MW DSW parent is the latest shoemaker to pull its outlook. The stock falls hard despite low expectations.

By Bill Peters

Management says it's worried about the 'indirect impact' of tariffs

Shares of Designer Brands Inc. fell sharply on Tuesday, after the company that owns the DSW footwear chain and Keds sneakers became the latest shoe-industry player to withdraw its full-year outlook, citing "persistent instability" and continued pressure on shoppers.

Designer Brands' stock $(DBI.AU)$ finished 18.5% lower in the wake of the announcement. After hours, the stock was down 1.6%.

That decline is the latest hit to a company whose shares have fallen nearly 60% over the past 12 months, even as it tries to refresh its product selection and marketing. Heading into the results, UBS analysts said expectations were already low, as consumers try to make ends meet amid high prices that economists worry could be driven higher by tariffs.

"Given the persistent instability and pressure on consumer discretionary spend, we've made the decision to withdraw our 2025 guidance for the time being," Chief Executive Doug Howe said in the company's first-quarter earnings release.

In April, comfort-footwear maker Skechers Inc. $(SKX)$ withdrew its outlook for the year, citing "macroeconomic uncertainty stemming from global trade policies." In May, Deckers Outdoor Corp. (DECK), which makes Uggs and Hokas, said it would not offer a full-year outlook for similar reasons. Discount chain Ross Stores Inc. $(ROST)$ also withdrew its full-year financial forecast. However, few companies overall have outright pulled their outlooks.

For the first quarter, Designer Brands reported an adjusted loss per share of 26 cents, worse than Wall Street's expectations for a loss of 6 cents. Sales fell 8% to $686.9 million, with a 7.8% drop in same-store sales. Both were below analysts' projections.

During the company's earnings call, Howe said trends in Designer Brands' second quarter were similar to the end of the first quarter.

As for tariffs, he said, "the biggest concern we have overall as Designer Brands is the indirect impact that tariffs are having on just the uncertainty and the volatility on customer sentiment."

He said that he currently expects "less than half" of the company's product sourcing would come from China by year's end, down from 70% at the beginning of the year. And the company said it expected save $20 million to $30 million over 2025.

Howe called out big sales gains for the company's Topo athletic sneakers, as it tries to sell them in more places and introduce new products under the brand name. Keds, he said, saw "increased momentum" as the company cleared a surplus of unsold shoes and relaunched some styles to add more comfort.

Still, he said, anxious consumers had complicated Designer Brands' momentum, after it brought in new leadership and tried to update its shelf selections as part of a bigger growth effort begun more than a year ago. Those efforts, he said, had begun to pay off in the second half of its past fiscal year, after what he said was the first same-store sales gain at DSW in nine quarters.

"Heading into fiscal 2025, we were confident in our plans to build on this momentum," Howe said. "However, as the macro environment has evolved rapidly, it has introduced increased uncertainty and reduced planning visibility, particularly around consumer behavior."

Elsewhere, yoga-wear maker Lululemon Athletica Inc. $(LULU)$ has also also tried to reinvigorate sales growth with new products after the pandemic's at-home workout boom. But some analysts have said that despite a rebound in mall traffic, the revamp hasn't worked, amid competition from dupes and celebrity-backed brands.

Morgan Stanley analysts, in downgrading Lululemon's stock this week, said "challenges stemming from higher competition are most likely permanent."

-Bill Peters

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June 10, 2025 16:29 ET (20:29 GMT)

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