Designer Brands Q1: Sales Stabilize, Margins Up 280 bps

Designer Brands Inc. (DBI) posted first-quarter results that showed a business finding its footing after a prolonged stretch of declining sales. Revenue for the 13 weeks ended May 2 came in at $770.3 million, down just 0.3% from a year earlier. That marks the smallest drop in several quarters and a notable deceleration from the 5.6% slide the company reported in the same period last year.

The better news was on the margin side. Gross margin expanded 280 basis points to 35.9%, driven by lower freight costs, fewer promotional discounts, and a shift in mix toward higher-margin categories. Adjusted operating margin came in at 5.4%, up from 3.7% a year ago. Adjusted earnings per share of $0.33 beat the consensus estimate of $0.24, according to data compiled by Bloomberg.

Same-store sales fell 1.6%, an improvement from the 6.2% decline in Q1 2025. The U.S. retail segment, which includes the DSW banner, saw same-store sales slip 1.8%. The Canada segment posted a 1.1% decline. The company's brand portfolio, which includes Vince Camuto, Le Tigre, and Topo, among others, grew revenue 3.4% on a constant-currency basis.

CEO Doug Howe said the quarter reflected "stabilizing trends" in the core footwear business and early traction from initiatives to refresh the merchandise assortment and improve the in-store experience. He pointed to strength in dress and seasonal categories, which offset continued weakness in athletic footwear.

"We are seeing the consumer respond to newness and fashion relevance," Howe said on the earnings call. "The team is executing with discipline on inventory and promotions."

The company ended the quarter with inventory down 6.4% year over year, a sign that the destocking cycle that weighed on margins in prior periods is largely behind it. Designer Brands also generated $42.6 million in operating cash flow, up from $18.2 million in the year-ago period.

CFO Sheamus Toal said the company now expects full-year adjusted EPS in a range of $1.50 to $1.70, up from a prior outlook of $1.40 to $1.60. The guidance assumes same-store sales growth of flat to up 1% for the remainder of the year.

One item flagged in the release: the company identified immaterial corrections to prior-year periods tied to a misapplication of duty rates on Topo-branded products imported into the U.S. The adjustments did not affect Q1 results, and the company said it is working with customs authorities to resolve the issue.

Designer Brands shares rose 4.8% in early trading Monday. The stock carries an Alpha Score of 64 out of 100, a moderate rating within the financial services sector. The full earnings transcript and PFG stock page offer additional detail on the quarter.

For a broader look at how retailers are navigating the current environment, see the latest stock market analysis.