DSW swings to Q2 loss as sales plunge; to focus on athleisure category

Designer Brands Inc. is pivoting as people dress up less.

The parent company of DSW Designer Shoe Warehouse reported a wider-than-expected fiscal second-quarter loss as sales fell more than forecast.

In a statement, CEO Roger Rawlins said that to better serve customers in the near-term, the company was flexing fall inventory away from seasonal and dress products and towards its highest-performing category — athleisure —with an emphasis on comfortable and cozy products.

“We have the unique ability to pivot inventory quickly and follow the customer as needs and preferences change in the future,” Rawlins said. “We are confident that we know what the customer wants, and we know how to deliver it to them, be it digitally or in-person and socially distanced, and we will be prepared in any situation."

Designer Brands swung to a net loss of $98.2 million, or $1.36 a share, for the quarter ended Aug.1, from net income of $27.4 million, or $0.37 a share, in the year-ago period. The company attributed the loss in profit primarily to the impacts of the COVID-19 outbreak on its operations. The adjusted loss per share was $1.28, compared with analysts’ estimates of $0.85 cents. 

Sales fell 42.8% to $489.7 million, below expectations. Same-store sales fell 42.7% versus expectations of a 26.5% decline.

“Although the COVID-19 pandemic continues to impact consumer behavior and our business, I am confident in Designer Brands' playbook to navigate this ever-changing environment,” stated Rawlins. “We believe our recent actions to right-size our expense structure and obtain additional liquidity, our strategic digital investments, flexible business model, and strong vendor partnerships, as well as our status as one of the largest footwear retailers, have firmly positioned Designer Brands to weather the road ahead."

Designer Brands operates nearly 700 stores under the DSW Designer Shoe Warehouse, The Shoe Company, and Shoe Warehouse banners. The company also designs and produces footwear and accessories through Camuto Group, a leading manufacturer selling in more than 5,400 stores worldwide.