# Designer Brands Inc.: Form 10-Q for the period ended Aug 1, 2026

- Company: [Designer Brands Inc.](/companies/dbi.md) (CIK 1319947)
- Form: 10-Q
- Filed: 2026-09-10
- Accepted by EDGAR: Sep 10, 2026, 16:16 ET
- Period: 2026-08-01
- Accession: 0001319947-26-000050
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1319947/000131994726000050/dsw-20260801.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1319947/000131994726000050/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2026-08-01.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2026-05-03 to 2026-08-01 | $730.6m | us-gaap:Revenues |
| Revenue | 6 months, 2026-02-01 to 2026-08-01 | $1.43bn | us-gaap:Revenues |
| Gross profit | 3 months, 2026-05-03 to 2026-08-01 | $365.4m | us-gaap:GrossProfit |
| Gross profit | 6 months, 2026-02-01 to 2026-08-01 | $680.7m | us-gaap:GrossProfit |
| Selling, general and administrative | 3 months, 2026-05-03 to 2026-08-01 | $313.4m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 6 months, 2026-02-01 to 2026-08-01 | $612.6m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2026-05-03 to 2026-08-01 | $54.7m | us-gaap:OperatingIncomeLoss |
| Operating income | 6 months, 2026-02-01 to 2026-08-01 | $73.6m | us-gaap:OperatingIncomeLoss |
| Income tax | 3 months, 2026-05-03 to 2026-08-01 | $10.0m | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 6 months, 2026-02-01 to 2026-08-01 | $14.8m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2026-05-03 to 2026-08-01 | $17.6m | us-gaap:NetIncomeLoss |
| Net income | 6 months, 2026-02-01 to 2026-08-01 | $18.7m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2026-05-03 to 2026-08-01 | $0.31 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 6 months, 2026-02-01 to 2026-08-01 | $0.34 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2026-05-03 to 2026-08-01 | $0.34 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 6 months, 2026-02-01 to 2026-08-01 | $0.37 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2026-05-03 to 2026-08-01 | 55,974,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 6 months, 2026-02-01 to 2026-08-01 | 55,757,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 6 months, 2026-02-01 to 2026-08-01 | $48.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 6 months, 2026-02-01 to 2026-08-01 | $22.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 6 months, 2026-02-01 to 2026-08-01 | $5.0m | us-gaap:PaymentsOfDividends |
| Cash and equivalents | at 2026-08-01 | $51.6m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2026-08-01 | $762.9m | us-gaap:AssetsCurrent |
| Total assets | at 2026-08-01 | $2.01bn | us-gaap:Assets |
| Current liabilities | at 2026-08-01 | $627.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2026-08-01 | $1.70bn | us-gaap:Liabilities |
| Long-term debt | at 2026-08-01 | $416.3m | us-gaap:LongTermDebt |
| Current portion of debt | at 2026-08-01 | $6.8m | us-gaap:LongTermDebtCurrent |
| Shareholders' equity | at 2026-08-01 | $301.1m | us-gaap:StockholdersEquityIncludingPortionAttributableToNoncontrollingInterest |

## Management's discussion and analysis

As filed, 42,209 characters.

### EXECUTIVE OVERVIEW AND TRENDS IN OUR BUSINESS

As described in Note 1*, Description of Business and Significant Accounting Policies - Immaterial Restatements of Prior Periods*, of the condensed consolidated financial statements of this Form 10-Q, we have made immaterial corrections to comparative prior period amounts. Refer to Note 12, *Immaterial Restatements of Prior Period Financial Statements,* of the condensed consolidated financial statements of this Form 10-Q for quantification of the prior period restatement impacts.

For the second quarter of 2026, net sales decreased 1.2% with a decrease in total comparable sales of 2.4% when compared to the same period last year. Gross profit as a percentage of net sales for the second quarter of 2026 was 50.0%, which included the benefit of $35.5 million of tariff recoveries recorded as a reduction of cost of sales and contributed to the total increase of 640 basis points when compared to the same period last year.

### EFFECTS OF MACROECONOMIC CONDITIONS AND TARIFFS

Macroeconomic conditions influenced by uncertain tariff policies, inflation, elevated fuel prices, stock market indices, interest rates and employment levels, along with geopolitical unrest, continue to persist and create a challenging retail environment. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. We believe these ongoing uncertainties have had a negative impact on our operating results and liquidity during 2026 and we may continue to experience the impact of decreased consumer demand for our products and lower direct-to-consumer traffic. We have enacted certain mitigating actions, including alignment of inventory with current demand levels and expense reductions. Although we have made progress in mitigating the impacts of certain macroeconomic conditions, our actions are not necessarily complete, and they should be viewed as part of the process in which we will continue our efforts to better align our cost structure with our operating results. We are unable to predict the severity of macroeconomic uncertainty, whether or when such circumstances may improve or worsen, including from one of our quarterly reporting periods to the next, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact further mitigating operating efficiency measures that could have a material adverse effect on our business, results of operations, and liquidity.

Following its January 2025 inauguration, the U.S. administration has taken action to increase tariffs assessed on most products imported into the U.S. Various modifications to the U.S. tariffs have been announced, and further changes are expected to be made in the future, including in response to litigation, which has introduced heightened uncertainty regarding the future of global trade and the impact to our cost structure. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the IEEPA. During April 2026, the CBP launched the CAPE process, which allows entities to submit refund claims for paid IEEPA tariffs. During the first quarter of 2026, we submitted claims seeking refunds of previously paid IEEPA tariffs through CAPE. Prior to the U.S. Supreme Court ruling, we entered into an agreement to sell the rights to potential claims to an Investor. As the refunds for the sold claims are received, we are remitting such funds to the Investor and recording the remittance as a financing transaction.

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

Further, following the U.S. Supreme Court decision, the U.S. administration imposed a new tariff surcharge of not less than 10% under Section 122 of the Trade Act of 1974 on all imports, subject to certain exceptions. The tariffs under this statute took effect on February 24, 2026, and remained in effect for 150 days (the maximum under the statute). Effective upon the expiration of these tariffs in July 2026, new tariff rates generally ranging from 10% to 12.5% on most imports from certain countries were imposed pursuant to Section 301of the Trade Act of 1974. Additional tariffs under Section 338 of the Tariff Act of 1930 were also recently imposed. Uncertainty with respect to tariffs remains ongoing, and U.S. import tariffs and international trade arrangements are expected to continue to change, potentially without warning and to an extent or duration that is difficult to predict. Changing tariff rates and shifting trade policies have created significant uncertainty, and our efforts to mitigate the impacts of tariffs are time-consuming and costly and may not be effective. Any future tariffs or other trade policy actions, including retaliatory measures enacted in response to such actions, could affect our cost structure and supply chain. All of the products manufactured through the Brand Portfolio segment come from third-party facilities outside of the U.S., with the majority of our units sourced from Asia. In addition to the merchandise sourced through our Brand Portfolio segment, our Retail segment also sources merchandise from third-party suppliers, with many of these suppliers importing a large portion of their merchandise from Asia. We are closely monitoring this situation and evaluating the actions we have taken and additional actions we may take in the future, including cost mitigation measures and price adjustments. For our Brand Portfolio segment, we have adjusted our sourcing diversification by optimizing where we source our products from in an effort to mitigate the risk, maximize flexibility, and decrease costs. However, sourcing diversification could result in product quality issues, higher product costs, and/or not being able to source the quantity desired on a timely basis and there can be no assurance that we will be able to fully mitigate the impact of such tariffs or new tariffs in Asia or elsewhere. The ultimate impact of tariffs and other trade policies on our business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures, and our ability to mitigate effects, which could include higher import costs and our ability to obtain any refund. Accordingly, our financial position or results of operations may be adversely influenced by political, economic, legal, compliance, social, and business conditions in the U.S. and in other countries.

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

### FINANCIAL SUMMARY AND OTHER KEY METRICS

For the three months ended August 1, 2026:

- Net sales decreased to $730.6 million from $739.8 million for the same period last year.
- Gross profit as a percentage of net sales was 50.0% compared to 43.6% for the same period last year.
- Net income attributable to Designer Brands Inc. was $17.6 million, or $0.31 per diluted share, compared to net income attributable to Designer Brands Inc. of $10.5 million, or $0.21 per diluted share, for the same period last year.

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

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

We consider the percent change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important measurement for management and investors of the performance of our direct-to-consumer businesses. We include in our comparable sales metric sales from stores in operation for at least 14 months at the beginning of the applicable year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Comparable sales include net sales from e-commerce sites. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation.

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

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

20

### RESULTS OF OPERATIONS

### SECOND QUARTER OF 2026 COMPARED WITH SECOND QUARTER OF 2025

*(amounts in thousands, except per share amounts)*

| August 1, 2026 | Three months ended Amount | % of Net Sales | August 2, 2025 Amount | % of Net Sales | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | **$730,631** | **100.0%** | $739,762 | 100.0% | $(9,131) | (1.2)% |
| Cost of sales | **(365,276)** | **(50.0)** | (417,269) | (56.4) | 51,993 | (12.5)% |
| Gross profit | **365,355** | **50.0** | 322,493 | 43.6 | 42,862 | 13.3% |
| Operating expenses | **(313,412)** | **(42.9)** | (297,462) | (40.2) | (15,950) | 5.4% |
| Income from equity investment | **2,780** | **0.4** | 2,578 | 0.3 | 202 | 7.8% |
| Impairment charges | **—** | **—** | (1,466) | (0.2) | 1,466 | NM |
| Operating profit | **54,723** | **7.5** | 26,143 | 3.5 | 28,580 | 109.3% |
| Interest expense on debt and tariff sale financing transaction, net of interest income | **(25,385)** | **(3.5)** | (11,783) | (1.6) | (13,602) | 115.4% |
| Non-operating income (expenses), net | **1,244** | **0.2** | (78) | — | 1,322 | NM |
| Income before income taxes and loss from equity investment | **30,582** | **4.2** | 14,282 | 1.9 | 16,300 | 114.1% |
| Income tax provision | **(10,031)** | **(1.4)** | (3,408) | (0.4) | (6,623) | 194.3% |
| Loss from equity investment | **(134)** | **—** | — | — | (134) | NM |
| Net income | **20,417** | **2.8** | 10,874 | 1.5 | 9,543 | 87.8% |
| Net income attributable to redeemable noncontrolling interest | **(2,860)** | **(0.4)** | (339) | (0.1) | (2,521) | 743.7% |
| Net income attributable to Designer Brands Inc. | **$17,557** | **2.4%** | $10,535 | 1.4% | $7,022 | 66.7% |
| Earnings per share attributable to Designer Brands Inc.: |  |  |  |  |  |  |
| Basic earnings per share | **$0.34** |  | $0.21 |  | $0.13 | 61.9% |
| Diluted earnings per share | **$0.31** |  | $0.21 |  | $0.10 | 47.6% |
| Weighted average shares used in per share calculations: |  |  |  |  |  |  |
| Basic shares | **50,894** |  | 49,109 |  | 1,785 | 3.6% |
| Diluted shares | **55,974** |  | 49,734 |  | 6,240 | 12.5% |

NM - Not meaningful

### NET SALES

The following table summarizes net sales by segment:

*(amounts in thousands)*

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

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

### GROSS PROFIT

The following table summarizes gross profit by segment:

*(amounts in thousands)*

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

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

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

*(in thousands)*

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

### OPERATING EXPENSES

The following table summarizes operating expenses by segment:

*(amounts in thousands)*

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

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

### OPERATING PROFIT

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

*(amounts in thousands)*

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

NM - Not meaningful

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

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

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

*(in thousands)*

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

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

### INCOME TAXES

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

### SIX MONTHS OF 2026 COMPARED WITH SIX MONTHS OF 2025

*(amounts in thousands, except per share amounts)*

| August 1, 2026 | Six months ended Amount | % of Net Sales | August 2, 2025 Amount | % of Net Sales | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: | ---: | ---: |
| Net sales | **$1,426,981** | **100.0%** | $1,426,671 | 100.0% | $310 | —% |
| Cost of sales | **(746,308)** | **(52.3)** | (809,697) | (56.8) | 63,389 | (7.8)% |
| Gross profit | **680,673** | **47.7** | 616,974 | 43.2 | 63,699 | 10.3% |
| Operating expenses | **(612,621)** | **(42.9)** | (599,324) | (42.0) | (13,297) | 2.2% |
| Income from equity investment | **5,541** | **0.4** | 5,005 | 0.4 | 536 | 10.7% |
| Impairment charges | **—** | **—** | (4,419) | (0.3) | 4,419 | NM |
| Operating profit | **73,593** | **5.2** | 18,236 | 1.3 | 55,357 | 303.6% |
| Interest expense on debt and tariff sale financing transaction, net of interest income | **(35,510)** | **(2.5)** | (23,754) | (1.7) | (11,756) | 49.5% |
| Non-operating income (expenses), net | **1,239** | **0.1** | (70) | — | 1,309 | NM |
| Income (loss) before income taxes and loss from equity investment | **39,322** | **2.8** | (5,588) | (0.4) | 44,910 | NM |
| Income tax provision | **(14,836)** | **(1.1)** | (1,219) | (0.1) | (13,617) | 1,117.1% |
| Loss from equity investment | **(615)** | **—** | — | — | (615) | NM |
| Net income (loss) | **23,871** | **1.7** | (6,807) | (0.5) | 30,678 | NM |
| Net income attributable to redeemable noncontrolling interest | **(5,155)** | **(0.4)** | (474) | — | (4,681) | 987.6% |
| Net income (loss) attributable to Designer Brands Inc. | **$18,716** | **1.3%** | $(7,281) | (0.5)% | $25,997 | NM |
| Earnings (loss) per share attributable to Designer Brands Inc.: |  |  |  |  |  |  |
| Basic earnings (loss) per share | **$0.37** |  | $(0.15) |  | $0.52 | NM |
| Diluted earnings (loss) per share | **$0.34** |  | $(0.15) |  | $0.49 | NM |
| Weighted average shares used in per share calculations: |  |  |  |  |  |  |
| Basic shares | **50,567** |  | 48,678 |  | 1,889 | 3.9% |
| Diluted shares | **55,757** |  | 48,678 |  | 7,079 | 14.5% |

NM - Not meaningful

### NET SALES

The following table summarizes net sales by segment:

*(amounts in thousands)*

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

For the six months ended August 1, 2026, net sales decreased in the Retail segment over the same period last year primarily driven by a decline in comparable sales of approximately $24.0 million, which was partially offset by an increase in non-product sales activity, including service revenue and shipping revenue. The decrease in comparable sales for the Retail segment was largely driven by lower comparable transactions of approximately 8% primarily due to reduced conversion and slightly lower traffic, partially offset by an increase in comparable average sales amounts per transaction. The increase in net sales for the Brand Portfolio segment was primarily due to higher revenue from wholesale activity due to increased demand from retail customers and the Retail segment, as we are experiencing positive trends in the dress category and the expansion of retail partner locations for Topo along with new Topo product introductions.

### GROSS PROFIT

The following table summarizes gross profit by segment:

*(amounts in thousands)*

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

The increase in gross profit for the Retail segment over the same period last year was primarily driven by the higher margin rates, which was driven by lower promotional activity and higher penetration of non-product sales activities. The increase in gross profit for the Brand Portfolio segment was primarily due to higher net sales as demand from retail customers increased with higher margin rates. Gross profit as a percentage of segment net sales increased for the Brand Portfolio segment primarily due to product mix and lower clearance activity, along with lower tariff rates and the leverage of fixed royalty expenses on higher net sales. Consolidated gross profit included the benefit of $35.5 million of tariff recoveries recorded as a reduction of cost of sales and resulted in a 250 basis point improvement over the same period last year in consolidated gross profit as a percentage of consolidated net sales.

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

*(in thousands)*

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

### OPERATING EXPENSES

The following table summarizes operating expenses by segment:

*(amounts in thousands)*

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

For the six months ended August 1, 2026, operating expenses increased in the Retail segment over the same period last year primarily due to an increase in marketing expenses of $6.3 million, an increase in personnel overhead costs of $2.3 million driven by higher incentive compensation as we did not recognize incentive compensation the same period last year based on the performance of the business relative to our targets, with the remaining increase primarily due to higher occupancy costs driven by the impact of lease renewals. Operating expenses as a percentage of net sales increased in the Retail segment due to higher expenses on lower net sales. Operating expenses increased in the Brand Portfolio segment due to an increase in marketing expenses of $1.6 million, with the remaining increase primarily due to distribution and fulfillment costs in line with higher net sales. Operating expenses as a percentage of segment net sales decreased in the Brand Portfolio segment as the increase in operating expenses leveraged on higher net sales. Operating expenses decreased for corporate shared services primarily due to restructuring actions taken in 2025, partially offset by an increase in incentive compensation as we did not recognize incentive compensation the same period last year based on the performance of the business relative to our targets.

### OPERATING PROFIT

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

*(amounts in thousands)*

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

NM - Not meaningful

For the six months ended August 1, 2026, operating profit for the Retail segment increased over the same period last year due to higher gross profit partially offset by higher operating expenses. The Brand Portfolio segment had an operating profit for the six months ended August 1, 2026 due to gross profit and income from equity investment exceeding operating expenses whereas the segment had an operating loss for the same period last year. Corporate/eliminations were favorable to consolidated operating profit due to the benefit of tariff recoveries of $35.5 million, partially offset by unfavorable intersegment activity. These factors led to an increase in consolidated operating profit for the six months ended August 1, 2026 as compared to the same period last year.

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

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

*(in thousands)*

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

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

### INCOME TAXES

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

### LIQUIDITY AND CAPITAL RESOURCES

### OVERVIEW

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy, and withstand unanticipated business volatility, including the impacts of the current macroeconomic conditions on our results of operations. We believe that cash generated from our operations, together with our current levels of cash, as well as the availability under our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures, and meet our debt service obligations over the next 12 months and beyond. As discussed above in the "*Executive Overview and Trends in Our Business*" section under the heading "*Effects of Macroeconomic Conditions and Tariffs*," current macroeconomic conditions have had a negative impact on our operating results and liquidity and we may continue to experience the impact of decreased consumer demand for our products. Future impacts are unknown at this time and could have a material adverse effect on our business, operations, results of operations, and liquidity.

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

*(in thousands)*

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

### OPERATING CASH FLOWS

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

### INVESTING CASH FLOWS

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

### FINANCING CASH FLOWS

For the six months ended August 1, 2026, net cash used in financing activities was primarily due to net payments on our ABL Revolver and debt issuance costs associated with amending our ABL Revolver compared to net cash provided by financing activities last year primarily due to net borrowings on our ABL Revolver.

### DEBT

***ABL Revolver-*** The ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes a first-in last-out term loan ("FILO Term Loan") with $29.5 million borrowed. The FILO Term Loan may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO

Term Loan may be reborrowed. The ABL Revolver may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. The ABL Revolver matures on the earlier of the maturity date of the Term Loan (currently June 2028) or February 2031. As of August 1, 2026, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $437.0 million, with $280.2 million in outstanding borrowings and $10.6 million in letters of credit issued, resulting in $146.2 million available for borrowings.

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

***Debt Covenants-*** The ABL Revolver requires us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. At any time that liquidity is less than $100.0 million, the Term Loan requires a maximum consolidated net leverage ratio as of the last day of each fiscal month of 2.50 to 1.00, calculated on a trailing twelve-month basis. Testing of the consolidated net leverage ratio ends after liquidity has been greater than or equal to $100.0 million for a period of 45 consecutive days. The ABL Revolver and the Term Loan also contain customary covenants restricting certain activities, including limitations on our ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. As of August 1, 2026, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan.

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

### PLANS FOR CAPITALIZED COSTS

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

### RECENT ACCOUNTING PRONOUNCEMENTS

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

### CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

## Market risk

As filed, 231 characters.

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

## Controls and procedures

As filed, 925 characters.

### EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES

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

### CHANGES IN INTERNAL CONTROL OVER FINANCIAL REPORTING

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

## Risk factors

As filed, 159 characters.

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

Filed Sep 10, 2026.
Source: SEC EDGAR, the filing index for accession 0001319947-26-000050. Last ingested by Listed: Nov 3, 2026, 19:27 ET. No prices; not investment advice.