Designer Brands reported a better-than-feared loss in the fiscal fourth quarter (ended Jan. 30) but missed analysts’ expectations for revenues. Shares of the shoe stores company slid 1.7% in Tuesday’s extended trading session after closing 2.1% lower on the day.
Designer Brands (DBI) incurred a loss of $0.53 per share in 4Q, compared to the $0.68 loss per share estimated by analysts. The company recorded a loss of $0.11 per share in the same quarter last year.
Net sales came in at $609.4 million, falling short of analysts’ expectations of $623.77 million and decreasing 26.6% year-over-year. Comparable sales declined 20.1%, while gross profit dipped 34.4% due to lower sales volume, which was impacted by the pandemic. (See Designer Brands stock analysis on TipRanks)
Designer Brands CEO Roger Rawlins said, “In 2021, Designer Brands will further stabilize our business by continuing to invest in the premier footwear brands our consumers demand, improving our digital and omni-channel capabilities and leveraging our ability to design and source goods.”
Recently, Deutsche Bank analyst Paul Trussell increased the stock’s price target to $12 (23% downside potential) from $7 and reiterated a Hold rating.
In a note to investors, Trussell said, “COVID has been a meaningful positive catalyst for margin trajectory as it forced retailers to make decisions about organizational structure, real estate, and pace of digital investments while also experiencing reduced competition and an opportunity to reset promotional activity and inventory level.”
The rest of the Street is cautiously optimistic about the stock with a Moderate Buy consensus rating. That’s based on 1 Buy versus 1 Hold. The average analyst price target of $11.25 implies a 27.7% downside potential to current levels.
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