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Designer Brands' turnaround is progressing.
Management forecast as much as $55 million in adjusted operating profits in 2025.
Shares of Designer Brands (NYSE: DBI) rocketed 48% higher on Tuesday after the footwear retailer's profits topped investors' expectations.
Image source: Getty Images.
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Designer Brands' net sales declined by 3.2% year over year to $752.4 million in its fiscal third quarter ended Nov. 1. Total comparable sales at stores open at least 14 months dropped 2.4%. However, that was a significant improvement from the 5% decline in comps in the second quarter.
"Our third quarter performance represents another meaningful step forward in our transformation, as we demonstrated continued sequential improvement across multiple financial and operating metrics," CEO Doug Howe said in a press release.
Moreover, Designer Brands' expense management initiatives helped to drive its gross margin to 45.1%, up from 43% in the year-ago quarter. The company's adjusted net income, in turn, jumped 36% to $19.6 million.
Better still, Designer Brands' adjusted earnings per share, which were boosted by stock buybacks, surged 41% to $0.38. That crushed Wall Street's estimates, which had called for per-share profits of $0.18.
Promising ongoing business trends prompted Designer Brands to issue an optimistic full-year profit forecast. Management guided for adjusted operating income of $50 million to $55 million in fiscal 2025.
"I'm encouraged that this positive momentum has extended into the early part of the fourth quarter, reinforcing the progress of our strategic initiatives and positioning us well as we close out the year," Howe said.
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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends Designer Brands. The Motley Fool has a disclosure policy.
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