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Designer Brands Inc. (DBI)·Q2 2026 Earnings Summary

Executive Summary

  • Q2 printed resilient sequential improvement: revenue $0.740B (-4.2% YoY), gross margin 43.7% (-30 bps YoY), GAAP diluted EPS $0.22 and adjusted EPS $0.34; adjusted EPS was above S&P Global consensus while revenue was essentially in line .*
  • U.S. Retail comps improved sequentially to -4.9% (from -7.3% in Q1), with women’s dress comp +5% and “top eight” brands penetration rising to 45% of sales; store conversion rose and DoorDash marketplace is sourcing ~85% new-to-DSW customers .
  • Management maintained a cautious stance, continuing to withhold FY2025 guidance amid tariff uncertainty and discretionary softness; Q3 carries a known $9M YoY headwind from last year’s bonus accrual reversal .
  • Liquidity remains adequate: cash $44.9M, revolver availability $104.3M, inventories $610.9M, and debt $516.3M at quarter-end; debt was further reduced post-quarter to $476.1M in fiscal August .

What Went Well and What Went Wrong

What Went Well

  • Sequential comps improved by 280 bps vs Q1, supported by back-to-school strength, higher traffic, and notable conversion uptick; adjusted EPS grew YoY to $0.34 from $0.29 .
  • Category and brand execution: women’s dress comp +5% (900 bps improvement vs Q1) and “top eight” brands delivered +1% comp with penetration rising to 45% of sales; athletic improved sequentially and Kids Athletic was flat .
  • Omni and marketing progress: simplified clearance pricing lifted clearance sales +3% YoY; new DoorDash partnership bringing ~85% new customers; brand repositioning launched (“Let Us Surprise You”) with a reimagined Framingham pilot store featuring Fitfinder and AR try-on kiosks .

What Went Wrong

  • Revenue declined 4.2% YoY to $0.740B, and total comps were -5.0%; consolidated operating margin was 3.6%, slightly below last year’s 3.7% .
  • Brand Portfolio segment down 23.8% YoY (anticipated due to lower internal sales to DSW), with segment gross margin down 240 bps; consolidated gross margin fell 30 bps YoY to 43.7% mainly on lower IMU from higher athletic mix .
  • Macro/tariffs remain a drag on sentiment; company withheld FY2025 guidance and highlighted Q3’s ~$9M headwind from last year’s bonus accrual reversal, limiting near-term visibility .

Financial Results

Consolidated performance vs prior periods

MetricQ2 2025Q4 2025Q1 2026Q2 2026
Net Sales ($USD Billions)$0.772 $0.714 $0.687 $0.740
GAAP Diluted EPS ($USD)$0.24 ($0.80) ($0.36) $0.22
Adjusted Diluted EPS ($USD)$0.29 ($0.44) ($0.26) $0.34
Gross Margin %44.0% 39.6% 43.0% 43.7%
Operating Margin %3.7% (3.6)% (1.1)% 3.6%
Total Comparable Sales %(1.4)% +0.5% (7.8)% (5.0)%

Segment breakdown (Net Sales and Gross Profit)

SegmentQ2 2025 Net Sales ($USD Millions)Q2 2026 Net Sales ($USD Millions)Q2 2025 Gross Profit Margin %Q2 2026 Gross Profit Margin %
U.S. Retail$641.7 $610.9 44.1% 43.3%
Canada Retail$74.8 $75.1 46.9% 46.6%
Brand Portfolio$96.0 $73.2 27.7% 25.3%
Consolidated$771.9 $739.8 44.0% 43.7%

KPIs and Operating metrics

KPIQ4 2025Q1 2026Q2 2026
Cash & Equivalents ($USD Millions)$44.8 $46.0 $44.9
Inventories ($USD Millions)$599.8 $623.6 $610.9
Total Debt ($USD Millions)$484.3 $522.9 $516.3
Revolver Availability ($USD Millions)$127.3 $125.5 $104.3
Weighted Avg Diluted Shares (Millions)47.9 48.2 49.7
Total Stores669 669 668

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Diluted EPSFY2025$0.30–$0.50 (issued Mar 20, 2025) Withdrawn (June 10, 2025) Lowered/Withdrawn
Net Sales GrowthFY2025Low-single digits (Mar 20, 2025) Withdrawn (June 10, 2025) Lowered/Withdrawn
Company OutlookFY2025N/ANot reinstating FY2025 guidance (Sept 9, 2025) Maintained no guidance
SG&A/OpExQ3 2026N/A~$9M YoY headwind from prior-year bonus accrual reversal New headwind disclosed

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2025)Previous Mentions (Q1 2026)Current Period (Q2 2026)Trend
Guidance & MacroProvided FY2025 EPS and sales growth guidance; positive Q4 comps after nine quarters Withdrew FY2025 guidance amid soft start, tariff uncertainty Withholding guidance due to tariff/discretionary uncertainty Cautious/unchanged
Marketing & BrandStrategy refresh and customer-first focus Focus on amplifying value, cost control “Let Us Surprise You” brand repositioning; store collateral/in-caps; optimized marketing Improving execution
Omni/DigitalOmnichannel enhancement Pivot away from “empty calorie” digital sales to profitability DoorDash partnership (~85% new customers), conversion up; more DC fulfillment Improving profitability focus
Product AssortmentModernize assortment Margin preservation Choice count down 25%, depth up 15%; women’s dress +5% comp; top brands +1% comp Mix improving
Supply Chain/TariffsOngoing trade barriers risk Tariff mitigation actions underway Diversifying sourcing; Topo early price increases, no demand hit Mitigating
Canada SegmentQ4 comps +4.7% Q1 comps -9.2% Sequential improvement; July turned positive comp Improving

Management Commentary

  • CEO: “Our second quarter results were highlighted by a 280-basis point sequential improvement in comparable sales from the first quarter…” .
  • CEO on sentiment: “Given the ongoing macroeconomic volatility with recent extended tariff increases… we remain committed to disciplined execution…” .
  • CEO on brand repositioning: “We unveiled our new tagline, ‘Let Us Surprise You’… a pivotal step in reinvigorating our DSW brand identity” .
  • CFO: “Adjusted operating expenses dropped $14.1 million versus last year… adjusted diluted EPS for the quarter… $0.34… above last year’s $0.29” .
  • CFO on liquidity and deleveraging: “Ended the quarter with total debt… $516.3M… subsequent to the end… paid down debt to… $476.1M” .

Q&A Highlights

  • Interquarter trends and August momentum: comps improved through the quarter; end-of-quarter still slightly negative, but store comps turned positive in August; deliberate pullback on lower-margin digital sales to improve profitability .
  • Tariffs: direct impact manageable (Brand Portfolio ~20% imported); greater concern is indirect consumer sentiment; selective price pass-throughs with maintained IMU; early days but cautiously optimistic .
  • Marketing investment: optimizing mix without significant deleverage; highlighting DSW differentiation; launched brand campaign on Sept 2; tracking returns closely .
  • Brand activations: Birkenstock takeover and stronger collateral; “top eight” brands performance including Nike; improving access/in-stock levels .
  • Assortment and SG&A savings: choice count down 25%, depth up 15% to improve in-stock; $20–$30M FY2025 SG&A savings targeted—~⅓ professional fees, ~½ personnel actions, remainder depreciation/occupancy puts/takes .

Estimates Context

MetricQ4 2025 ConsensusQ4 2025 ActualQ1 2026 ConsensusQ1 2026 ActualQ2 2026 ConsensusQ2 2026 Actual
Primary EPS ($)-0.487*-0.44-0.062*-0.260.223*0.34
Revenue ($USD Billions)0.719*0.7140.733*0.6870.738*0.740
EBITDA ($USD Millions)-6.8*-19.732.05*9.846.0*40.3

Values retrieved from S&P Global.*

Implications:

  • Q2 2026 adjusted EPS beat consensus; revenue was modestly above consensus; EBITDA was below consensus, indicating mixed quality of beat (pricing/mix and cost control vs lower EBITDA conversion). Actuals validated by company disclosures .

Key Takeaways for Investors

  • Sequential comp recovery, category/brand strength, and conversion gains support a near-term stabilization narrative; adjusted EPS rose YoY to $0.34 and beat Street, a potential positive catalyst despite withheld guidance .*
  • Expect Q3 optics to be tougher given the ~$9M bonus accrual reversal headwind; monitor whether marketing/brand repositioning sustains August momentum into back-to-school/boot season .
  • Watch mix and IMU: athletic penetration pressured gross margin (-30 bps YoY), but price discipline and inventory depth (choice down 25%, depth up 15%) aim to protect margin and conversion .
  • Brand Portfolio inflection hinges on external wholesale growth (up YoY) while internal sales to DSW normalize; execution on Topo/Keds scaling is key .
  • Liquidity and deleveraging improved post-quarter (debt to $476.1M in fiscal August); inventory down 5% YoY supports working capital health .
  • Risk factors: macro/tariff sentiment and digital channel profitability; management’s shift away from lower-margin digital “empty calorie” sales should enhance margin quality even if comps remain pressured .
  • Trading lens: near-term sentiment could hinge on evidence of sustained August trends and brand/marketing ROI; the EPS beat vs consensus establishes a floor, but withheld guidance may cap upside until Q3 visibility improves.*

Additional Detail

Comparable Sales by Segment

SegmentQ2 2025Q1 2026Q2 2026
U.S. Retail(1.1)% (7.3)% (4.9)%
Canada Retail(3.1)% (9.2)% (0.6)%
Brand Portfolio DTC(7.0)% (27.0)% (29.2)%
Total(1.4)% (7.8)% (5.0)%

Notable operational datapoints

  • Clearance sales +3% YoY on simplified pricing; store conversion up YoY; DoorDash marketplace ~85% new customers .
  • “Top eight” brands: +1% comp; 300 bps penetration increase to 45% of sales .
  • Canada Retail: sequential improvement; July positive comp .
  • Gross margin drivers: -30 bps YoY to 43.7% driven by athletic mix; +70 bps leverage vs Q1 .

Disclosures and legal context

  • Multiple investor rights law firm notices followed Q1 guidance withdrawal and stock reaction on June 10, 2025; relevant to sentiment but no direct impact on operations .

All quantitative and qualitative statements above are sourced from Designer Brands’ Q2 2026 8-K, press release, and earnings call transcript, with explicit citations. Actuals validated to filings and releases .