Loading...
01/10 16:01
Loading...
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call reflects a challenging financial situation with declining sales and negative consumer sentiment. Despite cost-saving measures, the lack of clear guidance and ongoing risks such as tariffs and supply chain issues contribute to uncertainty. The Q&A section highlights concerns about these risks, and the absence of specific guidance further dampens sentiment. While there are some positive aspects, like the growth of Topo, the overall outlook remains negative, suggesting a potential stock price decline of -2% to -8% over the next two weeks.
Net Sales $687 million, down 8% year-over-year due to lower traffic and consumer sentiment.
Comparable Sales (U.S. Retail) Down 7.3% year-over-year, reflecting lower traffic and unfavorable weather conditions.
Comparable Sales (Canada Retail) Down 9.2% year-over-year, primarily due to lower traffic and exchange rate headwinds.
Brand Portfolio Sales Down 7.9% year-over-year, but operating income grew by over 30% due to expense efficiency.
Gross Margin 43%, decreased by nearly 120 basis points year-over-year due to increased markdowns.
Adjusted Operating Expenses Dropped $20 million year-over-year, but deleveraged by 80 basis points to 43.4% of sales.
Adjusted Operating Income Essentially breakeven compared to $14.7 million last year.
Net Interest Expense $11.9 million, compared to $11.6 million last year.
Adjusted Net Loss $12.5 million compared to a gain of $4.8 million last year.
Cash Position $46 million at the end of the quarter.
Total Liquidity $171.5 million, including cash and availability under the revolver.
Total Debt Outstanding $522.9 million as of the end of the quarter.
Inventory Levels Up 0.5% year-over-year, reflecting proactive measures ahead of tariff increases.
Capital Expenditures Reduced from $50 million to $40 million for the year.
New Product Launches: Pursuing strategic expansion focused on full family premium product launches with top brand partners and the introduction of digitally native brands.
Brand Performance: Topo brand sales grew 84% year-over-year, driven by strategic distribution expansion and strong sell-through.
Keds Brand Strategy: Keds saw gross margin improvement of approximately 700 basis points year-over-year due to production transition.
Market Share: DSW gained 10 basis points in athleisure footwear market share.
Canadian Market Evaluation: Actively evaluating ways to better connect with the Canadian consumer.
Cost Structure Evaluation: Implemented expense cuts leading to a 6% reduction in operating expenses for the quarter.
Inventory Management: Improved in-store product availability and fulfillment efficiency, with a 56% increase in digital orders fulfilled through logistics centers.
Strategic Focus Shift: Shifting near-term focus to amplify value in retail channels, preserve margins, and evaluate tariff mitigation strategies.
Sourcing Diversification: Less than half of sourcing will come from China by year-end, down from 70% at the start of the year.
Consumer Sentiment: The company experienced a decline in comparable sales by 8%, reflecting weakening consumer sentiment and lower traffic, particularly in February due to unfavorable weather.
Regulatory Issues: Tariffs have emerged as a significant cost, necessitating sourcing diversification strategies to mitigate risk and reduce dependency on any one country.
Supply Chain Challenges: The company is facing potential supply chain disruptions and cost headwinds due to fluctuating exposure to tariffs and ongoing trade negotiations.
Economic Factors: The macro environment has introduced increased uncertainty, leading to cautious discretionary consumer spending and necessitating the withdrawal of forward-looking guidance.
Operational Costs: The company is implementing expense cuts expected to deliver between $20 million to $30 million in savings for 2025, in response to the challenging economic environment.
Cost Structure Evaluation: Implemented expense cuts expected to deliver between $20 million to $30 million in savings over the course of 2025 compared to last year.
Retail Channel Focus: Shifted near-term focus to amplify value in retail channels, preserve margins, and control costs.
Customer Engagement: Enhancing the VIP Rewards Program to deepen customer relationships and deliver targeted promotions.
Product Optimization: Reducing choice count while increasing depth on key styles to improve inventory availability and productivity.
Sourcing Diversification: Accelerated sourcing diversification to mitigate tariff impacts and reduce dependency on China.
Brand Investment: Continued investment in strategic brands like Topo and Keds to drive growth.
2025 Guidance: Withdrew forward-looking guidance due to volatile macro environment and consumer sentiment.
Capital Expenditures: Reduced anticipated annual capital spending from $50 million to $40 million.
Revenue Expectations: Expectations for revenue remain uncertain due to ongoing consumer sentiment challenges.
Inventory Management: Maintaining flexibility in inventory investments to respond to dynamic consumer demand.
Expense Cuts: The company is implementing expense cuts expected to deliver between $20 million to $30 million in savings over the course of 2025 compared to last year.
Capital Expenditures: Anticipated annual capital spending has been reduced from $50 million to $40 million.
The earnings call presents a mixed picture. Financial performance shows some improvement, with increased gross profit and EPS, but overall sales and comparable sales are down. The company withheld full-year guidance, citing macroeconomic challenges, which may concern investors. Positive trends in certain brands and categories, along with debt reduction, are offset by sourcing and weather-related challenges. The Q&A section reveals some uncertainty and lack of clarity in management's responses, contributing to a neutral sentiment. Without a market cap, the impact is uncertain, but the mixed signals suggest a neutral stock price movement.
The earnings call presents a mixed picture: improved gross profit and EPS, strategic inventory management, and debt reduction are positives. However, sales decline, macroeconomic challenges, and withholding guidance due to uncertainties are negatives. The Q&A reveals a lack of clarity on Q4 guidance and ongoing promotional pressures. The neutral sentiment reflects these balanced factors, predicting a stock price movement within the -2% to 2% range over the next two weeks.
While the company showed improvement in sales and comps from Q1, the withdrawal of 2025 guidance due to macro uncertainties and the slight decline in gross margin are concerning. The positive trends in women's dress and Topo sales, along with debt reduction, are offset by overall negative comps and lack of specific guidance. The Q&A highlighted cautious optimism but also noted management's reluctance to provide detailed guidance, indicating mixed sentiment. Given these factors, the stock price is likely to remain neutral in the short term.
The earnings call reflects a challenging financial situation with declining sales and negative consumer sentiment. Despite cost-saving measures, the lack of clear guidance and ongoing risks such as tariffs and supply chain issues contribute to uncertainty. The Q&A section highlights concerns about these risks, and the absence of specific guidance further dampens sentiment. While there are some positive aspects, like the growth of Topo, the overall outlook remains negative, suggesting a potential stock price decline of -2% to -8% over the next two weeks.
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
