Designer Brands Inc.

Good morning, and welcome to the Designer Brands Incorporated third quarter 2022 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Jesse Miller. Please go ahead.

Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week period ended October 29, 2022 to the 13-week period ended October 30, 2021. 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 various factors listed in today's press release and the company's public filings with the SEC. The company assumes no obligation to update any forward-looking statements. Joining us today are Roger Rollins, Chief Executive Officer, Jared Poff, Chief Financial Officer, and Doug Howe, President of DSW. Now let me turn the call over to Roger.

Good morning and thank you everyone for joining us today. We posted another consecutive quarter of solid results and made material progress on our brand building journey. We ended the quarter with comparable sales up 3% compared to the third quarter of 2021, which was on top of strong comp net sales growth last year of 41%. We are incredibly proud of these results as we lapped a record third quarter in 2021 and invite you to review our earnings infographic on our investor relations site that highlights some of these accomplishments. Notably, we made tangible progress against our long-term plan of doubling sales of our own brands by 2026, while also maintaining our sales levels of national brands as we continue to strengthen relationships with our top partners. As you know, our owned brand strategy will continue to be the key driver of our growth over the next five years as we have the unique ability to intimately understand our customers so we can design, source, and sell the products they love. We're excited to share that in the third quarter, owned brand sales grew 25% compared to the same period last year. Our direct-to-consumer sales through our retail stores and websites delivered a 33% increase to last year, And wholesale distribution also grew at 8%. And what makes this even more impressive? This growth is coming at a time when the industry is flooded with inventory. And while we see this inventory pressure across the industry, our ability to self-liquidate excess product through our own retail clearance section is a key differentiator of our unique business model that gives us confidence in our ability to continue to build our own brand's penetration and extract as much margin as possible along the way. Doug will dive more into our own brand strategy in just a few moments. As we've been transforming into a brand builder, we've been making strategic investments in talent and experience. To that end, over the last two years, we have created new positions and teams inside of designer brands, including a chief supply chain and sourcing office, brand level leadership, and international sourcing groups in new parts of the world. Additionally, we just announced last week the appointment of two new board members, Rich Paul, CEO and founder of Clutch Sports Group, the powerhouse agency representing some of the biggest athletes across major professional sports, and Tammy Fersko, Chief Operations and Supply Chain Manager of Centric Brands, a leading global lifestyle brand collective who brings strong leadership in this space, including past executive roles at Sourcing and Branding Leaders, Lee & Fung, and the Jones Group. Both Rich and Tammy bring extensive brand-building expertise and knowledge of the footwear industry, and we look forward to their input on our strategy. As we've been calling out since the introduction of our initial fiscal 2022 guidance, the third quarter was planned to be the quarter in which our strategic efforts to bring back our clearance shopper were expected to be running on all cylinders, and I'm happy to report we were wildly successful. Our clearance sales were up 28%, compared to the third quarter of 2021. We were pleased to see this critical part of our business model return to full strength, especially at a time when the industry faces large inventory challenges and more consumers are looking to cut back on discretionary spending. Given the material success we have had in growing our own brands and given the structural changes we have made in our overall retail business, we have seen our gross margin rates materially and substantially improve from legacy levels. And while we will always be subject to the impacts of macro condition and consumer sentiment, these structural changes should keep our margin profile consistently above legacy levels we delivered in 2019 and prior. In the third quarter specifically, we saw some of those pressures take hold. First, many of the largest footwear industry players, especially athletic brands, are massively over-inventory and have become very aggressive in their own DTC businesses. including exact styles we carry in our retail assortments. We noted last quarter that this was an area of potential risk, as the effects of competitors lowering price impacts the entire industry. Additionally, as you've heard many other brands and big box retailers discuss, we saw a drop in discretionary demand starting in the last two weeks of October. This drop came on very suddenly and appears to be widespread and continuing across much of the consumer market. With these impacts, we are returning back to a range within our original 2022 EPS guidance. Our revised guidance still includes mid-single-digit retail comp sales growth in full-year adjusted EPS in the range of $1.75 to $1.80. This still puts our EPS significantly above 2019, given our structurally improved gross margin profile. Jared will go into more details around some of the numbers and efforts we are implementing across the business to minimize the impact of this uncertainty as much as possible. In closing, I want to take this opportunity to thank our associates for remaining nimble and continuing to support designer brands. I'll now turn it over to Doug Howell, President of DSW. Doug?