Q4 2019 Earnings Call
Good morning, and welcome to the designer brands in fourth quarter 2019 earnings conference call. All participants will be in listen-only mode says you need assistance. Please signal conference special pressing the star key followed by zero after today's presentation. There will be an opportunity to ask questions. Please note today's event is being recorded. I would now like to turn the conference over to service turned off from Edelman, please go ahead ma'am. Good morning earlier today. The company issued a press release the results of operations for the 13 weeks. Monday, February 1st, 2022 the 13 week and fifty two week period ending February 2nd 2019. Please note that remarks made about future expectations plans and Prospects of the company name 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 phone number.
looking statements joining us
Today or larger role as chief executive officer and Jarrod cough Chief Financial Officer now, let me turn over the call to Rodger.
Good morning, and thank you for joining us to discuss our results for the fourth quarter and fiscal 2019 as I'm sure you have all seen the recent spread of the Cove in nineteen or coronavirus has caused massive disruption for every industry across the entire world first and foremost. Our thoughts are with those who have been affected by this virus. Our priority continues to be the health and safety of our employees customers in the communities in which we operate as well as the viability and stability of our business over the long term. We've already taken several precautions with a new policies conducted business continuity planning and our meeting daily to monitor this rapidly changing situation. We are relying on the Centers for Disease Control World Health Organization Canada and local and US government officials as a reliable sources of information to inform our decisions. I am committed to ongoing communication and taking all necessary ma'am.
There's to ensure our customers and Associates remain safe to that end. We're taking the following steps to help flatten the curve and protect the welfare and safety of our store associates and customers we will be temporarily closing all of our North American retail locations affected with the close of business Tuesday, March Seventeen in addition to forcing social distancing by these acts. It will also provide us time to conduct further deep cleaning and sanitization services across our entire Store Fleet Distribution Center and fulfillment center because this situation is incredibly complex and evolving rapidly our plans may change to our Associates will be compensated for two weeks following the official closure.
Our online business including our app and website remain up and running. Our warehouses will remain open to fulfill our online orders operating under our an emergency preparedness plan as dead assess the extreme fluidity of the unfolding economic impact of this virus. We feel we should exercise in abundance of prudence as it pertains to near-term cash expenditures as such thoughts were looking for material sg&a savings. We can execute swiftly across our entire business. We are significantly reducing our plans capex for the year, including new store openings remodels and special projects and we're reducing our quarterly dividend to ten cents. You should note however with only modest Bank debt levels outstanding and with our proven ability to react quickly to volatile situations, we feel these actions will be temporary in nature and we would expect to return to normal investment and distribution policies as this volatility subsides.
Importantly, all of these actions are aimed at preserving the long-term health of designer Brands and our plan is to emerge from this.
With a stronger Enterprise as we focus on running our business responsibly and sustainably.
Turning to our results as it relates to our recent performance. We are monitoring the rapid shifts and consumer behavior that we've seen as recently as last week for the first 36 Days of the quarter. Our business was operating exceptionally with solid costs and performance above expectations. However, when precautionary measures and coronavirus cases increased here in the US the impact to our business escalated and we've seen a dramatic reduction in both sales and store traffic as consumer priorities shift.
But looking back at a 2019 results, we're disappointed with our performance, which was not what we anticipated. When we began the year. We know what we can do better and deliver more as an organization. However, our business began to stabilize following the identification of issues in the third quarter and the subsequent steps that we have taken to course-correct. We feel we have solidified a basis on which we can move forward with executing our strategic initiatives even in the midst of unprecedented challenges. We saw costs of .8% for fiscal 2019 month gross margins decreased by 110 basis points, notably both cops and gross margins improved sequentially from the 3rd to 4th quarter.
Following a challenging third-quarter. I'm pleased with how we ended the year demonstrating our teams teligence and hard work to mitigate the missteps faced in the fall. We have taken Swift and effective action to correct the problems and have made notable progress in several key areas, including fixing our new POS system cleaning up inventory and rolling out a more effective marketing strategy. We are particularly pleased with the nipple and proactive approach of our teams and responding to the ever-changing retail environment and fourth quarter. We saw are Trends in kids and athletic continue to Excel and our digital and continue to provide strong growth our Canadian operations continue to deliver strong performance leveraging the infrastructure and expertise. We have given them and Komodo has readied and it off standing inaugural collection of product for our spring exclusive Brands, including the new J.Lo product that just launched
Regardless of short-term issues. We remain committed to our goal of becoming the leading Footwear and accessories company in North America through execution of our strategic pillars delivering differentiated products offering differentiated experiences, both in-store and online and focusing on new growth opportunities to increase our market share. We made meaningful progress in 2019 and expect to continue doing so into twenty-twenty in our three main businesses namely DSW Camuto and Canada. We are fine each of these three strategic pillars to ensure. Our customers have a consistent and positive shopping experience across our entire organization.
despite the
An impact of nineteen the Komodo group integration is moving forward is planned allowing us to bring exciting new products to the marketplace including our recently announced Business Partnership with global Superstar Jennifer Lopez We believe our differentiators will continue to pave the way for growth and margin expansion at designer Brands Camuto will continue assuming responsibility birth sign sourcing and Manufacturing all of which have exceeded my expectations. Thus far our loyalty program remains strong with thirty two million members and we continue to suck for new and innovative ways to provide unique experiences that drive engagement average spend and ticket size as our world grows increasingly digital we continue to enhance our technological abilities which are producing solid results. We are strengthening the way we engage with our customers at every touchpoint positioning our company as the leader an omni-channel Footwear retailing