Designer Brands Inc.'s Q1 2025: Unpacking Contradictions in Tariff Strategies, Cost Control, and Inventory Management

Tariff mitigation and supply chain strategy, management incentives and cost control, inventory management and sales performance, tariff mitigation strategies, and inventory management and market conditions are the key contradictions discussed in Designer Brands Inc.'s latest 2025Q1 earnings call.



Sales and Consumer Sentiment:
- Designer Brands Inc. (NYSE:DBI) reported first quarter comparable sales down 8%, reflecting ongoing macroeconomic pressures and a weaker consumer sentiment.
- The decline was primarily due to reduced traffic, particularly in February, and a challenging seasonal business across all demographics.

Operating Expense Management:
- The company achieved a 6% reduction in operating expenses for the quarter versus the first quarter last year, implementing cuts expected to deliver between $20 million to $30 million in savings over the course of 2025 compared to last year.
- These cuts were part of a broader strategy to navigate the volatile macro environment by reducing costs and preserving margins.

Private Label Growth and Sourcing Diversification:
- Topo brand grew at 84% year-over-year, demonstrating strong underlying performance and reinforcing its momentum as an emerging growth brand.
- The company is accelerating efforts to diversify sourcing, aiming to have less than half of its sourcing come from China by the end of the year, down from 70% at the start of the year.

Inventory Management and Value Proposition:
- Total inventories were up 0.5% versus the prior year, with a focus on product availability and productivity.
- The company emphasized reinforcing the value provided beyond price, including being a one-stop shop for family footwear and offering non-footwear accessories, supported by the VIP Rewards Program.