DBI▲
Designer Brands Raises Full-Year Sales Guidance on Tariff Refunds and Brand Growth
Designer Brands Inc. raised its full-year sales guidance to flat-to-up 1%, citing a strong start to the third quarter and back-to-school performance exceeding internal expectations. Second quarter gross margin benefited from $20.2 million in tariff refund claims, contributing 280 basis points to the reported improvement, while the company recorded a one-time interest expense of $16.1 million related to the sale of those claims. The company achieved 150 basis points of core gross margin expansion through disciplined markdown management and elevated assortments, and brand portfolio growth of 18% was fueled by double-digit wholesale increases, including exclusive brands Topo and Jessica Simpson. Management expects the Topo brand to exceed $100 million in revenue by 2027, with growth from expanding into new specialty run distribution channels, and noted that athletic demand improved sequentially by 400 basis points in August. Total debt was reduced by over $93 million compared to the prior year, and the relaunch of the VIP rewards program this month aims to increase customer frequency and retention for the 30 million members who represent nearly 90% of total transactions.