Designer Brands (NYSE:DBI), a company that sells shoes and fashion accessories, declined in pre-market trading after announcing disappointing third-quarter results. The company reported adjusted diluted earnings of $0.24 per share, almost half of the Street’s expectation of $0.46 per share.
Net sales declined by 9.1% year-over-year to $786.3 million, which also fell short of analysts’ expectations of $824.24 million. Designer Brands’ total comparable sales declined by 9.3% in the third quarter.
Doug Howe, Designer Brands’ CEO, commented, “This quarter, we were impacted by a footwear market that contracted for the first time since COVID coupled with unseasonably warm weather, which significantly reduced customer demand for shoes and pressured our heavily seasonal assortment.”
Howe added that the company saw “improved performance in casual and clearance categories this quarter, but this was not enough to offset the broader lack of demand.” The company’s management does not expect these macro pressures to lessen in the near term.
Moreover, Designer Brands lowered its FY23 guidance and now anticipates revenues (excluding Keds) to decline by a high-single-digit percentage. For reference, its prior guidance anticipated a mid-to-high single-digit decline. Diluted earnings (excluding Keds) will likely be in the range of $0.40 to $0.70 per share, down from its earlier guidance of between $1.20 and $1.50 per share.
What is the Target Price for DBI Stock?
Year-to-date, DBI stock has surged by more than 40%. Only two analysts have covered the stock over the past three months, and both have a Hold rating on the stock. The average DBI price target of $13.50 implies an upside potential of 5.4% at current levels.
