Rebranding and Store Experience Innovation with 'Let Us Surprise You' Campaign
The company launched a new brand campaign titled 'Let Us Surprise You' on September 2, 2025, aimed at reinvigorating the DSW brand identity.
The campaign emphasizes a whimsical, engaging shopping experience designed to deepen customer loyalty and brand differentiation.
A reimagined DSW store in Framingham, Massachusetts, serves as a pilot with immersive features like augmented reality try-on kiosks and customization stations.
Early feedback from customers and associates has been very positive, with strong impressions and increased store engagement.
The new store format integrates advanced technologies and services to create a modern, personalized shopping environment.
The company plans to use insights from this pilot to further evolve its retail experience and potentially expand innovative store formats.
Active clients ended Q4 at 2.3 million, down 7.9% year-over-year but with improving year-over-year active client growth rates for five consecutive quarters.
Adjusted EBITDA for Q4 was $8.7 million or 2.8% margin, exceeding guidance but down slightly year-over-year and quarter-over-quarter.
Average order value (AOV) grew 12% year-over-year in Q4, driven by higher items per Fix and a 7.6% increase in average unit retail (AUR).
FY 2025 adjusted EBITDA was $49.1 million or 3.9% margin, up 170 basis points from FY 2024.
FY 2025 net revenue was $1.27 billion, down 3.7% year-over-year adjusted, with second half revenue growing 2.5%.
Gross margin for FY 2025 was 44.4%, the highest since FY 2021, up 10 basis points year-over-year.
Q4 gross margin was 43.6%, down 100 basis points year-over-year due to higher transportation costs and mix shift to non-apparel.
Q4 revenue was $311.2 million, up 4.4% year-over-year on an adjusted basis, marking the second consecutive quarter of revenue growth.
Adjusted EPS grew 12% year-over-year to $1.04, the strongest growth rate since 2023.
Adjusted FIFO operating profit was $1.1 billion for the quarter.
E-commerce sales grew 16%, driven by increased households and order frequency, with delivery sales surpassing pickup sales for the first time.
Excluding the pharmacy mix and sale impact, FIFO gross margin rate decreased 9 basis points, in line with expectations to remain margin neutral.
FIFO gross margin rate increased 39 basis points year-over-year, primarily due to the sale of Kroger Specialty Pharmacy and lower supply chain costs.
Fuel sales and profitability declined due to lower retail prices and fewer gallons sold, with expectations for continued lower gallons sold through 2025.
Identical sales without fuel grew 3.4%, marking the sixth consecutive quarter of improvement.
Operating general and administrative (OG&A) rate improved, decreasing 5 basis points year-over-year, and 41 basis points on an underlying basis after adjustments.
Domestic commercial sales grew 12.5% on a 16-week basis, representing 33% of domestic auto parts sales and 28% of total company sales.
Domestic retail same-store sales increased 2.2%, with DIY ticket growth of 3.9% despite a 1.9% decline in traffic.
Earnings per share (EPS) decreased 5.6% year-over-year but increased 1.3% on a 16-week basis after adjusting for the extra week last year.
Free cash flow for the quarter was $511 million, totaling $1.8 billion for FY 2025, supporting strong capital returns including $447 million in share repurchases.
Gross margin was 51.5%, down 103 basis points versus last year, negatively impacted by an $80 million LIFO charge.
International same-store sales grew 7.2% on a constant currency basis but only 2.1% unadjusted due to currency headwinds.
Operating expenses increased 8.7% year-over-year on a 16-week basis, driven by investments in growth initiatives.
Total sales grew 0.6% year-over-year to $6.2 billion for Q4, with a 6.9% increase on a comparable 16-week basis.
Capital expenditures were approximately $1.97 billion in Q4 and nearly $5.5 billion for the full fiscal year, supporting warehouse growth and remodels.
Comparable sales grew 5.7% (6.4% adjusted for gas deflation and FX); e-commerce comparable sales rose 13.6% (13.5% adjusted for FX).
Gross margin improved by 13 basis points to 11.13%, with core margins up 29 basis points year over year.
Inflation remained in the low to mid-single-digit range, with fresh and food & sundries stable and nonfoods seeing a return of inflation.
Membership fee income increased 14% to $1.72 billion, driven by membership growth and fee increases.
Q4 net income was $2.61 billion or $5.87 per diluted share, up 11% year over year; excluding a non-recurring tax benefit last year, net income grew 14%.
Q4 net sales increased 8% to $84.43 billion from $78.18 billion last year.
SG&A rate increased by 17 basis points to 9.21%, impacted by wage increases and liability charges but partially offset by productivity gains.
Dafinchi
