Designer Brands Reports Q3 2025 Results With Higher Margins and Strong Operating Profit Growth

Designer Brands announced its financial results for the third quarter ended November 1, 2025, and the company emphasized that the quarter marked another meaningful step forward in its long-term transformation strategy. As momentum continues to build, the brand is entering the final stretch of the fiscal year with increased confidence.

Stronger Demand Drives Improved Performance

CEO Doug Howe highlighted that the company delivered sequential improvement across multiple financial and operational metrics, noting that stronger consumer demand and better in-store execution directly boosted comparable sales versus the second quarter. Moreover, the company expanded gross profit, managed expenses more efficiently, and ultimately increased operating income compared to the prior year.

Additionally, Howe shared that this positive momentum has carried into early Q4, reinforcing that the retailer’s strategic initiatives are taking hold. Although broader macroeconomic pressures remain, the company believes it is well positioned to navigate near-term challenges while continuing to advance its long-term objectives.

Third-Quarter Results: Margins Offset Sales Pressure

In the third quarter of fiscal 2025, Designer Brands delivered improved profitability despite ongoing top-line pressure.

Net sales declined 3.2 percent year over year to $752.4 million, while comparable sales fell 2.4 percent, reflecting continued softness in discretionary demand. Margin performance, however, moved sharply in the opposite direction. Gross profit rose to $339.6 million, up from $333.8 million a year earlier, as gross margin expanded 210 basis points to 45.1 percent.

The margin gains translated into earnings growth. Net income attributable to Designer Brands totaled $18.2 million, or $0.35 per diluted share, while adjusted net income reached $19.6 million, or $0.38 per diluted share. Management credited tighter inventory controls, improved pricing discipline, and cost management for driving profitability in a challenging sales environment.

Balance Sheet Improves as Liquidity Builds

The company also exited the quarter with a stronger balance sheet. Cash and equivalents increased to $51.4 million, up from $36.2 million a year ago, while total available liquidity under its senior secured ABL facility stood at $166.9 million.

Total debt declined meaningfully to $469.8 million, down from $536.3 million last year, underscoring progress on deleveraging efforts. Inventory levels were reduced to $620 million, compared to $637 million in the prior-year period, reflecting a more disciplined approach to demand planning.

Shareholder Returns and Store Footprint

Designer Brands maintained its commitment to shareholder returns, declaring a $0.05 per-share dividend on both Class A and Class B common stock. The dividend will be paid on December 19, 2025, to shareholders of record as of December 5, 2025.

At quarter end, the company operated 672 stores, slightly below 675 locations a year earlier. This included 497 DSW stores in the U.S. and 175 locations across Canada under The Shoe Co., Rubino, and DSW Canada banners. Total retail square footage remained stable at approximately 11.0 million square feet.

Outlook: Cautious but Stable

Looking ahead, Designer Brands reaffirmed its full-year fiscal 2025 outlook. The company expects net sales to decline between 3 percent and 5 percent, while forecasting adjusted operating profit of $50 million to $55 million. Adjusted income tax expense is projected to fall between $8 million and $10 million.

Management noted that adjusted guidance excludes potential restructuring charges or impairment costs, which remain difficult to predict. Overall, the outlook signals a continued focus on margin preservation, balance-sheet strength, and disciplined execution as the retailer navigates a still-uneven consumer environment.