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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 October 29, 2022
or
☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period fromto
Commission file number 1-32545
dsw-20221029_g1.jpg
DESIGNER BRANDS INC.
(Exact name of registrant as specified in its charter)
Ohio31-0746639
(State or other jurisdiction of incorporation or organization)(I.R.S. Employer Identification No.)
810 DSW Drive,Columbus,Ohio43219
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (614) 237-7100
Not Applicable
(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading SymbolName of each exchange on which registered
Class A Common Shares, without par valueDBINew 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 November 23, 2022: 55,899,696 Class A common shares and 7,732,743 Class B common shares.


    
    
    

DESIGNER BRANDS INC.
TABLE OF CONTENTS

PART I
Item 1
Item 2
Item 3
Item 4
PART II
Item 1
Item 1A
Item 2
Item 3
Item 4
Item 5
Item 6

All references to "we," "us," "our," "Designer Brands," "Designer Brands Inc.," or the "Company" in this Quarterly Report on Form 10-Q for the quarter ended October 29, 2022 (this "Form 10-Q") mean Designer Brands Inc. and its subsidiaries.

We have included website addresses throughout this report as inactive textual references only. The information contained on the websites referenced herein is not incorporated into this Form 10-Q.


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 these 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 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 other factors discussed elsewhere in this report, under Part I, Item 1A. Risk Factors in our Annual Report on Form 10-K for the fiscal year ended January 29, 2022 (the "2021 Form 10-K"), filed with the Securities and Exchange Commission (the "SEC") on March 21, 2022, 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:
•risks and uncertainties related to the ongoing coronavirus ("COVID-19") pandemic, any future COVID-19 resurgence, and any other adverse public health developments;
•risks that recent inflationary pressures, including higher freight costs, could have on our results of operations and customer demand based on pricing actions and operating measures taken to mitigate the impact of inflation;
•uncertain general economic conditions, including inflation and supply chain pressures, domestic and global political and social conditions and the potential impact of geopolitical turmoil or conflict, and the related impacts to consumer discretionary spending;
•our ability to execute on our long-term strategic plans;
•our ability to anticipate and respond to fashion trends, consumer preferences and changing customer expectations;
•our ability to maintain strong relationships with our vendors, manufacturers, licensors, and retailer customers;
•risks related to losses or disruptions associated with our distribution systems, including our distribution centers and fulfillment center and stores, whether as a result of the COVID-19 pandemic, reliance on third-party providers, or otherwise;
•our reliance on our loyalty programs and marketing to drive traffic, sales, and customer loyalty;
•risks related to cyber security threats and privacy or data security breaches or the potential loss or disruption of our information systems;
•our ability to protect our reputation and to maintain the brands we license;
•our competitiveness with respect to style, price, brand availability, and customer service;
•risks related to our international operations, including international trade, our reliance on foreign sources for merchandise, exposure to political, economic, operational, compliance and other risks, and fluctuations in foreign currency exchange rates;
•our ability to comply with privacy 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.

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.


Table of Contents     

PART I    

ITEM 1. FINANCIAL STATEMENTS

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(unaudited and in thousands, except per share amounts)Three months endedNine months ended
October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Net sales$865,020 $853,467 $2,554,882 $2,373,957 
Cost of sales(579,201)(539,850)(1,697,648)(1,559,548)
Gross profit285,819 313,617 857,234 814,409 
Operating expenses(222,232)(211,909)(674,348)(637,108)
Income from equity investments2,290 2,600 6,670 6,598 
Impairment charges(1,349)— (4,237)(1,174)
Operating profit64,528 104,308 185,319 182,725 
Interest expense, net(4,826)(7,706)(10,530)(24,592)
Loss on extinguishment of debt and write-off of debt issuance costs— — (12,862)— 
Non-operating income (expenses), net(152)172 (109)734 
Income before income taxes59,550 96,774 161,818 158,867 
Income tax provision(14,379)(16,590)(44,252)(18,797)
Net income$45,171 $80,184 $117,566 $140,070 
Basic and diluted earnings per share:
Basic earnings per share$0.70 $1.10 $1.71 $1.92 
Diluted earnings per share$0.65 $1.04 $1.60 $1.81 
Weighted average shares used in per share calculations:
Basic shares64,245 73,191 68,924 72,911 
Diluted shares69,140 77,135 73,287 77,216 

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

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Three months endedNine months ended
(unaudited and in thousands)October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Net income$45,171 $80,184 $117,566 $140,070 
Other comprehensive income (loss), net-
Foreign currency translation gain (loss)(2,956)302 (3,100)547 
Total comprehensive income$42,215 $80,486 $114,466 $140,617 

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)October 29, 2022January 29, 2022October 30, 2021
ASSETS
Current Assets:
Cash and cash equivalents
$62,507 $72,691 $83,069 
Receivables, net
228,746 199,826 231,391 
Inventories
681,843 586,429 602,101 
Prepaid expenses and other current assets
53,950 55,270 53,756 
Total current assets
1,027,046 914,216 970,317 
Property and equipment, net
233,515 256,786 263,581 
Operating lease assets
691,032 647,221 664,646 
Goodwill
93,655 93,655 93,655 
Intangible assets, net
19,273 15,527 16,005 
Equity investments
64,246 55,578 56,623 
Other assets
42,611 31,651 29,117 
Total assets
$2,171,378 $2,014,634 $2,093,944 
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable
$315,996 $340,877 $401,280 
Accrued expenses
213,905 215,812 211,017 
Current maturities of long-term debt— — 62,500 
Current operating lease liabilities
187,619 202,228 206,065 
Total current liabilities
717,520 758,917 880,862 
Long-term debt
415,467 225,536 165,422 
Non-current operating lease liabilities
628,820 593,429 622,273 
Other non-current liabilities
26,059 24,356 31,726 
Total liabilities
1,787,866 1,602,238 1,700,283 
Commitments and contingencies


Shareholders' equity:
Common shares paid-in capital, no par value
1,012,794 1,005,382 1,000,180 
Treasury shares, at cost
(662,614)(515,065)(515,065)
Retained earnings (deficit)
40,049 (74,304)(88,715)
Accumulated other comprehensive loss
(6,717)(3,617)(2,739)
Total shareholders' equity
383,512 412,396 393,661 
Total liabilities and shareholders' equity
$2,171,378 $2,014,634 $2,093,944 

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 sharesAmounts
(unaudited and in thousands, except per share amounts)Class A
Common
Shares		Class B
Common
Shares		Treasury SharesCommon Shares Paid in CapitalTreasury SharesRetained Earnings (Deficit)Accumulated Other Comprehensive LossTotal
Three months ended October 29, 2022
Balance, July 30, 202256,803 7,733 31,594 $1,010,181 $(643,563)$(1,909)$(3,761)$360,948 
Net income— — — — — 45,171 — 45,171 
Stock-based compensation activity373 — — 2,613 — — — 2,613 
Repurchase of Class A common shares(1,288)— 1,288 — (19,051)— — (19,051)
Dividends ($0.05 per share)
— — — — — (3,213)— (3,213)
Foreign currency translation adjustment— — — — — — (2,956)(2,956)
Balance, October 29, 202255,888 7,733 32,882 $1,012,794 $(662,614)$40,049 $(6,717)$383,512 
Three months ended October 30, 2021
Balance, July 31, 202165,236 7,733 22,169 $998,117 $(515,065)$(168,899)$(3,041)$311,112 
Net income— — — — — 80,184 — 80,184 
Stock-based compensation activity375 — — 2,063 — — — 2,063 
Foreign currency translation adjustment— — — — — — 302 302 
Balance, October 30, 202165,611 7,733 22,169 $1,000,180 $(515,065)$(88,715)$(2,739)$393,661 
Nine months ended October 29, 2022
Balance, January 29, 202265,624 7,733 22,169 $1,005,382 $(515,065)$(74,304)$(3,617)$412,396 
Net income— — — — — 117,566 — 117,566 
Stock-based compensation activity977 — — 14,509 — — — 14,509 
Repurchase of Class A common shares(10,713)— 10,713 — (147,549)— — (147,549)
Dividends ($0.15 per share)
— — — (7,097)— (3,213)— (10,310)
Foreign currency translation adjustment— — — — — — (3,100)(3,100)
Balance, October 29, 202255,888 7,733 32,882 $1,012,794 $(662,614)$40,049 $(6,717)$383,512 
Nine months ended October 30, 2021
Balance, January 30, 202164,666 7,733 22,169 $990,153 $(515,065)$(228,785)$(3,286)$243,017 
Net income— — — — — 140,070 — 140,070 
Stock-based compensation activity945 — — 10,027 — — — 10,027 
Foreign currency translation adjustment— — — — — — 547 547 
Balance, October 30, 202165,611 7,733 22,169 $1,000,180 $(515,065)$(88,715)$(2,739)$393,661 

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

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Nine months ended
(unaudited and in thousands)October 29, 2022October 30, 2021
Cash flows from operating activities:
Net income$117,566 $140,070 
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization64,754 59,178 
Stock-based compensation expense22,327 18,646 
Deferred income taxes(260)822 
Income from equity investments(6,670)(6,598)
Distributions received from equity investments6,230 8,573 
Impairment charges4,237 1,174 
Loss on extinguishment of debt and write-off of debt issuance costs12,862 — 
Other4,940 1,598 
Change in operating assets and liabilities:
Accounts receivable(25,043)(18,121)
Income tax receivable(2,979)(17,110)
Inventories(98,789)(127,513)
Prepaid expenses and other current assets(9,919)(988)
Accounts payable(24,389)153,511 
Accrued expenses(1,221)10,204 
Operating lease assets and liabilities, net(25,706)(59,152)
Net cash provided by operating activities37,940 164,294 
Cash flows from investing activities:
Cash paid for property and equipment(41,928)(22,061)
Equity investment in Le Tigre(8,228)— 
Other(5,853)— 
Net cash used in investing activities(56,009)(22,061)
Cash flows from financing activities:
Borrowing on revolving lines of credit1,490,199 349,653 
Payments on revolving lines of credit(1,074,733)(449,653)
Payments for borrowings and prepayment premium under Term Loan(238,196)(9,376)
Payments of debt issuance costs(2,316)— 
Cash paid for treasury shares(147,549)— 
Dividends paid(10,310)— 
Other(7,849)(8,487)
Net cash provided by (used in) financing activities9,246 (117,863)
Effect of exchange rate changes on cash balances(1,361)664 
Net increase (decrease) in cash, cash equivalents and restricted cash(10,184)25,034 
Cash, cash equivalents and restricted cash, beginning of period74,459 59,581 
Cash, cash equivalents and restricted cash, end of period$64,275 $84,615 
Supplemental disclosures of cash flow information:
Cash paid for income taxes$43,027 $13,228 
Cash paid for interest on debt$10,355 $19,339 
Cash paid for operating lease liabilities$169,328 $209,045 
Non-cash investing and financing activities:
Property and equipment purchases not yet paid$6,011 $3,250 
Operating lease liabilities arising from lease asset additions$12,014 $13,379 
Net increase to operating lease assets and lease liabilities for modifications$164,453 $72,698 

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)


6


1. DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES

DESCRIPTION OF BUSINESS

Business Operations- Designer Brands Inc. ("we," "us," "our," and the "Company") is one of the world's largest designers, producers, and retailers of footwear and accessories. We operate in three reportable segments: the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. The U.S. Retail segment operates the DSW Designer Shoe Warehouse ("DSW") banner through its direct-to-consumer U.S. stores and e-commerce site. The Canada Retail segment operates The Shoe Company and DSW banners through its direct-to-consumer Canada stores and e-commerce sites. The Brand Portfolio segment earns revenue from the sale of wholesale products to retailers, commissions for serving retailers as the design and buying agent for products under private labels (which we refer to as "First Cost"), and the sale of branded products through the direct-to-consumer e-commerce site at www.vincecamuto.com. An integral part of the Brand Portfolio segment is our equity investment in ABG-Camuto, LLC ("ABG-Camuto"), which is a partnership between Camuto LLC, a wholly-owned subsidiary doing business as "Camuto Group," and Authentic Brands Group LLC, a global brand management and marketing company. Camuto Group has a 40% stake in ABG-Camuto, a joint venture that holds several intellectual property rights, including, among others, Vince Camuto and Louise et Cie, and focuses on licensing and developing new category extensions to support the global growth of these brands. Camuto Group has a licensing agreement with ABG-Camuto whereby we pay royalties on our net sales from the brands managed by ABG-Camuto, subject to guaranteed minimums. Camuto Group also holds footwear and certain handbag licensing rights of Jessica Simpson, Lucky Brand and, through a joint venture, JLO Jennifer Lopez.

Basis of Presentation- The accompanying unaudited, condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The condensed consolidated financial position, results of operations and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet at January 29, 2022 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2021 Form 10-K.

Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year (e.g., "2022") refer to the calendar year in which the fiscal year begins. This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year (including 2022 and 2021), but occasionally will contain an additional week resulting in a 53-week fiscal year (including 2023).

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 2021 Form 10-K.

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

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

7


Severance- During the nine months ended October 29, 2022 and October 30, 2021, we incurred severance costs of $1.2 million and $2.6 million, respectively. These costs are included in operating expenses in the condensed consolidated statements of operations. As of October 29, 2022, January 29, 2022, and October 30, 2021, we had accrued severance of $0.7 million, $1.9 million, and $2.5 million, respectively, included in accrued expenses on the condensed consolidated balance sheets.

Income Taxes- We continue to assess the likelihood of realizing the benefits of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. In evaluating future taxable income, significant weight is given to positive and negative evidence that is objectively verifiable. As a result of the losses incurred in 2020 due to the impacts of the COVID-19 pandemic, we were in a three-year cumulative loss position in the U.S. as of October 29, 2022, which was significant objective negative evidence in considering whether U.S. deferred tax assets are realizable. Such objective evidence limits the ability to consider other subjective evidence, such as the projection of future taxable income. As of October 29, 2022, a valuation allowance has been maintained as a reserve on substantially all of our net deferred tax assets due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. Given the continued realization of income since 2020 and projected future income, sufficient positive evidence may become available for the release of all or a portion of the valuation allowance within the next twelve months. Such a release would result in a material non-cash income tax benefit in our consolidated statement of operations in the period of release and the recording of additional deferred tax assets on our consolidated balance sheet. However, the exact timing and amount of the valuation allowance releases are subject to change based on the level of profitability achieved in future periods.

On August 16, 2022, the U.S. enacted the Inflation Reduction Act of 2022, which, among other things, implements a 15% minimum tax on book income of certain large corporations and a 1% excise tax on net stock repurchases. Based on our current analysis of the provisions, we do not believe this legislation will have a material impact on our consolidated financial statements.

For the nine months ended October 29, 2022 and October 30, 2021, our effective tax rate was 27.3% and 11.8%, respectively. The rate for the nine months ended October 29, 2022 was impacted by permanent tax adjustments, primarily non-deductible compensation. The rate for the nine months ended October 30, 2021 was the result of maintaining a full valuation allowance on deferred tax assets while also recording net discrete tax benefits, primarily as a result of adjustments to our estimated 2020 return reflecting implemented tax strategies.

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

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown in the condensed consolidated statements of cash flows:
(in thousands)October 29, 2022January 29, 2022October 30, 2021
Cash and cash equivalents$62,507 $72,691 $83,069 
Restricted cash, included in prepaid expenses and other current assets1,768 1,768 1,546 
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows$64,275 $74,459 $84,615 

Equity Investment in Le Tigre- On July 1, 2022, we acquired a 33.3% interest in Le Tigre 360 Global LLC ("Le Tigre"), which manages the Le Tigre brand, for $8.2 million. We account for our investment in Le Tigre, where we exercise significant influence but do not have control, using the equity method. The difference between the purchase price of Le Tigre and our interest in Le Tigre's underlying net equity is comprised of a definite lived tradename intangible asset and equity method goodwill. Our share of net loss of Le Tigre and amortization of the intangible asset is included in income from equity investments on the consolidated statements of operations.

Intangible Assets- During the first quarter of 2022, we acquired the rights to the shoes.com tradename for $4.9 million, which was recorded as a definite lived tradename intangible asset with a useful life of 15 years.

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Fair Value- Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows:
•Level 1 - Quoted prices in active markets for identical assets or liabilities.
•Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable.
•Level 3 - Unobservable inputs in which little or no market activity exists.

The carrying value of cash and cash equivalents, restricted cash, receivables, and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowings under our revolving lines of credit approximated fair value based on its term and variable interest rate.

Impairment of Long-Lived Assets- During the three months ended October 29, 2022, we recorded impairment charges of $1.3 million with $0.4 million in the U.S. Retail segment related to an early store closure and $0.9 million in the Brand Portfolio segment resulting from the sublease of an abandoned leased space. During nine months ended October 29, 2022, we recorded impairment charges of $4.2 million, primarily in the Brand Portfolio segment resulting from subleases of abandoned leased spaces. During the nine months ended October 30, 2021, we recorded an impairment charge of $1.2 million in the U.S. Retail segment for abandoned equipment we replaced.

2. REVENUE

DISAGGREGATION OF NET SALES

Net Sales by Brand Categories- The following table presents net sales disaggregated by brand categories for each segment:
(in thousands)U.S. RetailCanada RetailBrand PortfolioEliminationsConsolidated
Three months ended October 29, 2022
Owned Brands:(1)
Direct-to-consumer$153,311 $— $9,810 $— $163,121 
External customer wholesale and commission income— — 66,530 — 66,530 
Intersegment wholesale and commission income— — 31,118 (31,118)— 
Total Owned Brands153,311 — 107,458 (31,118)229,651 
National brands553,080 — — — 553,080 
Canada Retail(2)
— 82,289 — — 82,289 
Total net sales$706,391 $82,289 $107,458 $(31,118)$865,020 
Three months ended October 30, 2021
Owned Brands:(1)
Direct-to-consumer$114,702 $— $7,726 $— $122,428 
External customer wholesale and commission income— — 61,341 — 61,341 
Intersegment wholesale and commission income— — 34,852 (34,852)— 
Total Owned Brands114,702 — 103,919 (34,852)183,769 
National brands594,906 — — — 594,906 
Canada Retail(2)
— 74,792 — — 74,792 
Total net sales$709,608 $74,792 $103,919 $(34,852)$853,467 
9


(in thousands)U.S. RetailCanada RetailBrand PortfolioEliminationsConsolidated
Nine months ended October 29, 2022
Owned Brands:(1)
Direct-to-consumer$440,343 $— $24,130 $— $464,473 
External customer wholesale and commission income— — 170,665 — 170,665 
Intersegment wholesale and commission income— — 76,470 (76,470)— 
Total Owned Brands440,343 — 271,265 (76,470)635,138 
National brands1,702,856 — — — 1,702,856 
Canada Retail(2)
— 216,888 — — 216,888 
Total net sales$2,143,199 $216,888 $271,265 $(76,470)$2,554,882 
Nine months ended October 30, 2021
Owned Brands:(1)
Direct-to-consumer$300,120 $— $18,616 $— $318,736 
External customer wholesale and commission income— — 129,001 — 129,001 
Intersegment wholesale and commission income— — 64,258 (64,258)— 
Total Owned Brands300,120 — 211,875 (64,258)447,737 
National brands1,753,239 — — — 1,753,239 
Canada Retail(2)
— 172,981 — — 172,981 
Total net sales$2,053,359 $172,981 $211,875 $(64,258)$2,373,957 
(1)    Owned Brands refers to those brands we have rights to sell through ownership or license arrangements.
(2)    We currently do not report the Canada Retail segment net sales by brand categories.

10


Net Sales by Product and Service Categories- The following table presents net sales disaggregated by product and service
category for each segment:
Three months endedNine months ended
(in thousands)October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Net sales:
U.S. Retail segment:
Women's footwear$450,130 $448,879 $1,394,340 $1,321,697 
Men's footwear151,106 154,523 461,035 454,688 
Kids' footwear65,638 69,159 171,742 178,003 
Accessories and other39,517 37,047 116,082 98,971 
706,391 709,608 2,143,199 2,053,359 
Canada Retail segment:
Women's footwear41,381 34,495 115,187 85,156 
Men's footwear20,334 17,963 56,224 43,296 
Kids' footwear17,291 19,607 36,700 38,674 
Accessories and other3,283 2,727 8,777 5,855 
82,289 74,792 216,888 172,981 
Brand Portfolio segment:
Wholesale95,837 90,558 237,748 181,916 
First Cost commission income1,811 5,635 9,387 11,343 
Direct-to-consumer9,810 7,726 24,130 18,616 
107,458 103,919 271,265 211,875 
Total segment net sales896,138 888,319 2,631,352 2,438,215 
Elimination of intersegment sales(31,118)(34,852)(76,470)(64,258)
Total net sales$865,020 $853,467 $2,554,882 $2,373,957 

DEFERRED REVENUE LIABILITIES

We record deferred revenue liabilities, included in accrued expenses on the condensed consolidated balance sheets, for remaining obligations we have to our customers. The following table presents the changes and total balances for gift cards and our loyalty programs:
Three months endedNine months ended
(in thousands)October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Gift cards:
Beginning of period$30,118 $28,691 $36,783 $34,442 
Gift cards redeemed and breakage recognized to net sales(14,341)(14,483)(50,896)(50,863)
Gift cards issued12,312 12,966 42,202 43,595 
End of period$28,089 $27,174 $28,089 $27,174 
Loyalty programs:
Beginning of period$16,788 $15,255 $15,736 $11,379 
Loyalty certificates redeemed and expired and other adjustments recognized to net sales(7,974)(9,025)(24,034)(19,929)
Deferred revenue for loyalty points issued8,795 10,365 25,907 25,145 
End of period$17,609 $16,595 $17,609 $16,595 

11


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, and members of his family ("Schottenstein Affiliates"). As of October 29, 2022, the Schottenstein Affiliates beneficially owned approximately 23% of the Company's outstanding common shares, representing approximately 58% of the combined voting power of the Company, consisting of, in the aggregate, 6.7 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 Schottenstein Affiliates. We also leased a fulfillment center from a Schottenstein Affiliate through September 2022 that was not renewed. During the three months ended October 29, 2022 and October 30, 2021, we recorded rent expense from leases with Schottenstein Affiliates of $2.3 million and $2.7 million, respectively. During the nine months ended October 29, 2022 and October 30, 2021, we recorded rent expense from leases with Schottenstein Affiliates of $7.3 million and $8.1 million, respectively. As of October 29, 2022, January 29, 2022, and October 30, 2021, we had related party current operating lease liabilities of $5.4 million, $6.3 million, and $7.1 million, respectively, and non-current operating lease liabilities of $11.5 million, $18.3 million, and $19.3 million, respectively.

Other Purchases and Services- For both the three months ended October 29, 2022 and October 30, 2021, we had other purchases and services we incurred from the Schottenstein Affiliates of $1.2 million. For both the nine months ended October 29, 2022 and October 30, 2021, we had other purchases and services we incurred from the Schottenstein Affiliates of $3.7 million.

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

Equity Method Investments

ABG-Camuto- We have a 40% interest in our equity investment in ABG-Camuto. We have a licensing agreement with ABG-Camuto, pursuant to which we pay royalties on the net sales of the brands managed by ABG-Camuto, subject to guaranteed minimums. For the three months ended October 29, 2022 and October 30, 2021, we recorded royalty expense for amounts paid to ABG-Camuto of $4.6 million and $4.4 million, respectively. For the nine months ended October 29, 2022 and October 30, 2021, we recorded royalty expense for amounts paid to ABG-Camuto of $13.7 million and $13.6 million, respectively. Amounts due to ABG-Camuto were immaterial for all periods presented.

Le Tigre- We have a 33.3% interest in our equity investment in Le Tigre. On July 1, 2022, we entered into a license agreement with Le Tigre whereby we pay royalties on our net sales from the Le Tigre brand, subject to guaranteed minimums. The license agreement provides for the exclusive right to design and produce Le Tigre branded footwear to be sold primarily through our DSW and The Shoe Company direct-to-consumer stores and e-commerce sites. Activity with Le Tigre during the nine months ended October 29, 2022 was immaterial.

4. EARNINGS PER SHARE

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

12


The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings per share:
Three months endedNine months ended
(in thousands)
October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Weighted average basic shares outstanding
64,245 73,191 68,924 72,911 
Dilutive effect of stock-based compensation awards
4,895 3,944 4,363 4,305 
Weighted average diluted shares outstanding
69,140 77,135 73,287 77,216 

For the three months ended October 29, 2022 and October 30, 2021, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings per share due to their anti-dilutive effect was 2.7 million and 3.6 million, respectively. For the nine months ended October 29, 2022 and October 30, 2021, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings per share due to their anti-dilutive effect was 2.8 million and 3.0 million, respectively.

5. STOCK-BASED COMPENSATION

Stock-based compensation expense consisted of the following:
Three months endedNine months ended
(in thousands)October 29, 2022October 30, 2021October 29, 2022October 30, 2021
Stock options$— $130 $101 $515 
Restricted and director stock units6,364 5,151 22,226 18,131 
$6,364 $5,281 $22,327 $18,646 

The following table summarizes the stock-based compensation award share activity for RSUs for the nine months ended October 29, 2022:
(in thousands)Shares of Time-Based RSUsShares of Performance-Based RSUs
Outstanding - beginning of period6,058 744 
Granted1,965 617 
Vested(1,235)(174)
Forfeited(232)— 
Outstanding - end of period6,556 1,187 

6. SHAREHOLDERS' EQUITY

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

The following table provides additional information for our common shares:
(in thousands)October 29, 2022January 29, 2022October 30, 2021
Class AClass BClass AClass BClass AClass B
Authorized shares250,000 100,000 250,000 100,000 250,000 100,000 
Issued shares88,770 7,733 87,793 7,733 87,780 7,733 
Outstanding shares55,888 7,733 65,624 7,733 65,611 7,733 
Treasury shares32,882 — 22,169 — 22,169 — 
13



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

Dividends- On November 17, 2022, the Board of Directors 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 December 28, 2022 to shareholders of record at the close of business on December 13, 2022, and is expected to be recorded against retained earnings.

Share Repurchases- On August 17, 2017, the Board of Directors authorized the repurchase of an additional $500 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. During the nine months ended October 29, 2022, we repurchased 10.7 million Class A common shares at an aggregate cost of $147.5 million, with $187.4 million of Class A common shares that remain authorized under the program as of October 29, 2022. The share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common shares under the program. Shares will be repurchased in the open market at times and in amounts considered appropriate based on price and market conditions.

7. RECEIVABLES

Receivables, net, consisted of the following:
(in thousands)October 29, 2022January 29, 2022October 30, 2021
Customer accounts receivables:
Serviced by third-party provider with guaranteed payment$53,304 $27,827 $51,574 
Serviced by third-party provider without guaranteed payment270 82 960 
Serviced in-house2,302 2,783 3,113 
Income tax receivable 165,218 162,240 166,934 
Other receivables8,729 8,026 10,043 
Total receivables229,823 200,958 232,624 
Allowance for doubtful accounts(1,077)(1,132)(1,233)
$228,746 $199,826 $231,391 

In November 2022, we received $120.3 million of our income tax receivable from the Internal Revenue Service as a result of the Coronavirus Aid, Relief, and Economic Security Act. We anticipate receiving the remaining income tax receivable within the next twelve months.

8. ACCRUED EXPENSES

Accrued expenses consisted of the following:
(in thousands)October 29, 2022January 29, 2022October 30, 2021
Gift cards$28,089 $36,783 $27,174 
Accrued compensation and related expenses38,815 41,603 29,874 
Accrued taxes30,689 28,327 43,677 
Loyalty programs deferred revenue17,609 15,736 16,595 
Sales returns, customer allowances and discounts21,643 20,671 22,608 
Other77,060 72,692 71,089 
$213,905 $215,812 $211,017 

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9. DEBT

Debt consisted of the following:
(in thousands)October 29, 2022January 29, 2022October 30, 2021
ABL Revolver$415,467 $— $— 
Term Loan— 231,250 234,375 
Total debt415,467 231,250 234,375 
Less unamortized Term Loan debt issuance costs— (5,714)(6,453)
Less current maturities of long-term debt— — (62,500)
Long-term debt$415,467 $225,536 $165,422 

ABL Revolver- On March 30, 2022, we replaced our previous senior secured asset-based revolving credit facility with our current senior secured asset-based revolving credit facility ("ABL Revolver"), which provides a revolving line of credit of up to $550.0 million, including a Canadian sub-limit of up to $55.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $55.0 million sub-limit for swing loan advances for U.S. borrowings, and a $5.5 million sub-limit for swing loan advances for Canadian borrowings. Our ABL Revolver matures in March 2027 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 October 29, 2022, the ABL Revolver had a borrowing base of $550.0 million, with $415.5 million in outstanding borrowings and $3.6 million in letters of credit issued, resulting in $130.9 million available for borrowings.

Borrowings and letters of credit issued under the ABL Revolver accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greatest of (i) the prime rate, (ii) the Fed Funds Rate (as defined and subject to a floor of 0%) plus 0.5%, and (iii) the one-month Adjusted Term SOFR (as defined) plus 1.0%; or (B) a one-month, three-month or six-month Adjusted Term SOFR per annum (subject to a floor of 0%), plus, in each instance, an applicable rate to be determined based on average availability, with an interest rate of 5.3% as of October 29, 2022. Commitment fees are based on the unused portion of the ABL Revolver. Interest expense related to the ABL Revolver includes interest on borrowings and letters of credit, commitment fees, and the amortization of debt issuance costs.

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 $41.3 million and 10.0% of the maximum borrowing amount. The ABL Revolver also contains customary covenants restricting our activities, including limitations on the ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. The ABL Revolver contains 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 cure periods, in addition to other remedies that may be available to the lenders, our obligations under the ABL Revolver may be accelerated, outstanding letters of credit may be required to be cash collateralized, and remedies may be exercised against the collateral. As of October 29, 2022, we were in compliance with all financial covenants contained in the ABL Revolver.

Termination of Term Loan- On February 8, 2022, we settled in full the $231.3 million principal amount outstanding on that date under our senior secured term loan agreement ("Term Loan"). In connection with this settlement, we incurred a $12.7 million loss on extinguishment of debt, composed of a $6.9 million prepayment premium and a $5.7 million write-off of unamortized debt issuance costs.

10. COMMITMENTS AND CONTINGENCIES

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

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Guarantee- We provide guarantees for lease obligations that are scheduled to expire in 2023 for locations that have been leased to third parties. If a third party does not pay the rent or vacates the premise, we may be required to make full rent payments to the landlord. As of October 29, 2022, the total future minimum lease payment requirements under these guarantees were approximately $11.2 million.

11. SEGMENT REPORTING
The following provides certain key financial data by segment reconciled to the condensed consolidated financial statements:
(in thousands)U.S. RetailCanada RetailBrand PortfolioEliminationsConsolidated
Three months ended October 29, 2022
Net sales:
External customer sales$706,391 $82,289 $76,340 $— $865,020 
Intersegment sales— — 31,118 (31,118)— 
Total net sales$706,391 $82,289 $107,458 $(31,118)$865,020 
Gross profit$232,058 $31,298 $23,839 $(1,376)$285,819 
Income from equity investments$— $— $2,290 $— $2,290 
Three months ended October 30, 2021
Net sales:
External customer sales$709,608 $74,792 $69,067 $— $853,467 
Intersegment sales— — 34,852 (34,852)— 
Total net sales$709,608 $74,792 $103,919 $(34,852)$853,467 
Gross profit$258,059 $28,588 $32,329 $(5,359)$313,617 
Income from equity investment$— $— $2,600 $— $2,600 
Nine months ended October 29, 2022
Net sales:
External customer sales$2,143,199 $216,888 $194,795 $— $2,554,882 
Intersegment sales— — 76,470 (76,470)— 
Total net sales$2,143,199 $216,888 $271,265 $(76,470)$2,554,882 
Gross profit$716,268 $81,145 $59,975 $(154)$857,234 
Income from equity investments$— $— $6,670 $— $6,670 
Nine months ended October 30, 2021
Net sales:
External customer sales$2,053,359 $172,981 $147,617 $— $2,373,957 
Intersegment sales— — 64,258 (64,258)— 
Total net sales$2,053,359 $172,981 $211,875 $(64,258)$2,373,957 
Gross profit$708,065 $58,191 $52,788 $(4,635)$814,409 
Income from equity investment $— $— $6,598 $— $6,598 

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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 FOR THE THIRD QUARTER OF 2022

For the third quarter of 2022, net sales increased 1.4% and comparable sales increased 3.0% over the same period last year. Net sales during the third quarter of 2022 from our Owned Brands increased 25.0% over the same period last year, with Owned Brands representing 26.5% of consolidated net sales as compared to 21.5% for the same period last year. The increase in net sales from our Owned Brands demonstrates progress towards our long-term plan of doubling net sales of our Owned Brands by 2026. Gross profit, operating profit, and net income for the third quarter of 2022 were lower when compared to the same period last year, which had record-setting results, as we were impacted by a more promotional retail environment as the industry experienced a shift from tighter inventory positions to excess inventory, resulting in us also being more promotional. In addition, we strategically increased our clearance assortment in order for us to attract customers who are more value oriented and this allows us to manage our inventory more effectively and proactively.

IMPACT OF THE COVID-19 PANDEMIC AND GLOBAL ECONOMIC CONDITIONS ON OUR RESULTS OF OPERATIONS

The COVID-19 pandemic continues to impact the global economy, including disrupted supply chain operations globally, temporary factory closures, labor shortages, vessel, container and other transportation shortages, and port congestion. Such disruptions have at times reduced the availability of inventory while at other times have caused excess inventory as the timing of inventory receipts has been disrupted. Disruptions may continue especially in geographic locations where government responses may result in mandated quarantines and closures of facilities and operations we depend on. Accordingly, it is not clear at this time how long and to what extent the pandemic will last and we cannot reasonably estimate the extent to which our business will continue to be affected by the COVID-19 pandemic.

In addition, other changes in economic conditions, most notably inflationary pressures (including increases in the cost of merchandise, transportation, and compensation), rising interest rates, significant foreign currency volatility, and the growing concerns of a potential recession, have also impacted consumer discretionary income levels and spending. In response to such pressures, as well as in an effort to reduce elevated inventory levels, many retailers have become increasingly more promotional in an attempt to offset traffic declines and increase conversion. The continuation of these trends could have a material adverse effect on our business or operating results.

We continue to assess the likelihood of realizing the benefits of our deferred tax assets by evaluating historical and projected future operating results, the reversal of existing temporary differences, taxable income in permitted carry back years, and the availability of tax planning strategies. In evaluating future taxable income, significant weight is given to positive and negative evidence that is objectively verifiable. As a result of the losses incurred in 2020 due to the impacts of the COVID-19 pandemic, we were in a three-year cumulative loss position in the U.S. as of October 29, 2022, which was significant objective negative evidence in considering whether U.S. deferred tax assets are realizable. Such objective evidence limits the ability to consider other subjective evidence, such as the projection of future taxable income. As of October 29, 2022, a valuation allowance has been maintained as a reserve on substantially all of our net deferred tax assets due to the uncertainty of realization of our loss carry forwards and other deferred tax assets. Given the continued realization of income since 2020 and projected future income, sufficient positive evidence may become available for the release of all or a portion of the valuation allowance within the next twelve months. Such a release would result in a material non-cash income tax benefit in our consolidated statement of operations in the period of release and the recording of additional deferred tax assets on our consolidated balance sheet. However, the exact timing and amount of the valuation allowance releases are subject to change based on the level of profitability achieved in future periods.

FINANCIAL SUMMARY AND OTHER KEY METRICS
For the three months ended October 29, 2022:
•Net sales increased to $865.0 million from $853.5 million for the three months ended October 30, 2021.
•Gross profit as a percentage of net sales was 33.0% compared to 36.7% for the same period last year.
•Net income was $45.2 million, or $0.65 per diluted share, which included after-tax charges of $2.0 million primarily related to impairment and termination costs partially offset by the change in valuation allowance on deferred tax assets of $1.1 million. Net income for the three months ended October 30, 2021 was $80.2 million, or $1.04 per diluted share, which included after-tax charges of $13.6 million, or $0.18 per diluted share, primarily related to the change in valuation allowance on deferred tax assets.

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Comparable Sales Performance Metric- The following table presents the change in comparable sales for each segment and in total:
Three months ended
October 29, 2022October 30, 2021
Change in comparable sales:
U.S. Retail segment1.1 %43.9 %
Canada Retail segment18.8 %15.2 %
Brand Portfolio segment - direct-to-consumer channel27.0 %50.4 %
Total3.0 %40.8 %

We consider the change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important indicator of the performance of our retail and direct-to-consumer businesses. We include in our comparable sales metric stores in operation for at least 14 months at the beginning of the fiscal year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales include stores temporarily closed as a result of the COVID-19 pandemic as management continues to believe that this metric is meaningful to monitor our performance. Comparable sales also include e-commerce sales. Comparable sales for the Canada Retail segment exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Comparable sales for the Brand Portfolio segment include the direct-to-consumer e-commerce site www.vincecamuto.com. 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 October 29, 2022 and October 30, 2021, we had the following number of stores:
October 29, 2022October 30, 2021
U.S. Retail segment - DSW stores504 515 
Canada Retail segment:
The Shoe Company stores113 117 
DSW stores25 27 
138 144 
Total number of stores642 659 

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RESULTS OF OPERATIONS

THIRD QUARTER OF 2022 COMPARED WITH THIRD QUARTER OF 2021

(amounts in thousands, except per share amounts)Three months ended
October 29, 2022October 30, 2021Change
Amount% of Net SalesAmount% of Net SalesAmount%
Net sales$865,020 100.0 %$853,467 100.0 %$11,553 1.4 %
Cost of sales(579,201)(67.0)(539,850)(63.3)(39,351)7.3 %
Gross profit285,819 33.0 313,617 36.7 (27,798)(8.9)%
Operating expenses(222,232)(25.7)(211,909)(24.8)(10,323)4.9 %
Income from equity investments2,290 0.3 2,600 0.3 (310)(11.9)%
Impairment charges(1,349)(0.2)— — (1,349)NM
Operating profit64,528 7.4 104,308 12.2 (39,780)(38.1)%
Interest expense, net(4,826)(0.5)(7,706)(0.9)2,880 (37.4)%
Non-operating income (expenses), net(152)— 172 — (324)NM
Income before income taxes 59,550 6.9 96,774 11.3 (37,224)(38.5)%
Income tax provision(14,379)(1.7)(16,590)(1.9)2,211 (13.3)%
Net income$45,171 5.2 %$80,184 9.4 %$(35,013)(43.7)%
Basic and diluted earnings per share:
Basic earnings per share$0.70 $1.10 $(0.40)(36.4)%
Diluted earnings per share$0.65 $1.04 $(0.39)(37.5)%
Weighted average shares used in per share calculations:
Basic shares64,245 73,191 (8,946)(12.2)%
Diluted shares69,140 77,135 (7,995)(10.4)%
NM - Not meaningful

Net Sales- The following summarizes net sales by segment:
Three months ended
(dollars in thousands)October 29, 2022October 30, 2021Change
Amount% of Segment Net SalesAmount% of Segment Net SalesAmount%Comparable Sales
Segment net sales:
U.S. Retail$706,391 78.8 %$709,608 79.9 %$(3,217)(0.5)%1.1 %
Canada Retail82,289 9.2 %74,792 8.4 %7,497 10.0 %18.8 %
Brand Portfolio107,458 12.0 %103,919 11.7 %3,539 3.4 %27.0 %
Total segment net sales896,138 100.0 %888,319 100.0 %7,819 0.9 %3.0 %
Elimination of intersegment net sales(31,118)(34,852)3,734 (10.7)%
Consolidated net sales$865,020 $853,467 $11,553 1.4 %

The improvement in net sales during the three months ended October 29, 2022 over the same period last year was primarily due to the increase in comparable sales across all segments, offset by store closures since the end of the third quarter of 2021. The decrease in net sales for the U.S. Retail segment was driven by store closures partially offset by the increase in comparable sales, which benefited from higher comparable transactions that more than offset lower comparable average unit retail prices. The increase in net sales for the Canada Retail segment was driven by the increase in comparable sales, which had higher comparable transactions and higher comparable average unit retail prices, partially offset by the unfavorable impact from
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foreign currency translation. The Brand Portfolio segment delivered increases in comparable sales for www.vincecamuto.com and wholesale sales, while commission income decreased.

Gross Profit- The following summarizes gross profit by segment:
Three months ended
(dollars in thousands)
October 29, 2022October 30, 2021Change
Amount% of Segment Net SalesAmount% of Segment Net SalesAmount%Basis Points
Segment gross profit:
U.S. Retail$232,058 32.9 %$258,059 36.4 %$(26,001)(10.1)%(350)
Canada Retail31,298 38.0 %28,588 38.2 %2,710 9.5 %(20)
Brand Portfolio23,839 22.2 %32,329 31.1 %(8,490)(26.3)%(890)
Total segment gross profit287,195 32.0 %318,976 35.9 %(31,781)(10.0)%(390)
Net elimination of intersegment gross profit(1,376)(5,359)3,983 
Consolidated gross profit$285,819 33.0 %$313,617 36.7 %$(27,798)(8.9)%(370)

The decrease in consolidated gross profit during the three months ended October 29, 2022 over the same period last year was impacted by a more promotional retail environment as the industry experienced a shift from tighter inventory positions to excess inventory, resulting in us being more promotional in both the U.S. Retail and the Brand Portfolio segments as well as our increase in freight costs. The decrease in the U.S. Retail segment gross profit was also impacted by strategically increasing our clearance assortment and moving our digital fulfillment activities from our Columbus location to our New Jersey location, which resulted in recognizing approximately $6.0 million of additional distribution costs, including accelerated depreciation and termination costs. The decrease in the Brand Portfolio segment gross profit was also impacted by lower commission income. As a result, consolidated gross profit as a percentage of consolidated net sales was down 370 basis points.

The net elimination of intersegment gross profit consisted of the following:
Three months ended
(in thousands)October 29, 2022October 30, 2021
Recognition (elimination) of intersegment activity:
Net sales recognized by Brand Portfolio segment$(31,118)$(34,852)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment21,426 22,950 
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period8,316 6,543 
$(1,376)$(5,359)

Operating Expenses- For the three months ended October 29, 2022, operating expenses increased by $10.3 million over the same period last year, primarily driven by an increase in store payroll and marketing expenses. Operating expenses as a percentage of sales were 25.7% compared to 24.8% in the same period last year.

Interest Expense, net- For the three months ended October 29, 2022, interest expense, net, decreased by $2.9 million over the same period last year, primarily due to the termination of the Term Loan in the first quarter of 2022, which had a higher interest rate than the ABL Revolver.

Income Taxes- For the three months ended October 29, 2022 and October 30, 2021, our effective tax rate was 24.1% and 17.1%, respectively. The rate for three months ended October 29, 2022 was impacted by permanent tax adjustments, primarily non-deductible compensation. The rate for the three months ended October 30, 2021 was the result of maintaining a full valuation allowance on deferred tax assets.

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NINE MONTHS OF 2022 COMPARED WITH NINE MONTHS OF 2021

(amounts in thousands, except per share amounts)Nine months ended
October 29, 2022October 30, 2021Change
Amount% of Net SalesAmount% of Net SalesAmount%
Net sales$2,554,882 100.0 %$2,373,957 100.0 %$180,925 7.6 %
Cost of sales(1,697,648)(66.4)(1,559,548)(65.7)(138,100)8.9 %
Gross profit857,234 33.6 814,409 34.3 42,825 5.3 %
Operating expenses(674,348)(26.4)(637,108)(26.9)(37,240)5.8 %
Income from equity investments6,670 0.3 6,598 0.3 72 1.1 %
Impairment charges(4,237)(0.2)(1,174)— (3,063)260.9 %
Operating profit185,319 7.3 182,725 7.7 2,594 1.4 %
Interest expense, net(10,530)(0.4)(24,592)(1.0)14,062 (57.2)%
Loss on extinguishment of debt and write-off of debt issuance costs(12,862)(0.5)— — (12,862)NM
Non-operating income (expenses), net(109)— 734 — (843)NM
Income before income taxes 161,818 6.4 158,867 6.7 2,951 1.9 %
Income tax provision(44,252)(1.7)(18,797)(0.8)(25,455)135.4 %
Net income$117,566 4.7 %$140,070 5.9 %$(22,504)(16.1)%
Basic and diluted earnings per share:
Basic earnings per share$1.71 $1.92 $(0.21)(10.9)%
Diluted earnings per share$1.60 $1.81 $(0.21)(11.6)%
Weighted average shares used in per share calculations:
Basic shares68,924 72,911 (3,987)(5.5)%
Diluted shares73,287 77,216 (3,929)(5.1)%
NM - Not meaningful

Net Sales- The following summarizes net sales by segment:
Nine months ended
(dollars in thousands)October 29, 2022October 30, 2021Change
Amount% of Segment Net SalesAmount% of Segment Net SalesAmount%Comparable Sales
Segment net sales:
U.S. Retail$2,143,199 81.5%$2,053,359 84.2%$89,840 4.4 %5.5 %
Canada Retail216,888 8.2%172,981 7.1%43,907 25.4 %33.5 %
Brand Portfolio271,265 10.3%211,875 8.7%59,390 28.0 %29.6 %
Total segment net sales2,631,352 100%2,438,215 100.0%193,137 7.9 %7.8 %
Elimination of intersegment net sales(76,470)(64,258)(12,212)19.0 %
Consolidated net sales$2,554,882 $2,373,957 $180,925 7.6 %

The improvement in sales during the nine months ended October 29, 2022 over the same period last year was primarily due to the increase in comparable sales across all segments, primarily driven by the fact that during the nine months ended October 30, 2021, the prolonged COVID-19 pandemic resulted in significantly reduced store traffic in the U.S. Retail and Canada Retail segments with the Canada Retail segment also impacted by mandated closures and restrictions in certain key markets. In addition, wholesale sales in the Brand Portfolio segment were higher during the nine months ended October 29, 2022 as compared to the same period last year due to increased orders as our retailer customers continue to recover. These increases
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were partially offset by the impact of store closures since the end of the third quarter of 2021 and the unfavorable impact from foreign currency translation of the Canada Retail segment net sales.

Gross Profit- The following summarizes gross profit by segment:
Nine months ended
(dollars in thousands)
October 29, 2022October 30, 2021Change
Amount% of Segment Net SalesAmount% of Segment Net SalesAmount%Basis Points
Segment gross profit:
U.S. Retail$716,268 33.4 %$708,065 34.5 %$8,203 1.2 %(110)
Canada Retail81,145 37.4 %58,191 33.6 %22,954 39.4 %380 
Brand Portfolio59,975 22.1 %52,788 24.9 %7,187 13.6 %(280)
Total segment gross profit857,388 32.6 %819,044 33.6 %38,344 4.7 %(100)
Net elimination of intersegment gross profit(154)(4,635)4,481 
Consolidated gross profit$857,234 33.6 %$814,409 34.3 %$42,825 5.3 %(70)

The increase in consolidated gross profit was primarily driven by increased sales during the nine months ended October 29, 2022 over the same period last year, partially offset by higher freight and distribution costs as well as a shift towards being more promotional in the U.S. Retail and Brand Portfolio segments during the third quarter of 2022. Higher distribution costs within the U.S. Retail segment were primarily driven by moving our digital fulfillment activities from our Columbus location to our New Jersey location, which resulted in recognizing approximately $16.0 million of additional distribution costs, including accelerated depreciation and termination costs. As a result, consolidated gross profit as a percentage of consolidated net sales was down 70 basis points.

The net elimination of intersegment profit consisted of the following:
Nine months ended
(in thousands)October 29, 2022October 30, 2021
Recognition (elimination) of intersegment activity:
Net sales recognized by Brand Portfolio segment$(76,470)$(64,258)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment52,149 43,592 
Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period24,167 16,031 
$(154)$(4,635)

Operating Expenses- For the nine months ended October 29, 2022, operating expenses increased by $37.2 million over the same period last year, primarily driven by an increase in store payroll and marketing expenses. Operating expenses as a percentage of sales improved to 26.4% compared to 26.9% in the same period last year, due to the improvement in net sales year over year as we leveraged our fixed costs.

Impairment Charges- During the nine months ended October 29, 2022, we recorded impairment charges of $4.2 million, primarily in the Brand Portfolio segment resulting from subleases of abandoned leased spaces. During the nine months ended October 30, 2021, we recorded an impairment charge of $1.2 million in the U.S. Retail segment for abandoned equipment we replaced.

Interest Expense, net- For the nine months ended October 29, 2022, interest expense, net, decreased by $14.1 million over the same period last year, primarily due to the termination of the Term Loan in the first quarter of 2022, which had a higher interest rate than the ABL Revolver.

Loss on extinguishment of debt and write-off of debt issuance costs- In connection with the settlement of our Term Loan on February 8, 2022, during the nine months ended October 29, 2022 we incurred a $12.7 million loss on extinguishment of debt, composed of a $6.9 million prepayment premium and a $5.7 million write-off of unamortized debt issuance costs. As a result of
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the replacement of the ABL Revolver during the nine months ended October 29, 2022, we also wrote-off $0.2 million of debt issuance costs.

Income Taxes- For the nine months ended October 29, 2022 and October 30, 2021, our effective tax rate was 27.3% and 11.8%, respectively. The rate for the nine months ended October 29, 2022 was impacted by permanent tax adjustments, primarily non-deductible compensation. The rate for the nine months ended October 30, 2021 was the result of maintaining a full valuation allowance on deferred tax assets while also recording net discrete tax benefits, primarily as a result of adjustments to our estimated fiscal 2020 return reflecting implemented tax strategies.

SEASONALITY

Our business consists of two principal selling seasons; the spring season, which includes the first and second fiscal quarters, and the fall season, which includes the third and fourth fiscal quarters. Generally, net sales in the fall season have been slightly higher than the spring season. Our seasonal results of operations may fluctuate based on global economic conditions, the change in weather conditions, and our customers' interest in new seasonal styles. Due to the COVID-19 pandemic, we did not experience the typical seasonal trends during 2021 given the changes in customer behavior.

LIQUIDITY AND CAPITAL RESOURCES

OVERVIEW

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, and capital expenditures. Our working capital and inventory levels fluctuate seasonally. During the nine months ended October 29, 2022, we repurchased 10.7 million Class A common shares at an aggregate cost of $147.5 million, with $187.4 million of Class A common shares that remain authorized under the program as of October 29, 2022. During the nine months ended October 30, 2021, we did not repurchase any Class A common shares. In November 2022, we received $120.3 million of our income tax receivable from the Internal Revenue Service as a result of the Coronavirus Aid, Relief, and Economic Security Act. We anticipate receiving the remaining income tax receivable within the next twelve months.

We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business and withstand unanticipated business volatility, including any ongoing impacts of the COVID-19 pandemic. We believe that cash generated from our operations, together with our current levels of cash, as well as the use of our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures, and repurchase common shares under our share repurchase program over the next 12 months and beyond.

The following table presents the key categories of our condensed consolidated statements of cash flows:
Nine months ended
(in thousands)October 29, 2022October 30, 2021Change
Net cash provided by operating activities$37,940 $164,294 $(126,354)
Net cash used in investing activities(56,009)(22,061)(33,948)
Net cash provided by (used in) financing activities9,246 (117,863)127,109 
Effect of exchange rate changes on cash balances(1,361)664 (2,025)
Net increase (decrease) in cash, cash equivalents and restricted cash$(10,184)$25,034 $(35,218)

OPERATING CASH FLOWS

The decrease in net cash provided by operations was driven by higher spend on working capital due to earlier receipts and vendor payments this year compared to last year as we experienced continued impacts of the COVID-19 pandemic with shipping delays and extended vendor payment terms. This higher spend on working capital was partially offset by an increase in net income for the nine months ended October 29, 2022 over the same period last year, after adjusting for non-cash activity including the loss from extinguishment of debt and write-off of debt issuance costs, depreciation and amortization, impairment charges, and stock-based compensation expense.

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INVESTING CASH FLOWS

For the nine months ended October 29, 2022, net cash used in investing activities was primarily due to capital expenditures relating to infrastructure and information technology ("IT") projects and store improvements as well as our investment in Le Tigre. During the nine months ended October 30, 2021, the net cash used in investing activities was due to capital expenditures relating to IT projects and store improvements. Capital expenditures for the nine months ended October 29, 2022 exceeded the capital expenditures for the same period last year as we continue to invest in our initiatives centered on our three pillars of Customer, Brand, and Speed.

FINANCING CASH FLOWS

For the nine months ended October 29, 2022, net cash provided by financing activities was due to net receipts of $415.5 million from our revolving lines of credit, partially offset by the payments of $238.2 million due to the settlement of the Term Loan, the repurchase of 10.7 million Class A common shares at an aggregate cost of $147.5 million, and the payment of dividends of $10.3 million. During the nine months ended October 30, 2021, net cash used in financing activities was due to net payments of $100.0 million on our revolving lines of credit and payments on the Term Loan of $9.4 million.

DEBT

ABL Revolver- On March 30, 2022, we replaced our previous senior secured asset-based revolving credit facility with our current ABL Revolver, which provides a revolving line of credit of up to $550.0 million, including a Canadian sub-limit of up to $55.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $55.0 million sub-limit for swing loan advances for U.S. borrowings, and a $5.5 million sub-limit for swing loan advances for Canadian borrowings. Our ABL Revolver matures in March 2027 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 October 29, 2022, the ABL Revolver had a borrowing base of $550.0 million, with $415.5 million in outstanding borrowings and $3.6 million in letters of credit issued, resulting in $130.9 million available for borrowings.

Debt Covenants- The ABL Revolver requires us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $41.3 million and 10.0% of the maximum borrowing amount. The ABL Revolver also contains customary covenants restricting our activities, including limitations on the ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. As of October 29, 2022, we were in compliance with all financial covenants contained in the ABL Revolver.

Termination of Term Loan - On February 8, 2022, we settled in full the $231.3 million principal amount outstanding on that date under our Term Loan. In connection with this settlement, we incurred a $12.7 million loss on extinguishment of debt, composed of a $6.9 million prepayment premium and a $5.7 million write-off of unamortized debt issuance costs.

Refer to Note 9, Debt, of the Condensed Consolidated Financial Statements of this Form 10-Q for further information about our debt arrangements.

CAPITAL EXPENDITURE PLANS

We expect to spend approximately $55.0 million to $65.0 million for capital expenditures in 2022, of which we invested $41.9 million during the nine months ended October 29, 2022. 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

There are no recent accounting pronouncements that are expected to have a material impact to our consolidated financial statements when adopted.

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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 2021 Form 10-K.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We have market risk exposure related to interest rates and foreign currency exchange rates. There have been no material changes in our primary risk exposures or management of market risks from those disclosed in our 2021 Form 10-K.

ITEM 4. CONTROLS AND PROCEDURES

EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

PART II

ITEM 1. LEGAL PROCEEDINGS

The information set forth in Note 10, Commitments and Contingencies - Legal Proceedings, of the Condensed Consolidated Financial Statements in 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 2021 Form 10-K.

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

SHARE REPURCHASE PROGRAM

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

The following table sets forth the Class A common shares repurchased during the three months ended October 29, 2022:
(in thousands, except per share amounts)
(a) Total Number of Shares Purchased(1)
(b) Average Price Paid Per Share(2)
(c) Total Number of Shares Purchased as Part of Publicly Announced Programs(d) Approximate Dollar Value of Shares that May Yet Be Purchased Under the Programs
July 31, 2022 to August 27, 2022307$14.41 306$202,044 
August 28, 2022 to October 1, 2022444$15.84 224$198,689 
October 2, 2022 to October 29, 2022761$14.89 758$187,386 
Total 1,512$14.79 1,288

(1)     The total number of shares repurchased includes the shares repurchased as part of publicly announced programs and 223,987 shares withheld in connection with tax payments due upon vesting of employee restricted stock awards.
(2)    The average price paid per share includes broker commissions paid.

DIVIDENDS

The payment of any future dividends is at the discretion of our Board of Directors 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. It is anticipated that dividends will be declared on a quarterly basis.

On November 17, 2022, the Board of Directors 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 December 28, 2022 to shareholders of record at the close of business on December 13, 2022, and is expected to be recorded against retained earnings.

RESTRICTIONS

The ABL Revolver contains 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

None.

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ITEM 6. EXHIBITS

Incorporated by Reference
Exhibit NumberExhibit DescriptionFormFile No.Date of FilingExhibit Number
Amended and Restated Nonqualified Deferred Compensation Plan----
Rule 13a-14(a)/15d-14(a) Certification - Principal Executive Officer.----
Rule 13a-14(a)/15d-14(a) Certification - Principal Financial Officer.----
Section 1350 Certification - Principal Executive Officer.----
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 October 29, 2022, formatted in iXBRL (Inline eXtensible Business Reporting Language): (i) Condensed Consolidated Statements of Operations; (ii) Condensed Consolidated Statements of Comprehensive Income; (iii) Condensed Consolidated Balance Sheets; (iv) Condensed Consolidated Statements of Shareholders’ Equity; (v) Condensed Consolidated Statements of Cash Flows; and (vi) Notes to Condensed the Consolidated Financial Statements.----
104*Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.----

*    Filed herewith
**    Furnished herewith     

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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:December 1, 2022By: /s/ Jared Poff
Jared Poff
Executive Vice President and Chief Financial Officer
(Principal Financial Officer and duly authorized officer)

28
Classification: DBI Confidential DESIGNER BRANDS INC. (F/K/A DSW INC.) NONQUALIFIED DEFERRED COMPENSATION PLAN Amended and Restated Effective September 29, 2022

 
i Classification: DBI Confidential TABLE OF CONTENTS Page ARTICLE I Purpose and Effective Date 1 1.1. Purpose.....................................................................................................................1 1.2. Effective Date ..........................................................................................................1 ARTICLE II Definitions 1 2.1. Account. ...................................................................................................................1 2.2. Act ...........................................................................................................................1 2.3. Affiliates ..................................................................................................................1 2.4. Beneficiary...............................................................................................................1 2.5. Board........................................................................................................................1 2.6. Bonus Deferral Commitment. ..................................................................................2 2.7. Change in Control ....................................................................................................2 2.8. Code. ........................................................................................................................3 2.9. Company. .................................................................................................................3 2.10. Company Contribution Account ..............................................................................3 2.11. Compensation. .........................................................................................................3 2.12. Compensation Deferral. ...........................................................................................4 2.13. Director’s Fees Deferral Commitment.....................................................................4 2.14. Disability..................................................................................................................4 2.15. Discretionary Contribution ......................................................................................4 2.16. Elective Deferral Account........................................................................................4 2.17. Employer..................................................................................................................4 2.18. Matching Contribution.............................................................................................4 2.19. Measurement Funds. ................................................................................................5 2.20. Participant. ...............................................................................................................5 2.21. Participation Agreement. .........................................................................................5 2.22. Plan. .........................................................................................................................5 2.23. Plan Administrator. ..................................................................................................5 2.24. Plan Year..................................................................................................................5 2.25. Related Group ..........................................................................................................5 2.26. Retirement................................................................................................................5 2.27. Salary Deferral Commitment. ..................................................................................5 2.28. Subsidiary.................................................................................................................6 2.29. Termination..............................................................................................................6 2.30. Unforeseeable Emergency. ......................................................................................6 2.31. Valuation Date .........................................................................................................6 2.32. Year of Credited Service..........................................................................................6 ARTICLE III Eligibility and Participation............................................................................6 3.1. Eligibility. ................................................................................................................6 3.2. Participation. ............................................................................................................6 3.3. Partial Year Participation.........................................................................................7

 
ii Classification: DBI Confidential TABLE OF CONTENTS Page ARTICLE IV Elective Deferrals .............................................................................................7 4.1. Amount of Deferral Election. ..................................................................................7 4.2. Deferral Limits.........................................................................................................7 4.3. Period of Commitment.............................................................................................8 4.4. Change of Status. .....................................................................................................8 ARTICLE V Participant Accounts .......................................................................................8 5.1. Establishment of Accounts. .....................................................................................8 5.2. Crediting Compensation Deferrals to Elective Deferral Account. ..........................8 5.3. Crediting Matching Contributions to Company Contribution Account ..................9 5.4. Crediting Discretionary Contributions to Company Contribution Account ............9 5.5. Investment Designations and Earnings (or Losses) on Account. ............................9 5.6. Valuation of Account. ..............................................................................................9 5.7. Vesting of Accounts.................................................................................................9 5.8. Discharge for Cause...............................................................................................10 5.9. Statement of Account.............................................................................................10 5.10. Payments from Account.........................................................................................10 ARTICLE VI Payments to Participants...............................................................................10 6.1. Distributions...........................................................................................................10 6.2. Timing of Benefit Payments ..................................................................................11 6.3. Form of Payment....................................................................................................11 6.4. Disability................................................................................................................11 6.5. Death. .....................................................................................................................11 6.6. Unforeseeable Emergency .....................................................................................12 6.7. Change in Election.................................................................................................13 6.8. Small Accounts ......................................................................................................13 6.9. Valuation of Payments...........................................................................................13 6.10. Delay of Payment for Specified Employees ..........................................................13 6.11. Effect of Code Section 4999 ..................................................................................13 6.12. Effect of Payment ..................................................................................................13 ARTICLE VII Beneficiary Designation.................................................................................12 7.1. Beneficiary Designation.........................................................................................14 7.2. Changing Beneficiary. ...........................................................................................14 7.3. Community Property..............................................................................................14 7.4. No Beneficiary Designation...................................................................................14 7.5. Effect of Payment ..................................................................................................14 ARTICLE VIII Administration ...............................................................................................14 8.1. Plan Administrator. ................................................................................................14 8.2. Agents ....................................................................................................................15 8.3. Binding Effect of Decisions...................................................................................15 8.4. Indemnification of Plan Administrator ..................................................................15

 
iii Classification: DBI Confidential TABLE OF CONTENTS Page ARTICLE IX Claims Procedures .........................................................................................15 9.1. Claim......................................................................................................................15 9.2. Claim Decision Not Involving Determination of Disability..................................15 9.3. Claim Decision Involving Determination of Disability.........................................16 9.4. Request for Review................................................................................................17 9.5. Review of Decision Not Involving Determination of Disability. ..........................17 9.6. Review of Decision Involving Determination of Disability. .................................18 ARTICLE X Miscellaneous..................................................................................................19 10.1. Unfunded Plan .......................................................................................................19 10.2. Unsecured General Creditor ..................................................................................19 10.3. Trust Fund..............................................................................................................19 10.4. Protective Provisions. ............................................................................................19 10.5. Inability to Locate Participant or Beneficiary........................................................20 10.6. No Contract of Employment. .................................................................................20 10.7. Withholding Taxes.................................................................................................20 10.8. No Limitation on Employer Actions......................................................................20 10.9. Obligations to Employer. .......................................................................................20 10.10. No Liability for Action or Omission......................................................................20 10.11. Nonalienation of Benefits. .....................................................................................20 10.12. Liability for Benefit Payments...............................................................................21 10.13. Governing Law. .....................................................................................................21 10.14. Severability of Provisions. .....................................................................................21 10.15. Headings and Captions. .........................................................................................21 10.16. Gender, Singular and Plural...................................................................................21 10.17. Participating Employers.........................................................................................21 10.18. Notice.....................................................................................................................21 10.19. Amendment and Termination. ...............................................................................22 10.20. Code Section 409A.................................................................................................22

 
1 Classification: DBI Confidential DESIGNER BRANDS INC. (F/K/A DSW INC.) NONQUALIFIED DEFERRED COMPENSATION PLAN Amended and Restated Effective September 29, 2022 ARTICLE I Purpose and Effective Date 1.1. Purpose. This Plan is intended to allow a select group of key management or other highly compensated employees of the Employer and directors of the Company to defer the receipt of compensation that would otherwise be payable to them and to provide supplemental retirement benefits for those employees. This Plan shall be unfunded for tax purposes and for purposes of Title I of ERISA. The terms of this Plan are intended to, and shall be shall be operated and interpreted and applied so as to, comply in all respects with applicable law and the provisions of Internal Revenue Code Section 409A and regulations and rulings thereunder. 1.2. Effective Date. This Plan was originally adopted effective as of August 1, 2007 and is amended and restated in its entirety as set forth herein effective as of September 29, 2022 (the “Restatement Date”). ARTICLE II Definitions For ease of reference, the following definitions will be used in the Plan: 2.1. Account. “Account” means the account maintained on the books of the Employer used solely to calculate the amount payable to each Participant who defers Compensation under this Plan and shall not constitute or be treated as a separate fund of assets. 2.2. Act. “Act” means the Securities Exchange Act of 1934, as amended, and any successor statute, as it may be amended from time to time. 2.3 Affiliates. “Affiliate” or “Affiliates” shall mean a group of entities including the Company which constitutes a controlled group of corporations (as defined in Code Section 414(b)), a group of trades or businesses (whether or not incorporated) under common control (as the defined Code Section 414(c)), and members of an affiliated service group (within the meaning of Code Section 414(m)). 2.4. Beneficiary. “Beneficiary”" means the person, persons or entity designated by the Participant to receive payments under this Plan in the event of the Participant's death as provided in Article VII. Inc.). 2.5. Board. “Board” means the Board of Directors of Designer Brands Inc. (f/k/a DSW

 
2 Classification: DBI Confidential 2.6. Bonus Deferral Commitment. “Bonus Deferral Commitment” means that portion of bonus compensation for which a Participant has made an election to defer receipt pursuant to Article IV. 2.7. Change in Control. “Change in Control” means each the following: (a) The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Act and for purposes of this Section 2.7, a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Act) of voting securities of the Company where such acquisition causes such Person to own 30% or more of the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of the Board (the “Outstanding Voting Securities”); provided, however, that for purposes of this Section 2.7(a), the following acquisitions shall not be deemed to result in a Change in Control: (i) any acquisition directly from the Company; (ii) any acquisition by the Company or a Subsidiary; (iii) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any Subsidiary; (iv) any acquisition by any corporation or other entity pursuant to a transaction that complies with clauses (i), (ii), and (iii) of Section 2.7(c) below; (v) any acquisition by Jay L. Schottenstein, Schottenstein Stores Corporation or any of their respective affiliates; or (vi) any acquisition by any trust established for the benefit of Jay L. Schottenstein or any of his spouse, children or lineal descendants or any other Person controlled by such trust; provided, further, that if any person’s beneficial ownership of the Outstanding Voting Securities reaches or exceeds 30% as a result of a transaction described in clause (i) or (ii) of this Section 2.7(a), and such Person subsequently acquires beneficial ownership of additional voting securities of the Company, such subsequent acquisition shall be treated as an acquisition that causes such Person to own 30% or more of the Outstanding Voting Securities; (b) Individuals who, as of the Restatement Date, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board; provided, however, that any individual becoming a director subsequent to the Restatement Date whose election, or nomination for election by the Company’s shareholders, was approved by a vote of at least a majority of the directors then comprising the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board shall be deemed to be a member of the Incumbent Board; (c) Consummation of a reorganization, merger, statutory share exchange or consolidation or similar transaction involving the Company or a Subsidiary, a sale or other disposition of all or substantially all of the assets of the Company, or the acquisition of assets or stock of a corporation or other entity by the Company or a Subsidiary (each, a “Business Combination”), excluding, however, such a Business Combination pursuant to which (i) all or substantially all of the individuals and entities who were the beneficial owners of the Outstanding Voting Securities immediately prior to such Business Combination beneficially own, directly or indirectly, more than 60% of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation or other entity resulting from such Business Combination (the “Resulting Entity”, including, without limitation, a corporation or other entity which as a result of such transaction owns the Company or all or substantially all of the

 
3 Classification: DBI Confidential Company’s assets either directly or through one or more subsidiaries); (ii) no Person (excluding any employee benefit plan (or related trust) of the Company or the Resulting Entity) beneficially owns, directly or indirectly, 20% or more of, respectively, the then outstanding shares of common stock or the combined voting power of the then outstanding voting securities of the Resulting Entity except to the extent that such ownership existed prior to the Business Combination; and (iii) at least a majority of the members of the board of directors of the Resulting Entity were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Business Combination; or (d) Approval of the shareholders of the Company of a complete liquidation or dissolution of the Company. Notwithstanding the foregoing, solely to the extent that a Change in Control is a distribution event for purposes of an Plan, the foregoing definition of Change in Control shall be interpreted, administered, limited and construed in a manner necessary to ensure that the occurrence of any such event shall result in a Change in Control only if such event qualifies as a “change in control event,” within the meaning of Treasury Regulation Section 1.409A-3(i)(5). Further, to the extent necessary to comply with Section 409A of the Code, the liquidation or dissolution of the Company described in this Section 2.7(d) shall comply with the procedures described in Treasury Regulation Section 1.409A-3(j)(4)(ix)(A). 2.8. Code. “Code” means the Internal Revenue Code of 1986, as amended (and any regulations thereunder). 2.9. Company. “Company” means Designer Brands Inc. (f/k/a DSW Inc.), an Ohio corporation, and any successor thereto. 2.10. Company Contribution Account. “Company Contribution Account” means the Account maintained in accordance with Section 5.3 with respect to Matching Contributions and Section 5.4 and with respect to any Discretionary Contributions made under this Plan. A Participant’s Company Contribution Account shall be utilized solely as a device for the determination and measurement of amounts to be paid to the Participant pursuant to this Plan and shall not constitute or be treated as a separate fund of assets. 2.11. Compensation. “Compensation” means compensation for services performed, including salary and bonus. This includes a Participant’s (i) base salary payable during a Plan Year; (ii) bonuses payable by the Employer for services performed in the period that begins during a Plan Year; and (iii) long-term incentive plan amounts paid in either cash or shares. Compensation also includes all fees payable to non-employee members of the Board, including the retainer for service as a member of the Board or any committees thereof and meeting fees. In no event shall any of the following items be treated as Compensation hereunder: (i) payments from this Plan or any other Employer nonqualified deferred compensation plan; (ii) with the exception of long-term incentive plan amounts paid in shares as described above, any form of non-cash compensation or benefits, including short and long term disability payments, group life insurance premiums, income from the exercise of non-qualified stock options, from the disqualifying disposition of incentive stock options, or realized upon vesting of restricted stock

 
4 Classification: DBI Confidential or the delivery of shares in respect of restricted stock units (or other similar items of income related to equity compensation grants or exercises); (iii) expense reimbursements; (iv) severance payments; or (v) any other payments or benefits other than normal Compensation as determined by the Plan Administrator in its sole discretion. Notwithstanding anything to the contrary, Compensation shall include amounts deferred on a pre-tax basis under this Plan, any tax- qualified retirement plan, any Code Section 125 plan, and any other nonqualified deferred compensation plan of the Employer. 2.12. Compensation Deferral. “Compensation Deferral” means that portion of Compensation as to which a Participant has made an annual irrevocable election to defer receipt pursuant to Article IV. A Participant's Compensation Deferral may consist of a Salary Deferral Commitment, a Bonus Deferral Commitment, a Director’s Fees Deferral Commitment, or a combination, as applicable to the Participant. 2.13. Director’s Fees Deferral Commitment. “Director’s Fees Deferral Commitment” means that portion of a director’s cash fees for which a Participant has made an election to defer receipt pursuant to Article IV. 2.14. Disability. “Disability” means that a Participant either (i) is unable to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, or (ii) is, by reason of any medically determinable physical or mental impairment which can be expected to result in death or can be expected to last for a continuous period of not less than twelve (12) months, receiving income replacement benefits for a period of not less than three (3) months under an accident or health plan covering employees of the Participant’s Employer. A Participant who has been determined to be eligible for Social Security disability benefits shall be presumed to have a Disability as defined herein. 2.15. Discretionary Contribution. “Discretionary Contribution” means any amount credited to a Participant's Account under Section 5.4. 2.16. Elective Deferral Account. “Elective Deferral Account” means the Account maintained in accordance with Section 5.2 with respect to any elective Compensation Deferrals made under this Plan. A Participant’s Elective Deferral Account shall be utilized solely as a device for the determination and measurement of the amounts to be paid to the Participant pursuant to this Plan and shall not constitute or be treated as a separate fund of assets. 2.17. Employer. “Employer” means the Company and any parent, subsidiary, or other affiliate designated by the Plan Administrator to participate in this Plan, as provided under Section 10.17. 2.18. Matching Contribution. “Matching Contribution” means the amount that equals the following: (a) Any Matching Contribution not paid into the Participant’s 401(k) plan account by the Employer due to the Participant’s participation in this Plan or any other plan of an Employer; plus

 
5 Classification: DBI Confidential (b) Any other amount determined by the Employer, and in its sole discretion, to be appropriate for the Plan Year. Such an amount may be larger or smaller than the amount credited to any other Participant and may defer from the amount credited to such participant in the preceding Plan Year. Notwithstanding the above, in no event shall a Participant who is a non-employee member of the Board be eligible for a Matching Contribution. 2.19. Measurement Funds. “Measurement Funds” means one or more of the independently established funds or indices that are identified by the Plan Administrator. These Measurement Funds are used solely to calculate the earnings that are credited to each Participant's Account(s) in accordance with Article V below, and do not represent any beneficial interest on the part of the Participant in any asset or other property of the Company. The determination of the increase or decrease in the performance of each Measurement Fund shall be made by the Plan Administrator in its reasonable discretion. Measurement Funds may be replaced, new funds may be added, or both, from time to time in the discretion of the Plan Administrator. 2.20. Participant. “Participant” means any employee who satisfies the eligibility requirements set forth in Article III. In the event of the death or incompetency of a Participant, the term means his or her beneficiary, personal representative or guardian. 2.21. Participation Agreement. “Participation Agreement” means the authorization form that an eligible employee files with the Plan Administrator to elect a Compensation Deferral under the Plan for a Plan Year. 2.22. Plan. “Plan” means this Plan, entitled the Designer Brands Inc. (f/k/a DSW Inc.) Nonqualified Deferred Compensation Plan, as amended from time to time. 2.23. Plan Administrator. “Plan Administrator” means the committee appointed by the Company to administer this Plan pursuant to Article VIII. 2.24. Plan Year. “Plan Year” means (a) for the 2007 Plan Year, August 1, 2007 through December 31, 2007, and (b) for each year thereafter, the twelve (12) month period beginning on each January 1 and ending on the following December 31. 2.25. Related Group. “Related Group” means the Company and all Affiliates of the Company. 2.26. Retirement. “Retirement” means separation of service from the Related Group after attaining age fifty-five (55) and completing at least five years of service. 2.27. Salary Deferral Commitment. “Salary Deferral Commitment” means that portion of salary compensation for which a Participant has made an election to defer receipt pursuant to Article IV.

 
6 Classification: DBI Confidential 2.28. Subsidiary. “Subsidiary” means (a) any corporation or other entity in which the Company, directly or indirectly, controls 50% or more of the total combined voting power of such corporation or other entity, or (b) any other corporation or other entity in which the Company has a significant equity interest, in either case as determined by the Compensation Committee of the Board. 2.29 Termination. “Termination” means a Participant’s separation from service with the Related Group, including termination of service as a member of the Board, for any reason other than Disability or death. 2.30. Unforeseeable Emergency. “Unforeseeable Emergency” means a severe financial hardship to the Participant resulting from an illness or accident of the Participant, the Participant’s spouse, or a dependent (as defined in Code Section 152(a)) of the Participant, loss of the Participant’s property due to casualty, or other similar extraordinary and unforeseeable circumstances arising as a result of events beyond the control of the Participant. 2.31. Valuation Date. “Valuation Date” means the last day of the Plan Year and any other date or dates that the Employer, in its sole discretion, reasonably chooses to calculate the value of the Participant’s Accounts and treat as a Valuation Date. 2.32. Year of Credited Service. “Year of Credited Service” means a twelve (12) month consecutive period in which the Participant has been employed by Employer. ARTICLE III Eligibility and Participation 3.1. Eligibility. An employee of an Employer shall be eligible to participate in this Plan if the employee is part of a select group of management or highly compensated employee and is named by the Plan Administrator to be a Participant in this Plan. In lieu of naming individual employees as eligible for participation, the Plan Administrator may establish eligibility criteria (consistent with the requirements of this Section 3.1) providing for participation of all employees of an Employer who satisfy such criteria. All non-employee Board members shall also be eligible to participate in this Plan. An individual shall remain a Participant until that individual has received full payment of all amounts credited to the Participant’s Accounts. 3.2. Participation. An eligible employee or Board member may elect to enter into a Salary Deferral Commitment and/or a Director’s Fees Deferral Commitment with respect to any Plan Year by submitting a Participation Agreement to the Plan Administrator by December 31 (or such earlier date established by the Plan Administrator) of the calendar year immediately preceding the Plan Year. An eligible employee may elect to enter into a Bonus Deferral Commitment by submitting a Participation Agreement to the Plan Administrator no later than six (6) months prior to the end of the period in which the performance-based compensation that is the subject of the Bonus Deferral Commitment is earned (or such earlier date established by the Plan Administrator), provided such bonus is determined based upon a period of least 12 months. Such Participation Agreement shall only be effective if entered into in a manner consistent with the provisions of Code Section 409A.

 
7 Classification: DBI Confidential 3.3. Partial Year Participation. If an employee or director first becomes eligible to participate during a calendar year, then the Plan Administrator, in its sole discretion, may allow such employee or director to submit a Participation Agreement to the Plan Administrator no later than thirty (30) days following the date the employee or director becomes eligible to participate. Any such Participation Agreement permitted by the Plan Administrator shall be effective only with respect to Compensation for services to be performed subsequent to the election and deferred in a manner consistent with the provisions of Code Section 409A. For bonus or incentive compensation earned in the initial Plan Year that is based upon a specified performance period, a Participant’s deferral election pursuant to this Section 3.3 may apply only to the portion of such Compensation that is equal to i) the total amount of compensation for the performance period, multiplied by ii) a fraction, the numerator of which is the number of days remaining in the service period after the Participant’s deferral election is made, and the denominator of which is the total number of days in the performance period. ARTICLE IV Elective Deferrals 4.1. Amount of Deferral Election. A Participant may elect a Compensation Deferral in the Participation Agreement as follows: (a) Salary Deferral Commitment. A Salary Deferral Commitment shall be related to the salary payable by the Employer to the Participant for services performed during the Plan Year. The amount to be deferred shall be stated as a percentage of the salary to be earned during the Plan Year, or in such other form as allowed by the Plan Administrator. Any deferral elections under the 401(k) Plan or changes thereto shall have no impact on the Salary Deferral Commitment under the Plan. (b) Bonus Deferral Commitment. The amount to be deferred shall be stated as a percentage of any bonus payable by the Employer for services performed in the period that begins during the Plan Year, or in such other form as allowed by the Plan Administrator. (c) Director’s Fees Deferral Commitment. The amount to be deferred shall be stated as a percentage of any fees earned during the Plan Year, or in such other form as allowed by the Plan Administrator. 4.2. Deferral Limits. The following limitations shall apply to Compensation Deferrals: (a) Minimum. The minimum deferral amount for a Salary, Bonus or Director’s Fees Deferral Commitment shall be two thousand dollars ($2,000) per Plan Year. (b) Maximum. The maximum deferral amount for a Salary Deferral Commitment shall be seventy percent (70%). The maximum deferral amount for a Bonus Deferral Commitment shall be eighty percent (80%) of any such bonus payable by the Employer for services performed in the period that begins during the Plan Year. The maximum deferral amount for a Director’s Fees Deferral Commitment shall be one hundred percent (100%) of any such cash fees to be earned during the Plan Year. Such deferrals shall be limited to the extent necessary to accommodate all income tax withholding obligations, deferral elections under the 401(k) Plan and contribution obligations for group health and other benefit plans.

 
8 Classification: DBI Confidential (c) Changes in Minimum or Maximum. The Plan Administrator may amend the Plan to change the minimum or maximum deferral amounts from time to time by giving written notice to all Participants. No such change may affect a Compensation Deferral made prior to the Plan Administrator’s action unless otherwise required by law. 4.3. Period of Commitment. A Participant's Participation Agreement as to a Compensation Deferral shall remain in effect only for the immediately succeeding Plan Year (or the remainder of the current year, as applicable). After a Plan Year has begun, the Participation Agreement shall be irrevocable for the remainder of that Plan Year. Notwithstanding the above, the Participation Agreement shall be terminated if a distribution is made to a Participant as a result of an Unforeseeable Emergency pursuant to Section 6.7 or if such termination is required for the Participant to be able to obtain a hardship distribution under a qualified plan with a qualified cash or deferred arrangement under Code Section 401(k). Further, the Plan Administrator may, in its sole discretion, cancel a Participation Agreement as permitted by Code Section 409A in connection with (a) the Participant’s “disability” or (b) such other event or condition as may be permitted under Code Section 409A pursuant to generally applicable guidance published in the Internal Revenue Bulletin. For purposes of the cancellation of a Participation Agreement pursuant to this Section 4.3, a “disability” refers to any medically determinable physical or mental impairment resulting in the Participant’s inability to perform the duties of his or her position or any substantially similar position, where such impairment can be expected to result in death or can be expected to last for a continuous period of not less than six months. Any resumption of the Participant’s deferrals under this Plan shall be made only at the election of the Participant in accordance with Article III herein. 4.4. Change of Status. Participation in a Plan Year does not guarantee active participation in any future Plan Year. If a Participant no longer meets the eligibility criteria set forth in Section 3.1 during a Plan Year, the Participant’s most recent Compensation Deferral should remain in effect for the remainder of the Plan Year and shall not terminate unless such termination of the Compensation Deferral is required for the Plan to continue to be maintained primarily for the purpose of providing deferred compensation for a select group of management or highly compensated employees within the meaning of ERISA Sections 201(2), 301(a), and 401(a)(1). ARTICLE V Participant Accounts 5.1. Establishment of Accounts. For record keeping purposes only, separate accounts shall be maintained for each Participant to reflect his or her Elective Deferral Account and Company Contribution Account (collectively referred to as “Accounts.”) Separate sub-accounts shall be maintained to the extent necessary to properly reflect the Participant’s election of Measurement Funds, distribution elections and vesting. 5.2. Crediting Compensation Deferrals to Elective Deferral Account. The Plan Administrator shall credit Compensation Deferrals to the Participant's Elective Deferral Account as soon as practicable after the date on which such Compensation would otherwise have been paid, in accordance with the Participant’s election.

 
9 Classification: DBI Confidential 5.3. Crediting Matching Contributions to Company Contribution Account. The Employer shall credit Matching Contributions to the Participant’s Company Contribution Account as determined as by the Employer in its discretion. 5.4. Crediting Discretionary Contributions to Company Contribution Account. The Employer may make Discretionary Contributions to the Participant’s Company Contribution Account, in accordance with Section 2.10 at such times as the Plan Administrator in its sole discretion shall determine. 5.5. Investment Designations and Earnings (or Losses) on Account. Participants must designate, on a Participation Agreement or by such other means as may be established by the Plan Administrator, the portion of the contributions to their Accounts that shall be allocated among the various Measurement Funds. In default of such designation, contributions to a Participant's Accounts shall be allocated to one or more default Measurement Funds as determined by the Plan Administrator in its sole discretion. A Participant's Account shall be credited with all deemed earnings (or losses) generated by the Measurement Funds, as elected by the Participant, on each business day for the sole purpose of determining the amount of earnings to be credited or debited to such Account as if the designated balance of the Account had been invested in the applicable Measurement Fund. Notwithstanding that the rates of return credited to Participant's Accounts are based upon the actual performance of the corresponding Measurement Funds, the Employer shall not be obligated to invest any amount credited to a Participant's Account under this Plan in such Measurement Funds or in any other investment funds. Upon notice to the Plan Administrator in the manner it prescribes, a Participant may reallocate the Funds to which his or her Account is deemed to be allocated. 5.6. Valuation of Account. The value of a Participant's Account as of any date shall equal the amounts theretofore credited to such Account, including any earnings (positive or negative) deemed to be earned on such Account in accordance with Section 5.5, less any payments made to the Participant or the Participant's Beneficiary pursuant to this Plan, and any forfeitures. 5.7. Vesting of Accounts. Participants shall be vested in their Accounts as follows: (a) Compensation Deferrals, and earnings credited thereon, shall be one hundred percent (100%) vested at all times. (b) Matching Contributions, and earnings credited thereon, and Discretionary Contributions shall vest in accordance with a schedule to be determined in the sole discretion of the Plan Administrator, with such schedule to be provided to the Participant at the time such contributions are credited to the Participant’s Company Contribution Account. Notwithstanding the above, the Company Contribution Account shall become one hundred percent (100%) vested upon the occurrence of any of the following events to the extent permitted under Code Section 409A: (i) The Participant’s Retirement, (ii) The Participant’s Disability, (iii) The Participant’s death,

 
10 Classification: DBI Confidential (iv) A Change in Control of the Company. 5.8. Discharge for Cause. Notwithstanding any other provision of this Plan to the contrary, a Participant’s Company Contribution Account shall be forfeited and no benefit shall be paid from that Account if a Participant’s employment with Employer is terminated for “Cause.” For these purposes, “Cause” means the Participant’s (a) breach of Section 1.00 of the Standard Executive Severance Agreement (if any) between the Participant and the Company, including Scope of Duties, Confidential Information, Solicitation of Employees, Solicitation of Third Parties, Non-Competition, Post-Termination Cooperation, Non-Disparagement, Nondisclosure, and Return of Company Property; (b) willful, illegal or grossly negligent conduct that is materially injurious to the Company or any Affiliate monetarily or otherwise; (c) violation of laws or regulations governing the Company or to any Affiliate; (d) breach of any fiduciary duty owed to the Company or any Affiliate, expressly including the duties of good faith, ordinary care, and to act in a manner that is not opposed to the best interests of the Company; (e) violation of a material provision of the Company’s or any Affiliate’s policies and procedures; (f) involvement in any act of moral turpitude that has or could reasonably have an injurious effect on the Company (or any Affiliate) or its reputation; (g) breach of the terms of any non-solicitation or confidentiality clauses contained in any agreement(s) with a former employer; (h) dishonesty or fraudulent conduct in violation of the Company’s or any Affiliate’s policies or procedures; or (i) conviction of any crime that constitutes a felony (or state law equivalent) or a crime that constitutes a misdemeanor involving moral turpitude after all applicable rights of appeal have been exhausted or waived. By way of non-limiting example, conduct constituting Cause under clause (f) of the preceding sentence of this Section 5.8 includes the Participant’s engagement in or facilitation of, as determined by the Company, any form of harassment, sexual or otherwise, or any other sexual misconduct. The Company’s dissatisfaction with the Participant’s performance, or the business results achieved, shall not, in and of itself, constitute Cause under this Section. 5.9. Statement of Account. The Plan Administrator shall provide or make available to each Participant (including electronically), not less frequently than annually, a statement in such form as the Plan Administrator deems desirable setting forth the balance of his or her Account. 5.10. Payments from Account. Any payment made to or on behalf of a Participant from his or her Account in an amount which is less than the entire balance of his or her Account shall be made pro rata from each of the Measurement Funds to which such Account is then allocated. ARTICLE VI Payments to Participants 6.1. Distributions. Distributions under this Plan may only be made in accordance with the requirements of Code Section 409A. 6.2. Timing of Benefit Payments. A Participant may elect the timing of his or her benefit payments in the Participation Agreement in a manner established by the Plan Administrator. Such election shall be made in a manner that satisfies Section 409A of the Code with regard to the timing of Participant elections. All payments of benefits shall be made, or shall commence as soon as administratively practicable after the Valuation Date immediately following the earliest of any date designated by the Participant in the applicable Participation Agreement, death, Disability, or Termination. Notwithstanding the above, if the Participant is re-employed by the Employer before

 
11 Classification: DBI Confidential the date any installment payment under the Plan is payable due to a Retirement, any future payments shall be suspended until another payment event occurs. 6.3. Form of Payment. Subject to the requirements of Code Section 409A, benefits payable under the Plan shall be payable in the following form: (a) Termination of Employee Prior to Retirement. Benefits payable as a result of a Termination of a Participant who is an employee prior to Retirement, Disability, or death shall be paid in the form of a single lump sum payment. (b) Termination of Employee Due to Retirement or any Termination of a Non- Employee Director. Benefits payable as a result of (x) a Termination of a Participant who is an employee due to Retirement, or (y) any Termination (whether due to Retirement or prior to Retirement) of a Participant who is a non-employee director, shall be paid in the form elected by the Participant in his or her Participation Agreement. If a Participant fails to make a timely election, benefits shall be paid in the form of a lump sum. Options for form of payment shall include: (i) A lump sum payment, or (ii) Annual installments over a period of three (3), five (5) or ten (10) years. The Participant’s Account shall continue to accrue earnings (or losses) as measured by the Measurement Funds during the payment period on the unpaid balance in the Participant’s Accounts. (c) In-Service Distributions. Benefits payable on a date designated by a Participant that is earlier than the Participant’s Termination, Disability, or death shall be paid in the form of a single lump sum payment. 6.4. Disability. Upon the Disability of a Participant, the Participant shall be paid the balance in his or her Account in the form of a lump sum payment, with such payment to be made as soon as practicable after the Participant's Disability has been determined by the Plan Administrator. Such payment may be made to any legally appointed guardian of the Participant. Upon the Disability of the Participant after installment benefit payments have commenced, the Participant shall receive the remaining unpaid balance in the Participant’s Account in the form of a lump sum payable as soon as administratively practicable after the Participant’s Disability. 6.5. Death. Upon the death of a Participant, the Employer shall pay to the Participant’s Beneficiary the balance in his or her Account in the form of a lump sum payment, with such payment to be made as soon as practicable after the Participant’s death as determined by the Plan Administrator. Upon the death of a Participant after installment benefit payments have commenced, the Participant’s Beneficiary shall receive the remaining unpaid balance in the Participant’s Account in the form of a lump sum payable as soon as administratively practicable after the Participant’s death. To the extent permitted by Code Section 409A, payment pursuant to this Section 6.5 shall be considered timely if it is made by December 31 of the first calendar year following the calendar year during which the Participant’s death occurs. 6.6. Unforeseeable Emergency. Upon a finding that a Participant has suffered an Unforeseeable Emergency, the Plan Administrator may, in its sole discretion, make distributions from the Participant's Elective Deferral Account and/or from the vested balance of the Participant’s Company Contribution Account. A Participant requesting a distribution as a result

 
12 Classification: DBI Confidential of an Unforeseeable Emergency shall apply in writing to the Plan Administrator and shall provide such additional information as the Plan Administrator may require. The amount of the withdrawal shall be limited to the amount necessary to satisfy such emergency plus amounts necessary to pay taxes reasonably anticipated as a result of the distribution, after taking into account the extent to which such hardship is or may be relieved through reimbursement or compensation by insurance or otherwise or by liquidation of the participant's assets (to the extent the liquidation of such assets would not itself cause severe financial hardship). If a distribution is made due to an Unforeseeable Emergency in accordance with this Section 6.6, the Participant's deferrals under this Plan shall cease for the remainder of the Deferral Period in which the distribution occurs. Any resumption of the Participant's deferrals under this Plan shall be made only at the election of the Participant in accordance with Article III herein. 6.7. Change in Election for In-Service Distributions. A Participant may change the payment date of an existing payment election made under Section 6.2 for a Plan Year for an in- service distribution that would otherwise be payable in a single lump sum payment on a date designated by the Participant that is earlier than the Participant’s Termination, Disability, or death pursuant to Section 4.3(c) by filing a new payment election, in the form specified by the Plan Administrator, at least twelve (12) months prior to the original in-service payment date, provided that such new election delays the payment date for the Participant’s lump sum payment pursuant to Section 4.3(c) by at least five (5) years from the original payment date. In no event shall the new payment election take effect until at least twelve (12) months after the date on which the election is made. A Participant may not change the payment date or form of payment with respect to any Accounts payable at Retirement, once elected. 6.8. Small Accounts. Notwithstanding any election made under this Plan, if the total value of the Participant's Account on the Participant’s Retirement date or any subsequent payment date does not exceed the limit imposed by Code Section 402(g) in effect on such date, then the Plan Administrator, in its sole discretion may cause the Participant's Account to be paid to the Participant in one lump sum as soon as practicable after the date on which such Account would otherwise have been paid in accordance with the Participant’s election. 6.9. Valuation of Payments. Any lump sum benefit owed under this Article VI shall be payable in an amount equal to the value of the Participant's Accounts (or relevant portion thereof) as of the most recent Valuation Date in the year in which payment is to be made. The first annual installment payment in a series of installment payments shall be equal to (i) the value of the Participant's Accounts (or relevant portion thereof) as of the most recent Valuation Date, divided by (ii) the number of installment payments elected by the Participant. The remaining installments shall be paid in an amount equal to the value of such Accounts (or relevant portion thereof) as of the most recent Valuation Date, divided by the number of remaining unpaid installment payments. 6.10. Delay of Payment for Specified Employees. Notwithstanding any provision of this Plan to the contrary, in the case of any Participant who is a "specified employee" within the meaning of Code Section 409A(a)(2)(B)(i), no distribution under this Plan due to the Participant’s Retirement or Termination (for any reason other than the Participant’s death) may be made, or may commence, before the Valuation Date immediately following the date that is 6 months after the date of such Participant's “separation from service” within the meaning of Code Section 409A(a)(2)(A)(i).

 
13 Classification: DBI Confidential 6.11. Effect of Code Section 4999. Notwithstanding any other provision of this Plan to the contrary, and unless otherwise specified in another written plan or agreement between the Participant and the Company or an Employer executed simultaneously with or before a Change in Control, if any payments or any acceleration of the payments made to a Participant from his Company Contribution Account, alone or together with any other compensation or benefit a Participant has received or may receive, would result in the Participant’s being subject to an excise tax under Section 4999 of the Code, the amount payable hereunder may be reduced or deferred to the extent necessary to ensure that no payment or distribution by the Employer or any other person to or for the benefit of the Participant will be subject to the excise tax imposed by Section 4999. Such reduction or deferral shall only be made in compliance with Code Section 409A. 6.12. Effect of Payment. The full payment of the applicable benefit under this Article VI shall completely discharge all obligations on the part of the Employer to the Participant (and each Beneficiary) with respect to the operation of this Plan, and the Participant's (and Beneficiary's) rights under this Plan shall terminate. ARTICLE VII Beneficiary Designation 7.1. Beneficiary Designation. Subject to Section 7.3, each Participant shall have the right, at any time, to designate one (1) or more persons or an entity as Beneficiary (both primary as well as contingent) to whom benefits under this Plan shall be paid in the event of such Participant's death prior to complete distribution of the Participant's Accounts. Each Beneficiary designation shall be in a written form prescribed by the Plan Administrator and shall be effective only when filed with the Plan Administrator during the Participant's lifetime. 7.2. Changing Beneficiary. Subject to Section 7.3, any Beneficiary designation may be changed by a Participant without the consent of the previously named Beneficiary by the filing of a new Beneficiary designation with the Plan Administrator. The filing of a new properly completed Beneficiary designation shall cancel all Beneficiary designations previously filed. 7.3. Community Property. If the Participant resides in a community property state, any Beneficiary designation shall be valid or effective only as permitted under applicable law. 7.4. No Beneficiary Designation. If any Participant fails to designate a Beneficiary in the manner provided in Section 7.1, if the Beneficiary designation is void under Section 7.3, or if the Beneficiary designated by a deceased Participant dies before the Participant or before complete distribution of the Participant's Accounts, the Participant's Beneficiary shall be the Participant's estate. 7.5. Effect of Payment. Payment to the deemed Beneficiary shall completely discharge the Employer’s obligations under this Plan. ARTICLE VIII Administration 8.1. Plan Administrator. The Plan Administrator shall be a committee or officer appointed by the Company to administer the Plan. The Plan Administrator shall have full discretionary power and authority to interpret the Plan, to prescribe, amend and rescind any

 
14 Classification: DBI Confidential rules, forms and procedures as it deems necessary or appropriate for the proper administration of the Plan and to make any other determinations, including factual determinations, and take such other actions as it deems necessary or advisable in carrying out its duties under the Plan. If the Company fails to appoint a Plan Administrator, the Company shall serve as the Plan Administrator. 8.2. Agents. The Plan Administrator may, from time to time, employ agents and delegate to them such administrative duties as it sees fit, and may, from time to time, consult with counsel who may be counsel to the Employer. 8.3. Binding Effect of Decisions. All decisions and determinations by the Plan Administrator shall be final, conclusive and binding on the Employer, Participants, Beneficiaries and any other persons having or claiming an interest hereunder. 8.4. Indemnification of Plan Administrator. The Company shall indemnify and hold the Plan Administrator harmless against any and all claims, loss, damage, expense or liability arising from any action or failure to act with respect to this Plan due to the Plan Administrator’s service as such, except in the case of gross negligence or willful misconduct by the Plan Administrator or as expressly provided by statute. ARTICLE IX Claims Procedures 9.1. Claim. A Participant who believes that he or she is being denied a benefit to which he or she is entitled under the Plan may file a written request for such benefit with the Plan Administrator, setting forth his or her claim for benefits. 9.2. Claim Decision Not Involving Determination of Disability. The Plan Administrator shall reply to any claim filed under Section 9.1 that does not involve a determination of disability within a reasonable period of time, but not later than 90 days of receipt of such claim, unless it determines that special circumstances require an extension of time, not to exceed an additional 90 days, for processing the claim. Written notice of such extension, indicating the special circumstances requiring an extension of time and the date by which the Plan Administrator expects to render a decision on such claim, shall be provided to the Participant before the expiration of the original 90-day period. If the claim is denied in whole or in part, such reply shall include a written explanation, using language calculated to be understood by the Participant, setting forth: (a) the specific reason or reasons for such denial; (b) the specific reference to relevant provisions of this Plan on which such denial is based; (c) a description of any additional material or information necessary for the Participant to perfect his or her claim and an explanation why such material or such information is necessary; (d) appropriate information as to the steps to be taken if the Participant wishes to submit the claim for review;

 
15 Classification: DBI Confidential (e) the time limits for requesting a review under Section 9.4 and for review under Section 9.5 hereof; and (f) the Participant's right to bring an action for benefits under Section 502 of ERISA following an adverse decision on review. 9.3. Claim Decision Involving Determination of Disability. The Plan Administrator shall reply to any claim filed under Section 9.1 that involves a determination of Disability within a reasonable period of time, but not later than 45 days of receipt of such claim, unless it determines that an extension of time, not to exceed an additional 30 days, is necessary due to matters beyond the control of the Plan. Written notice of such extension, indicating the circumstances requiring the extension of time and the date by which the Plan Administrator expects to render a decision on such claim, shall be provided to the Participant before the expiration of the original 45-day period. If, prior to the end of the first 30-day extension period, the Plan Administrator determines that, due to matters beyond the control of the Plan, a decision cannot be rendered within that extension period, the period for making a decision shall be extended for up to an additional 30 days. Written notice of such extension, indicating the circumstances requiring the extension of time and the date by which the Plan Administrator expects to render a decision on such claim, shall be provided to the Participant before the expiration of the first 30-day extension period. In the case of a first or second 30-day extension period, the notice informing the Participant of such extension period shall also specifically explain the standards on which entitlement to a benefit is based, the unresolved issues that prevent a decision on the claim, and the additional information needed to resolve those issues. The Participant shall be afforded at least 45 days within which to provide the specified information. If the Participant provides insufficient information or files an incomplete claim, the time for making a decision is tolled (suspended) from the date the Plan Administrator provides the Participant notice of an extension until the date it receives the Participant’s response to the request for additional information. If the claim is denied in whole or in part, such reply shall include a written explanation, using language calculated to be understood by the Participant, setting forth: (a) the specific reason or reasons for such denial; (b) the specific reference to relevant provisions of this Plan on which such denial is based; (c) a description of any additional material or information necessary for the Participant to perfect his or her claim and an explanation why such material or such information is necessary; (d) appropriate information as to the steps to be taken if the Participant wishes to submit the claim for review; (e) the time limits for requesting a review under Section 9.4 and for review under Section 9.6 hereof; (f) the Participant's right to bring an action for benefits under Section 502 of ERISA following an adverse decision on review;

 
16 Classification: DBI Confidential (g) if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse decision, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such a rule, guideline, protocol, or other similar criterion was relied upon in making the adverse decision and that a copy of such rule, guideline, protocol, or other criterion will be provided free of charge to the Participant upon request; and (h) if the adverse decision is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the determination, applying the terms of the plan to the claimant's medical circumstances, or a statement that such explanation will be provided free of charge upon request. 9.4. Request for Review. Within 60 days after the receipt by the Participant of the written explanation described in Section 9.2 above (in the case of a claim decision not involving a determination of Disability), or within 180 days after the receipt by the Participant of the written explanation described in Section 9.3 above (in the case of a claim decision involving a determination of Disability), the Participant may request in writing that the Plan Administrator review its determination. The Participant or his or her duly authorized representative shall be provided, upon request and free of charge, reasonable access to, and copies of, all documents, records and other information relevant to the Participant’s claim for benefits and may submit written comments, documents, records and other information relating to the claim for benefits for consideration by the Plan Administrator. If the Participant does not request a review of the initial determination within such 60-day or 180-day period, as the case may be, the Participant shall be barred and estopped from challenging the determination. 9.5. Review of Decision Not Involving Determination of Disability. After considering all materials presented by the Participant with respect to a request for review of a claim decision not involving a determination of Disability, the Plan Administrator will render a written decision, setting forth (a) the specific reasons for the decision; (b) specific references to the relevant provisions of this Plan on which the decision is based; (c) a statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Participant’s claim for benefits; and (d) the Participant’s right to bring an action for benefits under Section 502 of ERISA. The decision on review shall be communicated to the Participant within a reasonable period of time, but not later than 60 days after the Plan Administrator's receipt of the Participant's request for review. If the Plan Administrator determines that special circumstances require an extension of time for processing the claim, written notice shall be furnished to the Participant prior to the expiration of the initial 60-day period, which notice shall indicate the special circumstances requiring an extension of time and the date, not later than 60 days after the expiration of the

 
17 Classification: DBI Confidential initial 60-day period, by which the Plan Administrator expects to render the decision on review. All decisions on review shall be final and shall bind all parties concerned. 9.6. Review of Decision Involving Determination of Disability. The review of a claim decision involving a determination of Disability shall not afford deference to the initial adverse decision and shall be conducted by an appropriate named fiduciary of the Plan who is neither the individual who made the initial adverse decision that is the subject of the request for review, nor the subordinate of such individual. If the initial adverse decision was based in whole or in part on a medical judgment, the appropriate named fiduciary shall consult with a health care professional who has appropriate training and experience in the field of medicine involved in the medical judgment. Any health care professional engaged for purposes of such consultation shall be an individual who is neither an individual who was consulted in connection with the adverse decision that is the subject of the request for review, nor the subordinate of any such individual. The Plan Administrator shall identify medical or vocational experts whose advice was obtained on behalf of the Plan in connection with the Participant’s adverse decision, without regard to whether the advice was relied upon in making the claim decision. After considering all materials presented by the Participant with respect to a request for review of a claim involving a determination of Disability, the Plan Administrator will render a written decision, setting forth (a) the specific reasons for the decision; (b) the specific reference to relevant provisions of this Plan on which the decision is based; (c) a statement that the Participant is entitled to receive, upon request and free of charge, reasonable access to, and copies of, all documents, records, and other information relevant to the Participant’s claims for benefits; (d) a statement of the Participant’s right to bring an action for benefits under Section 502 of ERISA; (e) if an internal rule, guideline, protocol, or other similar criterion was relied upon in making the adverse decision, either the specific rule, guideline, protocol, or other similar criterion; or a statement that such rule, guideline, protocol, or other similar criterion was relied upon in making the adverse decision and that a copy of the rule, guideline, protocol, or other similar criterion will be provided free of charge to the Participant upon request; (f) if the adverse decision is based on a medical necessity or experimental treatment or similar exclusion or limit, either an explanation of the scientific or clinical judgment for the decision, applying the terms of the Plan to the Participant’s medical circumstances, or a statement that such explanation will be provided free of charge upon request; and (g) the following statement: "You and your Plan may have other voluntary alternative dispute resolution options, such as mediation. One way to find out what may be available is to contact your local U.S. Department of Labor Office and your State insurance regulatory agency."

 
18 Classification: DBI Confidential The decision on review shall be communicated to the Participant within a reasonable period of time, but not later than 45 days after the Plan Administrator's receipt of the Participant's request for review. If the Plan Administrator determines that special circumstances require an extension of time for processing the claim, written notice shall be furnished to the Participant prior to the expiration of the initial 45-day period, which notice shall indicate the special circumstances requiring an extension of time and the date, not later than 45 days after the expiration of the initial 45-day period, by which the Plan Administrator expects to render the decision on review. All decisions on review shall be final and shall bind all parties concerned. ARTICLE X Miscellaneous 10.1. Unfunded Plan. This Plan is intended to be an unfunded plan maintained primarily to provide deferred compensation benefits for a select group of “management or highly compensation employees” within the meaning of Sections 201, 301, and 401 of the Employee Retirement Income Security act of 1974, as amended (“ERISA”), and therefore to be exempt from the provisions of Parts 2, 3, and 4 of Title I of ERISA. Accordingly, the Plan shall terminate and no further benefits shall be paid hereunder if it is determined by a court of competent jurisdiction or by an opinion of counsel that the Plan constitutes an employee pension benefit plan within the meaning of Section 3(2) of ERISA which is not so exempt. 10.2. Unsecured General Creditor. Participants and their Beneficiaries, heirs, successors, and assigns shall have no legal or equitable rights, interest or claims in any property or assets of the Employer, nor shall they be Beneficiaries of, or have any rights, claims or interests in any life insurance policies, annuity contracts, or the proceeds therefrom owned or which may be acquired by the Employer. Except as may be provided in Section 10.3, such policies, annuity contracts or other assets of the Employer shall not be held under any trust for the benefit of Participants, their Beneficiaries, heirs, successors or assigns, or held in any way as collateral security for the fulfilling of the obligations of the Employer under this Plan. Any and all of the Employer’s assets and policies shall be, and remain, the general, unpledged, unrestricted assets of the Employer. The Employer’s obligation under the Plan shall be that of an unfunded and unsecured promise to pay money in the future. 10.3. Trust Fund. The Employer shall be responsible for the payment of all benefits provided under the Plan. At its discretion, the Employer may establish one or more trusts, with such trustees as the Board may approve, for the purpose of providing for the payment of such benefits. Such trust or trusts may be irrevocable, but the assets thereof shall be subject to the claims of the Employer’s creditors. To the extent any benefits provided under the Plan are actually paid from any such trust, the Employer shall have no further obligation with respect thereto, but to the extent not so paid, such benefits shall remain the obligation of, and shall be paid by, the Employer. Further, in no event shall any assets be transferred to any such trust at a time or in a manner that would cause any amount to be included in the income of a Participant pursuant to Code Section 409A(b). 10.4. Protective Provisions. Each Participant and Beneficiary shall cooperate with the Plan Administrator by furnishing any and all information requested by the Plan Administrator in order to facilitate the payment of benefits hereunder. Such cooperation includes providing consent to being insured under a Company owned life insurance policy in which the Company is

 
19 Classification: DBI Confidential the policy beneficiary. If a Participant or Beneficiary refuses to cooperate with the Plan Administrator, the Employer shall have no further obligation to the Participant or Beneficiary under the Plan, other than payment of the then-current balance of the Participant's Accounts in accordance with prior elections. 10.5. Inability to Locate Participant or Beneficiary. If the Plan Administrator is unable to locate a Participant or Beneficiary within two years following the date the Participant was to commence receiving payment, the entire amount allocated to the Participant's Account shall be forfeited. If, after such forfeiture, the Participant or Beneficiary later claims such benefit, such benefit shall be reinstated without interest or earnings from the date payment was to commence pursuant to Article VI. 10.6. No Contract of Employment. Neither the establishment of the Plan, nor any modification thereof, nor the creation of any fund, trust or account, nor the payment of any benefits shall be construed as giving any Participant or any person whosoever, the right to be retained in the service of the Employer, and all Participants and other employees shall remain subject to discharge to the same extent as if the Plan had never been adopted. 10.7. Withholding Taxes. The Plan Administrator and the Employer may make such provisions and take such action as it may deem necessary or appropriate for the withholding of any taxes which the Employer is required by any law or regulation of any governmental authority, whether federal, state or local, to withhold in connection with any contributions or benefits under the Plan, including, but not limited to, the withholding of appropriate sums from any amount otherwise payable to the Participant (or his or her Beneficiary). Each Participant, however, shall be responsible for the payment of all individual tax liabilities relating to any such benefits. 10.8. No Limitation on Employer Actions. Nothing contained in the Plan shall be construed to prevent the Employer from taking any action which is deemed by it to be appropriate or in its best interest. No Participant, Beneficiary, or other person shall have any claim against the Employer as a result of such action. 10.9. Obligations to Employer. If a Participant becomes entitled to a payment of benefits under the Plan, and if at such time the Participant has out-standing any debt, obligation, or other liability representing an amount owing to the Employer, then the Employer may offset such amount owed to it against the amount of benefits otherwise distributable. Such determination shall be made by the Plan Administrator in its sole discretion. 10.10. No Liability for Action or Omission. Neither the Company nor any director, officer or employee of the Company shall be responsible or liable in any manner to any Participant, Beneficiary or any person claiming through them for any benefit or action taken or omitted in connection with the granting of benefits, the continuation of benefits, or the interpretation and administration of this Plan. 10.11. Nonalienation of Benefits. Except as otherwise specifically provided herein, all amounts payable hereunder shall be paid only to the person or persons designated by the Plan and not to any other person or corporation. No part of a Participant's Account shall be liable for

 
20 Classification: DBI Confidential the debts, contracts, or engagements of any Participant, his or her Beneficiary, or successors in interest, nor shall such accounts of a Participant be subject to execution by levy, attachment, or garnishment or by any other legal or equitable proceeding, nor shall any such person have any right to alienate, anticipate, commute, pledge, encumber, or assign any benefits or payments hereunder in any manner whatsoever. By way of illustration, and without limiting the foregoing, a Participant’s benefits under this Plan shall not be transferable by domestic relations order. If any Participant, Beneficiary or successor in interest is adjudicated bankrupt or purports to anticipate, alienate, sell, transfer, assign, pledge, encumber or charge any payment from the Plan, voluntarily or involuntarily, the Plan Administrator, in its discretion, may cancel such payment (or any part thereof) to or for the benefit of such Participant, Beneficiary or successor in interest in such manner as the Plan Administrator shall direct. 10.12. Liability for Benefit Payments. The obligation to pay or provide for payment of a benefit hereunder to any Participant or his or her Beneficiary shall, at all times, be the sole and exclusive liability and responsibility of the Company. 10.13. Governing Law. This Plan shall be construed in accordance with and governed by the laws of the State of Ohio to the extent not superseded by federal law, without reference to the principles of conflict of laws. 10.14. Severability of Provisions. If any provision of this Plan shall be held invalid or unenforceable, such invalidity or unenforceability shall not affect any other provisions hereof, and this Plan shall be construed and enforced as if such provisions had not been included. 10.15. Headings and Captions. The headings and captions herein are provided for reference and convenience only, shall not be considered part of the Plan, and shall not be employed in the construction of the Plan. 10.16. Gender, Singular and Plural. All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, or neuter, as the identity of the person or persons may require. As the context may require, the singular may read as the plural and the plural as the singular. 10.17. Participating Employers. If any affiliated or subsidiary entity wishes to adopt the Plan as an Employer for the benefit of its employees, it shall execute a Participation Agreement or perform any other act as required by the Plan Administrator. 10.18. Notice. Any notice or filing required or permitted to be given to the Plan Administrator under the Plan shall be sufficient if in writing and hand delivered, or sent by registered or certified mail, to the Plan Administrator, Designer Brands Inc. (f/k/a DSW Inc.) Nonqualified Deferred Compensation Plan, c/o Designer Brands Inc. HR Benefits, Designer Brands Inc., 810 DSW Drive, Columbus, Ohio 43219, or to such other person or entity as the Plan Administrator may designate from time to time. Such notice shall be deemed given as to the date of delivery, or, if delivery is made by mail, as of the date shown on the postmark on the receipt for registration or certification.

 
21 Classification: DBI Confidential 10.19. Amendment and Termination. The Plan may be amended, suspended, or terminated at any time by Company or by the Plan Administrator in its sole discretion; provided, however, that no such amendment, suspension or termination shall result in any reduction in the value of a Participant's Accounts determined as of the effective date of such amendment. In addition, the Plan, and/or the terms of any election made hereunder, may be amended at any time and in any respect by Company or by the Plan Administrator if and to the extent recommended by counsel in order to conform to the requirements of Code Section 409A and regulations thereunder. In the event of any suspension or termination of the Plan, payment of Participants' Accounts shall be made under and in accordance with the terms of the Plan and the applicable elections (except that the Plan Administrator may determine, in its sole discretion, to accelerate payments to all Participants if and to the extent that such acceleration is permitted under Code Section 409A and regulations thereunder). 10.20. Code Section 409A. It is intended that the Plan comply with the provisions of Code Section 409A, so as to prevent the inclusion in gross income of any amounts deferred hereunder in a taxable year that is prior to the taxable year or years in which such amounts would otherwise actually be paid or made available to Participants (or their Beneficiaries or estates). This Plan shall be construed, administered, and governed in a manner that effects such intent, and the Plan Administrator shall not take any action that would be inconsistent with such intent. In furtherance of such intent, and notwithstanding any other provision of the Plan to the contrary, the Plan Administrator, in its sole discretion, may: (a) accelerate the time or schedule of a payment under the Plan to a time or form otherwise permitted under Code Section 409A and Treasury Regulation Section 1.409A-3(j); or (b) delay the time or form of a payment under the Plan to a time or form otherwise permitted under Code Section 409A and Treasury Regulation Section 1.409A-2(b)(7). Although the Plan Administrator shall use its best efforts to avoid the imposition of taxation, interest and penalties under Code Section 409A, the tax treatment of deferrals under this Plan is not warranted or guaranteed. Neither the Company and its Affiliates, nor the Plan Administrator (or its delegate(s)) shall be held liable for any taxes, interest, penalties or other monetary amounts owed by any Participant, Beneficiary or other taxpayer as a result of the Plan, whether under Code Section 409A or otherwise. Any reference in this Plan to Code Section 409A will also include any proposed, temporary or final regulations, or any other guidance, promulgated with respect to Code Section 409A by the U.S. Department of Treasury or the Internal Revenue Service. For purposes of the Plan, the phrase “permitted by Section 409A of the Code,” or words or phrases of similar import, shall mean that the event or circumstance shall only be permitted to the extent it would not cause an amount deferred or payable under the Plan to be includible in the gross income of a Participant or Beneficiary under Code Section 409A.

 

EXHIBIT 31.1

CERTIFICATIONS

I, Roger Rawlins, certify that:
1.    I have reviewed this Quarterly Report on Form 10-Q of Designer Brands Inc.;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
December 1, 2022By:/s/ Roger Rawlins
Roger Rawlins
Chief Executive Officer
(Principal Executive Officer)

EXHIBIT 31.2

CERTIFICATIONS

I, Jared Poff, certify that:
1.    I have reviewed this Quarterly Report on Form 10-Q of Designer Brands Inc.;
2.    Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.    Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.    The registrant's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
(a)    Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)    Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c)    Evaluated the effectiveness of the registrant's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(d)    Disclosed in this report any change in the registrant's internal control over financial reporting that occurred during the registrant's most recent fiscal quarter (the registrant's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant's internal control over financial reporting; and
5.    The registrant's other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee of the registrant's board of directors (or persons performing the equivalent functions):
(a)    All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant's ability to record, process, summarize and report financial information; and
(b)    Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal control over financial reporting.
December 1, 2022By:/s/ Jared Poff
Jared Poff
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)

EXHIBIT 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Designer Brands Inc. (the "Company") on Form 10-Q for the fiscal quarter ended October 29, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Roger Rawlins, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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

(2)    The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
December 1, 2022By:/s/ Roger Rawlins
Roger Rawlins
Chief Executive Officer
(Principal Executive Officer)
    
*    This Certification is being furnished as required by Rule 13a-14(b) under the Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.

EXHIBIT 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002*

In connection with the Quarterly Report of Designer Brands Inc. (the "Company") on Form 10-Q for the fiscal quarter ended October 29, 2022 as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, Jared Poff, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. § 1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, that, to the best of my knowledge:

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

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

December 1, 2022By:/s/ Jared Poff
Jared Poff
Executive Vice President and Chief Financial Officer
(Principal Financial Officer)
    
*    This Certification is being furnished as required by Rule 13a-14(b) under the Exchange Act of 1934 (the "Exchange Act") and Section 1350 of Chapter 63 of Title 18 of the United States Code, and shall not be deemed "filed" for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section. This Certification shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933 or the Exchange Act, except as otherwise stated in such filing.