Designer Brands 2026 Q1 Earnings Misses Targets as Net Income Declines 2036.3%

Designer Brands Inc. (DBI) reported its fiscal 2026 Q1 earnings on June 10, 2025. The footwear retailer experienced significant challenges, with net sales declining 8.0% to $686.9 million, falling short of analysts' expectations. Consequently, the company withdrew its 2025 guidance amid macroeconomic uncertainty. Designer Brands aims to achieve $20 million to $30 million in cost savings over the course of 2025 but remains cautious about providing specific revenue or EPS targets at this time.

Revenue
Designer Brands reported a total revenue decline of 8.0% to $686.91 million for 2026 Q1, compared to $746.60 million in 2025 Q1. The U.S. Retail segment contributed $573.24 million, while the Canada Retail segment added $53.91 million. The Brand Portfolio segment's revenue stood at $95.90 million. However, intersegment net sales resulted in a $36.13 million deduction, leading to consolidated net sales matching the overall revenue figure of $686.91 million.

Earnings/Net Income
Designer Brands reported a loss of $0.36 per share in 2026 Q1, a steep decline from the profit of $0.01 per share in 2025 Q1, resulting in a 3,700% negative change. The company experienced a net loss of $17.14 million, reflecting a 2,036.3% deterioration from the net income of $885,000 achieved in 2025 Q1. The dramatic drop in EPS indicates poor performance this quarter.

Post Earnings Price Action Review
Designer Brands' strategy of buying DBI when revenues exceed expectations and holding for 30 days has historically delivered strong results, with a remarkable return of 98.14%, significantly surpassing the benchmark. Despite this impressive return, the strategy carries considerable risk, evidenced by a substantial maximum drawdown of -51.74%. The Sharpe ratio of 0.44 suggests moderate risk and returns, highlighting the volatile nature of this approach. This strategy requires careful consideration due to its high-risk profile, which should be weighed against potential gains. Investors should remain cautious and assess their risk tolerance before adopting this strategy, given the unpredictable nature of Designer Brands' stock performance.

CEO Commentary
Douglas M. Howe, CEO & Director, noted that Designer Brands has faced a challenging macro environment with a comparable sales decline of 8% due to weakening consumer sentiment and adverse weather conditions. He emphasized the successful implementation of cost-saving measures, projecting $20 million to $30 million in savings for 2025. Howe highlighted the brand's strategic focus on enhancing customer value through optimized assortments and improved inventory management while expressing optimism regarding the ongoing transformation of the business despite prevailing uncertainties. He acknowledged the strong performance of Topo, which grew 84% year-over-year, reinforcing the company's commitment to brand growth and customer-centric strategies.

Guidance
Designer Brands has withdrawn its forward-looking guidance due to the unpredictable macroeconomic environment impacting consumer sentiment. The company anticipates operating expenses to decrease by $20 million to $30 million compared to the previous year, with a capital expenditure reduction from $50 million to $40 million. No specific revenue or EPS targets were provided, reflecting the company's cautious approach as it adapts to current market conditions.

Additional News
Recently, Designer Brands announced its commitment to maintaining a dividend of $0.05 per share, indicating confidence in managing current challenges with its liquidity position. Despite withdrawing its 2025 guidance, the company remains focused on mitigating the impact of tariffs and preserving margins amid economic volatility. Furthermore, Designer Brands has been proactive in addressing climate change and corporate responsibility issues, having donated over eleven million pairs of shoes to Soles4Souls since 2018. This initiative underscores the company's dedication to community support and environmental sustainability, aligning with their corporate values.