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Category: Stock Market and Designer Brands
Date: 18 June 2020 Stock Price: $7.02 We take a look at the 1st quarter earnings report for their 2020 fiscal year of shoe and footwear accessories designer and producer, Designer Brands. Net revenues for the quarter declined by 44.7% compared to the same quarter of the prior year, largely due to the impact of the Covid-19 pandemic.
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- As we said last quarter, the effect of COVID-19 on our industry has been unprecedented and has created many significant near-term challenges. "
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' 1st quarter 2020 earnings report
The numbers we are interested in (for the quarter):
- Net sales: $482.783 (down from $873.289 million for the same quarter of the previous year)
- Net sales decreased by 44.7% over the last 12 months
- Net loss: -$215.858 million (down from $31.194 million for the same quarter of the previous year)
- Diluted loss per share: -$3.00 (down from $0.40 for the same quarter of the previous year)
- PE ratio of Designer Brands: Since the group are loss making a PE cannot be calculated right now
- Diluted number of shares in issue: 71.914 million (down from 78.263 million for the same quarter of the previous year)
- Accounts receivable, net: $81.953 million (up from $78.287 million for the same quarter of the previous year)
- Accounts receivable makes up 3.36% of Designer Brands' total assets
- Inventories: $533.683 million (down from $642.045 million for the same quarter of the previous year)
- Inventories makes up 21.9% of Designer Brands' total assets
- Cash and cash equivalents: $250.874 million
- Cash and cash equivalents per share: $3.48
- Cash and cash equivalents makes up 49.6% of Designer Brands' market capital
- Cash and cash equivalents makes up 10.3% of Designer Brands' assets
- Stockholders equity in Designer Brands: $498.106 million
- Stockholders equity per share: $6.93
- Designer Brands is trading at 1.29 times its stockholders equity per share which is outside the expected range of between 2 and 4 times that most firms tend to trade at
- The average price to book value of firms in the S&P 500 is 3.7
Management commentary on their 1st quarter 2020 earnings
COLUMBUS, Ohio, June 18, 2020 /PRNewswire/ -- Designer Brands Inc. (NYSE: DBI) (the "Company"), one of North America's largest designers, producers and retailers of footwear and accessories, announced financial results for the three months ended May 2, 2020, compared to the three months ended May 4, 2019.
Roger Rawlins, Chief Executive Officer, stated, "As we said last quarter, the effect of COVID-19 on our industry has been unprecedented and has created many significant near-term challenges. The pandemic necessitated store closures and heavily impacted consumers, resulting in total comparable sales being down 42% during the first quarter."
Roger Rawlins, Chief Executive Officer, stated, "As we said last quarter, the effect of COVID-19 on our industry has been unprecedented and has created many significant near-term challenges. The pandemic necessitated store closures and heavily impacted consumers, resulting in total comparable sales being down 42% during the first quarter."
Mr. Rawlins continued, "I am proud of how our team has responded to the challenges and what we were able to accomplish in the first quarter. Over the past several years, we have made significant investments in our digital infrastructure, and, as a result, we were able to generate strong digital demand during the first quarter, which resulted in digital demand representing 50% of total demand for the quarter, growing 25% over last year. We also leveraged our best-in-class inventory controls to end the quarter with inventory units on hand flat versus last year. We have adjusted our near-term areas of focus to prioritize growing with the top fifty brands in footwear and further emphasizing our everyday value. We are also laser-focused on maintaining and preserving sufficient liquidity."
Operations Update
As of the date of this release, the Company has successfully reopened approximately 90% of its total store base. The Company expects to have nearly all North American stores open by the end of June. The Company has implemented a number of measures to protect the health and safety of its customers and associates as stores are re-opened.
2020 Guidance
As previously announced on March 17, 2020, the Company is not issuing guidance for fiscal 2020 given the rapidly evolving COVID-19 environment. The Company is not providing an update at this time.
Operations Update
As of the date of this release, the Company has successfully reopened approximately 90% of its total store base. The Company expects to have nearly all North American stores open by the end of June. The Company has implemented a number of measures to protect the health and safety of its customers and associates as stores are re-opened.
2020 Guidance
As previously announced on March 17, 2020, the Company is not issuing guidance for fiscal 2020 given the rapidly evolving COVID-19 environment. The Company is not providing an update at this time.
Designer Brands (NASDAQ: DBI) stock price history
The image below, obtained from Google 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. 5 years ago the stock traded at around $34.30 and is currently trading at $7.17 That is a loss of -79% suffered by Designer Brands stockholders over the last 5 years.
The stock of Designer Brands (DBI) is trading at a lot closer to its 52 week low of $2.60 than it is to its 52 week high of $19.93 which to us is a clear indication that the short term sentiment and momentum of Designer Brands stock is very negative.
The stock of Designer Brands (DBI) is trading at a lot closer to its 52 week low of $2.60 than it is to its 52 week high of $19.93 which to us is a clear indication that the short term sentiment and momentum of Designer Brands stock is very negative.
Designer Brands (DBI) vs Buckle (BKE)
The image below shows the stock price performance of Designer Brands (DBI) and Buckle (BKE) over the last 3 years. Over the three year period Designer Brands has had a far more volatile ride than that of Buckle. The stock of Designer Brands declined by -59.28% while the stock of Buckle declined by -9.9% over the same time period. Therefore the stock of Buckle has easily outperformed that of Designer Brands.
Recent coverage of Designer Brands
The extract below discusses the stock price plunge of Designer Brands after the release of their latest earnings report as obtained from Bezinga.com
Shares of Designer Brands (NYSE:DBI) moved higher by 0.3% in pre-market trading after the company reported Q1 results.
Quarterly Results
Earnings per share fell 525.58% over the past year to ($1.83), which missed the estimate of ($0.60).
Revenue of $482,783,000 declined by 45.05% year over year, which beat the estimate of $481,160,000.
Guidance
Designer Brands hasn't issued any earnings guidance for the time being.
Revenue guidance hasn't been issued by the company for now.
Read the full article here
Shares of Designer Brands (NYSE:DBI) moved higher by 0.3% in pre-market trading after the company reported Q1 results.
Quarterly Results
Earnings per share fell 525.58% over the past year to ($1.83), which missed the estimate of ($0.60).
Revenue of $482,783,000 declined by 45.05% year over year, which beat the estimate of $481,160,000.
Guidance
Designer Brands hasn't issued any earnings guidance for the time being.
Revenue guidance hasn't been issued by the company for now.
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 $15.90 a stock (down significantly from our last 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 $15.90. We therefore believe a good entry point into Designer Brands stock is at $14.30 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 $15.90. We therefore believe a good entry point into Designer Brands stock is at $14.30 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 2nd quarter and full fiscal 2019 earnings report in early September 2020