Designer Brands Inc.

Good day and welcome to the Designer Brands, Inc. First Quarter 2026 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 a zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad. To withdraw your question, please press star then two. Please note this event is being recorded. I would now like to turn the conference over to Matthew Crummey, Senior Vice President. Please go ahead.

Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week period ended May 2nd, 2026 to the 13-week period ended May 3rd, 2025. Please note that the financial results that we will be referencing during the remainder of today's call exclude certain adjustments recorded under GAAP unless specified otherwise. Contemplated within the results are immaterial corrections to prior year periods related to inadvertent errors due to a misapplication of duty rates applied to our topo-granted products imported into the United States as outlined in our press release. For a complete reconciliation of GAAP to adjusted 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 various factors listed in today's press release and the company's public filings with the SEC. Except as may be required by applicable law, the company assumes no obligation to update any forward-looking statements. Joining us today are Doug Howell, Chief Executive Officer, and Seamus Toll, Chief Financial Officer. I'll now turn the call over to Doug.

Good morning, and thank you everyone for joining us today. We are pleased with our start to fiscal 2026 with first quarter net sales growth in line with our plans and earnings per share exceeding our expectations, driven by strong margin expansion. Importantly, we continue to build on the momentum we generated in the back half of fiscal 2025, highlighted by solid execution across our strategic priorities and strong growth in our brand portfolio segment. Before I get into some additional detail on our business performance, I'd like to thank our designer brands associates for their continued hard work, focus, and commitment to serving our customers and advancing our strategic priorities. I'm proud of how our teams executed throughout the first quarter while continuing to navigate a dynamic consumer environment. For the first quarter, net sales increased 1% year over year and consolidated comparable sales decreased by 1%. Performance was led by our brand portfolio segment, that delivered strong growth of 19% versus the prior year, and retail segment sales were stable, approximately flat to last year. In addition to improved sales trends, we drove meaningful gross profit expansion, with gross margin increasing 240 basis points versus last year, and gross profit increasing by $21 million. We also leveraged adjusted operating expenses by 50 basis points year over year as we continue to drive efficiency throughout the business. Importantly, the margin improvement we delivered in the first quarter reflects more than just favorable mix. It is being driven by the structural changes we've made across inventory management, pricing, discipline sourcing, and channel profitability over the last several quarters. We believe these actions are helping create a more durable earnings model for the business going forward. Notably, we generated adjusted operating income of $19 million and adjusted EPS of 7 cents, representing a significant improvement versus last year and ahead of our expectations. I'm encouraged by the strong start to the year and the progress we are making in implementing our strategic initiatives amidst an uncertain external environment. Now let me discuss our results in a bit more detail. Starting with our retail segment, which, as a reminder, reflects the aggregation of our U.S. retail and Canada retail operating segments. Our total sales for the first quarter were approximately flat year over year, with comparable sales down slightly. Sales in seasonal categories were impacted by unfavorable weather in the quarter, which was more prevalent in Canada. In the U.S., revenue was up slightly, and according to Seconda data, in Q1, DSW held in footwear market share versus last year. Traffic trends improved, and we also continued to see strong regular price sales supported by our enhanced assortment and effective inventory management. From a product perspective, we shared on our last call that in 2026, we are focused on winning with the merchandise that matters most to our consumers, and we saw encouraging response across several categories in the first quarter. Our dress business was strong in Q1, up approximately 4%. Affordable luxury continues its significant growth trajectory with a category enhancing relevance and driving differentiation within the assortment. On our last earnings call, we also spoke about an opportunity to increase market share in categories adjacent to footwear. And we were pleased to drive double digit sales growth in these categories during the first quarter. led by strong performance across the accessories assortment. At the same time, weather-related headwinds impacted our seasonal sandals business, which was down low single digits in the quarter. We also saw softness in the casual and athletic categories as consumers shifted back towards fashion and occasion-based products, following several years of elevated demand in casual and athletic. These trends are not unique to our business. and we are confident that our assortment breadth positions us well to capitalize on these cyclical shifts in consumer preferences. Performance of our top 10 brands was generally in line with our retail trend during the quarter, with growth across several strategic partners offset by the category headwinds I mentioned earlier. These strategic brand partners continue to play an important role in driving customer engagement and reinforcing the strength and relevance of our assortment. Our marketing team amplified our assortment strength by building on our Let Us Surprise You platform in Q1. We continued to curate our DSW brand positioning throughout the quarter, driving increased engagement and impressions across PR and social channels. We also rolled out an evolved influencer strategy with elevated storytelling-driven campaigns intending to strengthen DSW's authority as a destination for seasonally relevant, occasion-based dressing through trusted influencer recommendations. We intend to continue building on these marketing initiatives through Q2, driving brand relevance as we support key seasonal categories across the business. We were encouraged to see positive momentum in our stores with improving traffic and sales trends, and demand that outpaced the broader footwear market in the quarter. We believe these trends reflect the progress we are making in refining our assortment and enhancing the customer experience across our store base. As we've mentioned, we are planning several new store openings as well as several remodels this year as we continue focusing on delivering a more elevated and distinctive in-store experience. Turning to our brand portfolio segment, on our last call, we talked about our focus on building and scaling our brand portfolio in 2026. And we were pleased with a strong start to the year, with Q1 sales increasing 19% and operating income improving by $13 million versus last year. Within our exclusive brands business, we continued to build on our strong partnership with the DSW team. Newness across the assortment resonated well with consumers during the quarter, and we remain confident in our ability to build on momentum in categories where we are seeing meaningful growth opportunities at DSW throughout the year. Topo continued its strong momentum and grew 32% during the quarter, in line with our expectations. Growth was driven by strong demand across core franchises, successful new product introductions, momentum in specialty running, and expanded distribution partnerships that further strengthened the brand's positioning within the category. Jessica Simpson also delivered another strong quarter, growing 35% versus last year, then ascending from continued strength in dress trends and positive response to the evolution of the assortment, including lower heel heights across key stocks. She has generated encouraging growth of 35%, benefiting from expanded distribution and momentum from newness across the assortment in both digital and wholesale channels as we enter the year with a sharper assortment and cleaner inventory levels. Across the portfolio, we remain focused on supporting profitable, sustainable growth while leveraging the strategic advantages of vertical integration and sourcing capabilities, as well as our strong retail partnerships. As we continue scaling the brand portfolio segment, we believe this diversified operating model enhances both profitability and flexibility across our organization. Before I conclude, I want to share a few thoughts on our 2026 guidance. Based on our strong first quarter performance, we now expect full-year EPS to trend toward the high end of the guidance range we shared on our last call. We have also had a solid start to Q2 with results trending in line with our expectations. Seamus will share more detail on the assumptions underlying guidance in a moment. Overall, we are pleased with the progress we are driving across the business. Importantly, we continue to deliver sequential improvement in both top line trends and profitability while remaining disciplined in our execution. I'm proud of the work our teams are doing to strengthen the foundation of designer brands, and I remain confident that our strategic actions position us well for long-term profitable growth. With that, I'll turn it over to Seamus.