DSW shoe store parent Designer Brands’ stock plunges as sales fall more than expected despite ‘aggressive’ promotions

Shares of Designer Brands Inc.
DBI,
-10.69%
plummeted 19% in premarket trading Thursday, after the parent of the DSW Designer Shoe Warehouse retail chain reported a wider-than-expected fiscal second-quarter loss as sales fell more than forecast despite “aggressive” promotional activity, as the COVID-19 pandemic continued to impact store traffic. For the quarter to Aug. 1, the company swung to a net loss of $98.2 million, or $1.36 a share, from net income of $27.4 million, or 37 cents a share, in the year-ago period. Excluding non-recurring items, the adjusted loss per share was $1.28, compared with the FactSet consensus of 85 cents. Sales dropped 43% to $489.7 million, missing the FactSet consensus of $589.6 million, as same-store sales fell 42.7% versus expectations of a 26.5% decline. Gross margin as a percentage of sales fell to 7.6% from 30.5%. “The decrease in gross profit was primarily driven by the impacts of the COVID-19 outbreak on our operations resulting in the temporary closure of stores and, subsequently, significantly reduced customer traffic upon store re-openings, which we addressed with aggressive promotional activity,” the company said in a statement. The stock has tumbled 47.5% year to date through Wednesday, while the SPDR S&P Retail ETF
XRT,
-1.45%
has rallied 15.8% and the S&P 500
SPX,
-2.77%
has gained 10.8%.