What changed in this filing

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Item 1A. Risk Factors

2025-04-01 compared with 2024-04-02 · 51 added, 40 removed, 205 unchanged (31% of the section changed)

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MACROECONOMIC AND INDUSTRY RISKS

Changes in the United States and international trade policies, including tariffs and trade restrictions, may adversely impact our business, results of operations and financial condition.

The United States administration recently announced tariffs on products manufactured in several jurisdictions, including China, Canada and Mexico and may impose tariffs on products from other jurisdictions.

The imposition of new tariffs or increases to existing tariffs on products we import from countries where our suppliers operate could result in increased product costs, which may require us to raise prices and accordingly, may make our product less competitive in the market.

While we continue to shift production outside of China and other countries impacted by tariffs and continue to negotiate with our suppliers to mitigate the impact of the tariffs, we may not be successful in changing our sourcing strategy to minimize the impact of the tariffs on our financial results and operations.

The extent and duration of these tariffs, and any retaliatory tariffs adopted in response to these tariffs, are uncertain and may limit our ability to meet incremental consumer demand, potentially impacting our net sales or financial results.

Consumer demand for our products may be adversely impacted by economic conditions and other factors.

Worldwide economic conditions continue to be uncertain.

Consumer confidence and spending are strongly influenced by general economic conditions and other factors, including inflation, concerns of a recession, elevated interest rates, fiscal policy, the changing tax and regulatory environment, minimum wage rates and regulations, consumer debt levels, the availability of consumer credit, the liquidity of consumers’ assets, health care costs, currency exchange rates, taxation, energy costs, real estate values, foreclosure rates, unemployment trends, weather conditions and the economic consequences of military action or terrorist activities, such as the heightened geo-political tensions between China and Taiwan and the potential impact of sanctions on the domestic and global economy.

Consumer sentiment, including a

preference for products made in the United States, may be impacted by the war in Eastern Europe, which may impact demand for our products that are sourced internationally.

In addition, with the majority of our supply originating in China, any significant negative development related to relations between United States and China may adversely impact the demand for our products sourced from China.

Consumer confidence and spending are strongly influenced by general economic conditions and other factors, including trade restrictions, tariffs, or taxes on imports from countries where we manufacture products, inflation, concerns of a recession, elevated interest rates, fiscal policy, the changing tax and regulatory environment, minimum wage rates and regulations, consumer debt levels, the availability of consumer credit, the liquidity of consumers’ assets, health care costs, currency exchange rates, taxation, energy costs, real estate values, foreclosure rates, unemployment trends, weather conditions and the economic consequences of military action or terrorist activities, such as the heightened geo-political tensions between China and Taiwan and the potential impact of sanctions on the domestic and global economy.

Consumer sentiment, including a preference for products made in the United States, may be impacted by tariffs or taxes on imports from countries where we source products, which may impact demand for our products that are sourced internationally.

In addition, with a significant amount of our supply originating in China, any negative development related to relations between United States and China, including tariffs imposed on imports from China, may adversely impact the cost or demand for our products sourced from China.

Negative economic conditions generally decrease disposable income and, consequently, consumer purchases of discretionary items like our products.

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Inflationary pressures in the United States and the global economy such as elevated interest rates, higher product and transportation costs and wage inflation, as well as fears of a recession, are creating a complex and challenging retail environment that may impact discretionary spending.

The extent and duration of these pressures are uncertain and may limit our ability to meet incremental consumer demand, potentially impacting our net sales.

The extent and duration of these inflationary pressures are uncertain and may limit our ability to meet incremental consumer demand, potentially impacting our net sales.

In addition, declines in consumer spending may result in reduced demand for our products, increased inventories, reduced orders from retailers for our products, order cancellations, lower revenues, higher discounts, pricing pressure and lower gross margins.

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Vessel, container and other transportation shortages, labor shortages and port congestion have in the past delayed inventory orders and, in turn, deliveries to our wholesale customers and availability in our retail stores and e-commerce sites.

In addition, the vast majority of our products pass through the United States west coast ports and any slowdown or stoppage relating to labor agreement negotiations may further delay the receipt of inventory or increase costs.

In addition, the vast majority of our products pass through the United States ports and any slowdown or stoppage relating to labor agreement negotiations may further delay the receipt of inventory or increase costs.

If we are unable to anticipate and respond to consumer preferences and fashion trends and successfully apply new technology, we may not be able to maintain or increase our net sales and earnings.

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In addition, negative trends in global economic conditions, including the impact of the wars in Israel and Eastern Europe and heightened tensions between China and Taiwan, or global pandemics, may adversely impact our suppliers.

third parties do not perform their obligations or are unable to provide us with the materials and services we need at prices and terms that are acceptable to us, our ability to meet our consumers’ demand could be adversely affected.

If these third parties do not perform their obligations or are unable to provide us with the materials and services we need at prices and terms that are acceptable to us, our ability to meet our consumers’ demand could be adversely affected.

Customer concentration and other trends in customer behavior may lead to a reduction in or loss of sales.

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Other competitors are able to offer footwear on a lateral basis alongside their apparel products, or have successfully branded their trademarks as lifestyle brands, resulting in greater competitive advantages.

Low barriers to entry into this industry further intensify competition by allowing new companies to easily enter the markets in which we compete.

to entry into this industry further intensify competition by allowing new companies to easily enter the markets in which we compete.

Some of our suppliers further compound these competitive pressures by allowing consumers to purchase their products directly through supplier-maintained e-commerce sites and retail stores.

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We remain competitive by increasing awareness of our brands, improving the efficiency of our supply chain and enhancing the style, comfort, fashion and perceived value of our products.

However, our competitors may implement more effective marketing campaigns, adopt more aggressive pricing policies, make more attractive offers to potential employees, distribution

partners and manufacturers, or respond more quickly to changes in consumer preferences than us.

However, our competitors may implement more effective marketing campaigns, adopt more aggressive pricing policies, make more attractive offers to potential employees, distribution partners and manufacturers, or respond more quickly to changes in consumer preferences than us.

As a result, we may not be able to compete successfully in the future, and increased competition may result in price reductions, reduced gross margins, loss of market share and an inability to generate cash flows that are sufficient to maintain or expand the development and marketing of our products, which could adversely impact our financial results.

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As is common in the industry, we do not have any long-term contracts with our third-party international manufacturers.

International sourcing is subject to numerous risks, including trade relations, work stoppages, transportation delays (including delays at international and domestic ports) and costs (including customs duties, quotas, tariffs, anti-dumping duties, safeguard measures, cargo restrictions or other trade restrictions), domestic and international political instability, foreign currency fluctuations, variable economic conditions, expropriation, nationalization, natural disasters, terrorist acts and military conflict, changes in governmental regulations (including the U.S.

Foreign Corrupt Practices Act) and geo-political events, such as the current wars in Israel and Ukraine and increased tensions between China and Taiwan.

domestic and international political instability, foreign currency fluctuations, variable economic conditions, expropriation, nationalization, natural disasters, terrorist acts and military conflict, changes in governmental regulations (including the U.S.

Foreign Corrupt Practices Act) and geo-political events, such as the current wars in Israel and Ukraine and continued tensions between China and Taiwan.

Supply chain disruptions and port congestion have in the past delayed receipt of inventory and this could occur again in the future.

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Approximately 50% of the footwear we sourced in 2024 was from China.

With the majority of our supply originating in China, a substantial portion of our supply could be at risk in the event of any significant negative development related to relations between United States and China.

With a significant portion of our supply originating in China, a substantial portion of our supply could be at risk in the event of any significant negative development related to relations between United States and China, including additional tariffs imposed on products imported from China.

In addition, international expansion in China may be hampered as a result of the adverse economic conditions that China is currently experiencing.

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If any of these systems fails to operate as expected, we experience problems with transitioning to upgraded or replacement systems, we fail to realize the expected return on our technology investment, a breach in security occurs or a natural disaster interrupts system functions, we may experience delays in product fulfillment, reduced efficiency in our operations, or delays in reporting our financial results to investors, or we may be required to expend significant capital to correct the problem, which may have an adverse effect on our results of operations and financial condition.

We are undergoing a multi-year enterprise resource planning (“ERP”) implementation, which will require significant financial and human capital resources.

The implementation of the new ERP system may be more difficult, costly or time-consuming than anticipated, and it is possible that the system will not yield the expected benefits.

Any disruptions, delays or deficiencies related to the new ERP system may materially and adversely impact our business operations, including our ability to process orders, manage our inventory, ship products to our customers, maintain our financial records, maintain effective internal control over financial reporting, or perform other business functions.

During 2024, we implemented a new enterprise resource planning (“ERP”) system, which required significant financial and human capital resources.

During the second quarter of 2024, we experienced operational challenges, primarily while

our e-commerce and drop-ship platforms were either offline or ramping up after the launch.

As we progressed through the quarter, the development of several key operational reports was delayed, resulting a lack of visibility to certain data and tools we rely on to manage the wholesale business.

As a result, our wholesale net sales in the second quarter of 2024 were unfavorably impacted.

While we believe we have taken the necessary steps to address the issues that temporarily impacted our visibility, we cannot be certain that additional disruptions will not occur.

Any deficiencies or additional disruptions related to the new ERP system may materially and adversely impact our business operations, including our ability to process orders, manage our inventory, ship products to our customers, maintain our financial records, maintain effective internal control over financial reporting, or perform other business functions.

A cybersecurity breach may adversely affect our sales and reputation.

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From time to time, we have experienced, and may continue to experience, attacks on our systems or those of our vendors.

While we believe we have taken reasonable and

appropriate steps to protect sensitive information, hackers and data thieves operate sophisticated, large-scale attacks that could breach our information systems, despite ongoing security measures.

While we believe we have taken reasonable and appropriate steps to protect sensitive information, hackers and data thieves operate sophisticated, large-scale attacks that could breach our information systems, despite ongoing security measures.

In addition, we are required to comply with increasingly complex regulations designed to protect our business and personal data.

Any breach of our network security, a third-party’s network security or failure to comply with applicable regulations may result in (a) the loss of valuable business data and/or our consumers’ or associates’ personal information, (b) increased costs associated with implementing additional protections and processes, (c) a disruption of our business and a loss of sales, (d) negative media attention, (e) damage to our consumer and associate relationships and reputation, and (f) fines or lawsuits.

Transitional challenges with acquisitions and divestitures could result in unexpected expenditures of time and resources.

As part of our business strategy, we periodically pursue acquisitions of other companies or businesses, such as our recently announced acquisition of Stuart Weitzman, as well as divestitures of our businesses.

Although we review the financial results and records of acquisition candidates, the review may not reveal all existing or potential problems.

As a result, we may not accurately assess the value of the business and may, accordingly, ultimately assume unknown adverse operating conditions and/or unanticipated expenses and liabilities related to the acquisition.

We anticipate funding the acquisition of Stuart Weitzman through our revolving credit agreement and we face the risk that the return on the acquisition will not support the expenditures or indebtedness to acquire the business.

Acquisitions may also cause us to incur write-offs of goodwill or intangible assets if the business does not perform as well as expected and substantial amortization expenses associated with other intangible assets.

We also face the risk that we will not be able to integrate acquisitions into our existing operations or divest our businesses effectively without substantial expense, delay or other operational or financial problems.

Integration may be hindered by, among other things, differing procedures, including internal controls, business practices and technology systems.

We may need to allocate more management resources to integration than we planned, which may adversely affect our ability to pursue other profitable activities.

Our operating results depend on preparing accurate sales forecasts and properly managing our inventory levels.

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Also, we have recently experienced changes in key senior management personnel, including our chief executive officer and chief financial officer.

Management transitions may create uncertainty, and if we do not successfully manage the transition, it

could be disruptive to our daily operations or impact public or market perception, which could negatively impact our ability to operate effectively and have an adverse impact on our business.

Management transitions may create uncertainty, and if we do not successfully manage the transition, it could be disruptive to our daily operations or impact public or market perception, which could negatively impact our ability to operate effectively and have an adverse impact on our business.

Our retail business depends on our ability to secure affordable and desirable leased locations without creating a competitive concentration of stores.

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This may result in impairments or lease termination charges that adversely impact our financial results.

Failure to successfully execute our planned campus sale and relocation could result in unexpected expenditures and operational disruptions.

We have entered into an agreement to sell a portion of our headquarters campus in Clayton, Missouri, which is subject to certain closing conditions.

We have also entered into two letters of intent to sell the remaining portions of the headquarters campus.

Should the sale of any of these parcels not be completed, we may have to carry the campus property longer than intended and incur unexpected costs, or if comparable sales prices cannot be secured, we may have to recognize a loss on disposal, adversely impacting our financial results.

In addition, the build-out of our new leased headquarters could be delayed or cost more than expected, which could cause disruption to our business operations or negatively impact our financial results.

Damage to our reputation or brands may negatively impact our business .

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If we are unable to effectively manage social media, our reputation and consumer’s perception of our brands may be negatively impacted.

Our ESG initiatives may result in increased scrutiny from stakeholders or regulators with respect to our ESG goals and objectives.

We may not be able to achieve our ESG goals within the timelines established, or at all.

Our responsible business initiatives may result in increased scrutiny from stakeholders or regulators with respect to our responsible business goals and objectives.

We may not be able to achieve those goals within the timelines established, or at all.

Failure to successfully achieve our established goals may damage our reputation, or the reputation of our brands.

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If our Rewards members do not continue to shop at Famous Footwear, our sales may be adversely affected.

Transitional challenges with acquisitions and divestitures could result in unexpected expenditures of time and resources.

As part of our business strategy, we periodically pursue acquisitions of other companies or businesses, as well as divestitures of our businesses.

Although we review the financial results and records of acquisition candidates, the review may not reveal all existing or potential problems.

Acquisitions may also cause us to incur debt, write-offs of goodwill or intangible assets if the business does not perform as well as expected and substantial amortization expenses associated with other intangible assets.

We face the risk that the returns on acquisitions will not support the expenditures or indebtedness incurred to acquire such businesses.

Integration may be hindered by, among other things, differing procedures, including internal controls, business practices and technology systems.

We may need to allocate more management resources to integration than we planned, which may adversely affect our ability to pursue other profitable activities.

TAX, LEGAL, AND REGULATORY RISKS

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In addition, changes in the tax laws of foreign jurisdictions may arise as a result of the Pillar Two (“Pillar Two”) Global Anti-Base Erosion model rules that were released by the Organization for Economic Cooperation and Development (OECD) in 2021.

The OECD continues to release guidance and many countries are implementing legislation to adopt the rules for tax years beginning in 2024.

The OECD continues to release guidance and many countries implemented legislation to adopt the rules for tax years beginning in 2024.

Although the United States has not yet enacted legislation implementing Pillar Two, there can be no assurance that our effective tax rate or tax payments will not be adversely affected as countries independently amend their tax laws to adopt Pillar Two.

Our commitments and shareholder expectations relating to environmental, social and governance ("ESG") considerations may expose us to liabilities, increased costs, reputational harm, and other adverse effects on our business.

We are increasingly focused on ESG considerations relating to our business, including greenhouse gas emissions, human and civil rights and diversity, equity and inclusion.

New laws and regulations in these areas, including those passed by the State of California and the SEC, will be required to be adopted, and may be passed by other states or regulatory agencies.

The criteria used by regulators and other relevant stakeholders to evaluate our ESG practices, capabilities, and performance may change rapidly, which in each case could require us to undertake costly initiatives or operational changes.

Our commitments and shareholder expectations relating to responsible business initiatives may expose us to liabilities, increased costs, reputational harm, and other adverse effects on our business.

We are increasingly focused on responsible business initiatives relating to our business, including greenhouse gas emissions, human and civil rights and talent management.

New laws and regulations in these areas, including those passed by the State of California, will be required to be adopted, and may be passed by other states or regulatory agencies.

The criteria used by regulators and other relevant stakeholders to evaluate our responsible business initiative practices, capabilities, and performance may change rapidly, which in each case could require us to undertake costly initiatives or operational changes.

In addition, the requirements may not be uniform across jurisdictions, which may result in increased complexity and cost to become or remain compliant.

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Managing these considerations and implementing these goals and initiatives involves risks and uncertainties, including increased costs, and often depends on third-party performance or data that is outside our control.

We cannot guarantee that we will achieve our announced ESG goals and initiatives, satisfy all stakeholder expectations, or that the benefits of implementing or achieving these goals and initiatives will not surpass their projected costs.

Any failure, or perceived failure, to achieve ESG goals and initiatives, as well as to manage ESG risks, adhere to public statements, comply with federal, state or international ESG laws and regulations or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

We cannot guarantee that we will achieve our announced responsible business initiatives, satisfy all stakeholder expectations, or that the benefits of implementing or achieving these goals and initiatives will not surpass their projected costs.

Any failure, or perceived failure, to achieve responsible business initiatives, as well as to manage associated risks, adhere to public statements, comply with federal, state or international laws and regulations or meet evolving and varied stakeholder expectations and standards could result in legal and regulatory proceedings against us and materially adversely affect our business, reputation, results of operations, financial condition and stock price.

Our business, sales and brand value could be harmed by violations of labor, trade or other laws.

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Furthermore, many of our license agreements require minimum royalty payments, and if we are unable to generate sufficient sales and profitability to cover these minimum royalty requirements, we may be required to make additional payments to the licensors that could have a material adverse effect on our business and results of operations.

In addition, because certain of our license agreements are non-exclusive, new or existing competitors may obtain licenses with overlapping product or geographic terms, resulting in increased competition for a particular market.

addition, because certain of our license agreements are non-exclusive, new or existing competitors may obtain licenses with overlapping product or geographic terms, resulting in increased competition for a particular market.

Licenses - Company as Licensor

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Our business, results of operations, financial condition and cash flows could be adversely affected by the failure of financial institutions to fulfill their commitments under our Credit Agreement.

The Fifth Amendment to our Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), which matures on October 5, 2026, is provided by a syndicate of financial institutions, with each institution agreeing severally (and not jointly) to make revolving credit loans to us in an aggregate amount of up to $500.0 million in accordance with the terms of the Credit Agreement.

The Fourth Amended and Restated Credit Agreement (the “Credit Agreement”), which matures on October 5, 2026, is provided by a syndicate of financial institutions, with each institution agreeing severally (and not jointly) to make revolving credit loans to us in an aggregate amount of up to $500.0 million in accordance with the terms of the Credit Agreement.

In addition, the Credit Agreement provides for an increase at the Company’s option by up to $250.0 million.

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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 1A. Risk Factors