What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2024-04-02 compared with 2023-03-28 · 327 added, 365 removed, 1041 unchanged (40% of the section changed)

3 unchanged sentences

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework).

Based on our evaluation, our principal executive officer and principal financial officer have concluded that the Company’s internal control over financial reporting was effective as of January 28, 2023.

The effectiveness of our internal control over financial reporting as of January 28, 2023 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which is included herein.

The effectiveness of our internal control over financial reporting as of February 3, 2024 has been audited by Ernst & Young LLP, an independent registered public accounting firm, as stated in its report, which is included herein.

Report of Independent Registered Public Accounting Firm

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

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

Opinion on Internal Control Over Financial Reporting

We have audited Caleres, Inc.’s internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) (the COSO criteria).

We have audited Caleres, Inc.’s internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, Caleres, Inc.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of January 28, 2023, based on the COSO criteria.

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

as of January 28, 2023 and January 29, 2022, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended January 28, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a), and our report dated March 28, 2023 expressed an unqualified opinion thereon.

(the Company) maintained, in all material respects, effective internal control over financial reporting as of February 3, 2024, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of February 3, 2024 and January 28, 2023, the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended February 3, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a), and our report dated April 2, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Louis, Missouri

March 28, 2023

April 2, 2024

Report of Independent Registered Public Accounting Firm

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

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

Opinion on the Financial Statements

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

(the Company) as of January 28, 2023 and January 29, 2022, the related consolidated statements of earnings (loss), comprehensive income (loss), shareholders’ equity and cash flows for each of the three years in the period ended January 28, 2023, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at January 28, 2023 and January 29, 2022, and the results of its operations and its cash flows for each of the three years in the period ended January 28, 2023, in conformity with U.S.

(the Company) as of February 3, 2024 and January 28, 2023, the related consolidated statements of earnings, comprehensive income, shareholders’ equity and cash flows for each of the three years in the period ended February 3, 2024, and the related notes and financial statement schedule listed in the Index at Item 15(a) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024, in conformity with U.S.

generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of January 28, 2023, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework) and our report dated March 28, 2023 expressed an unqualified opinion thereon.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 3, 2024, based on criteria established in Internal Control – Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated April 2, 2024 expressed an unqualified opinion thereon.

Basis for Opinion

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Critical Audit Matter

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

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

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

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

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

Inventory Markdown Reserve

Inventory Markdown Reserves

Description of the Matter

As described in Note 1 and Note 8, the Company had inventories of $580.2 million as of January 28, 2023 which included finished goods of $558.5 million, net of related reserves of $43.9 million.

As described in Note 1 and Note 8, the Company had inventories of $540.7 million as of February 3, 2024 which included finished goods of $525.8 million, net of related markdown reserves of $20.9 million.

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

10 unchanged sentences

Louis, Missouri

March 28, 2023

April 2, 2024

Consolidated Balance Sheets

($ thousands)

January 28, 2023

February 3, 2024

January 28, 2023

9 unchanged sentences

Property and equipment, net

Deferred income taxes

Goodwill and intangible assets, net

21 unchanged sentences

See notes to consolidated financial statements.

Consolidated Statements of Earnings (Loss)

Consolidated Statements of Earnings

($ thousands, except per share amounts)

1 unchanged sentence

Selling and administrative expenses

Impairment of goodwill and intangible assets

Restructuring and other special charges, net

Operating earnings (loss)

Operating earnings

Interest expense, net

1 unchanged sentence

Other income, net

Earnings (loss) before income taxes

Income tax (provision) benefit

Net earnings (loss)

Net (loss) earnings attributable to noncontrolling interests

Net earnings (loss) attributable to Caleres, Inc.

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

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

Earnings before income taxes

Income tax provision

Net earnings (loss) attributable to noncontrolling interests

Net earnings attributable to Caleres, Inc.

Basic earnings per common share attributable to Caleres, Inc.

Diluted earnings per common share attributable to Caleres, Inc.

See notes to consolidated financial statements.

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

($ thousands)

Net earnings (loss)

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

Foreign currency translation adjustment

Pension and other postretirement benefits adjustments

Derivative financial instruments

Other comprehensive (loss) income, net of tax

Comprehensive income (loss)

Comprehensive (loss) income attributable to noncontrolling interests

Comprehensive income (loss) attributable to Caleres, Inc.

Comprehensive income

Comprehensive income (loss) attributable to noncontrolling interests

Comprehensive income attributable to Caleres, Inc.

See notes to consolidated financial statements.

2 unchanged sentences

Operating Activities

Net earnings (loss)

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

Adjustments to reconcile net earnings to net cash provided by operating activities:

Amortization of capitalized software

4 unchanged sentences

Impairment charges for property, equipment, and lease right-of-use assets

Impairment of goodwill and intangible assets

Adjustment to expected credit losses

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Issuance of common stock under share-based plans, net

Contributions by noncontrolling interests, net

Contributions by noncontrolling interests

Blowfish Malibu mandatory purchase obligation

2 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Increase (decrease) in cash and cash equivalents

(Decrease) increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

8 unchanged sentences

Paid-In Capital

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

1 unchanged sentence

BALANCE JANUARY 28, 2023

Net earnings (loss)

Foreign currency translation adjustment

4 unchanged sentences

Acquisition of treasury stock

( 2,622,845 )

Issuance of common stock under share-based plans, net

Share-based compensation expense

BALANCE JANUARY 28, 2023

BALANCE FEBRUARY 3, 2024

See notes to consolidated financial statements.

5 unchanged sentences

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

The Company currently operates 965 retail shoe stores in the United States, Canada, China and Guam under the Famous Footwear, Sam Edelman, Naturalizer and Allen Edmonds names.

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

The Company currently operates 958 retail shoe stores in the United States, Canada, East Asia and Guam under the Famous Footwear, Sam Edelman, Naturalizer and Allen Edmonds names.

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

1 unchanged sentence

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.

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

Consolidation

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

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").

In 2023, capital contributions of $ 2.0 million were made to CLT, including $ 1.0 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.

As of February 3, 2024 and January 28, 2023, assets of CLT were $ 23.2 million and $ 19.8 million, respectively, and liabilities were $ 9.3 million and $ 9.1 million, respectively.

Net sales of CLT were $ 26.8 million and $ 16.9 million in 2023 and 2022, 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.

Operating earnings of CLT were $ 0.5 million for 2023, compared to an operating loss of $ 2.7 million in 2022.

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

3 unchanged sentences

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

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.

Fiscal year 2023 includes a 53-week period ending February 3, 2024.

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

Use of Estimates

1 unchanged sentence

Actual results could differ from those estimates.

COVID-19 Pandemic

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.

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.

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

Cash and Cash Equivalents

2 unchanged sentences

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.

Amounts due from the financial institutions for these transactions totaled $ 9.3 million and $ 8.6 million as of February 3, 2024 and January 28, 2023, respectively.

The Company had an immaterial amount of restricted cash as of February 3, 2024 and January 28, 2023.

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

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

The Company recognized 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.

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

The Company recognized a provision for expected credit losses of $ 1.0 million in 2023 and adjustments to the provision of $ 0.3 million and $ 2.2 million in 2022 and 2021, respectively.

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

5 unchanged sentences

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.

The Company recognized provisions for customer discounts of $ 9.9 million, $ 11.4 million and $ 7.5 million in 2023, 2022 and 2021, respectively.

The Company values inventories at the lower of cost or market for approximately 86 % of consolidated inventories, which represents divisions using the last-in, first-out (“LIFO”) method.

2 unchanged sentences

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

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.

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.

If the first-in, first-out (“FIFO”) method had been used, consolidated inventories would have been $ 10.3 million and $ 6.3 million higher at February 3, 2024 and January 28, 2023, respectively.

In 2023 and 2022, the Company recorded LIFO provisions of $ 4.9 million and $ 4.7 million, respectively, on certain inventories at the Famous Footwear segment as a result of product cost inflation.

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

11 unchanged sentences

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

Markdown reserves were $ 20.9 million and $ 43.9 million as of February 3, 2024 and January 28, 2023, respectively.

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

7 unchanged sentences

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

Other assets on the consolidated balance sheets include $ 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 $ 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.

Other assets on the consolidated balance sheets include $ 16.3 million and $ 16.0 million of computer software costs as of February 3, 2024 and January 28, 2023, respectively, which are net of accumulated amortization of $ 88.1 million and $ 88.5 million as of the end of the respective periods.

In addition, other assets on the consolidated balance sheets include $ 16.4 million and $ 5.6 million for cloud computing arrangements (software-as-a-service contracts) and related implementation costs as of February 3, 2024 and January 28, 2023, respectively, which are net of accumulated amortization of $ 6.7 million and $ 4.7 million as of the end of the respective periods.

The balance as of February 3, 2024 includes capitalized costs associated with the Company’s multi-year implementation of a cloud-based ERP.

Property and Equipment

2 unchanged sentences

Interest Expense

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.

Interest expense for 2021 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.

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.

The Company capitalized interest of $ 0.3 million in 2023 related to its multi-year implementation of a cloud-based ERP, with no corresponding interest capitalized in 2022.

Goodwill and Intangible Assets

4 unchanged sentences

The test compares the fair value of the Company’s reporting units to the carrying value of those reporting units.

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

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

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.

5 unchanged sentences

The estimated accruals for these liabilities could be affected if development of costs on claims differ from these assumptions and historical trends.

Based on available information as of January 28, 2023, the Company believes it has provided adequate reserves for its self-insurance exposure.

As of January 28, 2023 and January 29, 2022, self-insurance reserves were $ 9.7 million and $ 11.4 million, respectively.

Based on available information as of February 3, 2024, the Company believes it has provided adequate reserves for its self-insurance exposure.

As of February 3, 2024 and January 28, 2023, self-insurance reserves were $ 10.4 million and $ 9.7 million, respectively.

Supplier Finance Program

The Company facilitates a voluntary supplier finance program (“the Program”) that provides certain of the Company’s suppliers the opportunity to sell receivables related to products that the Company has purchased to participating financial institutions at a rate that leverages the Company’s credit rating, which may be more beneficial to the suppliers than the rate they can obtain based upon their own credit rating.

The Company negotiates payment and other terms directly with the suppliers, regardless of whether the supplier participates in the Program, and the Company’s responsibility is limited to making payment based on the terms originally negotiated with the supplier.

The suppliers that participate in the Program have discretion to determine which invoices, if any, are sold to the participating financing institutions.

The liabilities for the suppliers that participate in the Program are presented within accounts payable in the Company’s consolidated balance sheets, with changes reflected within cash flows from operating activities when settled.

As of February 3, 2024 and January 28, 2023, the Company had $ 13.0 million and $ 26.0 million, respectively, of accounts payable subject to the Program arrangements.

Revenue Recognition

8 unchanged sentences

The Company excludes sales and similar taxes collected from customers from the measurement of the transaction price for its retail sales.

Refer to Note 2 for further discussion of revenue.

The Company sells gift cards to its customers in its retail stores, through its e-commerce sites and at other retailers.

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.

Gift card breakage is recognized during the 24-month period following the sale of the gift card, according to the Company’s historical redemption pattern.

Gift card breakage income is included in net sales in the consolidated statements of earnings (loss) and the liability established upon the sale of a gift card is included in other accrued expenses within the consolidated balance sheets.

Gift card breakage income is included in net sales in the consolidated statements of earnings and the liability established upon the sale of a gift card is included in other accrued

expenses within the consolidated balance sheets.

The Company recognized gift card breakage of $ 0.8 million, $ 1.1 million and $ 1.0 million in 2023, 2022 and 2021, respectively.

5 unchanged sentences

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

Approximately 77 % of net sales in the Famous Footwear segment were made to its loyalty program members in 2022, compared to 78 % in 2021.

As of January 28, 2023 and January 29, 2022, the Company had a loyalty program liability of $ 17.7 million and $ 18.8 million, respectively, which is included in other accrued expenses on the consolidated balance sheets.

Approximately 77 % of net sales in the Famous Footwear segment were made to its loyalty program members in both 2023 and 2022.

In addition, loyalty programs have recently been launched for the Allen Edmonds and Naturalizer brands.

As of February 3, 2024 and January 28, 2023, the Company had loyalty program liabilities totaling $ 11.5 million and $ 17.7 million, respectively, which are included in other accrued expenses on the consolidated balance sheets.

Of the $ 11.5 million loyalty program liability as of February 3, 2024, $ 10.0 million is reflected in the Famous Footwear segment and $ 1.5 million is reflected in the Brand Portfolio segment.

Of the $ 17.7 million loyalty program liability as of January 28, 2023, $ 16.0 million is reflected in the Famous Footwear segment and $ 1.7 million is reflected in the Brand Portfolio segment.

Store Impairment Charges

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

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

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

The Company recorded asset impairment charges, primarily for operating lease right-of-use assets, leasehold improvements, and furniture and fixtures in the Company’s retail stores, of $ 0.7 million, $ 1.8 million and $ 4.1 million in 2023, 2022 and 2021, respectively.

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

Advertising and Marketing Expense

8 unchanged sentences

Total co-op advertising costs reflected as a reduction of net sales were $ 17.0 million in 2023, $ 18.5 million in 2022 and $ 10.8 million in 2021.

Total advertising costs attributable to future periods that are deferred and recognized as a component of prepaid expenses and other current assets were $ 4.6 million and $ 4.4 million at January 28, 2023 and January 29, 2022, respectively.

Total advertising costs attributable to future periods that are deferred and recognized as a component of prepaid expenses and other current assets were $ 7.0 million and $ 4.6 million at February 3, 2024 and January 28, 2023, respectively.

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

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.

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

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

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.

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

Operating Leases

6 unchanged sentences

Variable lease payments are expensed as incurred.

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

11 unchanged sentences

This rent-free period is referred to as a rent holiday.

The Company recognizes rent expense over the lease term, including any rent holiday, within selling and administrative expenses on the consolidated statements of earnings (loss).

The Company recognizes rent expense over the lease term, including any rent holiday, within selling and administrative expenses on the consolidated statements of earnings.

Pre-opening Costs

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

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

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

Earnings Per Common Share Attributable to Caleres, Inc.

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

shareholders.

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

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

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

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

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

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

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

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

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

during the year.

Diluted earnings per common share attributable to Caleres, Inc.

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

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

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

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

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

shareholders.

Comprehensive Income (Loss)

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

Comprehensive Income

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

Foreign Currency Translation Adjustment

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Assets and liabilities of these subsidiaries are translated into United States dollars at the period-end exchange rate or historical rates as appropriate.

Consolidated statements of earnings (loss) amounts are translated at average exchange rates for the period.

Consolidated statements of earnings amounts are translated at average exchange rates for the period.

The cumulative translation adjustments resulting from changes in exchange rates are included in the consolidated balance sheets as a component of accumulated other comprehensive loss in total Caleres, Inc.

shareholders’ equity.

Transaction gains and losses are included in the consolidated statements of earnings (loss).

Transaction gains and losses are included in the consolidated statements of earnings.

Pension and Other Postretirement Benefits Adjustments

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The unrecognized portion of the gain or loss on plan assets is included in the consolidated balance sheets as a component of accumulated other comprehensive loss in total Caleres, Inc.

shareholders’ equity and is recognized into the plans’ expense over time.

shareholders’ equity and is recognized into expense over time.

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

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

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

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

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

2 unchanged sentences

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

The Company accounts for share-based

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

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

Stock options generally vest over four years , with 25 % vesting annually and expense is recognized on a straight-line basis separately for each vesting portion of the stock option award.

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

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

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

Expense for graded-vesting grants is recognized ratably

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

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

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

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

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

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

Consolidated Statements of Cash Flows Supplemental Disclosures

The Company made payments for federal, state and international taxes, net of refunds, of $ 17.4 million, and $ 29.3 million in 2022 and 2021, respectively, and received refunds, net of payments, of $ 0.6 million in 2020.

The Company made payments for federal, state and international taxes, net of refunds, of $ 19.8 million, including $ 9.2 million for international taxes and $ 5.3 million each for federal and state taxes in 2023.

The Company made payments for federal, state and international taxes, net of refunds, of $ 17.4 million, including $ 8.4 million for state taxes, $ 4.7 million for federal taxes and $ 4.3 million for international taxes in 2022.

During 2021, the Company made payments for federal, state and international taxes, net of refunds, of $ 29.3 million, including $ 22.6 million for federal taxes, $ 3.5 million for state taxes and $ 3.2 million for international taxes.

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

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

Impact of Prospective Accounting Pronouncements

Impact of Recently Adopted Accounting Pronouncements

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

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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 ASU is effective for the Company in fiscal year 2023, except for the rollforward requirement, which is effective in fiscal year 2024.

The Company adopted the amendments on a retrospective basis during the first quarter of 2023, with the exception of the annual rollforward requirement, which will be adopted on a prospective basis by the effective date.

Refer to the Supply Chain Financing section earlier in this footnote for additional information regarding the Company’s supplier finance program.

Impact of Prospective Accounting Pronouncements

In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures , which is intended to improve reportable segment disclosures by disclosing significant segment expenses that are regularly provided to the chief operating decision maker.

The ASU is effective for the Company’s annual disclosures for fiscal year 2024 and for interim periods in the Company’s fiscal year 2025.

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

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

The ASU expands the income tax disclosure requirements, principally related to the rate reconciliation table and income taxes paid by jurisdiction.

ASU 2023-09 is effective for the Company on a prospective basis in fiscal 2025, with the option to apply the standard retrospectively, and early adoption is permitted.

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

Disaggregation of Revenues

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Licensing and royalty

(1) Collectively referred to as "e-commerce"

(1) Collectively referred to as "e-commerce" below

(2) Includes breakage revenue from unredeemed gift cards

Retail stores

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

The Company generates revenue from retail sales where control is transferred and revenue is recognized at the point of sale.

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

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

the sale of merchandise and the delivery of points that may be redeemed for future purchases.

the sale of merchandise and the delivery of points that may be converted to savings certificates and redeemed for future purchases.

The transaction price is allocated to the separate performance obligations based on the relative stand-alone selling price.

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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.

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, or picked up directly by the consumer from the Company’s stores (“e-commerce - Company websites”);

The Company 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, or picked up directly by the consumer from the Company’s stores (“e-commerce - Company websites”);

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

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($ thousands)

January 28, 2023

February 3, 2024

January 28, 2023

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Balance, end of period

EARNINGS (LOSS) PER SHARE

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

EARNINGS PER SHARE

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

shareholders.

In periods of net loss, no effect is given to the Company’s participating securities since they do not contractually participate in the losses of the Company.

The following table sets forth the computation of basic and diluted earnings (loss) per common share attributable to Caleres, Inc.

The following table sets forth the computation of basic and diluted earnings per common share attributable to Caleres, Inc.

shareholders:

($ thousands, except per share amounts)

Net earnings (loss)

Net loss (earnings) attributable to noncontrolling interests

Net earnings (loss) attributable to Caleres, Inc.

Net (earnings) loss attributable to noncontrolling interests

Net earnings attributable to Caleres, Inc.

Net earnings allocated to participating securities

Net earnings (loss) attributable to Caleres, Inc.

Net earnings attributable to Caleres, Inc.

after allocation of earnings to participating securities

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

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

Dilutive effect of share-based awards

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

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

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

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.

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

Basic earnings per common share attributable to Caleres, Inc.

Diluted earnings per common share attributable to Caleres, Inc.

There were no outstanding options to purchase shares of common stock in 2023 or 2022.

Options to purchase 16,667 shares of common stock in 2021 were not included in the denominator for diluted earnings per common share attributable to Caleres, Inc.

shareholders because the effect would be antidilutive.

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

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

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

shareholders.

The Company repurchased 2,622,845 , 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 .

As further discussed in Item 5, Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities, the Company has two publicly announced share repurchase programs.

The Company repurchased 763,000 , 2,622,845 and 661,265 shares at a cost of $ 17.4 million, $ 63.2 million and $ 17.0 million during the years ended February 3, 2024, January 28, 2023 and January 29, 2022, respectively, under these programs.

No excise taxes were due on the Company’s share repurchases during 2023 under the provisions of the Inflation Reduction Act of 2022.

RESTRUCTURING AND OTHER INITIATIVES

Expense Reduction Initiatives

During 2023, the Company incurred costs of $ 6.1 million ($ 4.5 million on an after-tax basis, or $ 0.13 per diluted share) associated with its expense reduction initiatives.

The costs were primarily for severance and other costs to integrate the Blowfish Malibu office, showroom and information systems into the St.

Louis infrastructure.

Of the $ 6.1 million in charges presented in restructuring and other special charges on the consolidated statements of earnings for 2023, $ 2.6 million is reflected in the Brand Portfolio segment, $ 2.1 million is reflected in the Eliminations and Other category and $ 1.4 million is reflected in the Famous Footwear segment.

As of February 3, 2024, restructuring reserves of $ 3.2 million were included in other accrued expenses on the consolidated balance sheet.

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.

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

Blowfish Mandatory Purchase Obligation

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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 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.

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 .

There were no corresponding charges during 2022.

There were no corresponding charges during 2023 or 2022.

Brand Portfolio – Business Exits

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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, 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.

Of these charges, which are all reflected within the Brand Portfolio segment, $ 12.4 million is presented as restructuring and other special charges and primarily represents non-cash impairment of property and right-of-use lease assets, incremental rent and lease termination costs, and severance costs.

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.

COVID-19-Related Impairments and Expenses

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

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

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

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

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

There were no corresponding charges in 2022 or 2021.

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 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.

There were no corresponding charges during 2022 or 2021.

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

RETIREMENT AND OTHER BENEFIT PLANS

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

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

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

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

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Benefit obligation at end of year

The accumulated benefit obligation for the United States pension plans was $ 280.5 million and $ 348.8 million as of January 28, 2023 and January 29, 2022, respectively.

The accumulated benefit obligation for the Canadian pension plans was $ 3.3 million and $ 3.9 million as of January 28, 2023 and January 29, 2022, respectively.

The accumulated benefit obligation for the United States pension plans was $ 277.1 million and $ 280.5 million as of February 3, 2024 and January 28, 2023, respectively.

The accumulated benefit obligation for the Canadian pension plans was $ 3.2 million and $ 3.3 million as of February 3, 2024 and January 28, 2023, respectively.

Pension Benefits

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Rate of compensation increase

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.

As of February 3, 2024 and January 28, 2023, 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.

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

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

The target allocations for plan assets for 2022 were 70 % equities and 30 % debt securities.

The target allocations for plan assets for 2023 were equities of between 65 % and 75 % and debt securities of between 25 % and 35 %.

Allocations may change periodically based upon changing market conditions.

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 $ 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.

Corporate stocks – common did not include any Company stock at February 3, 2024 or January 28, 2023.

Assets of the Canadian pension plans, which totaled approximately $ 4.3 million on February 3, 2024, 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 February 3, 2024 or January 28, 2023.

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

Refer to further discussion on the fair value hierarchy in Note 13 to the consolidated financial statements.

Refer to further discussion on the fair value hierarchy in Note 13 to the consolidated financial

Following is a description of the pension plan investments measured at fair value, including the general classification of such investments pursuant to the valuation hierarchy.

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

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.

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

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

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

1 unchanged sentence

● 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 28, 2023 by asset category were as follows:

Fair Value Measurements at January 28, 2023

The fair values of the Company’s pension plan assets at February 3, 2024 by asset category were as follows:

Fair Value Measurements at February 3, 2024

($ thousands)

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Funded Status

The over-funded status as of January 28, 2023 and January 29, 2022 for pension benefits was $ 71.2 million and $ 88.8 million, respectively.

The under-funded status for other postretirement benefits was $ 1.0 million and $ 1.1 million as of January 28, 2023 and January 29, 2022, respectively.

The over-funded status as of February 3, 2024 and January 28, 2023 for pension benefits was $ 61.9 million and $ 71.2 million, respectively.

The under-funded status for other postretirement benefits was $ 0.9 million and $ 1.0 million as of February 3, 2024 and January 28, 2023, respectively.

Amounts recognized in the consolidated balance sheets consist of:

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

The amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit income at January 28, 2023 and January 29, 2022 are as follows:

The amounts in accumulated other comprehensive loss that have not yet been recognized as components of net periodic benefit income at February 3, 2024 and January 28, 2023 are as follows:

Pension Benefits

17 unchanged sentences

Total net periodic benefit income

The non-service cost components of net periodic benefit income are included in other income, net in the consolidated statements of earnings (loss).

The non-service cost components of net periodic benefit income are included in other income, net in the consolidated statements of earnings.

Service cost is included in selling and administrative expenses.

26 unchanged sentences

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 $ 2.6 million for 2022 and $ 3.3 million for 2021.

Deferred Compensation Plan

The Company’s expense for the profit-sharing contribution was zero for 2023 and $ 2.6 million for 2022.

Beginning in January 2024, the Company also offers a 401(k) plan to certain hourly employees, providing the option to contribute from 2 % to 30 % of pre-tax wages to the 401(k) plan.

The hourly 401(k) plan does not offer matching contributions and therefore, the Company incurred no expense during 2023.

Non-Qualified Deferred Compensation Plan

The Company has a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for the benefit of certain management employees.

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

The liabilities of the Deferred Compensation Plan of $ 7.9 million and $ 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 $ 7.9 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).

The liabilities of the Deferred Compensation Plan of $ 9.5 million and $ 7.9 million as of February 3, 2024 and January 28, 2023, respectively, are presented in employee compensation and benefits in the accompanying consolidated balance sheets.

The assets held by the trust of $ 9.5 million and $ 7.9 million as of February 3, 2024 and January 28, 2023, 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.

Non-Qualified Deferred Compensation Restoration Plan

In 2023, the Company adopted a non-qualified restoration deferred compensation restoration plan (the “Restoration Plan”) for the benefit of certain members of executive management.

The Restoration Plan provides an incremental retirement benefit to key executives whose contributions to qualified retirement plans are limited by Internal Revenue Service annual compensation maximums.

The investment funds offered to the participants generally correspond to the funds offered in the Company’s 401(k) plan.

The initial contribution to the Restoration Plan was funded in January 2024 and will occur annually thereafter.

The plan assets and liabilities will fluctuate with the returns on the investment funds.

The deferrals are held in a separate trust, which has been established by the Company to administer the Restoration Plan.

The assets of the trust are subject to the claims of the Company’s creditors in the event that the Company becomes insolvent.

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

The liabilities of the Restoration Plan of $ 0.3 million are presented in employee compensation and benefits and the assets held by the trust of $ 0.3 million are classified within prepaid and other current assets in the accompanying consolidated balance sheet as of February 3, 2024.

Changes in deferred compensation plan assets and liabilities are charged to selling and administrative expense in the accompanying consolidated statement of earnings for 2023.

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 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).

The components of earnings (loss) before income taxes consisted of domestic earnings before income taxes of $ 168.0 million and $ 152.5 million in 2022 and 2021, respectively, and domestic loss before income taxes of $ 441.5 million in 2020.

The Company’s international earnings before incomes taxes were $ 45.0 and $ 36.7 million in 2022 and 2021, respectively, and international losses before income taxes were $ 75.6 million in 2020.

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

The liabilities of the plan of $ 2.0 million and $ 1.8 million as of February 3, 2024 and January 28, 2023, respectively, are based on 55,516 and 60,067 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.

The components of earnings before income taxes consisted of domestic earnings before income taxes of $ 132.5 million, $ 168.0 million and $ 152.5 million in 2023, 2022 and 2021, respectively.

The Company’s international earnings before incomes taxes were $ 48.8 million, $ 45.0 million and $ 36.7 million in 2023, 2022 and 2021, respectively.

The components of income tax provision on earnings were as follows:

($ thousands)

Total federal income tax provision (benefit)

Total state income tax provision (benefit)

Total federal income tax provision

Total state income tax (benefit) provision

International

Total international income tax provision

Total income tax provision (benefit)

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

Total income tax provision

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

($ thousands)

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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)

Total income tax provision (benefit)

Total income tax provision

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

4 unchanged sentences

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

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

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

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

($ thousands)

January 28, 2023

February 3, 2024

January 28, 2023

19 unchanged sentences

Net deferred tax liability

As of January 28, 2023, the Company had various federal, state and international net operating loss (“NOL”) carryforwards with tax values totaling $ 13.3 million.

As of February 3, 2024, the Company had various federal, state and international net operating loss (“NOL”) carryforwards with tax values totaling $ 10.1 million.

The state NOLs totaling $ 3.4 million have carryforward periods ranging from one to 20 years .

The Company has NOLs in Canada and the United Kingdom of $ 4.1 million and $ 2.6 million, respectively.

The Canada NOLs have carryforward periods ranging from 18 to 19 years , while the United Kingdom NOLs have no expiration.

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

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.

The Canada NOLs have a carryforward period of 18 years , while the United Kingdom NOLs have no expiration.

During 2020, as a result of the significant loss before income taxes driven by the impairment of goodwill and intangible assets during the pandemic, the Company entered into a three-year cumulative loss position for federal, state and certain international jurisdictions.

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.

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.

As a result, in 2022, the Company released approximately $ 17.4 million of its valuation allowances on deferred tax assets.

Due to continued strong earnings in 2023, the Company is no longer in a cumulative three-year loss position as of February 3, 2024.

Accordingly, the Company released valuation allowances on certain deferred tax assets totaling $ 26.7 million in the fourth quarter of 2023.

As of February 3, 2024, 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.

The Company periodically evaluates its international investment opportunities and plans, as well as its international working capital needs, to determine the level of investment required and, accordingly, determines the level of international earnings that is considered indefinitely reinvested.

Based upon that evaluation, earnings of the Company’s international subsidiaries that are not otherwise subject to United States taxation are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided.

If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted international earnings.

If the Company’s unremitted international earnings were not considered indefinitely reinvested as of January 28, 2023, an immaterial amount of additional deferred taxes would have been provided.

If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes

on unremitted international earnings.

If the Company’s unremitted international earnings were not considered indefinitely reinvested as of February 3, 2024, an immaterial amount of additional deferred taxes would have been provided.

Uncertain Tax Positions

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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 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.

As of February 3, 2024 and January 28, 2023, the Company had no unrecognized tax benefits.

For federal purposes, the Company’s tax filings for fiscal years 2020 to 2022 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 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.

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

The Brand Portfolio segment included 62 branded retail stores in the United States and 36 branded retail stores in East Asia at the end of 2023.

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

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

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

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

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

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

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Depreciation and amortization

Operating loss

Operating earnings (loss)

Segment assets

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Capitalized software

Products purchased for the Famous Footwear segment from three key third-party suppliers (Nike, Skechers and adidas) represented approximately 24 %, 26 % and 25 % of consolidated net sales for 2022, 2021 and 2020, respectively.

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

Products purchased for the Famous Footwear segment from three key third-party suppliers (Nike, Skechers and adidas) represented approximately 24 % of consolidated net sales for both 2023 and 2022, and 26 % for 2021.

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

($ thousands)

Operating earnings (loss)

Operating earnings

Interest expense, net

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Other income, net

Earnings (loss) before income taxes

Earnings before income taxes

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

The Company’s international operations consist of wholesale and retail operations primarily in Eastern Asia, Canada and Europe.

The Eastern Asia operations primarily include first-cost transactions, where footwear is sold at international ports to customers who then import the footwear into the United States and other countries.

The Company’s international operations consist of wholesale and retail operations primarily in East Asia, Canada and Europe.

The East Asia operations primarily include first-cost transactions, where footwear is sold at international ports to customers who then import the footwear into the United States and other countries.

A summary of the Company’s net sales and long-lived assets, including lease right-of-use assets and property and equipment, by geographic area were as follows:

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($ thousands)

January 28, 2023

February 3, 2024

January 28, 2023

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Inventories, net (1)

As of January 28, 2023 and January 29, 2022, the Company’s inventory balance included $ 0.2 million and $ 0.1 million, respectively, of finished goods product subject to consignment arrangements with wholesale customers.

(1) Net of adjustment to last-in, first-out cost of $ 10,254 and $ 6,301 as of February 3, 2024 and January 28, 2023, respectively.

As of February 3, 2024 and January 28, 2023, the Company’s inventory balance included $ 0.4 million and $ 0.2 million, respectively, of finished goods product subject to consignment arrangements with wholesale customers.

PROPERTY AND EQUIPMENT

Property and equipment consisted of the following:

January 28, 2023

February 3, 2024

January 28, 2023

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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.

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

The Company recorded charges for impairment of $ 0.7 million, $ 1.8 million and $ 4.1 million in 2023, 2022 and 2021, respectively, primarily for operating lease right-of-use assets, leasehold improvements and furniture and fixtures in the Company’s retail stores and capitalized software, which are presented in selling and administrative expenses.

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

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

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

Property and Equipment, Held for Sale

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 continues to actively market for sale its nine -acre corporate headquarters campus (the “Campus”) located in Clayton, Missouri and as of February 3, 2024, was engaged in discussions with multiple potential buyers.

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.

Accordingly, the Campus, primarily consisting of land and buildings, has been classified as property and equipment, held for sale category on the consolidated balance sheet as of February 3, 2024 within the Eliminations and Other category.

The Company evaluated the Campus asset group for impairment and determined that no indicators were present as of February 3, 2024.

GOODWILL AND INTANGIBLE ASSETS

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($ thousands)

January 28, 2023

February 3, 2024

January 28, 2023

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Goodwill and intangible assets, net

(1) The carrying amount of goodwill as of January 28, 2023 and January 29, 2022 is presented net of accumulated impairment charges of $ 415.7 million.

The Company’s intangible assets as of January 28, 2023 and January 29, 2022 were as follows:

(1) The carrying amount of intangible assets as of February 3, 2024 and January 28, 2023 is presented net of accumulated impairment charges of $ 106.2 million.

(2) The carrying amount of goodwill as of February 3, 2024 and January 28, 2023 is presented net of accumulated impairment charges of $ 415.7 million.

The Company’s intangible assets as of February 3, 2024 and January 28, 2023 were as follows:

($ thousands)

January 28, 2023

February 3, 2024

Estimated Useful Lives

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Customer relationships

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 $ 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.

Amortization expense related to intangible assets was $ 12.1 million in both 2023 and 2022, and $ 12.6 million in 2021.

The Company estimates $ 11.0 million of amortization expense related to intangible assets in 2024, 2025 , and 2026 , $10.9 million in 2027 and $ 10.7 million in 2028.

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

During 2023 and 2022, the goodwill impairment testing was performed as of the first day of the fourth fiscal quarter, which resulted in no impairment charges.

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

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

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

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

That review indicated no impairment.

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

The Company did not record any impairment charges for intangible assets during 2023 or 2022.

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

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

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

As a result of the impairment indicator for Allen Edmonds, the Company also tested the definite-lived Allen Edmonds customer relationships intangible asset.

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

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

FINANCING ARRANGEMENTS

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

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

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

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

On April 27, 2023, the Company entered into a Sixth Amendment to Fourth Amended and Restated Credit agreement to transition the borrowings on the revolving credit facility from bearing interest based on LIBOR to a team secured overnight financing rate (“SOFR”).

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

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

Interest on borrowings is at variable rates based on SOFR or the prime rate (as defined in the Credit Agreement), plus a spread.

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

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The Credit Agreement also contains certain other covenants and restrictions.

The Company was in compliance with all covenants and restrictions under the Credit Agreement as of January 28, 2023.

The Company was in compliance with all covenants and restrictions under the Credit Agreement as of February 3, 2024.

The maximum amount of borrowings under the Credit Agreement at the end of any month was $ 366.5 million and $ 380.5 million in 2023 and 2022, respectively.

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.

As of February 3, 2024, the Company had $ 182.0 million of borrowings outstanding and $ 9.5 million in letters of credit outstanding under the Credit Agreement, with total additional borrowing availability of $ 308.5 million.

Average daily borrowings were $ 267.9 million and $ 356.4 million in 2023 and 2022, respectively, and the weighted-average interest rates approximated 6.7 % and 3.6 % 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").

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

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

On August 16, 2021, the Company redeemed $ 100.0 million of Senior Notes at 100.0 %.

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

Loss on Early Extinguishment of Debt

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

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

In conjunction with the redemptions of the Company’s $ 200.0 million aggregate principal amount of Senior Notes in August 2021 and January 2022, prior to the maturity in August 2023, the Company incurred losses on early extinguishment of debt totaling $ 0.8 million.

In addition, the Company incurred a loss on early extinguishment of debt of $ 0.2 million in October 2021 associated with the amendment of the revolving credit facility prior to its maturity.

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

3 unchanged sentences

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 to determine the present value of future payments.

Lease expense for the minimum lease payments is recognized on a straight-line basis over the lease term.

For operating leases, lease expense for the minimum lease payments is recognized on a straight-line basis over the lease term.

Variable lease payments are expensed as incurred.

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

The 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 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.

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

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

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

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

Accordingly, in 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.

The weighted-average lease term and discount rate as of January 28, 2023 and January 29, 2022 were as follows:

January 28, 2023

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

The fair value of the lease right-of-use assets and property and equipment 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.

Refer to Note 13 to the consolidated financial statements for further discussion of impairment charges on the Company’s operating lease right-of-use assets and property and equipment in its retail stores.

The weighted-average lease term and discount rate as of February 3, 2024 and January 28, 2023 were as follows:

February 3, 2024

January 28, 2023

2 unchanged sentences

During 2023, the Company entered into new or amended leases that resulted in the recognition of right-of-use assets and lease obligations of $ 151.2 million on the consolidated balance sheets.

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.

As of February 3, 2024, the Company has entered into lease commitments for 11 retail locations for which the leases have not yet commenced.

The Company anticipates that the leases for 10 of the new retail locations will begin in the next fiscal year and one will begin in fiscal year 2025.

Upon commencement, right-of-use assets and lease liabilities of approximately $ 10.1 million and $ 0.3 million will be recorded on the consolidated balance sheets in 2024 and 2025, respectively.

6 unchanged sentences

Total lease expense

(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:

The aggregate future annual lease payments at February 3, 2024 were as follows:

($ thousands)

6 unchanged sentences

Cash received from sublease income

(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

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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.

Deferred Compensation Plan Assets and Liabilities

Non-Qualified Deferred Compensation Plan Assets and Liabilities

The Company maintains a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for the benefit of certain management employees.

The investment funds offered to the participants generally correspond to the funds offered in the Company’s 401(k) plan, and the account balance fluctuates with the investment returns on those funds.

The investment funds offered to the participants generally correspond to the funds

offered in the Company’s 401(k) plan, and the account balance fluctuates with the investment returns on those funds.

The Deferred Compensation Plan permits the deferral of up to 50 % of base salary and 100 % of compensation received under the Company’s annual incentive plan.

5 unchanged sentences

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

Non-Qualified Restoration Plan Assets and Liabilities

In 2023, the Company adopted a non-qualified restoration deferred compensation plan (the “Restoration Plan”) for the benefit of certain members of executive management.

The investment funds offered to the participants generally correspond to the funds offered in the Company’s 401(k) plan.

The initial contribution to the Restoration Plan was funded in January 2024 and will occur annually thereafter.

The plan assets and liabilities will fluctuate with the returns on the investment funds.

The deferrals are held in a separate trust, which has been established by the Company to administer the Restoration Plan.

The assets of the trust are subject to the claims of the Company’s creditors in the event that the Company becomes insolvent.

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

The liabilities of the Restoration Plan are presented in employee compensation and benefits and the assets held by the trust are classified within prepaid and other current assets in the accompanying consolidated balance sheet as of February 3, 2024.

Changes in deferred compensation plan assets and liabilities are charged to selling and administrative expense.

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

Deferred Compensation Plan for Non-Employee Directors

3 unchanged sentences

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.

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).

4 unchanged sentences

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

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.

The Company did not have any transfers between Level 1, Level 2 or Level 3 during 2022, 2021 or 2020.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at February 3, 2024 and January 28, 2023.

During 2023, 2022 or 2021, the Company did not have any transfers between into or out of Level 3.

Fair Value Measurements

1 unchanged sentence

Asset (Liability)

January 28, 2023:

February 3, 2024:

Non-qualified deferred compensation plan assets

Non-qualified deferred compensation plan liabilities

Non-qualified restoration plan assets

Non-qualified restoration plan liabilities

Deferred compensation plan liabilities for non-employee directors

12 unchanged sentences

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.

($ thousands)

5 unchanged sentences

The intangible asset impairment reviews performed in 2023, 2022 and 2021 resulted in no impairment charges.

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

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

During 2023, the Company performed a quantitative assessment of goodwill as of the first day of the fourth fiscal quarter and during 2022 and 2021, the Company performed qualitative assessments of goodwill.

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 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.

1 unchanged sentence

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.

The fair values of the borrowings under revolving credit agreement of $ 182.0 million and $ 307.5 million as of February 3, 2024 and January 28, 2023, respectively, approximate their carrying value due to the short-term nature of the borrowings.

SHAREHOLDERS’ EQUITY

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(in thousands)

January 28, 2023

February 3, 2024

January 28, 2023

3 unchanged sentences

Stock Repurchase Programs

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.

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 shares 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.

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In total, 5.0 million shares have been repurchased under the 2019 Program and there are no additional shares authorized to be repurchased.

There are 6,367,379 additional shares authorized to be repurchased under the 2022 Program as of January 28, 2023.

There are 5,604,379 additional shares authorized to be repurchased under the 2022 Program as of February 3, 2024.

Repurchases Related to Employee Share-based Awards

During 2023, 2022 and 2021, employees tendered 449,285 , 246,688 and 205,213 shares, respectively, related to certain share-based awards.

These shares were tendered in satisfaction of the exercise price of stock options and/or to satisfy tax withholding amounts for non-qualified stock options, restricted stock and stock performance awards.

These shares were tendered in satisfaction of the exercise price of stock options and/or to satisfy tax withholding amounts for restricted stock, stock performance awards and non-qualified stock options.

Accordingly, these share repurchases are not considered a part of the Company’s publicly announced stock repurchase programs.

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Transactions (1)

Transactions (2)

(Loss) Income

Balance February 1, 2020

Other comprehensive income before reclassifications

Reclassifications:

Amounts reclassified from accumulated other comprehensive loss

Net reclassifications

Other comprehensive income

Balance January 30, 2021

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Balance January 28, 2023

Other comprehensive income (loss) before reclassifications

Reclassifications:

Amounts reclassified from accumulated other comprehensive loss

Net reclassifications

Other comprehensive income (loss)

Balance February 3, 2024

(1) Amounts reclassified are included in other income, net.

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

(2) Amounts reclassified are included in net sales, costs of goods sold and selling and administrative expenses.

SHARE-BASED COMPENSATION

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Restricted stock units

Stock options

Total share-based compensation expense

The Company issued 537,267 , 703,452 and 330,206 shares of common stock in 2023, 2022 and 2021, 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.

The Company recognized an excess tax benefit of $ 3.1 million and $ 0.6 million in 2023 and 2022, respectively, and an excess tax provision of $ 0.1 million in 2021 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 on the Company’s consolidated statements of earnings.

Restricted Stock

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The restricted stock awards limit the sale or transfer of these shares during the requisite service period.

Expense for restricted stock grants is recognized on a straight-line basis separately for each vesting portion of the stock award based upon fair value of the award on the date of grant.

Expense for restricted stock grants is recognized on a straight-line basis separately for each vesting portion of the stock award based upon the fair value of the award on the date of grant.

The fair value of the restricted stock grants is the quoted market price for the Company’s common stock on the date of grant.

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Date Fair Value

Nonvested at February 1, 2020

Nonvested at January 30, 2021

1 unchanged sentence

Nonvested at January 28, 2023

Nonvested at February 3, 2024

Of the 603,121 restricted shares granted during 2023, 23,268 shares have a cliff-vesting term of one year , 7,000 shares have a graded vesting term of three years , with 50 % vesting after eighteen months and 50 % after three years , 5,800 shares have a cliff-vesting term of two years , and 567,053 shares have a graded-vesting term of three years , with 50 % vesting after two years and 50 % after three years .

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

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 .

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.

The total grant date fair value of restricted stock awards vested during the years ended February 3, 2024, January 28, 2023 and January 29, 2022 was $ 7.0 million, $ 6.8 million and $ 14.3 million, respectively.

The total fair value of restricted stock awards that vested during the years ended February 3, 2024, January 28, 2023 and January 29, 2022 was $ 12.2 million, $ 11.5 million and $ 10.4 million, respectively.

As of February 3, 2024, the total remaining unrecognized compensation cost related to nonvested restricted stock grants was $ 12.8 million, which will be amortized over the weighted-average remaining requisite service period of 1.5 years.

Performance Share Awards

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Under the plan, employees are granted performance share awards at a target number of shares or units, which generally vest over a three-year service period.

At the end of the vesting period, the employee will have earned an amount of shares between 0 % and 200 % of the targeted award, depending on the attainment of certain financial goals during the service period.

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 performance period of the share award.

During 2023, the Company granted performance share awards for a targeted 276,434 shares, with a weighted-average grant date fair value of $ 23.12 in connection with the 2023 performance award (2023 – 2025 performance period).

The 2023 performance award is payable in common stock for up to 100 % of the targeted award and the remainder in cash if any portion exceeds the targeted award.

Compensation expense is recognized based on the fair value of the award and the anticipated number of shares or units to be awarded for each tranche in accordance with the vesting schedule of the units over the three-year service period.

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.

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Grant Date Fair Value

Nonvested at February 1, 2020

Nonvested at January 30, 2021

1 unchanged sentence

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 .

Nonvested at February 3, 2024

The total fair value of performance share awards that vested during the years ended February 3, 2024, January 28, 2023 and January 29, 2022 was $ 13.8 million, $ 2.1 million and zero , respectively.

As of February 3, 2024, the remaining unrecognized compensation cost related to nonvested performance share awards for the 2023 performance award was $ 1.8 million, which will be recognized over the remaining service period of 25 months .

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.

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.

Stock Options

Stock options are granted to employees at exercise prices equal to the quoted market price of the Company’s stock at the date of grant.

Stock options generally vest over four years and have a term of 10 years .

Compensation cost for all stock options is recognized over the requisite service period for each award.

No dividends are paid on unexercised options.

Expense for stock options is recognized on a straight-line basis separately for each vesting portion of the stock option award.

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

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

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Expense for the dividend equivalents is recognized at fair value immediately.

Gains and losses resulting from changes in the fair value of the RSUs payable in cash subsequent to the vesting period and through the settlement date are recognized in the Company’s consolidated statements of earnings (loss).

Refer to Note 5 and Note 13 to the consolidated financial statements for information regarding the deferred compensation plan for non-employee directors.

The following table summarizes restricted stock unit activity for the year ended January 28, 2023:

January 29, 2022

The following table summarizes restricted stock unit activity for the year ended February 3, 2024:

January 28, 2023

February 3, 2024

(1) Granted RSUs include 4,959 RSUs resulting from dividend equivalents paid on outstanding RSUs, of which 4,460 related to outstanding vested RSUs and 499 to outstanding nonvested RSUs.

(2) Total number of RSUs as of January 28, 2023 includes 360,448 RSUs payable in shares and 137,679 RSUs payable in cash.

(2) Total number of RSUs as of February 3, 2024 includes 394,032 RSUs payable in shares and 138,573 RSUs payable in cash.

(3) Accrued RSUs include all fully vested awards and a pro-rata portion of nonvested awards based on the elapsed portion of the vesting period.

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(1) Includes dividend equivalents granted on outstanding RSUs, which vest immediately.

The following table details the RSU compensation expense and the related income tax (benefit) provision for 2022, 2021 and 2020:

The following table details the RSU compensation expense and the related income tax benefit for 2023, 2022 and 2021:

($ thousands)

Compensation expense (income)

Income tax (benefit) provision

Compensation expense (income), net of tax

The aggregate fair value of RSUs outstanding and currently vested at January 28, 2023 is $ 12.5 million and $ 11.4 million, respectively.

The liabilities associated with the accrued RSUs totaled $ 2.0 million and $ 2.6 million as of January 28, 2023 and January 29, 2022, respectively.

Compensation expense

Income tax benefit

Compensation expense, net of tax

The aggregate fair value of RSUs outstanding and currently vested at February 3, 2024 is $ 17.0 million and $ 15.3 million, respectively.

The liabilities associated with the accrued RSUs totaled $ 2.6 million and $ 2.0 million as of February 3, 2024 and January 28, 2023, respectively.

COMMITMENTS AND CONTINGENCIES

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The Company is involved in environmental remediation and ongoing compliance activities at several sites and has been notified that it is or may be a potentially responsible party at several other sites.

The Company is remediating, under the oversight of Colorado authorities, the groundwater and indoor air at its owned facility in Colorado (the “Redfield site” or, when referring to remediation activities at or under the facility, the “on-site remediation”) and residential neighborhoods adjacent to and near the property (the “off-site remediation”) that have been affected by solvents previously used at the facility.

affected by solvents previously used at the facility.

The on-site remediation calls for the operation of a pump and treat system (which prevents migration of contaminated groundwater off the property) as the final remedy for the site, subject to monitoring and periodic review of the on-site conditions and other remedial technologies that may be developed in the future.

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.

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.

The Company received permission from the oversight authorities to convert the pump and treat system to a passive treatment barrier system and completed the conversion during 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 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.

The cumulative expenditures for both on-site and off-site remediation through February 3, 2024 were $ 34.3 million.

The Company has recovered a portion of these expenditures from insurers and other third parties.

The reserve for the anticipated future remediation activities at January 28, 2023 is $ 9.8 million, of which $ 8.8 million is recorded within other liabilities and $ 1.0 million is recorded within other accrued expenses.

The reserve for the anticipated future remediation activities at February 3, 2024 is $ 9.2 million, of which $ 8.3 million is recorded within other liabilities and $ 0.9 million is recorded within other accrued expenses.

Of the total $ 9.2 million reserve, $ 4.8 million is for off-site remediation and $ 4.4 million is for on-site remediation.

The liability for the on-site remediation was discounted at 4.8 %.

On an undiscounted basis, the on-site remediation liability would be $ 13.1 million as of January 28, 2023 .

On an undiscounted basis, the on-site remediation liability would be $ 12.5 million as of February 3, 2024 .

The Company expects to spend approximately $ 0.2 million in the next year , $ 0.1 million in each of the following four years and $ 11.9 million in the aggregate thereafter related to the on-site remediation.

10 unchanged sentences

($ thousands)

YEAR ENDED JANUARY 28, 2023

YEAR ENDED FEBRUARY 3, 2024

Deducted from assets or accounts:

2 unchanged sentences

Customer discounts

Inventory valuation allowances

Inventory markdowns and other

Deferred tax asset valuation allowance

4 unchanged sentences

Customer discounts

Inventory valuation allowances

Inventory markdowns and other

Deferred tax asset valuation allowance

4 unchanged sentences

Customer discounts

Inventory valuation allowances

Inventory markdowns and other

Deferred tax asset valuation allowance

2 unchanged sentences

(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, 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