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Athleisure Styles, Closeouts Rising at DSW

DSW, the banner owned by publicly traded Designer Brands, essentially became a dotcom-only retailer on March 18 due to COVID-19. But the firm expects to have all of its 1,000+ North American locations open by June 30, and as of last week, 90 percent of doors were open for business.

Citing a customer pivot toward more casual and athleisure footwear and away from historically strong categories in dress and seasonal styles, DSW is beefing up fall assortments with a greater focus on the trending segments and working with key vendors on the strategy.

“What we’ve got to do is figure out how do get after the sneaker business in a bigger way,” CEO Roger Rawlins told analysts last week. “The beauty of our model is we have 30 million consumers, 80 percent of them female. And guess what: We do not have a huge portion of their wallet when it comes to athletic.”

Last month, DSW’s athleisure and kids’ footwear segments combined comped up 17 percent year over year.

Part of DSW’s new strategy is a shift toward the “Top 50” footwear brands its customers demand and away from the approximately 700 to 800 brand it typically carries. Inventory investments will be made in the “Top 50” labels, with DWS management already in discussions with key vendors on going deeper with their brands. But the company is also considering using its Camuto arm to develop some sneaker looks for DSW.

“The challenge we have is that a large chunk of our business is seasonal and dress. And guess what? That’s not comping,” Rawlins said.

The second and third buckets of DSW’s go-forward strategy will be special makeups that show value to the footwear customer and closeouts. Currently making up 8 to10 percent of DSW’s overall business, the plan is to at least double the closeout percentage going forward.

Designer Brands ended the first quarter with inventories down 17 percent. The company intends to closely monitor inventory levels as it retains “significant” open-to-buy dollars that will enable it to chase opportunistic buys from key brands. Additionally, the company has instituted new payment plans with vendors that better align with the sale of inventory and continues to talk with store landlords about go-forward rent structures. DBI has the ability to adjust its brick-and-mortar fleet, including 521 DSW locations at first quarter end, about 20 percent annually.