What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2023-03-28 compared with 2022-03-28 · 226 added, 313 removed, 1180 unchanged (31% of the section changed)

59 unchanged sentences

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.

In determining markdown reserves, the Company considers recent and forecasted sales prices, 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 and demand, considering the length of time the product is held in inventory and quantities of various product styles contained in inventory.

How We Addressed the Matter in Our Audit

1 unchanged sentence

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.

For example, we compared recent sales 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.

21 unchanged sentences

Borrowings under revolving credit agreement

Mandatory purchase obligation - Blowfish Malibu

Trade accounts payable

5 unchanged sentences

Noncurrent lease obligations

Long-term debt

Deferred income taxes

1 unchanged sentence

Total other liabilities

Preferred stock, $ 1.00 par value, 1,000,000 shares authorized;

no shares outstanding

Common stock, $ 0.01 par value, 100,000,000 shares authorized;

37,635,145 and 37,966,204 shares outstanding, net of 8,451,650 and 8,120,591 treasury shares in 2021 and 2020, respectively

Common stock, $ 0.01 par value, 35,715,752 and 37,635,145 shares outstanding in 2022 and 2021, respectively

Additional paid-in capital

19 unchanged sentences

Net earnings (loss)

Net earnings (loss) attributable to noncontrolling interests

Net (loss) earnings attributable to noncontrolling interests

Net earnings (loss) attributable to Caleres, Inc.

9 unchanged sentences

Derivative financial instruments

Other comprehensive income (loss), net of tax

Other comprehensive (loss) income, net of tax

Comprehensive income (loss)

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive (loss) income attributable to noncontrolling interests

Comprehensive income (loss) attributable to Caleres, Inc.

8 unchanged sentences

Amortization of debt issuance costs and debt discount

Fair value adjustments to Blowfish mandatory purchase obligation

Blowfish mandatory purchase obligation

Loss on early extinguishment of debt

Share-based compensation expense

2 unchanged sentences

Impairment of goodwill and intangible assets

Provision/adjustment for expected credit losses

Adjustment to expected credit losses

Deferred income taxes

Fair value adjustments to Blowfish mandatory purchase obligation

Blowfish mandatory purchase obligation

Loss on early extinguishment of debt

Changes in operating assets and liabilities:

6 unchanged sentences

Purchases of property and equipment

Disposals of property and equipment

Capitalized software

5 unchanged sentences

Dividends paid

Blowfish Malibu mandatory purchase obligation

Debt issuance costs

Acquisition of treasury stock

1 unchanged sentence

Contributions by noncontrolling interests, net

Blowfish Malibu mandatory purchase obligation

Debt issuance costs

Net cash used for financing activities

Effect of exchange rate changes on cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

9 unchanged sentences

BALANCE FEBRUARY 1, 2020

Net earnings (loss)

Net (loss) earnings

Foreign currency translation adjustment

1 unchanged sentence

Pension and other postretirement benefits adjustments, net of tax of $ 7,671

Comprehensive (loss) income

Contributions by noncontrolling interests

Comprehensive income (loss)

Contributions by noncontrolling interests, net

Dividends ($ 0.28 per share)

4 unchanged sentences

Share-based compensation expense

BALANCE FEBRUARY 1, 2020

Net (loss) earnings

BALANCE JANUARY 30, 2021

Foreign currency translation adjustment

Unrealized gain on derivative financial instruments, net of tax of $ 31

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

Comprehensive income (loss)

Contributions by noncontrolling interests, net

Comprehensive income

Dividends ($ 0.28 per share)

Acquisition of treasury stock

( 2,902,122 )

Issuance of common stock under share-based plans, net

Cumulative-effect adjustment from adoption of ASC 326

Share-based compensation expense

BALANCE JANUARY 29, 2022

Net earnings (loss)

Foreign currency translation adjustment

Pension and other postretirement benefits adjustments, net of tax of $ 6,145

Comprehensive income

Comprehensive (loss) income

Contributions by noncontrolling interests, net

Dividends ($ 0.28 per share)

Acquisition of treasury stock

( 2,622,845 )

Issuance of common stock under share-based plans, net

6 unchanged sentences

The Company’s shares are traded under the “CAL” symbol on the New York Stock Exchange.

The Company provides a broad offering of licensed, branded and private-label athletic, casual and dress footwear products to women, men and children.

The Company provides a broad offering of branded, licensed and private-label athletic, casual and dress footwear products to women, men and children.

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

3 unchanged sentences

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

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.

Although the third fiscal quarter has historically accounted for a substantial portion of the Company’s earnings for the year, the Company has experienced more equal distribution among the quarters in recent years.

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

4 unchanged sentences

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, to sell branded footwear in China, including Sam Edelman, Naturalizer and other brands.

In 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").

During 2020, CLT was funded with $ 3.0 million in capital contributions, including $ 1.5 million from the Company and $ 1.5 million from Brand Investment Holding.

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 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.

banner International Holdings Limited (“CBI”) to market Naturalizer footwear in China.

The Company was a 51 % owner of the joint venture (“B&H Footwear”), with CBI owning the other 49 %.

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

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.

In 2022, capital contributions of $ 6.3 million were made to CLT, including $ 3.1 million received from Brand Investment Holding.

In addition, during 2020, CLT was funded with $ 3.0 million in capital contributions, including approximately $ 1.5 million from the Company and $ 1.5 million from Brand Investment Holding.

As of January 28, 2023 and January 29, 2022, assets of CLT were $ 19.8 million and $ 13.8 million, respectively, and liabilities were $ 9.1 million and $ 5.4 million, respectively.

Net sales of CLT were $ 16.9 million and $ 17.5 million in 2022 and 2021, respectively.

Operating losses of CLT were $ 2.7 million for 2022, compared to operating earnings of $ 1.2 million in 2021.

Net sales and operating earnings were immaterial in 2020.

The Company consolidates CLT into its consolidated financial statements on a one-month lag.

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

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

Accounting Period

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

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.

Fiscal years 2022, 2021 and 2020, all of which included 52 weeks, ended on January 28, 2023, January 29, 2022 and January 30, 2021, respectively.

Use of Estimates

2 unchanged sentences

COVID-19 Pandemic

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

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;

reducing inventory purchases;

reducing marketing expenses;

and minimizing costs associated with the temporarily closed retail facilities.

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

During 2020, the United States and global economies were adversely impacted by COVID-19.

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

In response to the impact COVID-19 was having on the United States economy, 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.

During 2020, the Company deferred $ 9.4 million of employer social security payroll taxes, of which $ 5.0 million were payable by December 31, 2022 and presented in other accrued expenses on the consolidated balance sheet as of January 29, 2022.

The deferred payroll taxes were paid in December 2022 and therefore, there is no corresponding deferral on the consolidated balance sheet as of January 28, 2023.

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.

2 unchanged sentences

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

Cash equivalents also include amounts due from third-party financial institutions for credit and debit card transactions.

These receivables typically settle in five days or less.

The Company had an immaterial amount of restricted cash as of January 28, 2023 and January 29, 2022.

1 unchanged sentence

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.

The Company recognized adjustments to the provision for expected credit losses of $ 0.3 million and $ 2.2 million in 2022 and 2021, respectively, and a provision for expected credit losses of $ 10.6 million in 2020.

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.

1 unchanged sentence

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

The Company estimates the reserves needed for margin assistance by reviewing inventory levels on the retail floors, sell-through rates, historical dilution, current gross margin levels and other performance indicators of our major retail customers.

Product returns and customer deductions are estimated using historical experience and anticipated future trends.

Co-op advertising allowances are estimated based on customer agreements.

The Company recognized a provision for customer allowances of $ 26.1 million in 2020, $ 20.4 million in 2020 and $ 62.7 million in 2019.

The Company recognized provisions for customer allowances of $ 27.6 million, $ 26.1 million and $ 20.4 million in 2022, 2021 and 2020, respectively.

Customer discounts represent reserves against the Company’s accounts receivable for discounts that wholesale customers may take based on meeting certain order, payment or return guidelines.

The Company estimates the reserves needed for customer discounts based upon customer net sales and respective agreement terms.

The Company estimates the reserves needed for customer discounts based upon customer net sales and terms of the respective agreements.

The Company recognized a provision for customer discounts of $ 11.4 million in 2022, $ 7.5 million in 2021 and $ 11.7 million in 2020.

4 unchanged sentences

If the first-in, first-out (“FIFO”) method had been used, consolidated inventories would have been $ 6.3 million and $ 1.3 million higher at January 28, 2023 and January 29, 2022, 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.

In 2022, the Company recorded a LIFO provision of $ 4.7 million on certain inventories at the Famous Footwear segment as a result of product cost inflation.

I n 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.

21 unchanged sentences

Other assets on the consolidated balance sheets include $ 16.0 million and $ 14.1 million of computer software costs as of January 28, 2023 and January 29, 2022, respectively, which are net of accumulated amortization of $ 88.5 million and $ 130.3 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.

In addition, other assets on the consolidated balance sheets include $ 5.6 million and $ 7.7 million of implementation costs for software as a service as of January 28, 2023 and January 29, 2022, respectively, which are net of accumulated amortization of $ 4.7 million and $ 2.7 million as of the end of the respective periods.

Property and Equipment

2 unchanged sentences

Interest Expense

Capitalized Interest

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 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 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.

Interest expense generally includes interest for borrowings under the Company’s revolving credit agreement, fees paid for the unused portion of the line of credit, and amortization of the deferred debt issuance costs.

Interest expense for 2021 and 2020 also included interest for the Company’s long-term debt and related amortization of deferred debt issuance costs and debt discount, 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.

Goodwill and Intangible Assets

5 unchanged sentences

This test requires significant assumptions, estimates and judgments by management, and is subject to inherent uncertainties and subjectivity.

The fair value of the reporting unit is determined using both a market approach and discounted cash flow analysis.

The market approach method includes the use of multiples of comparable publicly-traded companies.

The discounted cash flow approach estimates the fair value of the reporting unit using projected cash flows of the reporting unit and a risk-adjusted discount rate to compute a net present value of future cash flows.

Projected net sales, gross profit, selling and administrative expense, capital expenditures and working capital requirements are based on the Company’s internal projections.

Discount rates reflect market-based estimates of the risks associated with the projected cash flows of the reporting units directly resulting from the use of its assets in its operations.

Assumptions that market participants may use are also considered.

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.

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.

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

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 as of May 2, 2020.

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.

In addition to the interim assessment, an impairment review of the goodwill associated with the Blowfish Malibu reporting unit was performed as of the first day of the fourth fiscal quarter, which indicated no impairment.

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.

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.

The Company performs its goodwill impairment assessment and 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 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.

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.

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.

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

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

Self-Insurance Reserves

16 unchanged sentences

The Company’s gift cards do not have expiration dates or inactivity fees.

The Company recognizes revenue from gift cards when (i) the gift card is redeemed by the consumer or (ii) the likelihood of the gift card being redeemed by the consumer is remote (“gift card breakage”) and the Company determines that it does not have a legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions.

The Company recognizes revenue from gift cards when (i) the gift card is redeemed by the consumer or (ii) the likelihood of the gift card being redeemed by the consumer

is remote (“gift card breakage”) and the Company determines that it does not have a legal obligation to remit the value of unredeemed gift cards to the relevant jurisdictions.

The gift card breakage rate is determined based upon historical redemption patterns.

5 unchanged sentences

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.

20 unchanged sentences

The Company establishes valuation allowances if it believes that it is more-likely-than-not that some or all of its deferred tax assets will not be realized.

The Company does not recognize a tax benefit unless it concludes that it is more-likely-than-not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position.

The Company does not recognize a tax benefit unless it concludes that it is more-likely-

than-not that the benefit will be sustained on audit by the taxing authority based solely on the technical merits of the associated tax position.

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.

4 unchanged sentences

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

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.

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.

1 unchanged sentence

Variable lease payments are expensed as incurred.

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.

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, treated those lease concessions as variable rent.

Contingent Rentals

23 unchanged sentences

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.

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.

2 unchanged sentences

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.

Comprehensive income (loss) primarily includes the effect of foreign currency translation adjustments and pension and other postretirement benefits adjustments.

Foreign Currency Translation Adjustment

11 unchanged sentences

Refer to additional information related to pension and other postretirement benefits in Note 5 and Note 14 to the consolidated financial statements.

Derivative Financial Instruments

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.

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

33 unchanged sentences

Refer to Note 11 to the consolidated financial statements for further discussion regarding the Company’s financing arrangements.

Impact of Recently Adopted Accounting Pronouncements

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.

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.

33-10890, Management’s Discussion and Analysis, Selected Financial Data and Supplementary Financial Information .

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

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

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.

In September 2022, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2022-04, Liabilities – Supplier Finance Programs (Topic 405-50):

Disclosure of Supplier Finance Program Obligations .

The guidance requires qualitative and quantitative disclosures about supplier finance programs in annual financial statements, including key terms of the programs, amounts outstanding, balance sheet presentation and a rollforward of amounts outstanding during the year.

For interim periods, the ASU requires disclosure of total obligations outstanding that have been confirmed as valid.

The ASU is effective for years beginning after December 15, 2022, except for the rollforward requirement, which is effective in fiscal year 2024.

Early adoption is permitted.

The amendments in the ASU will be applied retrospectively, except for the annual rollforward requirement, which will be applied prospectively.

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

Disaggregation of Revenues

5 unchanged sentences

Retail stores

Landed wholesale - e-commerce - drop ship (1)

E-commerce - Company websites (1)

E-commerce - wholesale drop-ship (1)

Total direct-to-consumer sales

First-cost wholesale - e-commerce (1)

Landed wholesale - e-commerce (1)

Landed wholesale - other

First-cost wholesale

Wholesale - e-commerce (1)

Wholesale - landed

Wholesale - first cost

Licensing and royalty

Total net sales

Eliminations and

3 unchanged sentences

Retail stores

Landed wholesale - e-commerce - drop ship (1)

E-commerce - Company websites (1)

E-commerce - wholesale drop-ship (1)

Total direct-to-consumer sales

First-cost wholesale - e-commerce (1)

Landed wholesale - e-commerce (1)

Landed wholesale - other

First-cost wholesale

Wholesale - e-commerce (1)

Wholesale - landed

Wholesale - first cost

Licensing and royalty

4 unchanged sentences

Retail stores

Landed wholesale - e-commerce - drop ship (1)

E-commerce - Company websites (1)

E-commerce - wholesale drop-ship (1)

Total direct-to-consumer sales

First-cost wholesale - e-commerce (1)

Landed wholesale - e-commerce (1)

Landed wholesale - other

First-cost wholesale

Wholesale - e-commerce (1)

Wholesale - landed

Wholesale - first cost

Licensing and royalty

10 unchanged sentences

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.

sales from the Company’s wholesale customers’ websites that are fulfilled on a drop-ship basis (“e-commerce - wholesale drop-ship”);

and other e-commerce sales (wholesale - e-commerce”), collectively referred to as “e-commerce”.

The Company transfers control and recognizes revenue for merchandise sold that is shipped directly to an individual consumer upon delivery to the consumer.

Landed wholesale

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

Landed sales are wholesale sales in which the Company obtains title to the footwear from the overseas suppliers and maintains title until the merchandise clears United States customs.

The merchandise is shipped directly to the customer from the Company’s warehouses.

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.

Landed sales generally carry a higher profit rate than first-cost wholesale sales as a result of the brand equity associated with the product along with the additional customs, warehousing and logistics services provided to customers and the risks associated with inventory ownership.

First-cost wholesale

First-cost sales are wholesale sales in which the Company purchases merchandise from an international factory that manufactures the product and subsequently sells to a customer at an overseas port.

Many of the customers then import this product into the United States.

Revenue is recognized at the time the merchandise is delivered to the customer’s designated freight forwarder and control is transferred to the customer.

The Company also generates revenue from sales on websites maintained by the Company that are shipped from the Company’s distribution centers or retail stores directly to the consumer, picked up directly by the consumer from the Company’s stores and e-commerce sales from the Company’s wholesale customers’ websites that are fulfilled on a drop-ship or first cost basis (collectively referred to as "e-commerce").

The Company transfers control and recognizes revenue for merchandise sold that is shipped directly to an individual consumer upon delivery to the consumer.

Licensing and royalty

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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 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.

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Revenue is recorded at the transaction price, net of estimates for variable consideration for which reserves are established, including returns, allowances and discounts.

Variable consideration is estimated using the expected value method and given the large number of contracts with similar characteristics, the portfolio approach is applied to determine the variable consideration for each revenue stream.

Variable consideration is estimated using the expected value method and given the large number of contracts with similar characteristics, the portfolio approach is applied to determine the variable

consideration for each revenue stream.

Reserves for projected returns are based on historical patterns and current expectations.

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Balance, beginning of period

Adjustment upon adoption of ASU 2016-13

Provision/adjustment for expected credit losses (1)

Adjustment for expected credit losses

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

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Net earnings (loss)

Net (earnings) loss attributable to noncontrolling interests

Net loss (earnings) attributable to noncontrolling interests

Net earnings (loss) attributable to Caleres, Inc.

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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.

There were no outstanding options to purchase shares of common stock in 2022.

Options to purchase 16,667 shares of common stock in 2021 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.

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shareholders.

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 .

The Company repurchased 2,622,845 , 661,265 and 2,902,122 shares at a cost of $ 63.2 million, $ 17.0 million and $ 23.3 million during the years ended January 28, 2023, January 29, 2022, and January 30, 2021, respectively, under the 2019 and 2022 publicly announced share repurchase programs.

The 2019 repurchase program permits repurchases of up to 5.0 million shares and the 2022 repurchase program permits the repurchase of up to 7.0 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

Organizational Change

During 2022, the Company incurred costs of $ 2.9 million ($ 2.7 million on an after-tax basis, or $ 0.07 per diluted share) related to a CFO transition at the corporate headquarters.

These costs were recognized as restructuring and other special charges in the consolidated statement of earnings (loss) within the Eliminations and Other category.

There were no corresponding charges in 2021 or 2020.

Blowfish Mandatory Purchase Obligation

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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.

Approximately $ 9.0 million was initially assigned to the mandatory purchase obligation and fair value 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 and $ 23.9 million ($ 17.8 million on an after-tax basis, or $ 0.48 per diluted share) in 2020.

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.

There were no corresponding charges during 2022.

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 costs primarily represented lease termination and other stores closure costs, including employee severance, for the 73 stores that were closed during the first quarter of 2022.

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.

As of January 29, 2022, reserves of $ 0.4 million were included in other accrued expenses on the consolidated balance sheets related to the strategic realignment of the Naturalizer retail store operations, with no reserves as of January 28, 2023.

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.

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.

COVID-19-Related Impairments and Expenses

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There were no corresponding charges in 2022 or 2021.

Vionic Acquisition and Integration-Related Costs

Vionic Integration-Related Costs

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.

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

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.

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, 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.

There were no corresponding charges during 2022 or 2021.

RETIREMENT AND OTHER BENEFIT PLANS

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Plan participants’ contribution

Plan amendments

Actuarial (gain) loss

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Rate of compensation increase

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-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.

During the fourth quarter of 2019, in conjunction with the Company’s expense containment initiatives, a Voluntary Early Retirement Program ("VERP") was offered to pension participants who met certain criteria.

A lump sum option was also offered to certain former employees during the fourth quarter of 2019.

The VERP and terminated vested lump sums resulted in $ 19.9 million of lump sum payments, and a settlement charge and curtailment that decreased the net periodic benefit income for 2019 by $ 2.7 million.

As of January 28, 2023 and January 29, 2022, the Company used the PRI-2012 Bottom Quartile mortality table, projected using generational scale MP-2021, a 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-2020 scale used in 2020 increased the projected benefit obligation by approximately $ 1.1 million as of January 29, 2022.

Pension assets are managed in accordance with the prudent investor standards of the Employee Retirement Income Security Act (“ERISA”).

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Corporate stocks – common did not include any Company stock at January 28, 2023 or January 29, 2022.

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.

Assets of the Canadian pension plans, which total approximately $ 4.5 million on January 28, 2023, 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 28, 2023 or January 29, 2022.

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● Investments in U.S.

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.

government securities, the mutual fund, exchange-traded funds, corporate stocks - common 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 and corporate stocks – common were offered in a private placement.

The preferred securities 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.

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● The unallocated insurance contract is measured at net asset value per share, and therefore, is not classified within the fair value hierarchy.

The fair values of the Company’s pension plan assets at January 29, 2022 by asset category are as follows:

The fair values of the Company’s pension plan assets at January 28, 2023 by asset category were as follows:

Fair Value Measurements at January 28, 2023

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Total investments at fair value

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

The fair values of the Company’s pension plan assets at January 29, 2022 by asset category were as follows:

Fair Value Measurements at January 29, 2022

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Settlement cost

Cost of contractual termination benefits

Total net periodic benefit income

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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.

The Company makes contributions for all eligible employees, ranging from 3 % to 5 % of the employee’s salary.

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

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

The Company’s expense for the profit-sharing contribution was $ 2.6 million for 2022 and $ 3.3 million for 2021.

Deferred Compensation Plan

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The liabilities of the Deferred Compensation Plan of $ 7.9 million and $ 7.5 million as of January 28, 2023 and January 29, 2022, 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).

The assets held by the trust of $ 7.9 million and $ 7.5 million as of January 28, 2023 and January 29, 2022, 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

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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 $ 1.8 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.

The liabilities of the plan of $ 1.8 million as of both January 28, 2023 and January 29, 2022 are based on 60,067 and 64,227 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).

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Share-based compensation

Non-deductibility of goodwill impairment

Impairment of international trade name taxed at higher rate

Provision for valuation allowance, net of utilization

CARES Act NOL, net carryback benefit (1)

Non-deductibility of 162(m) limitations

GILTI, BEAT and FDII provisions

Non-deductibility of goodwill impairment

Impairment of international trade name taxed at higher rate

CARES Act NOL, net carryback benefit (1)

International entity restructuring (2)

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As of January 28, 2023, the Company is in a three-year cumulative loss position for federal, state and certain international tax jurisdictions.

Accordingly, as of January 29, 2022, the Company increased its valuation allowances on deferred tax assets to $ 59.0 million, reflecting the uncertainty regarding the utilization of its deferred tax assets.

The Company experienced significant losses before income taxes in 2020, which were driven by the impairment of goodwill and intangible assets during the pandemic.

During 2021, the Company also experienced operating losses at its Canadian business division, which were driven by exit-related costs associated with the Naturalizer retail stores in the first quarter of 2021.

As a result of the strong earnings before income taxes in both 2021 and 2022, the Company’s net deferred tax asset position declined.

As a result, in the fourth quarter of 2022, the Company released approximately $ 17.4 million of its valuation allowances on deferred tax assets, reducing the valuation allowance to $ 39.5 million as of January 28, 2023.

As of January 28, 2023, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s international subsidiaries that are not subject to United States income tax, beyond the amounts recorded for the one-time transition tax for the mandatory deemed repatriation of cumulative international earnings, as required by the Tax Cuts and Jobs Act.

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

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.

As of January 28, 2023, the Company had no unrecognized tax benefits.

As of January 29, 2022 and January 30, 2021, the Company had unrecognized tax benefits of $ 1.0 million and $ 1.5 million, respectively, associated with international jurisdictions.

For federal purposes, the Company’s tax filings for fiscal years 2019 to 2021 remain open to examination but are not currently being examined.

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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, 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.

This segment sources, manufactures and markets branded, licensed 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 63 branded retail stores in the United States and 29 branded retail stores in China at the end of 2022.

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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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Total long-lived assets

(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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Furniture and fixtures

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.

After allowing for an appropriate start-up period, property and equipment at stores and any 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 charges for impairment of $ 1.8 million, $ 4.1 million and $ 56.3 million in 2022, 2021 and 2020, respectively, primarily for operating lease right-of-use assets, leasehold improvements and furniture and fixtures in the Company’s retail stores and capitalized software.

All of the charges in 2022 and 2021 are presented in selling and administrative expenses.

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Refer to Note 4, Note 12 and Note 13 to the consolidated financial statements for further discussion of these impairment charges.

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 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.

During 2021, the Company began actively marketing for sale its nine -acre corporate headquarters campus (the “Campus”) located in Clayton, Missouri.

In January 2023, the Company entered into a letter of intent to sell the Campus.

Subsequent to fiscal year-end, in February 2023, the Company entered into an agreement to sell the Campus, subject to certain closing conditions.

The Company expects the Campus to qualify as a completed sale within the next year.

Accordingly, the Campus, primarily consisting of land and buildings, has been classified as property and equipment, held for sale within the Eliminations and Other category on the consolidated balance sheet as of January 28, 2023.

The Company evaluated the Campus asset group for impairment and determined that no indicators were present as of January 28, 2023.

As of January 29, 2022, the Company was in negotiations to sell the campus and expected only a portion of the campus to qualify as a completed sale within twelve months.

That portion of the campus, which was included in the Eliminations and Other category, was classified within property and equipment, held for sale on the consolidated balance sheet as of January 29, 2022.

GOODWILL AND INTANGIBLE ASSETS

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Amortization expense related to intangible assets was $ 12.1 million in 2022, $ 12.6 million in 2021 and $ 13.0 million in 2020.

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 .

The Company estimates $ 11.9 million of amortization expense related to intangible assets in 2023, $11.0 million in 2024, 2025 and 2026 , and $10.9 million in 2027.

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.

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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

FINANCING ARRANGEMENTS

Credit Agreement

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.

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 Company is the lead borrower, and certain wholly-owned subsidiaries, including Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds LLC, Vionic Group LLC and Vionic International LLC, are co-borrowers and guarantors.

On April 8, 2022, Blowfish, LLC was joined to the revolving credit facility as a co-borrower and guarantor.

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, 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, and may be 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.

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

There is an unused line fee payable on the unused portion under the facility and a letter of credit fee payable on the outstanding face amount under letters of credit.

There is a fee payable on the unused portion under the facility and a letter of credit fee payable on the outstanding face amount under letters of credit.

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.

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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.

If an event of default occurs, the collateral agent may assume dominion and control over the Company’s cash (a “cash dominion event”) until such event of default is cured or waived or the excess availability exceeds such amount for 30 consecutive days, provided that a cash dominion event shall be deemed continuing (even if an event of default is no longer continuing and/or excess availability exceeds the required amount for 30 consecutive business days) after a cash dominion event has occurred and been discontinued on two occasions in any 12-month period.

If an event of default occurs, the collateral agent may assume dominion and control over the Company’s cash (a “cash dominion event”) until such event of default is cured or waived or the excess availability exceeds an amount as defined in the Credit Agreement for 30 consecutive days, provided that a cash dominion event shall be deemed continuing (even if an event of default is no longer continuing and/or excess availability exceeds the required amount for 30 consecutive business days) after a cash dominion event has occurred and been discontinued on two occasions in any 12-month period.

The Credit Agreement also contains certain other covenants and restrictions.

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The maximum amount of borrowings under the Credit Agreement at the end of any month was $ 380.5 million and $ 290.0 million in 2022 and 2021, respectively.

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.

As of January 28, 2023, the Company had $ 307.5 million of borrowings outstanding and $ 10.6 million in letters of credit outstanding under the Credit Agreement, with total additional borrowing availability of $ 181.9 million.

Average daily borrowings were $ 356.4 million and $ 172.8 million in 2022 and 2021, respectively, and the weighted-average interest rates approximated 3.6 % and 2.5 % for the respective periods.

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

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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 %.

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.

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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 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.

The Company did not elect the hindsight practical expedient to reevaluate the lease term of existing contracts.

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.

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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 market floor based on current market lease rates.

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 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.

The Company recorded asset impairment charges of $ 1.8 million during 2022, primarily related to capitalized software.

The Company recorded asset impairment charges of $ 4.1 million and $ 56.3 million during 2021 and 2020, respectively, primarily related to operating lease right-of-use assets and property and equipment associated with underperforming retail stores.

The impairment charges recorded in 2020 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.

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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).

Accordingly, in 2022, 2021 and 2020, the Company recorded $ 1.3 million, $ 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.

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During 2022, the Company entered into new or amended leases that resulted in the recognition of right-of-use assets and lease obligations of $ 162.2 million on the consolidated balance sheets.

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.

As of January 28, 2023, 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 four of the new retail locations will begin in the next fiscal year and two will begin in fiscal year 2024.

Upon commencement, right-of-use assets and lease liabilities of approximately $ 2.6 million and $ 1.8 million will be recorded on the consolidated balance sheets, in 2023 and 2024, respectively.

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Total lease expense (1)

(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:

(1) Net of lease concessions recognized of $ 1.3 million, $ 2.1 million and $ 5.4 million for 2022, 2021 and 2020, respectively.

The aggregate future annual lease payments at January 28, 2023 were as follows:

($ thousands)

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($ thousands)

Cash paid for lease liabilities (1)

Cash paid for lease obligations (1)

Cash received from sublease income

(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.

(1) Cash paid for lease obligations 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 obligations 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

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

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”).

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 Company measures fair value as an exit price, the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date, using the procedures described below for all financial and non-financial assets and liabilities measured at fair value.

Money Market Funds

The Company has cash equivalents primarily consisting of short-term money market funds backed by U.S.

Treasury securities.

The primary objective of these investing activities is to preserve the Company’s capital for the purpose of funding operations and it does not enter into money market funds for trading or speculative purposes.

The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1).

Deferred Compensation Plan Assets and Liabilities

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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.

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 4 in the consolidated financial statements.

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 $ 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 28, 2023 and January 29, 2022.

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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

Impairment Charges

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Long-lived assets held and used with a carrying amount of $ 562.2 million, $ 545.1 million and $ 615.7 million in 2022, 2021 and 2020, 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.

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, as well as capitalized software.

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

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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 2022 and 2021, the Company performed a qualitative assessment of goodwill as of the first day of the fourth fiscal quarter.

The reviews 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.

A quantitative assessment was performed for all reporting units as of May 2, 2020, which involved estimating the fair value of the reporting units using significant unobservable inputs (Level 3).

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.

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

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

The quantitative assessment performed as of the first day of the fourth fiscal quarter of 2020 resulted in no further impairment charges.

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

Fair Value of the Company’s Other Financial Instruments

The fair values of cash and cash equivalents (excluding money market funds discussed above), receivables and trade accounts payable approximate their carrying values due to the short-term nature of these instruments.

The carrying amounts and fair values of the Company’s other financial instruments subject to fair value disclosures are as follows:

The fair values of cash and cash equivalents, receivables and trade accounts payable approximate their carrying values due to the short-term nature of these instruments.

The fair values of the borrowings under revolving credit agreement of $ 307.5 million and $ 290.0 million as of January 28, 2023 and January 29, 2022, respectively, approximate their carrying value due to the short-term nature of the borrowings.

SHAREHOLDERS’ EQUITY

Company Stock

The Company’s common stock, which has a $ 0.01 par value per share, is listed for trading under the ticker symbol “CAL” on the New York Stock Exchange.

Holders of the common shares are entitled to one vote per share.

The Company is also authorized to issue preferred shares with a $ 1.00 par value per share.

The following table provides additional information regarding the Company’s common and preferred stock:

(in thousands)

January 28, 2023

January 29, 2022

($ thousands)

Borrowings under revolving credit agreement

Long-term debt

(1) Excludes unamortized debt issuance costs and debt discount

The fair value of the borrowings under revolving credit agreement approximates its carrying value due to its short-term nature (Level 1).

The fair value of the Company’s long-term debt was based upon quoted prices in an inactive market as of the end of the respective periods (Level 2).

SHAREHOLDERS’ EQUITY

Authorized shares

Outstanding shares

Treasury shares

Stock Repurchase Programs

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.

On September 2, 2019 and March 10, 2022, the Board of Directors approved stock repurchase programs (“2019 Program"

and "2022 Program", respectively) authorizing the repurchase of the Company’s outstanding common stock of up to 5.0 million shares in the 2019 Program and 7.0 million in the 2022 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.

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

During 2022, the Company repurchased 2,622,845 shares under the share repurchase programs.

In total, 5.0 million shares have been repurchased under the 2019 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 6,367,379 additional shares authorized to be repurchased under the 2022 Program as of January 28, 2023.

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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Balance February 1, 2020

Other comprehensive (loss) income before reclassifications

Reclassifications:

Amounts reclassified from accumulated other comprehensive loss

Net reclassifications

Other comprehensive (loss) income

Balance February 1, 2020

Other comprehensive income before reclassifications

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Balance January 29, 2022

Other comprehensive loss before reclassifications

Reclassifications:

Amounts reclassified from accumulated other comprehensive loss

Net reclassifications

Other comprehensive loss

Balance January 28, 2023

(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 1 to the consolidated financial statements for additional information related to derivative financial instruments .

SHARE-BASED COMPENSATION

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Total share-based compensation expense

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 $ 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.

The Company issued 703,452 , 330,206 and 471,569 shares of common stock in 2022, 2021 and 2020, respectively, for restricted stock grants, stock performance awards issued to employees, stock options exercised and common and restricted stock issued to non-employee directors, net of forfeitures and shares withheld to satisfy the tax withholding requirement.

The Company recognized an excess tax benefit of $ 0.6 million in 2022 and an excess tax provision of $ 0.1 million in 2021 and $ 1.1 million in 2020, respectively, related to restricted stock vestings and dividends, performance share award vestings and stock options exercised.

The excess tax benefit or 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

Nonvested at January 29, 2022

Nonvested at January 28, 2023

Of the 848,678 restricted shares granted during 2022, 10,470 shares have a cliff-vesting term of one year , 63,614 shares have a graded-vesting term of two years , and 774,594 shares have a graded-vesting term of three years .

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.

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

The shares that have a graded-vesting term of two years vest 50 % after one year and 50 % after two years and 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 28, 2023, January 29, 2022 and January 30, 2021, was $ 6.8 million, $ 14.3 million and $ 4.4 million, respectively.

As of January 28, 2023, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $ 15.0 million, which will be amortized over the weighted-average remaining requisite service period of 1.7 years.

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If the awards are granted in units, the employee will be given an amount of cash ranging from 0 % to 200 % of the equivalent market value of the targeted award.

Expense for performance share awards is recognized based upon the fair value of the awards on the date of grant and the anticipated number of shares or cash to be awarded on a straight-line basis for each vesting portion of the share award.

In connection with the Company’s CFO transition during 2022, the Company approved the accelerated vesting of 30,000 performance-based share awards, representing the maximum payout of two of the four award tranches from the 2020 performance award.

The performance conditions had been satisfied for the two award tranches based on the achievement of financial goals for the 2020 and 2021 fiscal periods.

The modification to accelerate vesting eliminated the remaining service requirement.

These awards had a weighted-average grant date fair value of $ 13.05 per share, but were revalued using a fair value on the date of modification of $ 24.31 per share.

The modification of these awards resulted in incremental compensation expense of $ 0.4 million, which is presented in restructuring and other special charges on the consolidated statements of earnings for 2022.

The following table summarizes performance share award activity for 2022, 2021 and 2020:

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Nonvested at February 1, 2020

Nonvested at January 30, 2021

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 .

Nonvested at January 28, 2023

As of January 28, 2023, the remaining unrecognized compensation cost related to nonvested performance share awards was $ 0.4 million, which will be recognized over the remaining service period of one month .

During 2022, the Company granted long-term incentive awards payable in cash for the 2022-2024 performance period, with a target value of $ 8.3 million and a maximum value of $ 16.6 million.

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.

There were no long-term cash incentive awards granted by the Company during 2020.

Stock Options

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The Company granted no stock options during 2022, 2021 and 2020.

The following table summarizes stock option activity for 2021:

Exercise Price

Outstanding at January 30, 2021

Canceled or expired

Outstanding at January 29, 2022

Exercisable at January 29, 2022

As of January 29, 2022, there are no nonvested options.

The remaining 16,667 options outstanding at January 29, 2022 were canceled during 2022 and therefore, there are no options outstanding or exercisable as of January 28, 2023.

Restricted Stock Units for Non-Employee Directors

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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In 2016, the Company submitted a revised plan to address on-site conditions, including direct treatment of source areas, and received approval from the oversight authorities to begin implementing the revised plan.

As the treatment of the on-site source areas progresses, the Company expects to convert the pump and treat system to a passive treatment barrier system.

The Company has received permission from the oversight authorities to convert the pump and treat system to a passive treatment barrier system and will begin implementing that conversion in 2023.

Off-site groundwater concentrations have been reducing over time since installation of the pump and treat system in 2000 and injection of clean water beginning in 2003.

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The results of groundwater monitoring are being used to evaluate the effectiveness of these activities.

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 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 Company continues to implement the expanded remedy workplan that was approved by the oversight authorities in 2015 and 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 28, 2023 were $ 33.1 million.

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Deducted from assets or accounts:

Doubtful accounts and allowances

Allowance for expected credit losses

Customer allowances

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Deducted from assets or accounts:

Doubtful accounts and allowances

Allowance for expected credit losses

Customer allowances

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Deferred tax asset valuation allowance

YEAR ENDED FEBRUARY 1, 2020

YEAR ENDED JANUARY 30, 2021

Deducted from assets or accounts:

Doubtful accounts and allowances

Allowance for expected credit losses

Customer allowances

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(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.

Refer to additional detail in Note 2 to the consolidated financial statements.

(E) Adjustment upon adoption of ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) .

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