DBI - Designer Brands Sees Improving Financials Ahead

2024-06-24 21:36:42 ET

Summary

• Designer Brands reported weak financials in Q4 due to inventory management, but reported a gradual improvement in Q1 as assortment, marketing, and omnichannel efforts started to show results.
• The company expects the improvements' momentum to continue into FY2024 and beyond, and I believe that investors should start to look closely for sequential improvements in sales.
• The stock's valuation seems to be balanced, largely determined by the sustainable margin level outlook beyond FY2024.

Designer Brands Inc. ( DBI ), the footwear retailer, has continued to report weak financials after my previous article on the stock – the company lowered its FY2023 guidance with the Q3 report as I previously wrote in the article, and the Q4 weakness seemingly related to inventory cleansing led to a -28% sell-off following the report that was quickly mitigated as the stock rose back. The start of FY2024 has started with less noticeable weakness so far, and Designer Brands expects improvements in the rest of the year....

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