Designer Brands Inc. (NYSE:DBI) saw its shares surge 15.4% in early trading after the footwear retailer delivered third-quarter earnings that dramatically outperformed expectations, even as revenue landed slightly below forecasts.
The owner of DSW Designer Shoe Warehouse reported adjusted earnings of $0.38 per share for the quarter ending November 1—more than double the analyst consensus of $0.15. Quarterly revenue totaled $752.4 million, coming in a bit shy of estimates at $756.97 million and marking a 3.2% year-over-year decline.
Profitability metrics improved notably. Gross margin climbed to 45.1%, up 210 basis points from 43.0% a year earlier. Comparable sales were down 2.4%, although this reflected a sequential improvement from the prior quarter.
CEO Doug Howe credited internal execution and resilient demand for the improved performance, saying, “Our third quarter performance represents another meaningful step forward in our transformation, as we demonstrated continued sequential improvement across multiple financial and operating metrics.”
He added, “Stronger consumer demand and improved in-store execution drove improved comparable sales in the third quarter compared to the second quarter.”
Looking ahead, Designer Brands expects fiscal 2025 net sales to decline between 3% and 5%, while projecting adjusted operating profit of $50 million to $55 million. The company also declared a dividend of $0.05 per share for both Class A and Class B shares, payable December 19.
The retailer ended the quarter with $51.4 million in cash and equivalents, a substantial improvement from $36.2 million the prior year, and continued to reduce debt to $469.8 million, down from $536.3 million.
Howe noted that momentum has carried into early Q4 despite continued macroeconomic challenges.