Designer Brands Inc.

Q1 consolidated net sales were $696 million, up 1.4% year over year, and comparable store sales declined 1.1%. Gross margin was 45.3%, up 240 basis points, and consolidated gross profit increased by $20.8 million. Adjusted operating income was $19.4 million versus an adjusted operating loss of $1.1 million last year; adjusted EPS was $0.07 versus an adjusted loss of $0.27 last year, and adjusted net income was $3.8 million versus an adjusted net loss of $13 million. Retail sales were approximately flat, Brand Portfolio sales rose 19.4%, inventories were down 6%, cash was $50 million, total liquidity was $189 million, and total debt was $475 million. For Q2, management expects total sales to be flat to slightly up, and for the full year it still expects sales in line with original guidance while EPS trends toward the high end of the annual range.

Doug Howe said the quarter showed strong execution across the company’s strategic priorities and continued momentum from late 2025. He emphasized that margin gains are being driven by structural changes in inventory management, pricing, disciplined sourcing, and channel profitability rather than mix alone. His tone was confident and constructive, pointing to improving traffic, better store performance, and continued growth in the Brand Portfolio as signs the strategy is working.

Sheamus Toal highlighted Q1 net sales of $696 million, adjusted operating income of $19.4 million, and adjusted EPS of $0.07, along with gross margin of 45.3% and a 240-basis-point improvement. He said inventory ended down 6% year over year, cash was $50 million, liquidity was $189 million, and debt was reduced to $475 million from $523 million last year. On outlook, he said Q2 sales are expected to be flat to slightly up, full-year sales guidance is unchanged, full-year tax rate should be in the low 40s, and share count is expected to be about 58 million; he also noted about a $10 million Q3 OpEx impact from incentive and stock comp programs.

Analysts focused on two main areas: how Q2 sales would split between Retail and Brand Portfolio, and how much more gross margin upside remains after the strong Q1 expansion. Management said Retail should be flat to slightly positive in Q2 while Brand Portfolio should remain strong, and that margin gains are coming from several levers including improved IMU, fewer markdowns, and a less promotional cadence. They also said Q2 should still see margin improvement, but comparisons get tougher in the back half of the year because they will be lapping prior-year benefits and will face higher incentive compensation expense.