DSW parent company Designer Brands Inc. is evolving its approach after missing revenue estimates in the first quarter of fiscal 2025.
On the company’s earnings call on Tuesday, chief executive officer Doug Howe told analysts that the team is “prioritizing value, optimizing its assortment and diversifying its sourcing” given the uncertainty in the market.
“As is consistent with our past approach, we have continued to monitor and aggregate weekly customer data to inform a more targeted and effective approach,” Howe said. “We’re emphasizing simplicity and more clearly positioning our offerings in a competitive marketplace, which includes more visible and purposeful in-store marketing that reinforces our value proposition across the assortment.”
This also means that the company is reviewing pricing across its portfolio, including its exclusive brands “as one lever to help mitigate the impact of tariffs and increased sourcing costs,” Howe noted.
As for sourcing, the CEO said that the company currently expects less than half of its sourcing will come from China by the end of the year, down from 70 percent at the start of the year. “We continue to view private label as a long-term margin driver and truly a unique differentiator for DBI given our design and sourcing capabilities and our commanding retail distribution and market share at DSW and The Shoe Co.,” Howe noted.
As for what is selling, Howe said that athletic and athleisure shoe styles “continue to outperform relative to other categories with minimal disruption, supported by resilient global demand and a well-diversified sourcing network.”
As a result, Howe said that the company sees “notable opportunity” for these categories to grow organically and expand their penetration in the current environment.
The CEO also noted that the company is pursuing “strategic expansion” focused on full family premium product launches with top brand partners and the introduction of digitally native brands.
“The environment remains unpredictable with our exposure fluctuating significantly within the quarter and continuing to shift into the second quarter, while the potential for significant cost headwinds, supply chain disruption and demand volatility remains,” Howe added. “We will continue to monitor the environment and our supply chain closely and adapt as needed.”
This comes as Designer Brands reported that net sales in the first quarter of fiscal 2025 decreased 8.0 percent to $686.9 million, down from $746.6 million the same time last year.
The news caused a sell-off of its stock on Wall Street on Tuesday. Shares closed the day down 18.23 percent, valued at $3.05 per share.
