DBI 10-K & 10-Q changes, risk factors and insider trading

Investing in our Class A common shares involves a high degree of risk. In addition to the other information in this Form 10-K and in our other public filings, investors should carefully consider the following risk factors. These disclosures reflect our beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. The risks described below are not the only risks we face or may face, and investors should not interpret the disclosure of a risk to imply that the risk has not already materialized. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Although the risks are organized by headings and each risk is discussed separately, many are interrelated. The occurrence of any of the following risks, or the occurrence of additional risks and uncertainties not presently known to us or that we currently believe to be immaterial, could materially and adversely affect our business, financial condition or results of operations. In such case, the trading price of our Class A common shares could decline, and investors may lose all or part of their original investment. This Form 10-K also contains forward-looking statements and estimates that involve risks and uncertainties. Our actual results could differ materially from those anticipated in the forward-looking statements and estimates as a result of specific factors, including the risks and uncertainties described below.

Adverse global economic conditions that are caused by events or conditions beyond our control create uncertainties and have in the past impacted our business and may in the future materially adversely affect our business, results of operations, and financial condition. These adverse economic conditions include inflation, economic downturns, recession or slower economic growth, neweconomic downturns or increased tariffsrecessions, and othermay barriersbe tocaused trade,by the impacts of inflation, uncertain tariff and trade policies, changes to fiscal and monetary policy, higher interest rates, high unemployment, volatile stock market indices, decreased consumer confidence in the economy, public health threats, labor and supply chain disruptions, geopolitical instability, international hostilities, political or social unrest, foreign currency exchange rate fluctuations, conditions affecting the retail environment for products we sell, and other matters that influence consumer confidence. Throughout 2024, our comparable sales declined as we experienced overall lower direct-to-consumer traffic. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. We believe the decrease in comparable sales is a result ofthese ongoing consumer concernconcerns of negative and/or uncertain economic conditions, most notably the concern of economic volatility, fluctuations in interest rates, inflationary pressures, uncertain tariff and trade policies, and changes in employment levels.levels Additionally,have had a negative impact on our majoroperating retailerresults customersand liquidity during 2025 and we may continue to experience the impact of decreased consumer demand for our Brandproducts Portfolioand segmentlower maydirect-to-consumer experiencetraffic. aWe significanthave downturnenacted certain mitigating actions, including alignment of inventory with current demand levels, expense and capital expenditure reductions, and accelerating sourcing diversification efforts. Although we have made progress in theirmitigating businessesthe impacts of certain macroeconomic conditions, our actions are not necessarily complete, and they should be viewed as apart resultof the process in which we will continue our efforts to better align our cost structure with our operating results. We are unable to predict the severity of macroeconomic conditionsuncertainty, and,whether inor turn,when thesesuch customerscircumstances may reduceimprove theiror purchasesworsen, including from us,one whichof our quarterly reporting periods to the next, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact further mitigating operating efficiency measures that may not be successful and could have a material adverse effect on our business.business, Competitiveresults pricingof pressureoperations, hasand been exacerbated by a more promotional retail environment as macroeconomic conditions impact discretionary consumer spending.liquidity.

E-commerce networks have rapidly evolved and consumer receptiveness to shopping online has substantially increased. Competition from e-commerce players has significantly increased due to their ability to provide improved user experiences, greater ease of buying goods, low or no shipping fees, faster shipping times, broader assortment, and more favorable return policies. Businesses, including our suppliers, can easily launch e-commerce websites and mobile platforms at nominal costs by using commercially available software or partnering with various successful digital marketplace providers. Some of our suppliers use such platforms to compete with us by allowing consumers to purchase products directly from them. Competitors with other revenue sources may also devote more resources to marketing and promotional campaigns, adopt more aggressive pricing policies, and devote more resources to websites, mobile platforms and applications, and systems development.

Demand for our products fluctuates according to rapid changes in consumer preferences and trends, which are dictated by lifestyle, fashion, and season, and may shift quickly. A variety of factors will affect our ability to maintain the proper mix of products, including economic conditions impacting discretionary consumer spending; unanticipated fashion trends; our ability to provide timely access to popular brands and styles at attractive prices; our success in distributing merchandise to our stores, online customers, and our wholesale retailer customers in an efficient manner; and changes in weather patterns, which, in turn, may affect consumer preferences. In addition, the continuing consumer shift to online and mobile shopping has increased customer expectations of lower shipping costs, improved shipping speeds, and optimized mobile platforms. If we are unable to anticipate trends and fulfill the merchandise needs of our customers, we may experience decreases in our net sales and/or may be forced to increase markdowns in relation to slow-moving merchandise, either of which could have a material adverse effect on our business.

We rely on our strong relationships with suppliers to purchase products, including third-party manufacturers and national brandour suppliers. If these relationships were to be impaired, we may be unable to obtain a sufficient assortment of merchandise at attractive prices or respond promptly to rapidly changing trends, either of which could have a material adverse effect on our business and financial performance.

The success of our business depends on our ability to obtain products from our suppliers, including third-party manufacturers and national brand suppliers,suppliers and third-party manufacturers, on a timely basis, on acceptable terms, and to our specifications. If we fail to maintain strong relationships with these suppliers or if they fail to ensure the quality of merchandise that they supply to us, our ability to provide our customers with merchandise they want at favorableattractive prices may be limited, which could have a material adverse effect on our business. In addition, any negative brand image, widespread product defects, financial distress, or negative publicity related to our suppliers could have a material adverse effect on our reputation and on our business.

We cannot guarantee that any supplier will have sufficient production capacity, meet our delivery expectations, or meet our product safety, social compliance, or quality standards. The loss of any of our major suppliers could disrupt our operations and adversely affect our business. If these third-party manufacturers cease working with us, fail to meet our product safety, social compliance, or quality standards, or are unable to provide us with the materials and services that we need, at prices and on terms that are acceptable to us, then we could experience product delays and shortages. Failure by us to deliver quality products to our customers on a timely basis and any associated damage to our reputation could have a material adverse impact on our business and results of operations.

Decisions by national brand suppliers to not sell to us or to limit the availability of the products they sell to us could have a negative impact on our business. In addition, our inability to stock our sales channels with desired merchandise at attractive prices could result in lower net sales and decreased customer interest in our sales channels, which could have a material adverse effect on our business. During 2024,2025, three key national brand suppliers together supplied approximately 25%24% of our retailRetail segmentssegment merchandise, with no individual supplier providing more than 10% of our retail merchandise. The loss of, or a reduction in the amount and quality of merchandise supplied by, any of our high-volume suppliers could have an adverse effect on our business. If we are unable to offer suitable alternatives to satisfy product demand, sales could decline, which could have a material adverse effect on our operating results.

Our operating results depend on the orderly operation of our receiving, distribution, and fulfillment processes, which in turn depend on suppliers' adherence to shipping schedules and our effective management of our facilities. We may not anticipate all of the changing demands on our operations, and events beyond our control may occur, including disruptions in operations due to public health threats, geopolitical instability, tariffs and other trade barriers and restrictions, catastrophic events, shortages in labor, or shipping problems, any of which may result in delays in the delivery of merchandise to our stores and customers. We rely on the flow of goods through ports worldwide on a consistent basis from factories and suppliers. Potential or actual disruptions at ports could create significant risks for our business, particularly if these disruptions occur during peak importing times. If we experience significant delays in receiving product, this could result in canceled orders by retailer customers, unanticipated inventory shortages, or receipt of seasonal product after the peak selling season, which could have a material adverse effect on our business and operations.

The loss or disruption of IT services and other third-party services could affect our operations and have a material adverse effect on our business.

Our IT systems are an integral part of our strategies for efficiently operating our business, managing operations, and protecting against security risks related to our electronic processing and transmitting of confidential customer and associate data. The requirements to keep our IT systems operating at peak performance may be higher than anticipated and could strain our capital resources, as well as impact our ability to manage any system upgrades,upgrades implement new systems, makeand management process changeschanges, forimplement newly implementednew systems, and prevent any information security breaches. In addition, any significant disruption of our data center could have a material adverse effect on our operations dependent on those systems, specifically, our store and e-commerce operations, our distribution centers, and our merchandising team. While we maintain business interruption and property insurance, in the event of a data center shutdown, our insurance may not be sufficient to cover the impact to our business.

We face risks related to our electronic processing of sensitive and confidential personal and business data. If such data is lost or disclosed in an unauthorized manner, or if we or our third-party vendors are subject to cyberattacks, data breaches, other security incidents, or disruption of IT systems or software, our business and operations may be adversely affected and we could be exposed to liability or experience reputational harm, which could have a material adverse effect on our business.harm.

The IT networks and systems operated by us or our vendors may be susceptible to damage, disruptions, data breaches, failures during the process of upgrading or replacing software, databases, or components, power outages, natural disasters, hardware failures, user errors or malfeasance, unauthorized access or attacks, including actions of foreign actors and insider attacks, phishing or denial-of-service attacks, the introduction of computer viruses and/or malicious or destructive code, ransomware or other malware attacks, and other real or perceived cyberattacks or catastrophic events, any of which may not be prevented by our or our vendors' efforts to secure our or their computer systems. Any of these incidents could lead to interruptions or shutdowns of our platform, disruptions in our ability to process customer orders or to track, record, or analyze the sale of our products, loss or corruption of data, loss of funds, or unauthorized access to or acquisition of personal information or other sensitive information, such as our intellectual property. Such incidents could also lead to widespread technology outages, interruptions or other failures of operational, communication, or other systems globally and across companies and industries. We utilize security tools and controls, which include reasonable efforts to ensure that our third-party vendors maintain sufficient security measures, including encryption and authentication technology, in an effort to reduce our cyber risk and protect personal and other sensitive information. However, our ability to monitor our vendors’ cybersecurity is limited, and we cannot ensure the cybersecurity measures they take will be sufficient to protect any information we share with them or prevent any disruption arising from a technology failure, cyberattack or other information or security breach. Furthermore, none of our or our vendors' security measures can provide absolute security. Advances in computer capabilities, continually evolving and increasingly sophisticated tools and methods used by hackers and cyber terrorists, new discoveries in the field of cryptography, the potential use of artificial intelligence by cyber-attackers to develop malicious code and launch sophisticated phishing or other social engineering attempts, or other developments may result in our or our vendors' failure or inability to adequately protect personal or other sensitive information. In addition, vulnerabilities may be introduced from the use of artificial intelligence by us and our vendors. Despite our or our vendors' security measures, we may be unable to anticipate cyberattacks or implement adequate preventative measures and could suffer the impacts of a cyberattack, unauthorized access to personal information or other sensitive data, and any such data compromise or unauthorized access may not be discovered in a timely fashion and could persist for an extended period of time.

We rely on associates, contractors, and other third parties who may attempt to circumvent our security measures in order to obtain personal information or other sensitive data and may purposefully or inadvertently cause a breach involving such information. Actual or anticipated attacks may cause us to incur increased costs, including costs to deploy additional personnel and protection technologies, train associates, pay higher insurance premiums, and engage third-party specialists for additional services. An information security breach involving confidential and personal data could result in a loss of funds, damage our reputation, adversely affect our customers' willingness to purchase from us, and adversely affect our vendors' willingness to supply or provide services to us. In addition, we may incur material liabilities and remediation costs as a result of an information security breach, including potential liability for stolen customer or associate data, costs relating to repairing system damage, or costs of providing credit monitoring or other benefits to customers or associates affected by the breach. If we experience a material information security breach, our insurance may not be sufficient to cover the impact to our business. Although we have developed mitigating security controls to reduce our cyber risk and protect our data from loss or disclosure due to a security breach, including processes designed to reduce the impact of a security breach at a third-party vendor, such measures cannot provide absolute security.

We, and our third-party vendors, regularly experience cyberattacks aimed at disrupting services. Our third-party vendors may be the victim of cyber-related attacks. If they fail to deter, detect, or report cyber incidents in a timely manner, we may suffer from financial and other harm, including to our information, operations, and reputation, and such incidents could lead to operational disruptions that could have an adverse effect on our ability to fulfill customer orders. Security incidents, such as ransomware attacks, are becoming increasingly prevalent and severe, as well as increasingly difficult to detect. We, and our third-party vendors, have been subject to cyber, phishing, and social engineering attacks and other security incidents in the past and may continue to be subject to such attacks in the future. Security breaches can also occur as a result of non-technical issues, including intentional or inadvertent actions by our associates, our third-party vendors, their personnel, or other parties. If we or our third-party service providers experience security breaches that result in a decline in marketplace performance, availability problems, or the loss of, corruption of, unauthorized access to, or disclosure of personal data or confidential information, customers may become unwilling to provide us with the information necessary for such customers to make purchases on our e-commerce websites, and our reputation and market position could be harmed. Existing customers may also decrease their purchases or close their accounts altogether. We could also face potential claims, investigations, regulatory proceedings, liability, and litigation, and could bear other substantial costs in connection with remediating and otherwise responding to any data security breach, all of which may not be adequately covered by insurance, and which may result in an increase in our costs for insurance or insurance not being available to us on economically feasible terms, or at all. Insurers may also deny us coverage as to any future claim. Further, cybersecurity and data protection laws and regulations continue to evolve, and are increasingly demanding, which adds compliance complexity and may increase our costs of compliance and expose us to litigation, monetary damages, regulatory enforcement actions or fines. Any of these results could harm our growth prospects, financial condition, business, and reputation.

Our failure to protect the value of our banners, Ownedexclusive Brands,and licensed brands, or our reputation could have a material adverse effect on our brands.

Our success is largely dependent on our ability to provide our customers with a merchandise assortment that they want and our ability to provide a consistent, high-quality customer experience. We believe that maintaining and enhancing the reputation and recognition of our banners and our Ownedexclusive Brandsand licensed brands is critical to our ability to expand and retain our customer base. Any negative publicity about us or the significant brands we offer may reduce demand for our merchandise. Failure to comply with ethical, social, product, labor, health and safety, accounting, or environmental regulations and standards could also jeopardize our reputation and potentially lead to various adverse consumer actions, in addition to potential investigations or actions against us by governmental entities, fines, penalties, or other liabilities. In addition, negative claims or publicity, including on social media, regarding celebrities and influencers with whom we have license and endorsement arrangements could adversely affect our reputation and sales, regardless of whether such claims are accurate. Consumer actions could include boycotts and negative publicity through social or digital media. Negative public perception about us or the products we carry, whether justified or not, could impair our reputation, subject us to litigation, damage our brands, or have a material adverse effect on our business.

We hold exclusive licensing rights that allow us to design, source, and sell footwear for certain of our key Ownedlicensed Brands,brands, including Vince Camuto, Jessica Simpson, and Lucky Brand. We rely on our ability to retain and maintain good relationships with the licensors and their ability to maintain strong, well-recognized brands and trademarks. The terms of our license agreements vary and are subject to renewal with various termination provisions, and we may not be able to renew these licenses. Even our longer-term or renewable licenses are typically dependent upon our ability to market and sell the licensed products at specified levels, and our failure to meet such levels may result in the termination or non-renewal of such licenses. Furthermore, many of our license agreements require minimum royalty payments,payments andregardless if we are unable to generate sufficientof sales and profitability to cover these minimum royalty requirements, we may be required to make additional payments to the licensors,volumes, which could have a material adverse effect on our business and results of operations.

The demand for the brands we sell may also depend on how we are viewed relative to corporate social responsibility ("CSR"), andincluding environmental, social, and governance ("ESG") positions, which may not align with the expectations of our customers, investors, and other stakeholders. Risks associated with these initiatives include any increased public focus, including by governmental and nongovernmental organizations, new laws and regulations, increased costs associated with sustainability efforts and/or compliance with laws and regulations, as well as increased pressure to expand our CSR and ESG disclosures in these areas,disclosures, make commitments, set targets, or establish additional goals and take actions to achieve such targets and goals. At the same time, there also exists sentiment against such initiatives among certain stakeholders and government institutions, and we may face scrutiny, customer boycotts, reputational risk, lawsuits, or market access restrictions from these parties regarding our CSR positions. Inconsistency of legislation and regulations among jurisdictions, including anti-environmental, social and governance policies or ESGlegislation, positions.and any additional regulations may also affect the costs of compliance with such laws and regulations. All of the foregoing could expose us to market, operational, and execution costs or risks. Any metrics related to these topics that we disclose, whether based on the standards we set for ourselves or those set by others, or our failure to achieve any metrics that we disclose, may influence our reputation and the demand for the brands that we sell. There is also increased focus, including by customers, investors, and other stakeholders, on these matters, including the use of plastic, energy, waste, worker safety, and products, offerings, and marketing towards certain demographics. Our reputation could be damaged if we do not, or are perceived to not, act responsibly with respect to these matters, which could also have a material adverse effect on our business, results of operations, financial position, and cash flows.

We are dependent on our retail customer retail reward programs and marketing to drive traffic, sales, and loyalty, and any decrease in membership or purchases from members could have a material adverse effect on our business.

Customer traffic is influenced by our marketing methods and our reward programs. We rely on our reward programs to drive customer traffic, sales, and purchase frequency as members earn points toward discounts on future purchases through our VIP reward programs in the U.S. and Canada. We employ a variety of marketing methods, including email, direct mail, and social media, to communicate product offerings and various promotions and discounts to all of our customers, as well as exclusive offers to our rewards members. As of FebruaryJanuary 1,31, 2025,2026, we had 30.830.0 million members enrolled in our VIP reward programs who have made at least one purchase over the last two years. In 2024,2025, shoppers in the reward programs generated approximately 86%89% of the combined U.S. Retail and Canada Retail segments'segment's net sales. If our rewards members decrease their purchase frequency or do not continue to shop with us, we fail to add new members, the number of members decreases, or our marketing is not effective in driving customer traffic, such event could have a material adverse effect on our business.

From time to time, we may acquire or invest in businesses, or we may license brands that we believe could complement our business and offer growth opportunities. For example, in the first quarter of 2024, we acquired Rubino. The expected contribution to our business as a result of this and other acquisitions or investments may not materialize. Further, such integrations may disrupt our business or divert the attention of our management. Achieving the expected benefits depends in large part on our successful integration of any new operations, systems, and personnel in a timely and efficient manner. We cannot ensure that all of our integration efforts will be completed on a timely basis, as planned, or without substantial expense, delay, or other operational problems. Until we make substantial progress with our integration efforts, we also face the risk that we may not be able to effectively manage the business and achieve planned results. In addition, the integration process may strain our financial and managerial controls and reporting systems and procedures and may also result in the diversion of management and financial resources from core business objectives. Our integration efforts may not be successful, or we may not realize the anticipated benefits after we complete our integration efforts.

In addition, we may from time to time evaluate and pursue other strategic initiatives, investments, acquisitions, or acquisitions.divestitures, including business restructurings and other strategic activities. These strategic initiatives, investments, acquisitions, or acquisitionsdivestitures could involve various inherent risks, and the benefits sought may not be realized, or these strategic initiatives, acquisitions, investments, or investmentsdivestitures may not create value or may harm our brand and adversely affect our business, financial condition, and results of operations.

Our failure to retain existing and secure new store locations under acceptable lease terms for our retail segments could have a material adverse effect on our business.

The success of our retailRetail segmentssegment depends, in part, on our ability to secure long-term leases in desirable locations at acceptable terms for our stores and to secure renewals of such leases. No assurance can be given that we will be able to successfully negotiate lease renewals for existing stores or obtain acceptable terms for new stores in desirable locations. Our ability to operate stores on a profitable basis depends on many factors, including our ability to identify suitable markets and sites for our store locations with financially stable co-tenants and landlords; build-out or remodel sites on a timely and effective basis; obtain sufficient financing and capital resources or generate sufficient cash flows from operations to fund store capital expenditures; open new stores or remodel existing stores at costs not significantly greater than those anticipated; successfully open new stores in markets in which we currently have few or no stores; control the costs associated with store openings; and hire, train, and retain qualified managers and store personnel. To the extent that we are opening new stores in our existing markets, we may experience reduced net sales in existing stores in those markets. As a result, the number of customers and financial performance of individual stores may decline and the average sales per square foot at our stores may be reduced. Due to the changing retail landscape, we may want to reduce the size or number of store locations but may be unable to successfully exit lease agreements, which could have a material adverse effect on our business.

Funds drawn under our ABL Revolver may be used for working capital purposes, capital expenditures, share repurchases, other expenditures, and permitted acquisitions,acquisitions as defined in the ABL Revolver. The amount of credit available under the ABL Revolver 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. Consequently, it is possible that, should we need to access any additional funds from our ABL Revolver, such funds may not be available in full. The ABL Revolver requires us to maintain a fixed charge coverage ratio of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount.

The ABL Revolver requires us to maintain a fixed charge coverage ratio of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. At any time that liquidity is less than $100.0 million, the Term Loan requires the consolidated net leverage ratio to be no greater than 2.50 to 1.00, calculated on a trailing twelve-month basis and measured on the last day of each fiscal month. Our ABL Revolver and Term Loan also contain customary covenants restricting ourcertain activities, including limitations on our ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends,dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants,covenants including, in some cases, upon satisfying specified payment conditions based on availability. The ABL Revolver and Term Loan contain customary events of default, including failure to comply with certain financial and other covenants. Upon an event of default that is not cured or waived within the applicable cure period, in addition to other remedies that may be available to the lenders, our obligations may be accelerated, outstanding letters of credit may be required to be cash collateralized, and remedies may be exercised against the collateral.

We have key international operations in various locations, including Canada and China, and we face risks inherent in sourcing our merchandise from third-party manufacturers and national brand suppliers and third-party manufacturers with foreign operations. Our operations may be adversely affected by international political, economic, and social instability; local laws and customs; legal and regulatory constraints, including compliance with applicable anti-bribery, anti-corruption, labor, trade, and foreign tax laws; local business practices, including compliance with foreign laws and with domestic and international labor standards; and currency laws and regulations. Risks may also include, among others, public health threats, which has in the past materially adversely impacted our businessthreats; inclement weather and natural disasters; international hostilities, including the ongoing warwars in Ukraine and conflicts in the Middle East, militant attacks on cargo vessels in the Red Sea, which ultimately could adversely impact supplier deliveries or freight costs,Iran, or terrorism; increases in shipping costs; transportation delays and interruptions, including increased inspections of import shipments by domestic authorities or the occurrence of international trade disruptions; labor or supply shortages; work stoppages; expropriation or nationalization; changes in foreign government administration and governmental policies; changes in import duties or quotas; increases in tariffs, sanctions, and other trade barriers or restrictions; cost and difficulties associated with managing operations outside of the U.S.; possible adverse tax consequences from changes in tax laws or the unfavorable resolution of tax assessments or audits; and greater difficulty in enforcing intellectual property rights. Additionally, fluctuations in foreign currency exchange rates may negatively impact our financial results. With a substantial portion of our merchandise being importedsourced from foreign countries, any of these events could result in our failure to obtain merchandise in a timely manner, which ultimately could have a material adverse effect on our business, financial condition, or results of operations.

We are subject to stringent and changing privacy laws, regulations and standards. State, federal, and foreign governments have enacted and are continuing to enact laws and regulations governing the collection, use, retention, sharing, transfer, and security of personally identifiable information and data. Our business is subject to a variety of federal, state, local, and foreign laws and regulations, orders, rules, codes, regulatory guidance, and certain industry standards regarding privacy, data protection, consumer protection, information security, and the processing of personal information and other data. For example, the California Consumer Privacy Act of 2018 ("CCPA") imposes certain restrictions and disclosure obligations on businesses that collect personal information about California residents and provides for a private right of action, as well as penalties for noncompliance. The CCPA provides for civil penalties for violations and creates a private right of action for certain data breaches that is expected to increase data breach litigation. In addition, the California Privacy Rights Act amended and expanded the CCPA and placed additional restrictions on the "sharing" of personal information for purposes of cross-context behavioral advertising. We are subject to additional state privacy regulations, including the Virginia Consumer Data Protection Act, the Colorado Privacy Act, the Connecticut Data Privacy Act, and the Utah Consumer Privacy Act, which regulate the processing of "personal data" regarding their respective residents and which grant residents certain rights with respect to their personal data. State laws are changing rapidly, and new legislation proposed or enacted in a number of other states imposes, or has the potential to impose, additional obligations on companies that process confidential, sensitive and personal information, and will continue to shape the data privacy environment nationally. The U.S. federal government is also significantly focused on privacy matters.

Locations where we operate and that we consider to be material to our business, as set forth in Item 2. Properties of this Form 10-K, as well as locations operated by our vendors, may be subject to natural disasters, other extreme weather conditions, and negative climate change patterns, which may be exacerbated by climate change. Weather-related risks, including resource scarcity, rationing, or unexpected costs from increases in fuel or raw material prices, could disrupt our operations. Such disruptions may result in decreased demand for our products and disruptions in our sales channels and sourcing and distribution networks, which ultimately could have a material adverse effect on our business, financial condition, and results of operations. Extreme weather events and changes in weather patterns can also influence customer trends and shopping habits. Because our business is heavily weighted towards dress and seasonal products, unseasonably warm temperatures during our fall selling season or unseasonably cool weather during our spring selling season may diminish demand for our seasonal merchandise. We experienced this during 2024 with respect to unseasonably warm weather during our fall selling season, which adversely impacted our results of operations.

As of FebruaryJanuary 1,31, 2025,2026, the Schottenstein Affiliates beneficially owned approximately 31%30% of the Company's outstanding common shares, representing 67%66% of the combined voting power, consisting of, in the aggregate, 7.27.4 million Class A common shares (which are entitled to one vote per share) and 7.7 million Class B common shares (which are entitled to eight votes per share). The Schottenstein Affiliates directly control or substantially influence the outcome of matters submitted to our shareholders for approval, including the election of directors, approval of mergers or other business combinations, and approval of acquisitions or dispositions of assets. The interests of the Schottenstein Affiliates may differ from or be opposed to the interests of other shareholders, and the Schottenstein Affiliates' level of ownership and voting power in the Company may have the effect of delaying or preventing a subsequent change in control of the Company that may be favored by other shareholders. Additionally, the disproportionate voting rights of our Class B common shares and the Schottenstein Affiliates' substantial holdings of Class B common shares could have an adverse effect on the market price of our Class A common shares.

For 2024,2025, net sales decreased 2.1%3.9% with a decrease in total comparable sales downof 1.7%4.3% over last year. Gross profit as a percentage of net sales for 20242025 was 4043.6%, an increase of 90 basis points lower when compared to last year primarily due to a change in mix of products sold as we expanded our athletic and casual offerings, which have lower margins than the seasonal and dress categories.year.

EFFECTS OF INFLATIONMACROECONOMIC CONDITIONS AND GLOBAL ECONOMIC CONDITIONSTARIFFS

DuringMacroeconomic 2024,conditions ourinfluenced comparableby salesuncertain declinedtariff aspolicies, westock experiencedmarket lowerindices, traffic,interest primarilyrates, ininflation theand U.S.employment Retaillevels, segment.along with geopolitical unrest, continue to persist and create a challenging retail environment. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. We believe these ongoing uncertainties have had a negative impact on our operating results and liquidity during 2025 and we may continue to experience the decreaseimpact of decreased consumer demand for our products and lower direct-to-consumer traffic. We have enacted certain mitigating actions, including alignment of inventory with current demand levels, expense and capital expenditure reductions, and accelerating sourcing diversification efforts. Although we have made progress in comparablemitigating salesthe is a resultimpacts of ongoingcertain consumermacroeconomic concernconditions, our actions are not necessarily complete, and they should be viewed as part of negative and/or uncertain economic conditions, most notably the concern of economic volatility, including an economic downturn, fluctuationsprocess in interestwhich rates,we inflationarywill pressures,continue andour changesefforts into employmentbetter levels.align our cost structure with our operating results. We are unable to predict the severity of macroeconomic uncertainty, whether or when such circumstances may improve or worsen, including from one of our quarterly reporting periods to the next, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact further mitigating operating efficiency measures that may not have the intended effect and could have a material adverse effect on our business, results of operations, and results of operations. Adverse global economic conditions and disruptions to our business, along with a sustained decline in our stock price, may lead to triggering events that may indicate that the carrying value of certain assets, including inventories, accounts receivables, equity investments, long-lived assets, intangibles, and goodwill, may not be recoverable.liquidity.

•Gross profit as a percentage of net sales was 42.7%43.6% compared to 43.1%42.7% in 2023 and 43.9% in 2022.2024.

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 andsegment. Canada Retail segments. For calculating comparableComparable 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.

During 2024,2025, operating expenses decreasedincreased in the U.S. Retail segment primarily due to aan $7.1increase in distribution and fulfillment costs of $7.7 million decrease in personnel overhead costs with athe loweraddition headcountof andour new distribution center, partially offset by lower store selling expenses of $4.9 million and distribution costs of $2.6 million in line with lower net sales. Operating expenses as a percentage of net sales increased in the Canada Retail segment primarilydue driven byto the additiondeleverage impact of Rubino.lower net sales. Operating expenses decreased in the Brand Portfolio segment primarily due to aan $4.7$8.6 million decrease in marketing expenses andwith the remaining decrease primarily due to lower distributionpersonnel costsoverhead and other costs, in line with lower net sales. Operating expenses as a percentage of $1.9net millionsales withdecreased in the Brand Portfolio segment as the decline in externaloperating customerexpenses wholesaleleveraged activity.even with lower net sales. Operating expenses increaseddecreased for corporate shared services primarily due to higherlower professional fees and costs for cloud computing arrangements, partially offset by approximately $5.0 million lower stock compensation expense as a result of the CEO transition costs incurred last year. The increase in consolidated operating expenses as a percentage of consolidated net sales over last year was due to the deleverage of our costs on lower net sales.fees.

Impairment charges are not attributed to any of our segments for segment presentation purposes. During 2025, we recorded impairment charges to long-lived assets of $2.4 million due to underperforming stores and $2.0 million of an interest in an equity security without a readily determinable fair value held at cost, which resulted in no remaining value due to the lack of liquidity and the deterioration in the business prospects of the investee. During 2024, we recorded impairment charges of $9.4 million due to a vacated leased corporate office and other corporate assets, $7.0 million of our equity investment in Le Tigre due to the inability of Le Tigre to generate earnings with expected future losses, $1.3and $1.9 million due to two underperforming Canada Retail segment stores, and $0.6 million due to an underperforming U.S. Retail segment store. During 2023, we recorded impairment charges of $4.8 million, primarily related to a vacated leased space.stores.

The following table summarizes operating profit (loss) by segment:

During 2024,2025, operating profit for the U.S. Retail segment decreased primarily due to lower gross profit. Operating profit for the Brand Portfolio segment increased due to lower operating expenses, partially offset by lower operating expenses. For the Brand Portfolio segment, the improvement in operating results was the result of the increase in gross profit and lower operating expenses.profit. Corporate/eliminations increased,were whichfavorable lowersto consolidated operating profit,profit due to lower corporate operating expenses, lower impairments, and favorable intersegment activity. These factors led to an increase in impairments in 2024 and higher eliminations of Brand Portfolio intercompany activity. These changes led to lower consolidated operating profit as a percent of consolidated net sales.profit.

The effective tax rate, which is calculated based on income (loss) before income tax and loss from equity investment, for 2025 and 2024 was 311.5% and 7.0%, respectively. The effective tax rate was 7.0% for 2024,2025 differed from the statutory rate primarily due to the impact of non-deductible compensation and higher state income taxes resulting from state valuation allowances and tax return adjustments as comparedwell toas 27.3%the forincome 2023.tax amounts on a relatively low pretax income base. The effective tax rate for 2024 differed from the statutory raterate, primarily due to non-deductible compensation and other adjustments partially offset by discrete tax benefits recognized, primarily related to the release of tax reserves no longer deemed necessary and state tax planning initiatives. The effective tax rate for 2023 differed from the statutory rate primarily due to non-deductible compensation offset by other permanent adjustments.

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. On April 8, 2024, we acquired Rubino for $16.1 million in cash, funded with available cash and borrowings on the ABL Revolver. During 2024, we repurchased 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 repurchase under the share repurchase program.

We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy, and withstand unanticipated business volatility, including the impacts of the global economic conditions on our results of operations. We believe that cash generated from our operations,operations together with our current levels of cash,cash as well asand the availability under our ABL Revolver,Revolver are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund acquisitions and capital expenditures, repurchase common shares under our share repurchase program, and meet our debt service obligations over the next 12 months and beyond.

As described in Note 11, toDescription of Business and Significant Accounting Policies - Immaterial Restatements of Prior Periods, of the condensed consolidated financial statements of this Form 10-Q, we have made immaterial corrections to comparative prior period amounts. Refer to Note 1212, Immaterial Restatements of Prior Period Financial Statements, of the condensed consolidated financial statements of this Form 10-Q for quantification of the prior period restatement impacts.

For the firstsecond quarter of 2026, net sales increaseddecreased 1.4%1.2% with a decrease in total comparable sales of 1.1%2.4% when compared to the same period last year. Gross profit as a percentage of net sales for the firstsecond quarter of 2026 was 45.3%,50.0%, anwhich included the benefit of $35.5 million of tariff recoveries recorded as a reduction of cost of sales and contributed to the total increase of 240640 basis points when compared to the same period last year.

Following its January 2025 inauguration, the U.S. administration has taken action to increase tariffs assessed on most products imported into the U.S. Various modifications to the U.S. tariffs have been announced, and further changes are expected to be made in the future, including in response to litigation, which has introduced heightened uncertainty regarding the future of global trade and the impact to our cost structure. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the IEEPA. During April 2026, the CBP launched the CAPE process, which allows entities to submit refund claims for paid IEEPA tariffs. We have submitted claims seeking refunds of previously paid IEEPA tariffs through CAPE. The timing of any refunds and the total amount ultimately received or recorded remains uncertain, and we cannot provide any assurance that we will receive the full amount expected. Further, following the U.S. Supreme Court decision, the U.S. administration imposed a new tariff surcharge of not less than 10% under Section 122 of the Trade Act of 1974 on all imports, subject to certain exceptions. The tariffs under this statute took effect on February 24, 2026, and will remainremained in effect for 150 days (the maximum under the statute). TariffsEffective haveupon notthe beenexpiration previouslyof these tariffs in July 2026, new tariff rates generally ranging from 10% to 12.5% on most imports from certain countries were imposed underpursuant thisto statutorySection provision, and, in May 2026,301of the U.S.Trade CourtAct of International1974. TradeAdditional invalidatedtariffs theseunder temporarySection tariffs, but they remain in place, subject to appeal. The U.S. administration has indicated future actions may be taken that could restore or exceed the level338 of the IEEPATariff Act of 1930 were also recently imposed. Uncertainty with respect to tariffs underremains otherongoing, statutoryand provisions.U.S. import tariffs and international trade arrangements are expected to continue to change, potentially without warning and to an extent or duration that is difficult to predict. Changing tariff rates and shifting trade policies have created significant uncertainty, and our efforts to mitigate the impacts of tariffs are time-consuming and costly and may not be effective. Any future tariffs or other trade policy actionsactions, including retaliatory measures enacted in response to such actions, could affect our cost structure and supply chain. All of the products manufactured through the Brand Portfolio segment come from third-party facilities outside of the U.S., with the majority of our units sourced from Asia. In addition to the merchandise sourced through our Brand Portfolio segment, our Retail segment also sources merchandise from third-party suppliers, with many of these suppliers importing a large portion of their merchandise from Asia. We are closely monitoring this situation and evaluating the actions we have taken and additional actions we may take in the future, including cost mitigation measures and price adjustments. For our Brand Portfolio segment, we have adjusted our sourcing diversification by optimizing where we source our products from in an effort to mitigate the risk, maximize flexibility, and decrease costs. However, sourcing diversification could result in product quality issues, higher product costs, and/or not being able to source the quantity desired on a timely basis and there can be no assurance that we will be able to fully mitigate the impact of such tariffs or new tariffs in Asia or elsewhere. The ultimate impact of tariffs and other trade policies on our business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures, and our ability to mitigate effects, which could include higher import costs and our ability to obtain any refund. Accordingly, our financial position or results of operations may be adversely influenced by political, economic, legal, compliance, social, and business conditions in the U.S. and in other countries.

For the three months ended MayAugust 2,1, 2026:

•Net sales increaseddecreased to $696.4$730.6 million from $686.9$739.8 million for the same period last year.

•Net income attributable to Designer Brands Inc. was $1.2$17.6 million, or $0.02$0.31 per diluted share, compared to a net lossincome attributable to Designer Brands Inc. of $17.8$10.5 million, or $0.37 loss$0.21 per diluted share, for the same period last year.

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 Retail segment. Comparable sales in Canada 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 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.

Number of Stores- As of MayAugust 2,1, 2026 and MayAugust 3,2, 2025, we had the following number of stores:

FIRSTSECOND QUARTER OF 2026 COMPARED WITH FIRSTSECOND QUARTER OF 2025

For the three months ended MayAugust 2,1, 2026, net sales were relatively flatdecreased in the Retail segment over the same period last year primarily driven by a decline in comparable sales of approximately $7.0$17.0 million, which was partially offset by an increase in non-product sales activity, including service revenue and shipping revenue, and the favorable impact from foreign currency translation.revenue. The decrease in comparable sales for the Retail segment was largely driven by lower comparable transactions of approximately 7%8%, primarily due to reduced conversion and slightly lower traffic, partially offset by an increase in comparable average sales amounts per transaction. The increase in net sales for the Brand Portfolio segment was primarily due to higher revenue from wholesale activity due to increased demand from retail customers and the Retail segment, as we are experiencing positive trends in the dress category,segment and the expansion of retail partner locations for Topo along with new Topo product introductions.

The increase in gross profit for the Retail segment over the same period last year was primarily drivendue by theto higher margin rates, which was driven by lower promotional activity and higher penetration of non-product sales activities. The increase in gross profit for the Brand Portfolio segment was primarily due to higher net sales as demand from retail customers increased with higher margin rates. Gross profit as a percentage of segment net sales increased for the Brand Portfolio segment primarily due to product mix,mix and lower clearance activity, along with lower tariff rates and the leverage of fixed royalty expenses on higher net sales. Consolidated gross profit included the benefit of $35.5 million of tariff recoveries recorded as a reduction of cost of sales and resulted in a 490 basis point improvement over the same period last year in consolidated gross profit as a percentage of consolidated net sales.

For the threesix months ended MayAugust 2,1, 2026, operating expenses increased in the Retail segment over the same period last year primarily due to an increase in marketing expenses of $6.3 million, an increase in personnel overhead costs of $2.3 million driven by higher incentive compensation as we did not recognize incentive compensation the same period last year based on the performance of the business relative to our targets, with the remaining increase primarily due to higher occupancy costs, as a result of higher utility costs anddriven by the impact of lease renewals, and an increase in marketing expenses.renewals. Operating expenses as a percentage of net sales increased in the Retail segment due to higher expenses on flatlower net sales. Operating expenses increased in the Brand Portfolio segment due to an increase in marketing expenses of $1.6 million, with the remaining increase primarily due to distribution and fulfillment costs in line with higher net sales. Operating expenses as a percentage of segment net sales decreased in the Brand Portfolio segment as the relatively flat changeincrease in operating expenses leveraged on higher net sales. Operating expenses decreased for corporate shared services primarily due to restructuring actions taken in 2025.2025, partially offset by an increase in incentive compensation as we did not recognize incentive compensation the same period last year based on the performance of the business relative to our targets.

For the threesix months ended MayAugust 2,1, 2026, operating profit for the Retail segment increased over the same period last year due to higher gross profit partially offset by higher operating expenses. OperatingThe Brand Portfolio segment had an operating profit for the Brandsix Portfoliomonths segmentended increasedAugust 1, 2026 due to higher gross profit.profit and income from equity investment exceeding operating expenses whereas the segment had an operating loss for the same period last year. Corporate/eliminations were favorable to consolidated operating profit due to lowerthe corporatebenefit operatingof expensestariff andrecoveries impairmentof charges$35.5 incurredmillion, lastpartially year.offset by unfavorable intersegment activity. These factors led to an increase in consolidated operating profit for the threesix months ended MayAugust 2,1, 2026 as compared to consolidated operating loss for the same period last year.

For the threesix months ended MayAugust 2,1, 2026 and MayAugust 3,2, 2025, our effective tax rate was 55.0%37.7% and 11.0%,negative 21.8%, respectively. The effective tax rate for the threesix months ended MayAugust 2,1, 2026 differed from the U.S. federal statutory rate primarily due to the tax impact of non-deductible compensation and state income taxes, which has a higher rate impact on a relatively low pre-tax income base.taxes. The effective tax rate for the threesix months ended MayAugust 3,2, 2025 differed from the statutory rate primarily due to statethe minimumimpact taxof expensepermanent onnon-deductible quarterlycompensation and being in a pre-tax loss andposition, non-deductiblewhich compensation.resulted in a negative effective tax rate.

The increase in net cash used in investing activities for the threesix months ended MayAugust 2,1, 2026 as compared to the same period last year was primarily due to the increase in capital expenditures of $2.6$5.5 million in line with planned new and remodeled stores.

For the threesix months ended MayAugust 2,1, 2026, net cash providedused byin financing activities increasedwas over the same period last yearprimarily due to higher net receiptspayments fromon our ABL Revolver used for funding working capital, partially offset byand debt issuance costs associated with amending our ABL Revolver compared to net cash provided by financing activities last year primarily due to net borrowings on our ABL Revolver.

ABL Revolver- The ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes a first-in last-out term loan ("FILO Term Loan") with $29.5 million borrowed. The FILO Term Loan may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. The ABL Revolver may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. 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. The ABL Revolver matures on the earlier of the maturity date of the Term Loan (currently June 2028) or February 2031. As of MayAugust 2,1, 2026, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $492.3$437.0 million, with $331.2$280.2 million in outstanding borrowings and $22.6$10.6 million in letters of credit issued, resulting in $138.5$146.2 million available for borrowings.

Debt Covenants- The ABL Revolver requires us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. At any time that liquidity is less than $100.0 million, the Term Loan requires a maximum consolidated net leverage ratio as of the last day of each fiscal month of 2.50 to 1.00, calculated on a trailing twelve-month basis. Testing of the consolidated net leverage ratio ends after liquidity has been greater than or equal to $100.0 million for a period of 45 consecutive days. The ABL Revolver and the Term Loan also contain customary covenants restricting certain activities, including limitations on our 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 based on availability. As of MayAugust 2,1, 2026, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan.

During 2026, we expect to spend approximately $45.0 million to $55.0 million that will be capitalized for property and equipment and implementation costs for cloud computing arrangements accounted for as service contracts, $11.7$26.2 million of which was spent during the threesix months ended MayAugust 2,1, 2026. Our future investments will depend primarily on the number of stores we open and remodel, infrastructure and IT projects that we undertake, and the timing of these expenditures.