Designer Brands aims to double private label sales

Diving Brief:

  • Footwear retailer Designer Brands announced a long-term plan on Friday that includes focusing on customers, building brands and optimizing for speed to drive growth, according to a company press release.
  • The conglomerate, which owns DSW Designer Shoe Warehouse and The Shoe Company, has a five-year financial strategy in place with a goal of reaching $4 billion in revenue by fiscal year 2026.
  • Designer Brands also plans to double its own-brand sales, primarily through its DTC channels.

Overview of the dive:

In 2020, Designer Brands reduced more than 1,000 positions and said it was considering closing until 80 stores.

Two years later, the shoe company aims to achieve $4 billion in revenue, a gross profit margin of 35% and the generation of $1 billion in cash from operating activities, all in here fiscal 2026.

“At Designer Brands, we have truly taken control of our destiny by transforming ourselves into a brand builder, combining our world-class design and sourcing capabilities with our state-of-the-art direct-to-consumer infrastructure,” said the CEO. Roger Rawlins in a statement. .

The company, which currently derives 19% of its total revenue from its house brands, wants to increase that figure to almost a third. The focus on private labels should increase its long-term operating margin.

A number of other retailers have also expanded their private label offerings for the same reason: own brands translate to better sales margins. The target may be one of best known companies for producing vibrant private label products and currently sports a roster of 48 private label brands across apparel, home, consumer goods and grocery categories, 10 of which are currently worth over $1 billion.

Macy’s Last Month hired Emily Erusha-Hilleque, a private label veteran Target, to focus on its own brand strategy. The department store carries 24 house brands across all categories, representing up to 20% of its volume.

“We are prioritizing our private label portfolio to grow our overall business and capture market share by offering assortments that build style credibility at attractive price points,” said Nata Dvir, Macy’s director of merchandising.

Similarly, Designer Brands sees private label as an opportunity to drive sales, with Rawlins describing it as “the main driver of growth over the next five years.”

On an earnings call with analysts in MarchRawlins pointed to private label as part of the quarter’s success, saying the company’s total own-brand sales were up 69% in the fourth quarter year-over-year, and distributor through its DTC channels (through DSW and its Vince Camuto website) grew 98% year over year.

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