Designer Brands - 10-Q quarterly report FY2026 Q2

January 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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)


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

For the quarterly period ended August 1, 2026


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


For the transition period from						to

Commission file number 001-32545


DESIGNER BRANDS INC.
(Exact name of registrant as specified in its charter)

Ohio

31-0746639

(State or other jurisdiction of incorporation or organization)

(I.R.S. Employer Identification No.)

810 DSW Drive,

Columbus,

Ohio

43219

(Address of principal executive offices)

(Zip Code)

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

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


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

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

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

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

Large accelerated filer

☐

Accelerated filer

☑

Non-accelerated filer

☐

Smaller reporting company

☑

Emerging growth company

☐

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

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

Number of shares outstanding of each of the registrant's classes of common stock, as of September 3, 2026: 43,390,683 Class A common shares and 7,732,721 Class B common shares.

DESIGNER BRANDS INC.

TABLE OF CONTENTS

All references to "we," "us," "our," "Designer Brands Inc.," or the "Company" in this Quarterly Report on Form 10-Q for the quarter ended August 1, 2026 (this "Form 10-Q") mean Designer Brands Inc. and its subsidiaries.

Table of contents

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

Certain statements in this Form 10-Q may constitute forward-looking statements and are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Such statements reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "could," "believes," "expects," "potential," "continues," "may," "will," "should," "would," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates," or the negative version of those words or other comparable words. Any forward-looking statements contained in this Form 10-Q are based upon current plans, estimates, expectations and assumptions relating to our operations, results of operations, financial condition, and liquidity. The inclusion of any forward-looking statements should not be regarded as a representation by us or any other person that the future plans, estimates, or expectations contemplated by us will be achieved. Such forward-looking statements are subject to numerous risks, uncertainties, and other factors, many of which are outside of our 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. In addition to those factors described under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the "2025 Form 10-K") filed with the Securities and Exchange Commission (the "SEC") on March 30, 2026 and otherwise in our reports and filings with the SEC, there are a number of important factors that could cause actual results, performance, or achievements to differ materially from those discussed in forward-looking statements that include, but are not limited to, the following:

•uncertain general economic and financial conditions, including economic volatility and potential downturn or recession, supply chain disruptions, geopolitical instability and conflicts, social unrest, new or increased tariffs and other barriers to trade, tariff refunds, 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 our business strategies, including growing our Brand Portfolio segment, enhancing in-store and digital shopping experiences, integrating previously acquired businesses and brands, and meeting consumer demands;

•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, and payment processing services whether as a result of reliance on third-party providers or otherwise;

•our reliance on third parties to provide customer payment processing services;

•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, including the use of artificial intelligence tools;

•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 ("ABL Revolver"), and our senior secured term loan credit agreement, as amended ("Term Loan"), 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.

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

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PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS


(unaudited and in thousands, except per share amounts)	Three months ended				Six months ended
	August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Net sales	$	730,631	$	739,762	$	1,426,981	$	1,426,671
Cost of sales	(365,276)		(417,269)		(746,308)		(809,697)
Gross profit	365,355		322,493		680,673		616,974
Operating expenses	(313,412)		(297,462)		(612,621)		(599,324)
Income from equity investment	2,780		2,578		5,541		5,005
Impairment charges	—		(1,466)		—		(4,419)
Operating profit	54,723		26,143		73,593		18,236
Interest expense on debt and tariff sale financing transaction, net of interest income (Note 1 and 10)	(25,385)		(11,783)		(35,510)		(23,754)
Non-operating income (expenses), net	1,244		(78)		1,239		(70)
Income (loss) before income taxes and loss from equity investment	30,582		14,282		39,322		(5,588)
Income tax provision	(10,031)		(3,408)		(14,836)		(1,219)
Loss from equity investment	(134)		—		(615)		—
Net income (loss)	20,417		10,874		23,871		(6,807)
Net income attributable to redeemable noncontrolling interest	(2,860)		(339)		(5,155)		(474)
Net income (loss) attributable to Designer Brands Inc.	$	17,557	$	10,535	$	18,716	$	(7,281)
Earnings (loss) per share attributable to Designer Brands Inc.:
Basic earnings (loss) per share	$	0.34	$	0.21	$	0.37	$	(0.15)
Diluted earnings (loss) per share	$	0.31	$	0.21	$	0.34	$	(0.15)
Weighted average shares used in per share calculations:
Basic shares	50,894		49,109		50,567		48,678
Diluted shares	55,974		49,734		55,757		48,678

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


(unaudited and in thousands)	Three months ended				Six months ended
	August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Net income (loss)	$	20,417	$	10,874	$	23,871	$	(6,807)
Other comprehensive income (loss) - foreign currency translation gain (loss)	(2,780)		9		(2,887)		3,507



Comprehensive income (loss)	17,637		10,883		20,984		(3,300)
Comprehensive income attributable to redeemable noncontrolling interest	(2,860)		(339)		(5,155)		(474)
Comprehensive income (loss) attributable to Designer Brands Inc.	$	14,777	$	10,544	$	15,829	$	(3,774)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED BALANCE SHEETS


(unaudited and in thousands)	August 1, 2026		January 31, 2026		August 2, 2025
ASSETS
Current assets:
Cash and cash equivalents	$	51,591	$	50,871	$	44,937
Receivables, net	80,397		61,716		57,607
Inventories	594,688		563,547		610,876
Prepaid expenses and other current assets	36,252		34,286		40,437
Total current assets	762,928		710,420		753,857
Property and equipment, net	208,965		213,291		227,141
Operating lease assets	694,367		675,648		716,685
Goodwill	130,601		130,837		130,716
Intangible assets, net	79,614		81,242		81,881
Deferred tax assets	30,018		35,882		45,067
Equity investments	55,153		56,260		59,446
Other assets	46,496		46,325		48,870
Total assets	$	2,008,142	$	1,949,905	$	2,063,663
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable	$	256,081	$	236,195	$	239,200
Accrued expenses	192,213		178,430		177,491
Current maturities of long-term debt	6,750		6,750		6,750
Current operating lease liabilities	172,454		175,515		157,212
Total current liabilities	627,498		596,890		580,653
Long-term debt	416,309		428,206		509,593
Non-current operating lease liabilities	613,503		596,587		646,431
Other non-current liabilities	43,482		46,606		48,201
Total liabilities	1,700,792		1,668,289		1,784,878
Commitments and contingencies (Note 10)
Redeemable noncontrolling interest	6,232		1,616		1,738
Shareholders' equity:
Common shares paid in-capital, no par value	1,072,207		1,061,957		1,055,199
Treasury shares, at cost	(833,351)		(833,351)		(833,351)
Retained earnings	71,138		57,383		62,743
Accumulated other comprehensive loss	(8,876)		(5,989)		(7,544)
Total shareholders' equity	301,118		280,000		277,047
Total liabilities, redeemable noncontrolling interest, and shareholders' equity	$	2,008,142	$	1,949,905	$	2,063,663

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


	Number of Shares			Amounts
(unaudited and in thousands, except per share amounts)	Class A Common Shares	Class B Common Shares	Treasury Shares	Common Shares Paid in Capital		Treasury Shares		Retained Earnings		Accumulated Other Comprehensive Loss		Total
Three months ended August 1, 2026
Balance, May 2, 2026	43,020	7,733	52,902	$	1,064,311	$	(833,351)	$	56,062	$	(6,096)	$	280,926
Net income attributable to Designer Brands Inc.	—	—	—	—		—		17,557		—		17,557
Stock-based compensation activity	285	—	—	7,896		—		—		—		7,896

Dividends ($0.05 per share)	—	—	—	—		—		(2,481)		—		(2,481)
Foreign currency translation adjustment	—	—	—	—		—		—		(2,780)		(2,780)

Balance, August 1, 2026	43,305	7,733	52,902	$	1,072,207	$	(833,351)	$	71,138	$	(8,876)	$	301,118
Three months ended August 2, 2025
Balance, May 3, 2025	40,900	7,733	52,902	$	1,049,774	$	(833,355)	$	54,616	$	(7,553)	$	263,482
Net income attributable to Designer Brands Inc.	—	—	—	—		—		10,535		—		10,535
Stock-based compensation activity	896	—	—	5,425		—		—		—		5,425

Dividends ($0.05 per share)	—	—	—	—		—		(2,408)		—		(2,408)
Foreign currency translation adjustment	—	—	—	—		—		—		9		9
Other	—	—	—	—		4		—		—		4
Balance, August 2, 2025	41,796	7,733	52,902	$	1,055,199	$	(833,351)	$	62,743	$	(7,544)	$	277,047
Six months ended August 1, 2026
Balance, January 31, 2026	42,062	7,733	52,902	$	1,061,957	$	(833,351)	$	57,383	$	(5,989)	$	280,000
Net income attributable to Designer Brands Inc.	—	—	—	—		—		18,716		—		18,716
Stock-based compensation activity	1,243	—	—	10,250		—		—		—		10,250

Dividends ($0.10 per share)	—	—	—	—		—		(4,961)		—		(4,961)
Foreign currency translation adjustment	—	—	—	—		—		—		(2,887)		(2,887)

Balance, August 1, 2026	43,305	7,733	52,902	$	1,072,207	$	(833,351)	$	71,138	$	(8,876)	$	301,118
Six months ended August 2, 2025
Balance, February 1, 2025	40,211	7,733	52,902	$	1,045,002	$	(833,355)	$	74,829	$	(11,051)	$	275,425
Net loss attributable to Designer Brands Inc.	—	—	—	—		—		(7,281)		—		(7,281)
Stock-based compensation activity	1,585	—	—	10,197		—		—		—		10,197

Dividends ($0.10 per share)	—	—	—	—		—		(4,805)		—		(4,805)
Foreign currency translation adjustment	—	—	—	—		—		—		3,507		3,507
Other	—	—	—	—		4		—		—		4
Balance, August 2, 2025	41,796	7,733	52,902	$	1,055,199	$	(833,351)	$	62,743	$	(7,544)	$	277,047

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS


	Six months ended
(unaudited and in thousands)	August 1, 2026		August 2, 2025
Cash flows from operating activities:
Net income (loss)	$	23,871	$	(6,807)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	28,267		29,664
Stock-based compensation expense	14,520		12,063
Deferred income taxes	5,864		(1,489)
Income from equity investments	(4,926)		(5,005)
Distributions received from equity investments	5,965		6,935
Impairment charges	—		4,419
Other	528		(260)
Change in operating assets and liabilities:
Receivables	(18,714)		(5,575)

Inventories	(32,872)		(8,714)
Prepaid expenses and other current assets	1,598		(118)
Accounts payable	21,519		(31,972)
Accrued expenses	7,133		16,309
Operating lease assets and liabilities, net	(4,517)		(8,373)
Net cash provided by operating activities	48,236		1,077
Cash flows from investing activities:
Cash paid for property and equipment	(22,251)		(16,753)





Other	—		(1,916)
Net cash used in investing activities	(22,251)		(18,669)
Cash flows from financing activities:
Borrowing on revolving credit facility	298,580		540,011
Payments on revolving credit facility	(307,920)		(512,187)

Payments for borrowings under Term Loan	(3,375)		(3,375)


Payments of debt issuance costs	(3,186)		—

Dividends paid	(4,961)		(4,805)
Cash paid for taxes for stock-based compensation shares withheld	(4,298)		(1,866)
Other	1,213		(1,296)
Net cash provided by (used in) financing activities	(23,947)		16,482
Effect of exchange rate changes on cash balances	(1,318)		1,295
Net increase in cash and cash equivalents	720		185
Cash and cash equivalents, beginning of period	50,871		44,752
Cash and cash equivalents, end of period	$	51,591	$	44,937
Supplemental disclosures:
Net cash paid (received) for income taxes	$	8,084	$	(2,660)
Cash paid for interest on debt and financing transaction	$	32,906	$	21,518
Operating cash paid for operating lease liabilities	$	106,670	$	107,287
Operating cash paid for finance leases	$	1,363	$	463
Financing cash paid for finance leases	$	1,329	$	370
Non-cash investing and financing activities
Property and equipment purchases not yet paid	$	2,204	$	3,534
Contribution of intangible asset to equity investment	$	—	$	2,700
Operating lease liabilities arising from lease asset additions	$	9,172	$	36,617
Finance lease liabilities arising from lease asset additions	$	—	$	32,482
Net increase to operating lease assets and lease liabilities for modifications	$	93,135	$	53,788

The accompanying notes are an integral part of the condensed consolidated financial statements.

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NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

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1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Business Operations- Designer Brands Inc. is one of the world's largest designers, producers, and retailers of footwear and accessories. We operate in two reportable segments: the Retail segment and the Brand Portfolio segment. The Retail segment operates the DSW Designer Shoe Warehouse ("DSW") banner through its direct-to-consumer stores and e-commerce sites in the United States ("U.S.") and Canada and The Shoe Co. and Rubino banners through its direct-to-consumer stores and e-commerce sites in Canada. The Brand Portfolio segment primarily earns revenue from the wholesale of our exclusive and licensed brands to retailers, our Retail segment, and international distributors and the sale of our Vince Camuto, Keds, and Topo brands through direct-to-consumer e-commerce sites.

Basis of Presentation- The accompanying unaudited, condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The condensed consolidated financial position, results of operations, and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2025 Form 10-K.

Immaterial Restatements of Prior Periods- During the first quarter of 2026, we identified that our previously acquired Topo business was utilizing incorrect duty rates applied to many of our Topo branded products imported into the U.S., both before and after the acquisition date. Based on a standard look-back period of five years and published interest rates, we estimated an obligation of additional duties and interest of $8.4 million due to the U.S. Customs and Border Protection (the "CBP") related to prior periods. The correction of this error to periods prior to the first quarter of 2026 is not material to the consolidated financial statements for any of the impacted periods; however, the aggregate impact of correcting prior periods within the first quarter of 2026 would have been material to our current period condensed consolidated financial statements. Consequently, we have made these immaterial corrections in the comparative prior periods. Refer to Note 12, Immaterial Restatements of Prior Period Financial Statements, for quantification of the restatement impacts to the prior periods presented. Additionally, comparative prior period amounts in the applicable notes to the condensed consolidated financial statements have been restated. We will also correct previously reported financial statements for such immaterial errors in future filings, as applicable.

Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year (e.g., "2026") refer to the calendar year in which the fiscal year begins. This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year (including 2026 and 2025) but occasionally will contain an additional week resulting in a 53-week fiscal year.

SIGNIFICANT ACCOUNTING POLICIES

Accounting Policies- The complete summary of significant accounting policies is included in the notes to the consolidated financial statements as presented in our 2025 Form 10-K.

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

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

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Interest Expenses on debt and tariff sale financing transaction, net of interest income- Interest expense on debt and tariff sale financing transaction, net of interest income, includes the following:


	Three months ended				Six months ended
(in thousands)	August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Interest expense on debt	$	9,531	$	11,991	$	19,853	$	24,180
Interest expense on tariff sale financing transaction	16,097		—		16,097		—
Interest income	(243)		(208)		(440)		(426)
Interest expense on debt and tariff sale financing transaction, net of interest income	$	25,385	$	11,783	$	35,510	$	23,754

The interest expense on tariff sale financing transaction is a result of interest expense related to the sale of tariff refund claims to the Investor. Refer to Note 10, Commitments and Contingencies - IEEPA Tariff Recoveries, for additional details.

Income Taxes- For the three months ended August 1, 2026 and August 2, 2025, our effective tax rate was 32.8% and 23.9%, respectively, and for the six months ended August 1, 2026 and August 2, 2025, our effective tax rate was 37.7% and negative 21.8%, respectively. The effective tax rate for the six months ended August 1, 2026 differed from the U.S. federal statutory rate primarily due to the tax impact of non-deductible compensation and state income taxes. The effective tax rate for the six months ended August 2, 2025 differed from the statutory rate primarily due to the impact of permanent non-deductible compensation and being in a loss before income tax position, which resulted in a negative effective tax rate.

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

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

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

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

The carrying value of cash and cash equivalents, receivables, and accounts payable approximated their fair values due to their short-term nature. The carrying value of borrowings under our ABL Revolver and our Term Loan approximated fair value based on the terms and variable interest rates.

Recently Issued Accounting Pronouncements- In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Income Statement Expense Disaggregation Disclosures, which requires disaggregated disclosures for specific cost and expense categories such as inventory purchases, employee compensation, depreciation, and amortization, as well as other disclosures. ASU 2024-03 is effective either on a retrospective basis to all prior periods presented or on a prospective basis beginning with our 2027 Annual Report on Form 10-K and subsequent interim periods. We are currently evaluating the impact of adopting ASU 2024-03 to the notes of the consolidated financial statements.

In September 2025, the FASB issued ASU 2025-06, Intangibles - Goodwill and Other - Internal Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which eliminates accounting consideration of software project development stages and instead requires capitalization to begin when management authorizes and commits to funding the project and it is probable the software will be completed and used as intended. ASU 2025-06 is effective for us in the first quarter of 2028 and early adoption is permitted either on a retrospective, prospective, or modified prospective approach. We are currently evaluating the impact of ASU 2025-06 on the consolidated financial statements and related disclosures.

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2. REVENUE

DISAGGREGATION OF NET SALES

The following table presents net sales disaggregated by product and service categories for the Retail segment and sales channel for the Brand Portfolio segment:


	Three months ended				Six months ended
(in thousands)	August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Net sales:
Retail segment:
Non-athletic footwear:
Women's	$	308,307	$	312,130	$	606,012	$	606,863
Men's	94,616		96,475		174,787		174,919
Kids'	23,834		25,829		46,247		50,263
Athletic footwear	196,753		208,897		380,425		406,126
Accessories and other	47,552		42,672		90,275		74,977
	671,062		686,003		1,297,746		1,313,148
Brand Portfolio segment:
Wholesale	74,721		62,211		177,667		146,709
Direct-to-consumer	10,233		9,812		20,780		20,167
Other	1,325		1,134		2,350		2,179
	86,279		73,157		200,797		169,055
Total segment net sales	757,341		759,160		1,498,543		1,482,203
Elimination of intersegment sales	(26,710)		(19,398)		(71,562)		(55,532)
Total net sales	$	730,631	$	739,762	$	1,426,981	$	1,426,671

DEFERRED REVENUE LIABILITIES

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


	Three months ended				Six months ended
(in thousands)	August 1, 2026		August 2, 2025		August 1, 2026		August 2, 2025
Gift cards:
Beginning of period	$	24,519	$	25,829	$	27,730	$	28,963
Gift cards redeemed and breakage recognized to net sales	(14,024)		(14,151)		(28,014)		(28,713)
Gift cards issued	12,713		12,490		23,492		23,918
Balance at end of period	$	23,208	$	24,168	$	23,208	$	24,168
Reward programs:
Beginning of period	$	12,549	$	13,894	$	12,845	$	14,126
Reward certificates redeemed and expired and other adjustments recognized to net sales	(6,014)		(7,201)		(12,038)		(13,911)
Deferred revenue for reward points issued	6,171		6,225		11,899		12,703
Balance at end of period	$	12,706	$	12,918	$	12,706	$	12,918

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3. RELATED PARTY TRANSACTIONS

SCHOTTENSTEIN AFFILIATES

We have transactions with entities owned or controlled by Jay L. Schottenstein, the executive chairman of our Board of Directors (the "Board"), and members of his family (the "Schottenstein Affiliates"). As of August 1, 2026, the Schottenstein Affiliates beneficially owned approximately 27% of the Company's outstanding common shares, representing approximately 64% of the combined voting power, consisting of, in the aggregate, 6.0 million Class A common shares and 7.7 million Class B common shares. The following summarizes the related party transactions with the Schottenstein Affiliates for the relevant periods:

Leases- We lease certain store and office locations that are owned by the Schottenstein Affiliates. For both the three months ended August 1, 2026 and August 2, 2025, we recorded lease expense from the leases with Schottenstein Affiliates of $1.7 million. For the six months ended August 1, 2026 and August 2, 2025, we recorded lease expense from the leases with Schottenstein Affiliates of $3.4 million and $3.5 million, respectively. As of August 1, 2026, January 31, 2026 and August 2, 2025, we had related party current operating lease liabilities of $4.7 million, $4.5 million and $4.1 million, respectively, and non-current operating lease liabilities of $9.6 million, $11.2 million and $15.4 million, respectively.

Other Purchases and Services and Due to Related Parties- Amounts for other purchases and services we incurred from the Schottenstein Affiliates and the amounts due to the Schottenstein Affiliates, other than operating lease liabilities, were immaterial for all periods presented.

ABG-CAMUTO

We have a 40.0% ownership interest in ABG-Camuto, LLC ("ABG-Camuto"). We have a licensing agreement with ABG-Camuto, pursuant to which we pay royalties on the net sales of the brands owned by ABG-Camuto, subject to guaranteed minimums. For both the three months ended August 1, 2026 and August 2, 2025, we recorded royalty expense for amounts paid to ABG-Camuto of $4.8 million. For both the six months ended August 1, 2026 and August 2, 2025, we recorded royalty expense for amounts paid to ABG-Camuto of $9.6 million.

4. EARNINGS (LOSS) PER SHARE

Basic earnings (loss) per share is based on net income (loss) attributable to Designer Brands Inc. and the weighted average of Class A and Class B common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares adjusted for outstanding stock-based compensation awards calculated using the treasury stock method. The dilutive effect of outstanding stock-based compensation awards is applicable only in periods when we have net income attributable to Designer Brands Inc.

The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings (loss) per share attributable to Designer Brands Inc., and the anti-dilutive shares excluded from the calculation of diluted earnings (loss) per share attributable to Designer Brands Inc.:


	Three months ended		Six months ended
(in thousands)	August 1, 2026	August 2, 2025	August 1, 2026	August 2, 2025
Weighted average basic shares outstanding	50,894	49,109	50,567	48,678
Dilutive effect of stock-based compensation awards	5,080	625	5,190	—
Weighted average diluted shares outstanding	55,974	49,734	55,757	48,678
Anti-dilutive shares	1,995	8,768	1,015	7,543

5. STOCK-BASED COMPENSATION

For the three months ended August 1, 2026 and August 2, 2025, we recorded stock-based compensation expense of $8.0 million and $6.0 million, respectively. For the six months ended August 1, 2026 and August 2, 2025, we recorded stock-based compensation expense of $14.5 million and $12.1 million, respectively. These costs are included in operating expenses on the condensed consolidated statements of operations.

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The following table summarizes the restricted stock units ("RSU") activity for the six months ended August 1, 2026:


(in thousands)	Shares of Time-Based RSUs	Shares of Performance-Based RSUs
Outstanding - beginning of period	8,409	1,084
Granted	3,560	2,908
Vested	(1,967)	—
Forfeited	(242)	(343)
Outstanding - end of period	9,760	3,649

6. SHAREHOLDERS' EQUITY

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

The following table provides additional information for our common shares:


(in thousands)	August 1, 2026		January 31, 2026		August 2, 2025
	Class A	Class B	Class A	Class B	Class A	Class B
Authorized shares	250,000	100,000	250,000	100,000	250,000	100,000
Issued shares	96,207	7,733	94,964	7,733	94,698	7,733
Outstanding shares	43,305	7,733	42,062	7,733	41,796	7,733
Treasury shares	52,902	—	52,902	—	52,902	—

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

DIVIDENDS

On September 9, 2026, the Board declared a quarterly cash dividend payment of $0.05 per share for both Class A and Class B common shares. The dividend will be paid on October 7, 2026 to shareholders of record at the close of business on September 24, 2026.

7. RECEIVABLES

Receivables, net, consisted of the following:


(in thousands)	August 1, 2026		January 31, 2026		August 2, 2025
Customer accounts receivables:
Receivables with payment guarantee by third-party provider	$	26,818	$	22,514	$	23,210
Receivables without payment guarantee	16,055		14,101		11,849

Other receivables	37,955		25,689		23,394
Total receivables	80,828		62,304		58,453
Allowance for credit losses	(431)		(588)		(846)
	$	80,397	$	61,716	$	57,607

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8. ACCRUED EXPENSES

Accrued expenses consisted of the following:


(in thousands)	August 1, 2026		January 31, 2026		August 2, 2025
Gift cards	$	23,208	$	27,730	$	24,168
Accrued compensation and related expenses	33,653		29,294		20,875
Accrued taxes	24,810		21,096		26,989
Customer returns and allowances	16,783		16,294		17,667
Reward programs deferred revenue	12,706		12,845		12,918

Other	81,053		71,171		74,874
	$	192,213	$	178,430	$	177,491

9. DEBT

Debt consisted of the following:


(in thousands)	August 1, 2026		January 31, 2026		August 2, 2025
ABL Revolver	$	309,723	$	319,063	$	397,914
Term Loan	116,250		119,625		123,000
Total debt	425,973		438,688		520,914
Less unamortized Term Loan debt issuance costs	(2,914)		(3,732)		(4,571)
Less current maturities of long-term debt	(6,750)		(6,750)		(6,750)
Long-term debt	$	416,309	$	428,206	$	509,593

ABL REVOLVER

On March 30, 2022, we replaced our previous senior secured asset-based revolving credit facility with our current ABL Revolver, which was subsequently amended on February 28, 2023, June 23, 2023, and February 27, 2026. The amended 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 matures on the earlier of the maturity date of the Term Loan (currently June 2028) or February 2031 and is secured by a first-priority lien on substantially all of our personal property assets, including credit card receivables and inventory. 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. As of August 1, 2026, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $437.0 million, with $280.2 million in outstanding borrowings and $10.6 million in letters of credit issued, resulting in $146.2 million available for borrowings.

Borrowings under the revolving line of credit and letters of credit issued under the ABL Revolver accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greatest of (i) the prime rate, (ii) the Fed Funds Rate (as defined in the credit facility agreement and subject to a floor of 0%) plus 0.5%, and (iii) Term SOFR (as defined in the credit facility agreement) plus 1.0%; or (B) a one-month, three-month, or six-month Term SOFR per annum (subject to a floor of 0%), plus, in each instance, an applicable rate to be determined based on average availability. The FILO Term Loan accrues interest, at our option, at a rate equal to: (A) a fluctuating interest rate per annum equal to the greatest of (i) the prime rate, (ii) the Fed Funds Rate plus 0.5%, or (iii) Term SOFR plus 1.0%, plus 2.5%; or (B) Term SOFR for the interest period in effect for such borrowing plus 3.5%. Commitment fees are based on the unused portion of the ABL Revolver available for borrowings. Interest expense related to the ABL Revolver includes interest on borrowings and letters of credit, with an interest rate of 6.0% as of August 1, 2026, commitment fees, and the amortization of debt issuance costs.

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TERM LOAN

On June 23, 2023, we entered into the Term Loan and have since borrowed the maximum aggregate amount of $135.0 million during 2023, consisting of $121.5 million in U.S. loans and $13.5 million in Canadian loans (denominated in USD). The Term Loan matures at the earlier of the maturity date of the ABL Revolver or June 2028 and is collateralized by a first-priority lien on substantially all of our real and intellectual property and by a second-priority lien on the assets used as collateral for the ABL revolver, primarily credit card receivables and inventory.

Borrowings under the Term Loan bear interest at a per annum rate equal to: (A) an adjusted three-month SOFR per annum (subject to a floor of 2.0%), plus 7.0%; or if (A) is not available, then (B) a base rate per annum equal to the greater of (i) 2.0%, (ii) the prime rate, (iii) the Fed Funds Rate plus 0.5%, and (iv) the Adjusted Term SOFR plus 1.0%; plus, in each instance, 6.0%, with an interest rate of 10.8% (effective interest rate of 12.2% when including the amortization of debt issuance costs) as of August 1, 2026.

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 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. 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 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. 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. As of August 1, 2026, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan.

10. COMMITMENTS AND CONTINGENCIES

LEGAL MATTERS

We are involved in various legal proceedings that are incidental to the conduct of our business. Although it is not possible to predict with certainty the eventual outcome of any litigation, we believe the amount of any potential liability with respect to current legal proceedings will not be material to our results of operations or financial condition. However, legal proceedings are inherently uncertain. As a result, the outcome of a particular matter or a combination of matters may be material to our results of operations for a particular period. We are also involved in certain legal matters in which we have agreed to settlement terms with the plaintiffs, which remain subject to court approval, and such matters are covered under our insurance policies and accordingly associated legal fees and settlement costs will be paid by the insurer. As a result, we have recorded accrued expenses for estimated settlement obligations covered by insurance with corresponding receivables on the condensed consolidated balance sheets of $25.3 million, $10.6 million and $12.4 million as of August 1, 2026, January 31, 2026 and August 2, 2025, respectively. As additional information becomes available, we will assess any potential liabilities related to pending litigation and revise the estimates as needed.

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IEEPA TARIFF RECOVERIES

On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (the "IEEPA"). During April 2026, the CBP launched the Consolidated Administration and Processing of Entries ("CAPE") process, which allows entities to submit refund claims for paid IEEPA tariffs. During the first quarter of 2026, we submitted claims seeking refunds of previously paid IEEPA tariffs through CAPE. We have elected to apply a gain contingency model to account for potential recoveries of previously paid IEEPA tariffs and any related interest received. Under this model, a gain contingency is not recognized in the consolidated financial statements until the gain is realized or realizable. Prior to the U.S. Supreme Court ruling, we entered into an agreement to sell the rights to potential claims to an unrelated financial investor (the "Investor"). Under the terms of this agreement, the Investor purchased $18.3 million of our refund claims for $2.2 million in cash. As the refunds for the sold claims are received, we are remitting such funds to the Investor and recording the remittance as a financing transaction.

During the second quarter of 2026, we received cash of $36.8 million from the CBP, which consisted of recoveries related to IEEPA tariff costs incurred of $35.5 million and related interest of $1.3 million, of which we remitted $18.3 million to the Investor. The recoveries were recognized as a reduction of cost of sales and the interest as non-operating income on the condensed consolidated statements of operations. The amount remitted to the Investor consisted of principal and interest payments of $2.2 million and $16.1 million, respectively. The interest payment was recognized as interest expense.

11. SEGMENT REPORTING

Our two reportable segments are the Retail segment and the Brand Portfolio segment. Beginning with the 2025 Form 10-K, we aggregated our previously reported U.S. Retail operating segment and Canada Retail operating segment into a single reportable segment, the Retail segment, due to the similar nature of their operations and economic characteristics. Prior period segment information has been recast to conform to the current reporting segment presentation. We have determined that the Chief Operating Decision Maker ("CODM") is our Chief Executive Officer.

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The following tables provide certain financial data by segment reconciled to the condensed consolidated financial statements (total assets by segment are not presented in the table below as the CODM does not evaluate, manage, or measure segment performance using total assets):


(in thousands)	Three months ended August 1, 2026						Three months ended August 2, 2025
	Retail		Brand Portfolio		Total		Retail		Brand Portfolio		Total
Net sales:
External customer sales	$	671,062	$	59,569	$	730,631	$	686,003	$	53,759	$	739,762
Intersegment sales	—		26,710		26,710		—		19,398		19,398
Segment net sales	671,062		86,279		757,341		686,003		73,157		759,160
Elimination of intersegment net sales					(26,710)						(19,398)
Consolidated net sales					$	730,631					$	739,762
Less segment expenses:
Cost of sales, exclusive of expenses shown below	(369,593)		(60,586)				(386,531)		(55,089)
Store selling expenses	(86,320)		—				(86,013)		—
Occupancy costs	(76,976)		(1,075)				(75,501)		(913)
Marketing	(36,349)		(5,180)				(31,639)		(3,959)
Distribution and fulfillment costs	(13,718)		(3,330)				(13,970)		(2,817)
Personnel overhead costs	(14,390)		(12,085)				(12,337)		(11,261)
Depreciation and amortization	(9,068)		(1,803)				(9,133)		(1,775)
Other expense items(1)	(2,621)		(4,021)				(2,170)		(3,967)
Plus income from equity investment	—		2,780				—		2,578
Segment operating profit (loss)	$	62,027	$	979	63,006		$	68,709	$	(4,046)	64,663
Net recognition of intersegment activity					2,657						4,953
Recoveries related to IEEPA tariff costs incurred(2)					35,536						—
Corporate shared services costs(3)					(46,476)						(42,007)
Impairment charges(3)					—						(1,466)
Consolidated operating profit					54,723						26,143
Interest expense on debt and tariff sale financing transaction, net of interest income					(25,385)						(11,783)
Non-operating income (expenses), net					1,244						(78)
Income before income taxes and loss from equity investment					$	30,582					$	14,282
Cash paid for segment property and equipment	$	9,882	$	219	$	10,101	$	8,029	$	399	$	8,428

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(in thousands)	Six months ended August 1, 2026						Six months ended August 2, 2025
	Retail		Brand Portfolio		Total		Retail		Brand Portfolio		Total
Net sales:
External customer sales	$	1,297,746	$	129,235	$	1,426,981	$	1,313,148	$	113,523	$	1,426,671
Intersegment sales	—		71,562		71,562		—		55,532		55,532
Segment net sales	1,297,746		200,797		1,498,543		1,313,148		169,055		1,482,203
Elimination of intersegment net sales					(71,562)						(55,532)
Consolidated net sales					$	1,426,981					$	1,426,671
Less segment expenses:
Cost of sales, exclusive of expenses shown below	(711,981)		(136,227)				(745,476)		(124,961)
Store selling expenses	(169,372)		—				(169,517)		—
Occupancy costs	(152,461)		(2,205)				(149,213)		(2,109)
Marketing	(72,729)		(9,330)				(66,385)		(7,757)
Distribution and fulfillment costs	(26,945)		(6,757)				(26,271)		(5,796)
Personnel overhead costs	(28,034)		(23,350)				(25,699)		(23,628)
Depreciation and amortization	(18,345)		(3,609)				(18,153)		(3,535)
Other expense items(1)	(4,574)		(8,458)				(3,752)		(8,374)
Plus income from equity investment	—		5,541				—		5,005
Segment operating profit (loss)	$	113,305	$	16,402	129,707		$	108,682	$	(2,100)	106,582
Net recognition (elimination) of intersegment activity					(5,198)						5,208
Recoveries related to IEEPA tariff costs incurred(2)					35,536						—
Corporate shared services costs(3)					(86,452)						(89,135)
Impairment charges(3)					—						(4,419)
Consolidated operating profit					73,593						18,236
Interest expense on debt and tariff sale financing transaction, net of interest income					(35,510)						(23,754)
Non-operating income (expenses), net					1,239						(70)
Income (loss) before income taxes and loss from equity investment					$	39,322					$	(5,588)
Cash paid for segment property and equipment	$	18,379	$	755	$	19,134	$	13,904	$	1,043	$	14,947

(1) Other expense items include professional services fees, payment service fees, supplies, travel, and other administrative segment expenses.

(2) Recoveries related to IEEPA tariff costs incurred were recognized as a reduction of cost of sales on the condensed consolidated statements of operations and were excluded from segment operating profit (loss) as such amounts were not included in the segment operating results provided to the CODM.

(3) Corporate shared services costs and impairment charges are not attributed to any of our segments. Corporate shared services costs primarily relate to corporate administration, IT, finance, human resources, legal, real estate, and other shared services performing corporate-level activities. We also do not allocate amounts related to restructuring and integration charges (including severance).

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12. IMMATERIAL RESTATEMENTS OF PRIOR PERIOD FINANCIAL STATEMENTS

As discussed in Note 1, Description of Business and Significant Accounting Policies - Immaterial Restatements of Prior Periods, during the first quarter of 2026, we identified errors related to prior period financial statements. While the prior period amounts have been restated, as detailed below for comparability, the impact of the corrections in periods prior to the first quarter of 2026 are not material to the consolidated financial statements in any of the impacted periods.

The following table presents the prior period impact to line items shown on the condensed consolidated statements of operations and comprehensive income (loss):


(in thousands, except per share amounts)	Three months ended August 2, 2025						Six months ended August 2, 2025
	Previously Reported		Adjustments		As Adjusted		Previously Reported		Adjustments		As Adjusted
Cost of sales	$	(416,829)	$	(440)	$	(417,269)	$	(808,612)	$	(1,085)	$	(809,697)
Gross profit	$	322,933	$	(440)	$	322,493	$	618,059	$	(1,085)	$	616,974
Operating profit	$	26,583	$	(440)	$	26,143	$	19,321	$	(1,085)	$	18,236
Interest expense, net	$	(11,667)	$	(116)	$	(11,783)	$	(23,535)	$	(219)	$	(23,754)
Income (loss) before income taxes	$	14,838	$	(556)	$	14,282	$	(4,284)	$	(1,304)	$	(5,588)
Income tax provision	$	(3,557)	$	149	$	(3,408)	$	(1,571)	$	352	$	(1,219)
Net income (loss)	$	11,281	$	(407)	$	10,874	$	(5,855)	$	(952)	$	(6,807)
Net income attributable to redeemable noncontrolling interest	$	(454)	$	115	$	(339)	$	(742)	$	268	$	(474)
Net income (loss) attributable to Designer Brands Inc.	$	10,827	$	(292)	$	10,535	$	(6,597)	$	(684)	$	(7,281)
Basic earnings (loss) per share	$	0.22	$	(0.01)	$	0.21	$	(0.14)	$	(0.01)	$	(0.15)
Diluted earnings (loss) per share	$	0.22	$	(0.01)	$	0.21	$	(0.14)	$	(0.01)	$	(0.15)
Comprehensive income (loss) attributable to Designer Brands Inc.	$	10,836	$	(292)	$	10,544	$	(3,090)	$	(684)	$	(3,774)

The following table presents the prior period impacts to line items shown on the condensed consolidated balance sheets and the related components of shareholders' equity (beginning retained earnings for 2025 decreased $3.1 million from $77.9 million to $74.8 million):


(in thousands)	January 31, 2026						August 2, 2025
	Previously Reported		Adjustments		As Adjusted		Previously Reported		Adjustments		As Adjusted
Receivables, net	$	59,444	$	2,272	$	61,716	$	55,675	$	1,932	$	57,607
Total current assets	$	708,148	$	2,272	$	710,420	$	751,925	$	1,932	$	753,857
Total assets	$	1,947,633	$	2,272	$	1,949,905	$	2,061,731	$	1,932	$	2,063,663
Accrued expenses	$	170,014	$	8,416	$	178,430	$	170,333	$	7,158	$	177,491
Total current liabilities	$	588,474	$	8,416	$	596,890	$	573,495	$	7,158	$	580,653
Total liabilities	$	1,659,873	$	8,416	$	1,668,289	$	1,777,720	$	7,158	$	1,784,878
Redeemable noncontrolling interest	$	5,274	$	(3,658)	$	1,616	$	3,214	$	(1,476)	$	1,738
Retained earnings	$	59,869	$	(2,486)	$	57,383	$	66,493	$	(3,750)	$	62,743
Total shareholders' equity	$	282,486	$	(2,486)	$	280,000	$	280,797	$	(3,750)	$	277,047
Total liabilities, redeemable noncontrolling interest, and shareholders' equity	$	1,947,633	$	2,272	$	1,949,905	$	2,061,731	$	1,932	$	2,063,663

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The following table presents the prior period impacts to line items shown on the condensed consolidated statements of cash flows:


(in thousands)	Six months ended August 2, 2025
	Previously Reported		Adjustments		As Adjusted
Cash flows from operating activities:
Net loss	$	(5,855)	$	(952)	$	(6,807)
Change in operating assets and liabilities:
Receivables	$	(5,223)	$	(352)	$	(5,575)
Accrued expenses	$	15,005	$	1,304	$	16,309
Net cash provided by operating activities	$	1,077	$	—	$	1,077

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

EXECUTIVE OVERVIEW AND TRENDS IN OUR BUSINESS

As described in Note 1, Description 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 12, 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 second quarter of 2026, net sales decreased 1.2% with a decrease in total comparable sales of 2.4% when compared to the same period last year. Gross profit as a percentage of net sales for the second quarter of 2026 was 50.0%, which 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 640 basis points when compared to the same period last year.

EFFECTS OF MACROECONOMIC CONDITIONS AND TARIFFS

Macroeconomic conditions influenced by uncertain tariff policies, inflation, elevated fuel prices, stock market indices, interest rates and employment levels, 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 2026 and we may continue to experience the impact 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 and expense reductions. Although we have made progress in mitigating the impacts of certain macroeconomic conditions, our actions are not necessarily complete, and they should be viewed as part of 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 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 could have a material adverse effect on our business, results of operations, and liquidity.

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. During the first quarter of 2026, we submitted claims seeking refunds of previously paid IEEPA tariffs through CAPE. Prior to the U.S. Supreme Court ruling, we entered into an agreement to sell the rights to potential claims to an Investor. As the refunds for the sold claims are received, we are remitting such funds to the Investor and recording the remittance as a financing transaction.

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 remained in effect for 150 days (the maximum under the statute). Effective upon the expiration of these tariffs in July 2026, new tariff rates generally ranging from 10% to 12.5% on most imports from certain countries were imposed pursuant to Section 301of the Trade Act of 1974. Additional tariffs under Section 338 of the Tariff Act of 1930 were also recently imposed. Uncertainty with respect to tariffs remains ongoing, and 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 actions, 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

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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.

Future impacts from macroeconomic conditions and tariffs are unknown at this time and could have a material adverse effect on our business, results of operations, and liquidity. Unfavorable developments may result in future write-downs or adjustments to inventories, receivables, the valuation allowance on deferred tax assets, and may also negatively impact the fair value of our reporting units, indefinite-lived tradenames, and long-lived assets, which could result in us recording impairment charges for amounts below their carrying value.

FINANCIAL SUMMARY AND OTHER KEY METRICS

For the three months ended August 1, 2026:

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

•Gross profit as a percentage of net sales was 50.0% compared to 43.6% for the same period last year.

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

Comparable Sales Performance Metric- The following table presents the percent change in comparable sales for each segment and in total:


	Three months ended
	August 1, 2026		August 2, 2025
Change in comparable sales:
Retail segment	(2.6)	%	(4.5)	%
Brand Portfolio segment - direct-to-consumer channel	7.1	%	(29.2)	%
Total	(2.4)	%	(5.0)	%

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 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 net sales from 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 August 1, 2026 and August 2, 2025, we had the following number of stores:


	August 1, 2026	August 2, 2025
DSW	523	519
The Shoe Co.	118	121
Rubino	27	28
Total number of stores	668	668

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RESULTS OF OPERATIONS

SECOND QUARTER OF 2026 COMPARED WITH SECOND QUARTER OF 2025


(amounts in thousands, except per share amounts)	Three months ended
	August 1, 2026				August 2, 2025				Change
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Net sales	$	730,631	100.0	%	$	739,762	100.0	%	$	(9,131)	(1.2)	%
Cost of sales	(365,276)		(50.0)		(417,269)		(56.4)		51,993		(12.5)	%
Gross profit	365,355		50.0		322,493		43.6		42,862		13.3	%
Operating expenses	(313,412)		(42.9)		(297,462)		(40.2)		(15,950)		5.4	%
Income from equity investment	2,780		0.4		2,578		0.3		202		7.8	%
Impairment charges	—		—		(1,466)		(0.2)		1,466		NM
Operating profit	54,723		7.5		26,143		3.5		28,580		109.3	%
Interest expense on debt and tariff sale financing transaction, net of interest income	(25,385)		(3.5)		(11,783)		(1.6)		(13,602)		115.4	%

Non-operating income (expenses), net	1,244		0.2		(78)		—		1,322		NM
Income before income taxes and loss from equity investment	30,582		4.2		14,282		1.9		16,300		114.1	%
Income tax provision	(10,031)		(1.4)		(3,408)		(0.4)		(6,623)		194.3	%
Loss from equity investment	(134)		—		—		—		(134)		NM
Net income	20,417		2.8		10,874		1.5		9,543		87.8	%
Net income attributable to redeemable noncontrolling interest	(2,860)		(0.4)		(339)		(0.1)		(2,521)		743.7	%
Net income attributable to Designer Brands Inc.	$	17,557	2.4	%	$	10,535	1.4	%	$	7,022	66.7	%
Earnings per share attributable to Designer Brands Inc.:
Basic earnings per share	$	0.34			$	0.21			$	0.13	61.9	%
Diluted earnings per share	$	0.31			$	0.21			$	0.10	47.6	%
Weighted average shares used in per share calculations:
Basic shares	50,894				49,109				1,785		3.6	%
Diluted shares	55,974				49,734				6,240		12.5	%

NM - Not meaningful

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NET SALES

The following table summarizes net sales by segment:


	Three months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Comparable Sales
Segment net sales:
Retail	$	671,062	88.6	%	$	686,003	90.4	%	$	(14,941)	(2.2)	%	(2.6)	%
Brand Portfolio	86,279		11.4		73,157		9.6		13,122		17.9	%	7.1	%
Total segment net sales	757,341		100.0	%	759,160		100.0	%	(1,819)		(0.2)	%	(2.4)	%
Elimination of intersegment net sales	(26,710)				(19,398)				(7,312)		37.7	%
Consolidated net sales	$	730,631			$	739,762			$	(9,131)	(1.2)	%

For the three months ended August 1, 2026, net sales decreased in the Retail segment over the same period last year primarily driven by a decline in comparable sales of approximately $17.0 million, which was partially offset by an increase in non-product sales activity, including service revenue and shipping revenue. The decrease in comparable sales for the Retail segment was largely driven by lower comparable transactions of approximately 8%, primarily due to reduced conversion and 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 and the expansion of retail partner locations for Topo along with new Topo product introductions.

GROSS PROFIT

The following table summarizes gross profit by segment:


	Three months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment gross profit:
Retail	$	301,469	44.9	%	$	299,472	43.7	%	$	1,997	0.7	%	120
Brand Portfolio	25,693		29.8	%	18,068		24.7	%	7,625		42.2	%	510
Total segment gross profit	327,162		43.2	%	317,540		41.8	%	9,622		3.0	%	140
Corporate/eliminations:
Net recognition of intersegment gross profit	2,657				4,953				(2,296)
Recoveries related to IEEPA tariff costs incurred	35,536				—				35,536
Consolidated gross profit	$	365,355	50.0	%	$	322,493	43.6	%	$	42,862	13.3	%	640

The increase in gross profit for the Retail segment over the same period last year was primarily due to 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 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.

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The net recognition of intersegment gross profit consisted of the following:


	Three months ended
(in thousands)	August 1, 2026		August 2, 2025
Intersegment recognition and elimination activity:
Elimination of net sales recognized by Brand Portfolio segment	$	(26,710)	$	(19,398)
Cost of sales:
Elimination of cost of sales recognized by Brand Portfolio segment	18,716		13,785
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period	10,651		10,566
	$	2,657	$	4,953

OPERATING EXPENSES

The following table summarizes operating expenses by segment:


	Three months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment operating expenses:
Retail	$	239,442	35.7	%	$	230,763	33.6	%	$	8,679	3.8	%	210
Brand Portfolio	27,494		31.9	%	24,692		33.8	%	2,802		11.3	%	(190)
Total segment operating expenses	266,936		35.2	%	255,455		33.6	%	11,481		4.5	%	160
Corporate	46,476				42,007				4,469		10.6	%
Consolidated operating expenses	$	313,412	42.9	%	$	297,462	40.2	%	$	15,950	5.4	%	270

For the three months ended August 1, 2026, operating expenses increased in the Retail segment over the same period last year due to an increase in marketing expenses of $4.7 million, an increase in personnel overhead costs of $2.1 million driven by higher incentive compensation as we did not recognize incentive compensation during 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 driven by the impact of lease renewals. Operating expenses as a percentage of segment net sales increased in the Retail segment due to higher expenses on lower net sales. Operating expenses increased in the Brand Portfolio segment due to an increase in marketing expenses of $1.2 million with the remaining increase primarily due to an increase in personnel overhead costs driven by higher incentive compensation as we did not recognize incentive compensation during the same period last year based on the performance of the business relative to our targets. Operating expenses as a percentage of segment net sales decreased in the Brand Portfolio segment as the increase in operating expenses leveraged on higher net sales. Operating expenses increased for corporate shared services primarily due to an increase in personnel overhead costs driven by higher incentive compensation as we did not recognize incentive compensation during the same period last year based on the performance of the business relative to our targets.

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OPERATING PROFIT

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


	Three months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment operating profit (loss):
Retail	$	62,027	9.2	%	$	68,709	10.0	%	$	(6,682)	(9.7)	%	(80)
Brand Portfolio	979		1.1	%	(4,046)		(5.5)	%	5,025		NM		NM
Total segment operating profit	63,006		8.3	%	64,663		8.5	%	(1,657)		(2.6)	%	(20)
Corporate/eliminations	(8,283)				(38,520)				30,237		(78.5)	%
Consolidated operating profit	$	54,723	7.5	%	$	26,143	3.5	%	$	28,580	109.3	%	400

NM - Not meaningful

For the three months ended August 1, 2026, operating profit for the Retail segment decreased over the same period last year due to higher operating expenses partially offset by higher gross profit. The Brand Portfolio segment had an operating profit for the second quarter of 2026 due to gross 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 the benefit of tariff recoveries of $35.5 million partially offset by higher operating expenses when compared to the same period last year. These factors led to an increase in consolidated operating profit for the three months ended August 1, 2026 as compared to the same period last year.

INTEREST EXPENSE ON DEBT AND TARIFF SALE FINANCING TRANSACTION, NET OF INTEREST INCOME

Interest expense on debt and financing transaction, net of interest income, includes the following:


	Three months ended
(in thousands)	August 1, 2026		August 2, 2025
Interest expense on debt	$	9,531	$	11,991
Interest expense on tariff sale financing transaction	16,097		—
Interest income	(243)		(208)
Interest expense on debt and tariff sale financing transaction, net of interest income	$	25,385	$	11,783

Interest expense on debt decreased due to the decrease in outstanding borrowings. The interest expense on tariff sale financing transaction was a result of interest expense related to the sale of tariff refund claims to the Investor.

INCOME TAXES

For the three months ended August 1, 2026 and August 2, 2025, our effective tax rate was 32.8% and 23.9%, respectively. The increase in the tax provision amount was primarily driven by the increase in pre-tax income over the same period last year and the higher effective tax rate was due to the impact of higher non-deductible compensation relative to the pre-tax income base.

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SIX MONTHS OF 2026 COMPARED WITH SIX MONTHS OF 2025


(amounts in thousands, except per share amounts)	Six months ended
	August 1, 2026				August 2, 2025				Change
	Amount		% of Net Sales		Amount		% of Net Sales		Amount		%
Net sales	$	1,426,981	100.0	%	$	1,426,671	100.0	%	$	310	—	%
Cost of sales	(746,308)		(52.3)		(809,697)		(56.8)		63,389		(7.8)	%
Gross profit	680,673		47.7		616,974		43.2		63,699		10.3	%
Operating expenses	(612,621)		(42.9)		(599,324)		(42.0)		(13,297)		2.2	%
Income from equity investment	5,541		0.4		5,005		0.4		536		10.7	%
Impairment charges	—		—		(4,419)		(0.3)		4,419		NM
Operating profit	73,593		5.2		18,236		1.3		55,357		303.6	%
Interest expense on debt and tariff sale financing transaction, net of interest income	(35,510)		(2.5)		(23,754)		(1.7)		(11,756)		49.5	%

Non-operating income (expenses), net	1,239		0.1		(70)		—		1,309		NM
Income (loss) before income taxes and loss from equity investment	39,322		2.8		(5,588)		(0.4)		44,910		NM
Income tax provision	(14,836)		(1.1)		(1,219)		(0.1)		(13,617)		1,117.1	%
Loss from equity investment	(615)		—		—		—		(615)		NM
Net income (loss)	23,871		1.7		(6,807)		(0.5)		30,678		NM
Net income attributable to redeemable noncontrolling interest	(5,155)		(0.4)		(474)		—		(4,681)		987.6	%
Net income (loss) attributable to Designer Brands Inc.	$	18,716	1.3	%	$	(7,281)	(0.5)	%	$	25,997	NM
Earnings (loss) per share attributable to Designer Brands Inc.:
Basic earnings (loss) per share	$	0.37			$	(0.15)			$	0.52	NM
Diluted earnings (loss) per share	$	0.34			$	(0.15)			$	0.49	NM
Weighted average shares used in per share calculations:
Basic shares	50,567				48,678				1,889		3.9	%
Diluted shares	55,757				48,678				7,079		14.5	%

NM - Not meaningful

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NET SALES

The following table summarizes net sales by segment:


	Six months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Comparable Sales
Segment net sales:
Retail	$	1,297,746	86.6	%	$	1,313,148	88.6	%	$	(15,402)	(1.2)	%	(1.9)	%
Brand Portfolio	200,797		13.4		169,055		11.4		31,742		18.8	%	5.0	%
Total segment net sales	1,498,543		100.0	%	1,482,203		100.0	%	16,340		1.1	%	(1.8)	%
Elimination of intersegment net sales	(71,562)				(55,532)				(16,030)		28.9	%
Consolidated net sales	$	1,426,981			$	1,426,671			$	310	—	%

For the six months ended August 1, 2026, net sales decreased in the Retail segment over the same period last year primarily driven by a decline in comparable sales of approximately $24.0 million, which was partially offset by an increase in non-product sales activity, including service revenue and shipping revenue. The decrease in comparable sales for the Retail segment was largely driven by lower comparable transactions of approximately 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 and the expansion of retail partner locations for Topo along with new Topo product introductions.

GROSS PROFIT

The following table summarizes gross profit by segment:


	Six months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment gross profit:
Retail	$	585,765	45.1	%	$	567,672	43.2	%	$	18,093	3.2	%	190
Brand Portfolio	64,570		32.2	%	44,094		26.1	%	20,476		46.4	%	610
Total segment gross profit	650,335		43.4	%	611,766		41.3	%	38,569		6.3	%	210
Corporate/eliminations:
Net recognition (elimination) of intersegment gross profit	(5,198)				5,208				(10,406)
Recoveries related to IEEPA tariff costs incurred	35,536				—				35,536
Consolidated gross profit	$	680,673	47.7	%	$	616,974	43.2	%	$	63,699	10.3	%	450

The increase in gross profit for the Retail segment over the same period last year was primarily driven by the 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 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 250 basis point improvement over the same period last year in consolidated gross profit as a percentage of consolidated net sales.

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The net recognition (elimination) of intersegment gross profit consisted of the following:


	Six months ended
(in thousands)	August 1, 2026		August 2, 2025
Intersegment recognition and elimination activity:
Elimination of net sales recognized by Brand Portfolio segment	$	(71,562)	$	(55,532)
Cost of sales:
Elimination of cost of sales recognized by Brand Portfolio segment	46,719		39,599
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period	19,645		21,141
	$	(5,198)	$	5,208

OPERATING EXPENSES

The following table summarizes operating expenses by segment:


	Six months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment operating expenses:
Retail	$	472,460	36.4	%	$	458,990	35.0	%	$	13,470	2.9	%	140
Brand Portfolio	53,709		26.7	%	51,199		30.3	%	2,510		4.9	%	(360)
Total segment operating expenses	526,169		35.1	%	510,189		34.4	%	15,980		3.1	%	70
Corporate	86,452				89,135				(2,683)		(3.0)	%
Consolidated operating expenses	$	612,621	42.9	%	$	599,324	42.0	%	$	13,297	2.2	%	90

For the six months ended August 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 driven by the impact of lease renewals. Operating expenses as a percentage of net sales increased in the Retail segment due to higher expenses on lower 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 increase in operating expenses leveraged on higher net sales. Operating expenses decreased for corporate shared services primarily due to restructuring actions taken in 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.

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OPERATING PROFIT

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


	Six months ended
(amounts in thousands)	August 1, 2026				August 2, 2025				Change
	Amount		% of Segment Net Sales		Amount		% of Segment Net Sales		Amount		%		Basis Points
Segment operating profit (loss):
Retail	$	113,305	8.7	%	$	108,682	8.3	%	$	4,623	4.3	%	40
Brand Portfolio	16,402		8.2	%	(2,100)		(1.2)	%	18,502		NM		NM
Total segment operating profit	129,707		8.7	%	106,582		7.2	%	23,125		21.7	%	150
Corporate/eliminations	(56,114)				(88,346)				32,232		(36.5)	%
Consolidated operating profit	$	73,593	5.2	%	$	18,236	1.3	%	$	55,357	303.6	%	390

NM - Not meaningful

For the six months ended August 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. The Brand Portfolio segment had an operating profit for the six months ended August 1, 2026 due to gross 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 the benefit of tariff recoveries of $35.5 million, partially offset by unfavorable intersegment activity. These factors led to an increase in consolidated operating profit for the six months ended August 1, 2026 as compared to the same period last year.

INTEREST EXPENSE ON DEBT AND TARIFF SALE FINANCING TRANSACTION, NET OF INTEREST INCOME

Interest expense on debt and financing transaction, net of interest income, includes the following:


	Six months ended
(in thousands)	August 1, 2026		August 2, 2025
Interest expense on debt	$	19,853	$	24,180
Interest expense on tariff sale financing transaction	16,097		—
Interest income	(440)		(426)
Interest expense on debt and tariff sale financing transaction, net of interest income	$	35,510	$	23,754

INCOME TAXES

For the six months ended August 1, 2026 and August 2, 2025, our effective tax rate was 37.7% and negative 21.8%, respectively. The effective tax rate for the six months ended August 1, 2026 differed from the U.S. federal statutory rate primarily due to the tax impact of non-deductible compensation and state income taxes. The effective tax rate for the six months ended August 2, 2025 differed from the statutory rate primarily due to the impact of permanent non-deductible compensation and being in a pre-tax loss position, which resulted in a negative effective tax rate.

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LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

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. 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 current macroeconomic conditions on our results of operations. We believe that cash generated from our operations, together with our current levels of cash, as well as the availability under our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures, and meet our debt service obligations over the next 12 months and beyond. As discussed above in the "Executive Overview and Trends in Our Business" section under the heading "Effects of Macroeconomic Conditions and Tariffs," current macroeconomic conditions have had a negative impact on our operating results and liquidity and we may continue to experience the impact of decreased consumer demand for our products. Future impacts are unknown at this time and could have a material adverse effect on our business, operations, results of operations, and liquidity.

The following table presents the key categories of our condensed consolidated statements of cash flows:


	Six months ended
(in thousands)	August 1, 2026		August 2, 2025		Change
Net cash provided by operating activities	$	48,236	$	1,077	$	47,159
Net cash used in investing activities	(22,251)		(18,669)		(3,582)
Net cash provided by (used in) financing activities	(23,947)		16,482		(40,429)
Effect of exchange rate changes on cash balances	(1,318)		1,295		(2,613)
Net increase in cash and cash equivalents	$	720	$	185	$	535

OPERATING CASH FLOWS

The increase in net cash provided by operating activities was positively impacted by the net income recognized during the six months ended August 1, 2026, which included $36.8 million received from the CBP for IEEPA tariff recoveries less $16.1 million of interest expense remitted to the Investor, as compared to the net loss recognized during the same period last year and the favorable impact of adjusting for noncash items for both years. Excluding the net favorable impact of $20.7 million to operating cash from the IEEPA tariff recoveries net of the related financing with the Investor, improved gross profit performance exceeded higher operating expenses that resulted in additional favorability to net cash provided by operating activities. Net cash provided by operating activities also increased due to improvements in working capital primarily due to shifts in timing of payments on payables partially offset by shifts in timing of inventory receipts and collection of receivables.

INVESTING CASH FLOWS

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

FINANCING CASH FLOWS

For the six months ended August 1, 2026, net cash used in financing activities was primarily due to net payments on our ABL Revolver and 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.

DEBT

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

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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 August 1, 2026, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $437.0 million, with $280.2 million in outstanding borrowings and $10.6 million in letters of credit issued, resulting in $146.2 million available for borrowings.

Term Loan- On June 23, 2023, we entered into the Term Loan and have since borrowed the maximum aggregate amount of $135.0 million. The Term Loan matures at the earlier of the maturity date of the ABL Revolver or June 2028.

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 August 1, 2026, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan.

Refer to Note 9, Debt, of the condensed consolidated financial statements of this Form 10-Q for further information about our debt arrangements.

PLANS FOR CAPITALIZED COSTS

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, $26.2 million of which was spent during the six months ended August 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.

RECENT ACCOUNTING PRONOUNCEMENTS

The information related to recent accounting pronouncements as set forth in Note 1, Description of Business and Significant Accounting Policies - Recently Issued Accounting Pronouncements, of the condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting period. We base these estimates and judgments on factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and valuation techniques. We constantly re-evaluate these significant factors and make adjustments where facts and circumstances dictate. While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. As the determination of these estimates requires the exercise of judgment, actual results may differ from those estimates, and such differences may be material to our condensed consolidated financial statements. There have been no material changes to the application of critical accounting policies and estimates disclosed in our 2025 Form 10-K.

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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have market risk exposure related to interest rates and foreign currency exchange rates. There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our 2025 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 10, Commitments and Contingencies, of the condensed consolidated financial statements of this Form 10-Q is incorporated herein by reference.


ITEM 1A. RISK FACTORS

As of the date of this filing, there have been no material changes to the risk factors as set forth in Part I, Item 1A., Risk Factors, in our 2025 Form 10-K.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

SHARE REPURCHASE PROGRAM

On August 17, 2017, the Board authorized the repurchase of an additional $500.0 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. As of August 1, 2026, $19.7 million of Class A common shares remained available for repurchase under the program. The share repurchase program may be suspended, modified, or discontinued at any time, and we have no obligation to repurchase any amount of our Class A common shares under the program. Under this share repurchase program, shares will be repurchased in the open market at times and in amounts considered appropriate based on price and market conditions. During the six months ended August 1, 2026, no Class A common shares were repurchased.

DIVIDENDS

The payment of any future dividends is at the discretion of our Board and is based on our future earnings, cash flow, financial condition, capital requirements, changes in taxation laws, general economic condition and any other relevant factors. On September 9, 2026, the Board declared a quarterly cash dividend payment of $0.05 per share for both Class A and Class B common shares. The dividend will be paid on October 7, 2026 to shareholders of record at the close of business on September 24, 2026.

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RESTRICTIONS

The ABL Revolver and the Term Loan contain customary covenants restricting our activities, including limitations on the ability to pay dividends or repurchase stock. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability.


ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable.


ITEM 5. OTHER INFORMATION

RULE 10B5-1 TRADING PLANS

During the three months ended August 1, 2026, none of our directors or executive officers adopted, modified, or terminated any contract, instruction, or written plan for the purchase or sale of the Company’s securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) of the Exchange Act or any "non-Rule 10b5-1 trading arrangement" (as defined in Item 408(c) of Regulation S-K).

AMENDED AND RESTATED CODE OF REGULATIONS

On June 17, 2026, at the Company's Annual Meeting of Shareholders (the "Annual Meeting"), the Company's shareholders approved certain amendments to the Company's Amended and Restated Code of Regulations (as further amended and restated, the "Code"), which were effective immediately following the Annual Meeting. Among other things, the amendments to the Code enhanced the procedural mechanics and disclosure requirements relating to advance notice of director nominations made by shareholders. More specifically, the new requirements include the following, among other provisions: (i) requiring greater information regarding the proposing shareholder (or associated persons), including with respect to their share ownership, potential conflicts of interests and/or legal proceedings; (ii) requiring the proposing shareholder to comply with the universal proxy rules and to provide reasonable evidence thereof prior to the shareholder meeting; (iii) adopting changes to augment the information provided about potential director nominees, including such nominee's share ownership, details as to potential conflicts of interests, including whether the proposed nominee has served as an officer or director of any competitor of the Company, requiring the nominee to complete a questionnaire and provide certain other information to the Company, and certification that the information provided by the nominee is accurate; and (iv) requiring updated notices so that any nomination is accurate as of the applicable shareholder meeting record date and as of 10 business days prior to the applicable shareholder meeting date. The amendments also require proposing shareholders presenting a director nominee to provide written notice of such proposal or nominee to the Secretary of the Company no later than the close of business on the 90th day and no earlier than the close of business on the 120th day prior to the one-year anniversary of the preceding year's annual meeting of shareholders.

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ITEM 6. EXHIBITS


		Incorporated by Reference
Exhibit Number	Exhibit Description	Form	File No.	Date of Filing	Exhibit Number
3.1	Second Amended and Restated Code of Regulations (effective as of June 17, 2026).	8-K	001-32545	6/18/2026	3.1
10.1#*	Mutual Separation Agreement, dated May 21, 2026, between Mary Turner and Designer Brands Inc.	-	-	-	-
31.1*	Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer.	-	-	-	-
31.2*	Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Officer.	-	-	-	-
32.1**	Section 1350 Certification - Principal Executive Officer.	-	-	-	-
32.2**	Section 1350 Certification - Principal Financial Officer.	-	-	-	-
101*	The following materials from the Designer Brands Inc. Quarterly Report on Form 10-Q for the quarter ended August 1, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income (Loss); (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Shareholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to the Condensed Consolidated Financial Statements.	-	-	-	-
104*	Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.	-	-	-	-

* Filed herewith

** Furnished herewith

# Management contract or compensatory plan or arrangement

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SIGNATURE

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

DESIGNER BRANDS INC.

Date:

September 10, 2026

By:

/s/ Sheamus Toal

Sheamus Toal

Executive Vice President and Chief Financial Officer

(Principal Financial Officer and duly authorized officer)

Designer Brands - 10-Q quarterly report FY2026 Q2

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DISCLAIMER

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PART I	FINANCIAL INFORMATION
Item 1	Financial Statements	1
	Condensed Consolidated Statements of Operations	1
	Condensed Consolidated Statements of Comprehensive Income (Loss)	2
	Condensed Consolidated Balance Sheets	3
	Condensed Consolidated Statements of Shareholders' Equity	4
	Condensed Consolidated Statements of Cash Flows	5
	Notes to the Condensed Consolidated Financial Statements	6
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	19
Item 3	Quantitative and Qualitative Disclosures About Market Risk	31
Item 4	Controls and Procedures	31
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	31
Item 1A	Risk Factors	31
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3	Defaults Upon Senior Securities	32
Item 4	Mine Safety Disclosures	32
Item 5	Other Information	32
Item 6	Exhibits	33
	SIGNATURE	34


Note 1	Description of Business and Significant Accounting Policies	7

Note 2	Revenue	9
Note 3	Related Party Transactions	10
Note 4	Earnings (Loss) Per Share	10
Note 5	Stock-Based Compensation	10
Note 6	Shareholders' Equity	11
Note 7	Receivables	11


Note 8	Accrued Expenses	12
Note 9	Debt	12
Note 10	Commitments and Contingencies	13
Note 11	Segment Reporting	14
Note 12	Immaterial Restatements of Prior Period Financial Statements	17