Designer Brands Inc (DBI)

Short-term

Turnover ratios

Designer Brands Inc's activity ratios provide insight into how efficiently the company manages its inventory, receivables, payables, and working capital turnover.

1. Inventory turnover:
- The inventory turnover ratio has remained relatively stable over the past five years, ranging from 3.63 to 4.06. This indicates that Designer Brands Inc effectively turns its inventory into sales, with an average of approximately 3.96 times per year. However, a slight decline in inventory turnover in the most recent year may suggest a potential need for improved management of inventory levels.

2. Receivables turnover:
- The receivables turnover ratio shows significant fluctuations over the years, ranging from 11.40 to 42.64, with the highest turnover in 2023. This indicates that the company collects its accounts receivable efficiently, demonstrating a strong ability to convert credit sales into cash. However, the sharp decrease in 2022 should be monitored for potential credit management issues.

3. Payables turnover:
- Designer Brands Inc's payables turnover ratio has fluctuated between 6.24 and 8.76 over the past five years. A higher turnover ratio generally indicates that the company pays its suppliers more quickly. The ratios suggest that the company manages its accounts payable effectively, balancing the timing of payments to suppliers.

4. Working capital turnover:
- The working capital turnover ratio has varied significantly, with a notable peak in 2021 followed by a decline in subsequent years. The high turnover in 2021 suggests the company efficiently utilized its working capital to generate sales. However, the subsequent decrease may indicate a less effective utilization of working capital for revenue generation.

In conclusion, Designer Brands Inc demonstrates solid efficiency in managing inventory, receivables, and payables, with some fluctuations in working capital turnover. Monitoring and analyzing these activity ratios can provide valuable insights into the company's operational efficiency and financial performance.

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Average number of days

The Days of Inventory on Hand (DOH) ratio for Designer Brands Inc has been relatively stable over the last five years, ranging from 89.79 days to 100.59 days. This indicates the number of days it takes for the company to sell its inventory, with a higher number suggesting slower inventory turnover.

The Days of Sales Outstanding (DSO) ratio has varied significantly over the same period, with sharp fluctuations from as low as 8.56 days to as high as 32.02 days. A lower DSO generally indicates more efficient collections from customers.

The Number of Days of Payables ratio has also shown variability, with fluctuations between 41.68 days and 58.47 days. This ratio reflects the number of days the company takes to pay its suppliers, with a higher number potentially indicating favorable cash management by delaying payments.

Overall, while the inventory turnover has been relatively stable, the collection period from customers and payment period to suppliers have shown more volatility, suggesting potential areas for improvement in working capital management strategies.

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Long-term

The long-term activity ratios of Designer Brands Inc, as indicated by the fixed asset turnover and total asset turnover ratios, reveal the company's efficiency in managing its assets over the past five years.

The fixed asset turnover ratio measures the company's ability to generate sales from its investment in fixed assets. Designer Brands Inc has shown consistent improvement in this ratio over the past five years, with a peak of 14.08 in Jan 28, 2023, indicating that the company efficiently utilizes its fixed assets to generate revenue.

On the other hand, the total asset turnover ratio measures the company's ability to generate sales from all of its assets. While Designer Brands Inc has shown fluctuations in this ratio over the years, the overall trend indicates a relatively stable performance in terms of generating sales compared to its total asset base.

Both ratios suggest that Designer Brands Inc has been effectively managing its assets to drive sales growth and optimize its asset utilization, which is a positive indicator of the company's operational efficiency and financial performance in the long term.