Q1 2026 Designer Brands Inc Earnings Call Transcript
Key Points
- Designer Brands Inc (DBI) reported a significant improvement in adjusted operating income of $19 million and adjusted EPS of $0.07, surpassing expectations.
- The company saw strong growth in its brand portfolio segment, with Q1 sales increasing by 19% and operating income improving by $13 million compared to last year.
- The dress business and affordable luxury categories showed strong performance, with the dress business up approximately 4% in Q1.
- DBI's marketing initiatives, including an evolved influencer strategy, have strengthened brand positioning and increased customer engagement.
- The company successfully managed inventory levels, ending Q1 with inventories down 6% compared to last year, contributing to improved gross margins.
- Comparable store sales were down 1.1% in Q1, indicating challenges in driving same-store growth.
- Weather-related headwinds negatively impacted the seasonal sandals business, which was down low single digits.
- There was softness in the casual and athletic categories as consumer preferences shifted back toward fashion and occasion-based products.
- The macro environment remains dynamic, with uncertainties around tariffs and potential impacts on the business.
- DBI anticipates earnings pressure in the third quarter due to the return to a normalized level of incentive-based compensation.
(audio in progress) A more durable earnings model for the business going forward. We generated adjusted operating income of $19 million and adjusted EPS of $0.07, representing a significant improvement versus last year and ahead of our expectations.
I'm encouraged by the strong start to the year in a bit more detail. Starting with our retail segment, which as a reminder, reflects the aggregation of our US retail and Canada retail operating segments. Our total sales for the first quarter were approximately flat year-over-year with comparable sales down slightly.
Sales in the quarter, which was more prevalent in Canada. In the US, revenue was up slightly, and according to Circana data, in Q1, DSW held in footwear market share versus last year. Traffic trends were price sales, supported by our enhanced assortment and effective inventory management.
From a product perspective, we shared on our last call that in 2026, we are focused on winning with the merchandise that matters most to our consumers. And we saw encouraging
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