13 Apr Designer Brands Sets $4 Billion Goal For Fiscal 2026
Designer Brands, the parent of DSW, raised its EPS outlook for the current year and established a goal of reaching $4 billion in sales by fiscal 2026. The update comes as the company holds an Investor Day Event on April 8, 2022.
Sales were $3.2 billion in fiscal 2021 (fiscal year ending January 30, 2022)
Other key announcements scheduled for Investor Day include:
- Plans to double sales of owned brands, primarily in DTC channels, by fiscal 2026;
- Target EPS Range of $2.75 to $2.85 in fiscal 2026;
- Raise full-year fiscal 2022 EPS outlook from $1.75 to $1.85 to a range of $1.80 to $1.90; and
- Reinstate dividend of $0.05 per share for the first quarter of fiscal 2022.
“At Designer Brands, we have truly taken control of our destiny as we have transformed into a brand builder, marrying our world-class design and sourcing capabilities to our industry-leading direct-to-consumer infrastructure. We know our customers like our best friends and utilize the data, feedback and insights gleaned from our nearly 30 million loyalty members to efficiently design top-quality products suited specifically for them and engage with them in innovative ways across any and all mediums they desire. Our nimble business model and the agile team have the ability to pivot with our consumers’ preferences and meet them where they want to shop,” said Roger Rawlins, CEO, Designer Brands.
“Our Owned Brands are the key driver of growth over the next five years, and we plan to double sales of these brands by fiscal 2026. This growth is complemented by maintaining our relationships with top national brand partners who utilize our leading omni-channel capabilities in their own DTC efforts in ways unique to DBI. In addition to our updated and differentiated assortment, we are expanding upon our already dominant sourcing and supply chain capabilities, leading to quicker speed to market with new designs and faster delivery times. Designer Brands’ mission to inspire self-expression is supported by our integrated organization, and this will meaningfully grow shareholder value over the long-term,” Rawlins continued.
During the event, Designer Brands’ management team will provide a deeper look at the company’s differentiated capabilities that will drive growth, demonstrated by the goal to double sales of Owned Brands in all channels and maintain sales in National Brands. In addition, the management team will outline the company’s specific initiatives to meaningfully grow shareholder value.
- Leading with Owned Brands, transforming from a retailer to a brand builder
- Tapping its nearly 30 million customers to leverage data analytics from its omni-channel platform
- Evolving partnerships with National Brands through value and must-have capabilities
- Delivering shareholder value through topline growth, margin expansion and cash generation
Long-Term Financial Outlook
During Investor Day, Designer Brands will outline a five-year financial roadmap that it expects to deliver significant bottom-line growth, building upon the investments made over the past several years and the integration work that has been completed resulting in a transformed business.
Designer Brands is announcing the following financial targets, which it anticipates reaching by fiscal 2026 (fiscal year ending January 30, 2027).
- Revenue of $4 billion, up from $3.2 billion in fiscal 2021;
- Gross profit margin of 35 percent, up from 33.4 percent in fiscal 2021;
- Operating margin of 9 percent, improving over 200 basis points;
- Target EPS range of $2.75 to $2.85, up from $1.70 in fiscal 2021; and
- Generation of over $1 billion of cash from operating activities over the next five years.
Designer Brands expects this growth to be driven by doubling its Owned Brand sales, from 19 percent of its total revenue to nearly one-third, with most of that business in it own DTC channels. This growth is highly margined accretive and is expected to drive its operating margin higher over the longer term.
Updated Fiscal 2022 Financial Outlook
Designer Brands is updating its fiscal 2022 outlook. For the fiscal 2022 full year, EPS is now expected to be in the range of $1.80 to $1.90.
Reinstatement of Cash Dividend
The company announced today that its Board of Directors approved the reinstatement of its regular quarterly cash dividend to shareholders, starting in the first quarter of fiscal 2022. A dividend of $0.05 per share of Class A common stock will be paid on May 6, 2022 to shareholders of record as of the close of business on April 22, 2022. The dividend will be paid out of its capital surplus as defined under the Ohio General Corporation Law.
Future declarations of dividends are subject to Board approval and may be adjusted based on the company’s results of operations, financial position or market conditions. As it is customary, details regarding the record and payment dates for any future quarterly dividends will be announced when such dividends are declared by the Board.
Share Repurchase Program
During the first quarter of fiscal 2022 and through April 6, 2022, Designer Brands has repurchased 1.5 million shares of its Class A common stock at an average price per share of $13.71 pursuant to its Board-authorized $500 million share repurchase program. As of April 6, 2022, $313.6 million remained available for repurchase under the Board-authorized program.