Designer Brands shares jumped 40% on strong earnings and profit growth, despite lower revenue.

Designer Brands Inc. (DBI) shares surged over 40% on December 9, 2025, after reporting third-quarter adjusted earnings of $0.38 per share, far exceeding the $0.18 consensus, despite a 3.2% revenue decline to $752.4 million. The company saw improved profitability, with gross profit rising to $339.6 million and gross margin expanding to 45.1% from 43.0%, driven by better cost management and pricing. A sharp 87% year-over-year increase in operating profit and reduced long-term debt to $463.089 million bolstered investor confidence. The stock rally was amplified by a short squeeze, with high short interest and a $0.05 dividend announced. Despite regional sales declines, the company reaffirmed its full-year 2025 net sales outlook of a 3% to 5% drop.