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03/22/2021

DSW Parent May Close 65 Stores, Hiring Digital Leaders

Designer Brands has identified around 65 U.S. stores it may close over the next four years, including 24 locations in 2021. However, it’s hiring digital leaders as it moves to meet the customer where they are: online.
Jamie Grill-Goodman
Senior Editor
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Designer Brands, parent company of DSW Designer Shoe Warehouse, said it has identified approximately 65 U.S. stores it may close over the next four years, including 24 locations in 2021.

The retailer saw fourth quarter 2020 sales dip 27% to $609 million, which was still the best quarterly sales performance that it experienced in 2020 versus 2019. For the full year, sales decreased 36% to $2.2 billion.

"Designer Brands' fourth quarter continues our story of sequential improvement in unprecedented market conditions,” said CEO Roger Rawlins. “I am proud of our team's exceptional execution of our near-term strategy as we continued to pivot our assortment to athleisure and kids, focused on the Top 50 brands in footwear and leaned even further into our digital-first capabilities.

As customers transitioned their spending online, the company saw continued strength in its e-commerce platform, said EVP and CFO Jared Poff. Digital demand for the fourth quarter continued to outperform store demand and was up 26% for U.S. retail on top of a strong 15% increase last year, while it spiked 113% for Canada in the quarter. 

“We firmly believe that our markets are strongest when we service the customer with engaging and convenient store experiences, while also providing a seamless and integrated top tier digital experience,” said Poff, “but we also have to recognize changes in productivity and expense structures as consumers continuously evolve their shopping behaviors.

“As store traffic remains constrained and consumers continue choosing to shop digitally and forego a trip to the store, we are closely evaluating our existing store infrastructure,” he continued. Designer Brands operates in nearly 700 locations under DSW Designer Shoe Warehouse, The Shoe Company and Shoe Warehouse banners. 

Poff said the 65 U.S. stores in question “would make sense to close upon their natural lease expirations.” He noted the planned store closures will be different than what actually materializes over time. “First, we anticipate more willingness to negotiate from landlords once we have a lease expiration on the horizon. Additionally, as with any projection, future sales demand will be different than what is currently modeled. Some stores will be stronger while others will be weaker.”

The retailer does plan to open eight U.S. DSW stores in 2021 that it contractually committed to prior to COVID. “We were successful in pushing the opening of these stores out of 2020, but we have met resistance from the landlords and pushing them out any further,” Poff noted.

In Canada, plans to close three stores and open three stores in 2021 would leave the store fleet unchanged. However, he noted the retailer continues to evaluate its Canadian fleet as well and could see additional store closures in 2021 as leases come up for renewal.

Designer Brands strategic priority in 2021 is to meet the customer where they are, Rawlins said, and the company has recently hired a new chief digital officer to lead that charge. 

Our customers are increasingly buying online and we want to provide them with a digitally enabled endless assortment. We've been leaning into digital marketing more heavily than ever before and reducing our reliance on direct mail. Specifically, we doubled down on digital media in early December and realized positive results on that investment. In geographies where we made these investments, digital demand grew double-digits and we saw a notable improvement in our store traffic as well.”

Additionally, the retailer is working on improving the speed of its website, which directly impacts its bounce rate and conversion.

Rawlins said the company is also adding leaders across its digital platform to improve overall efficiency as it monitors KPIs. The retailer’s new chief digital officer, Karime B. confirmed the hiring search posting on LinkedIn two weeks ago:

“It's still Day 1 at Designer Brands! I'm looking for a lot of positions across the Digital landscape from VPs down to managers. I am looking for smart, curious, self-starting general athletes who like a good challenge, get things done & have fun. REMOTE OK. Ping me for more Qs or recommendations!