What to Note Ahead of Designer Brands' (DBI) Q3 Earnings?
Designer Brands Inc. DBI is likely to register a decrease in the top and bottom lines when it reports third-quarter fiscal 2023 results on Dec 5, before the opening bell. The Zacks Consensus Estimate for revenues is pegged at $821.7 million, indicating a decline of 5% from the prior-year quarter’s reported level.
The Zacks Consensus Estimate for third-quarter earnings is pegged at 44 cents per share, whereas it reported earnings per share of 67 cents in the year-ago quarter. The consensus estimate has declined by 6.4% over the past 30 days.
Designer Brands has a trailing four-quarter earnings surprise of 112.7%, on average. In the last reported quarter, it surpassed the Zacks Consensus Estimate by 22.9%.
Designer Brands Inc. Price and EPS Surprise
Designer Brands Inc. price-eps-surprise | Designer Brands Inc. Quote
Key Factors to Note
Designer Brands is anticipated to have benefited from solid customer demand in the casual segment of its offerings and its brand-building strategy. Solid momentum in its wholesale business, along with strength in Keds and Topo Athletic businesses, is expected to have augmented its quarterly performance.
The company’s flexible business model has been enabling it to navigate a tough macroeconomic landscape. Its focus on customer acquisition, optimization of assortment and inventory management is also expected to have contributed to its quarterly performance.
DBI's investments in product innovation and digital initiatives, along with its focus on operational execution and cost-control measures, are likely to have supported its fiscal third-quarter performance.
However, the company has been grappling with a challenging operating landscape, with several issues like high inflation, supply-chain bottlenecks and currency headwinds. Of late, a higher inflationary environment has been affecting consumers’ discretionary spending, which, in turn, is expected to have hurt its performance in the third quarter. The Zacks Consensus Estimate for DBI’s fiscal third-quarter comparable sales is expected to decline 4.4% year over year.
High operating expenses have been concerning for the company over the past few quarters. For instance, in second-quarter fiscal 2023, its operating expenses totaled $214.5 million, while the metric, as a percentage of net sales, increased 50 basis points to 27.1% year over year.
Given its extensive regional presence, Designer Brands’ operations are subject to global economic and political risks, as well as forex woes. A stronger U.S. dollar is likely to have have hurt the company's overseas business in the to-be-reported quarter.
What the Zacks Model Unveils
Our proven model doesn’t conclusively predict an earnings beat for Designer Brands this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat, but that’s not the case here, as elaborated below.
Designer Brands has an Earnings ESP of -6.87%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
The company currently has a Zacks Rank #3.
Stocks With the Favorable Combination
Here are three stocks that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat in their upcoming releases:
Deckers Outdoor DECK has an Earnings ESP of +1.74% and a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
DECK’s earnings for the to-be-reported quarter are expected to increase by 3.6%. The consensus mark for its quarterly earnings has moved up by 0.8% to $10.86 per share in the past 30 days.
The Zacks Consensus Estimate for Deckers’ quarterly revenues is pegged at $1.4 billion, which suggests growth of 3.7% from the figure reported in the prior-year quarter.
American Eagle AEO has an Earnings ESP of +1.98% and currently carries a Zacks Rank #2. The company is likely to register growth in the top and bottom lines when it reports fourth-quarter fiscal 2023 numbers. The consensus mark for AEO’s quarterly earnings has moved up by 2.4% to 43 cents per share in the past 30 days. The consensus estimate suggests 16.2% growth from the year-ago quarter’s reported number.
The Zacks Consensus Estimate for American Eagle’s quarterly revenues is pinned at $1.58 billion, suggesting growth of 5.7% from the figure reported in the prior-year quarter.
Abercrombie & Fitch Co. ANF has an Earnings ESP of +5.79% and sports a Zacks Rank #1. ANF’s earnings for the to-be-reported quarter are expected to increase by 181.5% on a year-over-year basis. The consensus mark for its quarterly earnings has moved up by 26% to $2.28 per share in the past 30 days.
The Zacks Consensus Estimate for Abercrombie & Fitch’s quarterly revenues is pegged at $1.36 billion, which suggests growth of 13.8% from the figure reported in the prior-year quarter.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.
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Abercrombie & Fitch Company (ANF) : Free Stock Analysis Report
American Eagle Outfitters, Inc. (AEO) : Free Stock Analysis Report
Deckers Outdoor Corporation (DECK) : Free Stock Analysis Report
Designer Brands Inc. (DBI) : Free Stock Analysis Report
