Good morning, and welcome to the Designer Brands Inc. Q1 2023 earnings call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by 0. After today's presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Dustin Hauenstein, Director of Investor Relations. Please go ahead. Good morning. Earlier today, the company issued a press release comparing results of operation for the 13-week period ending April 29th, 2023, to the 13-week period ended April 30th, 2022. Please note that the financial results that we will reference during the remainder of today's call exclude certain adjustments recorded under GAAP, unless specified otherwise. For a complete reconciliation of GAAP to adjusted earnings, please reference our press release. Please note that remarks made about the future expectations, plans, and prospects of the company constitute forward-looking statements. Results may differ materially due to various factors listed in today's press release and the company's public filings with the SEC. The company assumes no obligation to update any forward-looking statements. Joining us today are Doug Howe, Chief Executive Officer, and Jared Poff, Chief Financial Officer. Let me turn over the call to Doug. I want to begin by thanking our team for their continued hard work throughout the quarter. Given the strength of our Q1 last year, which was propelled by the strong return of fashion, coupled with this year's broad-based pressure on the consumer, we anticipated our Q1 would face headwinds. That being said, the environment was slightly more difficult than we expected. I was pleased with how our team stepped up to read and react to an increasingly promotional environment and at the same time, manage our inventory level appropriately across both our retail and brand segments. In the Q1, Designer Brands' net sales declined 10.7% compared to the Q1 last year. As I just mentioned, the first quarter of 2022 was a robust period where we saw a net sales growth of 18.1% year-over-year. Additionally, our US retail store traffic was up 22% last year, significantly outpacing the market. Despite the negative trend that the retail industry has been experiencing since the fourth quarter, as well as the sequential downtrend in February, March, and April of this year, we are continuing to see increased customer demand in the casual segment of our offerings. However, the increase in casual sales were not significant enough to offset the decreases in our dress and seasonal businesses within our most important March/April selling season. Specifically, we saw a sharp pullback in seasonal products, particularly sandals, which were down 14% in women's and down 8% in men's in the quarter in our retail segment. Conversely, we saw strength in our overall casual category within DVI, with women's up 7% and men's up 4% in the quarter compared to the prior year. We are leaning on our ability to flex and pivot our assortment to offer even more of the casual brands they want. To mitigate the impact of changing consumer preferences, we quickly altered course, increasing our promotional drivers as we moved through the quarter. As we've mentioned frequently over the past year, we have been strategically building back our clearance inventory offering, providing our value customer segment options at lower price points, and we were able to leverage this further during the quarter. Our U.S. clearance business comps were up 5% on a net basis during the quarter compared to last year. Despite the softness in the quarter, we continue to be encouraged by the progress we are making against our long-term strategy of doubling sales of our own brands from 2021 to 2026, while editing and amplifying with our top national brand partners. We continue to see bright spots in own brands, particularly in the casual category, and are very excited to continue integrating our new brand acquisitions into our portfolio. We're pleased with the progress we have made in the quarter, growing own brands penetration to 27% of DVI net sales. As a reminder, over the last year, we have acquired Keds, Le Tigre, and Topo Athletic, all of which we anticipate will help to fuel growth for total DVI and provide for a diversified complement to our dress and seasonal powerhouse brands that will continue to benefit us over the long term. Now I'd like to briefly dive into each of these. Let's start with an update on Keds. We are continuing to integrate Keds and are pleased with the performance of the brand to date. Keds saw positive wholesale growth versus its performance last year under Wolverine's ownership and is performing in line with our acquisition expectations. Keds recently launched a brand refresh focused on honoring individual expression through playful, optimistic style. Our first product collection that celebrates individual self-expression is focused on the Keds Champion sneaker, our original sneaker and icon. Keds Champion sneaker is reinterpreted with different silhouettes, celebrating our iconic style, versatility, and staying power. The Court, which launched recently, is a new style within the collection that pays homage to tennis heritage and has been a success with both in-line offerings as well as our recent collaboration with Recreational Habits, experiencing very strong sell-through in multiple points of distribution as well as on keds.com. Le Tigre is planned to launch in late summer, just in time for the back-to-school season. This brand provides us with another unique opportunity to offer fashion-forward athletic footwear at a reasonable price point and furthers our own brand reach into the athletic category. Much like Keds, it's a heritage brand with a rich history. It offers great versatility and lifestyle and approach. We anticipate customers will be excited to see this online and in stores. Lastly, Topo. This acquisition gives us a specialty athletic brand that we intend to lean into across channels, from wholesale and DTC to Topo's already meaningful international distribution. We remain on track with our integration plans and are excited about the potential of this brand. These three brands will strengthen our positioning in the athletic category while moderating Designer Brands' penetration to dress and season, creating less volatility related to weather and fashion trends. In fact, during the first quarter, we saw strength in our owned athletic brands relative to seasonal and dress categories. In addition to these three, we are excited to announce that we are working on closing an agreement to become the exclusive licensee of the Hush Puppies brand in the U.S. and Canada, a stellar addition to our comfort and casual categories in owned brands. Our DSW segment has been the exclusive retail outlet for Hush Puppies for over two years now. This agreement now opens up the opportunity for us to wholesale the brand in the U.S. and Canada, as well as operate HushPuppies.com, which will be our sixth independent e-commerce site. The Hush Puppies brand showcased robust growth in the Q1 at DSW, with growth up 400%. This also brings design and sourcing of comfort casual product into our business model, which has meaningful upside for our own brand portfolio. I also want to touch on the performance of several of our legacy owned brands, specifically in the casual category. First, Lucky continues to be a standout, with women's sandals up 10% to last year. We've seen trend-driven demand for Lucky, motivated by the resurgence of denim and more Western styles. This drove sales up 8% in our DTC channel at DSW in the first quarter compared to the prior year. Crown Vintage also performed well. We are pleased with the momentum we are seeing as we continue our celebrity partnership with Emma Roberts, which includes her specially curated styles and storytelling around the latest spring collection. The collaboration drove 4.6 million media impressions over a five-day period in April. We made meaningful progress in the men's space, expanding our assortment beyond dress and serving our male customer across categories with a focus on expanding the casual and hybrid assortment. We are seeing encouraging results within this category with both our Vince Camuto and Crown Vintage casual business. Vince Camuto's men's DTC is up 87% for Q1. We are offering him a breadth of assortment in casuals across different types of constructions, sportier technical constructions, and versatile dress hybrids. Several new styles include the introduction of our Fly365 technology. This is an important step for our Vince Camuto brand, as it is the beginning of a journey of engaging with our male customer in an expanded manner. Turning to Crown Vintage, our men's Crown Vintage business is up 32% in Q1, with the growth driven by casuals. Crown Vintage is currently the number five brand overall for men's at DSW. In a similar way to our approach to Vince Camuto over the last year, our focus in Crown has been to grow the casual and dress hybrid assortment for the brand with a focus on natural-based materials such as canvas, chambray, and other cotton-based materials. Our strength in e-commerce continued across many of our brands, and our collective ownbrands.com DTC performance showed solid growth compared to last year, with vincecamuto.com delivering an 8.3% comp. In addition, topoathletic.com and keds.com both delivered meaningful new DTC sales to designer brands. As we focus our brand-building efforts, we continue to find moments to showcase our brands with engaging events, including several at the end of the quarter that generated excitement and drove traffic into stores and online. Lucky Brand celebrated festival culture during Coachella, hosting a Desert Mirage-themed event featuring surprise performances and exclusive giveaways for guests, including a customization station for trucker jackets. The influencers in attendance were dressed from head to toe in styles from Lucky Brand's Festival Collection, which featured footwear and handbags in crochet and natural leathers, reflecting the cool festival vibe of that moment. Vince Camuto created their own buzz at Coachella, treating VIP guests, celebrities, and influencers to the Ciao Bella Festival Fashion Experience, an homage to the Vince Camuto spring campaign titled Ciao Bella. In mid-April, Jessica Simpson celebrated the launch of her spring/summer 2023 collection of apparel and shoe silhouettes. The collection was inspired by Jessica's love of all things denim and features platforms, wedges, and slides in amazing fabrics, bright colors, and hot metallics. sure to inspire our devoted Jessica Simpson customers to complement their looks this season. Complementary to these own brands initiatives, we are committed to our national brand strategy and growing strong relationships with the largest national brands that are most relevant to our retail customer base. We are focused on editing and amplifying our national brands, acting as a top point of distribution for our consumers. As part of our edit and amplify strategy, we are excited to build on our partnership with Nike, which strengthens our position as a leader in the footwear and athletic space. This plan will elevate in October this year. Our partnership with Nike will allow us to provide an athletic offering across men's, women's, and kids' that gives our customers a premium, physical, and digital assortment. Before I hand it over to Jared, I want to quickly touch upon our guidance that he will discuss in a more detail in a few minutes. While we've had a slightly more challenging start to the year than anticipated, I am still quite proud of the quarter we delivered on top of outsized market-leading growth in the Q1 of last year. With this in mind, I am cautious about the balance of the year and mindful of several dynamics. First, we continue to see a consumer pressured by a macroeconomic environment, a factor that is now expected to be more impactful than originally anticipated. Second, the Q1 is a critical time frame for our business, as Marple is one of our 2 biggest selling periods of the year. Given that we have seen weakness across our original expectations, coupled with the consumer continuing to lean into value, we will continue to leverage an increased promotional and clearance strategy in the Q2. As a result of these elements, we are lowering our sales and earnings guidance for 2023. That being said, we do believe these trends are temporary and expect to see improvement later in the year. With that, I'll pass it over to Jared. Jared? Thank you, Doug. Good morning, everyone. I want to reiterate Doug's comments and echo how proud we are of this organization's ability to manage through the current challenging macroeconomic environment. We remain on the path to evolve our business model as we demonstrate the power of our brand-building capabilities. I am pleased with the progress we have made on our journey to date. As you heard from Doug, it was a challenging Q1, particularly on the top line. Our adjusted EPS came in slightly below our expectations at $0.21. With the strong Q1 performance last year in both our retail and wholesale segments, coupled with the challenges of the current environment, we had communicated that the Q1 would most likely be our most difficult by far from a year-over-year comparison on both the top and bottom line. We continue to feel that this is the case. However, Q1 was slightly more challenging than anticipated, and the trajectory change into Q2 is not materializing as originally projected. From a retail perspective, we continue to react to the constrained discretionary consumer and saw an increasingly promotional environment across most of our retail peers. Additionally, we had an especially pressured March, as weather did not support our all-important Marple expectations. This is a peak holiday for seasonal product, a category in which we dominate and over-penetrate. From a wholesale perspective, we met expectations which were down to last year due to many of our retail partners assuming a conservative stance with near-term inventory adjustments. Let me provide a bit more detail on our financial results. For the Q1, sales decreased 10.7% to $742.1 million compared to 2022, primarily as a result of the aforementioned pressures on consumers, inventory tightening across the industry, and a highly promotional retail environment. For the quarter, total retail comps were down 10% on top of a strong 15% comp in the Q1 of 2022. US retail comps specifically were down 12% for the quarter, driven by the same pressures. However, on a 2-year stacked basis, comps were up 2%. Canada had a strong quarter, posting comps up 3% on top of a robust 41% comp gain last year. Finally, the performance of vincecamuto.com continued to be positive, with comps up 8%, which was particularly noteworthy given last year's comp gain of 20%. Consolidated gross margin was 32% in the Q1, compared to 33.2% last year, a decrease of 120 basis points. While much of this decrease was planned, given the work we had been doing since fall of last year, rebuilding our clearance business, we also saw some deleverage in the quarter, given the promotional environments and deleverage of our fixed store occupancy costs. More importantly, gross margin continues to be structurally more robust than pre-pandemic, with consolidated gross margins up 230 basis points compared to the first quarter of 2019. Our adjusted SG&A ratio for the Q1 was 28.9% of sales, compared to 26.8% in the Q1 of 2022. Although we have deleveraged SG&A with a decrease in sales, we have recognized a significant cut in our expense base from 2022 as we continue to find opportunities to trim costs across the entire business. For the Q1, adjusted operating profit was 3.5% of sales, compared to 6.6% in the prior year. For the Q1, we had $6.6 million of net interest expense, and our effective tax rate on our adjusted results was 25.7%, compared to 29.3% last year. Our Q1 adjusted net income was $14.3 million, or $0.21 per diluted EPS, versus $36.7 million, or $0.48 last year. Turning to inventory, we ended the Q1 with inventories of $637.4 million, compared to $672.5 million last year. On a retail square footage basis, we ended the quarter down 4% versus the Q1 of 2022. Wholesale inventories ended the Q1 up 15%, but adjusted for the acquisitions of Topo and Keds, inventory would have been down 27% to last year. As we manage through the uncertainties of this year, we feel good about our inventory position heading into the Q2. We ended the quarter with $50.6 million of cash, and our total liquidity, which includes cash and availability under our revolver, was $250.9 million. As of the end of the quarter, we had $200.3 million available to draw on our revolving credit facility. As a reminder, we continue to await the receipt of our remaining $40 million of our CARES Act tax refund due to us from the IRS, which we expect as soon as the standard audits of the applicable prior tax years conclude. Before I conclude, I want to share a few remarks on our updated guidance. As we discussed last quarter, our original guidance assumed a pullback in consumer spending through the H1 of the year, with a soft landing in the Q3 and a modest return to growth in the Q4. With the Q1 performing slightly below our expectations and uncertainty continuing to linger, we believe that the recovery in consumer discretionary spending may be delayed. As a result, we are lowering our guidance. We have taken the appropriate steps to manage those factors under our control, including prudently managing our inventories and tightening up expenses across the board. As a result, the largest uncertainty lies squarely with the discretionary consumer. Accordingly, we are widening the range of our guidance to reflect this uncertainty and are now guiding to an adjusted EPS of $1.20-$1.50 per share. As you might expect, sales in our U.S. retail segment remain the largest uncertainty for the balance of the year. In contemplating the high end of our guidance, we have taken into consideration the slightly slower start to the year than we experienced in Q1 and slower than anticipated start to the recovery in Q2. However, the top end of the range still assumes that the consumer returns to a more normalized buying patterns in the fall. That, when coupled with increasingly easier comparables to last year, result in a return to net sales growth in the fall versus last year. More specifically, this assumes sales at our U.S. retail segment down mid-single digits to last year, and consolidated sales at Designer Brands, excluding Keds, are down mid-single digits as well. On the lower end of our guidance, we have assumed that the consumer doesn't recover as quickly. This would result in fall delivering slightly lower sales than last year, albeit still much improved comp performance over spring, given our newly elevated Nike relationship, opportunistic closeout buys we have secured, the extra week in the fiscal calendar, and easier comparables to last year than we experienced in the spring. The low end of our range assumes sales at our U.S. retail segment down in the high single digits to last year. Consolidated sales at Designer Brands, excluding Keds, also down in the high single digits to last year. I will now touch on the assumptions we've made for the other parts of our business within our guidance range. Regardless of the scenarios, within our Canadian retail business, we expect sales to be relatively flat to down low single digits to last year, given the continued post-COVID recovery that geography is experiencing. In our brand segment, given the conservative posture with which we entered the year, we are not revising our guidance much. We now expect external wholesale, excluding Keds, to be down to fiscal 2022 by approximately 20% versus the down 15%-20% in our original guidance. We still anticipate our vincecamuto.com DTC site to be relatively flat to last year. As a reminder, we closed on the Keds acquisition at the beginning of the fiscal year. Since the acquisition, we are pleased to say that Keds has been delivering as expected, and we continue to expect Keds to add approximately $75 million-$85 million of net sales across multiple channels, including wholesale, DTC, international, and Canada. As I noted previously, it should be highlighted that while we are excited about this acquisition and will recognize these incremental sales, we are not anticipating a material impact to profitability from these sales in the current year as a result of cost and investments related to the integration process. With an estimated tax rate of 29.8% and approximately 69 million weighted average shares for the year, we arrive at our revised EPS guidance range of $1.20-$1.50 per share. All of the guidance just discussed excludes the impact of the anticipated Dutch auction tender offer that we announced earlier today and related debt raise, which I will now discuss. After thoughtful consideration and discussion with management and our board of directors, later today, we expect to launch a Dutch auction tender offer. We believe this represents a significant investment in our own stock that will allow us to efficiently and effectively increase value for our shareholders. We intend to offer to repurchase up to $100 million in value of our Class A common stock at a price between $7 and $8 per share under our existing share repurchase authorization. The repurchase is conditioned upon obtaining financing, which we look to finalize with a $135 million term loan agreement prior to the expiration of the tender offer. The details of the anticipated tender offer can be found in the accompanying press release. As we navigate these uncertain and challenging times, we will continue to operate with a focus on growing value for our customers, as well as an emphasis on managing our expense base and our inventory levels in both our retail and wholesale segments. I'm continuing to be excited about the investments we have made in our brand portfolio, and I'm looking forward to continuing the momentum of these latest acquisitions to support and diversify our revenue streams. With that, we will open up the call for questions. Operator? Thank you. We will now begin the question- and- answer session. To ask a question, you may press star then one on your touch-tone phone. If you're using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we'll pause momentarily to assemble our roster. Our first question comes from Jay Sole from UBS. Please go ahead. Great. Thank you so much. Maybe just to start off, I'm interested if you can elaborate a little bit on this elevation of partnership with Nike. Can you just maybe tell us a little bit about how it came together? I think, you know, before Nike was, you know, 6% of sales, maybe 7% of sales. I mean, are we going to have, like, a full reversal and go back to that level of sales with Nike? If you can sort of give us some detail around that would be helpful. Thank you. Yeah. Hey, Jay. Thanks for the question. This is Doug. Obviously, we're, you know, very excited about the changes that the teams are making in the overall product portfolio. Elevating our relationship with Nike is obviously among them. They've been great partners. We've had ongoing dialogue for the past several months. You know, we're super excited to be able to bring that back across men's, women's, and kids. That'll happen in Q4, so November, available to customer. Again, they've been great partners. We're excited to be able to offer that across stores and digital. You know, we'll thoughtfully, with their partnership, you know, build that business back. You know, we're going to be focusing, obviously, on, like I said, men's, women's, and kids. big opportunity, I think, for both of us, just given our number 3 market share penetration in women's. you know, the customer will vote, but, we'll continue to, you know, evolve our portfolio with them and other partners as well, but, obviously, very excited about that. Got it. Maybe, just going to follow up on that. You know, you talked about, just want to touch on the guidance a little bit. You know, you mentioned that the trajectory change in the business that perhaps you've been anticipating for Q2, you know, hasn't yet materialized. Can you just talk about what you're seeing and sort of, like, what hasn't happened? Maybe also talk about when you said there's an increasingly promotional environment, like, you know, what categories are you seeing that in, and sort of where are you noticing the most kind of increased in promotions? Yeah, this is Doug again. Thanks, Jay. It's pretty equally spread across the categories, to be honest with you. I mean, we're definitely seeing strength and buoyancy in the casual area. That casualization trend just continues. You know, men's, women's, kids, all very, very similar, which to us, really just points to she's being much more discretionary with her income, right? You know, it's fairly broad-based. I think the good news on that is we feel like, you know, there's parts of that that are in our control, obviously, when that rebounds. We're being very thoughtful about our promotions, obviously, to be able to manage through that. We've always been known for value, we certainly want to lean into that as a core competency. I think, you know, we're just seeing a little bit of tampered demand. We had a lot of reasons to believe as we moved through the back half of the year. Teams have done an amazing job of rebalancing the inventory, both on the retail side and on the brand side, leaning into that casualization. Feel really good about the work the teams are doing there. We're going to be launching an exciting fall marketing campaign. Obviously excited for the first time to be able to launch an own brand in the athletic space with Le Tigre. As we said, you know, really excited about elevating our relationship with Nike as we move into the back half of the year. Got it. Okay. Thank you so much. Again, if you have a question, please press star then 1. That's star then 1, if you have a question. There are no more questions in the queue. This concludes our question- and- answer session. I would like to turn the conference back over to Doug Howe for any closing remarks. Thank you. Well, hopefully, you heard through our remarks, consistently, we are obviously focused on product. We're excited to continue to elevate our national brand portfolio through the relationship with Nike. As I said, we're looking forward to launching Le Tigre, first time we've launched a known brand in that athletic space in August of this year. I'll just close where I began by thanking our team for their continued hard work and dedication. I also want to thank our amazing brand partners, thanks to all of you for joining us today, we look forward to updating you our progress next quarter. The conference is now concluded. Thank you for attending today's presentation. You may now...