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DSW Parent Expects Owned Brands and DTC Channels to Drive Growth Through 2026

DSW is expecting its private brands to drive the company’s growth over the next five years.

At its investor day today, the DSW parent company will outline a five-year financial roadmap, which predicts owned-brand growth to drive sales and profits for the company. By fiscal year 2026, the company expects to hit annual revenue of $4 billion, with a gross profit margin of 35% and an operating margin of 9%. The company also anticipates earnings per share between $2.75 and $2.85.

The company expects sales from its owned brands and Camuto national owned and licensed brands to drive most growth, with sales of its third-party brands remaining steady. Specifically, DBI expects brand-owned sales to double from 19% of the company’s revenue to almost one-third by 2026. (In 2018, DBI company acquired Camuto Group, which designs and develops the Vince Camuto brand and licenses footwear for Jessica Simpson and Lucky Brand.)

“Our owned brands are the key driver of growth over the next five years, and we plan to double sales of these brands by fiscal 2026,” said CEO Roger Rawlins in a release. “This growth is complemented by maintaining our relationships with top national brand partners who utilize our leading omni-channel capabilities in their own DTC efforts in ways unique to DBI.”

DBI predicts that most of these sales to occur in the company’s DTC channels, including DSW, Shoe Co. in Canada and vincecamuto.com. In Q4, sales of DBI’s owned brands grew 69% year over year. Via DTC channels, sales of these owned-brands grew by 98% year over year.

“We needed to get in more control of our destiny,” said CFO Jared Poff in an interview with FN. “Not just be a retailer of other people’s brands, but truly be a brand builder.”

According to Poff, the infrastructure for the brand-owned and DTC shift was already in place, given the DBI’s established DTC channels and database of 30 million rewards members. To further propel the growth of these brands, DSW is rolling out a revamped “store of the future,” model which consolidates the retailer’s 20,000 to 25,000 square foot-stores into more efficient 15,000 square-foot locations and uses digital technology to tell brand stories.

These revamped stores, which will includes brand-specific shop-in-shops and displays, will allow DSW’s partner brands to better expand their own DTC presences. For example, some DSW stores will allow customers to come in and return items from Vince Camuto, which is partly owned by Authentic Brands Group and DSW Inc. Hush Puppies, which relies on DSW as its sole wholesale and brick-and-mortar distributor, will utilize a similar program and will leverage the retailer’s stores as return centers and BOPIS locations for consumers who shop for the band directly.

“They want to grow their DTC business,” Poff said of Hush Puppies. “But also don’t want to make the huge investments to build it out the way that we have.”

For fiscal year 2022, DBI raised its guidance and expects earnings per share between $1.80 and $1.90.

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