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Item 1. Business

2021-03-22 compared with 2020-05-01 · 170 added, 140 removed, 33 unchanged (90% of the section changed)

Designer Brands Inc., originally founded as DSW Inc.

and incorporated in the state of Ohio in 1969, is one of North America's largest designers, producers and retailers of footwear and accessories.

We operate a portfolio of retail concepts in the U.S.

and Canada under the DSW Designer Shoe Warehouse ("DSW"), The Shoe Company and Shoe Warehouse banners.

Through Camuto LLC, a wholly owned subsidiary doing business as "Camuto Group," we design and produce footwear and accessories.

We also own licensing rights for the Jessica Simpson footwear business and footwear and handbag licenses for Lucky Brand and Max Studio.

In partnership with Authentic Brands Group LLC, a global brand management and marketing company, we have a 40% stake in ABG-Camuto, LLC ("ABG-Camuto"), a joint venture that acquired several intellectual property rights, including Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, and others, and focuses on licensing and developing new category extensions to support the global growth of these brands.

We have a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto.

Our Affiliated Business Group ("ABG") partners with other retailers to help build and optimize their in-store and online footwear businesses by leveraging our sourcing network to produce a merchandise assortment that meets their needs.

ABG currently provides services to 282 Stein Mart stores, Steinmart.com, and a Frugal Fannie's store through ongoing supply arrangements.

We present three reportable segments:

Designer Brands Inc., originally founded as DSW Inc., is one of North America's largest designers, producers and retailers of footwear and accessories.

We operate in three reportable segments:

Retail segment, the Canada Retail segment, and the Brand Portfolio segment.

Retail segment includes stores operated in the U.S.

under the DSW Designer Shoe Warehouse banner and its related e-commerce site.

The Canada Retail segment, which is the result of the Town Shoes Limited ("TSL") acquisition, includes stores operated in Canada under The Shoe Company, Shoe Warehouse, DSW Designer Shoe Warehouse banners and related e-commerce sites.

Retail segment operates the DSW Designer Shoe Warehouse ("DSW") banner through its U.S.

stores and e-commerce site.

The Canada Retail segment operates The Shoe Company, Shoe Warehouse, and DSW banners through its Canada stores and e-commerce sites.

Together, the U.S.

Retail and Canada Retail segments are referred to as the "retail segments." The Brand Portfolio segment, which is the result of the Camuto LLC acquisition, earns revenue from the sale of wholesale products to retailers, commissions for serving retailers as the design and buying agent for products under private labels ("First Cost"), and the sale of branded products on direct-to-consumer e-commerce sites.

Our other operating segments, including ABG, are below the quantitative and qualitative thresholds for reportable segments and are aggregated into Other for segment reporting purposes.

Retail and Canada Retail segments are referred to as the "retail segments." The Brand Portfolio segment earns revenue from the sale of wholesale products to retailers, commission for serving retailers as the design and buying agent for products under private labels (which we refer to as "First Cost"), and the sale of branded products through the direct-to-consumer e-commerce site at www.vincecamuto.com.

Our fiscal year ends on the Saturday nearest to January 31.

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This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year, but occasionally will contain an additional week resulting in a 53-week fiscal year.

The periods presented in these financial statements and selected financial data each consisted of 52 weeks, except for fiscal 2017 which consisted of 53 weeks.

Recent Developments

In March 2020, the World Health Organization declared the coronavirus ("COVID-19") outbreak a pandemic, which continues to spread throughout North America and worldwide.

The health and safety of our customers and employees remain our top priority as we continue to make decisions during this rapidly evolving situation.

We have taken decisive actions across our businesses to help protect employees, customers and others in the communities we serve.

As a measure to limit the spread of the virus, effective March 18, 2020, we temporarily closed all of our stores in the U.S.

Our e-commerce business will continue to be available to customers and our stores will be used in the fulfillment of online orders to be shipped to customers or available for curbside pickup.

During this unprecedented period of uncertainty, we have in place business continuity plans involving adjustments to operational plans, inventory disciplines, liquidity management, and reductions to our expense and capital expenditure plans.

Such measures include implementing temporary leaves of absence for over 80% of our workforce without direct pay and pay reductions for nearly all employees not placed on temporary leave.

The COVID-19 outbreak and the temporary closure of all of our stores has had a material adverse impact on our business, liquidity, financial condition, and results of operations.

On November 5, 2018 , we completed the acquisition of Camuto LLC, a footwear design and brand development organization, from Camuto Group LLC (the "Sellers").

The acquisition of Camuto LLC gives us the capabilities to integrate Camuto Group produced products into our retail distribution networks from their existing national brands and to produce our exclusive branded products.

Also on November 5, 2018 , we formed the ABG-Camuto joint venture.

On May 10, 2018 , we acquired the remaining interest in TSL that we did not previously own.

Beginning with our second quarter of fiscal 2018, TSL ceased being accounted for under the equity method of accounting and was accounted for as a consolidated wholly owned subsidiary.

Subsequent to the acquisition, and as a result of our strategic review, we exited the Town Shoes banner in Canada during fiscal 2018.

On March 4, 2016, we acquired Ebuys, Inc.

("Ebuys"), an off-price footwear and accessories retailer operating in digital marketplaces.

Due to recurring operating losses incurred by Ebuys since its acquisition, as well as increased competitive pressures in the digital marketplace, we decided to exit the business and ended all operations in early fiscal 2018.

The footwear market is highly competitive with few barriers to entry.

We compete against a diverse group of manufacturers and retailers, both small and large, including department stores, mall-based shoe stores, national chains, independent shoe retailers, single-brand specialty retailers, online shoe retailers, brand-oriented discounters, multi-channel specialty retailers and brand suppliers.

In addition, our wholesale retailer customers sell shoes purchased from competing footwear suppliers with owned and licensed brands that are well-known.

Many of these suppliers invest significantly in marketing their brands.

In our retail segments, many of our competitors generally offer a more limited assortment at higher initial prices in a less convenient format than us and without the benefits of our customer loyalty programs.

In addition, we believe we successfully compete against retailers who have attempted to duplicate our format because they typically offer assortments with fewer recognizable brands and more styles from prior seasons, unlike our current on-trend merchandise.

We believe our stores provide a competitive advantage that drives growth through customer engagement by using self-service fixtures, stimulating digital sales, and providing a convenient location for customers to pick up and return products ordered online, as well as serving as geographically appropriate shipment centers for our digitally demanded products.

In our Brand Portfolio segment, we compete primarily based on providing fashion-forward styles at high quality standards along with strong customer relationships.

Retail Segments

The following table presents the number of stores we operated at the end of each of the last three fiscal years by segment and by banner:

February 1, 2020

February 2, 2019

February 3, 2018

Retail segment - DSW Designer Shoe Warehouse

Canada Retail segment:

The Shoe Company / Shoe Warehouse

DSW Designer Shoe Warehouse

Our growth strategy is to strengthen our position as a leading footwear and accessories retailer by expanding into new markets with the appropriate banners and store format, extending our customer reach through new categories and services, expanding our offering of exclusive brands, and creating a differentiated customer experience and strong value proposition.

With our stores playing a key role in supporting our strong online demand growth and increasing fulfillment of that demand, we are regularly evaluating our real estate strategy to optimize how we can best serve the customers' shopping preferences.

Our evaluation of potential new stores integrates information on demographics, co-tenancy, retail traffic patterns, site visibility and accessibility, store size and configuration, and lease terms.

Our real estate decision-making entails an analysis of underlying demand for our products through both physical and digital channels.

Our analysis also considers current penetration levels in markets we serve and our ability to deepen our market share and acquire new customers.

Our DSW banner stores, both in the U.S.

Our DSW banners, both in the U.S.

and in Canada, are the destination for on-trend and fashion-forward footwear and accessory brands at a great value every single day.

DSW stores tend to serve larger markets and average approximately 20,300 square feet.

We offer a wide assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids in stores and on e-commerce platforms.

The Shoe Company and Shoe Warehouse banner stores located in Canada offer on-trend footwear and accessory brands that target every-day family styles at a great value every single day.

The Shoe Company and Shoe Warehouse stores tend to serve mid- to smaller markets and average approximately 5,300 square feet.

We offer a select assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids in stores and on e-commerce platforms, with a significant number of our products geared towards athletic and kids.

Our strong retail market position with all of our banners is driven by our competitive strengths in assortment, convenience, and value as described in more detail below.

Our goal is to excite our customers with a competitive, compelling assortment of shoes and complementary accessories and services that fulfill a broad range of style and fashion preferences.

We sell a large assortment of brand name, designer and exclusive branded merchandise.

We purchase directly from over 580 domestic and foreign vendors, primarily in-season footwear that can be found in specialty and department stores.

We offer a broad assortment of handbags, hosiery, jewelry and other accessories that appeal to our brand and fashion-conscious customers.

During fiscal 2019, the retail segments purchased approximately 6% of our merchandise through the Brand Portfolio segment, including First Cost sourced exclusive branded products and wholesale purchases of licensed products.

By the end of fiscal 2020, we will have transitioned the sourcing of most of the exclusive branded products to the Brand Portfolio segment.

Our other vendors include suppliers who manufacture their own merchandise, or supply merchandise manufactured by others, or both.

Most of our domestic vendors import a large portion of their merchandise from abroad.

We have quality control programs under which our buyers are involved in establishing standards for quality and fit, and we examine incoming merchandise in regard to color, material and overall quality.

As our sales volume grows, we believe there will continue to be adequate sources available to acquire a sufficient supply of quality merchandise in a timely manner and on satisfactory economic terms.

Our top three third-party vendors in the aggregate supply approximately 21% of our retail merchandise.

Our merchandising group continuously monitors current fashion trends, as well as historical sales trends, to identify popular styles and styles that may become popular in the upcoming season.

We track performance and sales trends on a weekly basis and have a flexible buying process that allows us to reorder successful styles and cancel under-performing styles throughout each season.

To keep our product mix fresh and on target, we test new fashions and actively monitor sell-through rates.

We also identify new vendor and product category opportunities.

We separate our merchandise into four primary categories:

women’s footwear, men’s footwear, kids' footwear, and accessories and other.

The following table presents the percentages of the retail segments' total net sales attributable to each merchandise category:

Women's footwear

Men's footwear

Kids' footwear

Accessories and other

We provide our customers with the highest level of convenience based on our belief that customers should be empowered to control and personalize their shopping experiences.

In stores, our merchandise is displayed on the selling floor with self-service fixtures to enable customers to view and touch the merchandise.

We believe this shopping experience provides our customers with maximum convenience as they are able to browse and try on merchandise without feeling rushed or pressured to make a purchasing decision.

Merchandise is organized in a logical manner that groups together similar styles by gender, such as dress, casual, athletic, kids, and seasonal merchandise, for easy browsing.

Our omni-channel capabilities create an endless aisle for the customer.

Customers can order additional styles, sizes, widths and categories.

We offer a wide assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids.

The Shoe Company and Shoe Warehouse banners in Canada offer on-trend footwear and accessory brands that target every-day family styles at a great value every single day.

We offer a select assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids, with a significant number of our products geared towards athletic and kids.

Our e-commerce platforms offer customers access from a variety of devices through the Internet, with mobile-optimized sites, and our mobile application.

Our omni-channel capabilities allow customers to order a wide range of styles, sizes, widths and categories.

Online orders in the U.S.

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can also be fulfilled from our fulfillment center or directly from our suppliers (referred to as "drop ship").

To further meet customer demand of how they receive products, we provide our customers options to buy online, pickup in store and buy online, ship to store.

Our order routing optimization system determines the best location to fulfill digitally demanded products, which allows us to optimize our operating profit.

The fulfillment center processes U.S.

orders, which are shipped to a customer's home or to a store

when an order is placed online and a customer requests it to be shipped to store.

Orders originating from a store that cannot be fulfilled immediately in that store can either be fulfilled from our ship from store capability, from the fulfillment center (in the U.S.), or drop shipped from a vendor's warehouse.

Value for Our Customers

Our buying organization aims to provide customers with high quality, in-season fashion styles at attractive prices compared to the sale prices found at specialty retailers and department stores.

In addition, we provide additional value through our VIP rewards programs in the U.S.

and Canada where members earn points towards discounts on future purchases.

Members also receive promotional offers and gifts with purchase offers.

We employ a variety of methods, including email, direct mail and social media, to communicate exclusive offers to our rewards members.

We have approximately 32 million members enrolled in our loyalty programs who have made at least one purchase over the last two years.

To further meet customer demand of how they receive products, we provide our customers options to Buy Online Pick Up in Store, Buy Online Ship to Store, and Curbside Pickup.

Likewise, returns may be shipped to us or brought back to any of our locations.

We sell a large assortment of brand name, designer and exclusive branded merchandise.

During fiscal 2020, we experienced a shift in customer preferences from dress toward casual and athletic offerings (referred to as "athleisure").

We plan to continue to expand our athleisure and kids’ products, and offer customers stylish exclusive brands, including the Vince Camuto, Lucky, and Jessica Simpson brands.

We believe that our increased penetration in the athletic market, coupled with our historical success in dress and seasonal with a fully integrated supply chain supported by our Brand Portfolio segment, position us to be a premier footwear retailer for the entire family's needs over the long term.

We purchase directly from approximately 480 domestic and foreign vendors.

During fiscal 2020, the retail segments purchased approximately 8% of our merchandise through the Brand Portfolio segment, including First Cost sourced exclusive branded products and wholesale purchases of licensed products.

Our other vendors include suppliers who manufacture their own merchandise, or supply merchandise manufactured by others, or both.

Our top three unrelated third-party vendors in the aggregate supply approximately 22% of our retail merchandise.

We separate our merchandise into four primary categories:

women’s footwear, men’s footwear, kids' footwear, and accessories and other.

Refer to Note 3, Revenue , of the Consolidated Financial Statements of this Form 10-K for the U.S.

Retail and Canada Retail segments' total net sales attributable to each merchandise category.

Loyalty Programs

We invite customers to join our VIP rewards programs, where members in the U.S.

and Canada earn points towards discounts on future purchases.

As of January 30, 2021, we have approximately 30 million members enrolled in our loyalty programs who have made at least one purchase over the last two years.

In fiscal 2020, shoppers in the loyalty programs generated approximately 84% of the combined U.S.

Retail and Canada Retail segments' net sales.

We believe that our VIP rewards programs continue to provide timely customer insights and create stronger customer engagement while driving a higher-than-average level of customer spend.

Distribution and Fulfillment

Retail segment operations, the majority of our inventory is shipped directly from suppliers to our distribution center in Columbus, Ohio and a West Coast facility operated by a third party, where the inventory is then processed, sorted and shipped to one of our pool locations located throughout the country and then on to the stores.

Our inventory can also be shipped directly from our fulfillment center, also located in Columbus, Ohio, and supported by a third-party service provider, to our customers.

For our Canada Retail segment, we engage a logistics service provider to receive purchases and distribute them to our stores.

Through our ship-from-store capability, both in the U.S.

and in Canada, inventory is shipped directly from our stores to customers.

Through our drop ship program, inventory is shipped from the vendor's warehouse directly to the customer.

Inventory management is important to our business as we manage our inventory levels based on anticipated sales and the delivery requirements of our customers.

Our inventory strategy is focused on continuing to meet consumer demand while improving our efficiency over the long term by putting systems and processes in place.

During fiscal 2020, we made significant efforts to reduce our inventory exposure and increase our focus on athletic, casual kids, and the top 50 brands in footwear.

Brand Portfolio Segment

Our Brand Portfolio segment designs, develops and sources fashion footwear and accessories.

We provide retailer customers and consumers a portfolio of licensed brands, including Vince Camuto, Louise et Cie, Sole Society, CC Corso Como, Jessica Simpson, Lucky Brand, and others.

The Brand Portfolio segment earns revenue from the sale of wholesale products to retailers, First Cost commissions, and the sale of branded products on direct-to-consumer e-commerce sites, which include www.vincecamuto.com and www.solesociety.com.

Wholesale retailer customers and First Cost customers include department stores, specialty stores, value priced retailers, national chains and online retailers.

The Brand Portfolio segment sells branded products to the Company's retail segments and ABG.

Product Design

We have established a reputation for quality, on-trend merchandise.

Our design teams are responsible for the creation and development of new product styles by utilizing our proven design process.

Our designers monitor trends in footwear and apparel and work closely with our retailer customers to identify consumer preferences.

Our future success will depend on our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations.

We believe our design process provides us with a competitive advantage allowing us to mitigate the risk of incurring costs associated with the production and distribution of less desirable designs.

Our Brand Portfolio segment designs, develops and sources in-season fashion footwear and accessories through Camuto LLC, a wholly owned subsidiary doing business as "Camuto Group," for the sale of wholesale merchandise to our retail segments and other retailer customers.

Our First Cost model earns commission-based income for serving retailers as their design and buying agent while leveraging our overall design and sourcing infrastructure.

In addition, we sell branded products on the direct-to-consumer e-commerce site at www.vincecamuto.com.

Refer to Note 3, Revenue , of the Consolidated Financial Statements of this Form 10-K for the Brand Portfolio segments' total net sales attributable to each channel.

Licensing Rights

Through Camuto Group, we own footwear, and in some cases handbag, licensing rights of Jessica Simpson, Lucky Brand, and, through a joint venture, Jennifer Lopez.

ABG-Camuto is responsible for the growth and marketing of the brands held by the joint venture.

We have entered into a licensing agreement with ABG-Camuto whereby we pay royalties to ABG-Camuto, with the royalty expense included in our cost of sales on the consolidated statements of operations, based on the sales of footwear, handbags and jewelry, subject to guaranteed minimums.

ABG-Camuto also earns royalties on sales from third parties that license the brand names to produce non-footwear product categories.

Given our 40% ownership interest in ABG-Camuto, we recognize earnings under the equity method, which is included within the Brand Portfolio segment as ABG-Camuto and considered an integral part of the Brand Portfolio segment business.

Sourcing and Distribution

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rather, we use our sourcing offices in China and Brazil to procure our products from third-party manufacturers.

We are able to achieve consistent quality, competitive prices and on-time delivery based on the established relationships we have with these manufacturers.

Prior to production, our sourcing offices inspect samples and prototypes of each style and monitor the quality of the production process.

We manage our inventory levels based on existing orders and anticipated sales.

During fiscal 2020, we adjusted production to be more aligned with customer demand as we saw a shift away from traditional dress and seasonal.

The manufacturers of our products are required to meet our quality, human rights, local compliance, safety and other standard requirements.

The following table presents the percentages of the Brand Portfolio segment's merchandise units sourced by country for fiscal 2019:

Percent of Units Sourced

These vendors are expected to respect local laws, rules and regulations of the countries in which they operate and have pledged to follow the standards set forth in the Company’s Vendor Code of Conduct, which details our dedication to human rights, labor rights, environmental responsibility, and workplace safety.

The majority of our inventory is shipped directly from factories in foreign countries to our distribution center in Westampton, New Jersey, where our wholesale inventory is then processed, sorted and provided to our customers' shipping carriers.

The following table presents the percentages of the Brand Portfolio segment's merchandise units sourced by country:

China 73 % 83 %

Vietnam 13 % 8 %

Brazil 7 % 2 %

All other foreign locations 7 % 7 %

We utilize a state-of-the-art distribution center in New Jersey to receive, sort and distribute our products to retailer customers and for drop ship orders.

Most of the wholesale orders we receive are for deliveries over the following 180 days, subject to any subsequent cancellations.

The backlog of wholesale orders at any particular time is affected by a number of factors, including cancellations, seasonality, the volume of customer e-commerce drop ship orders we fulfill, and the timing of wholesale customer purchases of our products.

For example, wholesale customers are moving towards more frequent orders at lower volumes per order.

Accordingly, a comparison of backlog from period to period may not be indicative of eventual shipments.

This is particularly true in light of recent events resulting from the COVID-19 pandemic, which has resulted in material cancellations.

As of February 1, 2020 , we had a backlog of unfilled wholesale customer orders of $49.3 million , with subsequent cancellations of $30.2 million as a result of COVID-19.

This compares to backlog of unfilled wholesale customer orders of $89.1 million as of February 2, 2019 .

The amount of backlog excludes intersegment orders and is not adjusted for estimated customer allowances, discounts and returns.

ABG-Camuto Joint Venture

ABG-Camuto is responsible for the growth and marketing of the brands held by the joint venture.

We pay royalties to ABG-Camuto, with the royalty expense included in cost of sales, based on the sales of footwear, handbags and jewelry.

ABG-Camuto also earns royalties on sales from third parties that license the brand names to produce non-footwear product categories.

Given our 40% ownership interest in ABG-Camuto, we recognize earnings under the equity method, which will be included within the Brand Portfolio segment, as ABG-Camuto is considered an integral part of the Brand Portfolio segment business.

As the design and buying agent for retailer customers, we utilize our expertise and relationships with manufacturers to facilitate the production of private label footwear to retailer customer specifications.

Our First Cost model earns commission-based income while leveraging our overall design and sourcing infrastructure.

Additional Information

The footwear market is highly competitive with few barriers to entry.

We compete against a diverse group of manufacturers and retailers, including department stores, mall-based shoe stores, national chains, independent shoe retailers, single-brand specialty retailers, online shoe retailers, brand-oriented discounters, multi-channel specialty retailers and brand suppliers.

In addition, our wholesale retailer customers sell shoes purchased from competing footwear suppliers with owned and licensed brands that are well known.

Human Capital Resources

We believe the strength of our workforce is critical to our success.

Our associates strive every day to create a welcoming and inclusive environment for our customers.

One of our core strategies is to invest in and support our associates to differentiate our products and experiences in the competitive footwear market, including the following areas of focus described below.

Our key human capital management objectives are to attract, retain, and develop the highest quality talent.

To support these objectives, our human resources programs are aimed to:

• develop associates to prepare them for critical roles and leadership positions for the future;

• reward and support associates through competitive pay, benefit, and perquisite programs;

• enhance our culture through efforts aimed at making the workplace more engaging and inclusive;

• acquire talent and facilitate internal talent mobility to create a high-performing, diverse workforce;

• engage associates as brand ambassadors of our products and experiences;

• evolve and invest in technology, tools, and resources to support our associates at work.

As of January 30, 2021, we employed approximately 11,400 people worldwide, including approximately 9,500 in the U.S.

During fiscal 2020, the COVID-19 pandemic had a significant impact on our business, operations, and workforce and resulted in significant variances in our human capital metrics, such as headcount, compared to prior years.

Total Rewards

To remain an employer of choice and maintain the strength of our workforce, we consistently assess the current business environment and labor market to refine our compensation practices, benefit programs and other associate resources.

We have a history of investing in our workforce and offer comprehensive, relevant, and innovative benefits to eligible associates in the U.S.

Compensation Related-

• We provide market competitive wages and salaries, targeting the middle of the market in most cases.

• We establish a minimum starting pay rate for each U.S.

store that exceeds the federal minimum wage and typically exceeds the state minimum wage.

• Our incentive plans provide additional cash compensation upon the achievement of results that exceed defined Company goals and are available to store management, distribution center, call center, and corporate support center associates.

• We provide stock-based long-term incentives for leaders that align with the interests of shareholders.

• We provide retirement benefits through our safe harbor 401(k) Plan, with employer matching contributions up to 4% of associate contributions.

Health & Wellness Related-

• For fiscal 2020, we adopted a special COVID-19 paid leave policy that provided up to two weeks of pay for associates who contracted the virus, were involuntarily quarantined because of the virus, or were without work due to changes in our store hours or production schedules as a result of the virus.

• Subsidized backup childcare is provided to "front-line" associates who work in our stores, distribution centers, and the call center who need emergency childcare services, especially in light of the COVID-19 pandemic.

• All associates are provided free access to a national network resource to locate babysitters and nannies, cleared by a background check, as well as discounts on tutoring, and day care centers.

• Free counseling and support, including access to licensed counselors and work/life and bereavement specialists, is available to all associates and family members 24/7/365.

In addition to telephonic access, virtual tools were added in fiscal 2020 to better meet the needs of our associates.

• To better support our associates’ mental health and well-being, we conducted Mental Health First Aid training with our human resources personnel who support various associate populations through a program created by Mental Health America.

• Comprehensive health insurance coverage is available to all full-time associates through multiple medical plans, which also include prescription and vision insurance.

Other benefits provided to associates and their dependents who are enrolled in a medical plan include:

◦ Concierge care coordinators and nurses who provide assistance with all aspects of our health plan including clinical support for health conditions, locating high quality doctors, enrolling in benefit plans, advocating to resolve insurance billing issues, connecting to available community resources and answering member benefit questions.

◦ Unlimited telemedicine access to U.S.

board-certified physicians, via phone or video conference, is available to all full-time associates for general medical, dermatology, and mental health services.

◦ Fertility services are available through a premier fertility partner who provides concierge support and access to leading fertility centers of excellence across the nation.

Our medical plan covers up to two cycles of IVF or other fertility services in addition to necessary fertility medication and testing.

◦ Maternity and parenting tools to assist before, throughout, and beyond pregnancy are available to all full-time associates through a navigation application with capabilities to phone or text a nurse.

The application helps associates discover tools and resources available throughout a maternity/paternity leave of absence, as well as the subsequent return to work.

In addition, we welcome the arrival of new family members with an after-birth care package.

• Paid leave time programs are available to all full-time associates and include short-term disability, paid parental leave, military pay, jury duty, and bereavement pay.

• Free legal help is available to all associates in areas such as civil/criminal needs, family disputes, immigration law, landlord/tenant issues, and basic document preparation.

• Free financial help, including debt counseling, lease/purchase guidance, taxes, financial planning, and college funding, is available to all associates.

• Adoption assistance is available to all full-time associates with reimbursement up to $10,000 of eligible expenses for each adoption.

• Tuition reimbursement up to $5,250 per year is available to all full-time associates and matched tuition benefits are available through an accredited online university partner.

• Discounts for all associates on DSW, American Eagle Outfitters/Aerie, and American Signature/Value City Furniture products.

• Associate accomplishments and work anniversaries, starting with one year of service, are recognized and rewarded through our web based "Inspire Greatness" recognition program.

Diversity, Equity, & Inclusion ("DE&I")

We support diversity, equity, and inclusion.

• Diversity is the celebration of the ways we are alike, as well as unique.

• Equity compels us to be fair, while also recognizing the need to treat others differently in order to mitigate the risk of inadvertently perpetuating systemic barriers.

• Inclusion is the act of ensuring our differences are not only acknowledged, but also welcomed and valued.

We strive to inspire self-expression, authenticity, and empowerment to drive the best possible experiences for our associates, customers, and communities.

Formal ways for associates to get involved and help advance our DE&I strategy include:

• Business Resource Groups ("BRGs") are voluntary, associate-led groups organized around a common diversity dimension to foster an inclusive, engaging work environment for all.

• Community Interest Groups ("CIGs") are voluntary, associate-led groups based on a common passion or interest to drive a sense of community and shared purpose.

• Councils are voluntary, associate-led groups organized to create a sense of inclusion and belonging for those who work in our stores, distribution centers, and fulfillment centers.

No group is exclusive;

all groups are open to any associate who wants to join, and associates can be a member of one or more groups.

Our BRGs, CIGs and Councils provide a unique strategic perspective of shared experience, background, and allyship, while promoting diversity in our workplace and community.

Our DE&I principles are also reflected in our associate training programs, which address our policies against harassment, bullying, and bias in the workplace.

In fiscal 2020, a Racism Matters webinar series was utilized to address systemic racism and ensure we continue to create an inclusive culture for all associates.

Recognizing and respecting our customer base, we strive to maintain a diverse and inclusive workforce.

In the U.S., over 80% of our associates are female and over 50% of the associate population is comprised of people of color.

Additionally, women make up 40% of the Company’s Board of Directors.

Rawlins, Designer Brands' Chief Executive Officer ("CEO"), is a proud signatory of the CEO Action for Diversity & Inclusion Pledge, the largest CEO-driven business commitment to advance diversity and inclusion in the workplace.

This demonstrates our goals of cultivating open dialogue, expanding diversity training, sharing best practices with other companies, and engaging our Board of Directors in the evaluation of our progress.

For the second year in a row, Designer Brands has been recognized for its LGBTQ+ inclusion efforts with a perfect score on the Human Rights Campaign’s ("HRC") Corporate Equality Index.

A perfect score places us on HRC’s "Best Places to Work for LGBT Equality" list.

We are on a journey to promote greater levels of DE&I in everything we do.

While much progress has been made, we know there is still a long way to go.

We will continue to challenge our own biases, initiate difficult conversations in meaningful ways, engage diverse perspectives to drive innovation, and intentionally evolve our operating strategies to advance this important work.

Talent Development

To help our associates succeed in their roles, we emphasize continuous learning and development opportunities.

Training provided through our online learning platform includes a wide variety of topics and is designed to address the needs of our entire workforce, from entry-level associates to our most senior executives.

We invest resources in professional development and growth as a means of improving associate performance, engagement, and retention.

During fiscal 2020, over 11,000 associates took training courses via our online learning platform.

We believe that our continued focus on frequent and constructive performance feedback, talent reviews, succession planning, and retention, have contributed to a strong internal promotion rate.

Associate Engagement

We provide all associates with the opportunity to share their opinions and feedback on their employment experience through an engagement survey that is generally performed every two years across all business segments.

Results of the survey are measured and analyzed with a goal of enhancing the associate experience, strengthen engagement and retention, and drive change.

In addition to Company-led surveys, leaders are encouraged to conduct "skip level" touch bases, host round table chats, and conduct follow-up activities to better understand associate feedback.

Also, upon exiting the Company, associates who voluntarily leave the business are provided an exit survey to help us measure satisfaction and engagement specific to what factors may have contributed to pursing another opportunity.

We strive to give back and DBI Gives is our philanthropic program that has two main areas of focus:

Empowerment - Support organizations that prioritize empowerment and build self-confidence without discrimination.

Community - The places where we live and work mean everything to us.

As a result, we support the organizations that put local communities first.

DBI Gives has three primary areas of partnership:

SOLES4SOULS - Soles4Souls creates sustainable jobs and provides relief through the distribution of shoes and clothing around the world.

Since 2006, Soles4Souls has distributed more than 30 million pairs of new and gently worn shoes.

We are proud to have donated nearly four million of those pairs during our partnership.

Two Ten Footwear Foundation - Two Ten provides scholarships and financial aid to people working in the footwear industry, as well as free counseling and community resources.

Hometown Partnerships - We continually focus on what it means to be a good corporate citizen.

From annual United Way fundraisers, American Red Cross blood drives, local nonprofit partnerships, and associate volunteering efforts, we always look for ways to help and better the communities in which we operate.

Government Regulations

Our business activities are global and subject to various federal, state, local, and foreign laws, rules and regulations.

For example, substantially all of our import operations are subject to complex trade and customs laws, regulations and tax requirements such as sanctions orders or tariffs set by governments through mutual agreements or unilateral actions.

In addition, the countries in which our products are manufactured or imported may from time to time impose additional duties, tariffs or other restrictions on our imports or adversely modify existing restrictions.

Changes in tax policy or trade regulations, the disallowance of tax deductions on imported merchandise, or the imposition of new tariffs on imported products, could have an adverse effect on our business and results of operations.

Compliance with these laws, rules and regulations has not had, and is not expected to have, a material effect on our capital expenditures, results of operations and competitive position as compared to prior periods.

For more information on the potential impacts of government regulations affecting our business, see Item 1A.

Risk Factors .

Intellectual Property

We have registered a number of trademarks, service marks and domain names in the U.S., Canada and internationally, including DSW®, DSW Shoe Warehouse® and DSW Designer Shoe Warehouse®.

We also have a 40% interest in ABG-Camuto, which holds the intellectual property rights of Vince Camuto®, Louise et Cie®, Sole Society®, CC Corso Como®, and others.

We have entered into a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto.

We also have a 40% interest in ABG-Camuto, which holds the intellectual property rights of Vince Camuto®, Louise et Cie®, and others.

We believe our trademarks and service marks have significant value and are important to building our name recognition.

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We vigorously protect our patented fixture designs, as well as our packaging, private brand names, store design elements, marketing slogans and graphics.

As of February 1, 2020 , we employed approximately 15,800 associates worldwide.

None of our associates are covered by any collective bargaining agreements.

Our business is subject to seasonal merchandise trends driven by the change in weather conditions and our customers' interest in new seasonal styles.

Our business is generally subject to seasonal trends driven by the change in weather conditions and our customers' interest in new seasonal styles.

New spring styles are primarily introduced in the first quarter and new fall styles are primarily introduced in the third quarter.

During fiscal 2020, we did not experience the typical seasonal trends due to customer behavior impacted by COVID-19.

Available Information

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The SEC also maintains a website that contains reports, proxy statements, and other information regarding issuers that file electronically with the SEC at www.sec.gov.

We have included our website addresses throughout this report as textual references only.

We have included our website addresses throughout this report as inactive textual references only.

The information contained on the websites referenced herein is not incorporated into this Form 10-K.

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 1. Business