Shares of Designer Brands (NYSE:DBI) soared on Tuesday, peaking at a 12.7% gain near 1:20 p.m. EST. The company behind the Designer Shoe Warehouse retail chain didn't have any significant news of its own today. Instead, the stock surged as part of a nearly universal market rise as investors contemplated the prospect of having several coronavirus vaccines broadly available fairly soon.
As a vendor of premium clothing, Designer Brands suffered dramatically lower sales during the lockdowns and stay-at-home measures in the spring and summer of 2020. The company bolstered its liquidity in August by taking on more debt, and the usual fall season strategies have been replaced by a hard shift toward profitable product lines, such as athleisure and kidswear. Nonetheless, Designer Brands could use a quick return to normalcy, and a successful selection of coronavirus vaccines would be a big step in that direction.
It's no surprise that Designer Brands' investors are embracing the positive vaccine news. The stock has more than tripled from the multi-year lows in March, but we're still looking at a 47% year-to-date drop in share prices. Designer Brands needs the good coronavirus news to keep coming, and faster progress would be better. In the meantime, this troubled business is walking a risky tightrope.