What Happened?
Shares of footwear and accessories discount retailer Designer Brands (NYSE: DBI) fell 11.1% in the afternoon session after investor anxiety rose ahead of its second-quarter earnings report.
Analysts are forecasting the footwear retailer's revenue to decline 4.4% year-over-year. This pessimism is compounded by the company's recent history, which includes missing Wall Street's revenue estimates six times in the last two years. Following its last earnings announcement, where Designer Brands missed EPS estimates by $0.20, the stock plunged 15.74% in a single session. Broader financial concerns also weigh on sentiment, as the company has reported a recent revenue decline of nearly 8%, a negative net margin, and a high debt-to-equity ratio, signaling significant financial risk.
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What Is The Market Telling Us
Designer Brands’s shares are extremely volatile and have had 70 moves greater than 5% over the last year. But moves this big are rare even for Designer Brands and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 3 days ago when the stock gained 2.8% on the news that an analyst from UBS raised the company's price target. On September 4th, UBS analyst Jay Sole increased the price target on the footwear and accessories retailer to $4.00 from $3.00, representing a 33.33% raise, while maintaining a 'Neutral' rating on the shares. The investment firm cited modestly improved fundamentals for the company during the second quarter. This positive adjustment comes ahead of Designer Brands' upcoming earnings report, which is expected on September 9. Adding to the optimistic sentiment, the consensus earnings per share (EPS) estimate for the upcoming report has been revised 53.3% higher over the last 30 days.
Designer Brands is down 21.1% since the beginning of the year, and at $4.18 per share, it is trading 43.3% below its 52-week high of $7.38 from September 2024. Investors who bought $1,000 worth of Designer Brands’s shares 5 years ago would now be looking at an investment worth $667.89.
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