Designer Brands Inc. Reports 2.1% Net Sales Decline and $10.5 Million Loss for Fiscal Year Ending February 1, 2025

Designer Brands Inc. reported a net sales decline of 2.1% for the fiscal year ending February 1, 2025, totaling $3.0 billion, down from $3.1 billion in the previous year. The company experienced a net loss of $10.5 million, or $0.20 per diluted share, compared to a net income of $29.1 million, or $0.46 per diluted share, in the prior fiscal year. The decrease in sales was attributed to lower consumer traffic and a challenging economic environment, which impacted discretionary spending. Gross profit as a percentage of net sales also fell to 42.7%, down from 43.1% in 2023, primarily due to a shift in product mix towards lower-margin athletic and casual offerings.

In terms of operational changes, Designer Brands completed the acquisition of Rubino Shoes Inc. on April 8, 2024, which expanded its presence in Quebec, Canada. This followed the acquisition of Keds in February 2023, which enhanced the company's portfolio in casual and athleisure footwear. The Brand Portfolio segment saw a 14.3% increase in net sales, reaching $398.9 million, largely due to a change in sourcing strategy that transitioned to a wholesale model for certain Owned Brands. However, the U.S. Retail segment reported a 2.7% decline in net sales, reflecting ongoing challenges in consumer engagement.

The company’s customer engagement metrics showed a decrease in VIP rewards program membership, with 30.8 million members as of February 1, 2025, down from 32.1 million the previous year. These members accounted for 86% of the retail segments' net sales, indicating a strong reliance on this customer base for revenue generation. The total number of stores increased to 669, with the addition of Rubino stores contributing to growth in the Canada Retail segment.

Looking ahead, Designer Brands expressed caution regarding the economic landscape, particularly with the introduction of new tariffs on imports from China, where 77% of its merchandise is sourced. The company is actively evaluating its sourcing strategies and cost-mitigation measures to address potential impacts from these tariffs. Management remains focused on enhancing the customer experience through both in-store and digital channels, aiming to adapt to changing consumer preferences and improve overall sales performance in the upcoming fiscal year.