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Why Designer Brands' Stock Is Down Today

By John Rosevear - Jun 18, 2020 at 12:10PM

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The owner of DSW had a rougher quarter than expected.

What happened

Shares of big-box shoe retailer Designer Brands (DBI -0.06%) opened lower on Thursday, after the company reported a wider loss than Wall Street had expected.

As of 11 a.m. EDT, Designer Brands' shares were down about 4.1% from Wednesday's closing price.

So what

Designer Brands reported earnings for the quarter ended May 4 before the market opened on Thursday, and they weren't what Wall Street had expected. On a non-GAAP adjusted basis, Designer Brands lost $1.83 per share in the quarter as revenue fell 44.7% from a year ago to $482.8 million.

Designer Brands' revenue was a bit above analysts' estimates, but its loss was much wider than anticipated. Wall Street analysts polled by Thomson Reuters had expected an adjusted loss of $0.60 per share on revenue of $481.16 million, on average.

A woman inspects a sneaker in a shoe store.

Image source: Getty Images.

In a statement, CEO Roger Rawlins noted that the company was able to end the quarter with inventory on hand flat versus a year ago, as it took advantage of recent investments in "digital infrastructure" to drive online sales. Online sales accounted for half of total demand for the quarter, while same-store comparable sales were down 42%, he said.

Now what

As of Thursday, the company said, it has reopened about 90% of its total store base. It expects to have most or all of its stores in North America open by the end of June. 

But beyond that, Designer Brands declined to provide retail-store investors with guidance for the current quarter and fiscal year, citing "the rapidly evolving COVID-19 environment."

John Rosevear has no position in any of the stocks mentioned. The Motley Fool recommends Designer Brands Inc. The Motley Fool has a disclosure policy.

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