GitLab Inc. (NASDAQ: GTLB) Q1 2026 Earnings Call | 06/11/2025

Designer Brands Q1 2025 Earnings Call Summary

Designer Brands experienced a softer start to fiscal year 2025, with first-quarter comparable sales declining by 8% due to weakening consumer sentiment and unfavorable weather in February. Despite these headwinds, the company is implementing strategic adjustments and cost-cutting measures.

Key Financial Highlights (Q1 2025 vs. Q1 2024):

• Net Sales: Declined 8% to $687 million.
• Comparable Sales: Down 7.8% overall.
  • U.S. Retail: Down 7.3%.
  • Canada Retail: Down 9.2% (total sales down 2.9%, benefiting from the addition of Rubino).
• Operating Expenses: Reduced by 6% (or $20 million). The company expects $20 to $30 million in total expense savings for fiscal year 2025 compared to 2024.
• Adjusted Operating Income: Essentially break-even (compared to $14.7 million last year).
• Adjusted Net Loss: $12.5 million (compared to a gain of $4.8 million last year).
• Diluted EPS: Loss of $0.26 (compared to a gain of $0.08 last year).
• Gross Margin: Decreased by nearly 120 basis points to 43%, driven by increased markdowns.
• Inventory: Up 0.5% at quarter-end.
• Liquidity: $46 million in cash, with total liquidity (including revolver availability) of $171.5 million.
• Total Debt: $522.9 million.
• Capital Expenditures: Anticipated annual CapEx reduced from $50 million to $40 million.

Operational and Strategic Insights:

• Consumer Environment: Acknowledged increased uncertainty and reduced planning visibility due to evolving macro conditions and declining consumer sentiment.
• Cost Control: Implemented aggressive expense cuts and capital expenditure reductions.
• Retail Performance (U.S. & Canada): Lower traffic impacted sales, especially earlier in the quarter. Top eight brands (primarily athletic) were flat in comps, outperforming the rest of the assortment and increasing penetration to 43% of sales.
• Brand Portfolio Segment: Sales down 7.9%, but operating income grew over 30% due to a 23% reduction in operating expenses.
• Topo Brand: Continued strong growth, with sales up 84% year-over-year. Now in over 1,200 points of domestic distribution (up 43%).
• Keds Brand: Experienced top-line headwinds due to market cleanup but saw approximately 700 basis points of gross margin improvement from transitioning to internal production.
• Assortment and Inventory: Reducing choice count while increasing depth on key styles. Store conversion rates improved by 60 basis points. Shifting inventory allocation to optimize in-store availability, increasing store in-stock levels by 13 percentage points.
• Tariff Mitigation: Actively accelerating sourcing diversification efforts to reduce dependence on any one country, aiming for less than half of sourcing from China by year-end (down from 70% at the start of the year). Managing potential price increases with brand partners.
• VIP Rewards Program: Accounts for roughly 90% of transactions and will be relaunched next year with enhanced value messaging and targeted promotions.
• Guidance Withdrawal: Due to extreme uncertainty and volatility in the environment, the company has withdrawn its forward-looking guidance for the time being.

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