Shares of DSW parent Designer Brands (DBI) - Get Report plunged by double digits on Tuesday after the footwear and accessories retail chain reported fiscal third-quarter profit that missed expectations and cut its guidance.
The Columbus, Ohio-based company posted net income of $43.5 million, or 60 cents a share, vs. $39.3 million, or 48 cents a share, in the year-ago period. On an adjusted basis, however, per-share earnings came in at 67 cents, below the analysts’ consensus forecasts of 74 cents.
Revenue was $936.3 million, up from $833 million in 2018 and also above the $930 million expected by analysts polled by FactSet. Same-store sales grew 0.3%, ahead of the 0.1% FactSet guidance.
CEO Roger Rawlins said in a statement that the company faced “several meaningful headwinds” in the third quarter that impacted results, including “… near-record warm weather during our largest and most profitable quarter, which affected every segment of our business.”
Rawlins also pointed to other mitigating factors, including the recently enacted “very material” footwear tariffs, which already have impacted the company’s bottom line.
Still, he pointed to the growth in non-U.S. markets like Canada, where he expects the company's retail stores to "continue to strongly leverage the expertise and infrastructure from our U.S. business."
For fiscal 2019, Designer Brands now expects flat same-store sales vs. previous guidance for low single-digit growth. The company still expects low double-digit revenue growth.
The negative news prompted at least one analyst downgrade.
In a research note that referenced "Back to Talking About the Weather," William Blair analyst Dylan Carden downgraded the company to market perform from outperform, noting it was "damning" that management reverted to blaming the weather for poor sales.
Designer Brands' portfolio includes DSW Designer Shoe Warehouse and Camuto Group.
Shares of Designer Brands closed down 16.29%, or $2.77 a share, at $14.23. The stock has fallen more than 34% year to date.