Designer Brands Inc. Q4 FY2025 earnings call

• Doug Howell welcomes new CFO Seamus Toole and highlights disciplined execution in 4Q and full fiscal 2025 results. • Net sales were flat in 4Q with consolidated comparable sales improving sequentially by 50 basis points; full year total company sales declined 3.9% and comp sales were down 4.3% but adjusted operating income was $65 million above guidance. • Enhanced retail product strategy, launched DSW brand positioning campaign with 79 billion total impressions in 2025. • Brought U.S. and Canada retail under streamlined reporting structure and right-sized shared services. • In 2026, focus on winning with merchandise, amplifying/expanding DSW brand positioning, elevating in-store customer experience, and building/scaling brand portfolio. • Refreshed merchant team shaping 2026 assortment, working with Consensus for new brands, focusing on inventory optimization. • Launched Let Us Surprise You campaign for spring 2026 and relaunching loyalty program. • Planning new store openings and remodels, and continuing brand portfolio transformation with exclusive brands

Retail Segment: 4Q25 total sales flat year over year, comparable sales down 1.7% which was an improvement from 2.1% in the third quarter, driven by strength in the boost category, affordable luxury, and accessories; full year total sales declined 3.4% with comparable sales declining 3.9%. In the fourth quarter, retail operating profit expanded with a gross margin improvement of 140 basis points compared to 4Q of 2024, and for the full year, gross margin improved 30 basis points. Brand Portfolio Segment: 4Q25 sales were up over 5% driven by Topo up 42% and Jessica Simpson growing 17% versus last year; for the full year, total sales were down 9% but Topo continued to drive impressive growth up 46% on the year, and the segment drove an $8 million increase in operating income with an 80 basis point expansion in brand gross margin

• 2026 net sales expected to be between -1% and +1% driven by brand portfolio sales growth double digits. • Expect operating income growth through gross profit expansion and efficiency. • Guidance includes right-sizing workforce in 2025 and normalized incentive comp in 2026 with an effective tax rate of approximately 40%. • EPS expected between 28 cents and 38 cents per diluted share on an average diluted share count of 58 million shares. • Q1 sales anticipated to be flat to up low single digits and EPS breakeven to slightly positive, with stronger first half and more difficult back half comparisons

• Volatile macro environment including evolving tariffs dynamics and Middle East conflict which may introduce inflationary pressure and impact consumer sentiment

Q: Comment on performance in top eight national brands and the shape of the revenue guide.

A: Doug states they are evolving to top 10 brands, top eight drove comp increase in 2025; guidance is conservative due to macro uncertainty, Q1 momentum continued, and there's strong double-digit wholesale growth.

Q: Questions about share count increase and interest expenses.

A: Seamus says share count increase is due to including full dilutive shares in profitable periods; interest expenses are expected to be controlled with lower debt levels, anticipating ~$40 million interest for the full year.

Q: Questions about inventory, tariffs, and category-wise performance.

A: Doug says tariff environment is evolving, guidance is built on new tariffs largely inactive; category-wise is broad-based with growth in dress, boots, sandals, and promotional approach is more surgical with reduced markdowns and conservatively managed inventory