Company insiders are some of the most informed participants in the market and research shows that their trading activity can provide powerful return signals. If they’re buying company stock, it’s often worth taking a closer look.
In this report, we are going to highlight some insider buying at Designer Brands Inc (DBI:US). Designer Brands is a footwear retailer in the US. Founded in 1991, it currently operates over 500 stores across 44 states. The company is listed on the New York Stock Exchange and has a market capitalization of $1.25 billion at present.
Designer Brands Inc: Insider Buying
Our records show that between 24-25 March, Designer Brands’ Chairman Jay Schottenstein bought company stock both directly and for his company, Schottenstein Realty LLC. In total, the insider acquired 902,623 DBI shares, spending approximately $12.6 million on stock.
An Experienced Insider
Mr. Schottenstein – who has served as Chairman since 2005 – has a considerable amount of company and industry experience. Currently, he serves as CEO of fashion retailer American Eagle Outfitters. Previously, he was CEO of Designer Brands between 2005 and 2009. Additionally, he has served as Chairman of the Board of Directors of Schottenstein Stores Corporation (SSC), an affiliate of Designer Brands, since March 1992. This experience means he is likely to have a good read on the industry and the prospects for DBI stock. It’s worth noting that when DBI stock was crushed in last year’s Covid-19 sell-off, Schottenstein stepped up to buy shares. Since then, the stock has risen about 460%.
Well Placed for the Economic Recovery
Designer Brands was heavily impacted by the coronavirus in 2020. For the year, net sales decreased 36% to $2.2 billion. Meanwhile, the company registered a net loss of $488.7 million versus a profit of $94.5 million in 2019.
However, with vaccines now being rolled out rapidly across the US, and many consumers cashed up as a result of Joe Biden’s $1.9 trillion stimulus package, the outlook for Designer Brands appears to be improving. The company has worked hard to stabilize its business and it says that it has the capability to flex its business as customer preferences evolve, making it a dominant player with room to grow as the market recovers.
In light of the improved outlook, we see the insider buying here as bullish.