Designer Brands (DBI) PT Raised to $7 at Telsey

Telsey analyst Dana Telsey raised the price target on Designer Brands (NYSE: DBI) to $7.00 (from $5.00) while maintaining a Market Perform rating.

The analyst commented: "DBI reported sequential improvement in the third quarter. Sales and operating deleverage slightly missed the consensus, but the gross margin expansion was significantly favorable. The consolidated comp decline of 2.4% for the quarter sequentially improved from the 5.0% decrease reported in 2Q25 and the 7.8% decline reported in 1Q25. We are further encouraged by the reinstatement of guidance with one quarter left in the year, though the topline guide anticipates a decline for the year, indicative that demand remains challenged. Adjusted EBIT came in nicely above the prior consensus as DBI tightly manages margins and costs. Amid a challenging macro environment, management is focused on emphasizing value for its customers, reducing costs (recall DBI announced a $20MM-$30MM cost savings effort in Q1 this year), and mitigating the impact from tariffs. DSW's new brand positioning appears to be gaining traction with customers, and management is optimistic that the momentum can continue. Heading into FY25, the company had discussed returning to topline growth this year by executing against its strategic initiatives across product, marketing, and customer experience. Despite the slight topline beat, demand remains soft with comps and total revenue falling YoY. The macro-operating environment remains challenging with pressure on the consumer remaining a concern going forward, as well as the impact from tariffs on DBI's business and how consumers will react to the potential for higher prices across the board as tariff-related pricing goes into effect. Additionally, the overall footwear market remains challenged as work remains for DBI to return to historical profitability levels. As such, we maintain our Market Perform rating."

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