Designer Brands Inc. Q4 FY2024 earnings call

• Appreciation for associates' hard work. Return to positive comps in Q4 2024 after nine quarters. Leadership team refresh, assortment revitalization with more athleisure, strengthened brand partner relationships. Marketing focus on holiday season, giftable items. Brand Portfolio segment saw improved operating margin with expanded gross margins and reduced expenses. 2025 strategic focus areas: customer first approach with analytics, VIP rewards program revamp, omnichannel experience enhancement; assortment revitalization with data-driven product offering; brand portfolio strategies including private label growth, wholesale brand advancements, and investment in key brands like Topo Athletic and Keds.

U.S. Retail: Fourth quarter comps up 1% excluding the 53rd week; full year total sales down roughly 2%, comps down 1.7%. Canada Retail: Fourth quarter comps up 5%; full year comps down 2%, sales up 7% due to adding Rubino. Brand Portfolio: Fourth quarter sales up approximately 12%; full year up roughly 14%. Expanded gross margins by 100 basis points, reduced segment operating expenses by nearly 700 basis points. Topo Athletic was up nearly 80% and Jessica Simpson up over 20% in wholesale sales for the year.

• Consolidated sales expected low single digits growth in 2025. U.S. Retail: mid single-digit net sales growth, mid single-digit comp growth. Canada Retail: mid to high single-digit growth. Brand Portfolio: mid single-digit growth. Adjusted EPS expected $0.30 to $0.50, nearly 50% increase from 2024. Capital expenditures expected $45 million to $55 million.

• Macro uncertainty impacting consumer spending habits. Inflation, rising prices, and less discretionary income leading to selective spending. Uncertainty related to tariff policies.

Q: Could you tell us more on Q4 athleisure growth, Nike's performance, and Q1 sales expectation? Also, details on Q1 quarter-to-date and implications for first quarter decline range.

A: Doug Howe mentioned athleisure penetration increased, top eight brands had 25% full-year growth. Jared Poff noted Q1 started slower than anticipated due to macro environment, incorporated into 2025 guidance.

Q: Could you give a sense of gross margin for the year and SG&A dollar growth, and promotional strategy look?

A: Jared Poff said promotional activity is expected to leverage gross margin rate due to inventory availability efforts. SG&A has ~$50 million added over last year, anchored on West Coast Logistics Center, management incentive plan, and annualizing Rubino.