Designer Brands Inc. Reports Fourth Quarter and Fiscal Year 2024 Financial Results

Delivers full year 2024 EPS at high end of guidance range

Fiscal 2025 guidance reflects expectations for profitable growth

Designer Brands Inc. (NYSE: DBI) (the “Company,” “we,” “us,” “our,” and “Designer Brands”), one of the world's largest designers, producers, and retailers of footwear and accessories, today announced financial results for the three months and year ended February 1, 2025.

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“Positive comparable sales in the fourth quarter reflect a return to growth for the first time in nine quarters, highlighting the success of our strategic initiatives throughout the year,” stated Doug Howe, Chief Executive Officer. “This year's achievements are a direct result of our decisive actions and commitment to refresh and strengthen our leadership, revitalize and modernize our assortment, refine our marketing strategies, right size our brand portfolio, and elevate our customers' omnichannel experience.”

Howe continued, “Looking ahead to 2025, we are confident that our ongoing business transformation will drive continued stability and growth, with expectations to significantly increase EPS compared to our 2024 adjusted results. We anticipate our reinvigorated efforts to be customer-first and product obsessed will help us better understand our customers and strengthen our product offerings through a data-driven approach. Although we do see pressure on the consumer in the short term as a result of ongoing inflation, rising prices and less discretionary income, we believe these initiatives will drive improved financial performance through 2025 and continue to position us well for long-term, sustainable growth.”

Fourth Quarter Operating Results(Unless otherwise stated, all comparisons are to the fourth quarter of 2023)

— Net sales decreased 5.4% to $713.6 million.

— Total comparable sales increased by 0.5%.

— Gross profit decreased to $282.6 million versus $292.6 million last year, and gross margin was 39.6% compared to 38.8% last year.

— Reported net loss attributable to Designer Brands Inc. was $38.2 million, or loss per diluted share of $0.80.

— Adjusted net loss was $21.3 million, or $0.44 loss per diluted share.

Full Year Operating Results(Unless otherwise stated, all comparisons are to full year 2023)

— Net sales decreased 2.1% to $3.0 billion.

— Total comparable sales decreased by 1.7%.

— Gross profit decreased to $1.29 billion versus $1.32 billion last year, and gross margin was 42.7% compared to 43.1% last year.

— Reported net loss attributable to Designer Brands Inc. was $10.5 million, or loss per diluted share of $0.20.

— Adjusted net income was $15.0 million, or adjusted diluted earnings per share (“EPS”) of $0.27.

Liquidity

— Cash and cash equivalents totaled $44.8 million at the end of 2024, compared to $49.2 million at the end of 2023, with $127.3 million available for borrowings under our senior secured asset-based revolving credit facility. Debt totaled $491.0 million at the end of 2024 compared to $427.1 million at the end of 2023.

— Net cash provided by operating activities was $82.2 million for 2024 compared to $162.4 million last year.

— Inventories totaled $599.8 million at the end of 2024, compared to $571.3 million at the end of 2023.

Return to Shareholders

— During 2024, the Company repurchased an aggregate 10.3 million Class A common shares at an aggregate cost of $68.6 million. As of February 1, 2025, $19.7 million of Class A common shares remained available for future repurchase under the share repurchase program.

— A dividend of $0.05 per share of Class A and Class B common shares will be paid on April 11, 2025 to shareholders of record at the close of business on March 28, 2025.

Store Count

(square footage in thousands) February 1, 2025 February 3, 2024 Number of Square Number of Square Stores Footage Stores FootageU.S. Retail segment – DSW stores 494 9,740 499 9,958Canada Retail segment:The Shoe Co. stores 121 623 118 618Rubino stores 28 149 – -DSW stores 26 512 25 496 175 1,284 143 1,114Total number of stores 669 11,024 642 11,072

During the fourth quarter of 2024, the Company closed two stores in the United States (“U.S.”) and closed four stores in Canada, resulting in a total of 494 stores in the U.S. and 175 stores in Canada as of February 1, 2025.

2025 Financial Outlook

The Company has announced the following guidance for the full year 2025:

Metric 2025 GuidanceDesigner Brands Net Sales Growth Low-single digitsDiluted EPS $0.30 – $0.50

Webcast and Conference Call

The Company is hosting a conference call today at 8:30 am Eastern Time. Investors and analysts interested in participating in the call are invited to dial 1-888-317-6003, or the international dial in, 1-412-317-6061,and reference conference ID number 3141611 approximately ten minutes prior to the start of the conference call. The conference call will also be broadcast live over the internet and can be accessed through the following link, as well as through the Company's investor website at investors.designerbrands.com:

https://app.webinar.net/AOd2N6dpl4r

For those unable to listen to the live webcast, an archived version will be available at the same location until April 3, 2025. A replay of the teleconference will be available by dialing the following numbers:

U.S.: 1-877-344-7529 Canada: 1-855-669-9658 International: 1-412-317-0088 Passcode: 5154029

Important information may be disseminated initially or exclusively via the Company's investor website; investors should consult the site to access this information.

About Designer Brands

Designer Brands is one of the world's largest designers, producers, and retailers of the most recognizable footwear brands and accessories, transforming and defining the footwear industry through a mission of being shoe obsessed. With a diversified, world-class portfolio of coveted brands, including Topo Athletic, Keds, Vince Camuto, Kelly & Katie, Jessica Simpson, Lucky Brand, Mix No. 6, Crown Vintage and others, Designer Brands designs and produces on-trend footwear and accessories for all of life's occasions delivered to the consumer through a robust direct-to-consumer omni-channel infrastructure and powerful national wholesale distribution. Powered by a billion-dollar digital commerce business across multiple domains and over 650 DSW Designer Shoe Warehouse, The Shoe Co., and Rubino stores in North America, Designer Brands delivers current, in-line footwear and accessories from the largest national brands in the industry and holds leading market share positions in key product categories across women's, men's, and kids'. Designer Brands also distributes its brands internationally through select wholesale and distributor relationships while also leveraging design and sourcing expertise to build private label products for national retailers. Designer Brands is committed to being a difference maker in the world and the footwear industry. By leading with our corporate values of We Belong and We Do What's Right, Designer Brands supports the global community and the health of the planet by donatingmore than eleven million pairs of shoes to the global non-profit Soles4Souls since 2018. To learn more, visit www.designerbrands.com.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995

Certain statements in this press release may constitute forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. 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. These statements are based on the Company's current views and expectations and involve known and unknown risks, uncertainties, and other factors, many of which are outside of the Company's control, 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. These factors include, but are not limited to: uncertain general economic and financial conditions, including economic volatility and potential downturn or recession, supply chain disruptions, new or increased tariffs and other barriers to trade, fluctuating interest rates, unemployment rates, and inflationary pressures, and the related impacts to consumer discretionary spending, as well as our ability to plan for and respond to the impact of these conditions; our ability to anticipate and respond to rapidly changing consumer preferences, seasonality, customer expectations, and fashion trends; the impact on our consumer traffic and demand, our business operations, and the operations of our suppliers, as we experience unseasonable weather, climate change evolves, and the frequency and severity of weather events increases; our ability to execute on our business strategies, including growing our Brand Portfolio segment, enhancing in-store and digital shopping experiences, and meeting consumer demands; our ability to successfully and efficiently integrate our recent acquisitions in a manner that does not impede growth; our ability to maintain strong relationships with our suppliers, vendors, licensors, and retailer customers; risks related to losses or disruptions associated with our distribution systems, including our distribution centers and stores, whether as a result of reliance on third-party providers or otherwise; risks related to cyber security threats and privacy or data security breaches or the potential loss or disruption of our information technology (“IT”) systems, or those of our vendors; risks related to the implementation of new or updated IT systems; our ability to protect our reputation and to maintain the brands we license; our reliance on our reward programs and marketing to drive traffic, sales, and customer loyalty; our ability to successfully integrate new hires or changes in leadership and retain our existing management team, and to continue to attract qualified new personnel; risks related to restrictions imposed by our senior secured asset-based revolving credit facility, as amended, and our senior secured term loan credit agreement, as amended, that could limit our ability to fund our operations; our competitiveness with respect to style, price, brand availability, shopping platforms, and customer service; risks related to our international operations and our reliance on foreign sources for merchandise; our ability to comply with laws and regulations, as well as other legal obligations; risks associated with climate change and other corporate responsibility issues; and uncertainties related to future legislation, regulatory reform, policy changes, or interpretive guidance on existing legislation. Risks and other factors that could cause our actual results to differ materially from our forward-looking statements are described in the Company's latest Annual Report on Form 10-K or our other reports made or filed with the Securities and Exchange Commission. All forward-looking statements speak only as of the time when made. Except as may be required by applicable law, the Company undertakes no obligation to update or revise the forward-looking statements included in this press release to reflect any future events or circumstances.

DESIGNER BRANDS INC.SEGMENT RESULTS(unaudited)Net Sales Three months ended(dollars in thousands) February 1, 2025 February 3, 2024 Change Amount % of Amount % of Amount % Segment Segment Net Sales Net SalesSegment net sales:U.S. Retail $ 587,545 79.0% $ 630,811 81.6% $ (43,266) (6.9)%Canada Retail 69,210 9.3% 64,398 8.3% 4,812 7.5%Brand Portfolio 87,266 11.7% 77,719 10.1% 9,547 12.3%Total segment net sales 744,021 100.0% 772,928 100.0% (28,907) (3.7)%Elimination of intersegment net sales (30,449) (18,580) (11,869) 63.9%Consolidated net sales $ 713,572 $ 754,348 $ (40,776) (5.4)% Twelve months ended(dollars in thousands) February 1, 2025 February 3, 2024 Change Amount % of Amount % of Amount % Segment Segment Net Sales Net SalesSegment net sales:U.S. Retail $ 2,466,101 78.3% $ 2,533,849 80.5% $ (67,748) (2.7)%Canada Retail 283,023 9.0% 264,229 8.4% 18,794 7.1%Brand Portfolio 398,881 12.7% 348,976 11.1% 49,905 14.3%Total segment net sales 3,148,005 100.0% 3,147,054 100.0% 951 -%Elimination of intersegment net sales (138,743) (72,078) (66,665) 92.5%Consolidated net sales $ 3,009,262 $ 3,074,976 $ (65,714) (2.1)%Comparable Sales Three months ended Twelve months ended February 1, 2025 February 3, 2024 February 1, 2025 February 3, 2024Change in comparable sales:U.S. Retail segment 0.7% (7.4)% (1.4)% (9.5)%Canada Retail segment 4.7% (9.2)% (2.2)% (5.9)%Brand Portfolio segment – direct-to-consumer channel (17.1)% 5.9% (9.5)% 6.0%Total 0.5% (7.3)% (1.7)% (9.0)%Gross Profit Three months ended(dollars in thousands) February 1, 2025 February 3, 2024 Change Amount % of Amount % of Amount % Basis Segment Segment Points Net Sales Net SalesSegment gross profit:U.S. Retail $ 238,490 40.6% $ 248,014 39.3% $ (9,524) (3.8)% 130Canada Retail 27,388 39.6% 25,842 40.1% 1,546 6.0% (50)Brand Portfolio 18,389 21.1% 17,508 22.5% 881 5.0% (140)Total segment gross profit 284,267 38.2% 291,364 37.7% (7,097) (2.4)% 50Net recognition (elimination) of intersegment gross profit (1,684) 1,227 (2,911)Consolidated gross profit $ 282,583 39.6% $ 292,591 38.8% $ (10,008) (3.4)% 80 Twelve months ended(dollars in thousands) February 1, 2025 February 3, 2024 Change Amount % of Amount % of Amount % Basis Segment Segment Points Net Sales Net SalesSegment gross profit:U.S. Retail $ 1,060,198 43.0% $ 1,109,002 43.8% $ (48,804) (4.4)% (80)Canada Retail 126,030 44.5% 119,167 45.1% 6,863 5.8% (60)Brand Portfolio 109,814 27.5% 92,545 26.5% 17,269 18.7% 100Total segment gross profit 1,296,042 41.2% 1,320,714 42.0% (24,672) (1.9)% (80)Net recognition (elimination) of intersegment gross profit (10,084) 3,281 (13,365)Consolidated gross profit $ 1,285,958 42.7% $ 1,323,995 43.1% $ (38,037) (2.9)% (40)Intersegment Recognition and Elimination Activity Three months ended(in thousands) February 1, 2025 February 3, 2024Intersegment recognition and elimination activity:Elimination of net sales recognized by Brand Portfolio segment $ (30,449) $ (18,580)Cost of sales:Elimination of cost of sales recognized by Brand Portfolio segment 19,048 13,079Recognition of intersegment gross profit for inventory previously purchased that 9,717 6,728was subsequently sold to external customers during the current period $ (1,684) $ 1,227 Twelve months ended(in thousands) February 1, 2025 February 3, 2024Intersegment recognition and elimination activity:Elimination of net sales recognized by Brand Portfolio segment $ (138,743) $ (72,078)Cost of sales:Elimination of cost of sales recognized by Brand Portfolio segment 95,138 51,213Recognition of intersegment gross profit for inventory previously purchased that 33,521 24,146was subsequently sold to external customers during the current period $ (10,084) $ 3,281Operating Profit (Loss) Three months ended(dollars in thousands) February 1, 2025 February 3, 2024 Change Amount % of Amount % of Amount % Basis Segment Segment Points Net Sales Net SalesSegment operating profit (loss):U.S. Retail $ 23,230 4.0% $ 23,771 3.8% $ (541) (2.3)% 20Canada Retail 1,233 1.8% 2,071 3.2% (838) (40.5)% (140)Brand Portfolio (4,425) (5.1)% (13,635) (17.5)% 9,210 (67.5)% 1,240Total segment operating profit 20,038 2.7% 12,207 1.6% 7,831 64.2% 110Corporate/Eliminations (45,892) (48,224) 2,332 (4.8)%Consolidated operating loss $ (25,854) (3.6)% $ (36,017) (4.8)% $ 10,163 (28.2)% 120Twelve months ended(dollars in thousands) February 1, 2025 February 3, 2024 Change Amount % of Amount % of Amount % Basis Segment Segment Points Net Sales Net SalesSegment operating profit (loss):U.S. Retail $ 225,511 9.1% $ 261,675 10.3% $ (36,164) (13.8)% (120)Canada Retail 23,931 8.5% 24,632 9.3% (701) (2.8)% (80)Brand Portfolio 3,225 0.8% (26,723) (7.7)% 29,948 NM NMTotal segment operating profit 252,667 8.0% 259,584 8.2% (6,917) (2.7)% (20)Corporate/Eliminations (217,734) (187,183) (30,551) 16.3%Consolidated operating profit $ 34,933 1.2% $ 72,401 2.4% $ (37,468) (51.8)% (120)Impact of ReclassificationBeginning with the fourth quarter of 2024, we changed our financial statement presentation related to expenses associated with distribution and fulfillment and store occupancy for the U.S. Retail and Canada Retail segments. These expenses were previously included within cost of sales and are now included within operating expenses in order to present all of our operating segments on a consistent basis. Prior period reclassifications were made to conform to the current period presentation in the consolidated statements of operations. These reclassifications did not change operating profit (loss), net income (loss) attributable to Designer Brands Inc., earnings (loss) per share attributable to Designer Brands Inc., or any other consolidated financial statements. The below tables present amounts prior to and after the reclassifications. Three months ended(dollars in thousands) May 4, 2024 April 29, 2023 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount % of net before sales after Reclass sales before sales after Reclass sales Reclass ReclassConsolidated:Net sales $ 746,596 100.0% $ – $ 746,596 100.0% $ 742,082 100.0% $ – $ 742,082 100.0%Cost of sales (501,527) (67.2) 84,942 (416,585) (55.8) (504,343) (68.0) 86,169 (418,174) (56.4)Gross profit $ 245,069 32.8% $ 84,942 $ 330,011 44.2% $ 237,739 32.0% $ 86,169 $ 323,908 43.6%Operating expenses $ (238,551) (32.0)% $ (84,942) $ (323,493) (43.3)% $ (220,119) (29.6)% $ (86,169) $ (306,288) (41.3)%U.S. Retail segment:Net sales $ 621,367 100.0% $ – $ 621,367 100.0% $ 612,886 100.0% $ – $ 612,886 100.0%Cost of sales (422,912) (68.1) 75,953 (346,959) (55.8) (416,072) (67.9) 77,998 (338,074) (55.2)Gross profit $ 198,455 31.9% $ 75,953 $ 274,408 44.2% $ 196,814 32.1% $ 77,998 $ 274,812 44.8%Operating expenses $ (183,938) (29.6)% $ (75,953) $ (259,891) (41.8)% $ (173,834) (28.4)% $ (77,998) $ (251,832) (41.1)%Canada Retail segment:Net sales $ 55,512 100.0% $ – $ 55,512 100.0% $ 53,955 100.0% $ – $ 53,955 100.0%Cost of sales (38,127) (68.7) 8,989 (29,138) (52.5) (36,781) (68.2) 8,171 (28,610) (53.0)Gross profit $ 17,385 31.3% $ 8,989 $ 26,374 47.5% $ 17,174 31.8% $ 8,171 $ 25,345 47.0%Operating expenses $ (16,226) (29.2)% $ (8,989) $ (25,215) (45.4)% $ (15,118) (28.0)% $ (8,171) $ (23,289) (43.2)% Three months ended(dollars in thousands) August 3, 2024 July 29, 2023 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount % of net before sales after Reclass sales before sales after Reclass sales Reclass ReclassConsolidated:Net sales $ 771,900 100.0% $ – $ 771,900 100.0% $ 792,217 100.0% $ – $ 792,217 100.0%Cost of sales (518,986) (67.2) 86,635 (432,351) (56.0) (518,830) (65.5) 88,376 (430,454) (54.3)Gross profit $ 252,914 32.8% $ 86,635 $ 339,549 44.0% $ 273,387 34.5% $ 88,376 $ 361,763 45.7%Operating expenses $ (226,896) (29.4)% $ (86,635) $ (313,531) (40.6)% $ (214,530) (27.1)% $ (88,376) $ (302,906) (38.2)%U.S. Retail segment:Net sales $ 641,694 100.0% $ – $ 641,694 100.0% $ 658,542 100.0% $ – $ 658,542 100.0%Cost of sales (435,633) (67.9) 76,855 (358,778) (55.9) (432,774) (65.7) 79,541 (353,233) (53.6)Gross profit $ 206,061 32.1% $ 76,855 $ 282,916 44.1% $ 225,768 34.3% $ 79,541 $ 305,309 46.4%Operating expenses $ (173,021) (27.0)% $ (76,855) $ (249,876) (38.9)% $ (165,440) (25.1)% $ (79,541) $ (244,981) (37.2)%Canada Retail segment:Net sales $ 74,797 100.0% $ – $ 74,797 100.0% $ 70,266 100.0% $ – $ 70,266 100.0%Cost of sales (49,490) (66.2) 9,780 (39,710) (53.1) (46,455) (66.1) 8,835 (37,620) (53.5)Gross profit $ 25,307 33.8% $ 9,780 $ 35,087 46.9% $ 23,811 33.9% $ 8,835 $ 32,646 46.5%Operating expenses $ (18,246) (24.4)% $ (9,780) $ (28,026) (37.5)% $ (15,901) (22.6)% $ (8,835) $ (24,736) (35.2)% Six months ended(dollars in thousands) August 3, 2024 July 29, 2023 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount % of net before sales after Reclass sales before sales after Reclass sales Reclass ReclassConsolidated:Net sales $ 1,518,496 100.0% $ – $ 1,518,496 100.0% $ 1,534,299 100.0% $ – $ 1,534,299 100.0%Cost of sales (1,020,513) (67.2) 171,577 (848,936) (55.9) (1,023,173) (66.7) 174,545 (848,628) (55.3)Gross profit $ 497,983 32.8% $ 171,577 $ 669,560 44.1% $ 511,126 33.3% $ 174,545 $ 685,671 44.7%Operating expenses $ (465,447) (30.7)% $ (171,577) $ (637,024) (42.0)% $ (434,649) (28.3)% $ (174,545) $ (609,194) (39.7)%U.S. Retail segment:Net sales $ 1,263,061 100.0% $ – $ 1,263,061 100.0% $ 1,271,428 100.0% $ – $ 1,271,428 100.0%Cost of sales (858,545) (68.0) 152,808 (705,737) (55.9) (848,846) (66.8) 157,539 (691,307) (54.4)Gross profit $ 404,516 32.0% $ 152,808 $ 557,324 44.1% $ 422,582 33.2% $ 157,539 $ 580,121 45.6%Operating expenses $ (356,959) (28.3)% $ (152,808) $ (509,767) (40.4)% $ (339,274) (26.7)% $ (157,539) $ (496,813) (39.1)%Canada Retail segment:Net sales $ 130,309 100.0% $ – $ 130,309 100.0% $ 124,221 100.0% $ – $ 124,221 100.0%Cost of sales (87,617) (67.2) 18,769 (68,848) (52.8) (83,236) (67.0) 17,006 (66,230) (53.3)Gross profit $ 42,692 32.8% $ 18,769 $ 61,461 47.2% $ 40,985 33.0% $ 17,006 $ 57,991 46.7%Operating expenses $ (34,472) (26.5)% $ (18,769) $ (53,241) (40.9)% $ (31,019) (25.0)% $ (17,006) $ (48,025) (38.7)% Three months ended(dollars in thousands) November 2, 2024 October 28, 2023 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount % of net before sales after Reclass sales before sales after Reclass sales Reclass ReclassConsolidated:Net sales $ 777,194 100.0% $ – $ 777,194 100.0% $ 786,329 100.0% $ – $ 786,329 100.0%Cost of sales (529,749) (68.2) 86,370 (443,379) (57.0) (529,923) (67.4) 89,327 (440,596) (56.0)Gross profit $ 247,445 31.8% $ 86,370 $ 333,815 43.0% $ 256,406 32.6% $ 89,327 $ 345,733 44.0%Operating expenses $ (210,457) (27.1)% $ (86,370) $ (296,827) (38.2)% $ (230,788) (29.4)% $ (89,327) $ (320,115) (40.7)%U.S. Retail segment:Net sales $ 615,495 100.0% $ – $ 615,495 100.0% $ 631,610 100.0% $ – $ 631,610 100.0%Cost of sales (427,705) (69.5) 76,594 (351,111) (57.0) (431,342) (68.3) 80,599 (350,743) (55.5)Gross profit $ 187,790 30.5% $ 76,594 $ 264,384 43.0% $ 200,268 31.7% $ 80,599 $ 280,867 44.5%Operating expenses $ (162,853) (26.5)% $ (76,594) $ (239,447) (38.9)% $ (178,842) (28.3)% $ (80,599) $ (259,441) (41.1)%Canada Retail segment:Net sales $ 83,504 100.0% $ – $ 83,504 100.0% $ 75,610 100.0% $ – $ 75,610 100.0%Cost of sales (56,099) (67.2) 9,776 (46,323) (55.5) (49,004) (64.8) 8,728 (40,276) (53.3)Gross profit $ 27,405 32.8% $ 9,776 $ 37,181 44.5% $ 26,606 35.2% $ 8,728 $ 35,334 46.7%Operating expenses $ (18,621) (22.3)% $ (9,776) $ (28,397) (34.0)% $ (16,912) (22.4)% $ (8,728) $ (25,640) (33.9)% Nine months ended(dollars in thousands) November 2, 2024 October 28, 2023 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount after % of net before sales after Reclass sales before sales Reclass sales Reclass ReclassConsolidated:Net sales $ 2,295,690 100.0% $ – $ 2,295,690 100.0% $ 2,320,628 100.0% $ – $ 2,320,628 100.0%Cost of sales (1,550,262) (67.5) 257,947 (1,292,315) (56.3) (1,553,096) (66.9) 263,872 (1,289,224) (55.6)Gross profit $ 745,428 32.5% $ 257,947 $ 1,003,375 43.7% $ 767,532 33.1% $ 263,872 $ 1,031,404 44.4%Operating expenses $ (675,904) (29.5)% $ (257,947) $ (933,851) (40.7)% $ (665,437) (28.7)% $ (263,872) $ (929,309) (40.0)%U.S. Retail segment:Net sales $ 1,878,556 100.0% $ – $ 1,878,556 100.0% $ 1,903,038 100.0% $ – $ 1,903,038 100.0%Cost of sales (1,286,250) (68.5) 229,402 (1,056,848) (56.3) (1,280,188) (67.3) 238,138 (1,042,050) (54.8)Gross profit $ 592,306 31.5% $ 229,402 $ 821,708 43.7% $ 622,850 32.7% $ 238,138 $ 860,988 45.2%Operating expenses $ (519,812) (27.7)% $ (229,402) $ (749,214) (39.9)% $ (518,116) (27.2)% $ (238,138) $ (756,254) (39.7)%Canada Retail segment:Net sales $ 213,813 100.0% $ – $ 213,813 100.0% $ 199,831 100.0% $ – $ 199,831 100.0%Cost of sales (143,716) (67.2) 28,545 (115,171) (53.9) (132,240) (66.2) 25,734 (106,506) (53.3)Gross profit $ 70,097 32.8% $ 28,545 $ 98,642 46.1% $ 67,591 33.8% $ 25,734 $ 93,325 46.7%Operating expenses $ (53,093) (24.8)% $ (28,545) $ (81,638) (38.2)% $ (47,931) (24.0)% $ (25,734) $ (73,665) (36.9)% Three months ended(dollars in thousands) February 1, 2025 February 3, 2024 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount % of net before sales after Reclass sales before sales after Reclass sales Reclass ReclassConsolidated:Net sales $ 713,572 100.0% $ – $ 713,572 100.0% $ 754,348 100.0% $ – $ 754,348 100.0%Cost of sales (517,483) (72.5) 86,494 (430,989) (60.4) (546,994) (72.5) 85,237 (461,757) (61.2)Gross profit $ 196,089 27.5% $ 86,494 $ 282,583 39.6% $ 207,354 27.5% $ 85,237 $ 292,591 38.8%Operating expenses $ (225,489) (31.6)% $ (86,494) $ (311,983) (43.7)% $ (241,604) (32.0)% $ (85,237) $ (326,841) (43.3)%U.S. Retail segment:Net sales $ 587,545 100.0% $ – $ 587,545 100.0% $ 630,811 100.0% $ – $ 630,811 100.0%Cost of sales (426,014) (72.5) 76,959 (349,055) (59.4) (459,395) (72.8) 76,598 (382,797) (60.7)Gross profit $ 161,531 27.5% $ 76,959 $ 238,490 40.6% $ 171,416 27.2% $ 76,598 $ 248,014 39.3%Operating expenses $ (178,290) (30.3)% $ (76,959) $ (255,249) (43.4)% $ (189,584) (30.1)% $ (76,598) $ (266,182) (42.2)%Canada Retail segment:Net sales $ 69,210 100.0% $ – $ 69,210 100.0% $ 64,398 100.0% $ – $ 64,398 100.0%Cost of sales (51,357) (74.2) 9,535 (41,822) (60.4) (47,195) (73.3) 8,639 (38,556) (59.9)Gross profit $ 17,853 25.8% $ 9,535 $ 27,388 39.6% $ 17,203 26.7% $ 8,639 $ 25,842 40.1%Operating expenses $ (18,242) (26.4)% $ (9,535) $ (27,777) (40.1)% $ (16,947) (26.3)% $ (8,639) $ (25,586) (39.7)% Twelve months ended(dollars in thousands) February 1, 2025 February 3, 2024 Amount % of net Reclass Amount % of net Amount % of net Reclass Amount % of net before sales after Reclass sales before sales after Reclass sales Reclass ReclassConsolidated:Net sales $ 3,009,262 100.0% $ – $ 3,009,262 100.0% $ 3,074,976 100.0% $ – $ 3,074,976 100.0%Cost of sales (2,067,745) (68.7) 344,441 (1,723,304) (57.3) (2,100,090) (68.3) 349,109 (1,750,981) (56.9)Gross profit $ 941,517 31.3% $ 344,441 $ 1,285,958 42.7% $ 974,886 31.7% $ 349,109 $ 1,323,995 43.1%Operating expenses $ (901,393) (30.0)% $ (344,441) $ (1,245,834) (41.4)% $ (907,041) (29.4)% $ (349,109) $ (1,256,150) (40.8)%U.S. Retail segment:Net sales $ 2,466,101 100.0% $ – $ 2,466,101 100.0% $ 2,533,849 100.0% $ – $ 2,533,849 100.0%Cost of sales (1,712,264) (69.4) 306,361 (1,405,903) (57.0) (1,739,583) (68.7) 314,736 (1,424,847) (56.2)Gross profit $ 753,837 30.6% $ 306,361 $ 1,060,198 43.0% $ 794,266 31.3% $ 314,736 $ 1,109,002 43.8%Operating expenses $ (698,102) (28.3)% $ (306,361) $ (1,004,463) (40.7)% $ (707,700) (27.9)% $ (314,736) $ (1,022,436) (40.4)%Canada Retail segment:Net sales $ 283,023 100.0% $ – $ 283,023 100.0% $ 264,229 100.0% $ – $ 264,229 100.0%Cost of sales (195,073) (68.9) 38,080 (156,993) (55.5) (179,435) (67.9) 34,373 (145,062) (54.9)Gross profit $ 87,950 31.1% $ 38,080 $ 126,030 44.5% $ 84,794 32.1% $ 34,373 $ 119,167 45.1%Operating expenses $ (71,335) (25.2)% $ (38,080) $ (109,415) (38.7)% $ (64,878) (24.6)% $ (34,373) $ (99,251) (37.6)%DESIGNER BRANDS INC.CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS(unaudited and in thousands, except per share amounts) Three months ended Twelve months ended February 1, 2025 February 3, 2024 February 1, 2025 February 3, 2024Net sales $ 713,572 $ 754,348 $ 3,009,262 $ 3,074,976Cost of sales (430,989) (461,757) (1,723,304) (1,750,981)Gross profit 282,583 292,591 1,285,958 1,323,995Operating expenses (311,983) (326,841) (1,245,834) (1,256,150)Income from equity investments 4,126 2,418 13,145 9,390Impairment charges (580) (4,185) (18,336) (4,834)Operating profit (loss) (25,854) (36,017) 34,933 72,401Interest expense, net (11,130) (9,875) (45,291) (32,171)Non-operating income (expenses), net 140 (116) (372) (33)Income (loss) before income taxes (36,844) (46,008) (10,730) 40,197Income tax benefit (provision) (1,312) 16,391 755 (10,981)Net income (loss) (38,156) (29,617) (9,975) 29,216Net income attributable to redeemable noncontrolling interest (12) (81) (574) (154)Net income (loss) attributable to Designer Brands Inc. $ (38,168) $ (29,698) $ (10,549) $ 29,062Diluted earnings (loss) per share attributable to Designer Brands Inc. $ (0.80) $ (0.52) $ (0.20) $ 0.46Weighted average diluted shares 47,919 56,939 53,657 63,375DESIGNER BRANDS INC.CONDENSED CONSOLIDATED BALANCE SHEETS(unaudited and in thousands) February 1, 2025 February 3, 2024ASSETSCurrent assets:Cash and cash equivalents $ 44,752 $ 49,173Receivables, net 50,371 83,590Inventories 599,751 571,331Prepaid expenses and other current assets 39,950 73,338Total current assets 734,824 777,432Property and equipment, net 208,199 219,939Operating lease assets 701,621 721,335Goodwill 130,386 123,759Intangible assets, net 84,639 82,827Deferred tax assets 43,324 39,067Equity investments 56,761 62,857Other assets 49,470 49,016Total assets $ 2,009,224 $ 2,076,232LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST ANDSHAREHOLDERS' EQUITYCurrent liabilities:Accounts payable $ 271,524 $ 289,368Accrued expenses 152,153 159,622Current maturities of long-term debt 6,750 6,750Current operating lease liabilities 159,924 166,531Total current liabilities 590,351 622,271Long-term debt 484,285 420,344Non-current operating lease liabilities 635,076 646,161Other non-current liabilities 17,737 24,948Total liabilities 1,727,449 1,713,724Redeemable noncontrolling interest 3,284 3,288Total shareholders' equity 278,491 359,220Total liabilities, redeemable noncontrolling interest, and shareholders' equity $ 2,009,224 $ 2,076,232DESIGNER BRANDS INC.NON-GAAP RECONCILIATION(unaudited and in thousands, except per share amounts) Three months ended Twelve months ended February 1, 2025 February 3, 2024 February 1, 2025 February 3, 2024Operating expenses $ (311,983) $ (326,841) $ (1,245,834) $ (1,256,150)Non-GAAP adjustments:CEO transition costs – 369 – 4,352Restructuring and integration costs 1,729 1,188 11,843 6,378Acquisition-related costs – 36 2,154 1,633Total non-GAAP adjustments 1,729 1,593 13,997 12,363Adjusted operating expenses $ (310,254) $ (325,248) $ (1,231,837) $ (1,243,787)Operating profit (loss) $ (25,854) $ (36,017) $ 34,933 $ 72,401Non-GAAP adjustments:CEO transition costs – 369 – 4,352Restructuring and integration costs 1,729 1,188 11,843 6,378Acquisition-related costs – 36 2,154 1,633Impairment charges 580 4,185 18,336 4,834Total non-GAAP adjustments 2,309 5,778 32,333 17,197Adjusted operating profit (loss) $ (23,545) $ (30,239) $ 67,266 $ 89,598Net income (loss) attributable to Designer Brands Inc. $ (38,168) $ (29,698) $ (10,549) $ 29,062Non-GAAP adjustments:CEO transition costs – 369 – 4,352Restructuring and integration costs 1,729 1,188 11,843 6,378Acquisition-related costs – 36 2,154 1,633Impairment charges 580 4,185 18,336 4,834Foreign currency transaction losses (gains) (141) 115 371 32Total non-GAAP adjustments before tax effect 2,168 5,893 32,704 17,229Tax effect on above non-GAAP adjustments 13,567 (1,577) (8,458) (4,462)Discrete and permanent tax on non-deductible CEO transition costs – (936) – 1,868Valuation allowance change on deferred tax assets 1,116 949 768 (666)Total non-GAAP adjustments, after tax 16,851 4,329 25,014 13,969Net income attributable to redeemable noncontrolling interest 12 81 574 154Adjusted net income (loss) $ (21,305) $ (25,288) $ 15,039 $ 43,185Diluted earnings (loss) per share $ (0.80) $ (0.52) $ (0.20) $ 0.46Adjusted diluted earnings (loss) per share $ (0.44) $ (0.44) $ 0.27 $ 0.68

Non-GAAP Measures

To supplement amounts presented in our consolidated financial statements determined in accordance with accounting principles generally accepted in the United States (“GAAP”), the Company uses certain non-GAAP financial measures, including adjusted operating expenses, adjusted operating profit (loss), adjusted net income (loss), and adjusted diluted earnings (loss) per share as shown in the table above. These measures adjust for the effects of: (1) CEO transition costs; (2) restructuring and integration costs, including severance charges; (3) acquisition-related costs; (4) impairment charges; (5) foreign currency transaction losses (gains); (6) the net tax impact of such items, including discrete and permanent tax on non-deductible CEO transition costs; (7) the change in the valuation allowance on deferred tax assets; and (8) net income attributable to redeemable noncontrolling interest. The unaudited adjusted results should not be construed as an alternative to the reported results determined in accordance with GAAP. These financial measures are not based on any standardized methodology and are not necessarily comparable to similar measures presented by other companies. The Company believes that these non-GAAP financial measures provide useful information to both management and investors to increase comparability to prior periods by adjusting for certain items that may not be indicative of core operating measures and to better identify trends in our business. The adjusted financial results are used by management to, and allow investors to, evaluate the operating performance of the Company compared to prior periods, when reviewed in conjunction with the Company's GAAP statements. These amounts are not determined in accordance with GAAP and therefore should not be used exclusively in evaluating the Company's business and operations.

Comparable Sales Performance Metric

We consider the percent change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important measurement for management and investors of the performance of our direct-to-consumer businesses. We include in our comparable sales metric sales from stores in operation for at least 14 months at the beginning of the applicable 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 the e-commerce sales of the U.S. Retail and Canada Retail segments. For calculating comparable sales in 2024, periods in 2023 are shifted by one week to compare similar calendar weeks. 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. Stores added as a result of the Rubino acquisition that will have been in operation for at least 14 months at the beginning of 2025, along with its e-commerce sales, will be added to the comparable base for the Canada Retail segment beginning with the second quarter of 2025. Comparable sales include the e-commerce net sales of the Brand Portfolio segment from the direct-to-consumer e-commerce sites. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.

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