are optimistic that the positive trends will continue as the market recovers.”

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