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Item 1. Business

2023-03-16 compared with 2022-03-21 · 132 added, 111 removed, 109 unchanged (69% of the section changed)

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

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

We operate in three reportable segments:

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Together, the U.S.

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, commissions 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 our direct-to-consumer e-commerce site at www.vincecamuto.com.

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

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

References to a fiscal year (e.g., "2022") refer to the calendar year in which the fiscal year begins.

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.

RETAIL SEGMENTS

We offer a wide 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.

• DSW Designer Shoe Warehouse- Our DSW banner, which is offered both in the U.S.

and in Canada, is the destination for on-trend and fashion-forward footwear and accessory brands at a great value every single day, offering a wide assortment of brand name dress, casual and athletic footwear and accessories for women, men and kids.

We offer a wide assortment of dress, casual, and athletic footwear and accessories for women, men and kids, with a significant number of our products geared toward athletic and kids.

• DSW Designer Shoe Warehouse- Our DSW banner, which is offered both in the United States ("U.S.") and in Canada, is the destination for on-trend and fashion-forward footwear and accessory brands at a great value every single day, offering a wide assortment of dress, casual, and athletic footwear and accessories for women, men and kids.

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

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Online orders from the U.S.

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

can also be fulfilled from our distribution center located in New Jersey, which is a shared facility with the Brand Portfolio segment ("East Coast Logistics Center"), or directly from our vendors (referred to as "drop ship").

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

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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 2020 and continuing into 2021, 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, JLO Jennifer Lopez, and Jessica Simpson brands.

We believe that our increased penetration in the athletic market, coupled with our historical success in dress and seasonal footwear 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 sell a large assortment of national brands and brands we have rights to sell through ownership or license arrangements, which we refer to as "Owned Brands." During 2022, we made progress in our long-term goal of doubling the net sales from our Owned Brands by 2026 (using 2021 net sales as a baseline), while maintaining our net sales from national brands.

We expect this long-term goal will result in approximately one-third of our total net sales coming from Owned Brands by 2026.

We believe that increasing net sales from our Owned Brands products will not only drive growth and expand our gross margin, but will also elevate our presence as a brand builder.

In addition to disaggregating our net sales between Owned Brands and national brands, we disaggregate our net sales 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 disaggregation of total net sales.

The following table presents certain data about the sourcing of our merchandise:

Number of unrelated third-party merchandise vendors 440 480

Number of unrelated third-party merchandise vendors at end of fiscal year 420 440

Percentage of purchases from:

Brand Portfolio segment, including First Cost sourced exclusive branded products and wholesale purchases of licensed products 9 % 8 %

Top three unrelated third-party merchandise vendors 20 % 22 %

We separate our merchandise into four primary categories:

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

Refer to Note 2 , 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.

Brand Portfolio segment, including wholesale purchases and First Cost sourced Owned Brands 8 % 9 %

Top three national brand vendors 22 % 20 %

LOYALTY PROGRAMS

We invite customers to join our VIP rewards programs, where members earn points towards discounts on future purchases.

We invite customers to join our VIP rewards programs, which enable members to earn points toward discounts on future purchases.

Our VIP rewards programs provides timely customer insights and creates stronger customer engagement, while driving a higher-than-average level of customer spend.

The following table presents the number of members enrolled in our loyalty programs that have made a purchase over the prior two years and the percentage of retail segments' net sales generated from these members:

January 29, 2022 January 30, 2021

Number of VIP members (in thousands) 28,175 28,614

Number of VIP members at end of fiscal year (in millions) 32.1 28.2

Percentage of retail segments' net sales generated from VIP members 89 % 87 %

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.

Retail segment operations, the majority of our inventory is shipped directly from suppliers to our distribution center, which is located in Columbus, Ohio, and a West Coast facility that is 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 to our customers from our East Coast Logistics Center .

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

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Through our U.S.

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 enhancing systems and processes.

drop ship program, inventory is shipped from our vendors' warehouses directly to our customers.

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

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

BRAND PORTFOLIO SEGMENT

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 our other retailer customers.

Our Brand Portfolio segment designs, develops, and sources in-season fashion footwear and accessories for the sale of wholesale merchandise to our retail segments and our 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 a direct-to-consumer e-commerce site at www.vincecamuto.com.

Refer to Note 2 , Revenue , of the Consolidated Financial Statements of this Form 10-K for the Brand Portfolio segments' total net sales attributable to each channel.

The Brand Portfolio segment has four customers that make up approximately 57% of its total net sales, excluding intersegment net sales, and the loss of any or all of these customers could have a material adverse effect on the Brand Portfolio segment.

In addition, we sell our branded products on a 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 segment's total net sales attributable to each channel.

The Brand Portfolio segment has four customers that make up approximately 53% of its total net sales, excluding intersegment net sales.

The loss of any or all of these customers could have a material adverse effect on the Brand Portfolio segment.

LICENSING RIGHTS

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

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 owns several intellectual property rights, including, among others, Vince Camuto and Louise et Cie.

Our equity investments in ABG-Camuto, LLC ("ABG-Camuto") and Le Tigre 360 Global LLC ("Le Tigre") are an integral part of the Brand Portfolio segment.

In partnership with Authentic Brands Group LLC, a global brand management and marketing company, we have a 40% ownership interest in ABG-Camuto, a joint venture that owns the intellectual property rights of Vince Camuto and others.

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 licensed products, subject to guaranteed minimums.

We have entered into a licensing agreement with ABG-Camuto, whereby we pay royalties to ABG-Camuto based on the sales of licensed products, 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, included within the Brand Portfolio segment as it is considered an integral part of the Brand Portfolio segment business.

In July 2022, we acquired a 33.3% ownership interest in Le Tigre, which manages the Le Tigre brand, for $8.2 million.

We entered into a license agreement with Le Tigre, whereby we pay royalties on our net sales from the Le Tigre brand, subject to guaranteed minimums.

The license agreement provides for the exclusive right to design, source, and sell Le Tigre branded footwear .

W e recognize equity investments and earnings under the equity method within the Brand Portfolio segment.

In addition, we own the licensing rights for footwear of the Jessica Simpson brand and for footwear and handbags of the Lucky Brand.

SOURCING AND DISTRIBUTION

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

The majority of our wholesale inventory is shipped directly from factories in foreign countries to our East Coast Logistics Center, where the 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:

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All other foreign locations 6 % 5 %

On December 13, 2022, we acquired a 79.4% ownership interest in Topo Athletic LLC ("Topo") for $19.1 million.

Topo is a designer of specialty athletic footwear that sells its Topo branded products at wholesale to retailers and international distributors and through its direct-to-consumer e-commerce site at www.topoathletic.com.

The Topo acquisition provides us with expanded capabilities within the athletic footwear market.

On February 4, 2023, we acquired the Keds business, including the Keds brand, inventory, and inventory-related accounts payable, from Wolverine World Wide, Inc.

for $123.3 million.

The Keds business designs, sources, and sells branded footwear and earns revenue from the wholesale of products to retailers in the U.S.

and Canada, the wholesale of products to international distributors, and the sale of branded products through direct-to-consumer e-commerce sites in the U.S.

We will account for the acquisition and include the results of the Keds business in our Brand Portfolio segment beginning with our first quarter of 2023.

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.

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

CHIEF EXECUTIVE OFFICER TRANSITION

In January 2023, we announced our planned succession process relating to the Company's CEO role, whereby our current CEO, Roger Rawlins, will step down from his role as CEO and as a member of the Board of Directors effective April 1, 2023, or such earlier date as determined by the Board of Directors, at which time Doug Howe, who currently serves as Executive Vice President of the Company and President of DSW, will assume the CEO role and join the Board of Directors as a Class II director.

To assist in facilitating a smooth transition, Mr.

Rawlins will remain employed under the terms of a transition and consulting agreement through April 1, 2023 and, for the 12-month period thereafter, will serve as a strategic advisor to the Company and the Board of Directors.

HUMAN CAPITAL MANAGEMENT

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.

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

One of our core strategies is to invest in and support our associates who are key to differentiating our products and experiences in the competitive footwear market.

We monitor and adapt as necessary to maintain our competitive position, including the following areas of focus:

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

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

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

To support these objectives, our human resources programs aim 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;

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

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

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

As of January 29, 2022, we employed approximately 13,500 people worldwide, of which approximately 11,600 are employed in the U.S.

As of January 28, 2023, we employed approximately 14,000 people worldwide, 12,000 of whom are employed in the U.S.

TOTAL REWARDS

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

This practice was especially crucial in 2021 as we worked to mitigate the ongoing challenging labor market.

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 strive to provide market competitive wages and salaries, targeting the middle of the market in most cases.

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store that exceeds applicable minimum wage requirements.

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

• To compete for local distribution center talent, we provide a peak season incentive bonus and continually monitor local pay practices.

• We provide stock-based, long-term incentives for senior executives through the director level that align with the interests of shareholders.

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

• In 2021, we rewarded our frontline store associates with three separate discretionary bonuses to express appreciation for their dedication and perseverance through the ongoing challenges precipitated by the pandemic.

Health & Wellness Related-

• We continue to offer a COVID-19 paid leave policy that provides up to one week of pay for associates who contract the virus, are involuntarily quarantined, are experiencing side effects from obtaining a vaccine, or are without work due to changes in store hours because of direct or indirect impacts of the virus.

• In 2021, we implemented a new benefit granting paid time off to over 8,500 U.S.

part-time associates, which they began accruing for use at the beginning of 2022.

• Up to seven days of free backup childcare per year is provided to all full-time associates who need emergency childcare services for any reason.

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

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

Health & Wellness

• For most of 2022, we continued the COVID-19 paid leave policy that provided up to one week of pay for associates who contracted the virus, were involuntarily quarantined, were experiencing side effects from obtaining a vaccine, or were without work due to changes in store hours because of direct or indirect impacts of the virus.

The policy was deemed to no longer be necessary in October 2022;

however, we continue to follow all applicable COVID-19 local paid leave regulations.

• In 2022, we added a new paid time off benefit for our approximately 9,000 U.S.

part-time associates that enables them to take time off with pay if sick, to care for a family member, or to enjoy a break from work.

• In 2022, we added a medical access travel benefit that reimburses up to $4,000 per year for eligible travel expenses when it is necessary for an associate or dependent enrolled in a medical plan to travel 100 miles or more from home to obtain access to covered medical care.

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

Dental coverage is also available.

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

◦ concierge care coordinators and nurses who assist with clinical support for health conditions, locate high quality doctors, enroll in benefit plans, advocate to resolve insurance billing issues, connect to available community resources, and answer member benefit questions;

◦ unlimited telemedicine access to U.S.

board-certified physicians, via phone or video conference, for general medical, dermatology, and mental health services;

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

◦ Concierge care coordinators and nurses who can assist with clinical support for health conditions, locate high quality doctors, advocate to resolve insurance billing issues, connect members to available community resources, and answer member benefit questions.

◦ Free unlimited telemedicine access to U.S.

board-certified physicians, via phone or video, for general medical, dermatology, and mental health services.

◦ Specialty prescription drug medications with most at no cost to enrolled associates and their dependents.

◦ Fertility services that provide 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.

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

• Multiple types of paid leave are provided.

Full-time associates receive short-term disability income replacement insurance at no cost, paid parental leave, and jury duty pay.

◦ Maternity program that provides resources and support to expecting mothers through expert nurse care coordinators throughout their pregnancies.

• Multiple types of paid leave are provided at no cost to associates.

Full-time associates receive short-term disability income replacement pay, as well as paid parental leave, and jury duty pay.

All associates are eligible for military pay and bereavement pay.

• Voluntary benefits (long-term disability, accident, hospital indemnity, and critical illness) and flexible spending accounts are available to full-time associates to support their financial needs.

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

• 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.

• Free accredited, general education college courses, as well as discounted tuition offerings through multiple partner schools, is available to all associates.

• Tuition reimbursement up to $5,250/year is available to all full-time associates, providing the opportunity to take classes or earn a bachelor's degree.

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

• Free accredited, general education college courses, as well as discounted tuition offerings through multiple partner schools, are available to all associates.

• Up to $5,250 in tuition reimbursement per year i s available to all full-time associates to provide the opportunity to take classes or earn a degree.

• Up to seven days of free backup childcare per year is provided to all full-time associates who need emergency childcare services for any reason.

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

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

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

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 retent ion.

During 2021, over 11,800 associates completed one of our over 280 courses via our online learning platform.

Training provided through our online learning platform includes nearly 250 resources such as videos, self-paced on-demand learning, and virtual instructor-led sessions.

A wide variety of resources are designed to address the needs of our entire workforce, from entry-level associates to our most senior executives.

During 2022, 11,500 associates completed approximately 100,000 learning experiences through our online learning platfor m.

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

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.

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The Company is committed to good corporate citizenship.

Not only do we strive to create positive impacts within our organization, but we aim to better the communities in which we conduct business.

DBI Gives is our philanthropic community interest group whose mission is to inspire community involvement and enhance associate engagement and has three main areas of focus:

Not only do we strive to create positive impacts within our organization, but we aim to better the communities in which we conduct business through DBI Gives, our philanthropic community interest group.

DBI Gives' mission is to inspire community involvement and enhance associate engagement and has three main areas of focus:

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

Diversity, Equity & Inclusion - Support organizations whose key constituents align with the diversity dimensions represented by our Business Resource Groups ("BRGs").

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

As a result, we support the organizations that put our local communities first and provide opportunities for our associates to give back through volunteering and donations.

Community - As the places where our associates live and work mean everything to us, we support the organizations that put our local communities first and provide opportunities for our associates to give back through volunteering and donations.

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, while keeping them out of landfills and giving shoes and garments a second life.

Since partnering with Soles4Souls in 2018, we are proud to have donated nearly six million pairs of shoes, including more than 1.8 million pairs donated in 2021.

Soles4Souls - Soles4Souls creates sustainable jobs and provides relief through the distribution of shoes and clothing around the world, while giving shoes and garments a second life and keeping them out of landfills.

Since partnering with Soles4Souls in 2018, we are proud to have donated over 7 million pairs of shoes, including 1.6 million pairs donated in 2022.

I n 2022, we focused our register donation efforts to support Soles4Souls, generating over $600,000 in customer-funded donations.

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.

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We support Two Ten with corporate financial donations and subject matter expertise to continue to enrich their community program offerings.

Hometown Partnerships - 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.

In 2021, we received the Dale.

E Heydlauff United Way Legacy Award for Outstanding Philanthropy Leadership from Columbus Business First, for the new and innovative partnerships we forged through our point-of-sale campaigns and the creation of the Equity Advancement Fund at United Way of Central Ohio.

Through our register donations, during 2021, we also raised nearly $200,000 for Nationwide Children’s Hospital’s "On Your Sleeves" program to advance their goal of providing free mental health education resources to children in all communities across the U.S.

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

During the 2022 holiday season, with the cost of food on the rise, our associates helped address hunger and food insecurity by collecting and donating food items to their local food banks and packing meals for those in need.

Altogether, our associates collected/packed over 74,000 meals.

DIVERSITY, EQUITY, AND INCLUSION ("DE&I")

We support diversity, equity, and inclusion.

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

We support diversity, equity, and inclusion and believe that:

• diversity is the celebration of the ways we are alike and different, as well as unique;

• equity compels us to be fair, while also recognizing the need to treat others differently 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, on a voluntary basis, to get involved and help advance our DE&I strategy include:

• BRGs are associate-led groups organized around a common diversity dimension to foster an inclusive, engaging work environment for all.

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

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

No group is exclusive;

all groups are open to any associate who wants to join, and associates can be members of as many groups as they want.

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 workpl ace.

In 2021, a Racism Matters webinar series was utilized to address systemic racism and to 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., nearly 80% of our associates are female and over 50% of the associate population is comprised of people of color.

Additionally, as of the end of 2021, women make up 40% of the Company's Board of Directors and 49% of the executives in the vice president and above population.

Rawlins, Designer Brands' Chief Executive Officer, 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 third consecutive year, Designer Brands has been recognized for its LGBTQ+ inclusion efforts with a perfect score on the Human Rights Campaign's ("HRC") Corporate Equality Index, which places us on HRC's "Best Places to Work for LGBT Equality" list.

Designer Brands has also been recognized by Forbes as one of "The Best Employers for Women" and "The Best Employers for Diversity."

We believe that paying our people fairly, regardless of gender, race, or any other status, enables us to deliver on our goal of creating an inclusive environment where we can all be ourselves, contribute ideas and do our best work.

To this end, we have invested in pay equity processes that allow us to assess whether associates with similar roles and experience earn equal pay for

comparable work.

Against the backdrop of our belief that equality and diversity makes our organization stronger, we continue to focus on and invest in pay equity processes.

• inclusion is the act of ensuring our differences are welcomed, valued, respected, and heard.

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

Formal ways for associates, on a voluntary basis, to get involved include:

• BRGs, which are associate-led groups organized around a common diversity dimension to foster an inclusive, engaging work environment for all.

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

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

All groups are inclusive and open to any associate who wants to join.

Associates can be members of as many groups as they want.

Our BRGs, CIGs, and Councils provide a unique strategic perspective based on shared experience, background, and allyship, while promoting diversity in our workplace and community in alignment with our business goals.

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

We strive to maintain a diverse and inclusive workforce.

As of January 28, 2023, nearly 79% of our U.S.

based associates self-identified as female and over 55% of our U.S.

associate population self-identified as people of color.

Additionally, as of the end of 2022, 36% of the Company's Board of Directors and 46% of executives in vice president and above positions self-identified as female.

Rawlins, Designer Brands' current 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 top-down approach to furthering 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 fourth consecutive year, Designer Brands has been recognized for its LGBTQ+ inclusion efforts with a 100 score on the Human Rights Campaign's ("HRC") Corporate Equality Index, which places us on HRC's "Best Places to Work for LGBT Equality" list.

Designer Brands has also been recognized by Forbes as one of "The Best Employers for Diversity," "The World's Best Employers" and "The World's Top Female-Friendly Companies."

In 2022, Designer Brands announced an investment of $2.0 million into advancing action-oriented DE&I through a partnership with Pensole and legendary footwear designer Dr.

D'Wayne Edwards, President of Pensole Lewis College of Business & Design ("PLC").

Located in Detroit, PLC is the first and only Historically Black College & University ("HBCU") in Michigan and the first HBCU with a focus on design.

In this new partnership, Designer Brands invested in the first Black-owned footwear factory in the U.S.

– JEMS by Pensole – to produce shoes designed by PLC graduate students, to be sold exclusively at DSW.

Together with Pensole, we will provide designers with opportunities to offer new products directly to consumers.

Ultimately, the partnership is aimed at creating careers and investing in diverse, talented, aspiring designers to become the future of our industry.

We believe that paying our people fairly, regardless of gender, race, ethnicity, or any other status, enables us to deliver on our goal of creating an inclusive environment where we can all be ourselves, contribute ideas and do our best work.

To this end, we have invested in pay equity processes that allow us to assess whether associates with similar roles and experience earn equal pay for comparable work.

Based on our belief that equality and diversity makes our organization stronger, we continue to focus on and invest in pay equity processes.

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

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

ASSOCIATE ENGAGEMENT

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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 from which are imported may from time to time impose additional duties, tariffs, or other restrictions on our imports or adversely modify existing restrictions.

In addition, the countries where our products are manufactured or imported from 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, results of operations, and competitive position.

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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®, and others.

ABG-Camuto licenses the rights to certain of its trademarks in specific categories, such as footwear and handbags, to Camuto Group, which as of January 29, 2022, have seven years remaining on the initial license term, which are indefinitely renewable on five-year terms.

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

ABG-Camuto licenses to us the rights to certain of its trademarks in specific categories, such as footwear and handbags, which, as of January 28, 2023, have six years remaining on the initial license term and are indefinitely renewable on five-year terms.

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

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the spring season, which includes the first and second fiscal quarters, and the fall season, which includes the third and fourth fiscal quarters.

Generally, net sales in the fall season have been slightly higher than the spring season.

Our seasonal results of operations may fluctuate based on the change in weather conditions and our customers' interest in new seasonal styles.

Since the COVID-19 outbreak, we have not experienced the typical seasonal trends given changes in customer behavior.

AVAILABLE INFORMATION

Information about Designer Brands Inc., including its reports filed with or furnished to the Securities and Exchange Commission ("SEC"), is available through Designer Brands Inc.'s website at www.designerbrands.com.

Such reports are accessible at no charge through Designer Brands Inc.'s website and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC.

Historically, net sales have been slightly higher in the fall season than in the spring season;

however, during 2022, net sales in the fall season were slightly lower than the spring season due to the decline in overall global economic conditions and unseasonably warm weather.

Our seasonal results of operations may fluctuate based on global economic conditions, changes in weather conditions, and our customers' interest in new seasonal styles.

AVAILABLE IN FORMATION

Information about Designer Brands, including its reports filed with or furnished to the Securities and Exchange Commission ("SEC"), is available through our website at www.designerbrands.com.

Such reports are accessible at no charge through our website and are made available as soon as reasonably practicable after such material is filed with or furnished to the SEC.

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.

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