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Designer Brands plunges after earnings fall short of expectations

Designer Brands (NYSE:DBI) fell sharply in early trading on Thursday after Q3 earnings came in short of expectations.

Total sales were up 1.4% to $865M for the retailer vs. $878M consensus. Comparable sales rose 3.0% during the quarter against a tough comparable from a year ago when sales shot up 40.8%. The U.S. retail saw a 0.5% sales decline to $706.4M, while sales were higher for the Canada Retail (+10%) and Brand Portfolio (+3.4%) segments.

Gross margin as a percentage of sales fell to 33.0% from 36.7% a year ago.

"While we are seeing many of the same pressures across the consumer landscape that most retailers are seeing, our flexible business model continues to support our efforts to navigate a dynamic macro environment," noted CEO Roger Rawlins.

During Q3, Designer Brands opened one new store and closed three stores in the U.S. with no changes to the store count in Canada, resulting in a total of 504 U.S. stores and 138 Canadian stores as of October 29.

Looking ahead, Designer Brands (DBI) reaffirmed full-year comparable sales growth of mid-single digits and guided for EPS of $1.75 to $1.80 vs. a prior outlook for $2.05 to $2.15 and the consensus mark of $2.06.

Designer Brands (DBI) plunged 16.41% in premarket action on Thursday following the double earnings miss.