Designer Brands remains unmoved in withholding guidance amidst a drop in Q2 earnings and profits.
In the second quarter of the year, Designer Brands, the footwear and accessories retailer, faced a 5% decrease in U.S. retail comparative sales, mirroring a nearly 5% decline in U.S. retail sales, which account for over 80% of net retail sales.
Despite the year-on-year decline, the company reported sequential gains, a positive trend highlighted by CEO Michael Fiddelke, although the exact timeline of his remarks about the improvement in sales and increased implementation remains unspecified.
Designer Brands aimed to attract customers for back-to-school shopping with a series of store improvements, focusing on in-store enhancements as part of a new marketing campaign called "Let Us Surprise You." The campaign has been designed to address issues such as lack of size availability, which has led to customers leaving stores without making a purchase.
The company has made strides in improving store availability of more brand-name styles across sizes, a move that has protected store inventory and been more cost-effective. This focus on in-store improvements has contributed to a 280 basis points improvement in comparable sales from Q1.
Net sales fell 4.2% to $739.8 million compared to last year, and net income declined nearly 20% to $11.3 million. However, average clearance markdowns are trending lower, offering a glimmer of hope for the company's financial performance.
CEO Doug Howe noted "gradual improvements in traffic and a notable uptick in conversion," indicating a positive shift in consumer behaviour. In Q2, DSW fulfilled over 80% more of its online orders through its logistics center, a testament to the company's efforts to streamline its operations.
Despite these improvements, Designer Brands has not revised its guidance, citing ongoing volatility with tariff increases and consumer caution around discretionary spending as factors that continue to present challenges.
As the retail landscape remains uncertain, Designer Brands continues to focus on delivering a superior shopping experience for its customers, aiming to surprise and delight them at every turn.
