Why Designer Brands (DBI) Shares Are Getting Obliterated Today

Adam Hejl /
2024/06/04 11:04 am EDT

What Happened:

Shares of footwear and accessories discount retailer Designer Brands (NYSE:DBI) fell 20.7% in the morning session after the company reported first quarter earnings results. Same-store sales missed by a fairly large magnitude, though revenue beat slightly. Additionally, the company's EPS missed analysts' expectations and its full-year earnings guidance was also below Wall Street's estimates. Overall, this was a mediocre quarter for Designer Brands.

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What is the market telling us:

Designer Brands's shares are somewhat volatile and over the last year have had 34 moves greater than 5%. But moves this big are very rare even for Designer Brands and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 6 months ago, when the stock dropped 35.6% on the news that the company reported third results with revenue falling below Wall Street's estimates, driven by a huge same-store sales decrease, which greatly underperformed expectations. Its full-year earnings forecast also underwhelmed. The commentary was just as bad as the results. Management said that "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" and doesn't anticipate that these headwinds will ease. Overall, it was a weaker quarter for the company, with a worrisome outlook for the coming quarters.

Designer Brands is down 2% since the beginning of the year, and at $8.82 per share it is trading 31.2% below its 52-week high of $12.81 from December 2023. Investors who bought $1,000 worth of Designer Brands's shares 5 years ago would now be looking at an investment worth $464.21.

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