DSW testing new affordable luxury shop-in-shop concept

Designer Brands is testing a new store-within-a-store concept called The Edit at four DSW locations this fall, CEO Doug Howe said on a Thursday call with analysts.

Curated spaces inside existing DSW locations

The pilot retail experiment will be a curated, raised destination showcasing key affordable luxury and raised fashion brands, Howe said. Each open, experiential environment will occupy between 1,000 square feet and 1,500 square feet inside existing DSW stores, although Howe did not provide further information on specific locations.

Challenges in the retail sector

Also on Thursday, Designer Brands reported a second quarter 2026 consolidated net sales decrease of 1.2% year over year to $730.6 million. Retail sales fell 2.2% for the quarter, and comparable store retail sales were down 2.6%.

Recently appointed CFO Sheamus Toal told investors that top-line retail performance was slightly below expectations due in part to “sequential traffic headwind during the quarter.” The Designer Brands retail and brand portfolio features three store banners with a combined store count of 668 as of Aug. 1.

However, the company’s brand portfolio, which includes Topo Athletic, Keds, Vince Camuto, Jessica Simpson, Lucky Brand and others, has been especially strong, and was up nearly 18% year over year.

Strong performance in owned brands

In particular, Howe said the company’s “affordable luxury assortment continued to resonate, nearly doubling last year’s volume.” Meanwhile, Topo and Jessica Simpson revenue grew about 24% each for the quarter. Howe said Topo is expected to generate more than $100 million in 2027, with significant opportunity anticipated both in existing and new channels of distribution. Notably, Topo is not sold at DSW stores.

Designer Brands is relaunching its rewards program this month. “Nearly 90% of our transactions come from our approximately 30 million VIP members, and we have significantly modernized the program, enhancing the value we provide to our VIPs while improving the effectiveness and efficiency of our CRM efforts,” Howe said.

Looking ahead, Howe told analysts that the company was raising its full-year sales guidance for fiscal 2026 to a range of flat to up 1% year over year, compared to the previous guidance range of down 1% to up 1%. Retail sales are expected to remain flat to slightly down, while the brand segment is forecasting double-digit sales growth.

Toal attributed some of the revised forecast to anticipated improvement in top-line sales and added that the reduced expense structure related to lower debt levels also factored in. The company reduced its debt to $423.1 million for the second quarter of 2026, down $93 million compared to the second quarter of 2025. In February, Designer Brands also announced an unspecified number of layoffs. At the time, a company spokesperson told Retail Dive the move was intended to “strengthen our ability to execute, manage costs, and create long-term value for our customers, our teams and our business.”