Designer Brands Inc. recorded a 24% growth in Topo Athletic sales in the second quarter of 2026, contributing to the positive performance of the entire Brand Portfolio segment of the company. The running and trail running footwear brand is expected to exceed $100 million in sales in 2027.
CEO statements
“Topo continued to excel, with revenue growth exceeding 24% in the quarter, in line with our expectations”, stated Doug Howe, CEO of Designer Brands, during the conference call with analysts. Howe also highlighted the improvement in the brand’s profitability, linked to the Topo sourcing integration initiatives within the DBI platform. The brand currently has around 1,600 points of sale and is not yet distributed in DSW stores, a chain owned by Designer Brands. According to Howe, this represents an additional expansion opportunity, especially in the specialized retail channel.
Group financial results
Overall, Designer Brands’ adjusted earnings grew by 17.1%, reaching $19.2 million (34 cents per share), compared to $16.4 million in the same period of the previous year. The figure exceeded analysts’ estimates, which were at 26 cents per share. Total sales, however, decreased by 1.2%, amounting to $730.6 million, below the estimate of $745.09 million, due to weakness in the retail segment. Operating income increased by 32.1% in the quarter, to $39.4 million, while in the first half the increase was 104.4%, totaling $58.8 million. The overall gross margin improved by 430 basis points, to 47.9%, of which 280 basis points were due to customs duty refunds.
Brand Portfolio segment: +17.9%
The Brand Portfolio segment, which includes Topo Athletic as well as Keds, Vince Camuto, Kelly & Katie, Jessica Simpson, Lucky Brand, Mix No. 6, and Crown Vintage, recorded sales of $86.3 million, a 17.9% increase compared to $73.2 million in the previous year. The segment’s gross margin increased by 510 basis points, to 29.8%, with an operating profit of $979,000, compared to a loss of $4.05 million in the same period last year.
Retail segment: sandals weigh
Sales in the retail segment (DSW, The Shoe Co., and Rubino in North America) decreased by 2.2%, to $671.1 million, with comparable sales declining by 2.6%. Around 200 basis points of the decline are attributed to the sandal category, affected by unfavorable early season weather. The Athletic category also recorded weaker performance in the retail segment, although with improving margins; however, athletic product demand returned to grow by 400 basis points sequentially in August.
Forecasts
Designer Brands has revised upwards the guidance for the full year: sales are now expected to be stable or grow by up to 1% (compared to the previous range between -1% and +1%), and adjusted diluted earnings per share are expected to be between 47 and 52 cents (compared to the previous 28-38 cents). According to Howe, the third quarter has “started off great”, with a decrease in the weight of the Athletic category in the second half of the year in favor of clothing and boots.
