Designer Brands Q2 2024 Earnings Call Transcript

Quartr
Provided by Quartr
September 7, 2023

There are 8 speakers on the call.

Operator

Good morning, and welcome to the Designer Brands Second Quarter 2023 Earnings Conference Call. All participants will be in listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I'd now like to turn the conference over to Justin Fisher, Director of Investor Relations.

Operator

Please go ahead.

Speaker 1

Good morning. Earlier today, the company issued a press release comparing results of operations for the 13 week period ending July 29, 2023 to 13 week period ended July 30, 2022. Please note that the financial results that we will reference Earnings, please reference our press release. Additionally, please note that remarks made about the future expectations, Plans and prospects of the company constitute forward looking statements. Results may differ materially due to the various factors listed in today's press release and the company's public filings with the SEC.

Speaker 1

The company assumes no obligation to update any forward looking statements. Joining us today are Doug Howe, Chief Executive Officer and Jared Toph, Chief Financial Officer. Now, let me turn the call over to Doug.

Speaker 2

Good morning, everyone. Before discussing this quarter's performance,

Speaker 3

I

Speaker 2

want to thank our team for their dedication and hard work during the quarter that played out against Because of our team's commitment to improving results, I am pleased to share that we posted overall comps That improved throughout the quarter in addition to posting sequential improvements from the Q1. Our gross margin also increased year over year as well as sequentially and mark the 2nd highest Q2 rate over the past decade. Sequential improvement alone though is not enough. Within our organization, we are committed to producing year over year growth across our top and bottom lines. As we work towards achieving that goal consistently, I am pleased with our team's efforts to continue reading and reacting to a highly promotional environment, while simultaneously managing our inventory to an appropriate healthy level in both our retail and brand segments.

Speaker 2

We are also showcasing consistent operational progress. From an owned brand perspective, we are very excited to have completely new athleisure brand with KeyWay in the 1st month of Q3 and we are rolling out new collaborations as we diversify and strengthen our portfolio, which will drive our profitability over the longer term. I also want to take a moment to highlight a very important hire we made during the month of July. I'm thrilled to announce that Laura Denk has been brought on is the new President of Designer's She Warehouse. Laura joins us with an incredible resume that includes time at Macy's, Claire's and Michaels stores, most recently as Michael's Chief Merchandising Officer.

Speaker 2

Laura will bring her extensive merchandising background, Ability to forge strong vendor partnerships, knowledge of augmenting customer experiences and importantly, Positioning and elevating owned and national brands within our DSW specific channels. With her leadership, We'll be growing our credibility as an on trend brand builder and retailer. This will help us drive the next phase of growth and will allow me More time to focus on DBI's overall strategic priorities, including driving our own brands' performance, both inside and outside of VSW. Please join me in welcoming more. I recently hit the 100 day mark and my new seat is DBI's CEO, and I want to take a moment to reflect on the progress we've made and the actions we are taking to ensure we are well positioned for our next phase of growth.

Speaker 2

It has become increasingly clear to me that we have 2 distinct and valuable businesses, our legacy retail business and our new and growing brands business. Combined, they give us distinctive synergies that do not exist elsewhere in the industry. Fluorist Hire The organizational realignments we instituted a few months ago, which aim to align our talent and resources more closely with the needs of our different businesses, while setting the foundation for strong strategic growth. Additionally, we recently announced that Bill Jordan will be stepping down from the business. With this change, we intend to hire a seasoned brand builder to help lead our growing brands business.

Speaker 2

We are immensely thankful for the work Bill has led to help make Designer Brands what it is today and wish him the very best. Designer Brands truly is unlike any other company in the footwear industry, and I firmly believe we have unique advantages that deliver strategic growth into the future. Turning to our quarter's results. In the Q2, Designer Brands net sales declined 7.8% compared to the Q2 last year, but improved 290 basis points versus the Q1 decline driven by increasing strength in our casual offerings. Total retail comps were down 8.9%, While wholesale net sales were up roughly 20% versus last year as we integrate the kids and TOKO athletic brands and launch our newest brand, Latigrade.

Speaker 2

Our long term strategy of doubling sales of our own brands from 2021 2026 remains a top priority and we continue to move full speed ahead on our journey. Year to date, through the Q2, our own brands penetration, including wholesale sales, increased year over year By 60 basis points to 25 percent of total EBI revenue. This progress has continued into the 3rd quarter. We are thrilled with the recent launch of Lekigre. We are equally proud that Topo Athletic has seen steady growth and continues to meet our expectations in terms of performance.

Speaker 2

We are also excited to continue building our success with Hush Puppies as we have now become the exclusive licensee in the U. S. And Canada, including new DTC channels and international expansion. Rank 5th by people dot For the hottest fashion launches you need to shop for this summer, on August 1, Latigra launched as our newest brand And as of eightfourteen, customers were able to buy the brand at DSW. As a reminder, the KeyBrid is new to the footwear space, And we are thrilled their inaugural athletic athleisure launch is with us.

Speaker 2

The Latigah brand was established in 1977, rooted in New York Street culture and timeless styles, and we are bringing the born in the city, raised in the wild, ready for anything, spirit to this new collection. Their first footwear line includes both women's and men's selections inspired by vintage athletic design and loaded with modern day comfort. I couldn't be more excited about the work and the strategic approach that has gone into this launch, our first ever launch of a new national brand. Turning to Hush Puppies, we recently signed an agreement to become the exclusive licensee of the brands in the U. S.

Speaker 2

And Canada. This was highly informed by the special relationship VSW already had with Wolverine related to exclusive U. S. Distribution And as a stellar expansion to our comfort and casual categories and owned brands. Now as the official licensee, we'll take over the hushtuckies.com business, which will be our 6th independent e commerce site, and we will have the ability to wholesale the brand in North America.

Speaker 2

Hushpuppi's growth within DSW has been robust, up nearly 60% in the quarter versus last year, driven by men's with growth Cross casual, dress and boots. Excitingly, our first product expression is anticipated for spring of 2024. Returning to our progress in the quarter, at Keds, our integration continues to advance as expected. We also launched exciting collaborations in the quarter, both with Recreational Habits and STOG. First, Our recreational Havas partnership produced a sophisticated take on the court sneaker in classic white and gray colorways.

Speaker 2

Complimentary to this, our STOG launch is designed to cater to the latest pickleball craze and court sport enthusiasts. We've implemented marketing activations at Saks, complemented by a robust influencer and digital campaign. As part of this launch, We excited customers with an actual pickleball hop up court inside of Saks Fifth Avenue store in New York during July. As part of our exclusive launch, The product was initially available only through Saks Fifth Avenue and STAHL channels. And later this month, we are bringing the hype in house At Crown Vintage, Emma Roberts' 1st curated collection, PENN006, launched during the quarter.

Speaker 2

This included engaging video content on dsw.com, Which drove positive customer interactions and buzz. We also have new content coming with Emma in October around seasonal boots and booties. This long term partnership continues to strengthen our brand positioning and relevance with our Crown Vintage Target customer. At VINCEmuto, we're pleased to have launched our 1st men's franchise shoe line, Fly365, Address Neat's casual style hybrid shoe selection. As we build out this franchise, what sets this line apart from the rest The pack is the use of special technologies and production not often found in non athletic men's shoes, including features like a supportive cuff sole for stability, a cushioned lightweight midsole for weight reduction and energy return and a rubber outsole for traction and durability.

Speaker 2

We have merged the European inspired Vince Camuto Aesthetic with Technical Comfort Innovation To target the modern male customer who is less likely to compromise on comfort in this post COVID world. In fact, 365 was recently highlighted in footwear news. Growing our men's business across all of CDI remains one of our largest white space opportunities and we believe represents a significant growth lever over the long term. We believe that our new offerings from Vince Camuto and Zetegrex will help us gain traction We continue to be excited with our Nike partnership that we announced last quarter. We will leverage this relationship to provide an athletic offering Finally, we continue to be more cognizant of providing increased value to our customers.

Speaker 2

One of our greatest strengths is our long standing vendor relationships and associated opportunistic closeout buys with large national brands. As such, as part of our long term relationship with Wolverine, We look forward to offering additional events for our customers in the fall. Before I hand it over to Jared, I want to quickly speak to our full year outlook. Although we anticipate macro Pressures will continue through the end of the year and in fact have the potential to increase. Today, we reaffirmed our full year 2023 guidance, supported by the sequential improvement we saw from Q1 into Q2.

Speaker 2

We still have our September and holiday selling season is ahead of us, and we continue to be laser focused on meeting and driving demand with on trend product. Jared will go into more detail on this in a few moments. As we move forward, we continue to prioritize value creating opportunities and are committed to Returning capital to our shareholders. In fact, year to date, through September 5, Designer Brands has Earned $91,100,000 to shareholders through a combination of dividends and share repurchases. I'll let Jared speak more on our strategic capital allocation plans for the back half of fiscal 'twenty three.

Speaker 2

I look forward to updating you all on our strategic initiatives as we move through the back half of the year. With that, I'll pass it over to Jared. Jared? Thank you, Doug, and good morning, everyone.

Speaker 4

I want to reiterate Doug's comments and say how excited I am to welcome Laura Dang as our New President of DSW. She will be a tremendous asset in driving our strategic vision for our DSW business, Focusing on tactical merchandising, marketing and our overall experience, all of which will be anchored to our current and target customers. We believe that there is meaningful growth to be had at DSW and that Laura's leadership will help us unlock that growth. I share Doug's feeling of pride in our organization and this team's ability to continue managing through the increasingly challenging current environment, allowing us to deliver a second quarter adjusted EPS of $0.59 in line with our expectations. We saw sequential improvement over the Q1 in both our sales and gross margin.

Speaker 4

And as a result, we are reaffirming our current full year guidance despite continued industry and macro headwinds. Now let me provide a bit more detail on our financial results. For the Q2, sales decreased 7.8 percent from last year to $792,200,000 and an improvement from the Q1's results. The continued pressure on consumers, high inventory across the industry and an extremely promotional retail environment all contributed to this decrease. From a wholesale perspective, sales were up roughly 20% driven by the acquisition of Keds, our launch of Latigra and acquisition of Tovo Athletic.

Speaker 4

In our retail segments, total retail comps were down 8.9% compared to last year, but improved sequentially from the Q1. U. S. Retail comps specifically were down 9.2% in the quarter, but also sequentially improved from a pressured Q1. While Canada posted comps down 7.3% in the

Speaker 1

quarter, this was on top of

Speaker 4

a very strong post COVID recovery comp of just over 47% In the Q2 of 2022, we remain pleased with the results we are seeing at venskuuto.com, one of our premier DTC channels, With comps up 50 basis points on top of roughly 43% comp last year. Consolidated gross margin was 34.5 percent in the 2nd quarter compared to 34.4 percent last year, an increase of 10 basis points and a sequential improvement of 2.50 basis points versus last quarter. The sequential improvement was primarily driven by lower markdowns. Importantly, our gross margin continues Fundamentally stronger with consolidated gross margin up 400 basis points compared to the Q2 of 2019. Year over year profitability improvement was also driven by consolidation of our fulfillment centers and significantly lower logistics costs, including freight, shipping and distribution expense the impact of consolidating our fulfillment centers, Specifically, the Columbus fulfillment center into the New Jersey ECLC allowed us to achieve a more favorable level of fixed and variable expense leverage.

Speaker 4

This benefit was partially offset by increased promotions, the continued rebuilding of our clearance business and deleverage of our fixed store occupancy costs. Our adjusted SG and A ratio for the Q2 was 26.9 percent of sales compared to 26.5% in the Q2 2022. Although we are experiencing modest deleverage given our current retail comp performance, Marketing investment to build brand equity and maintain customer awareness could put pressure on sustaining this ratio. This trend May see volatility as we continue rolling out our new DTC sites and execute other strategic initiatives, but we will continue to pursue opportunities to trim costs For the Q2, adjusted operating profit was 7.9% of sales compared to 8.2% in the prior year And sequentially improved from 3.5% in the Q1 of 2023. In the second quarter, we had $6,900,000 of net And our effective tax rate on our adjusted results was 29.3% compared to 31.8% last year.

Speaker 4

Finally, our 2nd quarter adjusted net income was $39,400,000 or $0.59 diluted EPS versus 46 $1,000,000 or $0.62 last year $35,800,000 or $0.48 in 2019. We ended the 2nd quarter with inventories of $606,800,000 down roughly 13% compared to $694,000,000 last year And down sequentially from $637,400,000 in the Q1. On a retail inventory square footage basis, We ended down 10% versus the Q2 of 2022 and down 4% compared to Q1 of 2023. Wholesale inventory ended the 2nd quarter down 10% and adjusted for the acquisition of Toho and Keds, Inventory would have been down 33% when compared to last year. Because we have remained nimble in our approach to our assortment, we feel good about our inventory Heading into fall, ensuring we have the flexibility necessary to chase and take action on opportunistic buys.

Speaker 4

As a reminder, at the end of the last quarter, we announced the commencement of our Dutch auction tender offer, which allowed us to invest in our own stock. In mid July, we announced the final results of the offer, which included repurchasing $14,700,000 of our Class A common As always, we maintain an ongoing dialogue between management and our Board of Directors on our capital allocation strategy. Together, we continue to believe that our most prudent use of capital at this time is to return it to our shareholders. As a result, we have continued to purchase shares in the open market. We view this as a vote of confidence in our long term strategy.

Speaker 4

In the 1st 2 quarters of fiscal 2023, based on trading date, We returned $32,900,000 to shareholders through dividends and share repurchases. Thus Far in the Q3, we have added to that total by $58,300,000 through September 5, thanks to the continued open market repurchases. We ended the quarter with $46,200,000 of cash and our total liquidity, which includes cash and availability under our revolver of $279,900,000 As of the end of the quarter, we had $233,700,000 available to on our revolving credit facility. However, given the share repurchase activity mentioned previously that has occurred since the end of the second quarter, Our current availability to draw on our revolving credit facility was $227,900,000 as of ninetwenty twenty three. As a reminder, to help fund our capital allocation priorities, we previously announced that we had entered into a 5 year term loan.

Speaker 4

Upon closing that facility on June 23, 2023, we immediately drew $50,000,000 under the term loan and anticipate drawing the additional $85,000,000 throughout the course of the year. The proceeds of that subsequent draw will immediately be used to pay down outstanding debt under the revolving credit facility. We continue to await the receipt of the remaining $40,000,000 of our CARES Act tax refund due to us from the IRS. We are happy to report that the IRS has formally closed our standard audit for which this refund applies with no adjustments. And as such, we are now simply waiting on the refund request to work its way through the appropriate approval channels at the IRS and Treasury Department for ultimate funding.

Speaker 4

Before I conclude, I want to share a few remarks on our current guidance. As discussed last quarter, Our updated guidance assumes the continued pullback in consumer spending with a recovery delayed until later in the year. Consistent with prior views, the largest uncertainty continues to lie squarely with the discretionary consumer, while also Our current guidance assumes that our retail comp performance

Speaker 1

improves throughout the balance of

Speaker 4

the year as the macro pressures on the consumer begin to subside and as our prior year comparables become lighter. That being said, pressures continue to weigh on the consumer and therefore potential for headwinds to worsen remains. I do want to cover a few updates within our assumptions. With the previously discussed repurchase activity, our share count is now With the new term loan, interest expense is now expected to be approximately $35,000,000 for the full year. Thus, the incremental interest of the term loan essentially offsets the benefit of the lower weighted average outstanding share count for our fiscal 2023 EPS figure.

Speaker 4

Additionally, our estimated tax rate is anticipated to be 30%. With all of this in mind and given sequential improvement seen in our most recent quarter in terms of sales and margins, we are reaffirming our fiscal 2023 EPS guidance range of $1.20 to 1.50 As Doug noted, we have made incredible progress in our evolution as a company, including recent leadership hires, launches of new brands, Growing with existing brand partners and accelerating our journey as a brand builder. I have strong conviction in our path forward. With that, we will open the call for questions. Operator?

Operator

Today's first question comes from Gabby Carbone with Deutsche Bank. Please go ahead.

Speaker 5

Hi, good morning. Thanks for all the color today. So first, I was wondering if you could maybe discuss the changes you saw in category performance, if any, from 2Q versus 1Q? And then as we look to the fall season, obviously, the boot category becomes Quite important. Just curious how you're thinking about inventory there?

Speaker 5

Thank you.

Speaker 2

Yes. Thanks, Debbie. This is Doug. It's really

Speaker 6

the category performance. We continue to see buoyancy in the casual category. Obviously, the casualization trend just Sure point. We have a dominant penetration in the boot category. It's very, very early on.

Speaker 6

We talk a lot about September, Yes, which is the key time for booth selling. So I'd say the majority of that season is ahead of us obviously. We are seeing some nice Initial results on fashion goods, particularly driven by Western. So we're cautiously optimistic about that. But again, the majority of the season is still Advent.

Speaker 5

Got it. And if I could just sneak in one more. So moving ahead, obviously, it's been promotional out there. Curious just what kind of baked into your guidance on the promotion And then are there certain categories you're seeing more promotional activity in? And then you mentioned that like you're still seeing high inventory levels across the marketplace.

Speaker 5

So

Speaker 6

We've done a really strong job of managing our margin and largely that is fueled by the fact that our inventory is in really good shape. So we didn't feel the need to get overly promotional. We are seeing the landscape improve as we move through the back half, particularly in the I think we'll start to see that inventory start to normalize, which hopefully will allow us to be less promotional. So we're staying very close to that. But As you said, it's a choppy macroeconomic environment out there, so we'll definitely stay close to it.

Speaker 5

Great. Thank you so much.

Speaker 2

Thank you.

Operator

Today's next question comes from Mauricio Serna with UBS. Please go ahead.

Speaker 2

Great. Good morning and thanks for

Speaker 7

taking our questions. First, I wanted to ask if you could provide me some color on what you see on Quarter to date performance, have you seen any significant improvement versus Q2? And if we think about second half, should we You see like any big difference between the sales growth in Q3 and Q4. Then just on the margins, you Talked about SG and A probably the SG and A rate probably being a little bit more pressure because of the marketing and the launching of The website, so does that mean that SG and A dollar growth will accelerate in the second half? How should we think about that?

Speaker 7

And then just lastly on the balance sheet, very encouraging to see all the buybacks continuing in Q3. Is there like potential for even more given how you there's also the higher leverage On the balance sheet at this point. Thank you.

Speaker 6

Yes. Thanks, Mauricio. This is Doug. There's a lot

Speaker 2

of stuff back there. I think you had 4 questions. I'll take the first two on the current performance

Speaker 6

and then Q3 and Q4, and I'll hand it over to Jared to speak to SG and A and the balance of the year. As you know, we don't comment on sales in the current quarter. Having said that, we haven't seen anything that would lead us to change our guidance, which why we're maintaining our outlook. We think about sales growth in Q3 and Q4, definitely a tailwind we feel, Certainly, it's regards to we're up against softer comps in Q3 and most notably in Q4. NICE tailwinds are

Speaker 2

a fall campaign that we're going to

Speaker 6

be kicking off the DSW to really focus more on brand awareness, which we're optimistic about. And then secondly, as we shared last quarter, the return of Nike, we are very excited about continuing to elevate that partnership. So again, those are 2 tailwinds. But again, as we navigate through a choppy macroeconomic environment, we're balancing obviously those still tailwinds with the FedMint.

Speaker 4

And I want to echo one thing that Doug has said to make sure it's clear. We've reiterated this a few times. In our current guidance, which we reaffirmed, we are assuming there is a pretty material change And the current trajectory that we've experienced here today. That's always been the case and we believe especially as we get against easier comps, but that is why we have believed To date, we have not seen that, but we haven't planned to see that yet. But that is what is anticipated, but that is why we called out there is Certainly, I would say a net risk position as it pertains to the macroeconomic conditions and turning seeing that Turn to the degree that our current guidance has in there.

Speaker 4

But for now, it is on trend and that's why we've reaffirmed guidance. To your last Two questions on the SG and A. I'm actually very glad you spoke or asked about that because in my mind that's right now where the consensus modeling is probably most Disconnected for the fall, I want to take you back to a moment to our initial guidance for SG and A for the year. What we had said was that we had done the reorg that we talked about and some cost savings initiatives that stripped about $25,000,000 year over year out of our legacy business, but we also have about $50,000,000 of SG and A to add into the overall Company because of Ted's topo in the 53rd week. And right now, I'm not seeing consensus reflect that on a total year basis.

Speaker 4

In fact, it's looking like most consensus has that SG and A dollars below LY. So I think that's One of the biggest disconnects that are currently out there in consensus. So that and the new interest given the loan, I want to Calling you back to that, which I gave guidance to. If we look at a change in SG and A dollars spring to fall, There's about $40,000,000 shift to kind of get to what I just talked about our full year guidance. That's coming from a few big buckets Of work, one, we've got marketing.

Speaker 4

We shifted about $15,000,000 of marketing across the company Out of spring into fall, as we were not seeing the traction or the incremental traction that we would have expected to see with that marketing. So we've moved that into fall. We've used some of that for back to school, and we're very excited to be launching for the first time in a long time Some DSW branding top of funnel marketing, very video heavy in the fall as well. So that shift has moved. We also have about $9,000,000 of that 53rd week that's being added in there.

Speaker 4

So again, that's unique to fall, Not happening in spring. And then about $4,000,000 related to coming off the TSA with our Keds transition. That has always been the case. We just weren't sure when that was going to materialize. That final month, we have a month of catch up To do, and that happens to be in Q3.

Speaker 4

So all of that together, along with selling expenses Related to an improvement in our comp performance, total is about $40,000,000 shift in SG and A between fall versus spring And more in line with that total year guidance that we gave at the beginning of the year, which I just want to make sure you guys are properly modeling. And then the last question was repurchases. Obviously, we have wanted to take advantage of what we think is a very opportunistic price. We funded that with Term Loan liquidity and we've been executing. We did once again, which we did color in the current quarter because It was much heavier than even what we accomplished in the Q2, and there is some remaining.

Speaker 4

We never commit to future Activities, so we quoted up 3 yesterday, roughly 5th, but that's I think proof of how confident we feel our long term strategy.

Speaker 7

Great. Thanks so much for all the details.

Operator

Thank you. Our next question today comes from Dylan Carden with William Blair. Please go ahead.

Speaker 3

Thank you very much. Jared, just sticking with that last The IRS refund, in the memory you said, assume debt or how are you thinking about that

Speaker 6

Yes.

Speaker 4

The lion's share for a bit is on our revolving credit facility. So just mechanically, As soon as that comes in, that will immediately be used to pay that down. We will always assess as we always do, current stock price versus liquidity And overall capacity to buy. So we aren't committing to deploy that in one particular fashion. And on day 1, it would be used to pay down Our ABL did.

Speaker 4

But that's there's no commitments or earmark for those funds at this point.

Speaker 3

Right. And then I just want to make sure I understand kind of the bounds of guidance. So you have a lot of tailwind between comparisons in Nike, etcetera. But if the consumer sort of takes a leg down here, would that be sort of detrimental to guidance at this point? Just getting some of the rhetoric on.

Speaker 4

Yes, yes. Yes, certainly, John. And you hit it on Ed. As we look out for the year and how we built that guidance range, we are anticipating a pretty material shift in overall Year over year performance than what we've experienced in the spring. That's always been the case.

Speaker 4

That's what we've always communicated.

Speaker 7

And we

Speaker 4

do have some tailwinds, and you hit them on the head. We've easier comps, we've got Nike coming in. We've got some new branding, advertising going on that I just talked about. So there certainly are tailwinds. At the end of the day though, and then we've been seeing it across the entire retail and especially people who sell to the consumer, the discretionary consumer, we're seeing a lot of And right now, I call it, I feel like we're in a net risk position, even as it pertains to our current guidance.

Speaker 4

But it really lies With that discretionary consumer and how they're feeling it going into fall.

Speaker 3

And the last one, we haven't talked about Sort of the loyalty program will allow. I'm just kind of curious how these new brands interact with or potentially built on the back of

Speaker 6

Yes, John, this is Doug. Again, we're pleased with the progress of the brands that we mentioned in those remarks with

Speaker 2

the product to Keds and Cobras Play And then

Speaker 6

most recently with TIGRIT, it's very early days on obviously. We're excited about that as we were the 1st launch partners at DSW, but we We believe that there's opportunity to expand that outside of DBI channels of distribution, which is a broader opportunity as we move forward in general. Everything is performing to our expectations. We feel really good about that. And I think that just goes back to the strength of our business and the fact that We have the brand segment as well as the retail segment that we didn't realize those sales in our own channel.

Speaker 6

So just More confidence in the strategy that we're going to be deploying going forward.

Speaker 4

The one thing I would add to that, Dylan, and I mentioned it with our SG and A, this month, we will be basically pulling off that transition services agreement actually a little ahead of schedule with Keds. So while this has been a pretty transition latent year for Keds, They've been performing at their acquisition model. We're really excited to have them now on our infrastructures for wholesale, for DTC And really excited about positioning them to start having strategic growth now that they're actually on our systems.

Speaker 3

Got it. And I just another one occurred to me here. Nike, can you understand where the business was historically, but I think I'm right, this sort of new relationship that Nike regains this channel. How should how are you thinking about The scale, the pace, the dynamics of that relationship kind of come I think it launches this 4th quarter, right?

Speaker 6

Yes. And Dylan, this is Doug. Again, we continue to be very optimistic about that elevated partnership with Nike. We actually are going to be delivering the product a little bit earlier than we originally anticipated, about a month earlier. We We have some productivity on our site and we'll have significant amount of units rolling out to our stores in the next couple of weeks.

Speaker 6

And again, that's about a month earlier than we had anticipated. So again, that is definitely a tailwind. So we feel good about that. We haven't shared specific Maybe with regards to how large that brand would be, we shared obviously what it was historically, but we'll manage that very carefully as we manage all our Portfolio, Brandon, it will really be informed obviously by what the customer is demanding and where we're seeing the top line.

Speaker 3

Okay.

Operator

Thank you. And ladies and gentlemen, this concludes our question and answer session. I'd like to turn the conference back over to Doug Howe Any final remarks?

Speaker 2

Well, thanks everyone for tuning in today. And I just want to

Speaker 6

reiterate thanks you, our team, for all their dedication as we move throughout very challenging macroeconomic backdrop. We look forward to keeping you updated Our progress will be moved through the back half of the year next quarter. So thanks again.

Operator

Thank you. This concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Powered by Quartr
Earnings Conference Call
Designer Brands Q2 2024
00:00 / 00:00