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Designer Brands Reports Q4 2024 Earnings with Mixed Results

Designer Brands has reported its Q4 2024 earnings, marking a potential turning point after a prolonged period of declines. The company's positive comps in retail after nine quarters could signal a recovery, though overall sales were down, affecting investor outlook.

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AI Rating:   5
Earnings Per Share (EPS)
In the fourth quarter, Designer Brands reported an adjusted EPS of $0.27, which is at the upper end of the guidance range of $0.10 to $0.30. This demonstrates an improvement in earnings but still reflects challenges in the overall sales environment.

Revenue Growth
The company experienced a decline in total sales of about 2% for the full year, influenced in part by the 53rd week of sales last year. However, U.S. retail same-store sales were up 1% in the fourth quarter, marking a return to positive comps for the first time in nine quarters, and overall growth in the Canada retail segment was seen too.

Net Income
The full-year adjusted net income dropped to $15 million from $43.2 million in the prior year, demonstrating the financial struggles faced by the company. The fourth-quarter adjusted net loss was reported at $21.3 million, showing continued financial pressure.

Gross Profit Margins
Gross profit margin for the fourth quarter was reported at 39.6%, a slight increase of 80 basis points compared to the previous year, hinting at improved operational efficiency despite still dealing with overall declines in sales.

Free Cash Flow (FCF)
The company generated positive cash flow, ending 2024 with $44.8 million of cash. However, total debt levels were also significant at $491 million, which could raise investor concerns about future cash flows.

Outlook and Guidance
For 2025, the guidance suggests expected sales growth in the low single digits, which may not be enough to alleviate earlier declines.

Overall, while the positive comps may attract investor interest, the net income drop and decreasing total sales raise concerns about long-term growth potential.
Stocks:  DBI