Designer Brands Inc. (NYSE:DBI) reported first-quarter results on Tuesday that exceeded profit expectations, but weaker-than-expected guidance for the full year weighed on investor sentiment and sent the footwear retailer’s shares down 9% in premarket trading.
For the quarter ended May 2, the company posted adjusted earnings per share of $0.07, outperforming analyst forecasts for a loss of $0.09 per share by $0.16. Revenue totaled $696.3 million, slightly below the consensus estimate of $700.24 million, although sales increased 1.4% from $686.9 million in the same period last year.
Despite the stronger-than-expected earnings performance, investors focused on the company’s full-year outlook. Designer Brands reaffirmed its fiscal 2026 earnings guidance of $0.28 to $0.38 per share. The midpoint of $0.33 remains below Wall Street expectations of $0.40 per share.
Profitability improved during the quarter, with gross margin expanding by 240 basis points to 45.3%, compared with 42.9% a year earlier. The company attributed the improvement to better inventory management, disciplined pricing strategies and stronger profitability across its sales channels.
The Brand Portfolio division delivered particularly strong results, with net sales rising 19.4% year-over-year to $114.5 million. Meanwhile, performance in the Retail segment was largely unchanged from the prior-year period.
“Our strong start to the year was underscored by double-digit sales growth in our Brand Portfolio segment and encouraging stabilization in our Retail segment,” said Doug Howe, Chief Executive Officer. “Following our encouraging start to the year, we believe in our ability to achieve the high end of our fiscal 2026 EPS guidance range, even amidst ongoing uncertainty in the macroeconomic environment.”
The company maintained its full-year fiscal 2026 revenue outlook, continuing to forecast net sales ranging from a 1% decline to a 1% increase.
Designer Brands also strengthened its balance sheet during the quarter. Inventory levels fell to $586.6 million from $623.6 million a year earlier, while total debt declined to $475.3 million from $522.9 million in the prior-year period.