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Designer Brands Forecasting Mid-Single Digit Sales Decline in FY23


Last week, DSW parent company Designer Brands detailed its outlook for the current fiscal year by suggesting a consumer purchasing pullback that commenced last October will continue through H1 followed by a “soft landing” in the back-to-school quarter. Designer Brands’ U.S. retail sales are forecast to decline by mid-single digits for the year, excluding its new Keds’ business, despite flat quarterly comparable stores sales in Q3 and Q4. Acquired from Wolverine Worldwide, Keds is expected to contribute $75 to $85 million in total sales this FY.

Meanwhile, the company’s external wholesale business is projected to decline by 25 to 35 percent this spring year-over-year before recovering to a 5 to 15 percent drop in the Fall. Annual brand portfolio sales, excluding the Keds’ business, are seen as falling 15 to 20 percent this year.

Over the last six years, Designer Brands has aimed to retain its dominant status in the women’s dress and seasonal categories while bolstering its offerings in the athleisure segment. The result has seen athleisure move from about 30 percent of DSW’s assortment to more than 47 percent.

During its recently completed fiscal year, DBI generated comparable store sales growth of 4.4 percent while it continued fortifying its offerings of athleisure and casual styles. As it aims to makes its own brands an estimated one-third of its overall revenues by FY26, the company expanded its own brand penetration in DSW doors to 24 percent from 19 percent a year ago and grew its direct-to-consumer business to 18 percent penetration from 14 percent last year. In Q4, the Lucky (+65%), Kelly and Katy (+28%), and Crown vintage (+17%) brands each generated year-over-year, double-digit sales growth.

But a “pressured consumer” coupled with competitive and promotional environment contributed to an 8.1 percent retail comp decline and overall, year-over-year sales decline of 7.5 percent to $760.5 million in the final period. Clearance sales were up 2 percent year-over-year, but regular price selling was down 10 percent.