10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☑ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended July 31, 2021

or

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-32545

DESIGNER BRANDS INC.

(Exact name of registrant as specified in its charter)

Ohio			31-0746639
(State or other jurisdiction of incorporation or organization)			(I.R.S. Employer Identification No.)
810 DSW Drive,	Columbus,	Ohio	43219
(Address of principal executive offices)			(Zip Code)

Registrant's telephone number, including area code: (614) 237-7100

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol	Name of each exchange on which registered
Class A Common Shares, without par value	DBI	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☑ Yes ☐ No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). ☑ Yes ☐ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☑
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ☐ Yes ☑ No

Number of shares outstanding of each of the registrant's classes of common stock, as of August 24, 2021: 65,266,904 Class A common shares and 7,732,743 Class B common shares.

Cautionary Statement Regarding Forward-Looking Information for Purposes of the "Safe Harbor" Provisions of the Private Securities Litigation Reform Act of 1995

Certain statements in this Quarterly Report on Form 10-Q (this "Form 10-Q") may constitute forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as "outlook," "could," "believes," "expects," "potential," "continues," "may," "will," "should," "would," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words. Any forward-looking statements contained in this Form 10-Q are based upon current plans, estimates, expectations and assumptions relating to our operations, results of operations, financial condition, growth strategy and liquidity. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to numerous risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements. In addition to those factors described under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021 (the "2020 Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on March 22, 2021, and otherwise in our reports and filings with the SEC, there are a number of important factors that could cause actual results, performance or achievements to differ materially from those discussed in forward-looking statements including, but not limited to, the following:

•risks and uncertainty related to the continued outbreak of the coronavirus ("COVID-19"), any future COVID-19 resurgence, and any other adverse public health developments;

•risks related to losses or disruptions associated with our distribution systems, including our distribution and fulfillment centers and our stores, whether as a result of COVID-19, supply chain disruptions, reliance on third-party providers, cyber-related attacks, or otherwise;

•our ability to protect the health and safety of our associates and our customers, which may be affected by current or future government regulations related to stay-at-home orders and orders related to the operation of non-essential businesses;

•risks related to our international operations, including international trade, our reliance on foreign sources for merchandise and related supply chain disruptions, exposure to political, economic, operational, compliance and other risks, and fluctuations in foreign currency exchange rates;

•maintaining strong relationships with our vendors, manufacturers, licensors, and retailer customers;

•our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations;

•risks related to restrictions on our senior secured asset-based revolving credit facility ("ABL Revolver") and senior secured term loan ("Term Loan") that could limit our ability to fund operations;

•our reliance on our loyalty programs and marketing to drive traffic, sales and customer loyalty;

•failure to retain our key executives or attract qualified new personnel;

•risks related to the loss or disruption of our information systems and data and our ability to prevent or mitigate breaches of our information security and the compromise of sensitive and confidential data;

•our ability to comply with privacy laws and regulations, as well as other legal obligations;

•our ability to protect our reputation and to maintain the brands we license;

•uncertain general economic, political and social conditions and the related impacts to consumer discretionary spending;

•our competitiveness with respect to style, price, brand availability and customer service;

•our ability to provide customers cost-effective shopping platforms; and

•uncertainty related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation.

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results, performance or achievements may vary materially from what we have projected. Furthermore, new factors emerge from time to time and it is not possible for management to predict all such factors, nor can management assess the impact of any such factor on the business or the extent to which any factor, or combination of factors, may cause results to differ materially from those contained in any forward-looking statement. Any forward-looking statement speaks only as of the date on which such statement is made and, except as required by law, we undertake no obligation to update any forward-looking statement to reflect events or circumstances after the date on which such statement is made or to reflect the occurrence of unanticipated events.

DESIGNER BRANDS INC.

TABLE OF CONTENTS

	Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements of Operations	1
Condensed Consolidated Statements of Comprehensive Income (Loss)	2
Condensed Consolidated Balance Sheets	3
Condensed Consolidated Statements of Shareholders' Equity	4
Condensed Consolidated Statements of Cash Flows	5
Notes to the Condensed Consolidated Financial Statements	6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	17
Item 3. Quantitative and Qualitative Disclosures About Market Risk	26
Item 4. Controls and Procedures	26
PART II. OTHER INFORMATION
Item 1. Legal Proceedings	26
Item 1A. Risk Factors	26
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	27
Item 3. Defaults Upon Senior Securities	27
Item 4. Mine Safety Disclosures	27
Item 5. Other Information	27
Item 6. Exhibits	27
Signature	28

All references to "we," "us," "our," "Designer Brands," "Designer Brands Inc.," or the "Company" in this Form 10-Q mean Designer Brands Inc. and its subsidiaries.

PART I.    FINANCIAL INFORMATION

Item 1.     Financial Statements

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)

	Three months ended				Six months ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net sales	$	817,335	$	489,714	$	1,520,490	$	972,497
Cost of sales	(532,654)		(452,672)		(1,019,698)		(961,915)
Gross profit	284,681		37,042		500,792		10,582
Operating expenses	(224,385)		(168,424)		(425,199)		(355,645)
Income from equity investment	2,290		2,153		3,998		4,423
Impairment charges	(1,174)		(6,735)		(1,174)		(119,282)
Operating profit (loss)	61,412		(135,964)		78,417		(459,922)
Interest expense, net	(8,072)		(3,788)		(16,886)		(5,946)
Non-operating income (expenses), net	(244)		743		562		656
Income (loss) before income taxes	53,096		(139,009)		62,093		(465,212)
Income tax benefit (provision)	(10,236)		40,795		(2,207)		151,140
Net income (loss)	$	42,860	$	(98,214)	$	59,886	$	(314,072)
Basic and diluted earnings (loss) per share:
Basic earnings (loss) per share	$	0.59	$	(1.36)	$	0.82	$	(4.36)
Diluted earnings (loss) per share	$	0.55	$	(1.36)	$	0.78	$	(4.36)
Weighted average shares used in per share calculations:
Basic shares	72,932		72,142		72,773		72,028
Diluted shares	77,619		72,142		77,271		72,028

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

1

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(unaudited and in thousands)

	Three months ended				Six months ended
	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net income (loss)	$	42,860	$	(98,214)	$	59,886	$	(314,072)
Other comprehensive income (loss), net of income taxes:
Foreign currency translation gain (loss)	(298)		1,290		245		(2,251)
Unrealized net gain on debt securities	—		—		—		195
Reclassification adjustment for net gains realized in net loss	—		—		—		(368)
Total other comprehensive income (loss), net of income taxes	(298)		1,290		245		(2,424)
Total comprehensive income (loss)	$	42,562	$	(96,924)	$	60,131	$	(316,496)

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

2

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(unaudited and in thousands)

	July 31, 2021		January 30, 2021		August 1, 2020
ASSETS
Cash and cash equivalents	$	46,458	$	59,581	$	206,720
Receivables, net	199,371		196,049		49,240
Inventories	504,316		473,183		445,044
Prepaid expenses and other current assets	53,616		51,772		69,456
Total current assets	803,761		780,585		770,460
Property and equipment, net	271,401		296,469		332,730
Operating lease assets	676,665		700,481		797,413
Goodwill	93,655		93,655		93,655
Intangible assets, net	15,905		15,635		15,663
Deferred tax assets	—		—		182,866
Equity investment	55,149		58,598		56,690
Other assets	29,513		31,172		23,780
Total assets	$	1,946,049	$	1,976,595	$	2,273,257
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	$	299,322	$	245,071	$	224,693
Accrued expenses	222,055		200,326		202,831
Current maturities of long-term debt	62,500		62,500		—
Current operating lease liabilities	190,853		244,786		241,694
Total current liabilities	774,730		752,683		669,218
Long-term debt	184,569		272,319		393,000
Non-current operating lease liabilities	645,136		677,735		778,826
Other non-current liabilities	30,502		30,841		25,586
Total liabilities	1,634,937		1,733,578		1,866,630
Commitments and contingencies
Shareholders' equity:
Common shares paid-in capital, no par value	998,117		990,153		980,749
Treasury shares, at cost	(515,065)		(515,065)		(515,065)
Retained deficit	(168,899)		(228,785)		(54,138)
Accumulated other comprehensive loss	(3,041)		(3,286)		(4,919)
Total shareholders' equity	311,112		243,017		406,627
Total liabilities and shareholders' equity	$	1,946,049	$	1,976,595	$	2,273,257

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

3

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

(unaudited and in thousands, except per share data)

	Number of shares			Amounts
	Class A common shares	Class B common shares	Treasury shares	Common shares paid in capital		Treasury shares		Retained earnings (deficit)		Accumulated other comprehensive loss		Total
Three months ended July 31, 2021
Balance, May 1, 2021	65,134	7,733	22,169	$	992,379	$	(515,065)	$	(211,759)	$	(2,743)	$	262,812
Net income	—	—	—	—		—		42,860		—		42,860
Stock-based compensation activity	102	—	—	5,738		—		—		—		5,738
Foreign currency translation adjustment	—	—	—	—		—		—		(298)		(298)
Balance, July 31, 2021	65,236	7,733	22,169	$	998,117	$	(515,065)	$	(168,899)	$	(3,041)	$	311,112
Three months ended August 1, 2020
Balance, May 2, 2020	64,302	7,733	22,169	$	975,304	$	(515,065)	$	44,076	$	(6,209)	$	498,106
Net loss	—	—	—	—		—		(98,214)		—		(98,214)
Stock-based compensation activity	276	—	—	5,445		—		—		—		5,445
Foreign currency translation adjustment	—	—	—	—		—		—		1,290		1,290
Balance, August 1, 2020	64,578	7,733	22,169	$	980,749	$	(515,065)	$	(54,138)	$	(4,919)	$	406,627
Six months ended July 31, 2021
Balance, January 30, 2021	64,666	7,733	22,169	$	990,153	$	(515,065)	$	(228,785)	$	(3,286)	$	243,017
Net income	—	—	—	—		—		59,886		—		59,886
Stock-based compensation activity	570	—	—	7,964		—		—		—		7,964
Foreign currency translation adjustment	—	—	—	—		—		—		245		245
Balance, July 31, 2021	65,236	7,733	22,169	$	998,117	$	(515,065)	$	(168,899)	$	(3,041)	$	311,112
Six months ended August 1, 2020
Balance, February 1, 2020	64,033	7,733	22,169	$	971,380	$	(515,065)	$	267,094	$	(2,495)	$	720,914
Net loss	—	—	—	—		—		(314,072)		—		(314,072)
Stock-based compensation activity	545	—	—	9,369		—		—		—		9,369
Dividends ($0.10 per share)	—	—	—	—		—		(7,160)		—		(7,160)
Other comprehensive loss	—	—	—	—		—		—		(2,424)		(2,424)
Balance, August 1, 2020	64,578	7,733	22,169	$	980,749	$	(515,065)	$	(54,138)	$	(4,919)	$	406,627

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

4

DESIGNER BRANDS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited and in thousands)

	Six months ended
	July 31, 2021		August 1, 2020
Cash flows from operating activities:
Net income (loss)	$	59,886	$	(314,072)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	40,257		44,075
Stock-based compensation expense	13,365		10,596
Deferred income taxes	100		(152,988)
Income from equity investment	(3,998)		(4,423)
Distributions received from equity investment	7,447		5,493
Impairment charges	1,174		119,282
Gain on settlement	—		(8,990)
Other	800		403
Change in operating assets and liabilities:
Accounts receivable	5,859		30,699
Income tax receivable	(9,066)		—
Inventories	(30,114)		186,965
Prepaid expenses and other current assets	(612)		(847)
Accounts payable	53,009		(67,282)
Accrued expenses	21,546		26,693
Operating lease assets and liabilities, net	(63,424)		44,777
Net cash provided by (used in) operating activities	96,229		(79,619)
Cash flows from investing activities:
Cash paid for property and equipment	(13,189)		(22,141)
Sales of available-for-sale investments	—		24,755
Proceeds from settlement	—		4,166
Net cash provided by (used in) investing activities	(13,189)		6,780
Cash flows from financing activities:
Borrowing on revolving line under Credit Facility	—		251,000
Payments on revolving line under Credit Facility	—		(48,000)
Borrowing under ABL Revolver	342,053		—
Payments on borrowings under ABL Revolver	(425,243)		—
Payments on borrowings under Term Loan	(6,251)		—
Dividends paid	—		(7,160)
Other	(5,514)		(2,646)
Net cash provided by (used in) financing activities	(94,955)		193,194
Effect of exchange rate changes on cash balances	338		(199)
Net increase (decrease) in cash, cash equivalents and restricted cash	(11,577)		120,156
Cash, cash equivalents and restricted cash, beginning of period	59,581		86,564
Cash, cash equivalents and restricted cash, end of period	$	48,004	$	206,720
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes	$	(3,372)	$	165
Cash paid for interest on debt	$	13,437	$	5,606
Cash paid for operating lease liabilities	$	162,602	$	62,262
Non-cash investing and financing activities:
Property and equipment purchases not yet paid	$	2,320	$	1,981
Operating lease liabilities arising from lease asset additions	$	11,109	$	9,408
Net increase to operating lease assets and lease liabilities for modifications	$	45,723	$	23,195

The accompanying notes are an integral part of the Condensed Consolidated Financial Statements.

5

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

1.    SIGNIFICANT ACCOUNTING POLICIES

Business Operations- Designer Brands Inc. is one of North America's largest designers, producers and retailers of footwear and accessories. We operate in three reportable segments: the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. The U.S. 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. 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 the direct-to-consumer e-commerce site at www.vincecamuto.com. An integral part of the Brand Portfolio segment is our equity investment in ABG-Camuto, LLC ("ABG-Camuto"), which is a partnership between Camuto LLC, a wholly-owned subsidiary doing business as "Camuto Group," and Authentic Brands Group LLC, a global brand management and marketing company. Camuto Group has a 40% stake in ABG-Camuto, a joint venture that owns several intellectual property rights, including Vince Camuto, Louise et Cie, and others, and focuses on licensing and developing new category extensions to support the global growth of these brands. Camuto Group has a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto, subject to guaranteed minimums. Camuto Group also owns footwear and certain handbag licensing rights of Jessica Simpson, Lucky Brand and, through a joint venture, Jennifer Lopez. Our other operating segments are below the quantitative and qualitative thresholds for reportable segments and are aggregated into Other for segment reporting purposes.

Basis of Presentation- The accompanying unaudited, condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 30, 2021 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2020 Form 10-K.

Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year refer to the calendar year in which the fiscal year begins.

Accounting Policies- The complete summary of significant accounting policies is included in the notes to the consolidated financial statements as presented in our 2020 Form 10-K.

Impact of COVID-19- In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. On March 18, 2020, to help control the spread of the virus and protect the health and safety of our customers, employees, and the communities we serve, we temporarily closed all of our stores in the U.S. and Canada. In addition, we took several actions in late March 2020 to reduce costs and operations to levels that were more commensurate with then-current sales, including furloughs and pay reductions. As this continues to be an unprecedented period of uncertainty, we have made and may continue to make adjustments to our operational plans, inventory controls, and liquidity management, as well as changes to our expense and capital expenditure plans.

During the second quarter and into the third quarter of fiscal 2020, we re-opened all of our stores, discontinued the furlough program, and restored pay for our associates that had taken pay reductions. Beginning in July 2020, we initiated an internal reorganization and reduction of our workforce with additional actions taken throughout fiscal 2020 and into the first quarter of fiscal 2021, resulting in the elimination of approximately 1,000 associate positions. The severance charges recorded as a result of this reorganization are included in our severance discussion below.

Although operating results have improved throughout the first half of fiscal 2021, we continue to experience adverse impacts due to COVID-19, including temporary store closures, reduced hours and other requirements in certain areas where government-imposed restrictions were mandated, and global supply chain challenges. Our retail customers in the Brand Portfolio segment have had and are having similar experiences.

6

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

As a result of the material reduction in net sales and cash flows during fiscal 2020, we updated our impairment analyses for our U.S. Retail and Canada Retail segments at the store-level, which represents the lowest level for which identifiable cash flows are independent of the cash flows of other assets. The carrying amount of the store asset group, primarily made up of operating lease assets, leasehold improvements and fixtures, is considered impaired when the carrying value of the asset group exceeds the expected future cash flows from the asset group. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its fair value (categorized as Level 3 under the fair value hierarchy). Fair value at the store level is typically based on projected discounted cash flows over the remaining lease term. In addition, we evaluated other long-lived assets based on our intent to use such assets going forward. During the three months ended August 1, 2020, we recorded an impairment charge of $6.7 million for the U.S. Retail segment. During the six months ended August 1, 2020, we recorded impairment charges of $92.8 million ($73.1 million and $19.7 million for the U.S. Retail segment and Canada Retail segment, respectively). Also during the six months ended August 1, 2020, we recorded an impairment charge of $6.5 million for the Brand Portfolio segment customer relationship intangible resulting in a full impairment due to the lack of projected cash flows over the remaining useful life (categorized as Level 3 under the fair value hierarchy).

As a result of the material reduction in net sales and cash flows due to the temporary closure of all of our stores, the decrease in net sales from our retailer customers and the decrease in the Company's market capitalization due to the impact of COVID-19 on macroeconomic conditions, we performed an impairment analysis for goodwill and other indefinite-lived intangible assets during the first quarter of fiscal 2020. We calculated the fair value of the reporting units with goodwill primarily based on a discounted cash flow analysis (categorized as Level 3 under the fair value hierarchy). Our analysis concluded that the fair value of the First Cost reporting unit within the Brand Portfolio segment did not exceed its carrying value. Accordingly, during the six months ended August 1, 2020, we recorded an impairment charge of $20.0 million for the First Cost reporting unit in the Brand Portfolio segment, resulting in a full impairment.

The U.S. Retail segment inventory is accounted for using the retail inventory method and is stated at the lower of cost or market. Under the retail inventory method, the valuation of inventories reflects reductions for merchandise marked down with charges to cost of sales. As a result, earnings are negatively impacted as the merchandise is marked down prior to sale. Inventories for the Canada Retail and Brand Portfolio segments are accounted for using moving average cost method and are stated at the lower of cost or net realizable value. For all inventories, we also monitored excess and obsolete inventories in light of the temporary closure of stores during our fiscal 2020 peak spring selling season and reduced traffic experienced since re-opening stores. During the six months ended August 1, 2020, we recorded $64.0 million of additional inventory reserves over the same period of the previous year.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which, among other things, provided employer payroll tax credits for wages paid to employees who were unable to work over a defined period and options to defer payroll tax payments. Based on our evaluation of the CARES Act, we qualified for certain employer payroll tax credits, which were treated as government subsidies to offset related operating expenses, as well as the deferral of payroll and other tax payments in the future. Similar credits were also available in Canada and continue to be provided. During the three months ended July 31, 2021 and August 1, 2020, the qualified government credits reduced our operating expenses by $1.0 million and $3.5 million, respectively, on our condensed consolidated statements of operations. During the six months ended July 31, 2021 and August 1, 2020, the qualified government credits reduced our operating expenses by $3.7 million and $7.9 million, respectively, on our condensed consolidated statements of operations. As of July 31, 2021, we had $10.0 million of deferred qualified payroll and other tax obligations, half of which is included in accrued expenses on the condensed consolidated balance sheets that we expect to pay at the end of fiscal 2021, with the remaining included in other non-current liabilities on the condensed consolidated balance sheets that we expect to pay at the end of fiscal 2022.

We recorded our income tax expense, income tax receivable, and deferred tax assets and related liabilities based on management’s best estimates. Additionally, we assessed the likelihood of realizing the benefits of our deferred tax assets. Our ability to recover these deferred tax assets depends on several factors, including our ability to project future taxable income. One of the provisions of the CARES Act allows net operating losses generated within tax years 2018 through 2020 to be carried back up to five years, including years in which the U.S. federal statutory tax rate was 35%, as opposed to the current rate of 21%. In evaluating future taxable income, significant weight is given to positive and negative evidence that is objectively verifiable. As a result of the losses incurred in fiscal 2020 due to COVID-19, we are in a three-year cumulative loss position as of July 31, 2021, which is significant objective negative evidence in considering whether deferred tax assets are realizable. Such objective evidence limits the ability to consider other subjective evidence, such as the projection of future taxable income. A valuation allowance has been recognized as a reserve on the total deferred tax asset balance due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. Our effective tax rate changed from 32.5% for the six months ended

7

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

August 1, 2020 to 3.6% for the six months ended July 31, 2021. The rate for the six months ended July 31, 2021 is the result of maintaining a full valuation allowance on deferred tax assets while also recording net discrete tax benefits, primarily as a result of adjustments to our estimated fiscal 2020 return reflecting implemented tax strategies. The rate for the six months ended August 1, 2020 is the result of carry back of losses to a tax year where the U.S. federal statutory tax rate was 35%.

The impacts from the COVID-19 pandemic remain challenging and unpredictable. While trends improved during the first half of fiscal 2021, we cannot reasonably estimate the extent to which our business will continue to be affected by COVID-19 and to what extent the recent improved trends will continue. For instance, restrictions have recently been reinstated in certain locations within the U.S., and it is unclear whether these restrictions will continue and expand or if COVID-19 will result in long-term changes in consumer behavior. The ongoing and prolonged nature of the outbreak may lead to further adjustments to our operations. As such, the ultimate impacts of COVID-19 to our businesses remain highly uncertain and will depend on future developments, including global supply chain disruptions, the variants of COVID-19, and the global availability and use of vaccines, which are highly uncertain and cannot be predicted. As a result, we may have future write-downs or adjustments to inventories, receivables, long-lived assets, intangibles, goodwill, and the valuation allowance on deferred tax assets.

Severance- During the three months ended July 31, 2021 and August 1, 2020, we incurred severance costs of $1.2 million and $7.3 million, respectively. During the six months ended July 31, 2021 and August 1, 2020, we incurred severance costs of $2.6 million and $9.0 million, respectively. These costs are included in operating expenses in the condensed consolidated statements of operations. As of July 31, 2021, January 30, 2021 and August 1, 2020, we had accrued severance of $4.9 million, $6.5 million and $8.4 million, respectively, included in accrued expenses on the condensed consolidated balance sheets.

Gain on Settlement- During the three months ended August 1, 2020, we recognized a gain of $9.0 million, recorded to operating expenses in the condensed consolidated statements of operations, due to a settlement with a vendor for costs incurred on internal-use software that was capitalized and impaired in a previous fiscal year. During the three months ended August 1, 2020, we collected $4.2 million, net of legal costs incurred, and recorded a $4.8 million receivable included in receivables, net, on the condensed consolidated balance sheets, which has been subsequently received.

Principles of Consolidation- The condensed consolidated financial statements include the accounts of Designer Brands Inc. and its subsidiaries, including variable interest entities. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in U.S. dollars.

Use of Estimates- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of net sales and expenses during the reporting periods. Certain estimates and assumptions use forecasted financial information based on information reasonably available to us, along with the estimated, but uncertain, future impacts of COVID-19. Significant estimates and assumptions are required as a part of accounting for sales returns allowances, customer allowances and discounts, gift card breakage income, deferred revenue associated with loyalty programs, valuation of inventories, depreciation and amortization, impairments of long-lived assets, intangibles and goodwill, lease accounting, income taxes, and self-insurance reserves. Although we believe these estimates and assumptions are reasonable, they are based on management's knowledge of current events and actions we may undertake in the future. Changes in facts and circumstances may result in revised estimates and assumptions, and actual results could differ from these estimates.

Cash, Cash Equivalents, and Restricted Cash- Cash and cash equivalents represent cash, money market funds and credit card receivables that generally settle within three days. Restricted cash represented cash that is restricted as to withdrawal or usage and consists of a mandatory cash deposit maintained for certain insurance policies.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Cash and cash equivalents	$	46,458	$	59,581	$	206,720
Restricted cash, included in prepaid expenses and other current assets	1,546		—		—
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	48,004	$	59,581	$	206,720

8

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Fair Value- Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.

•Level 3 - Unobservable inputs in which little or no market activity exists.

The carrying value of cash and cash equivalents, restricted cash, receivables, and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowing under our ABL Revolver and our previous senior unsecured revolving credit agreement ("Credit Facility") approximated the carrying value. As of July 31, 2021, the fair value of borrowings under our Term Loan was $250.2 million compared to the carrying value of $237.5 million. The fair value of debt borrowings was estimated based on current interest rates offered for similar instruments (categorized as Level 2 under the fair value hierarchy).

Impairment of Long-Lived Assets- Refer to section above, Impact of COVID-19, regarding impairment charges of long-lived assets during fiscal 2020. During the three months ended July 31, 2021, we recorded an impairment charge of $1.2 million in the U.S. Retail segment for abandoned equipment we are replacing.

2.    REVENUE

Disaggregation of Net Sales- The following table presents net sales disaggregated by product and service category for each segment:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net sales:
U.S. Retail segment:
Women's footwear	$	467,518	$	253,539	$	872,818	$	513,102
Men's footwear	168,218		85,012		300,165		155,367
Kids' footwear	54,112		32,232		108,844		61,415
Accessories and other	33,245		23,194		61,924		41,166
	723,093		393,977		1,343,751		771,050
Canada Retail segment:
Women's footwear	30,230		25,329		50,661		41,301
Men's footwear	15,805		13,970		25,333		20,773
Kids' footwear	9,554		8,231		19,067		13,787
Accessories and other	1,996		2,052		3,128		3,050
	57,585		49,582		98,189		78,911
Brand Portfolio segment:
Wholesale	42,715		15,563		91,358		82,867
Commission income	2,377		5,018		5,708		10,141
Direct-to-consumer	5,437		9,877		10,890		19,563
	50,529		30,458		107,956		112,571
Other	—		22,266		—		35,889
Total segment net sales	831,207		496,283		1,549,896		998,421
Elimination of intersegment sales	(13,872)		(6,569)		(29,406)		(25,924)
Total net sales	$	817,335	$	489,714	$	1,520,490	$	972,497

9

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Deferred Revenue Liabilities- We record deferred revenue liabilities, included in accrued expenses on the condensed consolidated balance sheets, for remaining obligations we have to our customers. The following table presents the changes and total balances for gift cards and our loyalty programs:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Gift cards:
Beginning of period	$	30,809	$	30,908	$	34,442	$	35,461
Gift cards redeemed and breakage recognized to net sales	(19,210)		(11,343)		(36,380)		(24,868)
Gift cards issued	17,092		10,354		30,629		19,326
End of period	$	28,691	$	29,919	$	28,691	$	29,919
Loyalty programs:
Beginning of period	$	12,955	$	14,568	$	11,379	$	16,138
Loyalty certificates redeemed and expired and other adjustments recognized to net sales	(6,008)		(4,277)		(10,904)		(10,886)
Deferred revenue for loyalty points issued	8,308		4,506		14,780		9,545
End of period	$	15,255	$	14,797	$	15,255	$	14,797

3.    RELATED PARTY TRANSACTIONS

Schottenstein Affiliates

As of July 31, 2021, the Schottenstein Affiliates consist of entities owned or controlled by Jay L. Schottenstein, the executive chairman of our Board of Directors, and members of his family. As of July 31, 2021, the Schottenstein Affiliates beneficially owned approximately 17% of the Company's outstanding common shares, representing approximately 52% of the combined voting power, consisting of, in the aggregate, 4.8 million Class A common shares and 7.7 million Class B common shares. The following summarizes the related party transactions with the Schottenstein Affiliates for the relevant periods:

Leases- We lease our fulfillment center and certain store locations owned by the Schottenstein Affiliates. During the three months ended July 31, 2021 and August 1, 2020, we recorded rent expense from leases with Schottenstein Affiliates of $2.7 million and $2.6 million, respectively. During the six months ended July 31, 2021 and August 1, 2020, we recorded rent expense from leases with Schottenstein Affiliates of $5.4 million and $5.3 million, respectively. As of July 31, 2021, January 30, 2021 and August 1, 2020, we had related party current operating lease liabilities of $6.4 million, $8.0 million and $7.9 million, respectively, and non-current operating lease liabilities of $21.3 million, $24.6 million and $28.5 million, respectively.

Other Purchases and Services- During the three months ended July 31, 2021 and August 1, 2020, we had other purchases and services we incurred from the Schottenstein Affiliates of $1.1 million and $1.2 million, respectively. During both the six months ended July 31, 2021 and August 1, 2020, we had other purchases and services we incurred from the Schottenstein Affiliates of $2.5 million.

Due to Related Parties- Amounts due to Schottenstein Affiliates, other than operating lease liabilities, were immaterial for all periods presented.

ABG-Camuto

We have a 40% interest in our equity investment in ABG-Camuto. We have a licensing agreement with ABG-Camuto, pursuant to which we pay royalties on the net sales of the brands owned by ABG-Camuto, subject to guaranteed minimums. During both the three months ended July 31, 2021 and August 1, 2020, we recorded royalty expense for amounts paid to ABG-Camuto of $4.6 million. During the six months ended July 31, 2021 and August 1, 2020, we recorded royalty expense for amounts paid to ABG-Camuto of $9.2 million and $9.0 million, respectively. Amounts due to ABG-Camuto were immaterial for all periods presented.

10

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

4.    EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is based on net income (loss) and the weighted average of Class A and Class B common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares adjusted for outstanding stock options and restricted stock units ("RSUs") calculated using the treasury stock method.

The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings (loss) per share:

	Three months ended		Six months ended
(in thousands)	July 31, 2021	August 1, 2020	July 31, 2021	August 1, 2020
Weighted average basic shares outstanding	72,932	72,142	72,773	72,028
Dilutive effect of stock-based compensation awards	4,687	—	4,498	—
Weighted average diluted shares outstanding	77,619	72,142	77,271	72,028

For the three months ended July 31, 2021 and August 1, 2020, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings (loss) per share due to their anti-dilutive effect was 2.9 million and 5.9 million, respectively. For the six months ended July 31, 2021 and August 1, 2020, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings (loss) per share due to their anti-dilutive effect was 3.0 million and 5.5 million, respectively.

5.    STOCK-BASED COMPENSATION

Stock-based compensation expense consisted of the following:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Stock options	$	132	$	407	$	385	$	870
Restricted and director stock units	5,776		5,272		12,980		9,726
	$	5,908	$	5,679	$	13,365	$	10,596

The following table summarizes the stock-based compensation award activity for RSUs for the six months ended July 31, 2021:

	Number of shares
(in thousands)	Time-Based RSUs	Performance-Based RSUs
Outstanding - beginning of period	6,445	540
Granted	1,033	—
Vested	(512)	(359)
Forfeited	(225)	(17)
Outstanding - end of period	6,741	164

6.    SHAREHOLDERS' EQUITY

Shares- Our Class A common shares are listed for trading under the ticker symbol "DBI" on the New York Stock Exchange. There is currently no public market for the Company's Class B common shares, but the Class B common shares can be exchanged for the Company's Class A common shares at the election of the holder on a share for share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval.

11

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

The following table provides additional information for our common shares:

	July 31, 2021		January 30, 2021		August 1, 2020
(in thousands)	Class A	Class B	Class A	Class B	Class A	Class B
Authorized shares	250,000	100,000	250,000	100,000	250,000	100,000
Issued shares	87,405	7,733	86,835	7,733	86,747	7,733
Outstanding shares	65,236	7,733	64,666	7,733	64,578	7,733
Treasury shares	22,169	—	22,169	—	22,169	—

We have authorized 100 million shares of no par value preferred shares, with no shares issued for any of the periods presented.

Accumulated Other Comprehensive Loss- For the six months ended August 1, 2020, changes for the balances of each component of accumulated other comprehensive loss, net of tax, were as follows (for all other periods presented, the change was due to foreign currency translation adjustments as shown in the condensed consolidated statements of shareholders' equity):

(in thousands)	Foreign Currency Translation		Available-for-Sale Securities		Total
Accumulated other comprehensive income (loss) - beginning of period	$	(2,668)	$	173	$	(2,495)
Other comprehensive income (loss) before reclassifications	(2,251)		195		(2,056)
Amounts reclassified to non-operating income, net	—		(368)		(368)
Other comprehensive loss	(2,251)		(173)		(2,424)
Accumulated other comprehensive loss - end of period	$	(4,919)	$	—	$	(4,919)

7.    RECEIVABLES

Receivables, net, consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Customer accounts receivables:
Serviced by third-party provider with guaranteed payment	$	27,638	$	29,615	$	20,268
Serviced by third-party provider without guaranteed payment	76		363		739
Serviced in-house	2,665		4,576		6,248
Income tax receivable	158,890		149,824		—
Other receivables	11,295		12,865		23,973
Total receivables	200,564		197,243		51,228
Allowance for doubtful accounts	(1,193)		(1,194)		(1,988)
	$	199,371	$	196,049	$	49,240

12

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

8.    GOODWILL AND INTANGIBLE ASSETS

Goodwill- The following table presents the changes to goodwill by segment:

	Six months ended
	July 31, 2021						August 1, 2020
(in thousands)	Goodwill		Accumulated Impairments		Net		Goodwill		Accumulated Impairments		Net
Beginning of period by segment:
U.S. Retail	$	93,655	$	—	$	93,655	$	93,655	$	—	$	93,655
Canada Retail	43,086		(43,086)		—		41,610		(41,610)		—
Brand Portfolio	19,989		(19,989)		—		19,989		—		19,989
	156,730		(63,075)		93,655		155,254		(41,610)		113,644
Activity by segment:
Canada Retail-
Currency translation adjustment	1,098		(1,098)		—		(534)		534		—
Brand Portfolio-
Impairment charge	—		—		—		—		(19,989)		(19,989)
	1,098		(1,098)		—		(534)		(19,455)		(19,989)
End of period by segment:
U.S. Retail	93,655		—		93,655		93,655		—		93,655
Canada Retail	44,184		(44,184)		—		41,076		(41,076)		—
Brand Portfolio	19,989		(19,989)		—		19,989		(19,989)		—
	$	157,828	$	(64,173)	$	93,655	$	154,720	$	(61,065)	$	93,655

Intangible Assets- Intangible assets consisted of the following:

(in thousands)	Cost		Accumulated Amortization		Net
July 31, 2021
Definite-lived customer relationships	$	1,444	$	(1,444)	$	—
Indefinite-lived trademarks and tradenames	15,905		—		15,905
	$	17,349	$	(1,444)	$	15,905
January 30, 2021
Definite-lived customer relationships	$	2,909	$	(2,791)	$	118
Indefinite-lived trademarks and tradenames	15,517		—		15,517
	$	18,426	$	(2,791)	$	15,635
August 1, 2020
Definite-lived customer relationships	$	2,843	$	(2,507)	$	336
Indefinite-lived trademarks and tradenames	15,327		—		15,327
	$	18,170	$	(2,507)	$	15,663

13

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

9.    ACCRUED EXPENSES

Accrued expenses consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Gift cards	$	28,691	$	34,442	$	29,919
Accrued compensation and related expenses	49,037		49,864		29,422
Accrued taxes	35,030		24,206		22,624
Loyalty programs deferred revenue	15,255		11,379		14,797
Sales returns	19,204		17,333		20,713
Customer allowances and discounts	2,103		4,579		8,644
Other	72,735		58,523		76,712
	$	222,055	$	200,326	$	202,831

10.    DEBT

Debt consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
ABL Revolver	$	16,810	$	100,000	$	—
Term Loan	237,500		243,750		—
Credit Facility	—		—		393,000
Total debt	254,310		343,750		393,000
Less unamortized Term Loan debt issuance costs	(7,241)		(8,931)		—
Less current maturities of long-term debt	(62,500)		(62,500)		—
Long-term debt	$	184,569	$	272,319	$	393,000

ABL Revolver- On August 7, 2020, we replaced our Credit Facility with the ABL Revolver, which provides a revolving line of credit of up to $400.0 million, including a Canadian sub-limit of up to $20.0 million, a $50.0 million sub-limit for the issuance of letters of credit, a $40.0 million sub-limit for swing loan advances for U.S. borrowings, and a $2.0 million sub-limit for swing loan advances for Canadian borrowings. Our ABL Revolver matures in August 2025 and is secured by substantially all of our personal property assets, including a first priority lien on credit card receivables and inventory and a second priority lien on personal property assets that constitute first priority collateral for the Term Loan. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of July 31, 2021, the ABL Revolver had a borrowing base of $386.1 million, with $16.8 million outstanding and $5.3 million in letters of credit issued, resulting in $364.0 million available for borrowings.

Borrowings and letters of credit issued under the ABL Revolver accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greatest of (i) the prime rate, (ii) the overnight bank funding rate plus 0.5%, and (iii) the adjusted one-month London Interbank Offered Rate ("LIBOR") (as defined) plus 1.0%; or (B) an adjusted LIBOR per annum (subject to a floor of 0.75%), plus, in each instance, an applicable rate to be determined based on average availability, with an interest rate of 3.0% as of July 31, 2021. Commitment fees are based on the unused portion of the ABL Revolver. Interest expense related to the ABL Revolver includes interest on borrowings and letters of credit, commitment fees and the amortization of debt issuance costs.

Term Loan- On August 7, 2020, we also entered into a $250.0 million Term Loan. The Term Loan requires minimum quarterly principal payments with the remaining outstanding balance due in August 2025. The Term Loan has limited prepayment requirements under certain conditions. The Term Loan is collateralized by a first priority lien on substantially all of our personal and real property (subject to certain exceptions), including investment property and intellectual property, and by a second priority lien on certain other personal property, primarily credit card receivables and inventory, that constitute first priority collateral for the ABL Revolver.

14

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

Borrowings under the Term Loan accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greater of (i) 3.25%, (ii) the prime rate, (iii) the overnight bank funding rate plus 0.5%, and (iv) the adjusted one-month LIBOR plus 1.0%, plus, in each instance, 7.5%; or (B) an adjusted LIBOR per annum (subject to a floor of 1.25%), plus 8.5%, with an interest rate of 9.8% (effective interest rate of 11.8% when including the amortization of debt issuance costs) as of July 31, 2021.

Debt Covenants- The ABL Revolver contains a minimum availability covenant where an event of default shall occur if availability is less than the greater of $30.0 million or 10.0% of the maximum credit amount. The Term Loan includes a springing covenant imposing a minimum earnings before interest, taxes, depreciation, and amortization ("EBITDA") covenant, which arises when liquidity is less than $150.0 million. In addition, the ABL Revolver and the Term Loan each contain customary covenants restricting our activities, including limitations on the ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions. We are restricted from paying dividends or repurchasing stock until the third quarter of fiscal 2021 at the earliest, after which certain limitations apply. Both the ABL Revolver and the Term Loan contain customary events of default with cross-default provisions. Upon an event of default that is not cured or waived within the cure periods, in addition to other remedies that may be available to the lenders, the obligations may be accelerated, outstanding letters of credit may be required to be cash collateralized and remedies may be exercised against the collateral. As of July 31, 2021, we were in compliance with all financial covenants.

11.    COMMITMENTS AND CONTINGENCIES

Legal Proceedings- We are involved in various legal proceedings that are incidental to the conduct of our business. Although it is not possible to predict with certainty the eventual outcome of any litigation, we believe the amount of any potential liability with respect to current legal proceedings will not be material to the results of operations or financial condition. As additional information becomes available, we will assess any potential liability related to pending litigation and revise the estimates as needed.

Insurance Recoveries- During fiscal 2020, a third-party vendor experienced a shutdown of services to us that impacted our ability to fulfill orders from customers for a limited period of time. This incident was covered under an insurance policy that provides for reimbursement of lost profits and recognized losses as a result of the outage. During the fourth quarter of fiscal 2020, we recognized an insurance recovery receivable of $3.0 million, recorded as an offset to cost of sales, for recognized losses that we believe are probable of being reimbursed through the insurance policy. Reimbursement for lost profits and any additional recoveries in excess of recognized losses are treated as gain contingencies and will be recognized when realized or realizable. We continue to work with the insurance carrier to reach an agreement on the total amount to be recovered.

Guarantee- We provide guarantees for lease obligations that are scheduled to expire in fiscal 2023 for locations that have been leased to third parties. If a third party does not pay the rent or vacates the premise, we may be required to make full rent payments to the landlord. As of July 31, 2021, the total future minimum lease payment requirements for these guarantees were approximately $13.3 million.

15

DESIGNER BRANDS INC.

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

12.    SEGMENT REPORTING

The following provides certain key financial data by segment reconciled to the condensed consolidated financial statements:

(in thousands)	U.S. Retail		Canada Retail		Brand Portfolio		Other		Corporate/Eliminations		Total
Three months ended July 31, 2021
Net sales:
External customer sales	$	723,093	$	57,585	$	36,657	$	—	$	—	$	817,335
Intersegment sales	—		—		13,872		—		(13,872)		—
Total net sales	$	723,093	$	57,585	$	50,529	$	—	$	(13,872)	$	817,335
Gross profit	$	256,893	$	18,768	$	8,533	$	—	$	487	$	284,681
Income from equity investment	$	—	$	—	$	2,290	$	—	$	—	$	2,290
Three months ended August 1, 2020
Net sales:
External customer sales	$	393,977	$	49,582	$	23,889	$	22,266	$	—	$	489,714
Intersegment sales	—		—		6,569		—		(6,569)		—
Total net sales	$	393,977	$	49,582	$	30,458	$	22,266	$	(6,569)	$	489,714
Gross profit (loss)	$	40,097	$	5,650	$	(11,440)	$	118	$	2,617	$	37,042
Income from equity investment	$	—	$	—	$	2,153	$	—	$	—	$	2,153
Six months ended July 31, 2021
Net sales:
External customer sales	$	1,343,751	$	98,189	$	78,550	$	—	$	—	$	1,520,490
Intersegment sales	—		—		29,406		—		(29,406)		—
Total net sales	$	1,343,751	$	98,189	$	107,956	$	—	$	(29,406)	$	1,520,490
Gross profit	$	450,006	$	29,603	$	20,459	$	—	$	724	$	500,792
Income from equity investment	$	—	$	—	$	3,998	$	—	$	—	$	3,998
Six months ended August 1, 2020
Net sales:
External customer sales	$	771,050	$	78,911	$	86,647	$	35,889	$	—	$	972,497
Intersegment sales	—		—		25,924		—		(25,924)		—
Total net sales	$	771,050	$	78,911	$	112,571	$	35,889	$	(25,924)	$	972,497
Gross profit (loss)	$	7,127	$	3,339	$	2,464	$	(5,310)	$	2,962	$	10,582
Income from equity investment	$	—	$	—	$	4,423	$	—	$	—	$	4,423

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Item 2.     Management's Discussion and Analysis of Financial Condition and Results of Operations

Executive Overview and Trends in our Business

Operating profit in the second quarter of fiscal 2021 surpassed pre-COVID-19 levels with growth of 49% compared to the second quarter of 2019. This growth came despite the lingering effects of COVID-19, including global supply chain challenges. The volatile macro environment and supply chain disruptions have required us to be nimble and quickly adapt our business model.

As we look ahead to our strategic growth, we have organized our efforts around three pillars: Customer, Brand and Speed:

•Customer- More than ever, our customers have a great desire for products and experiences, and we are adding resources to our digital, IT and analytics teams to understand precisely what they want and what can be improved to provide the best possible experience. Undertaking these actions will enable us to better understand our customers, provide improved service, and target new demographics in targeted and personalized ways that we have never deployed before. We are also developing new ideas for how we can provide more value to our VIP rewards members who continue to be the lifeblood of our business and our largest competitive differentiator.

•Brand- Controlling our own brand destiny is critical for our growth. As we continue to design some of the best brands in the industry, Vince Camuto, Jessica Simpson, Lucky Brand and JLO Jennifer Lopez, we are combining that with our strong direct-to-consumer distribution through our physical footprint in North America and digital infrastructure. We are also partnering with some of the top brands in the industry to offer one of the largest and most broad assortments. We remain focused on investing in some of the top 50 brands in footwear and will continue to prioritize growing our own brands.

•Speed- Moving quickly is of the utmost importance to consumers. We are developing processes to deliver products more quickly. Fulfillment of digital customer orders takes 5 to 7 business days and we are working to improve that to 2 to 3 calendar days while simultaneously finding efficiencies to contain costs. We are optimizing our current infrastructure and expanding our delivery partnerships. We are also working to improve collaboration through technology and processes across our organization and to gain additional efficiencies in our overall development cycle.

We have a proven track record of staying ahead of trends to ensure our success, despite some of the challenges we face, including COVID-19 variants and supply chain disruptions.

Impact of COVID-19

In response to the sudden and significant impacts resulting from the COVID-19 pandemic, we took several actions during the first quarter of fiscal 2020 to reduce costs and operations to levels that were more commensurate with then-current sales, including furloughs and pay reductions. As this continues to be an unprecedented period of uncertainty, we have made and may continue to make adjustments to our operational plans, inventory controls, and liquidity management, as well as changes to our expense and capital expenditure plans.

Although operating results have improved throughout the first half of fiscal 2021, we continue to experience adverse impacts due to COVID-19, including temporary store closures, reduced hours and other requirements in certain areas where government-imposed restrictions were mandated, and global supply chain challenges. Our retail customers in the Brand Portfolio segment have had and are having similar experiences. The impacts from the COVID-19 pandemic remain challenging and unpredictable. While trends improved during the first half of fiscal 2021, we cannot reasonably estimate the extent to which our business will continue to be affected by COVID-19 and to what extent the recent improved trends will continue. For instance, restrictions have recently been reinstated in certain locations within the U.S., and it is unclear whether these restrictions will continue and expand or if COVID-19 will result in long-term changes in consumer behavior. The ongoing and prolonged nature of the outbreak may lead to further adjustments to our operations. As such, the ultimate impacts of COVID-19 to our businesses remain highly uncertain and will depend on future developments, including global supply chain disruptions, the variants of COVID-19, and the global availability and use of vaccines, which are highly uncertain and cannot be predicted. As a result, we may have future write-downs or adjustments to inventories, receivables, long-lived assets, intangibles, goodwill, and the valuation allowance on deferred tax assets.

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Financial Summary and Other Key Metrics for the Second Quarter of Fiscal 2021

Net sales increased to $817.3 million for the three months ended July 31, 2021 from $489.7 million for the three months ended August 1, 2020. The 66.9% increase in net sales was primarily driven by an 84.9% increase in comparable sales during the three months ended July 31, 2021, due to the fact that during the three months ended August 1, 2020, many of our stores remained closed or, to the extent they reopened, experienced significantly reduced customer traffic since reopening. The higher net sales due to the increase in total comparable sales were partially offset by store closures, including those serviced in the Other segment. Also, during the first quarter of fiscal 2020, we maintained higher sales returns reserves with stores not being available to accept returns, which resulted in significantly lower net sales. However, sales returns reserves normalized in the second quarter of fiscal 2020 as returns were not as high as expected, resulting in higher net sales. We did not have these significant changes in estimates between the first quarter and second quarter of fiscal 2021 as customer behavior has remained consistent. In addition, the Brand Portfolio segment net sales were higher in the quarter as compared to the second quarter of fiscal 2020 due to increased orders as our retailer customers recover, but still below pre-COVID-19 levels.

During the three months ended July 31, 2021, gross profit as a percentage of net sales was 34.8% as compared to 7.6% for the same period last year. The improvement in gross profit was primarily driven by increased sales as compared to the second quarter of fiscal 2020. In the second quarter of fiscal 2020, in response to the impacts of COVID-19 on our operations, we addressed the temporary closure of stores and the subsequent reduction in customer traffic upon store re-openings, with aggressive promotional activity. These actions resulted in higher inventory reserves, increased shipping costs associated with higher digital penetration, and the deleverage of distribution and fulfillment and store occupancy expenses on lower sales volume during fiscal 2020. During the second quarter of fiscal 2021, tight inventory positions resulted in fewer promotions. Accordingly, gross profit as a percentage of net sales for the second quarter of fiscal 2021 tracked higher than the pre-COVID-19 rate, which was 30.5% for the second quarter of fiscal 2019.

Net income for the three months ended July 31, 2021 was $42.9 million, or $0.55 earnings per diluted share, which included net after-tax charges of $0.6 million, or $0.01 per diluted share, primarily related to target acquisition costs, restructuring charges, impairment charges, and the change in the valuation allowance on deferred tax assets. Net loss for the three months ended August 1, 2020 was $98.2 million, or a loss of $1.36 per diluted share, which included net after-tax charges of $4.1 million, or $0.05 per diluted share, primarily related to impairment charges and integration and restructuring expenses, offset by a gain from a settlement with a vendor.

Comparable Sales Performance Metric

The following table presents the increase (decrease) in comparable sales for each segment and in total:

	Three months ended
	July 31, 2021		August 1, 2020
Comparable sales:
U.S. Retail segment	94.3	%	(44.9)	%
Canada Retail segment	14.6	%	(27.9)	%
Brand Portfolio segment - direct-to-consumer channel	10.6	%	120.5	%
Other	NA		(36.2)	%
Total comparable sales	84.9	%	(42.7)	%

NA - Not applicable

We consider comparable sales, a primary metric commonly used throughout the retail industry, to be an important indicator of the performance of our retail and direct-to-consumer businesses. We include stores in our comparable sales metric for those stores in operation for at least 14 months at the beginning of the fiscal year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales include stores temporarily closed as a result of COVID-19 as management continues to believe that this metric is meaningful to monitor our performance. Comparable sales include e-commerce sales. Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Comparable sales for the Brand Portfolio segment include the direct-to-consumer e-commerce site, www.vincecamuto.com. Beginning with the third quarter of fiscal 2020, comparable sales no longer include the Other segment due to no longer having activity in the Other segment. The calculation of comparable sales

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varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.

Number of Stores

At the end of the second quarter of fiscal 2021 and 2020, we had the following number of stores:

	July 31, 2021	August 1, 2020
U.S. Retail segment - DSW stores	515	522
Canada Retail segment:
The Shoe Company / Shoe Warehouse stores	116	117
DSW stores	27	27
	143	144
Total number of stores	658	666

Results of Operations

Comparison of the Three Months Ended July 31, 2021 with the Three Months Ended August 1, 2020

	Three months ended
	July 31, 2021				August 1, 2020				Change
(dollars in thousands, except per share amounts)	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Net sales	$	817,335	100.0	%	$	489,714	100.0	%	$	327,621	66.9	%
Cost of sales	(532,654)		(65.2)		(452,672)		(92.4)		(79,982)		17.7	%
Gross profit	284,681		34.8		37,042		7.6		247,639		668.5%
Operating expenses	(224,385)		(27.5)		(168,424)		(34.4)		(55,961)		33.2	%
Income from equity investment	2,290		0.3		2,153		0.4		137		6.4	%
Impairment charges	(1,174)		(0.1)		(6,735)		(1.4)		5,561		(82.6)%
Operating profit (loss)	61,412		7.5		(135,964)		(27.8)		197,376		NM
Interest expense, net	(8,072)		(1.0)		(3,788)		(0.8)		(4,284)		113.1	%
Non-operating income (expenses), net	(244)		(0.0)		743		0.2		(987)		NM
Income (loss) before income taxes	53,096		6.5		(139,009)		(28.4)		192,105		NM
Income tax benefit (provision)	(10,236)		(1.3)		40,795		8.3		(51,031)		NM
Net income (loss)	$	42,860	5.2	%	$	(98,214)	(20.1)	%	$	141,074	NM
Basic and diluted earnings (loss) per share:
Basic earnings (loss) per share	$	0.59			$	(1.36)			$	1.95	NM
Diluted earnings (loss) per share	$	0.55			$	(1.36)			$	1.91	NM
Weighted average shares used in per share calculations:
Basic shares	72,932				72,142				790		1.1	%
Diluted shares	77,619				72,142				5,477		7.6	%

NM - Not meaningful

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Net Sales- The following summarizes net sales by segment:

	Three months ended				Change
(dollars in thousands)	July 31, 2021		August 1, 2020		Amount		%		Comparable Sales %
Segment net sales:
U.S. Retail	$	723,093	$	393,977	$	329,116	83.5	%	94.3%
Canada Retail	57,585		49,582		8,003		16.1	%	14.6%
Brand Portfolio	50,529		30,458		20,071		65.9	%	10.6%
Other	—		22,266		(22,266)		NM		NA
Total segment net sales	831,207		496,283		334,924		67.5	%	84.9%
Elimination of intersegment net sales	(13,872)		(6,569)		(7,303)		111.2	%
Consolidated net sales	$	817,335	$	489,714	$	327,621	66.9	%

NA - Not applicable

NM - Not meaningful

The improvement in sales, including increases in comparable sales and total consolidated net sales, during the three months ended July 31, 2021 over the same period last year was due to the fact that during the three months ended August 1, 2020, many of our stores remained closed or, to the extent they reopened, experienced significantly reduced customer traffic since re-opening. During a portion of the second quarter of fiscal 2021, the Canada Retail segment was impacted by ongoing temporary closures and restrictions in certain key markets. The higher net sales due to the increase in total comparable sales was partially offset by store closures, including those serviced in the Other segment. Also, during the first quarter of fiscal 2020, we maintained higher sales returns reserves with stores not being available to accept returns, which resulted in significantly lower net sales. However, sales returns reserves normalized in the second quarter of fiscal 2020 as returns were not as high as expected, resulting in higher net sales. We did not have these significant changes in estimates between the first quarter and second quarter of fiscal 2021 as customer behavior has remained consistent. In addition, the Brand Portfolio segment net sales were higher in the quarter as compared to the second quarter of fiscal 2020 due to increased orders as our retailer customers recover, but still below pre-COVID-19 levels.

Gross Profit- The following summarizes gross profit (loss) by segment:

	Three months ended
	July 31, 2021				August 1, 2020
(dollars in thousands)	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Change
Segment gross profit (loss):
U.S. Retail	$	256,893	35.5	%	$	40,097	10.2	%	$	216,796
Canada Retail	18,768		32.6	%	5,650		11.4	%	$	13,118
Brand Portfolio	8,533		16.9	%	(11,440)		(37.6)	%	$	19,973
Other	—		—	%	118		0.5	%	$	(118)
	284,194				34,425
Elimination of intersegment gross profit	487				2,617
Gross profit	$	284,681	34.8	%	$	37,042	7.6	%	$	247,639

The improvement in gross profit was primarily driven by increased sales during the quarter as compared to the three months ended August 1, 2020. In the second quarter of fiscal 2020, in response to the impacts of COVID-19 on our operations, we addressed the temporary closure of stores and the subsequent reduction in customer traffic upon store re-openings with aggressive promotional activity. These actions resulted in higher inventory reserves, increased shipping costs associated with higher digital penetration, and the deleverage of distribution and fulfillment and store occupancy expenses on lower sales volume during fiscal 2020. During the second quarter of fiscal 2021, tight inventory positions resulted in being less

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promotional. Accordingly, gross profit as a percentage of net sales for the second quarter of fiscal 2021 tracked higher than the pre-COVID-19 rate, which was 30.5% for the second quarter of fiscal 2019. The Canada Retail and Brand Portfolio segments have significantly improved gross profit as a percentage of net sales during the quarter as compared to the same period last year, but remained below pre-COVID-19 levels when compared to the second quarter of fiscal 2019 due to the deleverage impacts of lower net sales.

Elimination of intersegment gross profit consisted of the following:

	Three months ended
(in thousands)	July 31, 2021		August 1, 2020
Elimination of intersegment activity:
Net sales recognized by Brand Portfolio segment	$	(13,872)	$	(6,569)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment	9,707		4,827
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period	4,652		4,359
Gross profit	$	487	$	2,617

Operating Expenses- For the three months ended July 31, 2021, operating expenses increased by $56.0 million over the same period last year, primarily driven by the implementation of temporary leaves of absence without pay for a significant number of our employees and reducing pay for nearly all employees not placed on temporary leave for most of the second quarter of fiscal 2020. Operating expenses during the second quarter of fiscal 2020 were offset by a gain from a settlement with a vendor of $9.0 million. Operating expenses as a percentage of sales improved to 27.5% compared to 34.4% in the same period last year but were still elevated compared to the pre-COVID-19 rate for the second quarter of fiscal 2019, which was 26.0% as a percentage of sales, primarily due to higher direct marketing and incentive compensation expense and lower sales in the Brand Portfolio segment.

Impairment Charges- During the three months ended July 31, 2021 and August 1, 2020, we evaluated certain long-lived assets based on our intent to use such assets going forward and, as a result, we recorded impairment charges of $1.2 million and $6.7 million, respectively.

Income Taxes- Our effective tax rate changed from 29.3% for the three months ended August 1, 2020 to 19.3% for the three months ended July 31, 2021. The rate for the three months ended July 31, 2021 is the result of maintaining a full valuation allowance on deferred tax assets. The rate for the three months ended August 1, 2020 is the result of carry back of losses to a tax year where the U.S. federal statutory tax rate was 35%.

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Comparison of the Six Months Ended July 31, 2021 with the Six Months Ended August 1, 2020

	Six months ended
	July 31, 2021				August 1, 2020				Change
(dollars in thousands, except per share amounts)	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Net sales	$	1,520,490	100.0	%	$	972,497	100.0	%	$	547,993	56.3	%
Cost of sales	(1,019,698)		(67.1)		(961,915)		(98.9)		(57,783)		6.0	%
Gross profit	500,792		32.9		10,582		1.1		490,210		4,632.5%
Operating expenses	(425,199)		(28.0)		(355,645)		(36.6)		(69,554)		19.6	%
Income from equity investment	3,998		0.3		4,423		0.5		(425)		(9.6)	%
Impairment charges	(1,174)		(0.1)		(119,282)		(12.3)		118,108		(99.0)%
Operating profit (loss)	78,417		5.1		(459,922)		(47.3)		538,339		NM
Interest expense, net	(16,886)		(1.1)		(5,946)		(0.6)		(10,940)		184.0	%
Non-operating income, net	562		0.0		656		0.1		(94)		(14.3)%
Income (loss) before income taxes	62,093		4.0		(465,212)		(47.8)		527,305		NM
Income tax benefit (provision)	(2,207)		(0.1)		151,140		15.5		(153,347)		NM
Net income (loss)	$	59,886	3.9	%	$	(314,072)	(32.3)	%	$	373,958	NM
Basic and diluted earnings (loss) per share:
Basic earnings (loss) per share	$	0.82			$	(4.36)			$	5.18	NM
Diluted earnings (loss) per share	$	0.78			$	(4.36)			$	5.14	NM
Weighted average shares used in per share calculations:
Basic shares	72,773				72,028				745		1.0	%
Diluted shares	77,271				72,028				5,243		7.3	%

NM - Not meaningful

Net Sales- The following summarizes net sales by segment:

	Six months ended				Change
(dollars in thousands)	July 31, 2021		August 1, 2020		Amount		%		Comparable Sales %
Segment net sales:
U.S. Retail	$	1,343,751	$	771,050	$	572,701	74.3	%	74.5%
Canada Retail	98,189		78,911		19,278		24.4	%	12.6%
Brand Portfolio	107,956		112,571		(4,615)		(4.1)	%	8.6%
Other	—		35,889		(35,889)		NM		NA
Total segment net sales	1,549,896		998,421		551,475		55.2	%	68.1%
Elimination of intersegment net sales	(29,406)		(25,924)		(3,482)		13.4	%
Consolidated net sales	$	1,520,490	$	972,497	$	547,993	56.3	%

NA - Not applicable

NM - Not meaningful

The increases in comparable sales for all segments and in total consolidated net sales was a result of the temporary closure of all stores beginning in March 2020 through much of the second quarter of fiscal 2020 and, since re-opening, we experienced significantly reduced customer traffic and net sales. During a portion of the first half of fiscal 2021, the Canada Retail segment was impacted by ongoing temporary closures and restrictions in certain key markets. The higher net sales due to the increase in total comparable sales was partially offset by store closures, including those serviced in the Other segment.

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Gross Profit- The following summarizes gross profit (loss) by segment:

	Six months ended
	July 31, 2021				August 1, 2020
(dollars in thousands)	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Change
Segment gross profit (loss):
U.S. Retail	$	450,006	33.5	%	$	7,127	0.9	%	$	442,879
Canada Retail	29,603		30.1	%	3,339		4.2	%	$	26,264
Brand Portfolio	20,459		19.0	%	2,464		2.2	%	$	17,995
Other	—		—	%	(5,310)		(14.8)	%	$	5,310
	500,068				7,620
Elimination of intersegment gross profit	724				2,962
Gross profit	$	500,792	32.9	%	$	10,582	1.1	%	$	490,210

The improvement in gross profit was primarily driven by increased sales during the six months ended July 31, 2021 as compared to the same period last year. In the second quarter of fiscal 2020, in response to the impacts of COVID-19 on our operations, we addressed the temporary closure of stores and the subsequent reduction in customer traffic upon store re-openings with aggressive promotional activity. These actions resulted in higher inventory reserves, increased shipping costs associated with higher digital penetration, and the deleverage of distribution and fulfillment and store occupancy expenses on lower sales volume during fiscal 2020. During the six months ended July 31, 2021, tight inventory positions resulted in fewer promotions. Accordingly, gross profit as a percentage of net sales for the six months ended July 31, 2021 tracked higher than the pre-COVID-19 rate, which was 30.1% for the same period in fiscal 2019. The Canada Retail and Brand Portfolio segments have significantly improved gross profit as a percentage of net sales during the six months ended July 31, 2021 as compared to the same period last year, but remained below pre-COVID-19 levels when compared to the same period in fiscal 2019 due to the deleverage impacts of lower net sales.

Elimination of intersegment gross profit consisted of the following:

	Six months ended
(in thousands)	July 31, 2021		August 1, 2020
Elimination of intersegment activity:
Net sales recognized by Brand Portfolio segment	$	(29,406)	$	(25,924)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment	20,642		16,961
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period	9,488		11,925
Gross profit	$	724	$	2,962

Operating Expenses- For the six months ended July 31, 2021, operating expenses increased by $69.6 million over the same period last year, primarily driven by the implementation of temporary leaves of absence without pay for a significant number of our employees and reducing pay for nearly all employees not placed on temporary leave in response to COVID-19 for most of the first half of fiscal 2020. Operating expenses as a percentage of sales improved to 28.0% compared to 36.6% in the same period last year but were still elevated compared to the pre-COVID-19 rate, which was 25.4% as a percentage of sales for the same period in fiscal 2019, primarily due to higher direct marketing expense and incentive compensation and lower sales.

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Impairment Charges- During the six months ended July 31, 2021, we recorded an impairment charge of $1.2 million for abandoned equipment we are replacing. As a result of the material reduction in net sales and cash flows due to the temporary closure of all of our stores during the six months ended August 1, 2020, we performed an impairment analysis at the store-level. In addition, we evaluated other long-lived assets based on our intent to use such assets going forward. During the six months ended August 1, 2020, we recorded impairment charges of $92.8 million for under-performing stores. Also during the six months ended August 1, 2020, we recorded an impairment charge of $6.5 million for the Brand Portfolio segment customer relationship intangible resulting in a full impairment due to the lack of projected cash flows over the remaining useful life. Further, as a result of the material reduction in net sales and cash flows and the decrease in the Company's market capitalization due to the impact of COVID-19 on macroeconomic conditions, we performed an impairment analysis for goodwill and other indefinite-lived intangible assets. Our analysis concluded that the fair value of the First Cost reporting unit within the Brand Portfolio segment did not exceed its carrying value. Accordingly, during the six months ended August 1, 2020, we recorded an impairment charge of $20.0 million for the First Cost reporting unit in the Brand Portfolio segment, resulting in a full impairment.

Income Taxes- Our effective tax rate changed from 32.5% for the six months ended August 1, 2020 to 3.6% for the six months ended July 31, 2021. The rate for the six months ended July 31, 2021 is the result of maintaining a full valuation allowance on deferred tax assets while also recording net discrete tax benefits, primarily as a result of adjustments to our estimated fiscal 2020 return reflecting implemented tax strategies. The rate for the six months ended August 1, 2020 is the result of carry back of losses to a tax year where the U.S. federal statutory tax rate was 35%.

Seasonality

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

Liquidity and Capital Resources

Overview

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business and withstand unanticipated business volatility, including the impact of COVID-19. We believe that cash generated from our operations, together with our current levels of cash, as well as the use of our ABL Revolver, are sufficient to maintain our ongoing operations, fund capital expenditures, and meet our debt service obligations over the next 12 months.

Operating Cash Flows

For the six months ended July 31, 2021, net cash provided by operations was $96.2 million compared to net cash used in operations of $79.6 million for the six months ended August 1, 2020. The change was driven by the net income recognized in the six months ended July 31, 2021 versus a net loss incurred during that same period last year as a result of COVID-19, after adjusting for non-cash activity including impairment charges and the change in deferred income taxes. This was partially offset by higher spend on working capital as business recovers from COVID-19 and the measures we implemented last year to manage our working capital to preserve liquidity, including delaying vendor and landlord payments while we renegotiate terms, reducing inventory orders, and significantly cutting costs.

Investing Cash Flows

For the six months ended July 31, 2021, our net cash used in investing activities was $13.2 million, which was due to capital expenditures relating to infrastructure and IT projects and store improvements. During the six months ended August 1, 2020, our net cash provided by investing activities was $6.8 million, which was due to the liquidation of our available-for-sale securities and the proceeds from a settlement from a vendor partially offset by capital expenditures of $22.1 million.

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Financing Cash Flows

For the six months ended July 31, 2021, our net cash used in financing activities was $95.0 million compared to net cash provided by financing activities of $193.2 million for the six months ended August 1, 2020. During the six months ended July 31, 2021, we had net payments of $83.2 million from the ABL Revolver and payments on the Term Loan of $6.3 million. During the six months ended August 1, 2020, we had net borrowings of $203.0 million from the Credit Facility as a precautionary measure to increase our cash position and preserve financial flexibility considering the uncertainty from COVID-19.

Debt

ABL Revolver- On August 7, 2020, we replaced the Credit Facility with the ABL Revolver, which provides a revolving line of credit of up to $400.0 million, including a Canadian sub-limit of up to $20.0 million, a $50.0 million sub-limit for the issuance of letters of credit, a $40.0 million sub-limit for swing loan advances for U.S. borrowings, and a $2.0 million sub-limit for swing loan advances for Canadian borrowings. Our ABL Revolver matures in August 2025 and is secured by substantially all of our personal property assets, including a first priority lien on credit card receivables and inventory and a second priority lien on personal property assets that constitute first priority collateral for the Term Loan. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of July 31, 2021, the ABL Revolver had a borrowing base of $386.1 million, with $16.8 million outstanding and $5.3 million in letters of credit issued, resulting in $364.0 million available for borrowings.

Borrowings and letters of credit issued under the ABL Revolver accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greatest of (i) the prime rate, (ii) the overnight bank funding rate plus 0.5%, and (iii) the adjusted one-month London Interbank Offered Rate ("LIBOR") (as defined) plus 1.0%; or (B) an adjusted LIBOR per annum (subject to a floor of 0.75%), plus, in each instance, an applicable rate to be determined based on average availability, with an interest rate of 3.0% as of July 31, 2021. Commitment fees are based on the unused portion of the ABL Revolver. Interest expense related to the ABL Revolver includes interest on borrowings and letters of credit, commitment fees and the amortization of debt issuance costs.

Term Loan- On August 7, 2020, we also entered into a $250.0 million Term Loan. The Term Loan requires minimum quarterly principal payments with the remaining outstanding balance due in August 2025. The Term Loan has limited prepayment requirements under certain conditions. The Term Loan is collateralized by a first priority lien on substantially all of our personal and real property (subject to certain exceptions), including investment property and intellectual property, and by a second priority lien on certain other personal property, primarily credit card receivables and inventory, that constitute first priority collateral for the ABL Revolver.

Borrowings under the Term Loan accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greater of (i) 3.25%, (ii) the prime rate, (iii) the overnight bank funding rate plus 0.5%, and (iv) the adjusted one-month LIBOR plus 1.0%, plus, in each instance, 7.5%; or (B) an adjusted LIBOR per annum (subject to a floor of 1.25%), plus 8.5%, with an interest rate of 9.8% (effective interest rate of 11.8% when including the amortization of debt issuance costs) as of July 31, 2021.

Debt Covenants- The ABL Revolver contains a minimum availability covenant where an event of default shall occur if availability is less than the greater of $30.0 million or 10.0% of the maximum credit amount. The Term Loan includes a springing covenant imposing a minimum EBITDA covenant, which arises when liquidity is less than $150.0 million. In addition, the ABL Revolver and the Term Loan each contain customary covenants restricting our activities, including limitations on the ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions. We are restricted from paying dividends or repurchasing stock until the third quarter of fiscal 2021 at the earliest, after which certain limitations apply. Both the ABL Revolver and the Term Loan contain customary covenants of default with cross-default provisions. Upon an event of default that is not cured or waived within the cure periods, in addition to other remedies that may be available to the lenders, the obligations may be accelerated, outstanding letters of credit may be required to be cash collateralized and remedies may be exercised against the collateral. As of July 31, 2021, we were in compliance with all financial covenants.

25

Capital Expenditure Plans

We expect to spend approximately $35.0 million to $45.0 million for capital expenditures in fiscal 2021, of which we invested $13.2 million during the six months ended July 31, 2021. Our capital expenditures for the remainder of the year will depend primarily on the number of store projects, as well as infrastructure and IT projects that we undertake and the timing of these expenditures.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting period. We base these estimates and judgments on factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and valuation techniques. We constantly re-evaluate these significant factors and make adjustments where facts and circumstances dictate. While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. As the determination of these estimates requires the exercise of judgment, actual results may differ from those estimates, and such differences may be material to our condensed consolidated financial statements. There have been no material changes to the application of critical accounting policies disclosed in our 2020 Form 10-K.

Item 3.    Quantitative and Qualitative Disclosures About Market Risk

We have market risk exposure related to interest rates and foreign currency exchange rates. There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our 2020 Form 10-K.

Item 4.     Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, performed an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the "Exchange Act")). Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this Form 10-Q, that such disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting

No change was made in our internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d -15(e), during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II.    OTHER INFORMATION

Item 1.    Legal Proceedings

The information set forth in Note 11, Commitments and Contingencies - Legal Proceedings, of the Condensed Consolidated Financial Statements of this Form 10-Q is incorporated herein by reference.

Item 1A.     Risk Factors

As of the date of the filing, there have been no material changes to the risk factors as set forth in Part I, Item 1A., Risk Factors, in our 2020 Form 10-K.

26

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds

On August 17, 2017, the Board of Directors authorized the repurchase of an additional $500 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. The share repurchase program is subject to the ABL Revolver and Term Loan restrictions and may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common shares under the program. Any share repurchases will be completed in the open market at times and in amounts considered appropriate based on price and market conditions.

The ABL Revolver and the Term Loan each contain customary covenants restricting our ability to pay dividends or repurchase stock. We are restricted from paying dividends or repurchasing stock until the third quarter of fiscal 2021 at the earliest, after which certain limitations apply. We currently do not anticipate paying dividends or repurchasing additional shares under our share repurchase program.

Item 3.    Defaults Upon Senior Securities

None.

Item 4.    Mine Safety Disclosures

Not Applicable.

Item 5.    Other Information

None.

Item 6.    Exhibits

Exhibit No.	Description
31.1*	Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer.
31.2*	Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Officer.
32.1**	Section 1350 Certification - Principal Executive Officer.
32.2**	Section 1350 Certification - Principal Financial Officer.
101*	The following materials from the Designer Brands Inc. Quarterly Report on Form 10-Q for the quarter ended July 31, 2021, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Shareholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed Consolidated Financial Statements.
104*	Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.

*    Filed herewith

**    Furnished herewith     

27

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

DESIGNER BRANDS INC.

Date:	August 31, 2021	By:	/s/ Jared Poff
			Jared Poff
			Executive Vice President and Chief Financial Officer
			(Principal Financial Officer and duly authorized officer)

28

EX-31.1

EXHIBIT 31.1

CERTIFICATIONS

I, Roger Rawlins, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Designer Brands Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.      The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 31, 2021	By:	/s/ Roger Rawlins
		Roger Rawlins
		Chief Executive Officer

EX-31.2

EXHIBIT 31.2

CERTIFICATIONS

I, Jared Poff, certify that:

1.      I have reviewed this quarterly report on Form 10-Q of Designer Brands Inc.;

2.      Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.      Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4.      The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and

5.      The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):

(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and

(b)     Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.

August 31, 2021	By:	/s/ Jared Poff
		Jared Poff
		Executive Vice President and Chief Financial Officer

EX-32.1

EXHIBIT 32.1

SECTION 1350 CERTIFICATION*

In connection with the Quarterly Report of Designer Brands Inc. (the "Company") on Form 10-Q for the period ended July 31, 2021 as filed with the Securities and Exchange Commission (the "SEC") on the date hereof (the "Report"), I, Roger Rawlins, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 31, 2021	By:	/s/ Roger Rawlins
		Roger Rawlins
		Chief Executive Officer

*    This Certification is being furnished as required by Rule 13a-14(b) under the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

EX-32.2

EXHIBIT 32.2

SECTION 1350 CERTIFICATION*

In connection with the Quarterly Report of Designer Brands Inc. (the "Company") on Form 10-Q for the period ended July 31, 2021 as filed with the Securities and Exchange Commission (the "SEC") on the date hereof (the "Report"), I, Jared Poff, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to § 906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

(1)    The Report fully complies with the requirements of section 13(a) or 15(d) of the Securities Exchange Act of 1934 (the "Exchange Act"); and

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

August 31, 2021	By:	/s/ Jared Poff
		Jared Poff
		Executive Vice President and Chief Financial Officer

*    This Certification is being furnished as required by Rule 13a-14(b) under the Exchange Act and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

A signed original of this written statement required by 18 U.S.C. § 1350 has been provided to the Company and will be retained by the Company and furnished to the SEC or its staff upon request.

XML

Cover Page - shares	6 Months Ended
	Jul. 31, 2021	Aug. 24, 2021
Class of Stock [Line Items]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Jul. 31, 2021
Document Transition Report	false
Entity File Number	001-32545
Entity Registrant Name	DESIGNER BRANDS INC.
Entity Incorporation, State or Country Code	OH
Entity Tax Identification Number	31-0746639
Entity Address, Address Line One	810 DSW Drive,
Entity Address, City or Town	Columbus,
Entity Address, State or Province	OH
Entity Address, Postal Zip Code	43219
City Area Code	614
Local Phone Number	237-7100
Title of 12(b) Security	Class A Common Shares, without par value
Trading Symbol	DBI
Security Exchange Name	NYSE
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Central Index Key	0001319947
Current Fiscal Year End Date	--01-29
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Amendment Flag	false
Class A common shares
Class of Stock [Line Items]
Entity Common Stock, Shares Outstanding		65,266,904
Class B common shares
Class of Stock [Line Items]
Entity Common Stock, Shares Outstanding		7,732,743

XML

Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
External customer sales	$ 817,335	$ 489,714	$ 1,520,490	$ 972,497
Gross profit	284,681	37,042	500,792	10,582
Operating expenses	(224,385)	(168,424)	(425,199)	(355,645)
Income from equity investment	2,290	2,153	3,998	4,423
Impairment charges	(1,174)	(6,735)	(1,174)	(119,282)
Operating profit (loss)	61,412	(135,964)	78,417	(459,922)
Interest expense, net	(8,072)	(3,788)	(16,886)	(5,946)
Non-operating income (expenses), net	(244)	743	562	656
Income (loss) before income taxes	53,096	(139,009)	62,093	(465,212)
Income tax benefit (provision)	(10,236)	40,795	(2,207)	151,140
Net income (loss)	$ 42,860	$ (98,214)	$ 59,886	$ (314,072)
Basic and diluted earnings (loss) per share:
Basic earnings (loss) per share (USD per share)	$ 0.59	$ (1.36)	$ 0.82	$ (4.36)
Diluted earnings (loss) per share (USD per share)	$ 0.55	$ (1.36)	$ 0.78	$ (4.36)
Weighted average shares used in per share calculations:
Basic shares (in shares)	72,932	72,142	72,773	72,028
Diluted shares (in shares)	77,619	72,142	77,271	72,028
Product
External customer sales	$ 817,335	$ 489,714	$ 1,520,490	$ 972,497
Cost of sales	$ (532,654)	$ (452,672)	$ (1,019,698)	$ (961,915)

XML

Condensed Consolidated Statements of Comprehensive Income (Loss) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 42,860	$ (98,214)	$ 59,886	$ (314,072)
Other comprehensive income (loss), net of income taxes:
Foreign currency translation gain (loss)	(298)	1,290	245	(2,251)
Unrealized net gain on debt securities	0	0	0	195
Reclassification adjustment for net gains realized in net loss	0	0	0	(368)
Total other comprehensive income (loss), net of income taxes	(298)	1,290	245	(2,424)
Total comprehensive income (loss)	$ 42,562	$ (96,924)	$ 60,131	$ (316,496)

XML

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Jul. 31, 2021	Jan. 30, 2021	Aug. 01, 2020
ASSETS
Cash and cash equivalents	$ 46,458	$ 59,581	$ 206,720
Receivables, net	199,371	196,049	49,240
Inventories	504,316	473,183	445,044
Prepaid expenses and other current assets	53,616	51,772	69,456
Total current assets	803,761	780,585	770,460
Property and equipment, net	271,401	296,469	332,730
Operating lease assets	676,665	700,481	797,413
Goodwill	93,655	93,655	93,655
Intangible assets, net	15,905	15,635	15,663
Deferred tax assets	0	0	182,866
Equity investment	55,149	58,598	56,690
Other assets	29,513	31,172	23,780
Total assets	1,946,049	1,976,595	2,273,257
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable	299,322	245,071	224,693
Accrued expenses	222,055	200,326	202,831
Current maturities of long-term debt	62,500	62,500	0
Current operating lease liabilities	190,853	244,786	241,694
Total current liabilities	774,730	752,683	669,218
Long-term debt	184,569	272,319	393,000
Non-current operating lease liabilities	645,136	677,735	778,826
Other non-current liabilities	30,502	30,841	25,586
Total liabilities	1,634,937	1,733,578	1,866,630
Commitments and contingencies
Shareholders' equity:
Common shares paid-in capital, no par value	998,117	990,153	980,749
Treasury shares, at cost	(515,065)	(515,065)	(515,065)
Retained deficit	(168,899)	(228,785)	(54,138)
Accumulated other comprehensive loss	(3,041)	(3,286)	(4,919)
Total shareholders' equity	311,112	243,017	406,627
Total liabilities and shareholders' equity	$ 1,946,049	$ 1,976,595	$ 2,273,257

XML

Condensed Consolidated Statements of Shareholders' Equity Statement - USD ($) shares in Thousands, $ in Thousands	Total	Class A common shares	Class B common shares	Treasury shares	Common shares paid in capital	Retained earnings (deficit)	Accumulated other comprehensive loss
Balance (in shares) at Feb. 01, 2020		64,033	7,733	22,169
Balance at Feb. 01, 2020	$ 720,914			$ (515,065)	$ 971,380	$ 267,094	$ (2,495)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ (314,072)					(314,072)
Stock-based compensation activity (in shares)	545
Stock-based compensation activity	$ 9,369				9,369
Dividends	(7,160)					(7,160)
Foreign currency translation adjustment	(2,424)						(2,424)
Balance (in shares) at Aug. 01, 2020		64,578	7,733	22,169
Balance at Aug. 01, 2020	406,627			$ (515,065)	980,749	(54,138)	(4,919)
Balance (in shares) at May. 02, 2020		64,302	7,733	22,169
Balance at May. 02, 2020	498,106			$ (515,065)	975,304	44,076	(6,209)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ (98,214)					(98,214)
Stock-based compensation activity (in shares)	276
Stock-based compensation activity	$ 5,445				5,445
Foreign currency translation adjustment	1,290						1,290
Balance (in shares) at Aug. 01, 2020		64,578	7,733	22,169
Balance at Aug. 01, 2020	406,627			$ (515,065)	980,749	(54,138)	(4,919)
Balance (in shares) at Jan. 30, 2021		64,666	7,733	22,169
Balance at Jan. 30, 2021	243,017			$ (515,065)	990,153	(228,785)	(3,286)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 59,886					59,886
Stock-based compensation activity (in shares)	570
Stock-based compensation activity	$ 7,964				7,964
Foreign currency translation adjustment	245						245
Balance (in shares) at Jul. 31, 2021		65,236	7,733	22,169
Balance at Jul. 31, 2021	311,112			$ (515,065)	998,117	(168,899)	(3,041)
Balance (in shares) at May. 01, 2021		65,134	7,733	22,169
Balance at May. 01, 2021	262,812			$ (515,065)	992,379	(211,759)	(2,743)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net income (loss)	$ 42,860					42,860
Stock-based compensation activity (in shares)	102
Stock-based compensation activity	$ 5,738				5,738
Foreign currency translation adjustment	(298)						(298)
Balance (in shares) at Jul. 31, 2021		65,236	7,733	22,169
Balance at Jul. 31, 2021	$ 311,112			$ (515,065)	$ 998,117	$ (168,899)	$ (3,041)

XML

Condensed Consolidated Statements of Shareholders' Equity (Parenthetical)	6 Months Ended
	Aug. 01, 2020 $ / shares
Statement of Stockholders' Equity [Abstract]
Dividends (USD per share)	$ 0.10

XML

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020
Cash flows from operating activities:
Net income (loss)	$ 59,886	$ (314,072)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization	40,257	44,075
Stock-based compensation expense	13,365	10,596
Deferred income taxes	100	(152,988)
Income from equity investment	(3,998)	(4,423)
Distributions received from equity investment	7,447	5,493
Impairment charges	1,174	119,282
Gain on settlement	0	(8,990)
Other	800	403
Change in operating assets and liabilities:
Accounts receivable	5,859	30,699
Income tax receivable	(9,066)	0
Inventories	(30,114)	186,965
Prepaid expenses and other current assets	(612)	(847)
Accounts payable	53,009	(67,282)
Accrued expenses	21,546	26,693
Operating lease assets and liabilities, net	(63,424)	44,777
Net cash provided by (used in) operating activities	96,229	(79,619)
Cash flows from investing activities:
Cash paid for property and equipment	(13,189)	(22,141)
Sales of available-for-sale investments	0	24,755
Proceeds from settlement	0	4,166
Net cash provided by (used in) investing activities	(13,189)	6,780
Cash flows from financing activities:
Borrowing on revolving line under Credit Facility	0	251,000
Payments on revolving line under Credit Facility	0	(48,000)
Dividends paid	0	(7,160)
Other	(5,514)	(2,646)
Net cash provided by (used in) financing activities	(94,955)	193,194
Effect of exchange rate changes on cash balances	338	(199)
Net increase (decrease) in cash, cash equivalents and restricted cash	(11,577)	120,156
Cash, cash equivalents and restricted cash, beginning of period	59,581	86,564
Cash, cash equivalents and restricted cash, end of period	48,004	206,720
Supplemental disclosures of cash flow information:
Cash paid (received) for income taxes	(3,372)	165
Cash paid for interest on debt	13,437	5,606
Cash paid for operating lease liabilities	162,602	62,262
Non-cash investing and financing activities:
Property and equipment purchases not yet paid	2,320	1,981
Operating lease liabilities arising from lease asset additions	11,109	9,408
Net increase to operating lease assets and lease liabilities for modifications	45,723	23,195
ABL Revolver
Cash flows from financing activities:
Borrowing under ABL Revolver	342,053	0
Payments on borrowings under ABL Revolver	(425,243)	0
Term Loan
Cash flows from financing activities:
Payments on borrowings under Term Loan	$ (6,251)	$ 0

XML

Significant Accounting Policies

6 Months Ended

Jul. 31, 2021

Accounting Policies [Abstract]

Significant Accounting Policies

SIGNIFICANT ACCOUNTING POLICIES

Business Operations- Designer Brands Inc. is one of North America's largest designers, producers and retailers of footwear and accessories. We operate in three reportable segments: the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. The U.S. 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. 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 the direct-to-consumer e-commerce site at www.vincecamuto.com. An integral part of the Brand Portfolio segment is our equity investment in ABG-Camuto, LLC ("ABG-Camuto"), which is a partnership between Camuto LLC, a wholly-owned subsidiary doing business as "Camuto Group," and Authentic Brands Group LLC, a global brand management and marketing company. Camuto Group has a 40% stake in ABG-Camuto, a joint venture that owns several intellectual property rights, including Vince Camuto, Louise et Cie, and others, and focuses on licensing and developing new category extensions to support the global growth of these brands. Camuto Group has a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands owned by ABG-Camuto, subject to guaranteed minimums. Camuto Group also owns footwear and certain handbag licensing rights of Jessica Simpson, Lucky Brand and, through a joint venture, Jennifer Lopez. Our other operating segments are below the quantitative and qualitative thresholds for reportable segments and are aggregated into Other for segment reporting purposes.

Basis of Presentation- The accompanying unaudited, condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 30, 2021 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2020 Form 10-K.

Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year refer to the calendar year in which the fiscal year begins.

Accounting Policies- The complete summary of significant accounting policies is included in the notes to the consolidated financial statements as presented in our 2020 Form 10-K.

Impact of COVID-19- In March 2020, the World Health Organization declared the COVID-19 outbreak a pandemic. On March 18, 2020, to help control the spread of the virus and protect the health and safety of our customers, employees, and the communities we serve, we temporarily closed all of our stores in the U.S. and Canada. In addition, we took several actions in late March 2020 to reduce costs and operations to levels that were more commensurate with then-current sales, including furloughs and pay reductions. As this continues to be an unprecedented period of uncertainty, we have made and may continue to make adjustments to our operational plans, inventory controls, and liquidity management, as well as changes to our expense and capital expenditure plans.

During the second quarter and into the third quarter of fiscal 2020, we re-opened all of our stores, discontinued the furlough program, and restored pay for our associates that had taken pay reductions. Beginning in July 2020, we initiated an internal reorganization and reduction of our workforce with additional actions taken throughout fiscal 2020 and into the first quarter of fiscal 2021, resulting in the elimination of approximately 1,000 associate positions. The severance charges recorded as a result of this reorganization are included in our severance discussion below.

Although operating results have improved throughout the first half of fiscal 2021, we continue to experience adverse impacts due to COVID-19, including temporary store closures, reduced hours and other requirements in certain areas where government-imposed restrictions were mandated, and global supply chain challenges. Our retail customers in the Brand Portfolio segment have had and are having similar experiences.

As a result of the material reduction in net sales and cash flows during fiscal 2020, we updated our impairment analyses for our U.S. Retail and Canada Retail segments at the store-level, which represents the lowest level for which identifiable cash flows are independent of the cash flows of other assets. The carrying amount of the store asset group, primarily made up of operating lease assets, leasehold improvements and fixtures, is considered impaired when the carrying value of the asset group exceeds the expected future cash flows from the asset group. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its fair value (categorized as Level 3 under the fair value hierarchy). Fair value at the store level is typically based on projected discounted cash flows over the remaining lease term. In addition, we evaluated other long-lived assets based on our intent to use such assets going forward. During the three months ended August 1, 2020, we recorded an impairment charge of $6.7 million for the U.S. Retail segment. During the six months ended August 1, 2020, we recorded impairment charges of $92.8 million ($73.1 million and $19.7 million for the U.S. Retail segment and Canada Retail segment, respectively). Also during the six months ended August 1, 2020, we recorded an impairment charge of $6.5 million for the Brand Portfolio segment customer relationship intangible resulting in a full impairment due to the lack of projected cash flows over the remaining useful life (categorized as Level 3 under the fair value hierarchy).

As a result of the material reduction in net sales and cash flows due to the temporary closure of all of our stores, the decrease in net sales from our retailer customers and the decrease in the Company's market capitalization due to the impact of COVID-19 on macroeconomic conditions, we performed an impairment analysis for goodwill and other indefinite-lived intangible assets during the first quarter of fiscal 2020. We calculated the fair value of the reporting units with goodwill primarily based on a discounted cash flow analysis (categorized as Level 3 under the fair value hierarchy). Our analysis concluded that the fair value of the First Cost reporting unit within the Brand Portfolio segment did not exceed its carrying value. Accordingly, during the six months ended August 1, 2020, we recorded an impairment charge of $20.0 million for the First Cost reporting unit in the Brand Portfolio segment, resulting in a full impairment.

The U.S. Retail segment inventory is accounted for using the retail inventory method and is stated at the lower of cost or market. Under the retail inventory method, the valuation of inventories reflects reductions for merchandise marked down with charges to cost of sales. As a result, earnings are negatively impacted as the merchandise is marked down prior to sale. Inventories for the Canada Retail and Brand Portfolio segments are accounted for using moving average cost method and are stated at the lower of cost or net realizable value. For all inventories, we also monitored excess and obsolete inventories in light of the temporary closure of stores during our fiscal 2020 peak spring selling season and reduced traffic experienced since re-opening stores. During the six months ended August 1, 2020, we recorded $64.0 million of additional inventory reserves over the same period of the previous year.

On March 27, 2020, the U.S. government enacted the Coronavirus Aid, Relief, and Economic Security Act (the "CARES Act"), which, among other things, provided employer payroll tax credits for wages paid to employees who were unable to work over a defined period and options to defer payroll tax payments. Based on our evaluation of the CARES Act, we qualified for certain employer payroll tax credits, which were treated as government subsidies to offset related operating expenses, as well as the deferral of payroll and other tax payments in the future. Similar credits were also available in Canada and continue to be provided. During the three months ended July 31, 2021 and August 1, 2020, the qualified government credits reduced our operating expenses by $1.0 million and $3.5 million, respectively, on our condensed consolidated statements of operations. During the six months ended July 31, 2021 and August 1, 2020, the qualified government credits reduced our operating expenses by $3.7 million and $7.9 million, respectively, on our condensed consolidated statements of operations. As of July 31, 2021, we had $10.0 million of deferred qualified payroll and other tax obligations, half of which is included in accrued expenses on the condensed consolidated balance sheets that we expect to pay at the end of fiscal 2021, with the remaining included in other non-current liabilities on the condensed consolidated balance sheets that we expect to pay at the end of fiscal 2022.

We recorded our income tax expense, income tax receivable, and deferred tax assets and related liabilities based on management’s best estimates. Additionally, we assessed the likelihood of realizing the benefits of our deferred tax assets. Our ability to recover these deferred tax assets depends on several factors, including our ability to project future taxable income. One of the provisions of the CARES Act allows net operating losses generated within tax years 2018 through 2020 to be carried back up to five years, including years in which the U.S. federal statutory tax rate was 35%, as opposed to the current rate of 21%. In evaluating future taxable income, significant weight is given to positive and negative evidence that is objectively verifiable. As a result of the losses incurred in fiscal 2020 due to COVID-19, we are in a three-year cumulative loss position as of July 31, 2021, which is significant objective negative evidence in considering whether deferred tax assets are realizable. Such objective evidence limits the ability to consider other subjective evidence, such as the projection of future taxable income. A valuation allowance has been recognized as a reserve on the total deferred tax asset balance due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. Our effective tax rate changed from 32.5% for the six months ended

August 1, 2020 to 3.6% for the six months ended July 31, 2021. The rate for the six months ended July 31, 2021 is the result of maintaining a full valuation allowance on deferred tax assets while also recording net discrete tax benefits, primarily as a result of adjustments to our estimated fiscal 2020 return reflecting implemented tax strategies. The rate for the six months ended August 1, 2020 is the result of carry back of losses to a tax year where the U.S. federal statutory tax rate was 35%.

The impacts from the COVID-19 pandemic remain challenging and unpredictable. While trends improved during the first half of fiscal 2021, we cannot reasonably estimate the extent to which our business will continue to be affected by COVID-19 and to what extent the recent improved trends will continue. For instance, restrictions have recently been reinstated in certain locations within the U.S., and it is unclear whether these restrictions will continue and expand or if COVID-19 will result in long-term changes in consumer behavior. The ongoing and prolonged nature of the outbreak may lead to further adjustments to our operations. As such, the ultimate impacts of COVID-19 to our businesses remain highly uncertain and will depend on future developments, including global supply chain disruptions, the variants of COVID-19, and the global availability and use of vaccines, which are highly uncertain and cannot be predicted. As a result, we may have future write-downs or adjustments to inventories, receivables, long-lived assets, intangibles, goodwill, and the valuation allowance on deferred tax assets.

Severance- During the three months ended July 31, 2021 and August 1, 2020, we incurred severance costs of $1.2 million and $7.3 million, respectively. During the six months ended July 31, 2021 and August 1, 2020, we incurred severance costs of $2.6 million and $9.0 million, respectively. These costs are included in operating expenses in the condensed consolidated statements of operations. As of July 31, 2021, January 30, 2021 and August 1, 2020, we had accrued severance of $4.9 million, $6.5 million and $8.4 million, respectively, included in accrued expenses on the condensed consolidated balance sheets.

Gain on Settlement- During the three months ended August 1, 2020, we recognized a gain of $9.0 million, recorded to operating expenses in the condensed consolidated statements of operations, due to a settlement with a vendor for costs incurred on internal-use software that was capitalized and impaired in a previous fiscal year. During the three months ended August 1, 2020, we collected $4.2 million, net of legal costs incurred, and recorded a $4.8 million receivable included in receivables, net, on the condensed consolidated balance sheets, which has been subsequently received.

Principles of Consolidation- The condensed consolidated financial statements include the accounts of Designer Brands Inc. and its subsidiaries, including variable interest entities. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in U.S. dollars.

Use of Estimates- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of net sales and expenses during the reporting periods. Certain estimates and assumptions use forecasted financial information based on information reasonably available to us, along with the estimated, but uncertain, future impacts of COVID-19. Significant estimates and assumptions are required as a part of accounting for sales returns allowances, customer allowances and discounts, gift card breakage income, deferred revenue associated with loyalty programs, valuation of inventories, depreciation and amortization, impairments of long-lived assets, intangibles and goodwill, lease accounting, income taxes, and self-insurance reserves. Although we believe these estimates and assumptions are reasonable, they are based on management's knowledge of current events and actions we may undertake in the future. Changes in facts and circumstances may result in revised estimates and assumptions, and actual results could differ from these estimates.

Cash, Cash Equivalents, and Restricted Cash- Cash and cash equivalents represent cash, money market funds and credit card receivables that generally settle within three days. Restricted cash represented cash that is restricted as to withdrawal or usage and consists of a mandatory cash deposit maintained for certain insurance policies.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Cash and cash equivalents	$	46,458	$	59,581	$	206,720
Restricted cash, included in prepaid expenses and other current assets	1,546		—		—
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	48,004	$	59,581	$	206,720

Fair Value- Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.

•Level 3 - Unobservable inputs in which little or no market activity exists.

The carrying value of cash and cash equivalents, restricted cash, receivables, and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowing under our ABL Revolver and our previous senior unsecured revolving credit agreement ("Credit Facility") approximated the carrying value. As of July 31, 2021, the fair value of borrowings under our Term Loan was $250.2 million compared to the carrying value of $237.5 million. The fair value of debt borrowings was estimated based on current interest rates offered for similar instruments (categorized as Level 2 under the fair value hierarchy).

Impairment of Long-Lived Assets- Refer to section above, Impact of COVID-19, regarding impairment charges of long-lived assets during fiscal 2020. During the three months ended July 31, 2021, we recorded an impairment charge of $1.2 million in the U.S. Retail segment for abandoned equipment we are replacing.

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Revenue

6 Months Ended

Jul. 31, 2021

Revenue from Contract with Customer [Abstract]

Revenue

REVENUE

Disaggregation of Net Sales- The following table presents net sales disaggregated by product and service category for each segment:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net sales:
U.S. Retail segment:
Women's footwear	$	467,518	$	253,539	$	872,818	$	513,102
Men's footwear	168,218		85,012		300,165		155,367
Kids' footwear	54,112		32,232		108,844		61,415
Accessories and other	33,245		23,194		61,924		41,166
	723,093		393,977		1,343,751		771,050
Canada Retail segment:
Women's footwear	30,230		25,329		50,661		41,301
Men's footwear	15,805		13,970		25,333		20,773
Kids' footwear	9,554		8,231		19,067		13,787
Accessories and other	1,996		2,052		3,128		3,050
	57,585		49,582		98,189		78,911
Brand Portfolio segment:
Wholesale	42,715		15,563		91,358		82,867
Commission income	2,377		5,018		5,708		10,141
Direct-to-consumer	5,437		9,877		10,890		19,563
	50,529		30,458		107,956		112,571
Other	—		22,266		—		35,889
Total segment net sales	831,207		496,283		1,549,896		998,421
Elimination of intersegment sales	(13,872)		(6,569)		(29,406)		(25,924)
Total net sales	$	817,335	$	489,714	$	1,520,490	$	972,497

Deferred Revenue Liabilities- We record deferred revenue liabilities, included in accrued expenses on the condensed consolidated balance sheets, for remaining obligations we have to our customers. The following table presents the changes and total balances for gift cards and our loyalty programs:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Gift cards:
Beginning of period	$	30,809	$	30,908	$	34,442	$	35,461
Gift cards redeemed and breakage recognized to net sales	(19,210)		(11,343)		(36,380)		(24,868)
Gift cards issued	17,092		10,354		30,629		19,326
End of period	$	28,691	$	29,919	$	28,691	$	29,919
Loyalty programs:
Beginning of period	$	12,955	$	14,568	$	11,379	$	16,138
Loyalty certificates redeemed and expired and other adjustments recognized to net sales	(6,008)		(4,277)		(10,904)		(10,886)
Deferred revenue for loyalty points issued	8,308		4,506		14,780		9,545
End of period	$	15,255	$	14,797	$	15,255	$	14,797

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Related Party Transactions

6 Months Ended

Jul. 31, 2021

Related Party Transactions [Abstract]

Related Party Transactions

RELATED PARTY TRANSACTIONS

Schottenstein Affiliates

As of July 31, 2021, the Schottenstein Affiliates consist of entities owned or controlled by Jay L. Schottenstein, the executive chairman of our Board of Directors, and members of his family. As of July 31, 2021, the Schottenstein Affiliates beneficially owned approximately 17% of the Company's outstanding common shares, representing approximately 52% of the combined voting power, consisting of, in the aggregate, 4.8 million Class A common shares and 7.7 million Class B common shares. The following summarizes the related party transactions with the Schottenstein Affiliates for the relevant periods:

Leases- We lease our fulfillment center and certain store locations owned by the Schottenstein Affiliates. During the three months ended July 31, 2021 and August 1, 2020, we recorded rent expense from leases with Schottenstein Affiliates of $2.7 million and $2.6 million, respectively. During the six months ended July 31, 2021 and August 1, 2020, we recorded rent expense from leases with Schottenstein Affiliates of $5.4 million and $5.3 million, respectively. As of July 31, 2021, January 30, 2021 and August 1, 2020, we had related party current operating lease liabilities of $6.4 million, $8.0 million and $7.9 million, respectively, and non-current operating lease liabilities of $21.3 million, $24.6 million and $28.5 million, respectively.

Other Purchases and Services- During the three months ended July 31, 2021 and August 1, 2020, we had other purchases and services we incurred from the Schottenstein Affiliates of $1.1 million and $1.2 million, respectively. During both the six months ended July 31, 2021 and August 1, 2020, we had other purchases and services we incurred from the Schottenstein Affiliates of $2.5 million.

Due to Related Parties- Amounts due to Schottenstein Affiliates, other than operating lease liabilities, were immaterial for all periods presented.

ABG-Camuto

We have a 40% interest in our equity investment in ABG-Camuto. We have a licensing agreement with ABG-Camuto, pursuant to which we pay royalties on the net sales of the brands owned by ABG-Camuto, subject to guaranteed minimums. During both the three months ended July 31, 2021 and August 1, 2020, we recorded royalty expense for amounts paid to ABG-Camuto of $4.6 million. During the six months ended July 31, 2021 and August 1, 2020, we recorded royalty expense for amounts paid to ABG-Camuto of $9.2 million and $9.0 million, respectively. Amounts due to ABG-Camuto were immaterial for all periods presented.

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Earnings (Loss) Per Share

6 Months Ended

Jul. 31, 2021

Earnings Per Share [Abstract]

Earnings (Loss) Per Share

EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is based on net income (loss) and the weighted average of Class A and Class B common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares adjusted for outstanding stock options and restricted stock units ("RSUs") calculated using the treasury stock method.

The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings (loss) per share:

	Three months ended		Six months ended
(in thousands)	July 31, 2021	August 1, 2020	July 31, 2021	August 1, 2020
Weighted average basic shares outstanding	72,932	72,142	72,773	72,028
Dilutive effect of stock-based compensation awards	4,687	—	4,498	—
Weighted average diluted shares outstanding	77,619	72,142	77,271	72,028

For the three months ended July 31, 2021 and August 1, 2020, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings (loss) per share due to their anti-dilutive effect was 2.9 million and 5.9 million, respectively. For the six months ended July 31, 2021 and August 1, 2020, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings (loss) per share due to their anti-dilutive effect was 3.0 million and 5.5 million, respectively.

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Stock-Based Compensation

6 Months Ended

Jul. 31, 2021

Share-based Payment Arrangement [Abstract]

Stock-Based Compensation

STOCK-BASED COMPENSATION

Stock-based compensation expense consisted of the following:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Stock options	$	132	$	407	$	385	$	870
Restricted and director stock units	5,776		5,272		12,980		9,726
	$	5,908	$	5,679	$	13,365	$	10,596

The following table summarizes the stock-based compensation award activity for RSUs for the six months ended July 31, 2021:

	Number of shares
(in thousands)	Time-Based RSUs	Performance-Based RSUs
Outstanding - beginning of period	6,445	540
Granted	1,033	—
Vested	(512)	(359)
Forfeited	(225)	(17)
Outstanding - end of period	6,741	164

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Shareholders' Equity

6 Months Ended

Jul. 31, 2021

Equity [Abstract]

Shareholders' Equity

SHAREHOLDERS' EQUITYShares- Our Class A common shares are listed for trading under the ticker symbol "DBI" on the New York Stock Exchange. There is currently no public market for the Company's Class B common shares, but the Class B common shares can be exchanged for the Company's Class A common shares at the election of the holder on a share for share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval.

The following table provides additional information for our common shares:

	July 31, 2021		January 30, 2021		August 1, 2020
(in thousands)	Class A	Class B	Class A	Class B	Class A	Class B
Authorized shares	250,000	100,000	250,000	100,000	250,000	100,000
Issued shares	87,405	7,733	86,835	7,733	86,747	7,733
Outstanding shares	65,236	7,733	64,666	7,733	64,578	7,733
Treasury shares	22,169	—	22,169	—	22,169	—

We have authorized 100 million shares of no par value preferred shares, with no shares issued for any of the periods presented.

Accumulated Other Comprehensive Loss- For the six months ended August 1, 2020, changes for the balances of each component of accumulated other comprehensive loss, net of tax, were as follows (for all other periods presented, the change was due to foreign currency translation adjustments as shown in the condensed consolidated statements of shareholders' equity):

(in thousands)	Foreign Currency Translation		Available-for-Sale Securities		Total
Accumulated other comprehensive income (loss) - beginning of period	$	(2,668)	$	173	$	(2,495)
Other comprehensive income (loss) before reclassifications	(2,251)		195		(2,056)
Amounts reclassified to non-operating income, net	—		(368)		(368)
Other comprehensive loss	(2,251)		(173)		(2,424)
Accumulated other comprehensive loss - end of period	$	(4,919)	$	—	$	(4,919)

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Receivables

6 Months Ended

Jul. 31, 2021

Accounts Receivable [Abstract]

Receivables

RECEIVABLES

Receivables, net, consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Customer accounts receivables:
Serviced by third-party provider with guaranteed payment	$	27,638	$	29,615	$	20,268
Serviced by third-party provider without guaranteed payment	76		363		739
Serviced in-house	2,665		4,576		6,248
Income tax receivable	158,890		149,824		—
Other receivables	11,295		12,865		23,973
Total receivables	200,564		197,243		51,228
Allowance for doubtful accounts	(1,193)		(1,194)		(1,988)
	$	199,371	$	196,049	$	49,240

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Goodwill and Intangible Assets

6 Months Ended

Jul. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

Goodwill- The following table presents the changes to goodwill by segment:

	Six months ended
	July 31, 2021						August 1, 2020
(in thousands)	Goodwill		Accumulated Impairments		Net		Goodwill		Accumulated Impairments		Net
Beginning of period by segment:
U.S. Retail	$	93,655	$	—	$	93,655	$	93,655	$	—	$	93,655
Canada Retail	43,086		(43,086)		—		41,610		(41,610)		—
Brand Portfolio	19,989		(19,989)		—		19,989		—		19,989
	156,730		(63,075)		93,655		155,254		(41,610)		113,644
Activity by segment:
Canada Retail-
Currency translation adjustment	1,098		(1,098)		—		(534)		534		—
Brand Portfolio-
Impairment charge	—		—		—		—		(19,989)		(19,989)
	1,098		(1,098)		—		(534)		(19,455)		(19,989)
End of period by segment:
U.S. Retail	93,655		—		93,655		93,655		—		93,655
Canada Retail	44,184		(44,184)		—		41,076		(41,076)		—
Brand Portfolio	19,989		(19,989)		—		19,989		(19,989)		—
	$	157,828	$	(64,173)	$	93,655	$	154,720	$	(61,065)	$	93,655

Intangible Assets- Intangible assets consisted of the following:

(in thousands)	Cost		Accumulated Amortization		Net
July 31, 2021
Definite-lived customer relationships	$	1,444	$	(1,444)	$	—
Indefinite-lived trademarks and tradenames	15,905		—		15,905
	$	17,349	$	(1,444)	$	15,905
January 30, 2021
Definite-lived customer relationships	$	2,909	$	(2,791)	$	118
Indefinite-lived trademarks and tradenames	15,517		—		15,517
	$	18,426	$	(2,791)	$	15,635
August 1, 2020
Definite-lived customer relationships	$	2,843	$	(2,507)	$	336
Indefinite-lived trademarks and tradenames	15,327		—		15,327
	$	18,170	$	(2,507)	$	15,663

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Accrued Expenses

6 Months Ended

Jul. 31, 2021

Payables and Accruals [Abstract]

Accrued Expenses

ACCRUED EXPENSES

Accrued expenses consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Gift cards	$	28,691	$	34,442	$	29,919
Accrued compensation and related expenses	49,037		49,864		29,422
Accrued taxes	35,030		24,206		22,624
Loyalty programs deferred revenue	15,255		11,379		14,797
Sales returns	19,204		17,333		20,713
Customer allowances and discounts	2,103		4,579		8,644
Other	72,735		58,523		76,712
	$	222,055	$	200,326	$	202,831

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Debt

6 Months Ended

Jul. 31, 2021

Debt Disclosure [Abstract]

Debt

DEBT

Debt consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
ABL Revolver	$	16,810	$	100,000	$	—
Term Loan	237,500		243,750		—
Credit Facility	—		—		393,000
Total debt	254,310		343,750		393,000
Less unamortized Term Loan debt issuance costs	(7,241)		(8,931)		—
Less current maturities of long-term debt	(62,500)		(62,500)		—
Long-term debt	$	184,569	$	272,319	$	393,000

ABL Revolver- On August 7, 2020, we replaced our Credit Facility with the ABL Revolver, which provides a revolving line of credit of up to $400.0 million, including a Canadian sub-limit of up to $20.0 million, a $50.0 million sub-limit for the issuance of letters of credit, a $40.0 million sub-limit for swing loan advances for U.S. borrowings, and a $2.0 million sub-limit for swing loan advances for Canadian borrowings. Our ABL Revolver matures in August 2025 and is secured by substantially all of our personal property assets, including a first priority lien on credit card receivables and inventory and a second priority lien on personal property assets that constitute first priority collateral for the Term Loan. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of July 31, 2021, the ABL Revolver had a borrowing base of $386.1 million, with $16.8 million outstanding and $5.3 million in letters of credit issued, resulting in $364.0 million available for borrowings.

Borrowings and letters of credit issued under the ABL Revolver accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greatest of (i) the prime rate, (ii) the overnight bank funding rate plus 0.5%, and (iii) the adjusted one-month London Interbank Offered Rate ("LIBOR") (as defined) plus 1.0%; or (B) an adjusted LIBOR per annum (subject to a floor of 0.75%), plus, in each instance, an applicable rate to be determined based on average availability, with an interest rate of 3.0% as of July 31, 2021. Commitment fees are based on the unused portion of the ABL Revolver. Interest expense related to the ABL Revolver includes interest on borrowings and letters of credit, commitment fees and the amortization of debt issuance costs.

Term Loan- On August 7, 2020, we also entered into a $250.0 million Term Loan. The Term Loan requires minimum quarterly principal payments with the remaining outstanding balance due in August 2025. The Term Loan has limited prepayment requirements under certain conditions. The Term Loan is collateralized by a first priority lien on substantially all of our personal and real property (subject to certain exceptions), including investment property and intellectual property, and by a second priority lien on certain other personal property, primarily credit card receivables and inventory, that constitute first priority collateral for the ABL Revolver.

Borrowings under the Term Loan accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greater of (i) 3.25%, (ii) the prime rate, (iii) the overnight bank funding rate plus 0.5%, and (iv) the adjusted one-month LIBOR plus 1.0%, plus, in each instance, 7.5%; or (B) an adjusted LIBOR per annum (subject to a floor of 1.25%), plus 8.5%, with an interest rate of 9.8% (effective interest rate of 11.8% when including the amortization of debt issuance costs) as of July 31, 2021.

Debt Covenants- The ABL Revolver contains a minimum availability covenant where an event of default shall occur if availability is less than the greater of $30.0 million or 10.0% of the maximum credit amount. The Term Loan includes a springing covenant imposing a minimum earnings before interest, taxes, depreciation, and amortization ("EBITDA") covenant, which arises when liquidity is less than $150.0 million. In addition, the ABL Revolver and the Term Loan each contain customary covenants restricting our activities, including limitations on the ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions. We are restricted from paying dividends or repurchasing stock until the third quarter of fiscal 2021 at the earliest, after which certain limitations apply. Both the ABL Revolver and the Term Loan contain customary events of default with cross-default provisions. Upon an event of default that is not cured or waived within the cure periods, in addition to other remedies that may be available to the lenders, the obligations may be accelerated, outstanding letters of credit may be required to be cash collateralized and remedies may be exercised against the collateral. As of July 31, 2021, we were in compliance with all financial covenants.

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Commitments and Contingencies

6 Months Ended

Jul. 31, 2021

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

COMMITMENTS AND CONTINGENCIES

Legal Proceedings- We are involved in various legal proceedings that are incidental to the conduct of our business. Although it is not possible to predict with certainty the eventual outcome of any litigation, we believe the amount of any potential liability with respect to current legal proceedings will not be material to the results of operations or financial condition. As additional information becomes available, we will assess any potential liability related to pending litigation and revise the estimates as needed.

Insurance Recoveries- During fiscal 2020, a third-party vendor experienced a shutdown of services to us that impacted our ability to fulfill orders from customers for a limited period of time. This incident was covered under an insurance policy that provides for reimbursement of lost profits and recognized losses as a result of the outage. During the fourth quarter of fiscal 2020, we recognized an insurance recovery receivable of $3.0 million, recorded as an offset to cost of sales, for recognized losses that we believe are probable of being reimbursed through the insurance policy. Reimbursement for lost profits and any additional recoveries in excess of recognized losses are treated as gain contingencies and will be recognized when realized or realizable. We continue to work with the insurance carrier to reach an agreement on the total amount to be recovered.

Guarantee- We provide guarantees for lease obligations that are scheduled to expire in fiscal 2023 for locations that have been leased to third parties. If a third party does not pay the rent or vacates the premise, we may be required to make full rent payments to the landlord. As of July 31, 2021, the total future minimum lease payment requirements for these guarantees were approximately $13.3 million.

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Segment Reporting

6 Months Ended

Jul. 31, 2021

Segment Reporting [Abstract]

Segment Reporting

SEGMENT REPORTING

The following provides certain key financial data by segment reconciled to the condensed consolidated financial statements:

(in thousands)	U.S. Retail		Canada Retail		Brand Portfolio		Other		Corporate/Eliminations		Total
Three months ended July 31, 2021
Net sales:
External customer sales	$	723,093	$	57,585	$	36,657	$	—	$	—	$	817,335
Intersegment sales	—		—		13,872		—		(13,872)		—
Total net sales	$	723,093	$	57,585	$	50,529	$	—	$	(13,872)	$	817,335
Gross profit	$	256,893	$	18,768	$	8,533	$	—	$	487	$	284,681
Income from equity investment	$	—	$	—	$	2,290	$	—	$	—	$	2,290
Three months ended August 1, 2020
Net sales:
External customer sales	$	393,977	$	49,582	$	23,889	$	22,266	$	—	$	489,714
Intersegment sales	—		—		6,569		—		(6,569)		—
Total net sales	$	393,977	$	49,582	$	30,458	$	22,266	$	(6,569)	$	489,714
Gross profit (loss)	$	40,097	$	5,650	$	(11,440)	$	118	$	2,617	$	37,042
Income from equity investment	$	—	$	—	$	2,153	$	—	$	—	$	2,153
Six months ended July 31, 2021
Net sales:
External customer sales	$	1,343,751	$	98,189	$	78,550	$	—	$	—	$	1,520,490
Intersegment sales	—		—		29,406		—		(29,406)		—
Total net sales	$	1,343,751	$	98,189	$	107,956	$	—	$	(29,406)	$	1,520,490
Gross profit	$	450,006	$	29,603	$	20,459	$	—	$	724	$	500,792
Income from equity investment	$	—	$	—	$	3,998	$	—	$	—	$	3,998
Six months ended August 1, 2020
Net sales:
External customer sales	$	771,050	$	78,911	$	86,647	$	35,889	$	—	$	972,497
Intersegment sales	—		—		25,924		—		(25,924)		—
Total net sales	$	771,050	$	78,911	$	112,571	$	35,889	$	(25,924)	$	972,497
Gross profit (loss)	$	7,127	$	3,339	$	2,464	$	(5,310)	$	2,962	$	10,582
Income from equity investment	$	—	$	—	$	4,423	$	—	$	—	$	4,423

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Significant Accounting Policies (Policies)

6 Months Ended

Jul. 31, 2021

Accounting Policies [Abstract]

Basis of Accounting, Policy

Basis of Presentation- The accompanying unaudited, condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 30, 2021 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2020 Form 10-K.

Fiscal Period, Policy

Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year refer to the calendar year in which the fiscal year begins.

Impairment or Disposal of Long-Lived Assets, Policy

As a result of the material reduction in net sales and cash flows during fiscal 2020, we updated our impairment analyses for our U.S. Retail and Canada Retail segments at the store-level, which represents the lowest level for which identifiable cash flows are independent of the cash flows of other assets. The carrying amount of the store asset group, primarily made up of operating lease assets, leasehold improvements and fixtures, is considered impaired when the carrying value of the asset group exceeds the expected future cash flows from the asset group. The impairment loss recognized is the excess of the carrying value of the asset or asset group over its fair value (categorized as Level 3 under the fair value hierarchy). Fair value at the store level is typically based on projected discounted cash flows over the remaining lease term. In addition, we evaluated other long-lived assets based on our intent to use such assets going forward.

Goodwill and Intangible Assets, Policy

As a result of the material reduction in net sales and cash flows due to the temporary closure of all of our stores, the decrease in net sales from our retailer customers and the decrease in the Company's market capitalization due to the impact of COVID-19 on macroeconomic conditions, we performed an impairment analysis for goodwill and other indefinite-lived intangible assets during the first quarter of fiscal 2020. We calculated the fair value of the reporting units with goodwill primarily based on a discounted cash flow analysis (categorized as Level 3 under the fair value hierarchy). Our analysis concluded that the fair value of the First Cost reporting unit within the Brand Portfolio segment did not exceed its carrying value. Accordingly, during the six months ended August 1, 2020, we recorded an impairment charge of $20.0 million for the First Cost reporting unit in the Brand Portfolio segment, resulting in a full impairment.

Inventory, Policy

The U.S. Retail segment inventory is accounted for using the retail inventory method and is stated at the lower of cost or market. Under the retail inventory method, the valuation of inventories reflects reductions for merchandise marked down with charges to cost of sales. As a result, earnings are negatively impacted as the merchandise is marked down prior to sale. Inventories for the Canada Retail and Brand Portfolio segments are accounted for using moving average cost method and are stated at the lower of cost or net realizable value. For all inventories, we also monitored excess and obsolete inventories in light of the temporary closure of stores during our fiscal 2020 peak spring selling season and reduced traffic experienced since re-opening stores.

Income Tax, Policy

We recorded our income tax expense, income tax receivable, and deferred tax assets and related liabilities based on management’s best estimates. Additionally, we assessed the likelihood of realizing the benefits of our deferred tax assets. Our ability to recover these deferred tax assets depends on several factors, including our ability to project future taxable income. One of the provisions of the CARES Act allows net operating losses generated within tax years 2018 through 2020 to be carried back up to five years, including years in which the U.S. federal statutory tax rate was 35%, as opposed to the current rate of 21%. In evaluating future taxable income, significant weight is given to positive and negative evidence that is objectively verifiable. As a result of the losses incurred in fiscal 2020 due to COVID-19, we are in a three-year cumulative loss position as of July 31, 2021, which is significant objective negative evidence in considering whether deferred tax assets are realizable. Such objective evidence limits the ability to consider other subjective evidence, such as the projection of future taxable income. A valuation allowance has been recognized as a reserve on the total deferred tax asset balance due to the uncertainty of realization of our loss carry forwards and other deferred tax assets.

Impact Of COVID-19, Policy

The impacts from the COVID-19 pandemic remain challenging and unpredictable. While trends improved during the first half of fiscal 2021, we cannot reasonably estimate the extent to which our business will continue to be affected by COVID-19 and to what extent the recent improved trends will continue. For instance, restrictions have recently been reinstated in certain locations within the U.S., and it is unclear whether these restrictions will continue and expand or if COVID-19 will result in long-term changes in consumer behavior. The ongoing and prolonged nature of the outbreak may lead to further adjustments to our operations. As such, the ultimate impacts of COVID-19 to our businesses remain highly uncertain and will depend on future developments, including global supply chain disruptions, the variants of COVID-19, and the global availability and use of vaccines, which are highly uncertain and cannot be predicted. As a result, we may have future write-downs or adjustments to inventories, receivables, long-lived assets, intangibles, goodwill, and the valuation allowance on deferred tax assets.

Severance, Policy

During the three months ended July 31, 2021 and August 1, 2020, we incurred severance costs of $1.2 million and $7.3 million, respectively. During the six months ended July 31, 2021 and August 1, 2020, we incurred severance costs of $2.6 million and $9.0 million, respectively. These costs are included in operating expenses in the condensed consolidated statements of operations. As of July 31, 2021, January 30, 2021 and August 1, 2020, we had accrued severance of $4.9 million, $6.5 million and $8.4 million, respectively, included in accrued expenses on the condensed consolidated balance sheets.

Gain on Settlement, Policy

During the three months ended August 1, 2020, we recognized a gain of $9.0 million, recorded to operating expenses in the condensed consolidated statements of operations, due to a settlement with a vendor for costs incurred on internal-use software that was capitalized and impaired in a previous fiscal year. During the three months ended August 1, 2020, we collected $4.2 million, net of legal costs incurred, and recorded a $4.8 million receivable included in receivables, net, on the condensed consolidated balance sheets, which has been subsequently received.

Principles of Consolidation, Policy

Principles of Consolidation- The condensed consolidated financial statements include the accounts of Designer Brands Inc. and its subsidiaries, including variable interest entities. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in U.S. dollars.

Use of Estimates, Policy

Use of Estimates- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of net sales and expenses during the reporting periods. Certain estimates and assumptions use forecasted financial information based on information reasonably available to us, along with the estimated, but uncertain, future impacts of COVID-19. Significant estimates and assumptions are required as a part of accounting for sales returns allowances, customer allowances and discounts, gift card breakage income, deferred revenue associated with loyalty programs, valuation of inventories, depreciation and amortization, impairments of long-lived assets, intangibles and goodwill, lease accounting, income taxes, and self-insurance reserves. Although we believe these estimates and assumptions are reasonable, they are based on management's knowledge of current events and actions we may undertake in the future. Changes in facts and circumstances may result in revised estimates and assumptions, and actual results could differ from these estimates.

Cash and Cash Equivalents, Restricted Cash and Cash Equivalents, Policy

Cash, Cash Equivalents, and Restricted Cash- Cash and cash equivalents represent cash, money market funds and credit card receivables that generally settle within three days. Restricted cash represented cash that is restricted as to withdrawal or usage and consists of a mandatory cash deposit maintained for certain insurance policies.

Fair Value, Policy

Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows:

•Level 1 - Quoted prices in active markets for identical assets or liabilities.

•Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.

•Level 3 - Unobservable inputs in which little or no market activity exists.

The carrying value of cash and cash equivalents, restricted cash, receivables, and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowing under our ABL Revolver and our previous senior unsecured revolving credit agreement ("Credit Facility") approximated the carrying value. As of July 31, 2021, the fair value of borrowings under our Term Loan was $250.2 million compared to the carrying value of $237.5 million. The fair value of debt borrowings was estimated based on current interest rates offered for similar instruments (categorized as Level 2 under the fair value hierarchy).

Deferred Revenue Liabilities, Policy

Deferred Revenue Liabilities- We record deferred revenue liabilities, included in accrued expenses on the condensed consolidated balance sheets, for remaining obligations we have to our customers.

Earnings Per Share, Policy

Basic earnings (loss) per share is based on net income (loss) and the weighted average of Class A and Class B common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares adjusted for outstanding stock options and restricted stock units ("RSUs") calculated using the treasury stock method.

Shareholders' Equity, Policy

Shares- Our Class A common shares are listed for trading under the ticker symbol "DBI" on the New York Stock Exchange. There is currently no public market for the Company's Class B common shares, but the Class B common shares can be exchanged for the Company's Class A common shares at the election of the holder on a share for share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval.

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Significant Accounting Policies (Tables)

6 Months Ended

Jul. 31, 2021

Accounting Policies [Abstract]

Schedule of Cash and Cash Equivalents

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Cash and cash equivalents	$	46,458	$	59,581	$	206,720
Restricted cash, included in prepaid expenses and other current assets	1,546		—		—
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	48,004	$	59,581	$	206,720

Reconciliation of Cash and Cash Equivalents and Restricted Cash

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Cash and cash equivalents	$	46,458	$	59,581	$	206,720
Restricted cash, included in prepaid expenses and other current assets	1,546		—		—
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	48,004	$	59,581	$	206,720

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Revenue (Tables)

6 Months Ended

Jul. 31, 2021

Revenue from Contract with Customer [Abstract]

Disaggregation of Revenue

The following table presents net sales disaggregated by product and service category for each segment:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Net sales:
U.S. Retail segment:
Women's footwear	$	467,518	$	253,539	$	872,818	$	513,102
Men's footwear	168,218		85,012		300,165		155,367
Kids' footwear	54,112		32,232		108,844		61,415
Accessories and other	33,245		23,194		61,924		41,166
	723,093		393,977		1,343,751		771,050
Canada Retail segment:
Women's footwear	30,230		25,329		50,661		41,301
Men's footwear	15,805		13,970		25,333		20,773
Kids' footwear	9,554		8,231		19,067		13,787
Accessories and other	1,996		2,052		3,128		3,050
	57,585		49,582		98,189		78,911
Brand Portfolio segment:
Wholesale	42,715		15,563		91,358		82,867
Commission income	2,377		5,018		5,708		10,141
Direct-to-consumer	5,437		9,877		10,890		19,563
	50,529		30,458		107,956		112,571
Other	—		22,266		—		35,889
Total segment net sales	831,207		496,283		1,549,896		998,421
Elimination of intersegment sales	(13,872)		(6,569)		(29,406)		(25,924)
Total net sales	$	817,335	$	489,714	$	1,520,490	$	972,497

Deferred Revenue

The following table presents the changes and total balances for gift cards and our loyalty programs:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Gift cards:
Beginning of period	$	30,809	$	30,908	$	34,442	$	35,461
Gift cards redeemed and breakage recognized to net sales	(19,210)		(11,343)		(36,380)		(24,868)
Gift cards issued	17,092		10,354		30,629		19,326
End of period	$	28,691	$	29,919	$	28,691	$	29,919
Loyalty programs:
Beginning of period	$	12,955	$	14,568	$	11,379	$	16,138
Loyalty certificates redeemed and expired and other adjustments recognized to net sales	(6,008)		(4,277)		(10,904)		(10,886)
Deferred revenue for loyalty points issued	8,308		4,506		14,780		9,545
End of period	$	15,255	$	14,797	$	15,255	$	14,797

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Earnings (Loss) Per Share (Tables)

6 Months Ended

Jul. 31, 2021

Earnings Per Share [Abstract]

Reconciliation of the Number of Shares Used in the Calculation of Diluted Earnings per Share

The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings (loss) per share:

	Three months ended		Six months ended
(in thousands)	July 31, 2021	August 1, 2020	July 31, 2021	August 1, 2020
Weighted average basic shares outstanding	72,932	72,142	72,773	72,028
Dilutive effect of stock-based compensation awards	4,687	—	4,498	—
Weighted average diluted shares outstanding	77,619	72,142	77,271	72,028

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Stock-Based Compensation (Tables)

6 Months Ended

Jul. 31, 2021

Share-based Payment Arrangement [Abstract]

Schedule of Share-based Compensation Expense

Stock-based compensation expense consisted of the following:

	Three months ended				Six months ended
(in thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020
Stock options	$	132	$	407	$	385	$	870
Restricted and director stock units	5,776		5,272		12,980		9,726
	$	5,908	$	5,679	$	13,365	$	10,596

Share-based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity

The following table summarizes the stock-based compensation award activity for RSUs for the six months ended July 31, 2021:

	Number of shares
(in thousands)	Time-Based RSUs	Performance-Based RSUs
Outstanding - beginning of period	6,445	540
Granted	1,033	—
Vested	(512)	(359)
Forfeited	(225)	(17)
Outstanding - end of period	6,741	164

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Shareholders' Equity (Tables)

6 Months Ended

Jul. 31, 2021

Equity [Abstract]

Schedule of Stock by Class

The following table provides additional information for our common shares:

	July 31, 2021		January 30, 2021		August 1, 2020
(in thousands)	Class A	Class B	Class A	Class B	Class A	Class B
Authorized shares	250,000	100,000	250,000	100,000	250,000	100,000
Issued shares	87,405	7,733	86,835	7,733	86,747	7,733
Outstanding shares	65,236	7,733	64,666	7,733	64,578	7,733
Treasury shares	22,169	—	22,169	—	22,169	—

Schedule of Accumulated Other Comprehensive Income (Loss)

For the six months ended August 1, 2020, changes for the balances of each component of accumulated other comprehensive loss, net of tax, were as follows (for all other periods presented, the change was due to foreign currency translation adjustments as shown in the condensed consolidated statements of shareholders' equity):

(in thousands)	Foreign Currency Translation		Available-for-Sale Securities		Total
Accumulated other comprehensive income (loss) - beginning of period	$	(2,668)	$	173	$	(2,495)
Other comprehensive income (loss) before reclassifications	(2,251)		195		(2,056)
Amounts reclassified to non-operating income, net	—		(368)		(368)
Other comprehensive loss	(2,251)		(173)		(2,424)
Accumulated other comprehensive loss - end of period	$	(4,919)	$	—	$	(4,919)

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Receivables (Tables)

6 Months Ended

Jul. 31, 2021

Accounts Receivable [Abstract]

Schedule of Accounts Receivable, Net

Receivables, net, consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Customer accounts receivables:
Serviced by third-party provider with guaranteed payment	$	27,638	$	29,615	$	20,268
Serviced by third-party provider without guaranteed payment	76		363		739
Serviced in-house	2,665		4,576		6,248
Income tax receivable	158,890		149,824		—
Other receivables	11,295		12,865		23,973
Total receivables	200,564		197,243		51,228
Allowance for doubtful accounts	(1,193)		(1,194)		(1,988)
	$	199,371	$	196,049	$	49,240

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Goodwill and Intangible Assets (Tables)

6 Months Ended

Jul. 31, 2021

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of goodwill

The following table presents the changes to goodwill by segment:

	Six months ended
	July 31, 2021						August 1, 2020
(in thousands)	Goodwill		Accumulated Impairments		Net		Goodwill		Accumulated Impairments		Net
Beginning of period by segment:
U.S. Retail	$	93,655	$	—	$	93,655	$	93,655	$	—	$	93,655
Canada Retail	43,086		(43,086)		—		41,610		(41,610)		—
Brand Portfolio	19,989		(19,989)		—		19,989		—		19,989
	156,730		(63,075)		93,655		155,254		(41,610)		113,644
Activity by segment:
Canada Retail-
Currency translation adjustment	1,098		(1,098)		—		(534)		534		—
Brand Portfolio-
Impairment charge	—		—		—		—		(19,989)		(19,989)
	1,098		(1,098)		—		(534)		(19,455)		(19,989)
End of period by segment:
U.S. Retail	93,655		—		93,655		93,655		—		93,655
Canada Retail	44,184		(44,184)		—		41,076		(41,076)		—
Brand Portfolio	19,989		(19,989)		—		19,989		(19,989)		—
	$	157,828	$	(64,173)	$	93,655	$	154,720	$	(61,065)	$	93,655

Schedule of finite-lived intangible assets

Intangible assets consisted of the following:

(in thousands)	Cost		Accumulated Amortization		Net
July 31, 2021
Definite-lived customer relationships	$	1,444	$	(1,444)	$	—
Indefinite-lived trademarks and tradenames	15,905		—		15,905
	$	17,349	$	(1,444)	$	15,905
January 30, 2021
Definite-lived customer relationships	$	2,909	$	(2,791)	$	118
Indefinite-lived trademarks and tradenames	15,517		—		15,517
	$	18,426	$	(2,791)	$	15,635
August 1, 2020
Definite-lived customer relationships	$	2,843	$	(2,507)	$	336
Indefinite-lived trademarks and tradenames	15,327		—		15,327
	$	18,170	$	(2,507)	$	15,663

Schedule of indefinite-lived intangible assets

Intangible assets consisted of the following:

(in thousands)	Cost		Accumulated Amortization		Net
July 31, 2021
Definite-lived customer relationships	$	1,444	$	(1,444)	$	—
Indefinite-lived trademarks and tradenames	15,905		—		15,905
	$	17,349	$	(1,444)	$	15,905
January 30, 2021
Definite-lived customer relationships	$	2,909	$	(2,791)	$	118
Indefinite-lived trademarks and tradenames	15,517		—		15,517
	$	18,426	$	(2,791)	$	15,635
August 1, 2020
Definite-lived customer relationships	$	2,843	$	(2,507)	$	336
Indefinite-lived trademarks and tradenames	15,327		—		15,327
	$	18,170	$	(2,507)	$	15,663

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Accrued Expenses (Tables)

6 Months Ended

Jul. 31, 2021

Payables and Accruals [Abstract]

Accrued Expenses

Accrued expenses consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
Gift cards	$	28,691	$	34,442	$	29,919
Accrued compensation and related expenses	49,037		49,864		29,422
Accrued taxes	35,030		24,206		22,624
Loyalty programs deferred revenue	15,255		11,379		14,797
Sales returns	19,204		17,333		20,713
Customer allowances and discounts	2,103		4,579		8,644
Other	72,735		58,523		76,712
	$	222,055	$	200,326	$	202,831

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Debt (Tables)

6 Months Ended

Jul. 31, 2021

Debt Disclosure [Abstract]

Schedule of Debt

Debt consisted of the following:

(in thousands)	July 31, 2021		January 30, 2021		August 1, 2020
ABL Revolver	$	16,810	$	100,000	$	—
Term Loan	237,500		243,750		—
Credit Facility	—		—		393,000
Total debt	254,310		343,750		393,000
Less unamortized Term Loan debt issuance costs	(7,241)		(8,931)		—
Less current maturities of long-term debt	(62,500)		(62,500)		—
Long-term debt	$	184,569	$	272,319	$	393,000

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Segment Reporting (Tables)

6 Months Ended

Jul. 31, 2021

Segment Reporting [Abstract]

Segment Information

The following provides certain key financial data by segment reconciled to the condensed consolidated financial statements:

(in thousands)	U.S. Retail		Canada Retail		Brand Portfolio		Other		Corporate/Eliminations		Total
Three months ended July 31, 2021
Net sales:
External customer sales	$	723,093	$	57,585	$	36,657	$	—	$	—	$	817,335
Intersegment sales	—		—		13,872		—		(13,872)		—
Total net sales	$	723,093	$	57,585	$	50,529	$	—	$	(13,872)	$	817,335
Gross profit	$	256,893	$	18,768	$	8,533	$	—	$	487	$	284,681
Income from equity investment	$	—	$	—	$	2,290	$	—	$	—	$	2,290
Three months ended August 1, 2020
Net sales:
External customer sales	$	393,977	$	49,582	$	23,889	$	22,266	$	—	$	489,714
Intersegment sales	—		—		6,569		—		(6,569)		—
Total net sales	$	393,977	$	49,582	$	30,458	$	22,266	$	(6,569)	$	489,714
Gross profit (loss)	$	40,097	$	5,650	$	(11,440)	$	118	$	2,617	$	37,042
Income from equity investment	$	—	$	—	$	2,153	$	—	$	—	$	2,153
Six months ended July 31, 2021
Net sales:
External customer sales	$	1,343,751	$	98,189	$	78,550	$	—	$	—	$	1,520,490
Intersegment sales	—		—		29,406		—		(29,406)		—
Total net sales	$	1,343,751	$	98,189	$	107,956	$	—	$	(29,406)	$	1,520,490
Gross profit	$	450,006	$	29,603	$	20,459	$	—	$	724	$	500,792
Income from equity investment	$	—	$	—	$	3,998	$	—	$	—	$	3,998
Six months ended August 1, 2020
Net sales:
External customer sales	$	771,050	$	78,911	$	86,647	$	35,889	$	—	$	972,497
Intersegment sales	—		—		25,924		—		(25,924)		—
Total net sales	$	771,050	$	78,911	$	112,571	$	35,889	$	(25,924)	$	972,497
Gross profit (loss)	$	7,127	$	3,339	$	2,464	$	(5,310)	$	2,962	$	10,582
Income from equity investment	$	—	$	—	$	4,423	$	—	$	—	$	4,423

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Significant Accounting Policies (Details)	1 Months Ended	3 Months Ended		6 Months Ended
	Jul. 31, 2020 position	Jul. 31, 2021 USD ($)	Aug. 01, 2020 USD ($)	Jul. 31, 2021 USD ($) segment	Aug. 01, 2020 USD ($)	Jan. 30, 2021 USD ($)	Aug. 07, 2020 USD ($)	Feb. 01, 2020 USD ($)
Number of reportable segments | segment				3
Long-lived assets, impairment charges					$ 92,800,000
Increase (decrease) for additional inventory reserves					$ 64,000,000
Deferred qualified payroll and other tax obligations		$ 10,000,000		$ 10,000,000
Effective tax rate				3.60%	32.50%
Severance costs		1,200,000	$ 7,300,000	$ 2,600,000	$ 9,000,000
Accrued severance		4,900,000	8,400,000	4,900,000	8,400,000	$ 6,500,000
Borrowings, carrying value		254,310,000	393,000,000	254,310,000	393,000,000	343,750,000
Gain on settlement			9,000,000	0	8,990,000
Proceeds from settlement			4,200,000
Nontrade Receivables			4,800,000		4,800,000
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents [Abstract]
Cash and cash equivalents		46,458,000	206,720,000	46,458,000	206,720,000	59,581,000
Restricted cash, included in prepaid expenses and other current assets		1,546,000	0	1,546,000	0	0
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows		$ 48,004,000	206,720,000	$ 48,004,000	206,720,000	59,581,000		$ 86,564,000
ABG-Camuto, LLC
Ownership percentage		40.00%		40.00%
Term Loan
Borrowings, fair value		$ 250,200,000		$ 250,200,000
Borrowings, carrying value		237,500,000	0	237,500,000	0	$ 243,750,000	$ 250,000,000
COVID Pandemic [Member]
Number of positions eliminated | position	1,000
Government grant received		1,000,000	3,500,000	3,700,000	7,900,000
U.S. Retail
Long-lived assets, impairment charges		$ 1,200,000	$ 6,700,000		73,100,000
Brand Portfolio
Impairment of intangible assets					6,500,000
Goodwill impairment charge				$ 0	19,989,000
Canada Retail
Long-lived assets, impairment charges					$ 19,700,000

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Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	$ 817,335	$ 489,714	$ 1,520,490	$ 972,497
Gift cards and merchandise credits, beginning of period	30,809	30,908	34,442	35,461
Gift cards and merchandise credits, end of period	28,691	29,919	28,691	29,919
Loyalty programs deferred revenue, beginning of period	12,955	14,568	11,379	16,138
Loyalty programs deferred revenue, end of period	15,255	14,797	15,255	14,797
Loyalty certificates redeemed and expired and other adjustments recognized to net sales
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase (decrease) in contract with customer, liability	(6,008)	(4,277)	(10,904)	(10,886)
Increase (decrease) in contract with customer, liability	(6,008)	(4,277)	(10,904)	(10,886)
Deferred revenue for loyalty points issued
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase (decrease) in contract with customer, liability	8,308	4,506	14,780	9,545
Increase (decrease) in contract with customer, liability	8,308	4,506	14,780	9,545
Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	817,335	489,714	1,520,490	972,497
Gift cards redeemed and breakage recognized to net sales
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase (decrease) in contract with customer, liability	(19,210)	(11,343)	(36,380)	(24,868)
Increase (decrease) in contract with customer, liability	(19,210)	(11,343)	(36,380)	(24,868)
Gift cards issued
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
Increase (decrease) in contract with customer, liability	17,092	10,354	30,629	19,326
Increase (decrease) in contract with customer, liability	17,092	10,354	30,629	19,326
Operating Segments | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	831,207	496,283	1,549,896	998,421
Operating Segments | U.S. Retail
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	723,093	393,977	1,343,751	771,050
Operating Segments | U.S. Retail | Women's footwear
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	467,518	253,539	872,818	513,102
Operating Segments | U.S. Retail | Men's footwear
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	168,218	85,012	300,165	155,367
Operating Segments | U.S. Retail | Kids' footwear
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	54,112	32,232	108,844	61,415
Operating Segments | U.S. Retail | Accessories and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	33,245	23,194	61,924	41,166
Operating Segments | Canada Retail
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	57,585	49,582	98,189	78,911
Operating Segments | Canada Retail | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	57,585	49,582	98,189	78,911
Operating Segments | Canada Retail | Women's footwear
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	30,230	25,329	50,661	41,301
Operating Segments | Canada Retail | Men's footwear
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	15,805	13,970	25,333	20,773
Operating Segments | Canada Retail | Kids' footwear
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	9,554	8,231	19,067	13,787
Operating Segments | Canada Retail | Accessories and other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	1,996	2,052	3,128	3,050
Operating Segments | Brand Portfolio
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	50,529	30,458	107,956	112,571
Operating Segments | Brand Portfolio | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	36,657	23,889	78,550	86,647
Operating Segments | Brand Portfolio | Wholesale
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	42,715	15,563	91,358	82,867
Operating Segments | Brand Portfolio | Commission Income [Member]
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	2,377	5,018	5,708	10,141
Operating Segments | Brand Portfolio | Direct-to-consumer
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	5,437	9,877	10,890	19,563
Elimination of intersegment sales
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	(13,872)	(6,569)	(29,406)	(25,924)
Elimination of intersegment sales | Brand Portfolio
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	13,872	6,569	29,406	25,924
Other
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	0	22,266	0	35,889
Other | Product
New Accounting Pronouncements or Change in Accounting Principle [Line Items]
External customer sales	$ 0	$ 22,266	$ 0	$ 35,889

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Related Party Transactions (Details) - USD ($) $ in Thousands, shares in Millions	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020	Jan. 30, 2021
Related Party Transaction [Line Items]
Related party transaction outstanding common shares owned (in hundredths)	17.00%		17.00%
Related party transaction combined voting power of outstanding common shares (in hundredths)	52.00%		52.00%
Current operating lease liabilities	$ 190,853	$ 241,694	$ 190,853	$ 241,694	$ 244,786
Non-current operating lease liabilities	645,136	778,826	645,136	778,826	677,735
Related Party
Related Party Transaction [Line Items]
Current operating lease liabilities	6,400	7,900	6,400	7,900	8,000
Non-current operating lease liabilities	21,300	28,500	21,300	28,500	$ 24,600
Related Party
Related Party Transaction [Line Items]
Lease expense	$ 2,700	2,600	$ 5,400	5,300
Class A common shares
Related Party Transaction [Line Items]
Related party transaction, number of shares owned by related party (in shares)	4.8		4.8
Class B common shares
Related Party Transaction [Line Items]
Related party transaction, number of shares owned by related party (in shares)	7.7		7.7
Schottenstein Affiliates
Related Party Transaction [Line Items]
Related party transaction, purchases from related party	$ 1,100	1,200	$ 2,500	2,500
Royalty Arrangement
Related Party Transaction [Line Items]
Royalty expense	$ 4,600	$ 4,600	$ 9,200	$ 9,000
ABG-Camuto, LLC
Related Party Transaction [Line Items]
Ownership percentage	40.00%		40.00%

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Earnings (Loss) Per Share (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
Earnings Per Share [Abstract]
Weighted average basic shares outstanding	72,932	72,142	72,773	72,028
Dilutive effect of stock-based compensation awards	4,687	0	4,498	0
Weighted average diluted shares outstanding	77,619	72,142	77,271	72,028

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Earnings (Loss) Per Share Anti-Dilutive Securities (Details) - shares shares in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
Earnings Per Share [Abstract]
Securities outstanding not included in computation of diluted earnings per share	2,900	5,900	3,000	5,500

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Stock-Based Compensation - Expense (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 5,908	$ 5,679	$ 13,365	$ 10,596
Stock options
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	132	407	385	870
Restricted and director stock units
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share-based compensation expense	$ 5,776	$ 5,272	$ 12,980	$ 9,726

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Stock-Based Compensation - Award Activity (Details) shares in Thousands	6 Months Ended
	Jul. 31, 2021 shares
Time-Based RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding - beginning of period	6,445
Granted	1,033
Vested	(512)
Forfeited	(225)
Outstanding - end of period	6,741
Performance-Based RSUs
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward]
Outstanding - beginning of period	540
Granted	0
Vested	(359)
Forfeited	(17)
Outstanding - end of period	164

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Shareholders' Equity - Class of Stock (Details)	Jul. 31, 2021 vote $ / shares shares	May 01, 2021 shares	Jan. 30, 2021 shares	Aug. 01, 2020 shares	May 02, 2020 shares	Feb. 01, 2020 shares
Class of Stock [Line Items]
Preferred stock, shares authorized	100,000,000
Preferred Stock, Par or Stated Value Per Share | $ / shares	$ 0
Preferred stock, shares issued	0
Class A common shares
Class of Stock [Line Items]
Common Stock, Voting Rights, Votes per Share | vote	1
Common stock, shares authorized (in shares)	250,000,000		250,000,000	250,000,000
Common stock, shares, issued (in shares)	87,405,000		86,835,000	86,747,000
Common stock, shares, outstanding (in shares)	65,236,000	65,134,000	64,666,000	64,578,000	64,302,000	64,033,000
Treasury Stock, Common, Shares	22,169,000		22,169,000	22,169,000
Class B common shares
Class of Stock [Line Items]
Common Stock, Voting Rights, Votes per Share | vote	8
Common stock, shares authorized (in shares)	100,000,000		100,000,000	100,000,000
Common stock, shares, issued (in shares)	7,733,000		7,733,000	7,733,000
Common stock, shares, outstanding (in shares)	7,733,000	7,733,000	7,733,000	7,733,000	7,733,000	7,733,000
Treasury Stock, Common, Shares	0		0	0

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Shareholders' Equity - AOCI Schedule (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Other comprehensive loss before reclassifications				$ (2,056)
Amounts reclassified to non-operating expenses, net				(368)
Other comprehensive income (loss)	$ (298)	$ 1,290	$ 245	(2,424)
Accumulated other comprehensive loss
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated other comprehensive loss - beginning of period				(2,495)
Other comprehensive income (loss)	$ (298)	1,290	$ 245	(2,424)
Accumulated other comprehensive loss - end of period		(4,919)		(4,919)
Foreign Currency Translation
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated other comprehensive loss - beginning of period				(2,668)
Other comprehensive loss before reclassifications				(2,251)
Amounts reclassified to non-operating expenses, net				0
Other comprehensive income (loss)				(2,251)
Accumulated other comprehensive loss - end of period		(4,919)		(4,919)
Available-for-Sale Securities
Accumulated Other Comprehensive Income (Loss) [Roll Forward]
Accumulated other comprehensive loss - beginning of period				173
Other comprehensive loss before reclassifications				195
Amounts reclassified to non-operating expenses, net				(368)
Other comprehensive income (loss)				(173)
Accumulated other comprehensive loss - end of period		$ 0		$ 0

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Receivables (Details) - USD ($) $ in Thousands	Jul. 31, 2021	Jan. 30, 2021	Aug. 01, 2020
Accounts Receivable [Abstract]
Accounts Receivable, Serviced by Third-Party Provider with Guaranteed Payment	$ 27,638	$ 29,615	$ 20,268
Accounts Receivable, Serviced by Third-Party Provider without Guaranteed Payment	76	363	739
Accounts Receivable, Serviced In-House	2,665	4,576	6,248
Income Taxes Receivable	158,890	149,824	0
Other Receivables	11,295	12,865	23,973
Accounts Receivable, before Allowance for Credit Loss, Current	200,564	197,243	51,228
Accounts Receivable, Allowance for Credit Loss	(1,193)	(1,194)	(1,988)
Accounts Receivable, after Allowance for Credit Loss, Current	$ 199,371	$ 196,049	$ 49,240

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Goodwill and Intangible Assets - Goodwill (Details) - USD ($) $ in Thousands	6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020
Goodwill [Roll Forward]
Goodwill, beginning of period	$ 156,730	$ 155,254
Accumulated Impairments, beginning of period	(63,075)	(41,610)
Net, end of period	93,655	113,644
Activity by segment:
Activity during the period by segment	1,098	(534)
Accumulated Impairments, activity during the period	(1,098)	(19,455)
Goodwill, Period Increase (Decrease), Net	0	(19,989)
Goodwill, end of period	157,828	154,720
Accumulated Impairments, end of period	(64,173)	(61,065)
Net, end of period	93,655	93,655
U.S. Retail
Goodwill [Roll Forward]
Goodwill, beginning of period	93,655	93,655
Accumulated Impairments, beginning of period	0	0
Net, end of period	93,655	93,655
Activity by segment:
Goodwill, end of period	93,655	93,655
Accumulated Impairments, end of period	0	0
Net, end of period	93,655	93,655
Canada Retail
Goodwill [Roll Forward]
Goodwill, beginning of period	43,086	41,610
Accumulated Impairments, beginning of period	(43,086)	(41,610)
Net, end of period	0	0
Activity by segment:
Currency translation adjustment	1,098	(534)
Currency translation adjustment	(1,098)	534
Goodwill, foreign currency translation gain (loss), net	0	0
Goodwill, end of period	44,184	41,076
Accumulated Impairments, end of period	(44,184)	(41,076)
Net, end of period	0	0
Brand Portfolio
Goodwill [Roll Forward]
Goodwill, beginning of period	19,989	19,989
Accumulated Impairments, beginning of period	(19,989)	0
Net, end of period	0	19,989
Activity by segment:
Goodwill, impairment loss	0	(19,989)
Goodwill, end of period	19,989	19,989
Accumulated Impairments, end of period	(19,989)	(19,989)
Net, end of period	$ 0	$ 0

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Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands	Jul. 31, 2021	Jan. 30, 2021	Aug. 01, 2020
Finite-lived Intangible Assets [Roll Forward]
Finite-lived intangible assets, accumulated amortization	$ (1,444)	$ (2,791)	$ (2,507)
Indefinite-lived Intangible Assets [Roll Forward]
Indefinite-lived trademarks	15,905	15,517	15,327
Intangible assets, gross (excluding goodwill)	17,349	18,426	18,170
Intangible assets	15,905	15,635	15,663
Customer Relationships
Finite-lived Intangible Assets [Roll Forward]
Finite-lived intangible assets, gross	1,444	2,909	2,843
Finite-lived intangible assets, accumulated amortization	(1,444)	(2,791)	(2,507)
Finite-lived intangible assets, net	$ 0	$ 118	$ 336

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Accrued Expenses (Details) - USD ($) $ in Thousands	Jul. 31, 2021	May 01, 2021	Jan. 30, 2021	Aug. 01, 2020	May 02, 2020	Feb. 01, 2020
Payables and Accruals [Abstract]
Gift cards	$ 28,691	$ 30,809	$ 34,442	$ 29,919	$ 30,908	$ 35,461
Accrued compensation and related expenses	49,037		49,864	29,422
Accrued taxes	35,030		24,206	22,624
Loyalty programs deferred revenue	15,255	$ 12,955	11,379	14,797	$ 14,568	$ 16,138
Sales returns	19,204		17,333	20,713
Customer allowances and discounts	2,103		4,579	8,644
Other	72,735		58,523	76,712
Accrued expenses	$ 222,055		$ 200,326	$ 202,831

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Debt (Details) - USD ($) $ in Thousands		6 Months Ended
	Aug. 07, 2020	Jul. 31, 2021	Jan. 30, 2021	Aug. 01, 2020
Debt Instrument [Line Items]
Long-term debt, gross		$ 254,310	$ 343,750	$ 393,000
Long-term line of credit		0	0	393,000
Less unamortized Term Loan debt issuance costs		(7,241)	(8,931)	0
Less current maturities of long-term debt		(62,500)	(62,500)	0
Long-term debt		184,569	272,319	393,000
Line of credit facility, current borrowing capacity		386,100
Letters of credit outstanding, amount		5,300
Line of credit facility, available borrowing capacity		364,000
ABL Revolver
Debt Instrument [Line Items]
Long-term debt, gross	$ 400,000	$ 16,810	100,000	0
Basis spread on variable interest rate		3.00%
ABL Revolver | Overnight Bank Funding Rate
Debt Instrument [Line Items]
Basis spread on variable interest rate	0.50%
ABL Revolver | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable interest rate	1.00%
ABL Revolver | London Interbank Offered Rate (LIBOR) | Interest Rate Floor
Debt Instrument [Line Items]
Basis spread on variable interest rate	0.75%
ABL Revolver | Canadian
Debt Instrument [Line Items]
Long-term debt, gross	$ 20,000
Term Loan
Debt Instrument [Line Items]
Long-term debt, gross	$ 250,000	$ 237,500	$ 243,750	$ 0
Basis spread on variable interest rate	3.25%
Interest rate increase (decrease)		9.80%
Effective interest rate		11.80%
Minimum availability covenant	$ 30,000
Minimum availability covenant, percent of maximum credit amount	10.00%
Minimum EBITDA covenant	$ 150,000
Term Loan | Overnight Bank Funding Rate
Debt Instrument [Line Items]
Basis spread on variable interest rate	0.50%
Term Loan | London Interbank Offered Rate (LIBOR)
Debt Instrument [Line Items]
Basis spread on variable interest rate	1.00%
Interest rate increase (decrease)	7.50%
Term Loan | London Interbank Offered Rate (LIBOR) | Interest Rate Floor
Debt Instrument [Line Items]
Basis spread on variable interest rate	1.25%
Interest rate increase (decrease)	8.50%
Letter of Credit
Debt Instrument [Line Items]
Long-term debt, gross	$ 50,000
Domestic Line of Credit | United States
Debt Instrument [Line Items]
Long-term debt, gross	40,000
Foreign Line of Credit | Canadian
Debt Instrument [Line Items]
Long-term debt, gross	$ 2,000

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Commitments and Contingencies (Details) - USD ($) $ in Thousands	3 Months Ended
	Jan. 30, 2021	Jul. 31, 2021
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Insurance Recoveries	$ 3,000
Guarantees, Fair Value Disclosure		$ 13,300

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Segment Reporting (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jul. 31, 2021	Aug. 01, 2020	Jul. 31, 2021	Aug. 01, 2020
Segment information [Abstract]
External customer sales	$ 817,335	$ 489,714	$ 1,520,490	$ 972,497
Gross profit	284,681	37,042	500,792	10,582
Income from equity investment	2,290	2,153	3,998	4,423
Product
Segment information [Abstract]
External customer sales	817,335	489,714	1,520,490	972,497
Operating Segments | U.S. Retail
Segment information [Abstract]
External customer sales	723,093	393,977	1,343,751	771,050
Gross profit	256,893	40,097	450,006	7,127
Income from equity investment	0	0	0	0
Operating Segments | Canada Retail
Segment information [Abstract]
External customer sales	57,585	49,582	98,189	78,911
Gross profit	18,768	5,650	29,603	3,339
Income from equity investment	0	0	0	0
Operating Segments | Brand Portfolio
Segment information [Abstract]
External customer sales	50,529	30,458	107,956	112,571
Gross profit	8,533	(11,440)	20,459	2,464
Income from equity investment	2,290	2,153	3,998	4,423
Operating Segments | Product
Segment information [Abstract]
External customer sales	831,207	496,283	1,549,896	998,421
Operating Segments | Product | U.S. Retail
Segment information [Abstract]
External customer sales	723,093	393,977	1,343,751	771,050
Operating Segments | Product | Canada Retail
Segment information [Abstract]
External customer sales	57,585	49,582	98,189	78,911
Operating Segments | Product | Brand Portfolio
Segment information [Abstract]
External customer sales	36,657	23,889	78,550	86,647
Other
Segment information [Abstract]
External customer sales	0	22,266	0	35,889
Gross profit	0	118	0	(5,310)
Income from equity investment	0	0	0	0
Other | Product
Segment information [Abstract]
External customer sales	0	22,266	0	35,889
Corporate/Eliminations
Segment information [Abstract]
External customer sales	(13,872)	(6,569)	(29,406)	(25,924)
Gross profit	487	2,617	724	2,962
Income from equity investment	0	0	0	0
Corporate/Eliminations | Product
Segment information [Abstract]
External customer sales	0	0	0	0
Intersegment eliminations
Segment information [Abstract]
External customer sales	(13,872)	(6,569)	(29,406)	(25,924)
Intersegment eliminations | Brand Portfolio
Segment information [Abstract]
External customer sales	$ 13,872	$ 6,569	$ 29,406	$ 25,924