Footwear and accessories company Designer Brands expects to potentially close 10% to 15% of its stores, representing approximately 50 to 80 locations, according to company executives on an earnings call.
Designer Brands’ net sales fell 30.1% year over year in Q3 to $652.9 million, while ecommerce sales increased 3%. Comparable store sales dropped 30.4% versus a 0.3% rise in the same period last year.
The company will be closely evaluating its existing store infrastructure as customers transition from the store to digital, including working on lease concessions. “We anticipate that we will likely open very few to no new stores for the foreseeable future,” said Jared Poff, CFO of Designer Brands on the call. “And we will begin aggressively negotiating exits of our worst-performing store locations as lease terms and market conditions warrant.
“While this will be a gradual transition over time, it is likely we will look to close 10% to 15% of our store fleet, while still retaining a physical presence in most geographic markets, and of course, a strong digital presence,” Poff added.
To weather the COVID-19 storm, the retailer has seen success by adapting its product assortment to align with consumer trends created by the pandemic, such as carrying more athletic and kids’ products. “Historically, Designer Brands is known as a dress and seasonal house,” said Roger Rawlins, CEO of Designer Brands on the call. “However, as most people are still working from home and consciously avoiding gatherings and social occasions, these two categories remain very challenged. As such, we continued our aggressive shift toward the categories and brands our customers are buying. In the short-term, we plan to keep pivoting our assortment to align with consumer preferences. Long-term, there will be a day that our customers feel comfortable going out to shows, church and social events.”
Rawlins also outlined the important role digital will continue to play for the business, with plans to remain committed to investing in these capabilities. “We continue to offer the digital services our customers appreciate, including buy online, pick up in store and curbside pickup,” he noted.