What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2022-03-28 compared with 2021-03-30 · 390 added, 551 removed, 1103 unchanged (46% of the section changed)

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Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors of Caleres, Inc.

To the Shareholders and Board of Directors of Caleres, Inc.

Opinion on Internal Control Over Financial Reporting

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of Caleres, Inc.

as of January 30, 2021 and February 1, 2020, the related consolidated statements of earnings (loss), comprehensive income (loss), cash flows and shareholders’ equity for each of the three years in the period ended January 30, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a), and our report dated March 30, 2021 expressed an unqualified opinion thereon.

as of January 29, 2022 and January 30, 2021, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended January 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a), and our report dated March 28, 2022 expressed an unqualified opinion thereon.

Basis for Opinion

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Report of Independent Registered Public Accounting Firm

The Shareholders and Board of Directors of Caleres, Inc.

To the Shareholders and Board of Directors of Caleres, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Caleres, Inc.

(the Company) as of January 30, 2021 and February 1, 2020, the related consolidated statements of earnings (loss), comprehensive income (loss), cash flows, and shareholders’ equity for each of the three years in the period ended January 30, 2021, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 30, 2021 and February 1, 2020, and the results of its operations and its cash flows for each of the three years in the period ended January 30, 2021, in conformity with U.S.

(the Company) as of January 29, 2022 and January 30, 2021, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended January 29, 2022, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 29, 2022 and January 30, 2021, and the results of its operations and its cash flows for each of the three years in the period ended January 29, 2022, in conformity with U.S.

generally accepted accounting principles.

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We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Impairment of Allen Edmonds indefinite-lived trade name

Description of the Matter

As discussed in Note 1, the Company performs an impairment test on its indefinite-lived intangible assets as of the first day of the fourth quarter of each fiscal year unless events indicate an interim test is required.

During the first quarter of 2020, as a result of the triggering event from the economic impacts of COVID-19, an interim assessment of the Company’s indefinite-lived intangible assets was performed as of May 2, 2020.

In addition to the interim assessment, the Company evaluated the indefinite-lived intangible assets as of the first day of the fourth fiscal quarter.

The Company recorded total impairment charges of $32.0 million associated with the indefinite-lived Allen Edmonds trade name during the year ended January 30, 2021.

Auditing the Company’s interim and annual impairment tests for the indefinite-lived Allen Edmonds trade name was complex and involved a high degree of subjectivity, as considerable management judgment was necessary to estimate the fair value of the Allen Edmonds trade name.

For the Allen Edmonds trade name, the key assumptions used include net sales projections, royalty rate, and discount rate.

These assumptions are subjective in nature and are affected by expectations about future market or economic conditions, particularly those in the retail industry.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s indefinite-lived Allen Edmonds trade name impairment process.

This included testing controls over the Company’s budgeting and forecasting process used to develop the projected net sales and the selection of royalty rates and discount rates used in estimating the fair value of Allen Edmonds trade name.

We also tested controls over the Company’s review of the valuation model and key assumptions described above, as well as the completeness and accuracy of data used in the valuation model.

We performed audit procedures that included, among other procedures, assessing methodologies and testing the key assumptions discussed above and the underlying data used by the Company in its analysis to estimate the fair value of the Allen Edmonds trade name.

For example, we compared the significant assumptions used by the Company to historical results, current industry and economic trends and other guideline companies within the same industry.

In addition, we performed sensitivity analyses of significant assumptions to evaluate the changes in the fair value of the Allen Edmonds trade name that would result from changes in the underlying assumptions.

We also compared the assumptions used in the forecasted cash flows with the Company’s strategic plans.

In addition, we involved internal specialists to assist in evaluating the Company’s discount rate and royalty rate.

Impairment of store assets

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the account or disclosure to which it relates.

Inventory Markdown Reserve

Description of the Matter

As discussed in Notes 1 and 13, the Company regularly analyzes the results of all of its stores and assesses the viability of underperforming stores to determine whether events or circumstances exist that indicate the stores should be closed or whether the carrying amount of their long-lived assets may not be recoverable.

Property and equipment and the lease right-of-use assets indicated as impaired are written down to fair value as calculated using a discounted cash flow method.

The fair value of the lease right-of-use assets is determined utilizing projected cash flows for each store location, discounted using a risk-adjusted discount rate, subject to a floor based on current market lease rates.

The Company recorded asset impairment charges, primarily related to underperforming retail stores, of $56.3 million during the year ended January 30, 2021.

The impairment charges recorded, included $31.4 million associated with lease right-of-use assets and $24.9 million associated with property and equipment.

Auditing the Company’s long-lived store impairment analysis was complex and involved a high degree of subjectivity, due to the estimation required in determining the projected cash flows used to assess recoverability (undiscounted) and determining the fair value (discounted).

The significant assumptions used include estimated future cash flows directly related to the future operation of the stores (including net sales projections) and the discount rate used to determine fair value.

Significant assumptions used in determining the fair value of the lease right-of-use assets include the current market lease rates for the remaining lease term of the related stores and risk-adjusted discount rate.

These assumptions are subjective in nature and are affected by expectations about future market or economic conditions, particularly those in the retail industry.

As described in Note 1 and Note 8, the Company had inventories of $596.8 million as of January 29, 2022 which included finished goods of $579.4 million, net of related reserves of $30.5 million.

The Company provides markdown reserves to reduce the carrying values of inventories.

In determining markdown reserves, the Company considers recent and forecasted sales prices, historical gross profit rates, the length of time the product is held in inventory, quantities of various product styles contained in inventory as well as demand, among other factors.

Auditing the Company’s Brand Portfolio markdown reserves was complex and involved a high degree of subjectivity, as it included assessing the significant assumptions, including forecasted sales prices, gross profit rates and demand.

How We Addressed the Matter in Our Audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s long-lived store impairment process.

This included testing controls over the Company's budget and forecasting process used to develop the projected undiscounted and discounted cash flows used in estimating the fair value of the retail stores.

We also tested controls over the Company’s review of the valuation model, including the model used to estimate the fair value of the lease right-of-use asset and significant, assumptions described above, as well as the completeness and accuracy of data used in the valuation model.

We performed audit procedures which included, among other procedures, testing the significant assumptions discussed above and other underlying data used by the Company to estimate the projected undiscounted and discounted cash flows to estimate the fair value of the retail stores,.

For example, we compared the significant assumptions used by the Company to historical results, current industry and economic trends and other guideline companies within the same industry.

In addition, we performed sensitivity analyses of significant assumptions to evaluate the changes in the individual retail stores identified for impairment and the fair value of the individual retail stores that would result from changes in the underlying assumptions.

We also compared the assumptions used in the forecasted cash flows with the Company’s strategic plans.

In addition, we involved internal specialists to assist in testing the market rent of the store leases and risk-adjusted discount rates by comparing them to current market lease rates for comparable leases and available market data

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company's markdown reserves determination process.

This included controls over the Company’s review of the significant assumptions underlying the markdown reserves estimate, as outlined above.

We performed audit procedures which included, among other procedures, testing the accuracy and completeness of the underlying data used in the estimation calculations and evaluating significant assumptions, including forecasted sales prices, gross profit rates and demand.

For example, we compared recent sales and gross margins of inventory items on-hand at year-end, performed a retrospective review analysis comparing sales activity in the current year to the inventory markdown reserves estimated by the Company in the prior year to evaluate management’s ability to accurately estimate the markdown reserves, and developed an independent expectation of the markdown reserves using historical activity and compared our independent expectation to the markdown reserves recorded.

In addition, we performed inquiries of the Company’s management to evaluate the Company’s estimate of the markdown reserves.

/s/ Ernst & Young LLP

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Consolidated Balance Sheets

($ thousands, except number of shares and per share amounts)

($ thousands)

January 29, 2022

February 1, 2020

January 30, 2021

Current assets:

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Inventories, net of adjustment to last-in, first-out cost of $ 1,255 in 2021 and $ 793 in 2020

Property and equipment, held for sale

Prepaid expenses and other current assets

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Property and equipment, net

Deferred income taxes

Intangible assets, net

Goodwill and intangible assets, net

Liabilities and Equity

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Restructuring and other special charges, net

Operating (loss) earnings

Operating earnings (loss)

Interest expense, net

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Other income, net

(Loss) earnings before income taxes

Income tax benefit (provision)

Net (loss) earnings

Earnings (loss) before income taxes

Income tax (provision) benefit

Net earnings (loss)

Net earnings (loss) attributable to noncontrolling interests

Net (loss) earnings attributable to Caleres, Inc.

Basic (loss) earnings per common share attributable to Caleres, Inc.

Diluted (loss) earnings per common share attributable to Caleres, Inc.

Net earnings (loss) attributable to Caleres, Inc.

Basic earnings (loss) per common share attributable to Caleres, Inc.

Diluted earnings (loss) per common share attributable to Caleres, Inc.

See notes to consolidated financial statements.

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($ thousands)

Net (loss) earnings

Net earnings (loss)

Other comprehensive income (loss) ("OCI"), net of tax:

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Other comprehensive income (loss), net of tax

Comprehensive (loss) income

Comprehensive income (loss)

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive (loss) income attributable to Caleres, Inc.

Comprehensive income (loss) attributable to Caleres, Inc.

See notes to consolidated financial statements.

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Operating Activities

Net (loss) earnings

Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:

Net earnings (loss)

Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:

Amortization of capitalized software

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Amortization of debt issuance costs and debt discount

Fair value adjustments to mandatory purchase obligation

Fair value adjustments to Blowfish mandatory purchase obligation

Blowfish mandatory purchase obligation

Loss on early extinguishment of debt

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Impairment of goodwill and intangible assets

Provision for expected credit losses

Deferred rent

Provision/adjustment for expected credit losses

Deferred income taxes

Changes in operating assets and liabilities, net of acquired amounts:

Changes in operating assets and liabilities:

Prepaid expenses and other current and noncurrent assets

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Capitalized software

Acquisition of Blowfish Malibu, net of cash received

Acquisition of Vionic, net of cash received

Net cash used for investing activities

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Repayments under revolving credit agreement

Redemption of senior notes

Dividends paid

Blowfish Malibu mandatory purchase obligation

Debt issuance costs

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Contributions by noncontrolling interests, net

Net cash (used for) provided by financing activities

Net cash used for financing activities

Effect of exchange rate changes on cash and cash equivalents

Increase (decrease) in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

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BALANCE FEBRUARY 2, 2019

Foreign currency translation adjustment

Unrealized loss on derivative financial instruments, net of tax of $ 350

Pension and other postretirement benefits adjustments, net of tax of $ 4,816

Comprehensive loss

Dividends ($ 0.28 per share)

Acquisition of treasury stock

( 1,465,649 )

Issuance of common stock under share-based plans, net

Cumulative-effect adjustment from adoption of ASU 2016-16

Cumulative-effect adjustment from adoption of ASU 2014-09 (Topic 606)

Share-based compensation expense

BALANCE FEBRUARY 2, 2019

Net earnings (loss)

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BALANCE JANUARY 30, 2021

Foreign currency translation adjustment

Pension and other postretirement benefits adjustments, net of tax of $ 444

Comprehensive income

Dividends ($ 0.28 per share)

Acquisition of treasury stock

Issuance of common stock under share-based plans, net

Share-based compensation expense

BALANCE JANUARY 29, 2022

See notes to consolidated financial statements.

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The footwear is sold at a variety of price points through multiple distribution channels both domestically and internationally.

The Company currently operates 1,086 retail shoe stores in the United States, Canada, China and Guam under the Famous Footwear, Naturalizer, Sam Edelman and Allen Edmonds names.

In addition, through its Brand Portfolio segment, the Company designs, sources and markets footwear to retail stores domestically and internationally, including online retailers, national chains, department stores, mass merchandisers and independent retailers.

The Company currently operates 980 retail shoe stores in the United States, Canada, China and Guam under the Famous Footwear, Sam Edelman, Naturalizer and Allen Edmonds names.

In addition, through its Brand Portfolio segment, the Company designs, sources, manufactures and markets footwear to retail stores domestically and internationally, including online retailers, national chains, department stores, mass merchandisers and independent retailers.

Refer to Note 2 to the consolidated financial statements for additional information regarding the Company’s revenue by category and Note 7 for discussion of the Company’s business segments.

The Company’s business is seasonal in nature due to consumer spending patterns with higher back-to-school and holiday season sales.

Traditionally, the third fiscal quarter accounts for a substantial portion of the Company’s earnings for the year.

Although the third fiscal quarter has historically accounted for a substantial portion of the Company’s earnings for the year, the Company is beginning to experience more equal distribution among the quarters.

Certain prior period amounts in the notes to the consolidated financial statements have been reclassified to conform to the current period presentation.

These reclassifications did not affect net (loss) earnings attributable to Caleres, Inc.

These reclassifications did not affect net earnings (loss) attributable to Caleres, Inc.

Consolidation

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Noncontrolling interests in the Company’s consolidated financial statements result from the accounting for noncontrolling interests in partially-owned consolidated subsidiaries or affiliates.

During 2019, the Company entered into a joint venture with Brand Investment Holding Limited ("Brand Investment Holding"), a member of the Gemkell Group.

During 2019, the Company entered into a joint venture with Brand Investment Holding Limited ("Brand Investment Holding"), a member of the Gemkell Group, to sell branded footwear in China, including Sam Edelman, Naturalizer and other brands.

The Company and Brand Investment Holding are each 50 % owners of the joint venture, which is named CLT Brand Solutions ("CLT").

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In 2019, CLT was funded with $ 5.0 million in capital contributions, including $ 2.5 million from the Company and $ 2.5 million from Brand Investment Holding.

Net sales and operating results were immaterial in both 2020 and 2019.

Net sales and operating earnings of CLT were $ 17.5 million and $ 1.2 million, respectively, in 2021.

Net sales and operating earnings were immaterial in both 2020 and 2019.

The Company had a joint venture agreement with a subsidiary of C.

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The license enabling the joint venture to market the footwear expired in August 2017 and the parties are in the process of dissolving their joint venture arrangements.

The Company anticipates the liquidation to be completed in 2021.

The Company consolidates CLT and B&H Footwear into its consolidated financial statements.

Net (loss) earnings attributable to noncontrolling interests represents the share of net earnings or losses that are attributable to CBI and Brand Investment Holding equity.

Net earnings (loss) attributable to noncontrolling interests represents the share of net earnings or losses that are attributable to Brand Investment Holding and CBI.

Transactions between the Company and the joint ventures have been eliminated in the consolidated financial statements.

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The Company’s fiscal year is the 52- or 53-week period ending the Saturday nearest to January 31.

Fiscal years 2020, 2019 and 2018, all of which included 52 weeks, ended on January 30, 2021, February 1, 2020 and February 2, 2019, respectively.

Fiscal years 2021, 2020 and 2019, all of which included 52 weeks, ended on January 29, 2022, January 30, 2021 and February 1, 2020, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.

Actual results could differ from those estimates.

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The United St ates and global economies continue to be adversely affected by the coronavirus (“COVID-19”) pandemic.

Although the Company has reopened all its retail stores from the temporary store closures in the first half of 2020, the Company’s financial results were adversely impacted by COVID-19 in 2020 .

Variants of the virus have emerged, resulting in additional shutdowns and supply chain disruptions.

During 2020, the Company’s financial results were adversely impacted by COVID-19 , driven by the temporary closure of all retail store locations for a portion of the first half of 2020 .

The Company took actions to manage its resources conservatively to mitigate the adverse impact of the pandemic, including reductions in the workforce, associate furloughs for a significant portion of the workforce during the first half of 2020 , and reductions in salary for most remaining associates, as well as a reduction in the cash retainers for the Board of Directors through the end of the second quarter;

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reducing marketing expenses;

and minimizing costs associated with the closed retail facilities.

In addition, as a precautionary measure to increase its cash position and preserve financial flexibility given the uncertainty in the United States and global markets resulting from COVID-19, the Company increased the borrowings on its revolving credit facility in March 2020 to $ 440.0 million.

In April, the Company entered into an amendment to the Fourth Amended and Restated Credit Agreement to increase its borrowing capacity, as further discussed in Note 1 2 to the consolidated financial statements.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted.

The CARES Act includes a provision that allows the Company to defer the employer portion of social security payroll tax payments that would have been paid between the enactment date and December 31, 2020, with 50% payable by December 31, 2021 and 50% payable by December 31, 2022.

As of January 30, 2021, the Company has deferred $ 9.4 million of employer social security payroll taxes, of which $ 4.7 million are presented in other accrued expenses and $ 4.7 million are presented in other liabilities on the consolidated balance sheet.

In addition, as further discussed below and in Note 7 to the consolidated financial statements, the CARES Act permits the carryback of certain current operating losses to prior years, which resulted in an incremental tax benefit of $ 8.2 million.

and minimizing costs associated with the temporarily closed retail facilities.

In 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted.

The CARES Act includes a provision that allowed the Company to defer the employer portion of social security payroll tax payments that would have been paid between the enactment date and December 31, 2020, with 50% payable by December 31, 2021 and 50% payable by December 31, 2022.

As of January 29, 2022, the Company has deferred $ 5.0 million of employer social security payroll taxes, which are payable by December 31, 2022 and presented in other accrued expenses on the consolidated balance sheet.

As of January 30, 2021, the Company had deferred $ 9.4 million of employer social security payroll taxes, of which $ 4.7 million are presented in other accrued expenses and $ 4.7 million are presented in other liabilities on the consolidated balance sheet.

In addition, as further discussed below and in Note 6 to the consolidated financial statements, the CARES Act permits the carryback of certain current operating losses to prior years, which resulted in an incremental tax benefit of $ 8.2 million in 2020.

Refer to further discussion of the impact of the pandemic on the Company’s business throughout this document, including Note 4, Note 6, Note 10 and Note 12 to the consolidated financial statements.

Cash and Cash Equivalents

The Company considers all highly liquid investments with maturities of three months or less when purchased to be cash equivalents.

The Company had an immaterial amount of restricted cash as of January 30, 2021 and February 1, 2020.

Prior to the adoption of Accounting Standards Update (“ASU”) 2016-13, Financial Instruments - Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments, (“Topic 326”) in 2020, the Company evaluated the collectability of selected accounts receivable on a case-by-case basis and recorded a reserve for incurred losses, considering such factors as ability to pay, bankruptcy, credit ratings and payment history.

As those circumstances changed, estimates of recoverability were further adjusted.

As further discussed below, the Company adopted Topic 326 on a modified retrospective basis during the first quarter of 2020, which replaced the “incurred loss” model with an “expected credit loss” model.

In accordance with Topic 326, the Company estimates and records an expected lifetime credit loss on accounts receivable by utilizing credit ratings and other customer-related information, as well as historical loss experience.

The Company recognized a provision for expected credit losses of $ 10.6 million in 2020, $ 0.8 million in 2019 and $ 0.5 million in 2018.

The Company had an immaterial amount of restricted cash as of January 29, 2022 and January 30, 2021.

In accordance with Accounting Standards Codification (“ASC”) Topic 326, Financial Instruments - Credit Losses, the Company estimates and records an expected lifetime credit loss on accounts receivable by utilizing credit ratings and other customer-related information, as well as historical loss experience.

The allowance for expected credit losses is adjusted for current conditions and reasonable and supportable forecasts.

The Company recognized an adjustment to the provision for expected credit losses of $ 2.2 million in 2021 and a provision for expected credit losses of $ 10.6 million and $ 0.8 million in 2020 and 2019, respectively.

As a result of the COVID-19 pandemic, the financial results of many of the Company’s wholesale customers were adversely impacted due to store closures during the first half of 2020.

Many of those customers also experienced deterioration in their credit ratings, which resulted in higher expected credit losses for the Company and an increase in expense in 2020.

Many of those customers also experienced deterioration in their credit ratings, which resulted in higher expected credit losses for the Company and an increase in expense in 2020, as well as a corresponding increase in uncollectible accounts written off in 2021.

Customer allowances represent reserves against the Company’s wholesale customers’ accounts receivable for margin assistance, product returns, customer deductions and co-op advertising allowances.

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The Company recognized a provision for customer discounts of $ 7.5 million in 2021, $ 11.7 million in 2020 and $ 12.0 million in 2019.

All inventories are valued at the lower of cost and net realizable value with approximately 88 % of consolidated inventories using the last-in, first-out (“LIFO”) method.

The Company values inventories at the lower of cost or market for approximately 89 % of consolidated inventories, which represents divisions using the last-in, first-out (“LIFO”) method.

For the remaining portion, the Company’s inventories are valued at the lower of cost or net realizable value.

For inventory valued at LIFO, the Company regularly reviews the inventory for excess, obsolete or impaired inventory, and writes it down to the lower of cost or market.

An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time.

Accordingly, interim LIFO calculations are based on management’s estimates of expected year-end inventory levels and costs and are subject to the final year-end LIFO inventory valuation.

If the first-in, first-out (“FIFO”) method had been used, consolidated inventories would have been $ 0.8 million and $ 3.8 million higher at January 30, 2021 and February 1, 2020, respectively.

In the fourth quarter of 2020, a reduction in inventory quantities associated with the ongoing exit of the Naturalizer retail business resulted in a liquidation of LIFO layers and reduction of the LIFO reserve of $ 2.9 million, with a corresponding reduction of cost of goods sold.

If the first-in, first-out (“FIFO”) method had been used, consolidated inventories would have been $ 1.3 million and $ 0.8 million higher at January 29, 2022 and January 30, 2021, respectively.

I n the fourth quarter of 2020, a reduction in inventory quantities associated with the ongoing exit of the Naturalizer retail business resulted in a liquidation of LIFO layers and reduction of the LIFO reserve of $ 2.9 million, with a corresponding reduction of cost of goods sold.

Refer to Note 8 to the consolidated financial statements for additional information related to inventories.

The Company applies judgment in determining the market value of inventory, which requires an estimate of net realizable value, including current and expected selling prices, costs to sell and normal gross profit rates.

The method used to determine market value varies by business division, based on the unique operating models.

At the Famous Footwear segment and certain operations within the Brand Portfolio segment, market value is determined based on net realizable value less an estimate of expected costs to be incurred to sell the product.

Accordingly, the Company records markdowns when it becomes evident that inventory items will be sold at prices below cost.

As a result, gross profit rates at the Famous Footwear segment and, to a lesser extent, the Brand Portfolio segment are lower than the initial markup during periods when permanent price reductions are taken to clear product.

For the majority of the Brand Portfolio segment, the Company determines market value based upon the net realizable value of inventory less a normal gross profit rate.

The Company believes these policies reflect the difference in operating models between the Famous Footwear and Brand Portfolio segments.

Famous Footwear periodically runs promotional events to drive sales to clear seasonal inventories.

The Brand Portfolio segment generally relies on permanent price reductions to clear slower-moving inventory.

The determination of markdown reserves for the Brand Portfolio segment requires significant assumptions, estimates and judgments by management, and is subject to inherent uncertainties and subjectivity.

In determining markdown reserves, management considers recent and forecasted sales prices, historical gross profit rates, the length of time the product is held in inventory and quantities of various product styles contained in inventory, as well as demand, among other factors.

The ultimate amount realized from the sale of certain products could differ from management estimates.

The costs of inventory, inbound freight and duties, markdowns, shrinkage and royalty expense are classified in cost of goods sold.

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Such sourcing and procurement costs totaled $ 22.2 million, $ 18.6 million and $ 23.1 million in 2021, 2020 and 2019, respectively.

The Company applies judgment in valuing inventories by assessing the net realizable value of inventories based on current selling prices.

At the Famous Footwear segment and certain Brand Portfolio operations, markdowns are recognized when it becomes evident that inventory items will be sold at retail prices less than cost, plus the cost to sell the product.

This policy causes the gross profit rates at Famous Footwear and, to a lesser extent, Brand Portfolio to be lower than the initial markup during periods when permanent price reductions are taken to clear product.

For the majority of the Brand Portfolio operations, markdown reserves reduce the carrying values of inventories to a level where, upon sale of the product, the Company will realize its normal gross profit rate.

The Company believes these policies reflect the difference in operating models between the Famous Footwear and Brand Portfolio segments.

Famous Footwear periodically runs promotional events to drive sales to clear seasonal inventories.

The Brand Portfolio segment relies on permanent price reductions to clear slower-moving inventory.

Markdowns are recorded to reflect expected adjustments to sales prices.

In determining markdowns, management considers current and recently recorded sales prices, the length of time the product is held in inventory and quantities of various product styles contained in inventory, among other factors.

The ultimate amount realized from the sale of certain products could differ from management estimates.

The Company performs physical inventory counts or cycle counts on all merchandise inventory on hand throughout the year and adjusts the recorded balance to reflect the results.

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The Company capitalizes certain costs in other assets, including internal payroll costs incurred in connection with the development or acquisition of software for internal use.

Other assets on the consolidated balance sheets include $ 15.5 million and $ 16.2 million of computer software costs as of January 30, 2021 and February 1, 2020, respectively, which are net of accumulated amortization of $ 131.1 million and $ 126.1 million as of the end of the respective periods.

In addition, other assets on the consolidated balance sheets include $ 9.6 million and $ 8.0 million of implementation costs for software as a service as of January 30, 2021 and February 1, 2020, respectively, which are net of accumulated amortization of $ 0.6 million and $ 0.3 million as of the end of the respective periods.

Other assets on the consolidated balance sheets include $ 14.1 million and $ 15.5 million of computer software costs as of January 29, 2022 and January 30, 2021, respectively, which are net of accumulated amortization of $ 130.3 million and $ 131.1 million as of the end of the respective periods.

In addition, other assets on the consolidated balance sheets include $ 7.7 million and $ 9.6 million of implementation costs for

software as a service as of January 29, 2022 and January 30, 2021, respectively, which are net of accumulated amortization of $ 2.7 million and $ 0.6 million as of the end of the respective periods.

Property and Equipment

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Interest costs for major asset additions are capitalized during the construction or development period and amortized over the lives of the related assets.

There was no interest capitalized in 2020.

The Company capitalized interest of $ 0.6 million and $ 0.2 million in 2019 and 2018, respectively, related to the new company-operated Brand Portfolio warehouse facilities in California.

There was no interest capitalized in 2021 or 2020.

The Company capitalized interest of $ 0.6 million in 2019 related to the new company-operated Brand Portfolio warehouse facilities in California.

Interest Expense

Interest expense includes interest for borrowings under both the Company’s short-term and long-term debt, net of amounts capitalized, as well as accretion and fair value adjustments on the mandatory purchase obligation from the acquisition of Blowfish Malibu, as further described in Note 2 to the consolidated financial statements.

Interest expense includes interest for borrowings under both the Company’s short-term and long-term debt, net of amounts capitalized, as well as fair value adjustments on the mandatory purchase obligation from the acquisition of Blowfish Malibu, as further described in Note 4 to the consolidated financial statements.

Interest expense also includes fees paid under the short-term revolving credit agreement for the unused portion of its line of credit, and the amortization of deferred debt issuance costs and debt discount.

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Goodwill and intangible assets deemed to have indefinite lives are not amortized but are subject to annual impairment tests.

In accordance with Accounting Standards Codification (“ASC”), Intangibles-Goodwill and Other (ASC Topic 350) , the Company is permitted, but not required, to qualitatively assess indicators of a reporting unit’s fair value when it is unlikely that a reporting unit is impaired.

In accordance with ASC 350, Intangibles-Goodwill and Other , the Company is permitted, but not required, to qualitatively assess indicators of a reporting unit’s fair value when it is unlikely that a reporting unit is impaired.

If a quantitative test is deemed necessary, a discounted cash flow analysis is prepared to estimate fair value.

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The estimate of the fair values of the Company’s reporting units is based on the best information available to the Company’s management as of the date of the assessment.

The Company has adopted ASU 2017-04, Simplifying the Test for Goodwill Impairment, which eliminates the requirement to calculate the implied fair value of goodwill.

Goodwill impairment is recorded if the fair value of the tangible and intangible assets exceeds the fair value of the reporting unit, not to exceed the carrying value of goodwill.

The Company performs its goodwill impairment assessment as of the first day of the fourth quarter of each fiscal year unless events indicate an interim test is required.

During the first quarter of 2020, as a result of the significant decline in the Company’s share price and market capitalization, and the impact of COVID-19 on business operations, the Company determined that an interim assessment of goodwill was required and performed the quantitative assessment for all reporting units.

In 2021, the Company elected to perform the qualitative assessment for the goodwill associated with the Blowfish Malibu reporting unit, resulting in no impairment.

The interim assessment indicated that the carrying value of the goodwill associated with the Brand Portfolio and Vionic reporting units exceeded the carrying value, resulting in non-cash goodwill impairment charges totaling $ 240.3 million in the first quarter of 2020.

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In 2019, the Company elected to perform the quantitative assessment for all reporting units and determined that the fair values of the reporting units exceeded the carrying values, resulting in no impairment.

During 2018, the Company recorded a non-cash impairment charge of $ 38.0 million for the impairment of goodwill of the Allen Edmonds reporting unit.

Refer to Note 10 to the consolidated financial statements for further discussion of goodwill and intangible assets.

The Company performs impairment tests on its indefinite-lived intangible assets as of the first day of the fourth quarter of each fiscal year unless events indicate an interim test is required.

Definite-lived intangible assets, other than goodwill, are amortized over their useful lives and are reviewed for impairment if and when impairment indicators are present.

Definite-lived intangible assets are amortized over their useful lives and are reviewed for impairment if and when impairment indicators are present.

The indefinite-lived intangible asset impairment reviews performed as of the first day of the Company’s fourth fiscal quarter in 2021 and 2019 resulted in no impairment charges.

The impairment review resulted in

total impairment charges of $ 22.4 million in the first quarter of 2020, including $ 12.2 million associated with the indefinite-lived Allen Edmonds trade name and $ 10.2 million of impairment associated with the indefinite-lived Via Spiga trade name.

The carrying value of the Via Spiga trade name of $ 0.5 million is being amortized over approximately two years.

The impairment review resulted in total impairment charges of $ 22.4 million in the first quarter of 2020, including $ 12.2 million associated with the indefinite-lived Allen Edmonds trade name and $ 10.2 million of impairment associated with the indefinite-lived Via Spiga trade name.

In addition to the interim assessment, the Company evaluated the indefinite-lived intangible assets and the definite-lived Allen Edmonds customer relationship intangible asset as of the first day of the fourth fiscal quarter.

These impairment reviews resulted in additional impairment totaling $ 23.8 million, consisting of $ 19.8 million associated with the Allen Edmonds tradename and $ 4.0 million associated with the Allen Edmonds customer relationships intangible asset.

The indefinite-lived intangible asset impairment reviews performed as of the first day of the Company’s fourth fiscal quarter in 2019 and 2018 resulted in no impairment charges in 2019 and a non-cash impairment charge of $ 60.0 million in 2018 for the impairment the Allen Edmonds indefinite-lived trade name.

Refer to Note 10 to the consolidated financial statements for further discussion.

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Based on available information as of January 29, 2022, the Company believes it has provided adequate reserves for its self-insurance exposure.

As of January 30, 2021 and February 1, 2020, self-insurance reserves were $ 10.4 million and $ 10.0 million, respectively.

As of January 29, 2022 and January 30, 2021, self-insurance reserves were $ 11.4 million and $ 10.4 million, respectively.

Revenue Recognition

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Upon reaching specified point values, consumers are issued a savings certificate that may be redeemed for purchases at Famous Footwear.

Savings certificates earned must be redeemed within stated expiration dates.

Savings certificates earned must be redeemed within stated

expiration dates.

In addition to the savings certificates, the Company also offers exclusive member discounts.

The value of points and rewards earned by Famous Footwear’s loyalty program members are recorded as a reduction of net sales and a liability is established within other accrued expenses at the time the points are earned based on historical conversion and

redemption rates.

Approximately 78 % of net sales in the Famous Footwear segment were made to its loyalty program members in 2021, compared to 79 % in 2020.

As of January 30, 2021 and February 1, 2020, the Company had a loyalty program liability of $ 14.0 million and $ 16.4 million, respectively, which is included in other accrued expenses on the consolidated balance sheets.

As of January 29, 2022 and January 30, 2021, the Company had a loyalty program liability of $ 18.8 million and $ 14.0 million, respectively, which is included in other accrued expenses on the consolidated balance sheets.

Store Impairment Charges

The Company regularly analyzes the results of all of its stores and assesses the viability of underperforming stores to determine whether events or circumstances exist that indicate the stores should be closed or whether the carrying amount of their long-lived assets may not be recoverable.

After allowing for an appropriate start-up period, unusual nonrecurring events or favorable trends, property and equipment at stores and, beginning in 2019, the lease right-of-use asset, indicated as impaired are written down to fair value as calculated using a discounted cash flow method.

The Company recorded asset impairment charges, primarily related to underperforming retail stores, of $ 56.3 million in 2020, $ 5.9 million in 2019 and $ 3.7 million in 2018.

Impairment charges in 2019 were higher as a result of the adoption of ASC 842, Leases , in the first quarter of 2019, as further discussed in Note 13 to the consolidated financial statements.

In addition, the Company’s impairment charges were impacted in 2020 as a result of the COVID-19 pandemic.

After allowing for an appropriate start-up period, unusual nonrecurring events or favorable trends, property and equipment at stores and the lease right-of-use asset, indicated as impaired are written down to fair value as calculated using a discounted cash flow method.

The Company recorded asset impairment charges, primarily for operating lease right-of-use assets, leasehold improvements, and furniture and fixtures in the Company’s retail stores, of $ 4.1 million, $ 56.3 million and $ 5.9 million in 2021, 2020 and 2019, respectively.

Impairment charges were higher in 2020 as a result of the adverse economic conditions driven by the COVID-19 pandemic.

Advertising and Marketing Expense

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Total co-op advertising costs reflected as a reduction of net sales were $ 10.8 million in 2021, $ 7.2 million in 2020 and $ 13.3 million in 2019.

Total advertising costs attributable to future periods that are deferred and recognized as a component of prepaid expenses and other current assets were $ 4.6 million and $ 2.8 million at January 30, 2021 and February 1, 2020, respectively.

Total advertising costs attributable to future periods that are deferred and recognized as a component of prepaid expenses and other current assets were $ 4.4 million and $ 4.6 million at January 29, 2022 and January 30, 2021, respectively.

The Company recognizes deferred tax assets and liabilities for the expected future tax consequences of temporary differences between the consolidated financial statement carrying amounts and the tax bases of its assets and liabilities.

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If the recognition threshold is met, the Company recognizes a tax benefit measured at the largest amount of the tax benefit that, in its judgment, is greater than 50% likely to be realized.

The Company records interest and penalties related to unrecognized tax positions within the income tax benefit (provision) on the consolidated statements of earnings (loss).

As further discussed in Note 7 to the consolidated financial statements, the CARES Act was signed into law in March 2020.

The CARES Act modified certain provisions of the Internal Revenue Code, including the five-year carryback period for net operating losses incurred in 2018, 2019 and 2020 tax years, which permits the Company to carry back net operating losses from years with a statutory 21 % federal tax rate to years when the rate was 35 %.

During 2020, the Company recorded a net income tax benefit of $ 8.2 million related to the carryback of the 2020 net operating loss.

The Company records interest and penalties related to unrecognized tax positions within the income tax (provision) benefit on the consolidated statements of earnings (loss).

Operating Leases

The Company leases all of its retail locations, a manufacturing facility and certain office locations, distribution centers and equipment under operating leases.

Approximately 40 % of the leases entered into by the Company include options that

allow the Company to extend the lease term beyond the initial commitment period, subject to terms agreed to at lease inception.

Approximately 38 % of the leases entered into by the Company include options that allow the Company to extend the lease term beyond the initial commitment period, subject to terms agreed to at lease inception.

Some leases also include early termination options that can be exercised under specific conditions.

As further discussed in Note 13 to the consolidated financial statements, during the first quarter of 2019, the Company adopted ASC 842 using the modified retrospective transition method.

In accordance with ASC 842, lease right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term.

In accordance with ASC Topic 842, Leases (“ASC 842”), lease right-of-use assets and lease liabilities are recognized based

on the present value of the future minimum lease payments over the lease term.

The majority of the Company’s leases do not provide an implicit rate and therefore, the Company uses an incremental borrowing rate based on the information available at the commencement date, including implied traded debt yield and seniority adjustments, to determine the present value of future payments.

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Variable lease payments are expensed as incurred.

As further discussed below, the Company has elected to account for COVID-19-related lease concessions as though the enforceable rights and obligations existed in the original lease and accordingly, has treated these lease concessions as variable rent.

During 2020, the Company elected to account for COVID-19-related lease concessions as though the enforceable rights and obligations existed in the original lease and accordingly, treated those lease concessions as variable rent.

Contingent Rentals

Many of the leases covering retail stores require contingent rental payments in addition to the minimum monthly rental charge based on retail sales volume.

Subsequent to the adoption of ASC 842 in the first quarter of 2019, the Company excludes from lease payments any variable payments that are not based on an index or market.

The Company excludes from lease payments any variable payments that are not based on an index or market.

If payment for a lease is fully contingent on sales, such as a percentage of sales gross rent lease, none of the lease payments are included in the lease right-of-use asset or the lease liability.

In accordance with ASC 840, the Company recorded expense for contingent rentals during the period in which the retail sales volume exceeded the respective targets.

Construction Allowances Received From Landlords

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The Company records rent expense on a straight-line basis over the lease term for all of its leased facilities.

For leases that have predetermined fixed escalations of the minimum rentals, the Company recognizes the related rental expense on a straight-line basis and records the difference between the recognized rental expense and amounts payable under the lease as the lease right-of-use asset, or under the guidance in ASC 840, as deferred rent.

At the time its retail facilities are leased, the Company is frequently not charged rent for a specified period of time, typically 30 to 60 days, while the store is being prepared for opening.

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Pre-opening costs associated with opening retail stores, including payroll, supplies and facility costs, are expensed as incurred.

(Loss) Earnings Per Common Share Attributable to Caleres, Inc.

The Company uses the two-class method to calculate basic and diluted (loss) earnings per common share attributable to Caleres, Inc.

Earnings (Loss) Per Common Share Attributable to Caleres, Inc.

The Company uses the two-class method to calculate basic and diluted earnings (loss) per common share attributable to Caleres, Inc.

shareholders.

Unvested restricted stock awards are considered participating units because they entitle holders to non-forfeitable rights to dividends or dividend equivalents during the vesting term.

Under the two-class method, basic (loss) earnings per common share attributable to Caleres, Inc.

shareholders is computed by dividing the net (loss) earnings attributable to Caleres, Inc.

Under the two-class method, basic earnings (loss) per common share attributable to Caleres, Inc.

shareholders is computed by dividing the net earnings (loss) attributable to Caleres, Inc.

after allocation of earnings to participating securities by the weighted-average number of common shares outstanding during the year.

Diluted (loss) earnings per common share attributable to Caleres, Inc.

shareholders is computed by dividing the net (loss) earnings attributable to Caleres, Inc.

Diluted earnings (loss) per common share attributable to Caleres, Inc.

shareholders is computed by dividing the net earnings (loss) attributable to Caleres, Inc.

after allocation of earnings to participating securities by the weighted-average number of common shares and potential dilutive securities outstanding during the year.

Potential dilutive securities consist of outstanding stock options and contingently issuable shares for the Company’s performance share awards.

Refer to Note 4 to the consolidated financial statements for additional information related to the calculation of (loss) earnings per common share attributable to Caleres, Inc.

Refer to Note 3 to the consolidated financial statements for additional information related to the calculation of earnings (loss) per common share attributable to Caleres, Inc.

shareholders.

Comprehensive (Loss) Income

Comprehensive (loss) income includes the effect of foreign currency translation adjustments, pension and other postretirement benefits adjustments and unrealized gains or losses from derivatives used for hedging activities.

Comprehensive Income (Loss)

Comprehensive income (loss) includes the effect of foreign currency translation adjustments, pension and other postretirement benefits adjustments and unrealized gains or losses from derivatives used for hedging activities.

Foreign Currency Translation Adjustment

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Derivative Financial Instruments

The Company recognizes all derivative financial instruments as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value.

The Company evaluates its exposure to volatility in foreign currency rates and may enter into derivative transactions.

In the normal course of business, the Company’s financial results are impacted by currency rate movements in foreign-currency-denominated assets, liabilities and cash flows as it makes a portion of its purchases and sales in local currencies.

The Company evaluates its exposure to volatility in foreign currency rates and may enter into derivative transactions that are intended to mitigate a portion of the effect of exchange rate fluctuations.

The Company’s hedging strategy permits the use of forward contracts as cash flow hedging instruments to manage its currency exposures.

These derivative financial instruments are viewed as risk management tools and are not used for trading or speculative purposes.

Refer to additional information related to derivative financial instruments in Note 14, Note 15 and Note 16 to the consolidated financial statements.

The Company recognizes all derivative financial instruments as either assets or liabilities in the consolidated balance sheets and measures those instruments at fair value.

The effective portion of gains and losses resulting from changes in the fair value of these hedge instruments are deferred in accumulated other comprehensive loss ("OCL") and reclassified to earnings in the period that the hedged transaction is recognized in earnings.

Litigation Contingencies

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The Company’s prior operations included numerous manufacturing and other facilities for which the Company may have responsibility under various environmental laws to address conditions that may be identified in the future.

Refer to Note 18 to the consolidated financial statements for a further description of specific properties.

Refer to Note 16 to the consolidated financial statements for additional information.

Environmental expenditures relating to an existing condition caused by past operations and that do not contribute to current or future revenue generation are expensed.

Based upon independent environmental assessments, liabilities are recorded when remedial action is considered probable and the costs can be reasonably estimated and are evaluated independently of any future claims recovery.

Generally, the timing of these accruals coincides with completion of a feasibility study or our commitment to a formal plan of action, and our estimates of cost are subject to change as new information becomes available.

Generally, the timing of these accruals coincides with completion of a feasibility study or the Company’s commitment to a formal plan of action, and our estimates of cost are subject to change as new information becomes available.

Costs of future expenditures for environmental remediation obligations are discounted to their present value in those situations requiring only continuing maintenance and monitoring based upon a schedule of fixed payments.

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Additionally, share-based grants may be made to non-employee members of the Board of Directors in the form of restricted stock units (“RSUs”) payable in cash or the Company’s common stock.

The Company accounts for share-based compensation in accordance with the fair value recognition provisions of ASC 718, Compensation – Stock Compensation , and ASC 505, Equity , which require all share-based payments to employees and members of the Board of Directors, including grants of employee stock options, to be recognized as expense in the consolidated financial statements based on their fair values.

The Company accounts for share-based

compensation in accordance with the fair value recognition provisions of ASC 718, Compensation – Stock Compensation , and ASC 505, Equity , which require all share-based payments to employees and members of the Board of Directors, including grants of employee stock options, to be recognized as expense in the consolidated financial statements based on their fair values.

The fair value of stock options is estimated using the Black-Scholes option pricing formula that requires assumptions for expected volatility, expected dividends, the risk-free interest rate and the expected term of the option.

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Expense for restricted stock is based on the fair value of the restricted stock on the date of grant.

Expense for graded-vesting grants is recognized ratably over the respective vesting periods and expense for cliff-vesting grants is recognized on a straight-line basis over the vesting period, which is generally four years .

Expense for graded-vesting grants is recognized ratably over the respective vesting periods, which is generally 50 % over two years and 50 % over three years , and expense for cliff-vesting grants is recognized on a straight-line basis over the vesting period, which is generally one year .

Expense for stock performance awards is recognized based upon the fair value of the awards on the date of grant and the anticipated number of shares or units to be awarded on a straight-line basis over the respective term of the award, or individual vesting portion of an award.

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The Company accounts for forfeitures of share-based grants as they occur.

If any of the assumptions used in the Black-Scholes model or the anticipated number of shares to be awarded change significantly, share-based compensation expense may differ materially in the future from that recorded in the current period.

If the anticipated number of shares to be awarded changes significantly, share-based compensation expense may differ materially in the future from that recorded in the current period.

Refer to additional information related to share-based compensation in Note 15 to the consolidated financial statements.

Consolidated Statements of Cash Flows Supplemental Disclosures

The Company had refunds for federal, state and international taxes, net of payments, of $ 0.6 million in 2020 and made payments, net of refunds, of $ 10.2 million, and $ 21.3 million in 2019 and 2018, respectively.

The Company made payments for federal, state and international taxes, net of refunds, of $ 29.3 million, and $ 10.2 million in 2021 and 2019, respectively, and received refunds, net of payments, of $ 0.6 million in 2020.

Refer to Note 6 to the consolidated financial statements for further information regarding income taxes.

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Impact of Recently Adopted Accounting Pronouncements

In June 2016, the Financial Accounting Standards Board ("FASB") issued ASU 2016-13, Financial Instruments - Credit Losses (Topic 326) , which significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income.

The ASU replaces the "incurred loss"

model with an "expected credit loss"

model that requires entities to estimate an expected lifetime credit loss on financial assets, including trade accounts receivable.

The Company adopted the ASU in the first quarter of 2020 on a modified retrospective basis.

Upon adoption, the Company recorded a cumulative-effect adjustment to retained earnings of $ 2.1 million, net of $ 0.4 million in deferred taxes.

The Company recorded a provision for expected credit losses of $ 10.6 million during 2020, primarily as a result of the COVID-19 pandemic and deteriorating financial conditions at many of the Company’s wholesale customers.

The following table summarizes the activity in the Company’s allowance for expected credit losses for the year ended January 30, 2021:

($ thousands)

Balance at February 1, 2020

Adjustment upon adoption of ASU 2016-13

Provision for credit losses

Uncollectible accounts written-off, net of recoveries

Balance at January 30, 2021

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement .

ASU 2018-13 modifies disclosure requirements on fair value measurements, removing and modifying certain disclosures, while adding other disclosures.

In August 2018, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2018-14, Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20), Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans.

The guidance changes the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans, eliminating the requirements for certain disclosures that are no longer considered cost beneficial and requiring new disclosures that the FASB considers pertinent.

The Company adopted the ASU during the first quarter of 2021, which did not have a material impact on the Company’s financial statement disclosures.

Refer to Note 15 to the consolidated financial statements for detail regarding the Company’s fair value measurements.

In March 2020, the SEC issued SEC Release No.

33-10762, Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities , which is effective for filings on or after January 4, 2021, with early application permitted.

The final rule amends the disclosure requirements in SEC Regulation S-X, Rule 3-10, which required entities to separately present financial statements for subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met.

The rule permits entities to provide summarized financial information of the parent company and its issuers and guarantors on a combined basis in either a note to the financial statements or in management’s discussion and analysis.

The Company adopted the rule during the second quarter of 2020 and elected to provide the summarized financial information in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

In October 2020, the FASB issued ASU 2020-09, Debt (Topic 470):

Amendments to SEC Paragraphs Pursuant to SEC Release No.

33-10762 , to reflect the new disclosure requirements in the FASB Accounting Standards Codification.

In April 2020, the FASB issued interpretive guidance indicating that entities may elect not to evaluate whether a concession provided by lessors is a lease modification.

Under existing lease guidance, an entity would be required to determine if a lease concession was the result of a new arrangement reached with the landlord, which would be accounted for under the lease modification framework, or if the concession was under the enforceable rights and obligations that existed in the original lease, it would be accounted for outside the lease modification framework.

The FASB guidance provides entities with the option to elect to account for COVID-19-related lease concessions as though the enforceable rights and obligations existed in the original lease.

The Company has elected to treat these lease concessions as variable rent.

Accordingly, COVID-19-related lease concessions totaling $ 5.4 million for the year ended January 30, 2021 were recorded as a reduction of rent expense within selling and administrative expenses in the consolidated statements of earnings (loss).

Refer to Note 13 to the condensed consolidated financial statements for further discussion regarding the Company’s leases.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

ASU 2019-12 eliminates certain exceptions in ASC 740 related to intraperiod tax allocation, simplifies certain elements of accounting for basis differences and deferred tax liabilities during a business combination, and standardizes the classification of franchise taxes.

The Company adopted ASU 2019-12 during the first quarter of 2021, which did not have a material impact on the Company’s consolidated financial statements.

In November 2020, the SEC issued SEC Release No.

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The rule amends existing requirements in Regulation S-K for disclosures related to management’s discussion and analysis and certain financial disclosure requirements.

The rule is effective for filings after August 9, 2021, with early adoption permitted on an item-by-item basis.

The Company has adopted the amendments associated with Items 301 and 302 of the rule and accordingly, has eliminated the selected financial data in Item 6 as well as the supplementary financial information that was previously included in the notes to the consolidated financial statements.

The final rule became effective on February 10, 2021 and the amendments are required for a registrant’s first fiscal year ending on or after August 9, 2021, with early adoption permitted on an item-by item basis.

The Company adopted the amendments associated with Items 301 and 302 of the rule during 2020.

The remaining provisions of the rule are reflected in this Form 10-K and did not have a material impact on the Company’s financial statement disclosures.

Impact of Prospective Accounting Pronouncements

In August 2018, the FASB issued ASU 2018-14, Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20), Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans.

The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The adoption of ASU 2018-14 is not expected to have a material impact on the Company’s financial statement disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes .

ASU 2019-12 eliminates certain exceptions related to intraperiod tax allocation, simplifies certain elements of accounting for basis differences and deferred tax liabilities during a business combination, and standardizes the classification of franchise taxes.

The ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted.

The adoption of ASU 2019-12 is not expected to have a material impact on the Company’s financial statements.

Acquisition of Blowfish, LLC

On July 6, 2018 , the Company entered into a Membership Interest Purchase Agreement ("Purchase Agreement") with Blowfish, LLC ("

Blowfish Malibu "), pursuant to which the Company acquired a controlling interest in Blowfish Malibu.

The noncontrolling interest is subject to a mandatory purchase obligation after a three-year period based upon an earnings multiple formula, as specified in the Purchase Agreement.

The aggregate purchase price was estimated to be $ 28.0 million, including approximately $ 9.0 million initially assigned to the mandatory purchase obligation, which will be paid upon settlement in 2021.

The remaining $ 19.0 million (or $ 16.8 million, net of $ 2.2 million of cash received) was funded with cash.

The initial $ 9.0 million estimate of the mandatory purchase obligation was valued on a discounted basis and is subject to remeasurement based on the earnings formula specified in the Purchase Agreement.

As of January 30, 2021, the fair value of the mandatory purchase obligation of $ 39.1 million is presented within current liabilities, reflecting the anticipated settlement in the third quarter of 2021.

As of February 1, 2020, the mandatory purchase obligation was valued at $ 15.2 million and was presented within other liabilities on the consolidated balance sheets.

Accretion and remeasurement adjustments on the mandatory purchase obligation are being recorded as interest expense and totaled $ 23.9 million and $ 6.0 million in 2020 and 2019, respectively.

The operating results of Blowfish Malibu since July 6, 2018 have been included in the Company’s consolidated financial statements within the Brand Portfolio segment, with the elimination of sales and profit for sales to the Famous Footwear segment reflected in the Eliminations and Other category.

Acquisition of Vionic

On October 18, 2018 , the Company entered into an Equity and Asset Purchase Agreement (the "Agreement") with the equity holders of Vionic Group LLC and Vionic International LLC, and VCG Holdings Ltd., a Cayman Islands corporation (collectively, "

Vionic "), pursuant to which the Company acquired all of the outstanding equity interests of Vionic Group LLC and Vionic International LLC and certain related intellectual property from VCG Holdings Ltd for $ 360.0 million plus adjustments for cash and indebtedness, as defined in the Agreement.

The aggregate purchase price was $ 360.7 million (or $ 352.7 million, net of $ 8.0 million of cash received).

The purchase was funded with borrowings from the Company’s revolving credit agreement.

The operating results of Vionic since October 18, 2018 have been included in the Company’s consolidated financial statements within the Brand Portfolio segment, with the elimination of sales and profits for sales to the Famous Footwear segment reflected in the Eliminations and Other category.

The Company recognized Vionic acquisition and integration-related costs of $ 5.8 million ($ 4.3 million on an after-tax basis, or $ 0.10 per diluted share) and $ 8.9 million ($ 6.6 million on an after-tax basis, or $ 0.15 per diluted share) for the incremental cost of goods sold in 2019 and 2018, respectively, related to the amortization of the inventory fair value adjustment required for purchase accounting.

There were no corresponding charges in 2020.

In addition, the Company incurred acquisition and integration-related costs of $ 3.4 million ($ 2.6 million on an after-tax basis, or $ 0.07 per diluted share), $ 1.9 million ($ 1.4 million on an after-tax basis, or $ 0.03 per diluted share) and $ 4.5 million ($ 3.3 million on an after-tax basis, or $ 0.08 per diluted share) in 2020, 2019 and 2018, respectively.

Of the $ 3.4 million of costs incurred in 2020, which were recorded as a component of restructuring and other special charges, $ 3.3 million is presented within the Brand Portfolio segment and $ 0.1 million is presented in the Eliminations and Other category.

Of the $ 1.9 million of costs incurred in 2019, $ 1.8 million is presented within the Eliminations and Other category and $ 0.1 million is presented in the Brand Portfolio segment and recorded as a component of restructuring and other special charges, net.

All of the 2018 costs are reflected within the Eliminations and Other category.

Refer to Note 5 to the consolidated financial statements for additional information related to these costs.

The Company has evaluated all recently issued, but not yet effective, accounting pronouncements and does not expect any of the pronouncements to have a material impact on the Company’s consolidated financial statements or disclosures.

Disaggregation of Revenues

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Retail stores

The majority of the Company’s revenue is generated from retail sales where control is transferred and revenue is recognized at the point of sale.

Traditionally, the majority of the Company’s revenue is generated from retail sales where control is transferred and revenue is recognized at the point of sale.

Retail sales are recorded net of estimated returns and exclude sales tax.

The Company carries a returns reserve and a corresponding return asset for expected returns of merchandise.

The Company records a returns reserve and a corresponding return asset for expected returns of merchandise.

Retail sales to members of the Company’s loyalty programs, including the Famously You Rewards program, include two performance obligations:

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The stand-alone selling price for the points is estimated using the retail value of the merchandise earned, adjusted for estimated breakage based upon historical redemption patterns.

The Company disregards the effect of the time value of money between payment for and receipt of goods when the sale does not include a financing element.

The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired.

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Landed sales are wholesale sales in which the merchandise is shipped directly to the customer from the Company’s warehouses.

Many landed customers arrange their own transportation of merchandise and, with limited exceptions, control is transferred at the time of shipment.

Many customers that purchase footwear on a landed basis arrange their own transportation of merchandise and, with limited exceptions, control is transferred at the time of shipment.

First-cost wholesale

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The Company has license agreements with third parties allowing them to sell the Company’s branded product, or other merchandise that uses the Company’s owned or licensed brand names.

These license agreements provide the licensee

access to the Company’s symbolic intellectual property, and revenue is therefore recognized over the license term.

For royalty contracts that do not have guaranteed minimums, the Company recognizes revenue as the licensee’s sales occur.

These license agreements provide the licensee access to the Company’s symbolic intellectual property, and revenue is therefore recognized over the license term.

royalty contracts that do not have guaranteed minimums, the Company recognizes revenue as the licensee’s sales occur.

For royalty contracts that have guaranteed minimums, revenue for the guaranteed minimum is recognized on a straight-line basis during the term, until such time that the cumulative royalties exceed the total minimum guarantee.

Up-front payments are recognized over the contractual term to which the guaranteed minimum relates.

The Company also licenses its Famous Footwear trade name and logo to a third-party financial institution to offer Famous Footwear-branded credit cards to its consumers.

The Company receives royalties based upon cardholder spending, which is recognized as licensing revenue at the time when the credit card is used.

Contract Balances

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January 29, 2022

February 1, 2020

January 30, 2021

Customer allowances and discounts

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Changes in contract balances with customers generally reflect differences in relative sales volume for the period presented.

In addition, during 2020, the loyalty programs liability increased $ 26.4 million due to points and material rights accrued for purchases and decreased $ 28.8 million due to expirations and redemptions.

During 2019, the loyalty programs liability increased $ 27.8 million due to points and material rights accrued for purchases and decreased $ 26.0 million due to expirations and redemptions.

In addition, during 2021, the loyalty programs liability increased $ 36.3 million due to points and material rights earned on purchases and decreased $ 31.5 million due to expirations and redemptions.

During 2020, the loyalty programs liability increased $ 26.4 million due to points and material rights earned on purchases and decreased $ 28.8 million due to expirations and redemptions.

Allowance for Expected Credit Losses

The following table summarizes the activity in the Company’s allowance for expected credit losses for 2021 and 2020:

($ thousands)

Balance, beginning of period

Adjustment upon adoption of ASU 2016-13

Provision/adjustment for expected credit losses (1)

Uncollectible accounts written off, net of recoveries

Balance, end of period

(1) The Company’s provision/adjustment for expected credit losses for 2020 was higher than in 2021 as a result of the COVID-19 pandemic and its impact on the financial condition of several of the Company’s wholesale customers.

EARNINGS (LOSS) PER SHARE

The Company uses the two-class method to compute basic and diluted (loss) earnings per common share attributable to Caleres, Inc.

The Company uses the two-class method to compute basic and diluted earnings (loss) per common share attributable to Caleres, Inc.

shareholders.

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($ thousands, except per share amounts)

Net (loss) earnings

Net earnings (loss)

Net (earnings) loss attributable to noncontrolling interests

Net (loss) earnings attributable to Caleres, Inc.

Net earnings (loss) attributable to Caleres, Inc.

Net earnings allocated to participating securities

Net (loss) earnings attributable to Caleres, Inc.

Net earnings (loss) attributable to Caleres, Inc.

after allocation of earnings to participating securities

Denominator for basic (loss) earnings per common share attributable to Caleres, Inc.

Denominator for basic earnings (loss) per common share attributable to Caleres, Inc.

Dilutive effect of share-based awards

Denominator for diluted (loss) earnings per common share attributable to Caleres, Inc.

Basic (loss) earnings per common share attributable to Caleres, Inc.

Diluted (loss) earnings per common share attributable to Caleres, Inc.

Options to purchase 22,667 and 16,667 shares of common stock in 2020 and 2019, respectively, were not included in the denominator for diluted (loss) earnings per common share attributable to Caleres, Inc.

Denominator for diluted earnings (loss) per common share attributable to Caleres, Inc.

Basic earnings (loss) per common share attributable to Caleres, Inc.

Diluted earnings (loss) per common share attributable to Caleres, Inc.

Options to purchase 16,667 shares of common stock in both 2021 and 2019 and 22,667 shares of common stock in 2020, were not included in the denominator for diluted earnings (loss) per common share attributable to Caleres, Inc.

shareholders because the effect would be antidilutive.

There were no options to purchase shares excluded from the denominator in 2018.

Due to the Company’s net loss attributable to Caleres, Inc.

in 2020 and 2018, the denominator for diluted loss per common share attributed to Caleres, Inc.

in 2020, the denominator for diluted loss per common share attributed to Caleres, Inc.

shareholders is the same as the denominator for basic loss per common share attributable to Caleres, Inc.

shareholders.

The Company repurchased 2,902,122 , 1,704,240 and 1,465,649 shares at a cost of $ 23.3 million, $ 33.4 million and $ 43.8 million during the years ended January 30, 2021, February 1, 2020 and February 2, 2019, respectively, under the 2011, 2018 and 2019 publicly announced share repurchase programs.

The Company repurchased 661,265 , 2,902,122 and 1,704,240 shares at a cost of $ 17.0 million, $ 23.3 million and $ 33.4 million during the years ended January 29, 2022, January 30, 2021 and February 1, 2020, respectively, under the 2011, 2018 and 2019 publicly announced share repurchase programs.

The 2011 and 2018 repurchase programs permit repurchases of up to 2.5 million shares and the 2019 repurchase program permits repurchases of up to 5.0 million shares, as further discussed in Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities .

RESTRUCTURING AND OTHER INITIATIVES

COVID-19-Related Impairments and Expenses

The Company incurred costs associated with the COVID-19 pandemic and related impacts on the Company’s business, totaling $ 114.3 million ($ 115.5 million on an after-tax basis, or $ 3.10 per diluted share) during 2020.

These costs included non-cash impairment of property and equipment and lease right-of-use assets, incremental inventory markdowns, employee severance and other direct expenses specific to the impact of COVID-19 on the Company’s operations.

Of the $ 114.3 million in charges, $ 80.9 million is presented in restructuring and other special charges, net and $ 33.4 million is

reflected as cost of goods sold in the consolidated statements of earnings (loss).

Of the $ 80.9 million reflected as restructuring and other special charges, $ 63.7 million is reflected in the Brand Portfolio segment, $ 16.6 million is reflected in the Famous Footwear segment and $ 0.6 million is reflected within the Eliminations and Other category.

The $ 33.4 million reflected as cost of goods sold represents incremental inventory markdowns, of which $ 27.4 million is reflected in the Brand Portfolio segment and $ 6.0 million is reflected in the Famous Footwear segment.

There were no corresponding charges in 2019 or 2018.

Blowfish Mandatory Purchase Obligation

In 2018, the Company acquired a controlling interest in Blowfish Malibu, as further discussed in Note 2 to the consolidated financial statements.

The noncontrolling interest is subject to a mandatory purchase obligation after a three-year period based upon an earnings multiple formula as specified in the purchase agreement.

Accretion and remeasurement adjustments on the mandatory purchase obligation are being recorded as interest expense.

The fair value adjustments on the mandatory purchase obligation totaled $ 23.9 million ($ 17.8 million on an after-tax basis, or $ 0.48 per diluted share) in 2020 and $ 5.4 million ($ 4.0 million on an after-tax basis, or $ 0.10 per diluted share) in 2019.

On July 6, 2018, the Company acquired a controlling interest in Blowfish Malibu.

The remaining interest was subject to a mandatory purchase obligation after a three-year period, which ended on July 31, 2021, based upon an earnings multiple formula as specified in the purchase agreement.

Approximately $ 9.0 million was initially assigned to the mandatory purchase obligation and remeasurement adjustments on the mandatory purchase obligation were recorded as interest expense.

The fair value adjustments on the mandatory purchase obligation totaled $ 15.4 million ($ 11.5 million on an after-tax basis, or $ 0.30 per diluted share) in 2021, $ 23.9 million ($ 17.8 million on an after-tax basis, or $ 0.48 per diluted share) in 2020 and $ 5.4 million ($ 4.0 million on an after-tax basis, or $ 0.10 per diluted share) in 2019.

The mandatory

purchase obligation was settled for $ 54.6 million on November 4, 2021.

The settlement of the $ 9.0 million initially assigned to the mandatory purchase obligation is presented within financing activities on the consolidated statements of cash flows and the remaining $ 45.6 million is presented within operating activities, in accordance with ASC 230, Statement of Cash Flows .

Refer to further discussion regarding the mandatory purchase obligation in Note 13 to the consolidated financial statements.

Brand Portfolio – Business Exits

During 2021, the Company incurred costs of $ 13.5 million ($ 11.9 million on an after-tax basis, or $ 0.31 per diluted share) related to the strategic realignment of the Naturalizer retail store operations.

These costs primarily represented lease termination and other store closure costs, including employee severance, for the 73 stores that were closed during the first quarter of 2021.

These charges are presented in restructuring and special charges on the consolidated statement of earnings (loss) within the Brand Portfolio segment.

As of January 29, 2022 and January 30, 2021, reserves of $ 0.4 million and $ 2.1 million, respectively, were included in other accrued expenses on the consolidated balance sheets related to the strategic realignment of the Naturalizer retail store operations.

During 2020, the Company incurred costs of $ 16.4 million ($ 14.9 million on an after-tax basis, or $ 0.40 per diluted share) related to the decision to close all but a limited number of its Naturalizer retail stores and exit the Fergie brand.

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An additional $ 4.0 million is presented as cost of goods sold and represents the incremental inventory markdowns required to reduce the value of inventory for these two brands to net realizable value.

As of January 30, 2021, reserves of $ 2.1 million were included in other accrued expenses on the consolidated balance sheet.

During 2019, the Company incurred costs of $ 3.5 million ($ 2.6 million on an after-tax basis, or $ 0.06 per diluted share) related to the decision to exit the Carlos brand and reposition the Via Spiga brand.

Of these charges, which are all reflected within the Brand Portfolio segment, $ 3.0 million relates to incremental inventory markdowns required to reduce the value of inventory to net realizable value and is presented in cost of goods sold on the consolidated statements of earnings (loss), while the remaining $ 0.5 million, which is presented in restructuring and other special charges, is for severance and other related costs.

During 2018, the Company incurred costs of $ 2.4 million ($ 1.8 million on an after-tax basis, or $ 0.04 per diluted share) related to the decision to exit the Diane von Furstenberg and George Brown Bilt brands.

Of these charges, which are all reflected within the Brand Portfolio segment, $ 1.8 million primarily represents incremental inventory markdowns required to reduce the value of inventory to net realizable value and is presented in cost of goods sold on the consolidated statements of earnings (loss), while the remaining $ 0.6 million is for severance and other related costs and presented in restructuring and other special charges.

COVID-19-Related Impairments and Expenses

Of the $ 114.3 million in charges, $ 80.9 million is presented in restructuring and other special charges, net and $ 33.4 million is reflected as cost of goods sold in the consolidated statements of earnings (loss).

Of the $ 80.9 million presented as restructuring and other special charges, $ 63.7 million is reflected in the Brand Portfolio segment, $ 16.6 million is reflected in the Famous Footwear segment and $ 0.6 million is reflected within the Eliminations and Other category.

The $ 33.4 million presented as cost of goods sold represents incremental inventory markdowns, of which $ 27.4 million is reflected in the Brand Portfolio segment and $ 6.0 million is reflected in the Famous Footwear segment.

There were no corresponding charges in 2021 or 2019.

Vionic Acquisition and Integration-Related Costs

On October 18, 2018, the Company acquired all of the outstanding equity interests of Vionic Group LLC and Vionic International LLC, as further discussed in Note 2 to the consolidated financial statements.

The Company incurred acquisition and integration-related costs associated with the acquisition totaling $ 3.4 million ($ 2.6 million on an after-tax basis, $ 0.07 per diluted share), $ 1.9 million ($ 1.4 million on an after-tax basis, or $ 0.03 per diluted share) and $ 4.5 million ($ 3.3 million on an after-tax basis, or $ 0.08 per diluted share) during 2020, 2019 and 2018, respectively.

On October 18, 2018, the Company acquired all of the outstanding equity interests of Vionic Group LLC and Vionic International LLC.

The Company incurred acquisition and integration-related costs associated with the acquisition totaling $ 3.4 million ($ 2.6 million on an after-tax basis, $ 0.07 per diluted share) and $ 1.9 million ($ 1.4 million on an after-tax basis, or $ 0.03 per diluted share) during 2020 and 2019, respectively.

Of the $ 3.4 million in charges in 2020, which were presented as restructuring and other special charges in the consolidated statements of earnings (loss), $ 3.3 million is reflected within the Brand Portfolio segment and $ 0.1 million is reflected within the Eliminations and Other category, and represent non-cash impairment of assets, severance and other related costs.

Of the $ 1.9 million in charges in 2019 presented as restructuring and other special charges, which were primarily for severance and professional fees, $ 1.8 million is reflected within the Eliminations and Other category and $ 0.1 million is reflected in the Brand Portfolio segment.

All of the 2018 charges, which were primarily for professional fees, are reflected within the Eliminations and Other category.

There were no corresponding charges during 2021.

Expense Containment Initiatives

During the fourth quarter of 2019, the Company announced expense containment initiatives, including a Voluntary Early Retirement Program ("VERP") and other restructuring actions.

The total costs to implement these initiatives, which were recorded in the fourth quarter of 2019, were $ 15.0 million ($ 11.2 million on an after-tax basis, or $ 0.27 per diluted share).

These costs included employee-related costs for severance, including health care benefits and enhanced pension benefits.

Of the $ 15.0 million in charges, $ 12.3 million is presented as restructuring and other special charges, net and $ 2.7 million is reflected as other income, net in the consolidated statements of earnings (loss).

Of the $ 12.3 million reflected as restructuring and other special charges, $ 5.0 million is reflected in the Brand Portfolio segment, $ 3.8 million is reflected within the Eliminations and Other category and $ 3.5 million is reflected in the Famous Footwear segment.

The total costs to implement these initiatives, including employee-related costs for severance, health care benefits and enhanced pension benefits, which were recorded in the fourth quarter of 2019, were $ 15.0 million ($ 11.2 million on an after-tax basis, or $ 0.27 per diluted share).

Of the $ 15.0 million in charges recorded in the fourth quarter of 2019, $ 12.3 million is presented as restructuring and other special charges, net and $ 2.7 million is presented as other income, net in the consolidated statements of earnings (loss).

Of the $ 12.3 million presented as restructuring and other special charges, $ 5.0 million is reflected in the Brand Portfolio segment, $ 3.8 million is reflected within the Eliminations and Other category and $ 3.5 million is reflected in the Famous Footwear segment.

The $ 2.7 million presented in other income within the Eliminations and Other category is a one-time pension settlement charge and special termination benefit costs associated with the VERP, as further discussed in Note 5 to the consolidated financial statements.

As of February 1, 2020, reserves of $ 8.0 million were included in other accrued expenses on the consolidated balance sheets, with no corresponding reserves as of January 30, 2021.

Integration and Reorganization of Men’s Brands

During 2018, the Company incurred integration and reorganization costs related to the 2016 acquisition of Allen Edmonds, primarily for professional fees and severance, totaling $ 5.8 million ($ 4.3 million on an after-tax basis, or $ 0.10 per diluted share), related to the men’s business.

These charges are presented in restructuring and other special charges in the consolidated statement of earnings (loss).

Of the $ 5.8 million of costs in 2018, $ 5.4 million is included in the Brand Portfolio segment and $ 0.4 million is reflected within the Eliminations and Other category.

Logistics Transition

During the fourth quarter of 2018, the Company incurred costs of $ 4.5 million ($ 3.3 million on an after-tax basis, or $ 0.08 per diluted share) associated with the transition from a third-party operated warehouse in Chino, California to new company-operated Brand Portfolio warehouse facilities in California, as well as the transition of the Allen Edmonds distribution center in Port Washington, Wisconsin to the Company’s existing retail distribution center in Lebanon, Tennessee.

These charges are presented as restructuring and other special charges within the Brand Portfolio segment.

Retail Operations Restructuring

During 2018, the Company incurred costs, primarily for severance expense, of $ 0.4 million ($ 0.3 million on an after-tax basis, or $ 0.01 per diluted share), related to restructuring of its retail operations, which are presented in restructuring and other special charges in the consolidated statements of earnings (loss).

All of the costs for 2018 are presented within the Famous Footwear segment.

RETIREMENT AND OTHER BENEFIT PLANS

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Generally, under the current plan provisions, a participant receives credit for one year of service for each 365 days of employment as an eligible employee with the Company commencing after the employee’s date of participation in the plan, up to 30 years .

Beginning in 2019, except for grandfathered employees and certain hourly associates in the Company’s retail divisions, final average compensation, taxable covered compensation and credit service for purposes of determining accrued pension benefits were frozen as of December 31, 2018.

Except for grandfathered employees and certain hourly associates in the Company’s retail divisions, final average compensation, taxable covered compensation and credit service for purposes of determining accrued pension benefits were frozen as of December 31, 2018.

The Company’s Canadian pension plans cover certain employees based on plan specifications.

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Plan participants’ contribution

Plan amendments

Actuarial loss (gain)

Actuarial (gain) loss

Benefits paid

Contractual termination benefits

Foreign exchange rate changes

Benefit obligation at end of year

The accumulated benefit obligation for the United States pension plans was $ 358.7 million and $ 379.9 million as of January 30, 2021 and February 1, 2020, respectively.

The accumulated benefit obligation for the Canadian pension plans was $ 4.0 million and $ 4.3 million as of January 30, 2021 and February 1, 2020, respectively.

The accumulated benefit obligation for the United States pension plans was $ 348.8 million and $ 358.7 million as of January 29, 2022 and January 30, 2021, respectively.

The accumulated benefit obligation for the Canadian pension plans was $ 3.9 million and $ 4.0 million as of January 29, 2022 and January 30, 2021, respectively.

Pension Benefits

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As of January 29, 2022, the Company is using the PRI-2012 Bottom Quartile mortality table, projected using generational scale MP-2021, an updated base mortality table issued by the Society of Actuaries in 2021, to estimate the plan liabilities.

Actuarial losses, related to the change in mortality projection scales from the MP-2019 scale used in 2019, increased the projected benefit obligation by approximately $ 2.0 million as of January 30, 2021.

Actuarial losses related to the change in mortality projection scales from the MP-2020 scale used in 2020 and the MP-2019 scale used in 2019, increased the projected benefit obligation by approximately $ 1.1 million and $ 2.0 million as of January 29, 2022 and January 30, 2021, respectively.

In the fourth quarter of 2020, a lump sum option was offered to certain former employees, resulting in $ 35.7 million of lump sum payments and a settlement charge that decreased the net periodic benefit income for 2020 by $ 1.1 million.

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The Company’s overall investment strategy is to achieve a mix of approximately 97 % of investments for long-term growth and 3 % for near-term benefit payments with a wide diversification of asset types, fund strategies and fund managers.

The target allocations for plan assets for 2020 were 70 % equities and 30 % debt

The target allocations for plan assets for 2021 were 70 % equities and 30 % debt securities.

Allocations may change periodically based upon changing market conditions.

Corporate stocks – common did not include any Company stock at January 30, 2021 or February 1, 2020.

Corporate stocks – common did not include any Company stock at January 29, 2022 or January 30, 2021.

Assets of the Canadian pension plans, which total approximately $ 5.0 million at January 29, 2022, were invested 55 % in equity funds, 42 % in bond funds and 3 % in money market funds.

The Canadian pension plans did not include any Company stock as of January 30, 2021 or February 1, 2020.

The Canadian pension plans did not include any Company stock as of January 29, 2022 or January 30, 2021.

A financial instrument’s level within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

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● Investments in U.S.

government securities, mutual funds, real estate investment trusts, exchange-traded funds, corporate stocks - common, preferred securities and S&P 500 Index put and call options (traded on security exchanges) are classified within Level 1 of the fair value hierarchy because the fair values are based on unadjusted quoted market prices in active markets with sufficient volume and frequency.

government securities, the mutual fund, exchange-traded funds, corporate stocks - common, preferred securities and S&P 500 Index put and call options (traded on security exchanges) are classified within Level 1 of the fair value hierarchy because the fair values are based on unadjusted quoted market prices in active markets with sufficient volume and frequency.

Interest rate swap agreements and certain U.S.

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Therefore, these investments are classified within Level 2 of the fair value hierarchy.

Certain preferred securities were offered in a private placement.

Certain preferred securities and corporate stocks – common were offered in a private placement.

The fair value of these investments is based on unobservable prices and therefore, they are classified within Level 3 of the fair value hierarchy.

● The alternative investment fund, with a fair value of $ 17.5 million and $ 16.3 million as of January 30, 2021 and February 1, 2020, respectively, is an investment in a pool of long-duration domestic investment grade assets.

● The alternative investment fund is an investment in a pool of long-duration domestic investment grade assets.

This investment is measured using net asset value per share, and therefore, is not classified within the fair value hierarchy.

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Total investments at fair value

The fair values of the Company’s pension plan assets at February 1, 2020 by asset category are as follows:

Fair Value Measurements at February 1, 2020

The fair values of the Company’s pension plan assets at January 30, 2021 by asset category are as follows:

Fair Value Measurements at January 30, 2021

($ thousands)

1 unchanged sentence

government securities

Interest rate swap agreements

Exchange-traded funds

2 unchanged sentences

S&P 500 Index options

Total investments in the fair value hierarchy

Investments measured at net asset value:

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Funded Status

The over-funded status as of January 30, 2021 and February 1, 2020 for pension benefits was $ 79.1 million and $ 39.9 million, respectively.

The under-funded status as of January 30, 2021 and February 1, 2020 for other postretirement benefits was $ 1.2 million and $ 1.4 million, respectively.

The over-funded status as of January 29, 2022 and January 30, 2021 for pension benefits was $ 88.8 million and $ 79.1 million, respectively.

The under-funded status for other postretirement benefits was $ 1.1 million and $ 1.2 million as of January 29, 2022 and January 30, 2021, respectively.

Amounts recognized in the consolidated balance sheets consist of:

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The accumulated postretirement benefit obligation exceeds assets for all of the Company’s other postretirement benefit plans.

The amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit income at January 30, 2021 and February 1, 2020 are as follows:

The amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit income at January 29, 2022 and January 30, 2021 are as follows:

Pension Benefits

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Service cost is included in selling and administrative expenses.

Weighted-average assumptions used to determine net periodic benefit income:

Pension Benefits

Other Postretirement Benefits

Weighted–average assumptions used to determine net periodic benefit income

Discount rate

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Defined Contribution Plans

The Company’s domestic defined contribution 401(k) plan covers salaried and certain hourly employees.

Prior to certain plan changes that became effective on January 1, 2019, the Company’s contributions represented a partial matching of employee contributions, generally up to a maximum of 3.5 % of the employee’s salary and bonus.

Currently, for eligible salaried employees, the Company makes a core contribution of 1.5 % and a matching contribution of up to 50 % of the first 6% of the employees’ contributions.

In addition, the Company has the discretion to contribute up to an additional 2 % profit-sharing benefit based on the Company’s performance.

The Company’s domestic defined contribution 401(k) plan covers certain salaried employees.

For eligible salaried employees, the Company makes a core contribution of 1.5 % and a matching contribution of up to 50 % of the first 6 % of the employees’ contributions.

The Company’s expense for this plan was $ 5.5 million in 2021, $ 4.0 million in 2020, and $ 5.4 million in 2019.

In addition to the core and matching contributions, the Company has the discretion to contribute up to an additional 2 % profit-sharing benefit based on the Company’s performance.

The Company’s expense for the profit-sharing contribution was $ 3.3 million for 2021, with no corresponding expenses in 2020 or 2019.

The Company’s Canadian defined contribution plan covers certain salaried and hourly employees.

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In addition, eligible employees may voluntarily contribute to the plan.

The Company’s expense for this plan was $ 0.1 million in 2020, and $ 0.2 million in both 2019 and 2018.

The Company’s expense for this plan was $ 0.1 million in both 2021 and 2020, and $ 0.2 million in 2019.

Deferred Compensation Plan

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Consequently, the trust qualifies as a grantor trust for income tax purposes (i.e., a “Rabbi Trust”).

The liabilities of the Deferred Compensation Plan of $ 7.9 million and $ 8.0 million as of January 30, 2021 and February 1, 2020, respectively, are presented in employee compensation and benefits in the accompanying consolidated balance sheets.

The assets held by the trust of $ 7.9 million and $ 8.0 million as of January 30, 2021 and February 1, 2020, respectively, are presented within prepaid expenses and other current assets in the accompanying consolidated balance sheets, with changes in the deferred compensation charged to selling and administrative expenses in the accompanying consolidated statements of earnings (loss).

The liabilities of the Deferred Compensation Plan of $ 7.5 million and $ 7.9 million as of January 29, 2022 and January 30, 2021, respectively, are presented in employee compensation and benefits in the accompanying consolidated balance sheets.

The assets held by the trust of $ 7.5 million and $ 7.9 million as of January 29, 2022 and January 30, 2021, respectively, are presented within prepaid expenses and other current assets in the

accompanying consolidated balance sheets, with changes in the deferred compensation charged to selling and administrative expenses in the accompanying consolidated statements of earnings (loss).

Deferred Compensation Plan for Non-Employee Directors

Non-employee directors are eligible to participate in a deferred compensation plan, whereby deferred compensation amounts are valued as if invested in the Company’s common stock through the use of phantom stock units (“PSUs”).

Under the plan, each participating director’s account is credited with the number of PSUs equal to the number of shares of the Company’s common stock that the participant could purchase or receive with the amount of the deferred compensation, based upon the fair value (as determined based on the average of the high and low prices) of the Company’s common

stock on the last trading day of the fiscal quarter when the cash compensation was earned.

Dividend equivalents are paid on PSUs at the same rate as dividends on the Company’s common stock and are re-invested in additional PSUs at the next fiscal quarter-end.

The PSUs are payable in cash based on the number of PSUs credited to the participating director’s account, valued on the basis of the fair value at fiscal quarter-end on or following termination of the director’s service.

The liabilities of the plan of $ 1.0 million as of January 30, 2021 and $ 1.5 million as of February 1, 2020 are based on 23,644 and 71,108 outstanding PSUs, respectively, and are presented in other liabilities in the accompanying consolidated balance sheets.

The liabilities of the plan of $ 1.8 million as of January 29, 2022 and $ 1.0 million as of January 30, 2021 are based on 64,227 and 23,644 outstanding PSUs, respectively, and are presented in other liabilities in the accompanying consolidated balance sheets.

Gains and losses resulting from changes in the fair value of the PSUs are charged to selling and administrative expenses in the accompanying consolidated statements of earnings (loss).

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law.

The CARES Act modified certain provisions to the Internal Revenue Code.

Among the provisions modified by the CARES Act was a five-year carryback period for net operating losses incurred in the 2018, 2019 and 2020 tax years;

temporary removal of the 80% limitation on net operating loss usage, reinstated for tax years after 2020;

a temporary increase in the interest expense limitation and acceleration of refundable AMT credit.

The five-year carryback presented an opportunity to carry back net operating losses from years with a statutory 21 % federal tax rate to years when the rate was 35 %.

During 2020, the Company recorded a net income tax benefit of $ 8.2 million related to the carryback of the 2020 net operating loss.

The components of (loss) earnings before income taxes consisted of domestic loss before income taxes of $ 441.5 million in 2020 and domestic earnings before income taxes of $ 37.3 million and $ 40.0 million in 2019 and 2018, respectively.

The Company’s international earnings before incomes taxes were $ 41.3 million in 2019 and international losses before income taxes were $ 75.6 million and $ 45.8 million in 2020 and 2018, respectively.

The components of income tax (benefit) provision on (loss) earnings were as follows:

The components of earnings (loss) before income taxes consisted of domestic earnings before income taxes of $ 152.5 million and $ 37.3 million in 2021 and 2019, respectively, and domestic loss before income taxes of $ 441.5 million in 2020.

The Company’s international earnings before incomes taxes were $ 36.7 and $ 41.3 million in 2021 and 2019, respectively, and international losses before income taxes were $ 75.6 million in 2020.

The components of income tax provision (benefit) on earnings (loss) were as follows:

($ thousands)

Total federal income tax (benefit) provision

Total state income tax (benefit) provision

Total federal income tax provision (benefit)

Total state income tax provision (benefit)

International

Total international income tax provision (benefit)

Total income tax (benefit) provision

The differences between the income tax (benefit) provision reflected in the consolidated financial statements and the amounts calculated at the federal statutory income tax rate were as follows:

Total international income tax provision

Total income tax provision (benefit)

The differences between the income tax provision (benefit) reflected in the consolidated financial statements and the amounts calculated at the federal statutory income tax rate were as follows:

($ thousands)

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Impairment of international trade name taxed at higher rate

Provision for valuation allowance

Provision for valuation allowance, net of utilization

CARES Act NOL, net carryback benefit (1)

Income tax reform, net benefit

Non-deductibility of 162(m) limitations

GILTI, BEAT and FDII provisions

Non-deductibility of acquisition costs

Total income tax (benefit) provision

(1) The other category of income tax (benefit) provision principally represents the impact of expenses that are not deductible or partially deductible for federal income tax purposes and the impact of any return-to-provision adjustments.

In 2020, the Company’s effective tax rate was 15.1 % in 2020, compared to 21.0 % in 2019.

In 2020, the Company’s effective tax rate was impacted by several discrete tax items, including the non-deductibility of a portion of its goodwill impairment charges and the incremental tax provision related to the vesting of stock awards.

The Company’s tax benefit also includes the favorable impact of approximately $ 8.2 million related to the CARES Act, which permits the Company to carry back a significant portion of our 2020 losses to years with a higher federal tax rate, as discussed above.

In 2019, the Company’s effective tax rate was impacted by discrete tax benefits totaling $ 1.4 million, primarily reflecting adjustments to changes in tax rates in state and other international jurisdictions.

In 2018, the Company’s effective tax rate was impacted by several factors, including the non-deductibility of our goodwill impairment charge of $ 38.0 million.

In addition, discrete tax benefits totaling $ 5.9 million were recognized in 2018, primarily reflecting adjustments associated with the Tax Cuts and Jobs Act and related actions for state and other international jurisdictions (in aggregate, "income tax reform").

International entity restructuring (2)

Total income tax provision (benefit)

(1) The Coronavirus Aid, Relief, and Economic Security Act (“CARES Act”) was signed into law during 2020.

Among the Internal Revenue Code provisions modified by the CARES Act was a five-year carryback period for net operating losses incurred in the 2018, 2019 and 2020 tax years;

temporary removal of the 80% limitation on net operating loss usage, reinstated for tax years after 2020;

a temporary increase in the interest expense limitation and acceleration of refundable AMT credit.

The five-year carryback presented an opportunity to carry back net operating losses from years with a statutory 21 % federal tax rate to years when the rate was 35 % .

(2) Reflects the deferred tax impacts of the liquidation of certain international subsidiaries, with related impacts presented in the provision for valuation allowance, net of utilization line in the table above.

(3) The other category of income tax provision (benefit) principally represents the impact of expenses that are not deductible or partially deductible for federal income tax purposes and the impact of any return-to-provision adjustments.

Significant components of the Company’s deferred income tax assets and liabilities were as follows:

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January 29, 2022

February 1, 2020

January 30, 2021

Deferred Tax Assets

Lease obligations

Goodwill and intangible assets

Net operating loss carryforward/carryback

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Postretirement and postemployment benefit plans

Capital loss carryforward

Total deferred tax assets, before valuation allowance

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Lease right-of-use assets

Intangible assets

LIFO inventory valuation

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Capitalized software

Goodwill and intangible assets

Total deferred tax liabilities

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The state NOLs totaling $ 4.8 million have carryforward periods ranging from one to 20 years .

The planned carryback of the federal NOL released other tax attributes with a tax value of $ 4.4 million.

The Company has NOLs in Canada and the United Kingdom of $ 7.7 million and $ 1.9 million, respectively.

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ASC 740, Income Taxes , establishes a single model to address accounting for uncertain tax positions.

The standard clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet

before being recognized in the financial statements.

The standard clarifies the accounting for income taxes by prescribing a minimum recognition threshold a tax position is required to meet before being recognized in the financial statements.

The standard also provides guidance on derecognition, measurement classification, interest and penalties, accounting in interim periods, disclosure and transition.

As of January 30, 2021, February 1, 2020 and February 2, 2019, the Company had unrecognized tax benefits of $ 1.5 million, $ 1.9 million and $ 2.5 million, respectively, associated with international jurisdictions.

As of January 29, 2022,

January 30, 2021 and February 1, 2020, the Company had unrecognized tax benefits of $ 1.0 million, $ 1.5 million and $ 1.9 million, respectively, associated with international jurisdictions.

For federal purposes, the Company’s tax filings for fiscal years 2018 to 2020 remain open to examination but are not currently being examined.

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The Famous Footwear segment is comprised of Famous Footwear, famousfootwear.com and famousfootwear.ca.

Famous Footwear operated 916 stores at the end of 2020, primarily selling branded footwear for the entire family.

Famous Footwear operated 894 stores at the end of 2021, selling primarily branded footwear for the entire family.

The Brand Portfolio segment is comprised of wholesale operations selling the Company’s branded footwear, and the retail stores and e-commerce sites associated with those brands.

This segment sources and markets licensed, branded and private-label footwear primarily to online retailers, national chains, department stores, mass merchandisers and independent retailers as well as Company-owned Famous Footwear, Allen Edmonds, Naturalizer and Sam Edelman stores and e-commerce businesses.

The Brand Portfolio segment included 107 branded retail stores in the United States, 50 branded retail stores in Canada, and 13 branded retail stores in China at the end of 2020.

This segment sources, manufactures and markets licensed, branded and private-label footwear primarily to online retailers, national chains, department stores, mass merchandisers and independent retailers as well as Company-owned Famous Footwear, Sam Edelman, Naturalizer and Allen Edmonds stores and e-commerce businesses.

The Brand Portfolio segment included 70 branded retail stores in the United States and 16 branded retail stores in China at the end of 2021.

The Company’s Famous Footwear and Brand Portfolio reportable segments are operating units that are managed separately.

These reportable segments reflect the level at which the Company’s chief operating decision maker evaluates financial performance and allocates resources.

Operating (loss) earnings for the reportable segments represents gross profit, less selling and administrative expenses, impairment of goodwill and intangible assets and restructuring and other special charges, net.

Operating earnings (loss) for the reportable segments represents gross profit, less selling and administrative expenses, impairment of goodwill and intangible assets and restructuring and other special charges, net.

The accounting policies of the reportable segments are the same as those described in Note 1 to the consolidated financial statements.

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Depreciation and amortization

Operating loss

Operating earnings (loss)

Segment assets

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Depreciation and amortization

Operating earnings (loss)

Operating loss

Segment assets

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Products purchased for the Famous Footwear segment from three key third-party suppliers (Nike, Skechers and adidas) represented approximately 26 %, 25 % and 22 % of consolidated net sales for 2021, 2020 and 2019, respectively.

Following is a reconciliation of operating (loss) earnings to (loss) earnings before income taxes:

Following is a reconciliation of operating earnings (loss) to earnings (loss) before income taxes:

($ thousands)

Operating (loss) earnings

Operating earnings (loss)

Interest expense, net

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Other income, net

(Loss) earnings before income taxes

Earnings (loss) before income taxes

For geographic purposes, the domestic operations include the Company’s domestic retail operations, the wholesale distribution of licensed, branded and private-label footwear to a variety of retail customers, including the Famous Footwear and Brand Portfolio stores, as well as the Company’s e-commerce businesses.

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Total long-lived assets

(1) Long-lived assets include $ 554,303 and $ 695,594 of lease right-of-use assets in 2020 and 2019, respectively, with no corresponding amounts in 2018, as it precedes the adoption of ASC 842.

(1) Long-lived assets include $ 503,430 , $ 554,303 and $ 695,594 of lease right-of-use assets in 2021, 2020 and 2019, respectively.

The Company’s net inventory balance was comprised of the following:

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January 29, 2022

February 1, 2020

January 30, 2021

Raw materials

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Inventories, net

As of January 30, 2021 and February 1, 2020, the Company’s inventory balance included $ 0.8 million and $ 2.5 million, respectively, of finished goods product subject to a consignment arrangement with wholesale customers.

As of January 29, 2022 and January 30, 2021, the Company’s inventory balance included $ 0.1 million and $ 0.8 million, respectively, of finished goods product subject to consignment arrangements with wholesale customers.

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

($ thousands)

January 29, 2022

February 1, 2020

January 30, 2021

Land and buildings

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The Company recorded charges for impairment of $ 4.1 million, $ 56.3 million and $ 5.9 million in 2021, 2020 and 2019, respectively, primarily for operating lease right-of-use assets, leasehold improvements and furniture and fixtures in the Company’s retail stores.

Of the $ 56.3 million of impairment charges in 2020, $ 55.3 million is reflected in restructuring and other special charges, and $ 1.0 million is reflected in selling and administrative expenses.

All of the charges in 2021 and 2019 are presented in selling and administrative expenses.

Of the $ 56.3 million of impairment charges in 2020, $ 55.3 million is reflected in restructuring and other special charges, and $ 1.0 million is reflected in selling and administrative expenses.

Fair value was based on estimated future cash flows to be generated by retail stores, discounted at a market rate of interest.

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Interest costs for major asset additions are capitalized during the construction or development period and amortized over the lives of the related assets.

The Company capitalized interest of $ 0.6 million and $ 0.2 million in 2019 and 2018, respectively, related to the new company-operated Brand Portfolio warehouse facilities in California, with no corresponding interest capitalized in 2020.

The Company capitalized interest of $ 0.6 million in 2019 related to the new company-operated Brand Portfolio warehouse facilities in California, with no corresponding interest capitalized in 2021 or 2020.

Property and Equipment, Held for Sale

In April 2021, the Company announced that it would begin marketing for sale its nine -acre corporate headquarters campus (the “Campus”) located in Clayton, Missouri and the Company is currently in negotiations to sell the campus.

The Company expects a portion of the campus to qualify as a completed sale within twelve months .

Accordingly, as of January 29, 2022, that portion of the Campus, which is included in the Eliminations and Other category, is classified within property and equipment, held for sale on the consolidated balance sheet.

The remaining portion of the Campus that is not anticipated to qualify as a completed sale within twelve months is classified as property and equipment, net on the consolidated balance sheet as of January 29, 2022.

The Company evaluated the Campus asset group for impairment indicators and determined that no indicators were present.

GOODWILL AND INTANGIBLE ASSETS

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January 29, 2022

February 1, 2020

January 30, 2021

Intangible Assets

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Goodwill and intangible assets, net

The Company’s intangible assets as of January 30, 2021 and February 1, 2020 were as follows:

(1) The carrying amount of goodwill as of January 29, 2022 and January 30, 2021 is presented net of accumulated impairment charges of $ 415.7 million.

The Company’s intangible assets as of January 29, 2022 and January 30, 2021 were as follows:

($ thousands)

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Estimated Useful Lives

Cost Basis (1)

Net Carrying Value

Customer relationships

February 1, 2020

January 30, 2021

Estimated Useful Lives

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Customer relationships

(1) The Via Spiga trade name was reclassified from indefinite-lived trade names to definite-lived trade names.

The remaining carrying value of $ 0.5 million is being amortized over two years .

(2) Cost basis has been reduced by $ 60.0 million in impairment charges recognized in 2018 related to the Allen Edmonds trade name.

Amortization expense related to intangible assets was $ 12.6 million in 2021, $ 13.0 million in 2020 and $ 13.1 million in 2019.

The Company estimates $ 12.6 million of amortization expense related to intangible assets in 2021, $ 12.1 million in 2022, $ 11.9 million in 2023, and $ 11.0 million in 2024 and 2025 .

The Company estimates $ 12.1 million of amortization expense related to intangible assets in 2022, $ 11.9 million in 2023 and $ 11.0 million in 2024, 2025 and 2026 .

Goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate it might be impaired, using either the qualitative assessment or a quantitative fair value-based test.

During the first quarter of 2020, as a result of the significant decline in the Company’s share price and market capitalization and the impact of the COVID-19 pandemic on the Company’s business operations, the Company determined that an interim assessment of goodwill was required.

During 2021 and 2019, the goodwill impairment testing was performed as of the first day of the fourth fiscal quarter, which resulted in no impairment charges.

During the first quarter of 2020, as a result of the significant decline in the Company’s share price and market capitalization and the impact of the pandemic on the Company’s business operations, the Company determined that an interim assessment of goodwill was required.

A quantitative assessment was performed for all reporting units as of May 2, 2020.

The assessment indicated that the carrying value of the goodwill associated with the Brand Portfolio and Vionic reporting units was impaired, resulting in total goodwill impairment charges of $ 240.3 million.

In addition to the interim assessment, the Company performed an impairment review of the remaining goodwill balance, which is associated with the Blowfish Malibu reporting unit, as of the first day of the fourth fiscal quarter.

That review indicated no impairment.

During 2019 and 2018, the goodwill impairment testing was performed as of the first day of the fourth fiscal quarter, which resulted in no impairment charges in 2019 and $ 38.0 million of impairment charges in 2018 associated with goodwill of the Allen Edmonds reporting unit.

Indefinite-lived intangible assets are tested for impairment as of the first day of the fourth quarter of each fiscal year unless events or circumstances indicate an interim test is required.

As a result of the triggering event from the economic impacts of COVID-19, an interim assessment was performed as of May 2, 2020.

The indefinite-lived trade name impairment review resulted in total impairment charges of $ 22.4 million for the thirteen weeks ended May 2, 2020, including $ 12.2 million associated with the indefinite-lived Allen Edmonds trade name and $ 10.2 million of impairment associated with the indefinite-lived Via Spiga trade name.

The remaining carrying value of the Via Spiga trade name of $ 0.5 million is being amortized over approximately two years .

The Company did not record any impairment charges for intangible assets during 2021 or 2019.

As a result of the triggering event from the economic impacts of the pandemic, an interim assessment was performed as of May 2, 2020.

The interim indefinite-lived trade name impairment review resulted in total impairment charges of $ 22.4 million, including $ 12.2 million associated with the indefinite-lived Allen Edmonds trade name and $ 10.2 million of impairment associated with the indefinite-lived Via Spiga trade name.

In addition to the interim assessment, the Company tested the indefinite-lived intangible assets as of the first day of the fourth fiscal quarter.

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Those reviews resulted in additional impairment totaling $ 23.8 million, consisting of $ 19.8 million associated with the Allen Edmonds trade name and $ 4.0 million associated with the Allen Edmonds customer relationships intangible asset.

The Company did not record any impairment charges during 2019.

During 2018, an impairment charge of $ 60.0 million was recorded for impairment of the Allen Edmonds indefinite-lived trade name.

Total intangible asset impairment charges of $ 46.2 million and $ 60.0 million in 2020 and 2018, respectively, are reflected within the Brand Portfolio segment.

Total intangible asset impairment charges of $ 46.2 million in 2020 are reflected within the Brand Portfolio segment.

LONG-TERM AND SHORT-TERM FINANCING ARRANGEMENTS

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The Company maintains a revolving credit facility for working capital needs.

The Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds LLC, Vionic Group LLC and Vionic International LLC are each co-borrowers and guarantors under the revolving credit facility.

On January 18, 2019, the Loan Parties entered into a Third Amendment to Fourth Amended and Restated Credit Agreement to extend the maturity date to January 18, 2024 and change the borrowing capacity from an aggregate amount of up to $ 600.0 million to an aggregate amount of up to $ 500.0 million, with the option to further increase by up to $ 250.0 million.

On April 14, 2020, the Company entered

into a Fourth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the "Credit Agreement") which, among other modifications, increased the amount available under the revolving credit facility by $ 100.0 million to an aggregate amount of up to $ 600.0 million, subject to borrowing base restrictions, and may be further increased by up to $ 150.0 million.

The Credit Agreement increased the spread applied to the LIBOR or prime rate by a total of 75 basis points and increased the unused line fee by 5 basis points.

The Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds LLC, Vionic Group LLC and Vionic International LLC

are each co-borrowers and guarantors.

On October 5, 2021, the Company entered into a Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the "Credit Agreement") which, among other modifications, extended the maturity date of the credit facility from January 18, 2024 to October 5, 2026, and decreased the amount available under the revolving credit facility by $ 100.0 million to an aggregate amount of up to $ 500.0 million, subject to borrowing base restrictions, which may be further increased by up to $ 250.0 million.

The Credit Agreement also decreased the spread applied to the London Interbank Offered Rate (“LIBOR”) or prime rate by a total of 75 basis points.

Borrowing availability under the Credit Agreement is limited to the lesser of the total commitments and the borrowing base ("Loan Cap"), which is based on stated percentages of the sum of eligible accounts receivable, eligible inventory and eligible credit card receivables, as defined, less applicable reserves.

Under the Credit Agreement, the Loan Parties’ obligations are secured by a first-priority security interest in all accounts receivable, inventory and certain other collateral.

Interest on borrowings is at variable rates based on the London Interbank Offered Rate (“LIBOR”) (with a floor of 1.0 % imposed by the Credit Agreement) or the prime rate, as defined in the Credit Agreement, plus a spread.

Interest on borrowings is at variable rates based on LIBOR (with a floor of 0.0 %) or the prime rate (as defined in the Credit Agreement), plus a spread.

The interest rate and fees for letters of credit vary based upon the level of excess availability under the Credit Agreement.

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The Credit Agreement limits the Company’s ability to create, incur, assume or permit to exist additional indebtedness and liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures and merge or acquire or sell assets.

In addition, if excess availability falls below the greater of 10.0 % of the lesser of the Loan Cap and $ 40.0 million for three consecutive business days, and the fixed charge coverage ratio is less than 1.0 to 1.0, the Company would be in default under the Credit Agreement.

In addition, if excess availability falls below the greater of 10.0 % of the Loan Cap and $ 40.0 million for three consecutive business days, and the fixed charge coverage ratio is less than 1.25 to 1.0, the Company would be in default under the Credit Agreement and certain additional covenants would be triggered.

The Credit Agreement contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations, certain events of bankruptcy and insolvency, judgment defaults and the failure of any guaranty or security document supporting the agreement to be in full force and effect.

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The maximum amount of borrowings under the Credit Agreement at the end of any month was $ 290.0 million and $ 438.5 million in 2021 and 2020, respectively.

As discussed further in Note 2 to the consolidated financial statements, the Company utilized the Credit Agreement in October 2018 to fund the Vionic acquisition.

In addition, in March 2020, the Company increased the borrowings on the revolving credit facility to $ 440.0 million as a precautionary measure to increase its cash position and preserve financial flexibility given the uncertainty resulting from COVID-19.

The Company made debt reduction a priority during the second half of 2020, reducing the borrowings outstanding to $ 250.0 million as of January 30, 2021.

In addition to the $ 250.0 million of borrowings outstanding, the Company had $ 11.2 million in letters of credit outstanding under the Credit Agreement, with total additional borrowing availability of $ 136.0 million at January 30, 2021.

In March 2020, the Company increased the borrowings on the revolving credit facility to $ 440.0 million as a precautionary measure to increase its cash position and preserve financial flexibility given the uncertainty resulting from COVID-19.

The Company made debt reduction a priority during the second half of 2020 and throughout 2021.

As of January 29, 2022, the Company had $ 290.0 million of borrowings outstanding and $ 10.8 million in letters of credit outstanding under the Credit Agreement, with total additional borrowing availability of $ 155.2 million at January 29, 2022.

Average daily borrowings during the year were $ 172.8 million and $ 299.8 million in 2021 and 2020, respectively, and the weighted-average interest rates approximated 2.5 % and 3.4 % for the respective periods.

$200 Million Senior Notes

On July 27, 2015, the Company issued $ 200.0 million aggregate principal amount of Senior Notes due on August 15, 2023 (the "Senior Notes").

The Senior Notes bear interest at 6.25 %, which is payable on February 15 and August 15 of each year.

The Senior Notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that is a borrower or guarantor under the Credit Agreement.

If the Company experiences specific kinds of changes of control, it would be required to offer to purchase the Senior Notes at a purchase price equal to 101 % of the principal amount, plus accrued and unpaid interest and Additional Interest (as defined in the Senior Notes indenture), if any, to, but not including, the date of repurchase.

The Senior Notes also

contain certain other covenants and restrictions that limit certain activities including, among other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments, common stock repurchases, mergers and acquisitions and sales of assets.

As of January 30, 2021, the Company was in compliance with all covenants and restrictions relating to the Senior Notes.

The Senior Notes bore interest at 6.25 %, which was payable on February 15 and August 15 of each year.

The Senior Notes were guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that is a borrower or guarantor under the Credit Agreement.

On August 16, 2021, the Company redeemed $ 100.0 million of Senior

Notes at 100.0 %.

In addition, on January 3, 2022, the remaining $ 100.0 million of Senior Notes were redeemed at 100.0 %, extinguishing the Company’s long-term debt.

Loss on Early Extinguishment of Debt

In conjunction with the redemptions of the Senior Notes in August 2021 and January 2022, prior to the maturity in August 2023, the Company incurred losses on early extinguishment of debt totaling $ 0.8 million.

In addition, the Company incurred a loss on early extinguishment of debt of $ 0.2 million associated with the amendment of the revolving credit facility prior to its maturity.

The Company leases all of its retail locations, a manufacturing facility, and certain office locations, distribution centers and equipment.

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Leases with an initial term of 12 months or less are not recorded on the balance sheet.

During the first quarter of 2019, the Company adopted ASC Topic 842, Leases (“ASC 842”), using the modified retrospective transition method.

Prior period financial information in the consolidated financial statements has not been adjusted and is presented in compliance with ASC 840.

During the first quarter of 2019, the Company adopted ASC 842, using the modified retrospective transition method.

The Company elected the package of practical expedients and the expedient to account for lease and non-lease components as a single component for the entire population of operating lease assets.

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After allowing for an appropriate start-up period, unusual nonrecurring events or favorable trends, property and equipment at stores and the lease right-of-use assets indicated as impaired are written down to fair value as calculated using a discounted cash flow method.

After allowing for an appropriate start-up period, unusual nonrecurring events, property and equipment at stores and the lease right-of-use assets indicated as impaired are written down to fair value as calculated using a discounted cash flow method.

The Company recorded asset impairment charges, primarily related to underperforming retail stores, of $ 4.1 million, $ 56.3 million and $ 5.9 million during 2021, 2020 and 2019, respectively.

The impairment charges recorded in 2020, including $ 31.4 million associated with operating lease right-of-use assets and $ 24.9 million associated with property and equipment, primarily reflect the impact of the COVID-19 pandemic on the Company’s retail operations and estimates of remaining cash flows for each store, as well as the decision to close all but a few of the Company’s Naturalizer retail stores.

The impairment charges recorded in 2020, including $ 31.4 million associated with operating lease right-of-use assets and $ 24.9 million associated with property and equipment, primarily reflect the impact of the pandemic on the Company’s retail operations and estimates of remaining cash flows for each store, as well as the decision to close all but two of the Company’s Naturalizer retail stores.

Refer to Note 4 and Note 13 to the consolidated financial statements for further discussion on these impairment charges.

As a result of the temporary store closures during the first half of 2020 associated with the COVID-19 pandemic, the Company negotiated with landlords to modify payment terms for certain leases.

Deferred payments for these leases are reflected in lease obligations on the consolidated balance sheets.

As further discussed in Note 1 to the consolidated financial statements, under relief provided by the FASB, entities may make a policy election to account for the lease concessions related to COVID-19 as if the enforceable rights existed under the original contract, accounting for them as variable rent rather than lease modifications.

The Company has made a policy election to account for lease concessions related to COVID-19 as variable rent.

Accordingly, in 2020 the Company recorded $ 5.4 million in lease concessions as a reduction of rent expense within selling and administrative expenses in the consolidated statements of earnings (loss).

Rent deferrals for leases that were extended in connection with the rent concession will continue to be recognized consistent with the original lease agreement.

The weighted-average lease term and discount rate as of January 30, 2021 and February 1, 2020 were as follows:

As a result of the temporary store closures during the first half of 2020 associated with the pandemic, certain leases were amended to provide rent abatements and/or deferral of lease payments.

Deferred payments continue to be reflected in the lease obligations on the consolidated balance sheets.

Under relief provided by the FASB, entities could make a policy election to account for the lease concessions related to COVID-19 as if the enforceable rights existed under the original contract, accounting for them as variable rent rather than lease modifications.

The Company made a policy election to account for rent abatements as variable rent.

Accordingly, in 2021 and 2020, the Company recorded $ 2.1 million and $ 5.4 million, respectively, in lease concessions as a reduction of rent expense within selling and administrative expenses in the consolidated statements of earnings (loss).

Rent concessions for leases that were extended were recognized as a lease modification.

The weighted-average lease term and discount rate as of January 29, 2022 and January 30, 2021 were as follows:

January 29, 2022

February 1, 2020

January 30, 2021

Weighted-average remaining lease term (in years)

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During 2021, the Company entered into new or amended leases that resulted in the recognition of right-of-use assets and lease obligations of $ 118.1 million on the consolidated balance sheets.

As of January 30, 2021, the Company has entered into lease commitments for six retail locations for which the leases have not yet commenced.

The Company anticipates that the leases for five of the new retail locations will begin in the next fiscal year and one will begin in fiscal year 2022.

As of January 29, 2022, the Company has entered into lease commitments for four retail locations for which the leases have not yet commenced.

The Company anticipates that the leases for three of the new retail locations will begin in the next fiscal year and one will begin in fiscal year 2023.

Upon commencement, right-of-use assets and lease liabilities of approximately $ 2.2 million and $ 1.2 million will be recorded on the consolidated balance sheets, in 2022 and 2023, respectively.

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Total lease expense (1)

(1) Net of lease concessions recognized of $ 5.4 million.

(1) Net of lease concessions recognized of $ 2.1 million and $ 5.4 million for 2021 and 2020, respectively.

The aggregate future annual lease obligations at January 29, 2022 were as follows:

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Cash received from sublease income

As previously reported in accordance with the guidance in ASC 840, a summary of rent expense for operating leases for 2018 is as follows:

($ thousands)

Contingent rent

Sublease income

RISK MANAGEMENT AND DERIVATIVES

General Risk Management

The Company maintains cash and cash equivalents and certain other financial instruments with various financial institutions.

The financial institutions are located throughout the world and the Company’s policy is designed to limit exposure to any one institution or geographic region.

The Company’s periodic evaluations of the relative credit standing of these financial institutions are considered in the Company’s investment strategy.

The Company’s Brand Portfolio segment sells to online retailers, national chains, department stores, mass merchandisers and independent retailers in the United States, Canada and approximately 66 other countries.

Receivables arising from these sales are not collateralized.

However, a portion is covered by documentary letters of credit.

Credit risk is affected by conditions or occurrences within the economy and the retail industry.

The Company maintains an allowance for expected credit losses based upon factors surrounding the credit risk of specific customers and historical trends.

The Company has established policies and business practices that are intended to mitigate a portion of the effect of these exposures.

The Company’s hedging strategy permits the use of forward contracts as cash flow hedging instruments to manage its currency exposures.

These derivative financial instruments are viewed as risk management tools and are not used for trading or speculative purposes.

Derivatives entered into by the Company are designated as cash flow hedges of forecasted foreign currency transactions.

Derivative financial instruments expose the Company to credit and market risk.

The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions being hedged.

The Company does not believe there is a significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with major international financial institutions.

Credit risk is managed through the continuous monitoring of exposures to such counterparties.

The Company principally uses foreign currency forward contracts as cash flow hedges to offset a portion of the effects of exchange rate fluctuations.

The Company’s cash flow exposures include anticipated foreign currency transactions, such as foreign currency denominated sales, costs, expenses and intercompany charges, as well as collections and payments.

The cash flow hedging instruments are recorded in the Company’s consolidated balance sheets at fair value.

The Company had no forward contracts as of January 30, 2021.

As of February 1, 2020, the Company had forward contracts maturing at various dates through May 2020.

The contract amounts in the following table represent the net notional amount of all purchase and sale contracts of a foreign currency.

$equivalent in thousands)

January 30, 2021

February 1, 2020

Financial Instruments

dollars (purchased by the Company’s Canadian division with Canadian dollars)

Other currencies

Total financial instruments

The classification and fair values of derivative instruments designated as hedging instruments included within the consolidated balance sheets as of January 30, 2021 and February 1, 2020 are as follows:

Asset Derivatives

Liability Derivatives

($ thousands)

Balance Sheet Location

Foreign Exchange Forward Contracts

January 30, 2021

Prepaid expenses and other current assets

Other accrued expenses

February 1, 2020

Prepaid expenses and other current assets

Other accrued expenses

During 2020 and 2019, the effect of derivative instruments in cash flow hedging relationships on the consolidated statements of earnings (loss) was as follows:

Foreign exchange forward contracts:

Recognized in

Income Statement Classification

Gains (Losses)- Realized

Cost of goods sold

Selling and administrative expenses

Additional information related to the Company’s derivative financial instruments are disclosed within Note 1 and Note 15 to the consolidated financial statements.

(1) Cash paid for lease liabilities in 2021 includes payment of certain lease payments deferred in 2020, as described above, as well as lease termination costs associated with the Naturalizer retail store closures, as further discussed in Note 4 to the consolidated financial statements.

In addition, cash paid for lease liabilities in 2020 was significantly lower than comparable periods, reflecting the deferral of lease payments during the onset of the pandemic.

FAIR VALUE MEASUREMENTS

Fair Value Hierarchy

Fair value measurement disclosure requirements specify a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (“observable inputs”) or reflect the Company’s own assumptions of market participant valuation (“unobservable inputs”).

from independent sources (“observable inputs”) or reflect the Company’s own assumptions of market participant valuation (“unobservable inputs”).

In accordance with the fair value guidance, the inputs to valuation techniques used to measure fair value are categorized into three levels based on the reliability of the inputs as follows:

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The liabilities of the plan are based on the fair value of the outstanding PSUs and are presented in other accrued expenses (current portion) or other liabilities in the accompanying consolidated balance sheets.

Gains and losses resulting from changes in the fair value of the PSUs are presented in selling and administrative expenses in the Company’s consolidated statements of earnings (loss).

Gains and losses resulting from changes in the fair value of the PSUs are

presented in selling and administrative expenses in the Company’s consolidated statements of earnings (loss).

The fair value of each PSU is based on an unadjusted quoted market price for the Company’s common stock in an active market with sufficient volume and frequency on each measurement date (Level 1).

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Additional information related to RSUs for non-employee directors is disclosed in Note 15 to the consolidated financial statements.

Derivative Financial Instruments

The Company may use derivative financial instruments, primarily foreign exchange contracts, to reduce its exposure to market risks from changes in foreign exchange rates.

These foreign exchange contracts are measured at fair value using quoted forward foreign exchange prices from counterparties corroborated by market-based pricing (Level 2).

information related to the Company’s derivative financial instruments is disclosed in Note 1 and Note 14 to the consolidated financial statements.

Mandatory Purchase Obligation

The Company recorded a mandatory purchase obligation of the noncontrolling interest in conjunction with the acquisition of Blowfish Malibu in July 2018 as further discussed in Note 2 in the consolidated financials.

The fair value of the mandatory purchase obligation is based on the earnings formula specified in the Purchase Agreement (Level 3).

The mandatory purchase obligation and any fair value adjustments are recorded as interest expense.

The Company recorded fair value adjustments of $ 23.9 million during 2020 and $ 6.0 million during 2019.

From the acquisition date of July 6, 2018 through February 2, 2019, an immaterial amount of accretion was recorded on the mandatory purchase obligation.

The earnings projections and discount rate utilized in the initial estimate of the fair value of the mandatory purchase obligation required management judgment and are the assumptions to which the fair value calculation was the most sensitive.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at January 30, 2021 and February 1, 2020.

The Company recorded fair value adjustments of $ 15.4 million, $ 23.9 million, $ 6.0 million during 2021, 2020 and 2019, respectively.

The earnings projections and discount rate utilized in the initial estimate of the fair value of the mandatory purchase obligation required management judgment and were the assumptions to which the fair value calculation was the most sensitive.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at January 29, 2022 and January 30, 2021.

The Company did not have any transfers between Level 1, Level 2 or Level 3 during 2021, 2020 or 2019.

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January 29, 2022:

Cash equivalents – money market funds

Non-qualified deferred compensation plan assets

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Restricted stock units for non-employee directors

Mandatory purchase obligation - Blowfish Malibu

February 1, 2020:

January 30, 2021:

Cash equivalents – money market funds

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Restricted stock units for non-employee directors

Derivative financial instruments, net

Mandatory purchase obligation - Blowfish Malibu

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Certain factors, such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered Level 3 inputs as defined by FASB ASC 820, Fair Value Measurement .

Long-lived assets held and used with a carrying amount of $ 615.7 million, $ 780.2 million and $ 99.0 million in 2020, 2019 and 2018, respectively, were assessed for indicators of impairment and written down to their fair value.

This assessment resulted in the impairment charges presented in the table below, primarily for operating lease right-of-use assets, leasehold improvements, and furniture and fixtures in the Company’s retail stores.

Long-lived assets held and used with a carrying amount of $ 545.1 million, $ 615.7 million and $ 780.2 million in 2021, 2020 and 2019, respectively, were assessed for indicators of impairment.

This assessment resulted in the impairment charges presented in the table below, primarily for operating lease right-of-use assets, leasehold

improvements, and furniture and fixtures in the Company’s retail stores.

Higher impairment charges were recorded in 2020, reflecting adverse economic conditions, driven in part by the COVID-19 pandemic.

Adoption of ASC 842 in 2019 has resulted in higher impairment charges for underperforming retail stores as a direct result of including the right-of-use asset in the asset group that is evaluated for impairment.

($ thousands)

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Total long-lived asset impairment charges

The Company performed its annual impairment review of indefinite-lived intangible assets, which involves estimating the fair value using significant unobservable inputs (Level 3).

As a result of its annual impairment testing, the Company recorded $ 46.2 million in impairment charges in 2020.

The Company did not record any impairment charges in 2019.

The Company recorded $ 60.0 million in impairment charges in 2018 related to the Allen Edmonds trade name, as further discussed in Note 11 to the consolidated financial statements.

The Company performed its annual impairment review of intangible assets, which involves estimating the fair value using significant unobservable inputs (Level 3).

The intangible asset impairment reviews performed in 2021 and 2019 resulted in no impairment charges.

As a result of its annual impairment testing, the Company recorded $ 46.2 million in impairment charges in 2020, as further discussed in Note 1 and Note 10 to the consolidated financial statements.

During 2021, the Company performed a qualitative assessment of goodwill as of the first day of the fourth fiscal quarter.

The review indicated no impairment.

During 2020, the Company performed an interim impairment test of goodwill, as further discussed in Note 10 to the consolidated financial statements.

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The review indicated no impairment.

The quantitative assessments performed in 2019 resulted no impairment charges.

The quantitative and qualitative assessments performed in 2018 resulted in impairment charges of $ 38.0 million.

The quantitative assessments performed as of the first day of the fourth fiscal quarter of 2020 and 2019 resulted in no impairment charges.

Refer to Note 1 and Note 10 to the consolidated financial statements for additional information related to the goodwill impairment tests.

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January 29, 2022

February 1, 2020

January 30, 2021

($ thousands)

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Stock Repurchase Programs

On August 25, 2011, December 14, 2018 and September 2, 2019, the Board of Directors approved stock repurchase programs (“2011 Program”, "2018 Program"

and "2019 Program", respectively) authorizing the repurchase of the Company’s outstanding common stock of up to 2.5 million shares in both the 2011 Program and 2018 Program and 5.0 million shares in the 2019 Program.

On December 14, 2018 and September 2, 2019, the Board of Directors approved stock repurchase programs (“2018 Program"

and "2019 Program", respectively) authorizing the repurchase of the Company’s outstanding common stock of up to 2.5 million shares in the 2018 Program and 5.0 million shares in the 2019 Program.

The Company can use the repurchase programs to repurchase shares on the open market or in private transactions from time to time, depending on market conditions.

The repurchase programs do not have an expiration date.

Repurchases of common stock are limited under the Company’s debt agreements.

In total, 2.5 million shares have been repurchased under the 2011 Program and there are no additional shares authorized to be

During 2020, the Company repurchased the remaining 553,611 shares under the 2018 Program and 2,348,511 shares under the 2019 Program.

There are 2,651,489 shares additional shares authorized to be repurchased under the 2019 Program as of January 30, 2021.

Repurchases of common stock are limited

under the Company’s debt agreements.

In total, 2.5 million shares have been repurchased under the 2018 Program and there are no additional shares authorized to be repurchased.

During 2021, the Company repurchased 661,265 shares under the 2019 Program.

There are 1,990,224 additional shares authorized to be repurchased under the 2019 Program as of January 29, 2022.

Subsequent to year-end, the Board of Directors authorized an additional 7,000,000 shares under the Company’s stock repurchase programs.

With this increase, the Company has 8,990,224 shares authorized to be repurchased under the repurchase programs.

Repurchases Related to Employee Share-based Awards

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(Loss) Income

Balance January 28, 2018

Other comprehensive loss before reclassifications

Reclassifications:

Amounts reclassified from accumulated other comprehensive loss

Net reclassifications

Other comprehensive loss

Balance February 2, 2019

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Balance January 30, 2021

Other comprehensive loss before reclassifications

Reclassifications:

Amounts reclassified from accumulated other comprehensive loss

Net reclassifications

Other comprehensive (loss) income

Balance January 29, 2022

(1) Amounts reclassified are included in other income, net.

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(2) Amounts reclassified are included in net sales, costs of goods sold and selling and administrative expenses.

Refer to Note 14 and Note 15 to the consolidated financial statements for additional information related to derivative financial instruments .

Refer to Note 1 to the consolidated financial statements for additional information related to derivative financial instruments .

SHARE-BASED COMPENSATION

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The Company issued 330,206 , 471,569 and 214,435 shares of common stock in 2021, 2020 and 2019, respectively, for restricted stock grants, stock performance awards issued to employees, stock options exercised and common and restricted stock grants issued to non-employee directors, net of forfeitures and shares withheld to satisfy the tax withholding requirement.

The Company recognized an excess tax provision of $ 1.1 million and $ 0.1 million in 2020 and 2019, respectively, related to restricted stock vestings and dividends, performance share award vestings and stock options exercised.

Excess tax benefits of $ 0.3 million were recognized in 2018.

The excess tax provision or benefit for the respective periods were recorded in income tax benefit (provision).

The Company recognized an excess tax provision of $ 0.1 in both 2021 and 2019 and $ 1.1 million in 2020 related to restricted stock vestings and dividends, performance share award vestings and stock options exercised.

The excess tax provision for the respective periods were recorded in income tax (provision) benefit.

Restricted Stock

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Nonvested at February 1, 2020

Nonvested at January 30, 2021

Of the 707,931 restricted shares granted during 2020, 12,748 shares have a cliff-vesting term of one year and 695,183 shares have a graded-vesting term of three years , with 50 % vesting after two years and 50 % after three years .

Of the 463,234 restricted shares granted during 2019, 12,914 shares had a cliff-vesting term of one year and 450,320 shares have a graded-vesting term of three years , with 50 % vesting after two years and 50 % after three years .

Of the 427,083 restricted shares granted during 2018, 3,642 shares had a cliff-vesting term of one year , 413,941 shares have a graded-vesting term of three years , with 50 % vesting after two years and 50 % after three years , and 9,500 shares have a cliff-vesting term of four years .

The total grant date fair value of restricted stock awards vested during the years ended January 30, 2021, February 1, 2020 and February 2, 2019, was $ 4.4 million, $ 6.7 million and $ 8.2 million, respectively.

Nonvested at January 29, 2022

Of the 616,442 restricted shares granted during 2021, 4,910 shares have a cliff-vesting term of one year , 20,000 shares have a cliff-vesting term of two years and 591,532 shares have a graded-vesting term of three years .

Of the 707,931 restricted shares granted during 2020, 12,748 shares have a cliff-vesting term of one year and 695,183 shares have a graded-vesting term of three years .

Of the 463,234 restricted shares granted during 2019, 12,914 shares had a cliff-vesting term of one year and 450,320 shares have a graded-vesting term of three years .

The shares that have a graded-vesting term of three years vest 50 % after two years and 50 % after three years .

The total grant date fair value of restricted stock awards vested during the years ended January 29, 2022, January 30, 2021 and February 1, 2020, was $ 14.3 million, $ 4.4 million and $ 6.7 million, respectively.

As of January 29, 2022, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $ 9.2 million, which will be amortized over the weighted-average remaining requisite service period of 1.6 years.

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Under the plan, employees are granted performance share awards at a target number of shares or units, which generally vest over a three-year service period.

Vesting of the performance share award granted in 2020 is dependent upon the attainment of certain financial goals during the second half of 2020.

At the end of the vesting period, the employee will have earned an amount of shares between 0 % and 200 % of the targeted award, depending on the attainment of certain financial goals during the service period.

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Nonvested at February 1, 2020

Nonvested at January 30, 2021

As of January 30, 2021, the remaining unrecognized compensation cost related to nonvested performance share awards was $ 1.0 million, which will be recognized over the remaining service period of two years .

Nonvested at January 29, 2022

As of January 29, 2022, the remaining unrecognized compensation cost related to nonvested performance share awards was $ 2.7 million, which will be recognized over the remaining service period of one year .

During 2021, the Company granted long-term incentive awards payable in cash for the 2021-2023 performance period, with a target value of $ 7.3 million and a maximum value of $ 14.6 million.

These awards, which vest after a three-year period, are dependent upon the attainment of certain financial goals of the Company for each of the three years and individual achievement of strategic initiatives over the cumulative period of the award.

The estimated value of the award, which is reflected within other liabilities on the consolidated balance sheets, is being accrued over the three-year performance period.

There were no long-term cash incentive awards granted by the Company during 2020 or 2019.

Stock Options

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Exercise Price

Outstanding at February 1, 2020

Outstanding at January 30, 2021

Canceled or expired

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Equity-based grants may be made to non-employee directors in the form of restricted stock units (“RSUs”) payable in cash or common stock at no cost to the non-employee director.

The RSUs are subject to a vesting requirement (usually one year ), earn dividend equivalent units and are payable in cash or common stock on the date the director terminates service or such earlier date as a director may elect, subject to restrictions, based on the then current fair value of the Company’s common stock.

The RSUs are subject to a vesting requirement (usually one

year ), earn dividend equivalent units and are payable in cash or common stock on the date the director terminates service or such earlier date as a director may elect, subject to restrictions, based on the then current fair value of the Company’s common stock.

Dividend equivalents are paid on outstanding RSUs at the same rate as dividends on the Company’s common stock, are automatically re-invested in additional RSUs and vest immediately as of the payment date for the dividend.

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Expense for the dividend equivalents is recognized at fair value immediately.

Gains and losses resulting from changes in the fair value of the RSUs

payable in cash subsequent to the vesting period and through the settlement date are recognized in the Company’s consolidated statements of earnings (loss).

Gains and losses resulting from changes in the fair value of the RSUs payable in cash subsequent to the vesting period and through the settlement date are recognized in the Company’s consolidated statements of earnings (loss).

Refer to Note 5 and Note 13 to the consolidated financial statements for information regarding the deferred compensation plan for non-employee directors.

The following table summarizes restricted stock unit activity for the year ended January 29, 2022:

February 1, 2020

January 30, 2021

January 29, 2022

(1) Granted RSUs include 6,605 RSUs resulting from dividend equivalents paid on outstanding RSUs, of which 5,901 related to outstanding vested RSUs and 704 to outstanding nonvested RSUs.

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(1) Includes dividend equivalents granted on outstanding RSUs, which vest immediately.

The following table details the RSU compensation expense and the related income tax provision (benefit) for 2020, 2019 and 2018:

The following table details the RSU compensation expense and the related income tax (benefit) provision for 2021, 2020 and 2019:

($ thousands)

Compensation (income) expense

Income tax provision (benefit)

Compensation (income) expense, net of tax

Compensation expense (income)

Income tax (benefit) provision

Compensation expense (income), net of tax

The aggregate fair value of RSUs outstanding and currently vested at January 29, 2022 is $ 13.2 million and $ 12.1 million, respectively.

The liabilities associated with the accrued RSUs totaled $ 1.7 million and $ 2.6 million as of January 30, 2021 and February 1, 2020, respectively.

The liabilities associated with the accrued RSUs totaled $ 2.6 million and $ 1.7 million as of January 29, 2022 and January 30, 2021, respectively.

COMMITMENTS AND CONTINGENCIES

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The Company continues to implement the expanded remedy workplan that was approved by the oversight authorities in 2015.

Based on the progress of the direct remedial action of on-site conditions, the Company has submitted a request to the oversight authorities for permission to convert the perimeter pump and treat active remediation system to a passive one.

During 2019, a final response was received from the oversight authorities, which is allowing the Company to move forward with implementation of the revised plan.

Based on the progress of the direct remedial action of on-site conditions, the Company submitted a request to the oversight authorities for permission to convert the perimeter pump and treat active remediation system to a passive one.

During 2019, a final response was received from the oversight authorities, which is allowing the Company to move forward with implementation of the revised plan on a portion of the treatment system.

The Company continues to pursue approval from the oversight authorities for the full conversion of the perimeter pump and treat active remediation system to a passive one.

The Company also continues to work with the oversight authorities on the off-site work plan.

The cumulative expenditures for both on-site and off-site remediation through January 29, 2022 were $ 32.4 million.

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Deferred tax asset valuation allowance

YEAR ENDED FEBRUARY 1, 2020

YEAR ENDED JANUARY 30, 2021

Deducted from assets or accounts:

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(B) Discounts and allowances granted to wholesale customers of the Brand Portfolio segment.

(D) Reductions to the valuation allowances for the net operating loss carryforwards for certain states based on the Company’s expectations for utilization of net operating loss carryforwards.

(E) Adjustment upon adoption of ASU 2016-13, as further discussed in Note 1 to the consolidated financial statements.

(F) Established through purchase accounting related to the Vionic acquisition .

(E) Adjustment upon adoption of ASU 2016-13.

Refer to additional detail in Note 2 to the consolidated financial statements.

ITEM 9 CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data