Designer Brands (DBI) earnings release for the 2nd quarter of their 2021 fiscal year
Category: Designer Brands (DBI)
Date: 1 September 2021 Stock Price of Designer Brands: $14.50 Market Capital of Designer Brands: $1.06 billion We take a look at the 2nd quarter earnings report for their 2021 fiscal year of shoe and footwear accessories designer and producer, Designer Brands. For the quarter the group reported net revenues of $817.3 million and net income of $43.4 million.
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- Roger Rawlins, Chief Executive Officer -Our tremendous second quarter results reflect successful execution on our short-term priorities coupled with our strategy to gain market share in athleisure and kids. Our sales results were driven by increased store traffic as we substantially grew our loyal customer base and welcomed core DSW customers back into our stores. "
About Designer Brands
Designer Brands is one of North America’s largest designers, producers and retailers of footwear and accessories. Our primary concept, DSW Designer Shoe Warehouse, offers brand name and designer dress, casual and athletic footwear and accessories. The first store opened in 1991 in Dublin, Ohio. Today, DSW operates more than 500 stores in 44 states.
The Affiliated Business Group operates nearly 290 leased departments for other retailers, such as Stein Mart, in the U.S. Designer Brands also operates several retail concepts in Canada, including The Shoe Company and Shoe Warehouse, which provide a convenient footwear solution for the whole family, as well as DSW Designer Shoe Warehouse – nearly 150 locations in all.
In 2018, the company acquired Camuto Group, the legendary product design and brand development organization best known for the successful Vince Camuto® brand and the footwear licenses of Jessica Simpson® and Lucky Brand®. The partnership transformed Designer Brands into one of the largest footwear companies in North America with global, industry-leading capabilities in product design, development, sourcing and production. A public company since 2005, our stock is traded on the New York City Stock Exchange as “DBI.”
The Affiliated Business Group operates nearly 290 leased departments for other retailers, such as Stein Mart, in the U.S. Designer Brands also operates several retail concepts in Canada, including The Shoe Company and Shoe Warehouse, which provide a convenient footwear solution for the whole family, as well as DSW Designer Shoe Warehouse – nearly 150 locations in all.
In 2018, the company acquired Camuto Group, the legendary product design and brand development organization best known for the successful Vince Camuto® brand and the footwear licenses of Jessica Simpson® and Lucky Brand®. The partnership transformed Designer Brands into one of the largest footwear companies in North America with global, industry-leading capabilities in product design, development, sourcing and production. A public company since 2005, our stock is traded on the New York City Stock Exchange as “DBI.”
Overview of Designer Brands' 2nd quarter 2021 earnings
Second Quarter Results
- Net sales increased 66.9% to $817.3 million in the second quarter of fiscal 2021 compared to the same period last year.
- Comparable sales increased 84.9% for the second quarter of fiscal 2021.
- Gross profit increased to $284.7 million in the second quarter of fiscal 2021 versus $37.0 million last year, and gross margin as a percentage of net sales was 34.8% as compared to 7.6% for the same period last year and 30.5% for the second quarter of fiscal 2019.
- Reported net income in the second quarter of fiscal 2021 was $42.9 million, or $0.55 per diluted share, including net charges of $0.01 per diluted share from adjusted items, primarily related to target acquisition costs, restructuring charges, impairment charges, and the change in the valuation allowance on deferred tax assets.
- Adjusted net income in the second quarter of fiscal 2021 was $43.4 million, or $0.56 per diluted share.
Designer Brands management commentary on their 2nd quarter 2021 earnings
COLUMBUS, Ohio, Aug. 31, 2021 /PRNewswire/ -- Designer Brands Inc. (NYSE: DBI) (the "Company" and "Designer Brands"), one of North America's largest designers, producers, and retailers of footwear and accessories, announced financial results for the three months ended July 31, 2021, compared to the three months ended August 1, 2020.
Roger Rawlins, Chief Executive Officer, stated, "Our tremendous second quarter results reflect successful execution on our short-term priorities coupled with our strategy to gain market share in athleisure and kids. Our sales results were driven by increased store traffic as we substantially grew our loyal customer base and welcomed core DSW customers back into our stores.
"As we look forward to our strategic growth, we have organized our efforts around three pillars: customer, brand and speed. All three of these pillars interact with one another and simultaneously strengthen each other. We are offering customers the experiences they crave, the speed they demand, and the brands that can rise to those challenges. Given the positive momentum and strength of our strategy, we expect to achieve an adjusted operating income in the second half of fiscal 2021 that will be in-line or slightly better than fiscal 2019 levels."
Roger Rawlins, Chief Executive Officer, stated, "Our tremendous second quarter results reflect successful execution on our short-term priorities coupled with our strategy to gain market share in athleisure and kids. Our sales results were driven by increased store traffic as we substantially grew our loyal customer base and welcomed core DSW customers back into our stores.
"As we look forward to our strategic growth, we have organized our efforts around three pillars: customer, brand and speed. All three of these pillars interact with one another and simultaneously strengthen each other. We are offering customers the experiences they crave, the speed they demand, and the brands that can rise to those challenges. Given the positive momentum and strength of our strategy, we expect to achieve an adjusted operating income in the second half of fiscal 2021 that will be in-line or slightly better than fiscal 2019 levels."
Liquidity Highlights
Store Openings and Closings
During the second quarter of fiscal 2021, we did not open any new stores; we closed one store in the U.S. and two stores in Canada, resulting in a total of 515 U.S. stores and 143 Canadian stores.
- Cash and cash equivalents totaled $46.5 million at the end of the second quarter of fiscal 2021 compared to $206.7 million for the same period last year, with $364.0 million available for borrowings under our senior secured asset-based revolving credit facility ("ABL Revolver"). Debt totaled $247.1 million at the end of the second quarter of fiscal 2021 compared to $393.0 million debt outstanding for the same period last year.
- The Company ended the quarter with inventories of $504.3 million compared to $445.0 million for the same period last year.
Store Openings and Closings
During the second quarter of fiscal 2021, we did not open any new stores; we closed one store in the U.S. and two stores in Canada, resulting in a total of 515 U.S. stores and 143 Canadian stores.
Designer Brands (NASDAQ: DBI) stock price chart over the last 5 years
The image below shows the stock price history of Designer Brands (NYSE: DBI) for the last 5 years. And its been a pretty torrid time for Designer Brands investors. With the underlying trend in the group's stock price over the last 5 years being mostly negative. However in recent months its stock has made a decent recovery. Over the last 5 years the stock of Designer Brands declined by -30.8%
The stock of Designer Brands (DBI) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Designer Brands stock is positive at this point in time.
The stock of Designer Brands (DBI) is trading at a lot closer to its 52 week high than it is to its 52 week low which to us is a clear indication that the short term sentiment and momentum of Designer Brands stock is positive at this point in time.
Designer Brands (DBI) vs Buckle (BKE) stock price history over the last 5 years
The image below shows the stock price performance of Designer Brands (DBI) and Buckle (BKE) over the last 5 years. Over the 5 year period Designer Brands has had a far more volatile ride than that of Buckle.
The stock of Buckle (BKE) has easily outperformed that of Designer Brands over the last 5 years.
- Buckle (BKE): 167.10%
- Designer Brands: -30.8%
The stock of Buckle (BKE) has easily outperformed that of Designer Brands over the last 5 years.
Recent coverage of Designer Brands
The extract below discusses the stock price movements of Designer Brands as obtained from Fool.com
What happened
Shares of Designer Brands (NYSE:DBI) rose 82.4% in November, according to data from S&P Global Market Intelligence. The footwear retail company's stock gained ground thanks to positive coverage from analysts, news of effective coronavirus vaccines, and record momentum for the broader market in the month.
The coronavirus pandemic has been very hard on companies in the brick-and-mortar retail industry, and Designer Brands is no exception. The business's outlook improved thanks to the announcement of multiple highly effective coronavirus vaccines in November, and the beaten-down stock recorded a month of big gains.
So whatDesigner Brands also appears to have gotten a boost early last month thanks to analyst ratings upgrades. Susquehanna's Sam Poser published a note on the company on Nov. 3, raising his stock rating from "negative" to "neutral" and giving it a one-year price target of $4.30 per share. UBS analyst Jay Sole then initiated coverage on the stock with a note published on Nov. 9, giving the stock a "neutral" rating and a price target of $6 per share.
Now whatDesigner Brands stock has continued to climb early in December's trading. The company's share price is up roughly 2% in the month so far.
Read the full article here
What happened
Shares of Designer Brands (NYSE:DBI) rose 82.4% in November, according to data from S&P Global Market Intelligence. The footwear retail company's stock gained ground thanks to positive coverage from analysts, news of effective coronavirus vaccines, and record momentum for the broader market in the month.
The coronavirus pandemic has been very hard on companies in the brick-and-mortar retail industry, and Designer Brands is no exception. The business's outlook improved thanks to the announcement of multiple highly effective coronavirus vaccines in November, and the beaten-down stock recorded a month of big gains.
So whatDesigner Brands also appears to have gotten a boost early last month thanks to analyst ratings upgrades. Susquehanna's Sam Poser published a note on the company on Nov. 3, raising his stock rating from "negative" to "neutral" and giving it a one-year price target of $4.30 per share. UBS analyst Jay Sole then initiated coverage on the stock with a note published on Nov. 9, giving the stock a "neutral" rating and a price target of $6 per share.
Now whatDesigner Brands stock has continued to climb early in December's trading. The company's share price is up roughly 2% in the month so far.
Read the full article here
Designer Brands (NYSE: DBI) latest stock valuation
So based on Designer Brands latest earnings report and the fiscal guidance that they provided what to we value their stock at? Based on the earnings reported and the guidance provided our valuation model provides a target price (full value price) for Designer Brands at $14.30 a stock (down significantly from our 1st quarter 2020 valuation of Designer Brands). We therefore believe the stock of Designer Brands is undervalued following the significant decline in the group's stock price in recent months
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) wich in this case is $14.30. We therefore believe a good entry point into Designer Brands stock is at $12.90 or below.
Since the stock of Designer Brands is trading at well below our suggested entry point we rate the stock a buy. However this is a risky buy so investors should not invest any money they cannot afford to lose.
We usually recommend that long term fundamental or value investors look to enter a stock at least 10% below our target price (full value price) wich in this case is $14.30. We therefore believe a good entry point into Designer Brands stock is at $12.90 or below.
Since the stock of Designer Brands is trading at well below our suggested entry point we rate the stock a buy. However this is a risky buy so investors should not invest any money they cannot afford to lose.
Next earnings release of Designer Brands
It is expected that Designer Brands will release their 4th quarter 2020 earnings report in March 2021
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