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 ~~31, 2020~~30, 2021

☐	Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from _____________ to _____________

Commission file number: 1-~~2191~~-2191


CALERES, INC.
(Exact name of registrant as specified in its charter)

New York	43-0197190
(State or other jurisdiction	(IRS Employer Identification Number)
of incorporation or organization)

8300 Maryland Avenue	63105
St. Louis, Missouri	(Zip Code)
(Address of principal executive offices)

(314) 854-4000
(Registrant’s telephone number, including area code)

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


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock - par value of $0.01 per share	CAL	New York Stock Exchange

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

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

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


Large accelerated filer ☑☐	Accelerated filer ☐☑
Non-accelerated filer ☐	Smaller reporting company ☐
	Emerging growth company ☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☑

As of November ~~27, 2020, 37,906,760~~26, 2021, 38,089,914 common shares were outstanding.

Table of Contents

PART IFINANCIAL INFORMATION

ITEM 1FINANCIAL STATEMENTS

CALERES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

($thousands)

October 31, 2020

November 2, 2019

February 1, 2020
Assets






Current assets:






Cash and cash equivalents

$
124,330

$
52,502

$
45,218
Receivables, net

141,059

156,253

162,181
Inventories, net

507,365

644,646

618,406
Income taxes

53,888

2,271

6,189
Prepaid expenses and other current assets

45,513

45,974

50,305
Total current assets

872,155

901,646

882,299

Other assets

97,050

92,214

89,389
Goodwill

4,956

245,275

245,275
Intangible assets, net

262,118

297,570

294,304
Lease right-of-use assets

601,574

704,244

695,594
Property and equipment

562,003

591,370

593,979
Allowance for depreciation

(372,796)

(361,109)

(369,133)
Property and equipment, net

189,207

230,261

224,846
Total assets

$
2,027,060

$
2,471,210

$
2,431,707

Liabilities and Equity






Current liabilities:






Borrowings under revolving credit agreement

$
300,000

$
295,000

$
275,000
Mandatory purchase obligation

30,146

0

0
Trade accounts payable

285,582

275,699

267,018
Income taxes

7,053

13,979

7,186
Lease obligations

156,200

144,501

127,869
Other accrued expenses

180,927

165,051

173,877
Total current liabilities

959,908

894,230

850,950

Other liabilities:






Noncurrent lease obligations

556,343

629,731

629,032
Long-term debt

198,736

198,276

198,391
Income taxes

7,786

7,786

7,786
Other liabilities

42,632

87,837

96,418
Total other liabilities

805,497

923,630

931,627

Equity:






Common stock

379

406

404
Additional paid-in capital

159,327

152,214

153,489
Accumulated other comprehensive loss

(31,184)

(30,318)

(31,843)
Retained earnings

128,149

528,538

523,900
Total Caleres, Inc. shareholders’ equity

256,671

650,840

645,950
Noncontrolling interests

4,984

2,510

3,180
Total equity

261,655

653,350

649,130
Total liabilities and equity

$
2,027,060

$
2,471,210

$
2,431,707



	(Unaudited)
($ thousands)	October 30, 2021		October 31, 2020		January 30, 2021
Assets
Current assets:
Cash and cash equivalents	$	74,772	$	124,330	$	88,295
Receivables, net		161,892		141,059		126,994
Inventories, net		543,218		507,365		487,955
Income taxes		35,026		53,888		33,925
Prepaid expenses and other current assets		47,790		45,513		45,387
Total current assets		862,698		872,155		782,556

Prepaid pension costs		96,705		59,267		88,833
Lease right-of-use assets		500,308		601,574		554,303
Property and equipment, net		155,516		189,207		172,437
Deferred income taxes		0		9,456		0
Goodwill and intangible assets, net		230,625		267,074		240,071
Other assets		28,706		28,327		28,850
Total assets	$	1,874,558	$	2,027,060	$	1,867,050

Liabilities and Equity
Current liabilities:
Borrowings under revolving credit agreement	$	175,000	$	300,000	$	250,000
Mandatory purchase obligation - Blowfish Malibu		54,558		30,146		39,134
Current portion of long-term debt		99,598		0		0
Trade accounts payable		352,084		285,582		280,501
Income taxes		22,371		7,053		5,069
Lease obligations		128,151		156,200		153,060
Other accrued expenses		238,298		180,927		177,745
Total current liabilities		1,070,060		959,908		905,509

Other liabilities:
Noncurrent lease obligations		452,786		556,343		518,942
Long-term debt		0		198,736		198,851
Income taxes		2,464		7,786		5,038
Deferred income taxes		13,603		12,944		8,244
Other liabilities		29,900		29,688		26,612
Total other liabilities		498,753		805,497		757,687

Equity:
Common stock		383		379		380
Additional paid-in capital		165,475		159,327		160,446
Accumulated other comprehensive loss		(8,471)		(31,184)		(9,136)
Retained earnings		143,711		128,149		48,557
Total Caleres, Inc. shareholders’ equity		301,098		256,671		200,247
Noncontrolling interests		4,647		4,984		3,607
Total equity		305,745		261,655		203,854
Total liabilities and equity	$	1,874,558	$	2,027,060	$	1,867,050

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)

    (Unaudited)

Thirteen Weeks Ended

Thirty-Nine Weeks Ended
($thousands, except per share amounts)

October 31, 2020

November 2, 2019

October 31, 2020

November 2, 2019
Net sales

$
647,480

$
792,375

$
1,546,111

$
2,222,614
Cost of goods sold

390,508

472,605

984,621

1,317,064
Gross profit

256,972

319,770

561,490

905,550
Selling and administrative expenses

236,901

275,330

663,425

804,972
Impairment of goodwill and intangible assets

0

0

262,719

0
Restructuring and other special charges, net

0

969

65,625

2,434
Operating earnings (loss)

20,071

43,471

(430,279)

98,144
Interest expense, net

(10,881)

(10,559)

(33,747)

(25,288)
Other income, net

5,461

2,633

12,718

7,902
Earnings (loss) before income taxes

14,651

35,545

(451,308)

80,758
Income tax benefit (provision)

275

(7,784)

89,393

(18,685)
Net earnings (loss)

14,926

27,761

(361,915)

62,073
Net earnings (loss) attributable to noncontrolling interests

509

(226)

223

(338)
Net earnings (loss) attributable to Caleres, Inc.

$
14,417

$
27,987

$
(362,138)

$
62,411

Basic earnings (loss) per common share attributable to Caleres, Inc. shareholders

$
0.38

$
0.69

$
(9.67)

$
1.51

Diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders

$
0.38

$
0.69

$
(9.67)

$
1.51


	(Unaudited)
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
($ thousands, except per share amounts)	October 30,2021		October 31,2020		October 30, 2021		October 31, 2020
Net sales	$	784,156	$	647,480	$	2,098,323	$	1,546,111
Cost of goods sold		448,805		390,508		1,165,792		984,621
Gross profit		335,351		256,972		932,531		561,490
Selling and administrative expenses		254,033		236,901		757,070		663,425
Impairment of goodwill and intangible assets		0		0		0		262,719
Restructuring and other special charges, net		0		0		13,482		65,625
Operating earnings (loss)		81,318		20,071		161,979		(430,279)
Interest expense, net		(5,069)		(10,881)		(28,803)		(33,747)
Loss on early extinguishment of debt		(649)		0		(649)		0
Other income, net		3,844		5,461		11,533		12,718
Earnings (loss) before income taxes		79,444		14,651		144,060		(451,308)
Income tax (provision) benefit		(19,759)		275		(39,838)		89,393
Net earnings (loss)		59,685		14,926		104,222		(361,915)
Net earnings attributable to noncontrolling interests		63		509		1,057		223
Net earnings (loss) attributable to Caleres, Inc.	$	59,622	$	14,417	$	103,165	$	(362,138)

Basic earnings (loss) per common share attributable to Caleres, Inc. shareholders	$	1.56	$	0.38	$	2.70	$	(9.67)

Diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders	$	1.54	$	0.38	$	2.68	$	(9.67)

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)


	(Unaudited)								(Unaudited)
	Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended
($thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
($ thousands)									October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Net earnings (loss)	$	14,926	$	27,761	$	(361,915)	$	62,073	$	59,685	$	14,926	$	104,222	$	(361,915)
Other comprehensive income (loss), net of tax:
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment		401		582		(409)		(397)		(267)		401		(423)		(409)
Pension and other postretirement benefits adjustments		(67)		429		1,057		1,285		358		(67)		1,071		1,057
Derivative financial instruments		0		63		92		361		0		0		0		92
Other comprehensive income, net of tax		334		1,074		740		1,249		91		334		648		740
Comprehensive income (loss)		15,260		28,835		(361,175)		63,322		59,776		15,260		104,870		(361,175)
Comprehensive income (loss) attributable to noncontrolling interests		590		(239)		304		(372)
Comprehensive income attributable to noncontrolling interests										53		590		1,040		304
Comprehensive income (loss) attributable to Caleres, Inc.	$	14,670	$	29,074	$	(361,479)	$	63,694	$	59,723	$	14,670	$	103,830	$	(361,479)

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

Thirty-Nine Weeks Ended
($thousands)

October 31, 2020

November 2, 2019
Operating Activities




Net (loss) earnings

$
(361,915)

$
62,073
Adjustments to reconcile net (loss) earnings to net cash provided by operating activities:


Depreciation

31,923

34,312
Amortization of capitalized software

4,410

4,910
Amortization of intangible assets

9,786

9,790
Amortization of debt issuance costs and debt discount

1,016

979
Fair value adjustments to mandatory purchase obligation

14,946

4,410
Share-based compensation expense

6,920

8,933
Loss on disposal of property and equipment

848

874
Impairment charges for property, equipment, and lease right-of-use assets

35,620

5,105
Impairment of goodwill and intangible assets

262,719

0
Provision for expected credit losses

10,663

728
Changes in operating assets and liabilities:


Receivables

8,313

34,740
Inventories

110,954

37,482
Prepaid expenses and other current and noncurrent assets

(60,300)

(7,819)
Trade accounts payable

18,592

(37,537)
Accrued expenses and other liabilities

55,345

(25,627)
Income taxes, net

(47,833)

12,470
Other, net

(241)

(86)
Net cash provided by operating activities

101,766

145,737

Investing Activities




Purchases of property and equipment

(12,016)

(37,354)
Disposals of property and equipment

0

636
Capitalized software

(3,525)

(4,893)
Net cash used for investing activities

(15,541)

(41,611)

Financing Activities




Borrowings under revolving credit agreement

340,500

237,000
Repayments under revolving credit agreement

(315,500)

(277,000)
Dividends paid

(8,148)

(8,631)
Acquisition of treasury stock

(23,348)

(31,168)
Issuance of common stock under share-based plans, net

(1,078)

(2,605)
Contributions by noncontrolling interests

1,500

1,500
Other

(980)

(1,022)
Net cash used for financing activities

(7,054)

(81,926)
Effect of exchange rate changes on cash and cash equivalents

(59)

102
Increase in cash and cash equivalents

79,112

22,302
Cash and cash equivalents at beginning of period

45,218

30,200
Cash and cash equivalents at end of period

$
124,330

$
52,502


	Thirty-Nine Weeks Ended
($ thousands)	October 30, 2021		October 31, 2020
Operating Activities
Net earnings (loss)	$	104,222	$	(361,915)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:
Depreciation		25,617		31,923
Amortization of capitalized software		4,417		4,410
Amortization of intangible assets		9,446		9,786
Amortization of debt issuance costs and debt discount		732		1,016
Fair value adjustments to Blowfish mandatory purchase obligation		15,424		14,946
Loss on early extinguishment of debt		649		0
Share-based compensation expense		8,811		6,920
Loss on disposal of property and equipment		640		848
Impairment charges for property, equipment, and lease right-of-use assets		3,399		35,620
Impairment of goodwill and intangible assets		0		262,719
Provision/adjustment for expected credit losses		(2,711)		10,663
Deferred income taxes		5,359		(41,790)
Changes in operating assets and liabilities:
Receivables		(32,188)		8,313
Inventories		(54,917)		110,954
Prepaid expenses and other current and noncurrent assets		(9,056)		(18,510)
Trade accounts payable		71,468		18,592
Accrued expenses and other liabilities		25,972		55,345
Income taxes, net		13,627		(47,833)
Other, net		(1,183)		(241)
Net cash provided by operating activities		189,728		101,766

Investing Activities
Purchases of property and equipment		(10,437)		(12,016)
Capitalized software		(4,122)		(3,525)
Net cash used for investing activities		(14,559)		(15,541)

Financing Activities
Borrowings under revolving credit agreement		363,000		340,500
Repayments under revolving credit agreement		(438,000)		(315,500)
Redemption of senior notes		(100,000)		0
Dividends paid		(8,011)		(8,148)
Debt issuance costs		(1,190)		0
Acquisition of treasury stock		0		(23,348)
Issuance of common stock under share-based plans, net		(3,779)		(1,078)
Contributions by noncontrolling interests, net		0		1,500
Other		(676)		(980)
Net cash used for financing activities		(188,656)		(7,054)
Effect of exchange rate changes on cash and cash equivalents		(36)		(59)
(Decrease) increase in cash and cash equivalents		(13,523)		79,112
Cash and cash equivalents at beginning of period		88,295		45,218
Cash and cash equivalents at end of period	$	74,772	$	124,330

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Accumulated

Total

Other

Caleres, Inc.

Non-

(Unaudited)

Common Stock

Additional

Comprehensive

Retained

Shareholders’

controlling

($ thousands, except number of shares and per share amounts)

Shares

Dollars

Paid-In Capital

(Loss) Income

Earnings

Equity

Interests

Total Equity
BALANCE AUGUST 1, 2020

37,912,156

$
379

$
156,913

$
(31,437)

$
116,385

$
242,240

$
2,894

$
245,134
Net (loss) earnings

14,417

14,417

509

14,926
Foreign currency translation adjustment

320



320

81

401
Pension and other postretirement benefits adjustments, net of tax of $44

(67)



(67)



(67)
Comprehensive income (loss)

253

14,417

14,670

590

15,260
Contributions by noncontrolling interests

0

1,500

1,500
Dividends ($0.07 per share)



(2,653)

(2,653)



(2,653)
Issuance of common stock under share-based plans, net

32,018

0

(104)

(104)



(104)
Share-based compensation expense

2,518





2,518



2,518
BALANCE OCTOBER 31, 2020

37,944,174

$
379

$
159,327

$
(31,184)

$
128,149

$
256,671

$
4,984

$
261,655

BALANCE AUGUST 3, 2019

40,720,927

$
407

$
149,881

$
(31,405)

$
504,546

$
623,429

$
1,249

$
624,678
Net earnings (loss)

27,987

27,987

(226)

27,761
Foreign currency translation adjustment

595



595

(13)

582
Unrealized gain on derivative financial instruments, net of tax of $4

63



63

63
Pension and other postretirement benefits adjustments, net of tax of $149

429



429

429
Comprehensive income (loss)

1,087

27,987

29,074

(239)

28,835
Contributions by noncontrolling interests

1,500

1,500
Dividends ($0.07 per share)



(2,823)

(2,823)

(2,823)
Acquisition of treasury stock

(58,263)

(1)

(1,172)

(1,173)



(1,173)
Issuance of common stock under share-based plans, net

(69,377)

(0)

(58)



(58)



(58)
Share-based compensation expense

2,391





2,391



2,391
BALANCE NOVEMBER 2, 2019

40,593,287

$
406

$
152,214

$
(30,318)

$
528,538

$
650,840

$
2,510

$
653,350


						Accumulated				Total
						Other				Caleres, Inc.		Non-
(Unaudited)	Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling
($ thousands, except number of shares and per share amounts)	Shares	Dollars		Paid-In Capital		(Loss) Income		Earnings		Equity		Interests		Total Equity
BALANCE JULY 31, 2021	38,268,064	$	383	$	162,122	$	(8,572)	$	86,764	$	240,697	$	4,594	$	245,291
Net earnings									59,622		59,622		63		59,685
Foreign currency translation adjustment							(257)				(257)		(10)		(267)
Pension and other postretirement benefits adjustments, net of tax of $87							358				358				358
Comprehensive income							101		59,622		59,723		53		59,776
Dividends ($0.07 per share)									(2,675)		(2,675)				(2,675)
Issuance of common stock under share-based plans, net	(10,554)		(0)		(27)						(27)				(27)
Share-based compensation expense					3,380						3,380				3,380
BALANCE OCTOBER 30, 2021	38,257,510	$	383	$	165,475	$	(8,471)	$	143,711	$	301,098	$	4,647	$	305,745

BALANCE AUGUST 1, 2020	37,912,156	$	379	$	156,913	$	(31,437)	$	116,385	$	242,240	$	2,894	$	245,134
Net earnings									14,417		14,417		509		14,926
Foreign currency translation adjustment							320				320		81		401
Pension and other postretirement benefits adjustments, net of tax of $44							(67)				(67)				(67)
Comprehensive income (loss)							253		14,417		14,670		590		15,260
Contributions by noncontrolling interests													1,500		1,500
Dividends ($0.07 per share)									(2,653)		(2,653)				(2,653)
Acquisition of treasury stock	—		—						—		0				—
Issuance of common stock under share-based plans, net	32,018		0		(104)				—		(104)				(104)
Share-based compensation expense					2,518				—		2,518				2,518
BALANCE OCTOBER 31, 2020	37,944,174	$	379	$	159,327	$	(31,184)	$	128,149	$	256,671	$	4,984	$	261,655


						Accumulated															Accumulated
						Other				Total Caleres, Inc.		Non-									Other				Total Caleres, Inc.		Non-
(Unaudited)	Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling				Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling
($ thousands, except number of shares and per share amounts)	Shares	Dollars		Paid-In Capital		(Loss) Income		Earnings		Equity		Interests		Total Equity		Shares	Dollars		Paid-In Capital		(Loss) Income		Earnings		Equity		Interests		Total Equity
BALANCE AS OF FEBRUARY 1, 2020	40,396,757	$	404	$	153,489	$	(31,843)	$	523,900	$	645,950	$	3,180	$	649,130
Net loss									(362,138)		(362,138)		223		(361,915)
BALANCE AS OF JANUARY 30, 2021																37,966,204	$	380	$	160,446	$	(9,136)	$	48,557	$	200,247	$	3,607	$	203,854
Net earnings																								103,165		103,165		1,057		104,222
Foreign currency translation adjustment							(490)				(490)		81		(409)							(406)				(406)		(17)		(423)
Unrealized gain on derivative financial instruments, net of tax of $31							92				92				92
Pension and other postretirement benefits adjustments, net of tax of $269																						1,071				1,071				1,071
Comprehensive income																						665		103,165		103,830		1,040		104,870
Dividends ($0.21 per share)																								(8,011)		(8,011)				(8,011)
Issuance of common stock under share-based plans, net																291,306		3		(3,782)						(3,779)				(3,779)
Share-based compensation expense																				8,811						8,811				8,811
BALANCE OCTOBER 30, 2021																38,257,510	$	383	$	165,475	$	(8,471)	$	143,711	$	301,098	$	4,647	$	305,745

BALANCE FEBRUARY 1, 2020																40,396,757	$	404	$	153,489	$	(31,843)	$	523,900	$	645,950	$	3,180	$	649,130
Net (loss) earnings																								(362,138)		(362,138)		223		(361,915)
Foreign currency translation adjustment																						(490)				(490)		81		(409)
Unrealized loss on derivative financial instruments, net of tax of $31																						92				92				92
Pension and other postretirement benefits adjustments, net of tax of $336							1,057				1,057				1,057							1,057				1,057				1,057
Comprehensive income (loss)							659		(362,138)		(361,479)		304		(361,175)							659		(362,138)		(361,479)		304		(361,175)
Contributions by noncontrolling interests											0		1,500		1,500											—		1,500		1,500
Dividends ($0.21 per share)									(8,148)		(8,148)				(8,148)									(8,148)		(8,148)				(8,148)
Acquisition of treasury stock	(2,902,122)		(29)						(23,319)		(23,348)				(23,348)	(2,902,122)		(29)						(23,319)		(23,348)				(23,348)
Issuance of common stock under share-based plans, net	449,539		4		(1,082)						(1,078)				(1,078)	449,539		4		(1,082)						(1,078)				(1,078)
Cumulative-effect adjustment from adoption of ASC 326									(2,146)		(2,146)				(2,146)									(2,146)		(2,146)				(2,146)
Share-based compensation expense					6,920						6,920				6,920					6,920						6,920				6,920
BALANCE OCTOBER 31, 2020	37,944,174	$	379	$	159,327	$	(31,184)	$	128,149	$	256,671	$	4,984	$	261,655	37,944,174	$	379	$	159,327	$	(31,184)	$	128,149	$	256,671	$	4,984	$	261,655

BALANCE FEBRUARY 2, 2019	41,886,562	$	419	$	145,889	$	(31,601)	$	519,346	$	634,053	$	1,382	$	635,435
Net earnings (loss)									62,411		62,411		(338)		62,073
Foreign currency translation adjustment							(363)				(363)		(34)		(397)
Unrealized loss on derivative financial instruments, net of tax of $83							361				361				361
Pension and other postretirement benefits adjustments, net of tax of $448							1,285				1,285				1,285
Comprehensive income (loss)							1,283		62,411		63,694		(372)		63,322
Contributions by noncontrolling interests											0		1,500		1,500
Dividends ($0.21 per share)									(8,631)		(8,631)				(8,631)
Acquisition of treasury stock	(1,588,741)		(16)						(31,152)		(31,168)				(31,168)
Issuance of common stock under share-based plans, net	295,466		3		(2,608)						(2,605)				(2,605)
Cumulative-effect adjustment from adoption of ASC 842									(13,436)		(13,436)				(13,436)
Share-based compensation expense					8,933						8,933				8,933
BALANCE NOVEMBER 2, 2019	40,593,287	$	406	$	152,214	$	(30,318)	$	528,538	$	650,840	$	2,510	$	653,350

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Basis of Presentation and General

Basis of Presentation

The accompanying condensed consolidated financial statements have been prepared in accordance with the instructions to Form 10-Q of the United States Securities and Exchange Commission (“SEC”) and reflect all adjustments and accruals of a normal recurring nature, which management believes are necessary to present fairly the financial position, results of operations, comprehensive income and cash flows of Caleres, Inc. ("the Company"). These statements, however, do not include all information and footnotes necessary for a complete presentation of the Company’s consolidated financial position, results of operations, comprehensive income and cash flows in conformity with accounting principles generally accepted in the United States. The condensed consolidated financial statements include the accounts of the Company and its wholly-owned and majority-owned subsidiaries, after the elimination of intercompany accounts and transactions.

The Company’s business is seasonal in nature due to consumer spending patterns, with higher back-to-school and holiday season sales. Traditionally, the third fiscal quarter accounts for a substantial portion of the Company’s earnings for the year. Interim results may not necessarily be indicative of results which may be expected for any other interim period or for the year as a ~~whole, particularly given the impact of the coronavirus pandemic on the results of operations for the thirteen and thirty-nine weeks ended October 31, 2020, as further discussed below.~~whole.

Certain prior period amounts in the condensed consolidated financial statements and footnotes have been reclassified to conform to the current period presentation. These reclassifications did not affect net earnings (loss) ~~earnings~~ attributable to Caleres, Inc.

The accompanying condensed consolidated financial statements and footnotes should be read in conjunction with the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended ~~February 1,~~January 30, 2021.

Noncontrolling Interests

During 2019, the Company entered into a joint venture with Brand Investment Holding Limited (“Brand Investment Holding”), a member of the Gemkell Group. The Company and Brand Investment Holding are each 50% owners of the joint venture, which is named CLT Brand Solutions (“CLT”). Net sales and operating earnings were $4.7 million and $0.2 million, respectively, for the thirteen weeks and $14.5 million and $2.4 million, respectively, for the thirty-nine weeks ended October 30, 2021. Net sales and operating earnings were not significant during the thirteen or thirty-nine weeks ended October 31, 2020.

~~COVID-19 Pandemic~~The Company had a joint venture agreement with a subsidiary of C. banner International Holdings Limited (“CBI”) to market Naturalizer footwear in China. The Company was a 51% owner of the joint venture (“B&H Footwear”), with CBI owning the other 49%. The license enabling the joint venture to market the footwear expired in August 2017 and the parties are in the process of dissolving their joint venture agreements. The Company anticipates the liquidation to be completed during the fourth quarter of 2021.

The ~~United States~~Company consolidates CLT and ~~global economies continue~~B&H Footwear into its condensed consolidated financial statements. Net earnings (loss) attributable to ~~be adversely affected by~~noncontrolling interests represents the share of net earnings or losses that are attributable to Brand Investment Holding equity. Transactions between the Company and the joint ventures have been eliminated in the condensed consolidated financial statements.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Derivative Financial Instruments

The Company’s hedging policy permits the use of forward contracts as cash flow hedging instruments to manage its currency exposures in foreign currency-denominated assets, liabilities and cash flows. These derivative financial instruments are viewed as risk management tools and are not used for trading or speculative purposes. The Company recognizes all derivative financial instruments as either assets or liabilities in the condensed consolidated balance sheets and measures those instruments at fair value.

COVID-19 Pandemic

The coronavirus (“COVID-19”) ~~pandemic. Although~~pandemic had a significant adverse impact on the ~~Company has reopened all~~United States economy and the retail ~~stores from the temporary store closures in~~industry. The Company’s financial results were negatively impacted during the first half of 2020 as a result of the ~~Company’s financial results continue to be negatively impacted~~temporary closure of all retail stores beginning in mid-March. The Company experienced sequential improvement in sales in the second half of 2020, driven by ~~COVID-19. Many~~ the reopening

Table of Contents

of the retail stores, ~~have reduced operating hours~~ and ~~have experienced declines in foot traffic with stay-at-home orders and other government mandates, which has resulted in lower sales, despite~~continued solid growth of the e-commerce ~~business experiencing robust growth during this time.~~business. During the first half of 2021, as the vaccines became widely distributed and governments continued to ease restrictions, consumer sentiment and spending began to improve. In addition, the additional stimulus measures approved by the federal government provided a ~~small number of stores have temporarily closed again due~~boost in consumer spending. These factors strengthened demand for our products, which contributed to ~~local government mandates.~~

~~The Company has taken decisive actions to manage its resources conservatively to mitigate the adverse impact of the pandemic. These actions included reductions~~higher store traffic and strong growth in the ~~workforce, associate furloughs for a significant portion of the workforce,~~Company’s net sales and ~~reductions in salary for most remaining associates through the end of the second quarter, as well as a reduction in the cash retainers~~operating earnings for the Board of Directors through the end of the fiscal year; reducing inventory purchases; reducing marketing expenses; and minimizing costs associated with the closed retail facilities. In addition, as a precautionary measure to increase its cash position and preserve financial flexibility given the uncertainty in the United States and global markets resulting from COVID-19, the Company increased the borrowings on its revolving credit facility in March 2020 to $440.0 million. In April, the Company entered into an amendment to its Fourth Amended and Restated Credit Agreement to increase its borrowing capacity, as further discussed in Note 10 to the condensed consolidated financial statements. During the third quarter of 2020, the Company continued to repay the incremental borrowings from March, with total net repayments of $138.5 million since the end of the first quarter of 2020.thirty-nine weeks ended October 30, 2021.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted. The CARES Act includes a provision that allows the Company to defer the employer portion of social security payroll tax payments that would have been paid between the enactment date and December 31, 2020, with 50% payable by December 31, 2021 and 50% payable by December 31, 2022. ~~As of October 31,~~During 2020, the Company ~~has~~ deferred approximately ~~$7.0~~$9.4 million of employer social security payroll ~~taxes, which are~~taxes. As of October 30, 2021, approximately $4.7 million is recorded in other accrued expenses and $4.7 million is recorded in other liabilities on the condensed consolidated balance sheet. As of October 31, 2020, approximately $7.0 million was recorded in other liabilities on the condensed consolidated balance sheet.

Corporate Headquarters Campus

In April 2021, the Company announced that it would begin marketing for sale its nine-acre corporate headquarters campus (the “Campus”) located in Clayton, Missouri. The Company continues to evaluate offers and explore relocation and redevelopment options. The Company does not anticipate the Campus to qualify as a completed sale within the next twelve months. Accordingly, as of October 30, 2021, the Campus is considered held and used and classified within property and equipment, net on the condensed consolidated balance sheets. In addition, the ~~CARES Act permits~~Company evaluated the carryback of certain current operating losses to prior years. As discussed in Note 16 to the condensed consolidated financial statements, this carryback provision resulted in approximately $6.6 million of incremental tax benefit, as current year losses are expected to be carried back to years with a higher federal corporate tax rate.

~~Table of Contents~~

~~Noncontrolling Interests~~

~~During 2019, the Company entered into a joint venture with Brand Investment Holding Limited (“Brand Investment Holding”), a member of the Gemkell Group. The Company~~Campus asset group for impairment indicators and Brand Investment Holding are each 50% owners of the joint venture, which is named CLT Brand Solutions (“CLT”). The Company consolidates CLT into its consolidated financial statements. Net earnings (loss) attributable to noncontrolling interests represents the share of net earnings or lossesdetermined that are attributable to Brand Investment Holding equity. Transactions between the Company and the joint venture have been eliminated in the consolidated financial statements. During both the thirty-nine weeks ended October 31, 2020 and November 2, 2019, CLT was funded with $3.0 million in capital contributions, including $1.5 million from the Company and $1.5 million from Brand Investment Holding. Net sales and operating earningsno indicators were ~~immaterial during the thirty-nine weeks ended October 31, 2020 and November 2, 2019.~~ present.

Note 2 Impact of New Accounting Pronouncements

Impact of Recently Adopted Accounting Pronouncements

In ~~June 2016,~~August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") ~~2016-13,~~ ~~Financial Instruments - Credit Losses (Topic 326)~~, which significantly changes how entities measure credit losses for most financial assets and certain other instruments that are not measured at fair value through net income. The ASU replaces the "incurred loss" model with an "expected credit loss" model that requires entities to estimate an expected lifetime credit loss on financial assets, including trade accounts receivable. The Company adopted the ASU in the first quarter of 2020 on a modified retrospective basis. Upon adoption, the Company recorded a cumulative-effect adjustment to retained earnings of $2.1 million, net of $0.4 million in deferred taxes. The Company recorded a provision for expected credit losses of $10.7 million during the thirty-nine weeks ended October 31, 2020, primarily as a result of the COVID-19 pandemic and deteriorating financial conditions at several of the Company’s wholesale customers.

~~The following table summarizes the activity in the Company’s allowance for expected credit losses during the thirty-nine weeks ended October 31, 2020:~~

($ thousands)

Balance at February 1, 2020

$
1,813
Adjustment upon adoption of ASU 2016-13

2,521
Provision for expected credit losses

10,663
Uncollectible accounts written off, net of recoveries

221
Balance at October 31, 2020

$
15,218

~~In August 2018, the FASB issued ASU 2018-13,~~ ~~Fair Value Measurement (Topic 820): Disclosure Framework — Changes to the Disclosure Requirements for Fair Value Measurement~~. ASU 2018-13 modifies disclosure requirements on fair value measurements, removing and modifying certain disclosures, while adding other disclosures. The Company adopted the ASU during the first quarter of 2020, which did not have a material impact on the Company’s financial statement disclosures. Refer to Note 15 to the condensed consolidated financial statements for detail regarding the Company’s fair value measurements.

~~In March 2020, the SEC issued SEC Release No. 33-10762,~~ ~~Financial Disclosures about Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities,~~ which is effective for filings on or after January 4, 2021, with early application permitted. The final rule amends the disclosure requirements in SEC Regulation S-X, Rule 3-10, which required entities to separately present financial statements for subsidiary issuers and guarantors of registered debt securities unless certain exceptions are met. The rule permits entities to provide summarized financial information of the parent company and its issuers and guarantors on a combined basis in either a note to the financial statements or in management’s discussion and analysis. The Company adopted the rule during the second quarter of 2020 and elected to provide the summarized financial information in ~~Management’s Discussion and Analysis of Financial Condition and Results of Operations~~~~. In October 2020, the FASB issued ASU 2020-09,~~ ~~Debt (Topic 470): Amendments to SEC Paragraphs Pursuant to SEC Release No. 33-10762~~~~, to reflect the new disclosure requirements in the FASB Accounting Standards Codification.~~

In April 2020, the FASB issued interpretive guidance indicating that entities may elect not to evaluate whether a concession provided by lessors is a lease modification. Under existing lease guidance, an entity would be required to determine if a lease concession was the result of a new arrangement reached with the landlord, which would be accounted for under the lease modification framework, or if the concession was under the enforceable rights and obligations that existed in the original lease, which would be accounted for outside the lease modification framework. The FASB guidance provides entities with the option to elect to account for lease concessions as though the enforceable rights and obligations existed in the original lease. The Company has elected to treat lease concessions as variable rent. Accordingly, $1.7 million and $3.7 million in lease concessions for the thirteen and thirty-nine weeks ended, respectively, were recorded as

~~Table of Contents~~

a reduction of rent expense within selling and administrative expenses in the condensed consolidated statements of earnings (loss). Refer to Note 9 to the condensed consolidated financial statements for further discussion regarding the Company’s leases.

~~Impact of Prospective Accounting Pronouncements~~

~~In August 2018, the FASB issued ASU~~ 2018-14, Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20), Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans. The guidance changes the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans, eliminating the requirements for certain disclosures that are no longer considered cost beneficial and requiring new disclosures that the FASB considers pertinent. The Company adopted the ASU ~~is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption~~during the first quarter of ~~ASU 2018-14 is~~2021, which did not ~~expected to~~ have a material impact on the Company’s financial statement disclosures.

In December 2019, the FASB issued ASU 2019-12, Simplifying the Accounting for Income Taxes. ASU 2019-12 eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 related to intraperiod tax allocation, simplifies certain elements of accounting for basis differences and deferred tax liabilities during a business combination, and standardizes the classification of franchise taxes. The ~~ASU is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2020, with early adoption permitted. The adoption of~~Company adopted ASU 2019-12 isduring the first quarter of 2021, which did not ~~expected to~~ have a material impact on the Company’s condensed consolidated financial statements.

Impact of Prospective Accounting Pronouncements

In November 2020, the SEC issued SEC Release No. 33-10890, Management’s Discussion and Analysis, Selected Financial Data and Supplementary Financial Information. The rule amends existing requirements in Regulation S-K for disclosures related to management’s discussion and analysis and certain financial disclosure requirements. The final rule became effective on February 10, 2021 and the amendments are required for a registrant’s first fiscal year ending on or after August 9, 2021, with early adoption permitted on an item-by-item basis. The Company adopted the amendments associated with Items 301 and 302 of the rule during 2020. The remaining provisions of the rule, which are not expected to have a material impact on the Company’s financial statement disclosures, will be reflected in the Form 10-K for the fiscal year ended January 29, 2022.

Table of Contents

Note 3 Revenues

Disaggregation of Revenues

The following table disaggregates revenue by segment and major source for the periods ended October 30, 2021 and October 31, ~~2020 and November 2, 2019:~~2020:

Thirteen Weeks Ended October 31, 2020

Thirteen Weeks Ended October 30, 2021

Eliminations and

($ thousands)

Famous Footwear

Brand Portfolio

Other

Total

Famous Footwear

Brand Portfolio

Other

Total

Retail stores ⁽²⁾

325,501

14,291

339,792

429,914

17,230

447,144

Landed wholesale - e-commerce - drop ship ⁽¹⁾

22,054

(644)

21,410

E-commerce - Company websites ⁽¹⁾

63,964

44,101

108,065

Total direct-to-consumer sales

493,878

83,385

(644)

576,619

First-cost wholesale - e-commerce ⁽¹⁾

567

Landed wholesale - e-commerce ⁽¹⁾

42,001

46,842

Landed wholesale - e-commerce - drop ship ^{(1) (2)}

21,256

Landed wholesale - other

136,627

(11,813)

124,814

138,813

(10,373)

128,440

First-cost wholesale

15,368

27,315

First-cost wholesale - e-commerce ^{(1) (2)}

E-commerce - Company websites ^{(1) (2)}

66,058

35,100

101,158

Licensing and royalty

2,809

602

3,536

4,138

Other ⁽³⁾

147

183

Other ⁽²⁾

180

235

Net sales

391,706

267,587

(11,813)

647,480

494,660

300,513

(11,017)

784,156


	Thirteen Weeks Ended November 2, 2019								Thirteen Weeks Ended October 31, 2020
					Eliminations and								Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total		Famous Footwear		Brand Portfolio		Other		Total

Retail stores ⁽²⁾	$	401,943	$	40,621	$	0	$	442,564	$	325,501	$	14,291	$	0	$	339,792
Landed wholesale - e-commerce - drop ship ⁽¹⁾										0		21,256		0		21,256
E-commerce - Company websites ⁽¹⁾										66,058		35,100		0		101,158
Total direct-to-consumer sales										391,559		70,647		0		462,206
First-cost wholesale - e-commerce ⁽¹⁾										0		99		0		99
Landed wholesale - e-commerce ⁽¹⁾		0		27,304		0		27,304		0		42,001		0		42,001
Landed wholesale - e-commerce - drop ship ^{(1) (2)}		0		58,653		0		58,653
Landed wholesale - other		0		177,146		(14,071)		163,075		0		136,627		(11,813)		124,814
First-cost wholesale		0		16,124		0		16,124		0		15,368		0		15,368
First-cost wholesale - e-commerce ^{(1) (2)}		0		354		0		354
E-commerce - Company websites ^{(1) (2)}		44,489		36,692		0		81,181
Licensing and royalty		0		2,908		0		2,908		0		2,809		0		2,809
Other ⁽³⁾		151		61		0		212
Other ⁽²⁾										147		36		0		183
Net sales	$	446,583	$	359,863	$	(14,071)	$	792,375	$	391,706	$	267,587	$	(11,813)	$	647,480

Table of Contents

Thirty-Nine Weeks Ended October 31, 2020

Thirty-Nine Weeks Ended October 30, 2021

Eliminations and

($ thousands)

Famous Footwear

Brand Portfolio

Other

Total

Famous Footwear

Brand Portfolio

Other

Total

Retail stores ⁽²⁾

712,761

33,173

745,934

1,166,837

44,241

1,211,078

Landed wholesale - e-commerce - drop ship ⁽¹⁾

62,529

(1,477)

61,052

E-commerce - Company websites ⁽¹⁾

178,367

136,458

314,825

Total direct-to-consumer sales

1,345,204

243,228

(1,477)

1,586,955

First-cost wholesale - e-commerce ⁽¹⁾

2,340

Landed wholesale - e-commerce ⁽¹⁾

91,477

114,608

Landed wholesale - e-commerce - drop ship ^{(1) (2)}

61,235

Landed wholesale - other

327,322

(39,229)

288,093

353,597

(36,445)

317,152

First-cost wholesale

39,139

67,651

First-cost wholesale - e-commerce ^{(1) (2)}

601

E-commerce - Company websites ^{(1) (2)}

203,888

108,926

312,814

Licensing and royalty

6,463

602

8,302

8,904

Other ⁽³⁾

244

111

355

Net sales

916,893

668,447

(39,229)

1,546,111

Other ⁽²⁾

607

106

713

Total net sales

1,346,413

789,832

(37,922)

2,098,323


	Thirty-Nine Weeks Ended November 2, 2019								Thirty-Nine Weeks Ended October 31, 2020
					Eliminations and								Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total		Famous Footwear		Brand Portfolio		Other		Total

Retail stores ⁽²⁾	$	1,108,200	$	115,819	$	0	$	1,224,019	$	712,761	$	33,173	$	0	$	745,934
Landed wholesale - e-commerce - drop ship ⁽¹⁾										0		61,235		0		61,235
E-commerce - Company websites ⁽¹⁾										203,888		108,926		0		312,814
Total direct-to-consumer sales									$	916,649	$	203,334	$	0	$	1,119,983
First-cost wholesale - e-commerce ⁽¹⁾										0		601		0		601
Landed wholesale - e-commerce ⁽¹⁾		0		64,182		0		64,182		0		91,477		0		91,477
Landed wholesale - e-commerce - drop ship ^{(1) (2)}		0		148,745		0		148,745
Landed wholesale - other		0		549,321		(56,463)		492,858		0		327,322		(39,229)		288,093
First-cost wholesale		0		66,826		0		66,826		0		39,139		0		39,139
First-cost wholesale - e-commerce ^{(1) (2)}		0		1,528		0		1,528
E-commerce - Company websites ^{(1) (2)}		109,954		102,637		0		212,591
Licensing and royalty		0		11,234		0		11,234		0		6,463		0		6,463
Other ⁽³⁾		435		196		0		631
Other ⁽²⁾										244		111		0		355
Net sales	$	1,218,589	$	1,060,488	$	(56,463)	$	2,222,614	$	916,893	$	668,447	$	(39,229)	$	1,546,111

(1)	Collectively referred to as "e-commerce" below

(2)	~~Collectively referred to as “Direct-to-consumer”~~

~~(3)~~

Includes breakage revenue from unredeemed gift cards

Retail stores

Traditionally, the majority of the Company’s revenue is generated from retail sales where control is transferred and revenue is recognized at the point of sale. Retail sales are recorded net of estimated returns and exclude sales tax. The Company records a returns reserve and a corresponding return asset for expected returns of merchandise.

Retail sales to members of the Company’s loyalty programs, including the Famously You Rewards program, include two performance obligations: the sale of merchandise and the delivery of points that may be redeemed for future purchases. The transaction price is allocated to the separate performance obligations based on the relative stand-alone selling price. The stand-alone selling price for the points is estimated using the retail value of the merchandise earned, adjusted for estimated breakage based upon historical redemption patterns. The revenue associated with the initial merchandise purchased is recognized immediately and the value assigned to the points is deferred until the points are redeemed, forfeited or expired.

Landed wholesale

Landed sales are wholesale sales in which the merchandise is shipped directly to the customer from the Company’s warehouses. Many customers purchasing footwear on a landed ~~customers~~basis arrange their own transportation of merchandise and, with limited exceptions, control is transferred at the time of shipment.

Table of Contents

First-cost wholesale

First-cost sales are wholesale sales in which the Company purchases merchandise from an international factory that manufactures the product and subsequently sells to a customer at an overseas port. Revenue is recognized at the time the merchandise is delivered to the customer’s designated freight forwarder and control is transferred to the customer.

E-commerce

The Company also generates revenue from sales on websites maintained by the Company that are shipped from the Company’s distribution centers or retail stores directly to the consumer, picked up directly by the consumer from the Company’s stores and e-commerce sales from the Company’s wholesale customers’ websites that are fulfilled on a drop-ship or first-cost basis (collectively referred to as "e-commerce"). The Company transfers control and recognizes revenue for merchandise sold that is shipped directly to an individual consumer upon delivery to the consumer.

Licensing and royalty

The Company has license agreements with third parties allowing them to sell the Company’s branded product, or other merchandise that uses the Company’s owned or licensed brand names. These license agreements provide the licensee access to the Company’s symbolic intellectual property, and revenue is therefore recognized over the license term. For royalty contracts that do not have guaranteed minimums, the Company recognizes revenue as the licensee’s sales occur. For royalty contracts that have guaranteed minimums, revenue for the guaranteed minimum is recognized on a straight-line basis during the term, until such time that the cumulative royalties exceed the total minimum guarantee. Up-front payments are recognized over the contractual term to which the guaranteed minimum relates.

The Company also licenses its Famous Footwear trade name and logo to a third-party financial institution to offer Famous Footwear-branded credit cards to its consumers. The Company receives royalties based upon cardholder spending, which is recognized as licensing revenue at the time when the credit card is used.

Contract Balances

Revenue is recorded at the transaction price, net of estimates for variable consideration for which reserves are established, including returns, allowances and discounts. Variable consideration is estimated using the expected value method and given the large number of contracts with similar characteristics, the portfolio approach is applied to determine the variable consideration for each revenue stream. Reserves for projected returns are based on historical patterns and current expectations.

Information about significant contract balances from contracts with customers is as follows:


($ thousands)	October 31, 2020		November 2, 2019		February 1, 2020		October 30, 2021		October 31, 2020		January 30, 2021
Customer allowances and discounts	$	22,182	$	25,762	$	26,200	$	20,277	$	22,182	$	17,043
Loyalty programs liability		14,634		17,274		16,405		18,354		14,634		13,986
Returns reserve		14,889		15,040		14,033		15,704		14,889		11,040
Gift card liability		4,909		4,794		5,742		5,034		4,909		6,091

Changes in contract balances with customers generally reflect differences in relative sales volume for the periods presented. In addition, during the thirty-nine weeks ended October 30, 2021, the loyalty programs liability increased $27.4 million due to points and material rights earned on purchases and decreased $23.0 million due to expirations and redemptions. During the thirty-nine weeks ended October 31, 2020, the loyalty programs liability increased $20.7 million due to points and material rights ~~accrued for~~earned on purchases and decreased $22.5 million due to expirations and redemptions. ~~During~~

Table of Contents

The following table summarizes the activity in the Company’s allowance for expected credit losses during the thirty-nine weeks ended ~~November 2, 2019, the loyalty programs liability increased $24.2 million due to points~~October 30, 2021 and ~~material rights accrued for purchases and decreased $21.6 million due to expirations and redemptions.~~October 31, 2020:


	Thirty-Nine Weeks Ended
($ thousands)	October 30, 2021		October 31, 2020
Balance, beginning of period	$	14,928	$	1,813
Adjustment upon adoption of ASU 2016-13		—		2,521
Provision/adjustment for expected credit losses ⁽¹⁾		(2,711)		10,663
Uncollectible accounts written off, net of recoveries		(2,724)		221
Balance, end of period	$	9,493	$	15,218

(1)	The Company’s provision/adjustment for expected credit losses for the thirty-nine weeks ended October 31, 2020 was higher than the comparable period in 2021 as a result of the COVID-19 pandemic and its impact on the financial condition of several of the Company’s wholesale customers.

Note 4 Earnings (Loss) Per Share

The Company uses the two-class method to compute basic and diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders. In periods of net loss, no effect is given to the Company’s participating securities since they do not contractually participate in

~~Table of Contents~~

the losses of the Company. The following table sets forth the computation of basic and diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders for the periods ended October 30, 2021 and October 31, ~~2020 and November 2, 2019:~~2020:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended
($ thousands, except per share amounts)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019		October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020

NUMERATOR
Net earnings (loss)	$	14,926	$	27,761	$	(361,915)	$	62,073	$	59,685	$	14,926	$	104,222	$	(361,915)
Net (earnings) loss attributable to noncontrolling interests		(509)		226		(223)		338
Net earnings attributable to noncontrolling interests										(63)		(509)		(1,057)		(223)
Net earnings (loss) attributable to Caleres, Inc.									$	59,622	$	14,417	$	103,165	$	(362,138)
Net earnings allocated to participating securities		(512)		(946)		0		(2,042)		(2,140)		(512)		(3,737)		—
Net earnings (loss) attributable to Caleres, Inc. after allocation of earnings to participating securities	$	13,905	$	27,041	$	(362,138)	$	60,369	$	57,482	$	13,905	$	99,428	$	(362,138)

DENOMINATOR
Denominator for basic earnings (loss) per common share attributable to Caleres, Inc. shareholders		36,554		39,258		37,439		39,983		36,889		36,554		36,825		37,439
Dilutive effect of share-based awards		176		55		0		57		457		176		294		—
Denominator for diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders		36,730		39,313		37,439		40,040		37,346		36,730		37,119		37,439

Basic earnings (loss) per common share attributable to Caleres, Inc. shareholders	$	0.38	$	0.69	$	(9.67)	$	1.51	$	1.56	$	0.38	$	2.70	$	(9.67)

Diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders	$	0.38	$	0.69	$	(9.67)	$	1.51	$	1.54	$	0.38	$	2.68	$	(9.67)

Options to purchase ~~24,667~~16,667 shares of common stock for both the thirteen and thirty-nine weeks ended October ~~31, 2020,~~30, 2021 were not included in the denominator for diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders because the effect would be anti-dilutive. Options to purchase ~~16,667~~24,667 shares of common stock were excluded from the denominator for both the thirteen and thirty-nine weeks ended ~~November 2, 2019.~~October 31, 2020.

During the ~~thirteen~~thirty-nine weeks ended October 31, 2020, ~~and November 2, 2019,~~ the Company repurchased ~~0 and 58,263~~2,902,122 shares ~~respectively,~~ under the 2018 and 2019 publicly announced share repurchase programs, which permits repurchases of up to 2.5 million and 5.0 million shares, respectively. The Company ~~repurchased 2,902,122 and 1,588,741~~

Table of Contents

did 0t repurchase any shares under the share repurchase programs during the thirteen weeks ended October 31, 2020 or the thirty-nine weeks ended October ~~31, 2020 and November 2, 2019, respectively.~~30, 2021. Refer to further discussion in Item 2, Unregistered Sales of Equity Securities and Use of Proceeds.

Note 5 Restructuring and Other Special Charges

Blowfish Mandatory Purchase Obligation

In 2018, the Company acquired a controlling interest in Blowfish Malibu. The ~~noncontrolling~~remaining interest iswas subject to a mandatory purchase obligation after a three-year period, which ended on July 31, 2021, based upon an earnings multiple formula as specified in the purchase agreement. Approximately $9.0 million was initially assigned to the mandatory purchase obligation ~~which will be paid upon settlement during the third quarter of 2021. Accretion~~ and remeasurement adjustments ~~on the mandatory purchase obligation are being~~were recorded as interest expense. The fair value adjustments on the mandatory purchase obligation totaled $1.9 million ($1.4 million on an after-tax basis, or $0.04 per diluted share) for the thirteen weeks ended October 30, 2021, reflecting the settlement of the remaining interest in Blowfish Malibu. Fair value adjustments totaled $15.4 million ($11.5 million on an after-tax basis, or $0.30 per diluted share) for the thirty-nine weeks ended October 30, 2021. For the thirteen and thirty-nine weeks ended October 31, 2020, the Company recorded fair value adjustments of $5.1 million ($3.8 million on an after-tax basis, or $0.10 per diluted share) and $14.9 million ($11.1 million on an after-tax basis, or $0.30 per diluted share) ~~for~~, respectively. As of October 30, 2021, the ~~thirteen and thirty-nine weeks ended October 31, 2020, respectively.~~mandatory purchase obligation was valued at $54.6 million. The ~~fair value adjustment totaled $3.9 million ($2.9 million~~mandatory purchase obligation was paid subsequent to the third quarter of 2021, on ~~an after-tax basis, or $0.07 per diluted share) in the thirteen and thirty-nine weeks ended~~ November ~~2, 2019.~~4, 2021. Refer to further discussion regarding the mandatory purchase obligation in Note 1514 to the condensed consolidated financial statements.

Brand Exits

During the thirty-nine weeks ended October 30, 2021, the Company incurred costs of $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share) related to the strategic realignment of the Naturalizer retail store operations. These costs primarily represented lease termination and other store closure costs, including employee severance, for the 73 stores that were closed during the first quarter of 2021. These charges are presented in restructuring and special charges on the condensed consolidated statements of earnings (loss) within the Brand Portfolio segment for the thirty-nine weeks ended October 30, 2021. As of October 30, 2021, reserves of $2.5 million were included on the condensed consolidated balance sheets.

During the thirty-nine weeks ended October 31, 2020, the Company incurred costs of $1.6 million ($1.2 million on an after-tax basis, or $0.03 per diluted share) related to the decision to exit the Fergie brand. These charges, which represented inventory markdowns required to reduce the value of inventory to net realizable value, are presented in cost of goods sold on the condensed consolidated statements of earnings (loss) within the Brand Portfolio segment for the thirty-nine weeks ended October 31, 2020.

COVID-19-Related Expenses

~~The~~During the thirty-nine weeks ended October 31, 2020, the Company incurred costs associated with the COVID-19 pandemic and related impacts on the Company’s business totaling $99.0 million ($78.0 million on an after-tax basis, or $2.08 per diluted share) ~~during the thirty-nine weeks ended October 31, 2020.~~. These costs included

~~Table of Contents~~

non-cash impairment of property and equipment and lease right-of-use assets, incremental inventory markdowns, employee severance and other ~~identified~~direct expenses ~~that were~~ specific to the impact of COVID-19 on the Company’s operations. Of the $99.0 million in charges, $65.6 million is presented as restructuring and other special charges, net and $33.4 million is reflected as cost of goods sold in the condensed consolidated statements of earnings (loss). Of the $65.6 million reflected as restructuring and other special charges, $48.4 million is reflected in the Brand Portfolio segment, $16.6 million is reflected in the Famous Footwear segment and $0.6 million is reflected within the Eliminations and Other category. The $33.4 million reflected as cost of goods sold represents incremental inventory markdowns, of which $27.4 million is reflected in the Brand Portfolio segment and $6.0 million is reflected in the Famous Footwear segment. There were 0 corresponding special charges for the ~~thirteen~~thirty-nine weeks ended October ~~31, 2020.~~30, 2021. Refer to Note 9 to the condensed consolidated financial statements for additional information regarding the impact of COVID-19 on the Company’s leases.

~~Impairment of Goodwill and Intangible Assets~~

During the first quarter of 2020, the Company recorded non-cash impairment charges totaling $262.7 million ($218.5 million on an after-tax basis, or $5.84 per diluted share), including $240.3 million of impairment associated with the Company’s goodwill and $22.4 million associated with indefinite-lived trademarks. All of the charges are reflected in the Brand Portfolio segment. Refer to further discussion in Note 8 to the condensed consolidated financial statements.

~~Brand Exits~~

During the first quarter of 2020, the Company incurred costs of $1.6 million ($1.2 million on an after-tax basis, or $0.03 per diluted share) related to the decision to exit the Fergie brand. These charges represent inventory markdowns required to reduce the value of inventory to net realizable value and are presented in cost of goods sold on the condensed consolidated statements of earnings (loss) within the Brand Portfolio segment for the thirty-nine weeks ended October 31, 2020. There were 0 corresponding costs in the thirteen weeks ended October 31, 2020.

The Company’s license agreement to sell Carlos by Carlos Santana footwear expired in December 2018. In connection with the decision to exit the Carlos brand, the Company incurred restructuring-related costs of $1.9 million ($1.4 million on an after-tax basis, or $0.03 per diluted share) during the thirty-nine weeks ended November 2, 2019. Of these charges included in the Brand Portfolio segment, $1.3 million ($1.0 million on an after-tax basis or $0.02 per diluted share) primarily represents incremental inventory markdowns required to reduce the value of inventory to net realizable value and is presented in cost of goods sold on the condensed consolidated statements of earnings (loss) and the remaining $0.6 million ($0.4 million on an after-tax basis, or $0.01 per diluted share) for severance and other related costs is presented in restructuring and other special charges. There were 0 corresponding costs in the thirty-nine weeks ended October 31, 2020 or the thirteen weeks ended November 2, 2019.

~~Vionic Integration-Related Costs~~

During the thirteen weeks ended November 2, 2019, the Company incurred integration-related costs associated with the acquisition of Vionic in October 2018, primarily for severance, totaling $1.0 million ($0.7 million on an after-tax basis, or $0.02 per diluted share). The costs are presented as restructuring and other special charges, net in the condensed consolidated statements of earnings (loss) within the Eliminations and Other category. During the thirty-nine weeks ended November 2, 2019, the Company incurred integration-related costs, primarily for severance, totaling $1.9 million ($1.4 million on an after-tax basis, or $0.03 per diluted share). Of the $1.9 million in costs, which are presented as restructuring and other special charges, net in the condensed consolidated statements of earnings (loss), $1.8 million are reflected within the Eliminations and Other category and $0.1 million are included in the Brand Portfolio segment. There were 0 corresponding costs in the thirty-nine weeks ended October 31, 2020. The integration of Vionic is ongoing and the Company anticipates additional integration-related costs as it completes this initiative in the fourth quarter of 2020.

Table of Contents

Note 6 Business Segment Information

Following is a summary of certain key financial measures for the Company’s business segments for the periods ended October 30, 2021 and October 31, ~~2020 and November 2, 2019:~~2020:

Famous

Brand

Eliminations

($ thousands)

Footwear

Portfolio

and Other

Total
Thirteen Weeks Ended October 31, 2020









Net sales

$
391,706

$
267,587

$
(11,813)

$
647,480
Intersegment sales ⁽¹⁾

—

11,813

—

11,813
Operating earnings (loss)

27,845

7,304

(15,078)

20,071
Segment assets

837,228

924,976

264,856

2,027,060








Thirteen Weeks Ended November 2, 2019








Net sales

$
446,583

$
359,863

$
(14,071)

$
792,375
Intersegment sales⁽¹⁾

—

14,071

—

14,071
Operating earnings (loss)

27,681

19,398

(3,608)

43,471
Segment assets

973,272

1,360,445

137,493

2,471,210








Thirty-Nine Weeks Ended October 31, 2020









Net sales

$
916,893

$
668,447

$
(39,229)

$
1,546,111
Intersegment sales ⁽¹⁾

—

39,229

—

39,229
Operating loss

(38,651)

(352,556)

(39,072)

(430,279)








Thirty-Nine Weeks Ended November 2, 2019








Net sales

$
1,218,589

$
1,060,488

$
(56,463)

$
2,222,614
Intersegment sales ⁽¹⁾

—

56,463

—

56,463
Operating earnings (loss)

70,036

46,225

(18,117)

98,144


	Famous		Brand		Eliminations
($ thousands)	Footwear		Portfolio		and Other		Total
Thirteen Weeks Ended October 30, 2021
Net sales	$	494,660	$	300,513	$	(11,017)	$	784,156
Intersegment sales ⁽¹⁾		—		11,017		—		11,017
Operating earnings (loss)		87,375		11,383		(17,440)		81,318
Segment assets		736,858		909,175		228,525		1,874,558

Thirteen Weeks Ended October 31, 2020
Net sales	$	391,706	$	267,587	$	(11,813)	$	647,480
Intersegment sales⁽¹⁾		—		11,813		—		11,813
Operating earnings (loss)		27,845		7,304		(15,078)		20,071
Segment assets		837,228		924,976		264,856		2,027,060

Thirty-Nine Weeks Ended October 30, 2021
Net sales	$	1,346,413	$	789,832	$	(37,922)	$	2,098,323
Intersegment sales ⁽¹⁾		—		37,922		—		37,922
Operating earnings (loss)		220,746		25,116		(83,883)		161,979

Thirty-Nine Weeks Ended October 31, 2020
Net sales	$	916,893	$	668,447	$	(39,229)	$	1,546,111
Intersegment sales ⁽¹⁾		—		39,229		—		39,229
Operating loss		(38,651)		(352,556)		(39,072)		(430,279)

(1)	Included in net sales in the Brand Portfolio segment and eliminated in the Eliminations and Other ~~category~~category.

The Eliminations and Other category includes corporate assets, administrative expenses and other costs and recoveries, which are not allocated to the operating segments, as well as the elimination of intersegment sales and profit.

Following is a reconciliation of operating earnings (loss) to earnings (loss) before income taxes:


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended
	October 31,		November 2,		October 31,		November 2,		Thirteen Weeks Ended				Thirty-Nine Weeks Ended
($ thousands)	2020		2019		2020		2019		October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Operating earnings (loss)	$	20,071	$	43,471	$	(430,279)	$	98,144	$	81,318	$	20,071	$	161,979	$	(430,279)
Interest expense, net		(10,881)		(10,559)		(33,747)		(25,288)		(5,069)		(10,881)		(28,803)		(33,747)
Loss on early extinguishment of debt										(649)		—		(649)		—
Other income, net		5,461		2,633		12,718		7,902		3,844		5,461		11,533		12,718
Earnings (loss) before income taxes	$	14,651	$	35,545	$	(451,308)	$	80,758	$	79,444	$	14,651	$	144,060	$	(451,308)

Note 7 Inventories

The Company’s net inventory balance was comprised of the following:


($thousands)	October 31, 2020		November 2, 2019		February 1, 2020
($ thousands)							October 30, 2021		October 31, 2020		January 30, 2021
Raw materials	$	14,907	$	19,005	$	18,455	$	14,951	$	14,907	$	14,592
Work-in-process		293		422		454		581		293		349
Finished goods		492,165		625,219		599,497		527,686		492,165		473,014
Inventories, net	$	507,365	$	644,646	$	618,406	$	543,218	$	507,365	$	487,955

Table of Contents

Note 8 Goodwill and Intangible Assets

Goodwill and intangible assets were as follows:

($thousands)

October 31, 2020

November 2, 2019

February 1, 2020
Intangible Assets






Famous Footwear

$
2,800

$
2,800

$
2,800
Brand Portfolio

365,888

388,288

388,288
Total intangible assets

368,688

391,088

391,088
Accumulated amortization

(106,570)

(93,518)

(96,784)
Total intangible assets, net

262,118

297,570

294,304
Goodwill






Brand Portfolio

4,956

245,275

245,275
Total goodwill

4,956

245,275

245,275
Goodwill and intangible assets, net

$
267,074

$
542,845

$
539,579


($ thousands)	October 30, 2021		October 31, 2020		January 30, 2021
Intangible Assets
Famous Footwear	$	2,800	$	2,800	$	2,800
Brand Portfolio		342,083		365,888		342,083
Total intangible assets		344,883		368,688		344,883
Accumulated amortization		(119,214)		(106,570)		(109,768)
Total intangible assets, net		225,669		262,118		235,115
Goodwill
Brand Portfolio ⁽¹⁾		4,956		4,956		4,956
Total goodwill		4,956		4,956		4,956
Goodwill and intangible assets, net	$	230,625	$	267,074	$	240,071

(1)	The carrying amount of goodwill as of October 30, 2021, October 31, 2020 and January 30, 2021 is presented net of accumulated impairment charges of $415.7 million.

The Company’s intangible assets as of October 30, 2021, October 31, 2020 ~~November 2, 2019~~ and ~~February 1, 2020~~January 30, 2021 were as follows:


($thousands)	October 31, 2020
($ thousands)											October 30, 2021
	Estimated Useful Lives				Accumulated						Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis			Amortization		Impairment		Net Carrying Value		(In Years)	Cost Basis ⁽²⁾		Amortization		Impairment		Net Carrying Value
Trademarks	15 - 40	$	288,788		$	99,376	$	—	$	189,412
Trademarks	Indefinite		58,100	⁽¹⁾		—		22,400		35,700
Trade names											2 - 40	$	299,488	$	109,545	$	10,200	$	179,743
Trade names											Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200			7,194		—		37,006	15 - 16		44,200		9,669		4,005		30,526
		$	391,088		$	106,570	$	22,400	$	262,118		$	451,088	$	119,214	$	106,205	$	225,669

	November 2, 2019										October 31, 2020
	Estimated Useful Lives				Accumulated						Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis			Amortization		Impairment		Net Carrying Value		(In Years)	Cost Basis ⁽²⁾		Amortization		Impairment		Net Carrying Value
Trademarks	15 - 40	$	288,788		$	89,360	$	—	$	199,428
Trademarks	Indefinite		58,100	⁽¹⁾		—		0		58,100
Trade names											2 - 40	$	299,488	$	99,376	$	10,200	$	189,912
Trade names											Indefinite		107,400		—		72,200		35,200
Customer relationships	15 - 16		44,200			4,158		—		40,042	15 - 16		44,200		7,194		—		37,006
		$	391,088		$	93,518	$	0	$	297,570		$	451,088	$	106,570	$	82,400	$	262,118

	February 1, 2020										January 30, 2021
	Estimated Useful Lives				Accumulated						Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis			Amortization		Impairment		Net Carrying Value		(In Years)	Cost Basis ⁽²⁾		Amortization		Impairment		Net Carrying Value
Trademarks	15 - 40	$	288,788		$	91,827	$	—	$	196,961
Trademarks	Indefinite		58,100	⁽¹⁾		—		0		58,100
Trade names											2 - 40	$	299,488	$	101,919	$	10,200	$	187,369
Trade names											Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200			4,957		—		39,243	15 - 16		44,200		7,849		4,005		32,346
		$	391,088		$	96,784	$	0	$	294,304		$	451,088	$	109,768	$	106,205	$	235,115

~~(1)~~(2)

~~Cost basis for~~The Via Spiga trade name was reclassified from indefinite-lived ~~trademarks has been reduced~~trade names to definite-lived trade names. The remaining carrying value of $0.1 million as of October 30, 2021 will be fully amortized by ~~$60.0 million in impairment charges recognized in 2018 related to~~ the ~~Allen Edmonds tradename.~~end of fiscal 2021.

Amortization expense related to intangible assets was $3.1 million and $3.3 million for ~~both~~ the thirteen weeks ended October 30, 2021 and October 31, 2020, respectively, and ~~November 2, 2019~~$9.4 million and $9.8 million for ~~both~~ the thirty-nine weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019.~~respectively. The Company estimates that amortization expense related to intangible assets will be approximately ~~$13.1 million in 2020, $12.9~~$12.6 million in 2021, ~~$12.5~~$12.1 million in 2022, ~~$12.2~~$11.9 million in 2023, and ~~$11.4~~$11.0 million in ~~2024.~~2024 and 2025.

Table of Contents

Goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate it might be impaired, using either the qualitative assessment or a quantitative fair value-based test. During the first quarter of 2020, as a result of the significant decline in the Company’s share price and market capitalization and the impact of ~~COVID-19~~the pandemic on the Company’s business operations, the Company determined that an interim assessment of goodwill was required. A quantitative assessment was performed for all reporting units as of May 2, 2020. The assessment indicated that the carrying value of the goodwill associated with the Brand Portfolio and Vionic reporting units was

~~Table of Contents~~

impaired, resulting in total goodwill impairment charges of $240.3 million. The Company recorded 0 goodwill impairment charges during the thirty-nine weeks ended October 30, 2021 or the thirteen weeks ended October 31, ~~2020 or the thirty-nine weeks ended November 2, 2019.~~2020.

Indefinite-lived intangible assets are tested for impairment as of the first day of the fourth quarter of each fiscal year unless events or circumstances indicate an interim test is required. As a result of the triggering event from the economic impacts of COVID-19, an interim assessment was performed as of May 2, 2020. The indefinite-lived intangible asset impairment review resulted in total impairment charges of $22.4 million ~~for~~during the ~~thirteen weeks ended May 2,~~first quarter of 2020, including $12.2 million associated with the indefinite-lived Allen Edmonds ~~trademark~~trade name and $10.2 million of impairment associated with the indefinite-lived Via Spiga ~~trademark.~~trade name. The carrying value of the Via Spiga ~~trademark~~trade name of $0.5 million ~~will be~~is being amortized over approximately two years. In addition to the interim assessment, the Company tested the indefinite-lived intangible assets as of the first day of the fourth fiscal quarter. As a result of the impairment indicator for Allen Edmonds, the Company also tested the definite-lived Allen Edmonds customer relationships intangible asset. Those assessments resulted in additional impairment totaling $23.8 million, consisting of $19.8 million associated with the Allen Edmonds trade name and $4.0 million associated with the Allen Edmonds customer relationships intangible asset. The Company recorded 0 impairment charges during the thirty-nine weeks ended October 30, 2021 or the thirteen weeks ended October 31, ~~2020 or the thirty-nine weeks ended November 2, 2019.~~2020.

Note 9 Leases

The Company leases all of its retail locations, a manufacturing facility, and certain ~~manufacturing facilities,~~ office locations, distribution centers and equipment. At contract inception, leases are evaluated and classified as either operating or finance leases. Leases with an initial term of 12 months or less are not recorded on the balance sheet.

Lease right-of-use assets and lease liabilities are recognized based on the present value of the future minimum lease payments over the lease term. The majority of the Company’s leases do not provide an implicit rate and therefore, the Company uses an incremental borrowing rate based on information available at the commencement date to determine the present value of future payments. Lease expense for minimum lease payments is recognized on a straight-line basis over the lease term. Variable lease payments are expensed as incurred.

The Company regularly analyzes the results of all of its stores and assesses the viability of underperforming stores to determine whether events or circumstances exist that indicate the stores should be closed or whether the carrying amount of their long-lived assets may not be recoverable. After allowing for an appropriate start-up period and consideration of any unusual nonrecurring events, ~~or favorable trends,~~ property and equipment at stores and the lease right-of-use assets indicated as impaired are written down to fair value as calculated using a discounted cash flow method. The fair value of the lease right-of-use assets is determined utilizing projected cash flows for each store location, discounted using a risk-adjusted discount rate, subject to a market floor based on current market lease rates. The Company recorded asset impairment charges of ~~$0.4~~$1.1 million and ~~$2.2~~$0.4 million during the thirteen weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively. The Company recorded asset impairment charges ~~primarily related to underperforming retail stores,~~ of $3.4 million and $35.6 million ~~and $5.1 million in~~during the thirty-nine weeks ended October 30, 2021 and October 31, 2020, respectively. The impairment charges recorded in the thirteen and ~~November 2, 2019, respectively.~~thirty-nine weeks ended October 30, 2021 are related to underperforming retail stores. The impairment charges recorded in the thirty-nine weeks ended October 31, 2020, including $21.1 million associated with operating lease right-of-use assets and $14.5 million associated with property and equipment, reflect the impact of the COVID-19 pandemic on the Company’s retail operations and estimates of remaining cash flows for each store. Refer to Note 5 and Note 1514 to the condensed consolidated financial statements for further discussion on these impairment charges.

As a result of the temporary store closures during the first half of 2020 associated with the ~~COVID-19~~ pandemic, ~~the Company is negotiating with landlords~~certain leases were amended to ~~modify payment terms for certain leases.~~provide rent abatements and/or deferral of lease payments. Deferred payments ~~for these leases are~~continue to be reflected in lease obligations on the condensed consolidated balance sheets. ~~As further discussed in Note 2 to the condensed consolidated financial statements, under~~Under relief provided by the FASB, entities ~~may~~could make a policy election to account for ~~the~~COVID-19-related lease concessions as if the enforceable rights existed under the original contract, accounting for them as variable rent rather than lease modifications. The Company ~~has~~ made a policy election to account for rent abatements as variable rent. Accordingly, ~~the Company recorded $1.7 million and $3.7 million in~~during the thirteen and thirty-nine weeks ended October ~~31, 2020,~~30, 2021, the Company recorded $0.1 million and $1.7 million, respectively, in lease concessions as a reduction of rent expense within selling and administrative expenses in the condensed consolidated statements of earnings (loss). ~~Rent deferrals for leases that were extended in connection with~~During the ~~rent concession will continue to be recognized consistent with the original lease agreement.~~

~~During the~~thirteen and thirty-nine weeks ended October 31, 2020, the Company ~~entered into new or amended~~recorded $1.7 million and $3.7 million in lease concessions. Rent concessions for leases that ~~resulted in the recognition of right-of-use assets and~~were extended were recognized as a lease obligations of $63.1 million on the condensed consolidated balance sheets. As of October 31, 2020, the Company has entered into lease commitments for 4 retail locations for which the leases have not yet commenced. The Company anticipates that 1 lease will begin in the current fiscal year and 3 leases will begin in the next fiscal year. Upon commencement, ~~right-of-use assets~~ ~~and lease liabilities of approximately $0.9 million will be recorded in the current fiscal year and $3.9 million in the~~ ~~next~~ ~~fiscal year on the condensed consolidated balance sheets.~~modification.

Table of Contents

During the thirty-nine weeks ended October 30, 2021, the Company entered into new or amended leases that resulted in the recognition of right-of-use assets and lease obligations of $77.7 million on the condensed consolidated balance sheets. As of October 30, 2021, the Company has entered into lease commitments for 2 retail locations for which the leases have not yet commenced. The Company anticipates that both leases will begin in the next fiscal year. Upon commencement, right-of-use assets and lease liabilities of approximately $1.3 million will be recorded in the next fiscal year on the condensed consolidated balance sheets.

The components of lease expense for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 ~~and November 2, 2019~~ were as follows:


	Thirteen Weeks Ended				Thirteen Weeks Ended
($thousands)	October 31, 2020		November 2, 2019
($ thousands)					October 30, 2021		October 31, 2020
Operating lease expense	$	38,568	$	47,068	$	35,140	$	38,568
Variable lease expense		12,739		11,794		10,982		12,739
Short-term lease expense		1,775		577		737		1,775
Sublease income		(29)		(73)		(419)		(29)
Total lease expense	$	53,053	$	59,366	$	46,440	$	53,053


	Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended
($thousands)	October 31, 2020		November 2, 2019
($ thousands)					October 30, 2021		October 31, 2020
Operating lease expense	$	124,906	$	139,380	$	112,838	$	124,906
Variable lease expense		36,090		35,277		30,985		36,090
Short-term lease expense		3,872		2,654		2,011		3,872
Sublease income		(76)		(220)		(477)		(76)
Total lease expense	$	164,792	$	177,091	$	145,357	$	164,792

Supplemental cash flow information related to leases is as follows:


	Thirty-Nine Weeks Ended					Thirty-Nine Weeks Ended
($thousands)		October 31, 2020		November 2, 2019
($ thousands)						October 30, 2021		October 31, 2020
Cash paid for lease liabilities(1)		$	99,517	$	136,497	$	140,930	$	99,517
Cash received from sublease income			76		220		477		76

(1)

Cash paid for lease liabilities for the thirty-nine weeks ended October 30, 2021 includes payment of certain lease payments deferred in 2020, as described above, as well as lease termination costs associated with the Naturalizer retail store closings, as further discussed in Note 5 to the condensed consolidated financial statements. In addition, cash paid for lease liabilities during the thirty-nine weeks ended October 31, 2020 was significantly lower than comparable periods, reflecting the deferral of lease payments during the onset of the pandemic.

Note 10 Long-term and Short-term Financing Arrangements

Credit Agreement

The Company maintains a revolving credit facility for working capital needs. On December 18, 2014, the Company and certain of its subsidiaries (the “Loan Parties”) entered into a Fourth Amended and Restated Credit Agreement ("the Former Credit Agreement"), which was further amended on July 20, 2015 to release all of the Company’s subsidiaries that were borrowers under or that guaranteed the Former Credit Agreement other than Sidney Rich Associates, Inc. and BG Retail, LLC. Allen Edmonds and Vionic were joined to the Former Credit Agreement as guarantors on December 13, 2016 and October 31, 2018, respectively. After giving effect to the joinders, theThe Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds LLC, Vionic Group LLC and Vionic International LLC are each co-borrowers and ~~guarantors under the Former Credit Agreement.~~guarantors. On January 18, 2019, the Loan Parties entered into a Third Amendment to Fourth Amended and Restated Credit Agreement to extend the maturity date to January 18, 2024 and change the borrowing capacity under the Former Credit Agreement from an aggregate amount of up to $600.0 million to an aggregate amount of up to $500.0 million, with the option to increase by up to $250.0 million. On April 14, 2020,October 5, 2021, the Company entered into a ~~Fourth~~Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the "Credit Agreement") which, among other modifications, ~~increased~~decreased the amount available under the revolving credit facility by $100.0 million to an aggregate amount of up to ~~$600.0~~$500.0 million, subject to borrowing base restrictions, and may be further increased by up to ~~$150.0~~$250.0 million. The Credit Agreement ~~increased~~also decreased the spread applied to the ~~LIBOR~~London Interbank Offered Rate (“LIBOR”) or prime rate by a total of 75 ~~basis points and increased the unused line fee by 5~~ basis points.

Borrowing availability under the Credit Agreement is limited to the lesser of the total commitments and the borrowing base ("Loan Cap"), which is based on stated percentages of the sum of eligible accounts receivable, eligible inventory and eligible credit card receivables, as defined, less applicable reserves. Under the Credit Agreement, the Loan Parties’ obligations are secured by a first-priority security interest in all accounts receivable, inventory and certain other collateral.

Table of Contents

Interest on borrowings is at variable rates based on ~~the London Interbank Offered Rate (“LIBOR”)~~LIBOR (with a floor of ~~1.0% imposed by the Credit Agreement)~~0.0%), or the prime rate as(as defined in the Credit ~~Agreement,~~Agreement), plus a spread. The interest rate and fees for letters of credit vary based upon the level of excess availability under the Credit Agreement. There is an unused line fee payable on the unused portion under the facility and a letter of credit fee payable on the outstanding face amount under letters of credit.

~~Table of Contents~~

The Credit Agreement limits the Company’s ability to create, incur, assume or permit to exist additional indebtedness and liens, make investments or specified payments, give guarantees, pay dividends, make capital expenditures and merge or acquire or sell assets. In addition, if excess availability falls below the greater of 10.0% of the ~~lesser of the~~ Loan Cap and $40.0 million for three consecutive business days, and the fixed charge coverage ratio is less than ~~1.0~~1.25 to 1.0, the Company would be in default under the Credit Agreement and certain additional covenants would be triggered.

The Credit Agreement contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations, certain events of bankruptcy and insolvency, judgment defaults and the failure of any guaranty or security document supporting the agreement to be in full force and effect. If an event of default occurs, the collateral agent may assume dominion and control over the Company’s cash (a “cash dominion event”) until such event of default is cured or waived or the excess availability exceeds such amount for 30 consecutive days, provided that a cash dominion event shall be deemed continuing (even if an event of default is no longer continuing and/or excess availability exceeds the required amount for 30 consecutive business days) after a cash dominion event has occurred and been discontinued on two occasions in any 12-month period. The Credit Agreement also contains certain other covenants and restrictions. The Company was in compliance with all covenants and restrictions under the Credit Agreement as of October ~~31, 2020.~~30, 2021.

At October ~~31, 2020,~~30, 2021, the Company had ~~$300.0~~$175.0 million of borrowings outstanding and ~~$11.2~~$12.5 million in letters of credit outstanding under the Credit Agreement. Total additional borrowing availability was ~~$170.6~~$312.5 million at October ~~31, 2020.~~30, 2021.

~~$200 Million~~ Senior Notes

On July 27, 2015, the Company issued $200.0 million aggregate principal amount of ~~6.25%~~ Senior Notes due on August 15, 2023 (the "Senior Notes"). The Senior Notes bear interest at 6.25%, which is payable on February 15 and August 15 of each year. The Senior Notes are guaranteed on a senior unsecured basis by each of the Company’s subsidiaries that is a borrower or guarantor under the Credit Agreement. ~~Interest on the Senior Notes is payable on February 15 and August 15 of each year. The Senior Notes will mature on August 15, 2023.~~

If the Company experiences specific kinds of changes of control, it would be required to offer to purchase the Senior Notes at a purchase price equal to 101% of the principal amount, plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the date of repurchase. The Senior Notes also contain ~~certain other~~ covenants and restrictions that limit certain activities including, among other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments, common stock repurchases, mergers and acquisitions and sales of assets. As of October ~~31, 2020,~~30, 2021, the Company was in compliance with all covenants and restrictions relating to the Senior Notes.

On August 16, 2021, the Company redeemed $100.0 million of Senior Notes at 100.0%. During the thirteen weeks ended October 30, 2021, the Company determined that it would redeem the remaining $100.0 million of Senior Notes during the fourth quarter of 2021. Accordingly, the Company classified $100.0 million aggregate principal amount of its Senior Notes as a current liability. On November 18, 2021, the Company notified the holders of the Senior Notes that the remaining $100.0 million would be redeemed in January 2022.

Table of Contents

Note 11 Shareholders’ Equity

Accumulated Other Comprehensive Loss

The following table sets forth the changes in accumulated other comprehensive loss (OCL) by component for the periods ended October 30, 2021 and October 31, ~~2020 and November 2, 2019:~~2020:


			Pension and		Derivative						Pension and		Derivative
			Other		Financial		Accumulated				Other		Financial		Accumulated
	Foreign		Postretirement		Instrument		Other		Foreign		Postretirement		Instrument		Other
	Currency		Transactions		Transactions		Comprehensive		Currency		Transactions		Transactions		Comprehensive
($thousands)	Translation		(1)		(2)		(Loss) Income
($ thousands)									Translation		(1)		(2)		(Loss) Income
Balance at July 31, 2021									$	(260)	$	(8,312)	$	—	$	(8,572)
Other comprehensive loss before reclassifications										(257)		—		—		(257)
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss										—		445		—		445
Tax benefit										—		(87)		—		(87)
Net reclassifications										—		358		—		358
Other comprehensive (loss) income										(257)		358		—		101
Balance at October 30, 2021									$	(517)	$	(7,954)	$	—	$	(8,471)

Balance at August 1, 2020	$	(1,390)	$	(30,047)	$	0	$	(31,437)	$	(1,390)	$	(30,047)	$	—	$	(31,437)
Other comprehensive income before reclassifications		320		0		0		320		320		—		—		320
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		0		(111)		0		(111)		—		(111)		—		(111)
Tax provision ⁽³⁾		0		44		0		44		—		44		—		44
Net reclassifications		0		(67)		0		(67)		—		(67)		—		(67)
Other comprehensive income		320		(67)		0		253
Other comprehensive income (loss)										320		(67)		—		253
Balance at October 31, 2020	$	(1,070)	$	(30,114)	$	0	$	(31,184)	$	(1,070)	$	(30,114)	$	—	$	(31,184)

Balance at August 3, 2019	$	(896)	$	(30,199)	$	(310)	$	(31,405)
Other comprehensive income before reclassifications		595		0		66		661
Balance at January 30, 2021									$	(111)	$	(9,025)	$	—	$	(9,136)
Other comprehensive loss before reclassifications										(406)		—		—		(406)
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		0		578		(4)		574		—		1,340		—		1,340
Tax (benefit) provision		0		(149)		1		(148)
Tax benefit										—		(269)		—		(269)
Net reclassifications		0		429		(3)		426		—		1,071		—		1,071
Other comprehensive income		595		429		63		1,087
Balance at November 2, 2019	$	(301)	$	(29,770)	$	(247)	$	(30,318)
Other comprehensive (loss) income										(406)		1,071		—		665
Balance at October 30, 2021									$	(517)	$	(7,954)	$	—	$	(8,471)

Balance at February 1, 2020	$	(580)	$	(31,171)	$	(92)	$	(31,843)	$	(580)	$	(31,171)	$	(92)	$	(31,843)
Other comprehensive (loss) income before reclassifications		(490)		0		87		(403)		(490)		—		87		(403)
Reclassifications:		—
Amounts reclassified from accumulated other comprehensive loss		0		1,393		6		1,399		—		1,393		6		1,399
Tax benefit ⁽³⁾		0		(336)		(1)		(337)		—		(336)		(1)		(337)
Net reclassifications		0		1,057		5		1,062		—		1,057		5		1,062
Other comprehensive (loss) income		(490)		1,057		92		659		(490)		1,057		92		659
Balance at October 31, 2020	$	(1,070)	$	(30,114)	$	0	$	(31,184)	$	(1,070)	$	(30,114)	$	—	$	(31,184)

Balance at February 2, 2019	$	62	$	(31,055)	$	(608)	$	(31,601)
Other comprehensive (loss) income before reclassifications		(363)		0		160		(203)
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		0		1,733		254		1,987
Tax benefit(3)		0		(448)		(53)		(501)
Net reclassifications		0		1,285		201		1,486
Other comprehensive (loss) income		(363)		1,285		361		1,283
Balance at November 2, 2019	$	(301)	$	(29,770)	$	(247)	$	(30,318)

(1)	Amounts reclassified are included in other income, net. Refer to Note 13 to the condensed consolidated financial statements for additional information related to pension and other postretirement benefits.

(2)	Amounts reclassified are included in net sales, costs of goods sold and selling and administrative expenses. Refer to Note ~~14 and Note 15~~1 to the condensed consolidated financial statements for additional information related to derivative financial ~~instruments.~~instruments.

(3)	Includes approximately $0.5 million of expenserelated to a valuation allowance on net deferred taxes, including those related to other comprehensive income, for the Company’s Canadian subsidiary.

Table of Contents

Note 12 Share-Based Compensation

The Company recognized share-based compensation expense of ~~$2.5~~$3.4 million and ~~$2.4~~$2.5 million during the thirteen weeks and ~~$6.9~~$8.8 million and ~~$8.9~~$6.9 million during the thirty-nine weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively.

The Company had net (repurchases) issuances ~~(repurchases)~~ of ~~32,018~~(10,554) and ~~(69,377)~~32,018 shares of common stock during the thirteen weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively, for restricted stock grants, stock performance awards issued to employees ~~stock options exercised~~ and common and restricted stock grants issued to non-employee directors, net of forfeitures and shares withheld to satisfy the tax withholding requirement. During the thirty-nine weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ the Company ~~issued~~had net issuances of 291,306 and 449,539 ~~and 295,466~~ shares of common stock, respectively, related to the share-based plans.

Restricted Stock

The following table summarizes restricted stock activity for the periods ended October 30, 2021 and October 31, ~~2020 and November 2, 2019:~~2020:

Thirteen Weeks Ended

October 31, 2020

November 2, 2019

October 30, 2021

October 31, 2020

Weighted-

Total Number

Average

Total Number

Average

Total Number

Average

Total Number

Average

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

Fair Value

August 1, 2020

1,360,602

17.81

August 3, 2019

1,433,470

27.09

July 31, 2021

1,380,246

14.05

August 1, 2020

1,360,602

17.81

Granted

35,000

9.73

Granted

11,000

22.44

—

Granted

35,000

9.73

Forfeited

(875)

14.51

Forfeited

(78,000)

30.75

(9,500)

15.72

Forfeited

(875)

14.51

Vested

(6,500)

25.18

Vested

(10,000)

32.85

(3,500)

26.42

Vested

(6,500)

25.18

October 31, 2020

1,388,227

17.57

November 2, 2019

1,356,470

26.80

October 30, 2021

1,367,246

14.01

October 31, 2020

1,388,227

17.57

Thirty-Nine Weeks Ended

October 31, 2020

November 2, 2019

October 30, 2021

October 31, 2020

Weighted-

Total Number

Average

Total Number

Average

Total Number

Average

Total Number

Average

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

Fair Value

February 1, 2020

1,271,795

26.77

February 2, 2019

1,249,223

29.17

January 30, 2021

1,397,227

16.74

February 1, 2020

1,271,795

26.77

Granted

598,431

6.14

Granted

461,234

22.94

568,916

18.73

Granted

598,431

6.14

Forfeited

(68,787)

23.11

Forfeited

(135,425)

29.91

(78,375)

15.48

Forfeited

(68,787)

23.11

Vested

(413,212)

28.23

Vested

(218,562)

30.25

(520,522)

26.26

Vested

(413,212)

28.23

October 31, 2020

1,388,227

17.57

November 2, 2019

1,356,470

26.80

October 30, 2021

1,367,246

14.01

October 31, 2020

1,388,227

17.57

There were 0 restricted shares granted during the thirteen weeks ended October 30, 2021. Of the 568,916 restricted shares granted during the thirty-nine weeks ended October 30, 2021, 4,910 shares have a cliff-vesting term of one year, 20,000 shares have a cliff-vesting term of two years and 544,006 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years. All of the restricted shares granted during the thirteen weeks ended October 31, 2020 have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years. Of the 598,431 restricted shares granted during the thirty-nine weeks ended October 31, 2020, 585,683 shares have a graded-vesting term of three years, with 50% vesting after two years and 12,748 shares have a cliff-vesting term of one year. All of the restricted shares granted during the thirteen weeks ended November 2, 2019 have a graded-vesting term of three years. Of the 461,234 restricted shares granted during the thirty-nine weeks ended November 2, 2019, 448,320 shares have a graded-vesting term of50% after three years and ~~12,914~~12,748 shares have a cliff-vesting term of one year. Share-based compensation expense for graded-vesting grants is recognized ratably over the respective vesting periods.

Performance Share Awards

There were 0 performance-based share awards granted by the Company during the thirteen weeks ended October 30, 2021. During the thirty-nine weeks ended October 30, 2021, the Company granted performance share awards for a targeted 175,500 shares, with a weighted-average grant date fair value of $18.63 in connection with the 2020 performance award. During the thirteen and thirty-nine weeks ended October 31, 2020, the Company granted performance share awards for a targeted 87,750 shares, with a weighted-average grant date fair value of $7.47. During the thirty-nine weeks ended November 2, 2019, the Company granted performance share awards for a targeted 180,000 shares, with a weighted-average grant date fair value of $23.42. There were 0 performance-based share awards granted by the Company during the thirteen weeks ended November 2, 2019. Vesting of performance-based awards is generally dependent upon the financial performance of the Company and the attainment of certain financial goals during the three-year period following the grant. Vesting of performance-based awards for the performance share award granted during the thirteen weeks ended October 31, 2020 is dependent upon the attainment of certain financial goals during the second half of 2020. At the end of the vesting period, the employee will

Table of Contents

have earned an amount of shares or units between 0% and 200% of the targeted award, depending on the

~~Table of Contents~~

achievement of the specified financial goals for the service period. Compensation expense is recognized based on the fair value of the award and the anticipated number of shares or units to be awarded for each tranche in accordance with the vesting schedule of the units over the three-year service period.

During the thirty-nine weeks ended October 30, 2021, the Company granted long-term incentive awards payable in cash for the 2021-2023 performance period, with a target value of $6.5 million and a maximum value of $13.0 million. These awards, which vest after a three-year period, are dependent upon the attainment of certain financial goals of the Company for each of the three years and individual achievement of strategic initiatives over the cumulative period of the award. The estimated value of the award, which is reflected within other liabilities on the condensed consolidated balance sheets, is being accrued over the three-year performance period. There were 0 long-term cash incentive awards granted by the Company during the thirteen weeks ended October 30, 2021 or during the thirty-nine weeks ended October 31, 2020.

Restricted Stock Units for Non-Employee Directors

Equity-based grants may be made to non-employee directors in the form of restricted stock units ("RSUs") payable in cash or common stock at no cost to the non-employee director. The RSUs earn dividend equivalents at the same rate as dividends on the Company’s common stock. The dividend equivalents, which vest immediately, are automatically re-invested in additional RSUs. Expense related to the initial grant of RSUs is recognized ratably over the vesting period based upon the fair value of the RSUs. The RSUs payable in cash are remeasured at the end of each period. Expense for the dividend equivalents is recognized at fair value when the dividend equivalents are granted. The Company granted ~~3,618~~1,739 and ~~1,350 to non-employee directors~~3,618 for dividend equivalents, during the thirteen weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively, with weighted-average grant date fair values of ~~$9.78~~$22.49 and ~~$23.27,~~$9.78, respectively. The Company granted ~~118,150~~44,180 and ~~55,679~~118,150 RSUs to non-employee directors, including ~~16,166~~4,900 and ~~4,023~~16,166 for dividend equivalents, during the thirty-nine weeks ended October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively, with weighted-average grant date fair values of ~~$10.01~~$27.03 and ~~$19.59,~~$10.01, respectively.

Note 13 Retirement and Other Benefit Plans

The following table sets forth the components of net periodic benefit income for the Company, including domestic and Canadian plans:


	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended
($ thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019		October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Service cost	$	2,005	$	1,805	$	0	$	0	$	1,872	$	2,005	$	0	$	0
Interest cost		2,970		3,707		10		15		2,811		2,970		8		10
Expected return on assets		(8,330)		(6,933)		0		0		(7,108)		(8,330)		0		0
Amortization of:
Actuarial loss (gain)		240		977		(27)		(27)		601		240		(27)		(27)
Prior service income		(324)		(372)		0		0		(129)		(324)		0		0
Total net periodic benefit income	$	(3,439)	$	(816)	$	(17)	$	(12)	$	(1,953)	$	(3,439)	$	(19)	$	(17)


	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended				Thirty-Nine Weeks Ended
($ thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019		October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Service cost	$	6,412	$	5,414	$	0	$	0	$	5,615	$	6,412	$	—	$	—
Interest cost		9,252		11,112		31		45		8,430		9,252		28		31
Expected return on assets		(23,205)		(20,792)		0		0		(21,331)		(23,205)		—		—
Amortization of:
Actuarial loss (gain)		2,506		2,929		(82)		(81)		1,808		2,506		(82)		(82)
Prior service income		(1,031)		(1,115)		0		0		(386)		(1,031)		—		—
Settlement cost		222		0		0		0		—		222		—		—
Curtailment gain		(189)		0		0		0		—		(189)		—		—
Total net periodic benefit income	$	(6,033)	$	(2,452)	$	(51)	$	(36)	$	(5,864)	$	(6,033)	$	(54)	$	(51)

The non-service cost components of net periodic benefit income are included in other income, net in the condensed consolidated statements of earnings (loss). Service cost is included in selling and administrative expenses.

~~Note 14 Risk Management and Derivatives~~

In the normal course of business, the Company’s financial results are impacted by currency rate movements in foreign currency denominated assets, liabilities and cash flows as it makes a portion of its purchases and sales in local currencies. The Company has established policies and business practices that are intended to mitigate a portion of the effect of these exposures. The Company uses derivative financial instruments, primarily forward contracts, to manage its currency exposures. These derivative financial instruments are viewed as risk

Table of Contents

~~management tools and are not used for trading or speculative purposes. Derivatives entered into by the Company are designated as cash flow hedges of forecasted foreign currency transactions.~~

Derivative financial instruments expose the Company to credit and market risk. The market risk associated with these instruments resulting from currency exchange movements is expected to offset the market risk of the underlying transactions being hedged. The Company does not believe there is a significant risk of loss in the event of non-performance by the counterparties associated with these instruments because these transactions are executed with major international financial institutions. Credit risk is managed through the continuous monitoring of exposures to such counterparties.

The Company’s hedging strategy allows for the use of forward contracts as cash flow hedging instruments, which are recorded in the Company’s condensed consolidated balance sheets at fair value. The effective portion of gains and losses resulting from changes in the fair value of these hedge instruments are deferred in accumulated other comprehensive loss and reclassified to earnings in the period that the hedged transaction is recognized in earnings.

The Company had no forward contracts as of October 31, 2020. As of November 2, 2019, and February 1, 2020, the Company had forward contracts maturing through May 2020. The contract amounts in the following table represent the net notional amount of all purchase and sale contracts of a foreign currency.

(U.S. $equivalent in thousands)

October 31, 2020

November 2, 2019

February 1, 2020
Financial Instruments






U.S. dollars (purchased by the Company’s Canadian division with Canadian dollars)

$
0

$
3,235

$
3,963
Euro

0

5,763

1,251
Chinese yuan

0

2,905

2,355
New Taiwanese dollars

0

—

0
Other currencies

0

139

69
Total financial instruments

$
0

$
12,042

$
7,638

The classification and fair values of derivative instruments designated as hedging instruments included within the condensed consolidated balance sheets as of October 31, 2020, November 2, 2019 and February 1, 2020 are as follows:

Asset Derivatives

Liability Derivatives
($ thousands)

Balance Sheet Location

Fair Value

Balance Sheet Location

Fair Value
Foreign Exchange Forward Contracts








October 31, 2020

Prepaid expenses and other current assets

0

Other accrued expenses

0
November 2, 2019

Prepaid expenses and other current assets

17

Other accrued expenses

325
February 1, 2020

Prepaid expenses and other current assets

0

Other accrued expenses

103

~~Table of Contents~~

For the thirteen and thirty-nine weeks ended October 31, 2020 and November 2, 2019, the effect of derivative instruments in cash flow hedging relationships on the condensed consolidated statements of earnings (loss) was as follows:

Thirteen Weeks Ended
($ thousands)

October 31, 2020

November 2, 2019




Gain (Loss)




Reclassified

Loss Reclassified

Gain (Loss)

from

(Loss) Gain

from

Recognized

Accumulated

Recognized

Accumulated
Foreign Exchange Forward Contracts: Income Statement

in OCL on

OCL into

in OCL on

OCL into
Classification Gains (Losses) – Realized

Derivatives

Earnings

Derivatives

Earnings
Net sales

$
0

$
0

$
69

$
2
Cost of goods sold

0

0

38

—
Selling and administrative expenses

0

0

(33)

2

Thirty-Nine Weeks Ended
($ thousands)

October 31, 2020

November 2, 2019


Loss



Loss

Reclassified

Reclassified

Gain

from

(Loss) Gain

from

Recognized

Accumulated

Recognized

Accumulated
Foreign Exchange Forward Contracts: Income Statement

in OCL on

OCL into

in OCL on

OCL into
Classification Gains (Losses) – Realized

Derivatives

Earnings

Derivatives

Earnings
Net sales

$
23

$
0

$
(51)

$
(3)
Cost of goods sold

60

0

390

(38)
Selling and administrative expenses

33

(6)

(147)

(213)

~~Additional information related to the Company’s derivative financial instruments are disclosed within Note 15 to the condensed consolidated financial statements.~~

Note 1514 Fair Value Measurements

Fair Value Hierarchy

Fair value measurement disclosure requirements specify a hierarchy of valuation techniques based upon whether the inputs to those valuation techniques reflect assumptions other market participants would use based upon market data obtained from independent sources (“observable inputs”) or reflect the Company’s own assumptions of market participant valuation (“unobservable inputs”). In accordance with the fair value guidance, the inputs to valuation techniques used to measure fair value are categorized into three levels based on the reliability of the inputs as follows:

●	Level 1 – Quoted prices in active markets that are unadjusted and accessible at the measurement date for identical, unrestricted assets or liabilities;

●	Level 2 – Quoted prices for identical assets and liabilities in markets that are not active, quoted prices for similar assets and liabilities in active markets or financial instruments for which significant inputs are observable, either directly or indirectly; and

●	Level 3 – Prices or valuations that require inputs that are both significant to the fair value measurement and unobservable.

In determining fair value, the Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs to the extent possible. The Company also considers counterparty credit risk in its assessment of fair value. Classification of the financial or non-financial asset or liability within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

Measurement of Fair Value

The Company measures fair value as an exit price, the price to sell an asset or transfer a liability in an orderly transaction between market participants at the measurement date, using the procedures described below for all financial and non-financial assets and liabilities measured at fair value.

~~Table of Contents~~

Money Market Funds

The Company has cash equivalents consisting of short-term money market funds backed by U.S. Treasury securities. The primary objective of these investing activities is to preserve the Company’s capital for the purpose of funding operations, and it does not enter into money market funds for trading or speculative purposes. The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1).

Non-Qualified Deferred Compensation Plan Assets and Liabilities

The Company maintains a non-qualified deferred compensation plan (the “Deferred Compensation Plan”) for the benefit of certain management employees. The investment funds offered to the participants generally correspond to the funds offered in the Company’s 401(k) plan, and the account balance fluctuates with the investment returns on those funds. The Deferred Compensation Plan permits the deferral of up to 50% of base salary and 100% of compensation received under the Company’s annual incentive plan. The deferrals are held in a separate trust, which has been established by the Company to administer the Deferred Compensation Plan. The assets of the trust are subject to the claims of the Company’s creditors in the event that the Company becomes insolvent. Consequently, the trust qualifies as a grantor trust for income tax purposes (i.e., a “Rabbi Trust”). The liabilities of the Deferred Compensation Plan are presented in other accrued expenses and the assets held by the trust are classified within prepaid expenses and other current assets in the accompanying condensed consolidated balance sheets. Changes in deferred compensation plan assets and liabilities are charged to selling and administrative expenses. The fair value is based on unadjusted quoted market prices for the funds in active markets with sufficient volume and frequency (Level 1).

Deferred Compensation Plan for Non-Employee Directors

Non-employee directors are eligible to participate in a deferred compensation plan with deferred amounts valued as if invested in the Company’s common stock through the use of phantom stock units (“PSUs”). Under the plan, each participating director’s account is credited with the number of PSUs equal to the number of shares of the Company’s common stock that the participant could purchase or receive with the amount of the deferred compensation, based upon the average of the high and low prices of the Company’s common stock on the last trading day of the fiscal quarter when the cash compensation was earned. Dividend equivalents are paid on PSUs at the same rate as dividends on the Company’s common stock and are re-invested in additional PSUs at the next fiscal quarter-end. The liabilities of the plan are based on the fair value of the outstanding PSUs and are presented in other accrued expenses (current portion) or other liabilities in the accompanying condensed consolidated balance sheets. Gains and losses resulting from changes in the fair value of the PSUs are presented in selling and administrative expenses in the Company’s condensed consolidated statements of earnings (loss). The fair value of each PSU is based on an unadjusted quoted market price for the Company’s common stock in an active market with sufficient volume and frequency on each measurement date (Level 1).

Table of Contents

Restricted Stock Units for Non-Employee Directors

Under the Company’s incentive compensation plans, cash-equivalent restricted stock units (“RSUs”) of the Company were previously granted at no cost to non-employee directors. These cash-equivalent RSUs are subject to a vesting requirement (usually one year), earn dividend-equivalent units, and are settled in cash on the date the director terminates service or such earlier date as a director may elect, subject to restrictions, based on the then current fair value of the Company’s common stock. The fair value of each cash-equivalent RSU is based on an unadjusted quoted market price for the Company’s common stock in an active market with sufficient volume and frequency on each measurement date (Level 1). Additional information related to RSUs for non-employee directors is disclosed in Note 12 to the condensed consolidated financial statements.

~~Derivative Financial Instruments~~

The Company uses derivative financial instruments, primarily foreign exchange contracts, to reduce its exposure to market risks from changes in foreign exchange rates. These foreign exchange contracts are measured at fair value using quoted forward foreign exchange prices from counterparties corroborated by market-based pricing (Level 2). Additional information related to the Company’s derivative financial instruments is disclosed in Note 14 to the condensed consolidated financial statements.

Mandatory Purchase Obligation

The Company recorded a mandatory purchase obligation of the ~~noncontrolling~~remaining interest in conjunction with the acquisition of Blowfish Malibu in July of 2018. The fair value of the mandatory purchase obligation iswas based on the earnings formula specified in the purchase agreement (Level 3). ~~Accretion of~~Fair value adjustments on the mandatory purchase obligation ~~and fair value adjustments are~~were recorded as interest expense. During the thirteen ~~and thirty-nine~~ weeks ended October 30, 2021 and October 31, 2020, the Company recorded fair value adjustments of $1.9 million and $5.1 million, respectively. During the thirty-nine weeks ended October 30, 2021 and October 31, 2020, the Company recorded fair value adjustments of $15.4 million and $14.9 million, respectively. ~~Accretion and remeasurement adjustments of $3.9 million and $4.4 million were recorded during the thirteen and thirty-nine weeks ended November 2, 2019, respectively.~~ The ~~earnings projections and discount rate utilized in the estimate of the fair value of the~~ mandatory purchase obligation ~~require management judgment and are the assumptions to which the fair value calculation is the most sensitive.~~of $54.6 million was paid on November 4, 2021. Refer to further discussion of the mandatory purchase obligation in Note 5 to the condensed consolidated financial statements.

~~Table of Contents~~

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at October 30, 2021, October 31, 2020 ~~November 2, 2019~~ and ~~February 1, 2020.~~January 30, 2021. During the thirty-nine weeks ended October 30, 2021 and October 31, 2020, there were 0 transfers into or out of Level 3.


	Fair Value Measurements								Fair Value Measurements
($thousands)	Total		Level 1		Level 2		Level 3
($ thousands)									Total		Level 1		Level 2		Level 3
Asset (Liability)
October 30, 2021:
Cash equivalents – money market funds									$	35,000	$	35,000	$	0	$	0
Non-qualified deferred compensation plan assets										7,789		7,789		0		0
Non-qualified deferred compensation plan liabilities										(7,789)		(7,789)		0		0
Deferred compensation plan liabilities for non-employee directors										(1,764)		(1,764)		0		0
Restricted stock units for non-employee directors										(2,558)		(2,558)		0		0
Mandatory purchase obligation - Blowfish Malibu										(54,558)		0		0		(54,558)
October 31, 2020:
Cash equivalents – money market funds	$	82,500	$	82,500	$	0	$	0	$	82,500	$	82,500	$	0	$	0
Non-qualified deferred compensation plan assets		7,741		7,741		0		0		7,741		7,741		0		0
Non-qualified deferred compensation plan liabilities		(7,741)		(7,741)		0		0		(7,741)		(7,741)		0		0
Deferred compensation plan liabilities for non-employee directors		(813)		(813)		0		0		(813)		(813)		0		0
Restricted stock units for non-employee directors		(840)		(840)		0		0		(840)		(840)		0		0
Mandatory purchase obligation - Blowfish Malibu		(30,146)		—		0		(30,146)		(30,146)		0		0		(30,146)
November 2, 2019:
Non-qualified deferred compensation plan assets	$	8,117	$	8,117	$	0	$	0
Non-qualified deferred compensation plan liabilities		(8,117)		(8,117)		0		0
Deferred compensation plan liabilities for non-employee directors		(1,879)		(1,879)		0		0
Restricted stock units for non-employee directors		(3,282)		(3,282)		0		0
Derivative financial instruments, net		(308)		0		(308)		0
Mandatory purchase obligation - Blowfish Malibu		(13,655)		0		0		(13,655)
February 1, 2020:
January 30, 2021:
Cash equivalents – money market funds	$	18,001	$	18,001	$	0	$	0	$	45,000	$	45,000	$	0	$	0
Non-qualified deferred compensation plan assets		8,004		8,004		0		0		7,918		7,918		0		0
Non-qualified deferred compensation plan liabilities		(8,004)		(8,004)		0		0		(7,918)		(7,918)		0		0
Deferred compensation plan liabilities for non-employee directors		(1,536)		(1,536)		0		0		(989)		(989)		0		0
Restricted stock units for non-employee directors		(2,572)		(2,572)		0		0		(1,661)		(1,661)		0		0
Derivative financial instruments, net		(103)		0		(103)		0
Mandatory purchase obligation - Blowfish Malibu		(15,200)		0		0		(15,200)		(39,134)		0		0		(39,134)

Impairment Charges

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important that could trigger an impairment review include underperformance relative to historical or projected future operating results, a significant change in the manner of the use of the asset, or a negative industry or economic trend. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method. Certain factors, such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered Level 3 inputs as defined by FASB ASC Topic 820, Fair Value Measurement. Long-lived assets held and used with a carrying amount of ~~$657.6~~$542.3 million and ~~$658.1~~

Table of Contents

$657.6 million at October 30, 2021 and October 31, 2020, ~~and November 2, 2019,~~ respectively, were assessed for indicators of impairment and written down to their fair value. This assessment resulted in the following impairment charges, primarily for operating lease right-of-use assets, leasehold improvements and furniture and fixtures in the Company’s retail stores. Higher impairment charges were recorded in the thirty-nine weeks ended October 31, 2020, reflecting the deteriorating economic conditions driven in part by the COVID-19 pandemic, as further discussed in Note 5 and Note 9 to the condensed consolidated financial statements.


	Thirteen Weeks Ended				Thirty-Nine Weeks Ended				Thirteen Weeks Ended				Thirty-Nine Weeks Ended
($thousands)	October 31, 2020		November 2, 2019		October 31, 2020		November 2, 2019
Impairment Charges
($ thousands)									October 30, 2021		October 31, 2020		October 30, 2021		October 31, 2020
Long-Lived Asset Impairment Charges
Famous Footwear	$	0	$	769	$	14,896	$	1,509	$	400	$	—	$	1,200	$	14,896
Brand Portfolio		398		1,382		20,724		3,596		711		398		2,199		20,724
Total impairment charges	$	398	$	2,151	$	35,620	$	5,105
Total long-lived asset impairment charges									$	1,111	$	398	$	3,399	$	35,620

Fair Value of the Company’s Other Financial Instruments

The fair values of cash and cash equivalents (excluding money market funds discussed above), receivables and trade accounts payable approximate their carrying values due to the short-term nature of these instruments.

~~Table of Contents~~

The carrying amounts and fair values of the Company’s other financial instruments subject to fair value disclosures are as follows:


	October 31, 2020				November 2, 2019				February 1, 2020				October 30, 2021				October 31, 2020				January 30, 2021
	Carrying				Carrying				Carrying				Carrying				Carrying				Carrying
($thousands)	Value ⁽¹⁾		Fair Value		Value ⁽¹⁾		Fair Value		Value ⁽¹⁾		Fair Value
($ thousands)													Value ⁽¹⁾		Fair Value		Value ⁽¹⁾		Fair Value		Value ⁽¹⁾		Fair Value
Borrowings under revolving credit agreement	$	300,000	$	300,000	$	295,000	$	295,000	$	275,000	$	275,000	$	175,000	$	175,000	$	300,000	$	300,000	$	250,000	$	250,000
Current portion of long-term debt														100,000		100,000		—		—		—		—
Long-term debt		200,000		188,750		200,000		206,200		200,000		205,000		—		—		200,000		188,750		200,000		201,000
Total debt	$	500,000	$	488,750	$	495,000	$	501,200	$	475,000	$	480,000	$	275,000	$	275,000	$	500,000	$	488,750	$	450,000	$	451,000

(1)	Excludes unamortized debt issuance costs and debt discount

The fair ~~value~~values of borrowings under the revolving credit agreement ~~approximates its~~and current portion of long-term debt approximate their carrying ~~value~~values due to ~~its~~the short-term nature of these borrowings (Level 1). The fair value of the Company’s long-term debt was based upon quoted prices in an inactive market as of the end of the respective periods (Level 2).

Note 1615 Income Taxes

The Company’s consolidated effective tax rate can vary considerably from period to period, depending on a number of factors. The Company’s consolidated ~~rate was (1.9%)~~effective tax rates were a provision of 24.9% and a benefit of 1.9% for the thirteen weeks ended October 30, 2021 and October 31, 2020, ~~compared to 21.9% for the thirteen weeks ended November 2, 2019.~~respectively. The lower effective tax rate for the thirteen weeks ended October 31, 2020 ~~primarily~~ reflects the impact of a higher anticipated full year tax benefit, driven by the impact of the CARES Act, which ~~permits~~permitted the Company to carry back 2020 losses to years with a higher federal tax rate, and the mix of projected earnings between international and domestic jurisdictions.

~~For~~The Company’s consolidated effective tax rate was a provision of 27.7% for the thirty-nine weeks ended October 30, 2021, compared to a benefit of 19.8% for the thirty-nine weeks ended October 31, ~~2020, the Company’s consolidated effective~~2020. The higher tax rate ~~was 19.8%, compared to 23.1%~~ for the thirty-nine weeks ended ~~November 2, 2019.~~October 30, 2021 primarily reflects strong domestic earnings and incremental valuation allowances for the Company’s deferred tax assets in certain jurisdictions. The rate also reflects the non-deductibility of losses at the Company’s Canadian business division, which were driven by exit-related costs associated with Naturalizer retail stores during the first quarter of 2021. The Company's effective tax rate ~~was impacted by several discrete tax items~~ for the thirty-nine weeks ended October 31, 2020 was impacted by several discrete tax items, including the non-deductibility of a portion of the ~~Company’s~~Company's intangible asset impairment charges, the provision of a valuation allowance related to certain state and Canada deferred tax assets, and the incremental tax provision related to ~~share-based compensation. As discussed above,~~ the ~~Company’s tax~~vesting of stock awards. Offsetting these impacts was a benefit ~~also includes the favorable impact of~~associated with the CARES Act, which ~~permits~~permitted the Company to carry back 2020 losses to years with a higher federal tax rate. If these discrete taxes had not been recognized during the thirty-nine weeks ended October 31, 2020, the Company’s effective tax rate would have been 23.5%. During the nine months ended November 2, 2019, the Company recognized an immaterial amount of discrete tax items.

As of October ~~31, 2020,~~30, 2021, 0 deferred taxes have been provided on the accumulated unremitted earnings of the Company’s foreign subsidiaries that are not subject to United States income tax, beyond the amounts recorded for the one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings, as required by the Tax Cuts and Jobs Act. The Company periodically evaluates its foreign

Table of Contents

investment opportunities and plans, as well as its foreign working capital needs, to determine the level of investment required and, accordingly, determines the level of foreign earnings that is considered indefinitely reinvested. Based upon that evaluation, earnings of the Company’s foreign subsidiaries that are not otherwise subject to United States taxation are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided. If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted foreign earnings.

Note 1716 Commitments and Contingencies

Environmental Remediation

Prior operations included numerous manufacturing and other facilities for which the Company may have responsibility under various environmental laws for the remediation of conditions that may be identified in the future. The Company is involved in environmental remediation and ongoing compliance activities at several sites and has been notified that it is or may be a potentially responsible party at several other sites.

Redfield

The Company is remediating, under the oversight of Colorado authorities, the groundwater and indoor air at its owned facility in Colorado (the “Redfield site” or, when referring to remediation activities at or under the facility, the “on-site remediation”) and residential neighborhoods adjacent to and near the property (the “off-site remediation”) that have been affected by solvents previously used at the facility. The on-site remediation calls for the operation of a pump and treat system (which prevents migration of contaminated groundwater

~~Table of Contents~~

off the property) as the final remedy for the site, subject to monitoring and periodic review of the on-site conditions and other remedial technologies that may be developed in the future. In 2016, the Company submitted a revised plan to address on-site conditions, including direct treatment of source areas, and received approval from the oversight authorities to begin implementing the revised plan.

As the treatment of the on-site source areas progresses, the Company expects to convert the pump and treat system to a passive treatment barrier system. Off-site groundwater concentrations have been reducing over time since installation of the pump and treat system in 2000 and injection of clean water beginning in 2003. However, localized areas of contaminated bedrock just beyond the property line continue to impact off-site groundwater. The modified work plan for addressing this condition includes converting the off-site bioremediation system into a monitoring well network and employing different remediation methods in these recalcitrant areas. In accordance with the work plan, a pilot test was conducted of certain groundwater remediation methods and the results of that test were used to develop more detailed plans for remedial activities in the off-site areas, which were approved by the authorities and are being implemented in a phased manner. The results of groundwater monitoring are being used to evaluate the effectiveness of these activities. The Company continues to implement the expanded remedy work plan that was approved by the oversight authorities in 2015. Based on the progress of the direct remedial action of on-site conditions, the Company ~~has~~ submitted a request to the oversight authorities for permission to convert the perimeter pump and treat active remediation system to a passive one. ~~During the fourth quarter of~~In 2019, a final response was received from the oversight authorities, which ~~allows~~is allowing the Company to proceed with implementation of the revised plan. The Company continues to work with outside experts and the oversight authorities on the off-site work plan.

The cumulative expenditures for both on-site and off-site remediation through October ~~31, 2020~~30, 2021 were ~~$31.8~~$32.3 million. The Company has recovered a portion of these expenditures from insurers and other third parties. The reserve for the anticipated future remediation activities at October ~~31, 2020~~30, 2021 is ~~$9.7~~$9.9 million, of which $8.9 million is recorded within other liabilities and ~~$0.8~~$1.0 million is recorded within other accrued expenses. Of the total ~~$9.7~~$9.9 million reserve, ~~$5.0~~$5.1 million is for off-site remediation and ~~$4.7~~$4.8 million is for on-site remediation. The liability for the on-site remediation was discounted at 4.8%. On an undiscounted basis, the on-site remediation liability would be ~~$13.9~~$13.7 million as of October ~~31, 2020.~~30, 2021. The Company expects to spend approximately $0.6 million in 202021, $0.1 million in each of the following four years and ~~$12.9~~$12.7 million in the aggregate thereafter related to the on-site remediation.

Other

Various federal and state authorities have identified the Company as a potentially responsible party for remediation at certain other sites. However, the Company does not currently believe that its liability for such sites, if any, would be material.

The Company continues to evaluate its remediation plans in conjunction with its environmental consultants and records its best estimate of remediation liabilities. However, future actions and the associated costs are subject to oversight and approval of various governmental authorities. Accordingly, the ultimate costs may vary, and it is possible costs may exceed the recorded amounts.

Table of Contents

Litigation

The Company is involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of such ordinary course of business proceedings and litigation currently pending is not expected to have a material adverse effect on the Company’s results of operations or financial position. Legal costs associated with litigation are generally expensed as incurred.

~~Note 18 Subsequent Event~~

On November 19, 2020, the Company announced that, with the exception of a limited number of flagship locations, it plans to close all Naturalizer retail stores in the United States and Canada by the end of fiscal 2020. In addition to the store closures, the Company anticipates aligning the back-office infrastructure to the reduced store footprint, shifting talent to amplify the digital presence, and reallocating capital to further enhance the Company’s ecommerce platform and capabilities. The Company expects pre-tax charges in the fourth quarter of 2020 of between $20 million and $25 million. ~~When~~ ~~the realignment is complete, an annual pre-tax benefit of between $10 million and $12 million is expected.~~

2827

Table of Contents

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

OVERVIEW

~~The United States~~We achieved exceptional financial results in the third quarter of 2021, driven by a successful back-to-school season and ~~global economies continue~~strong consumer demand. We recorded sequential net sales growth and strong gross margins, and achieved the highest third quarter operating earnings in our history. Our strong performance was driven by our Famous Footwear segment, which reported a 26.5% increase in same-store sales and an operating margin of 17.7%, which was the highest third quarter operating margin in its history. Our Brand Portfolio segment also contributed to ~~be adversely affected~~our strong results in the third quarter of 2021, with a 12.3% increase in net sales and a 55.8% increase in operating earnings compared to the third quarter of 2020.

Our financial results were negatively impacted in 2020 by the coronavirus (“COVID-19”) ~~pandemic. Although we have reopened~~pandemic, including the temporary closure of all of our retail stores ~~from the temporary store closures~~beginning in mid-March, with a phased re-opening beginning in mid-May. We experienced sequential improvement in sales in the ~~first half~~latter part of 2020, ~~our business results continue to be negatively impacted~~driven by ~~COVID-19. Many~~the reopening of our retail stores, ~~have reduced operating hours~~ and ~~have experienced declines in foot traffic with stay-at-home orders and other government mandates, which has resulted in lower sales, despite~~continued solid growth of our e-commerce ~~business experiencing robust growth during this time. In addition, a small number~~business. During the first nine months of ~~stores have temporarily closed again due~~2021, as the vaccines became widely distributed and governments continued to local government mandates. We believe we are better positioned and prepared to manage through this period as a result of the actions we have taken. However, the depth and duration of the pandemic and its impact on overallease restrictions, consumer ~~confidence~~sentiment and spending ~~is not known. Furthermore, if COVID-19 cases continue~~improved, which contributed to ~~rise or additional federal, state~~higher store traffic and ~~local government restrictions are implemented, we may continue to experience disruption to~~strong growth in our ~~business, results of operations~~net sales and ~~financial condition.~~operating earnings.

Financial Highlights

We continued our steady upward momentum in the third quarter of 2020, overcoming the ongoing pressures from COVID-19, and we delivered better than expected financial results. We delivered sequential sales growth compared to the second quarter of 2020, a return to profitability and stronger gross margins, as well as a further improved working capital position, despite the still uncertain economic environment. We continued to advance a number of our key strategic objectives during the quarter that are helping to drive our recovery, including prudent management of working capital and operating expenses, effectively adjusting to the extended back-to-school season and further reducing our overall indebtedness. The followingFollowing is a summary of the financial highlights for the third quarter of ~~2020:~~2021:

●

Consolidated net sales ~~decreased $144.9~~increased $136.7 million, or ~~18.3%~~21.1%, to $784.2 million in the third quarter of 2021, compared to $647.5 million in the third quarter of ~~2020,~~2020. Our Famous Footwear segment’s net sales of $494.7 million were the highest quarterly net sales in its history. Net sales in our Brand Portfolio segment increased $32.9 million, or 12.3%, compared to ~~$792.4 million in~~ the third quarter of 2019. Although our sales continue to be adversely impacted by COVID-19, driving a $92.3 million, or 25.6%, decline in the Brand Portfolio segment and a $54.9 million, or 12.3%, decline in the Famous Footwear segment sales, we continued to experience significant growth in our e-commerce business, with consolidated e-commerce penetration rising to 25.4% of consolidated net sales.2020. On a consolidated basis, our direct-to-consumer sales represented ~~71.4%~~approximately 73% of consolidated net ~~sales.~~sales for the third quarter of 2021, compared to 71% in the third quarter of 2020.

●

Consolidated gross profit ~~decreased $62.8~~increased $78.4 million, or ~~19.6%~~30.5%, to $335.4 million in the third quarter of 2021, compared to $257.0 million in the third quarter of ~~2020, compared~~2020. Our gross profit margin increased to ~~$319.8 million~~42.8% in the third quarter of ~~2019. Our gross profit margin decreased~~2021, compared to 39.7% in the third quarter of 2020, ~~compared to 40.4%~~reflecting a decline in ~~the third quarter of 2019.~~promotional activity driven by strong consumer demand, partially offset by higher inbound freight costs.

●

Consolidated operating earnings ~~decreased $23.4~~increased $61.2 million to $81.3 million in the third quarter of 2021, compared to $20.1 million in the third quarter of 2020, compared to $43.5 million in the third quarter of 2019. We returned to profitability during the third quarter, despite lower sales driven by the challenging retail environment, due to our ongoing conservative approach to expenses and prudent inventory management.2020.

●

Consolidated net earnings attributable to Caleres, Inc. were $59.6 million, or $1.54 per diluted share, in the third quarter of 2021, compared to $14.4 million, or $0.38 per diluted share, in the third quarter of ~~2020, compared to net earnings of $28.0 million, or $0.69 per diluted share, in the third quarter of 2019.~~2020.

The following items should be considered in evaluating the comparability of our third quarter results in ~~2020~~2021 and ~~2019:~~2020:

●

Blowfish Malibu mandatory purchase obligation – As further discussed in Note 5 and Note 1514 to the condensed consolidated financial statements, the Blowfish Malibu noncontrolling interest iswas subject to a mandatory purchase obligation after a three-year period following the 2018 acquisition, based on an earnings multiple formula. During the third quarter of ~~2020,~~2021, we recorded a final fair value adjustment of $1.9 million ($1.4 million on an after-tax basis, or $0.04 per diluted share), compared to an adjustment of $5.1 million ($3.8 million on an after-tax basis, or $0.10 per diluted share)~~, which is~~ in the third quarter of 2020. The fair value adjustments are recorded as interest expense, net in the condensed consolidated statements of earnings (loss). ~~A fair value adjustment~~The purchase obligation was settled for $54.6 million on November 4, 2021, subsequent to the end of ~~$3.9~~the third quarter, utilizing borrowings under our revolving credit agreement.

●

Loss on early extinguishment of debt – During the third quarter of 2021, we incurred a loss of $0.6 million ($~~2.9~~0.5 million on an after-tax basis, or ~~$0.07~~$0.01 per diluted share) ~~was recorded during~~related to the ~~third quarter~~redemption of ~~2019.~~ $100 million of our Senior Notes in August 2021, prior to maturity, and the amendment of our revolving credit facility prior to its maturity. Refer to Note 10 to the condensed consolidated financial statements for further discussion.

~~Recent Developments~~

In November 2020, we announced that, with the exception of a limited number of flagship locations, we plan to close all Naturalizer stores in the United States and Canada by the end of fiscal 2020. In addition to the store closures, we plan to right-size the back-office infrastructure to better align with the reduced store footprint, shift talent to amplify our digital presence, capture the consumer where they want to shop and reallocate capital to further enhance our ecommerce platform and capabilities.

2928

Table of Contents

Recent Developments – Supply Chain Disruptions

While we achieved strong financial results for the third quarter of 2021, we continue to experience global supply chain disruptions, including a delay in the receipt of inventory due to port congestion, reduced shipping vessel and container availability, and factory closures, as well as higher inbound freight costs, all of which resulted in incremental freight expenses and lower gross profit of approximately $11.5 million for the Brand Portfolio segment during the third quarter of 2021. We are actively working to minimize the impact of these disruptions by diversifying and leveraging our sourcing model, but we anticipate higher inbound freight costs in the fourth quarter of 2021 and into 2022. As of October 30, 2021, our Brand Portfolio segment has over $100 million of inventory in transit that is not yet available to sell. Depending on the timing of receipt of this inventory, it is possible that certain customers may cancel their orders or demand price concessions for the late receipts. If we are unable to sell this in-transit inventory, we may have to liquidate it through other less profitable channels, which may negatively impact our gross margins. In addition, the supply chain delays and inflationary cost pressures we are currently experiencing may limit our ability to meet incremental consumer demand and may negatively impact net sales during the fourth quarter of 2021 and into 2022. The extent and duration of these supply chain disruptions and higher freight costs are uncertain. However, we are actively working to mitigate these cost pressures and recover a portion of the increased costs through price increases.

Metrics Used in the Evaluation of Our Business

The following are a couple of key metrics by which we evaluate our business and make strategic decisions:

Same-store sales

The same-store sales metric is a metric commonly used in the retail industry to evaluate the revenue generated for stores that have been open for more than a year, though other retailers may calculate the metric differently. Management uses the same-store sales metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. Our same-store sales metric is a daily-weighted calculation for the period, which includes sales for stores that have been open for at least 13 months. In addition, in order to be included in the same-store sales metric, a store must be open in the current period as well as the corresponding day(s) of the comparable retail calendar in the prior year. Accordingly, closed stores ~~(whether~~(including the temporary ~~or permanent closures)~~store closures for a portion of 2020 for all of our Famous Footwear and Brand Portfolio stores in North America) are excluded from the same-store sales metric for each day of the closure. Relocated stores are treated as new stores and therefore excluded from the calculation. E-commerce sales for those websites that function as an extension of a retail chain are included in the same-store sales calculation. We believe the same-store sales metric is useful to shareholders and investors in assessing our retail sales performance of existing locations with comparable prior year sales, separate from the impact of store openings or store closures.

Beginning in mid-March 2020, all of our Famous Footwear and Brand Portfolio stores in North America were temporarily closed and we began a phased reopening of retail stores in mid-May. Our same-store sales calculation excludes the impact of both permanent and temporary store closures. During the third quarter, we experienced approximately 1,700 days of retail store closure related to illness, weather, fires, civil unrest and government mandates. Accordingly, for both the thirteen and thirty-nine weeks ended October 31, 2020, our same-store sales calculation is impacted more heavily by our e-commerce sales penetration, which was higher than in prior periods, given the strong growth in that channel and the fact that our e-commerce sites have continued to operate throughout the year.

Sales per square foot

The sales per square foot metric is commonly used in the retail industry to calculate the efficiency of sales based upon the square footage in a store. Management uses the sales per square foot metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. The sales per square foot metric is calculated by dividing total retail store sales, excluding e-commerce sales, by the total square footage of the retail store base at the end of each month of the respective period. This metric was adversely impacted by the temporary retail store closures during a portion of the ~~first half of~~nine months ended October 31, 2020 and therefore, the metric is not comparable to the ~~thirty-nine weeks~~nine months ended ~~November 2, 2019.~~October 30, 2021.

Outlook

~~There is ongoing~~While the global supply chain disruptions have caused uncertainty ~~and limited visibility~~in the macro environment, we are actively working with our suppliers to help offset the impacts to our business and financial ~~impacts of the pandemic. Despite the uncertainty,~~performance. Although we believe we are ~~better positioned~~well-positioned to navigate through the supply chain disruptions by responding to the variables within our control, including actively working to mitigate cost pressures through price increases, we expect the inflationary economy and ~~prepared~~the increase in inbound freight costs to ~~manage through this period with~~impact our financial results in the ~~many efficiency~~fourth quarter of 2021. As we ship spring 2022 orders, we anticipate the price increases currently being implemented will mitigate the impact of the higher freight costs. We continued to make excellent progress toward our balance sheet initiatives ~~that have been implemented. We expect to further~~during the third quarter of 2021, including redeeming $100.0 million aggregate principal amount of our ~~debt reduction progress to end fiscal 2020 with borrowings under our~~Senior Notes and securing more advantageous terms on the revolving credit ~~agreement~~agreement. We believe these actions, in ~~line with pre-COVID-19 levels.~~addition to redeeming the remaining $100.0 million of Senior Notes in the fourth quarter, will result in approximately a $12 million decline in annual interest expense. We ~~are continuing~~will continue to ~~adjust to the current~~leverage our core competencies and ~~evolving market environment by strengthening~~execute on our ~~financial position~~short and ~~furthering our~~ long-term strategic ~~objectives, which we believe will enable us~~priorities to ~~drive innovation in~~enhance long-term value for our ~~brands and create value as business conditions normalize.~~ shareholders.

3029

Table of Contents

Following are the consolidated results and the results by segment:

CONSOLIDATED RESULTS


	Thirteen Weeks Ended								Thirty-Nine Weeks Ended								Thirteen Weeks Ended								Thirty-Nine Weeks Ended
	October 31, 2020				November 2, 2019				October 31, 2020				November 2, 2019				October 30, 2021				October 31, 2020				October 30, 2021				October 31, 2020
			% of				% of				% of				% of				% of				% of				% of				% of
($ millions)			Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales
Net sales	$	647.5	100.0	%	$	792.4	100.0	%	$	1,546.1	100.0	%	$	2,222.6	100.0	%	$	784.2	100.0	%	$	647.5	100.0	%	$	2,098.3	100.0	%	$	1,546.1	100.0	%
Cost of goods sold		390.5	60.3	%		472.6	59.6	%		984.6	63.7	%		1,317.0	59.3	%		448.8	57.2	%		390.5	60.3	%		1,165.8	55.6	%		984.6	63.7	%
Gross profit		257.0	39.7	%		319.8	40.4	%		561.5	36.3	%		905.6	40.7	%		335.4	42.8	%		257.0	39.7	%		932.5	44.4	%		561.5	36.3	%
Selling and administrative expenses		236.9	36.6	%		275.3	34.8	%		663.5	42.9	%		805.0	36.2	%		254.1	32.4	%		236.9	36.6	%		757.0	36.1	%		663.5	42.9	%
Impairment of goodwill and intangible assets		—	—			—	—			262.7	17.0	%		—	—			—	—			—	—			—	—	%		262.7	17.0	%
Restructuring and other special charges, net		—	—	%		1.0	0.1	%		65.6	4.2	%		2.5	0.1	%		—	—	%		—	—	%		13.5	0.6	%		65.6	4.2	%
Operating earnings (loss)		20.1	3.1	%		43.5	5.5	%		(430.3)	(27.8)	%		98.1	4.4	%		81.3	10.4	%		20.1	3.1	%		162.0	7.7	%		(430.3)	(27.8)	%
Interest expense, net		(10.9)	(1.7)	%		(10.5)	(1.3)	%		(33.7)	(2.2)	%		(25.2)	(1.2)	%		(5.1)	(0.7)	%		(10.9)	(1.7)	%		(28.8)	(1.4)	%		(33.7)	(2.2)	%
Loss on early extinguishment of debt																		(0.6)	(0.1)	%		—	—	%		(0.6)	(0.0)	%		—	—	%
Other income, net		5.5	0.9	%		2.6	0.3	%		12.7	0.8	%		7.9	0.4	%		3.8	0.5	%		5.5	0.9	%		11.5	0.6	%		12.7	0.8	%
Earnings (loss) before income taxes		14.7	2.3	%		35.6	4.5	%		(451.3)	(29.2)	%		80.8	3.6	%		79.4	10.1	%		14.7	2.3	%		144.1	6.9	%		(451.3)	(29.2)	%
Income tax benefit (provision)		0.2	—	%		(7.8)	(1.0)	%		89.4	5.8	%		(18.7)	(0.8)	%
Income tax (provision) benefit																		(19.7)	(2.5)	%		0.2	(0.0)	%		(39.9)	(1.9)	%		89.4	5.8	%
Net earnings (loss)		14.9	2.3	%		27.8	3.5	%		(361.9)	(23.4)	%		62.1	2.8	%		59.7	7.6	%		14.9	2.3	%		104.2	5.0	%		(361.9)	(23.4)	%
Net earnings (loss) attributable to noncontrolling interests		0.5	0.1	%		(0.2)	—	%		0.2	—	%		(0.3)	—	%		0.1	0.0	%		0.5	0.1	%		1.0	0.1	%		0.2	(0.0)	%
Net earnings (loss) attributable to Caleres, Inc.	$	14.4	2.2	%	$	28.0	3.5	%	$	(362.1)	(23.4)	%	$	62.4	2.8	%	$	59.6	7.6	%	$	14.4	2.2	%	$	103.2	4.9	%	$	(362.1)	(23.4)	%

Net Sales

Net sales ~~decreased $144.9~~increased $136.7 million, or ~~18.3%~~21.1%, to $784.2 million for the third quarter of 2021, compared to $647.5 million for the third quarter of ~~2020,~~2020. Our Famous Footwear segment had an extremely successful back-to-school season and continued to benefit from strong consumer demand throughout the quarter, achieving the highest quarterly net sales in the segment’s history, with net sales increasing $103.0 million, or 26.3%, compared to ~~$792.4 million for~~ the third quarter of ~~2019. Our~~2020. Net sales for our Brand Portfolio segment ~~experienced a sales decline of $92.3~~increased $32.9 million, or ~~25.6%,~~12.3% during the third quarter of ~~2020, while sales at our Famous Footwear segment decreased $54.9 million, or 12.3%. Our e-commerce and logistics capabilities positioned us~~2021, compared to ~~capitalize on the accelerating shift to online purchasing, driving e-commerce sales on our owned websites to increase 24.6% during~~ the third quarter of 2020. While Brand Portfolio net sales improved over last year, they remain below pre-pandemic levels, due in part to the brand exits announced in late 2019 and early 2020 ~~with consolidated e-commerce penetration rising to approximately 25%~~and the related closure of ~~net sales.~~all but two Naturalizer retail stores in North America. On a consolidated basis, our direct-to-consumer sales represented ~~71.4%~~approximately 73% of total net sales for the third quarter of 2020. Athletic and sport categories of footwear were the strongest performers during the quarter, with weakness in many dress footwear categories. Boots have also performed well in the quarter, with lug sole, casual booties and weatherproof leading the way.2021. Our ~~Brand Portfolio segment experienced a 45% sequential increase in net sales, led by our~~ casual, athletic and ~~sport-inspired assortment. Our Famous Footwear segment also~~sport footwear categories continue to perform well, sandals experienced ~~sequential sales~~strong growth during the third quarter of 2021, and demand for the dress category continues to improve, as ~~we capitalized on~~more people return to the ~~extended back-to-school season and growth in our product assortment for kids.~~workplace.

Net sales ~~decreased $676.5~~increased $552.2 million, or ~~30.4%~~35.7%, to $2,098.3 million for the nine months ended October 30, 2021, compared to $1,546.1 million for the nine months ended October 31, ~~2020, compared~~2020. As COVID-19 vaccines became more widely available and government restrictions eased, we experienced strong growth in consumer demand during the nine months ended October 30, 2021, which has led to ~~$2,222.6~~a significant increase in retail store traffic and conversion rates.Our Famous Footwear segment experienced a net sales increase of $429.5 million, or 46.8%, for the nine months ended November 2, 2019. The temporary closure of all of our retail stores for an average of 10 weeks in the first half of 2020 due to the COVID-19 pandemic, as well as the closure of stores operated by our wholesale customers, resulted in a $392.1 million, or 37.0%, decrease inOctober 30, 2021, with net sales ~~for our~~of $1,346.4 million. Our Brand Portfolio segment ~~and~~reported a ~~$301.7~~$121.4 million, or ~~24.8% decrease in net sales for our Famous Footwear segment. With the closure of our retail stores, our Famous Footwear e-commerce business delivered approximately an 85%~~18.2%, increase in net sales, ~~for the nine months of 2020.~~with strong sales growth from our Sam Edelman, Blowfish, Vionic and Allen Edmonds brands.

Gross Profit

Gross profit ~~decreased $62.8~~increased $78.4 million, or ~~19.6%~~30.5%, to $335.4 million for the third quarter of 2021, compared to $257.0 million for the third quarter of 2020, ~~compared to $319.8 million for the third quarter of 2019, primarily as a result of lower~~reflecting higher net sales ~~reflecting the continued difficult retail environment driven by the COVID-19 pandemic.~~and a higher gross profit rate. As a percentage of net sales, gross profit ~~decreased~~increased to 42.8% for the third quarter of 2021, compared to 39.7% for the third quarter of 2020, ~~compared~~reflecting a significant decline in promotional activity in our Famous Footwear segment driven by strong consumer demand, partially offset by an adverse impact of approximately $11.5 million of incremental cost of goods sold in our Brand Portfolio segment associated with supply chain disruptions and related vessel and container shortages. As discussed above, we anticipate the higher inbound freight costs to ~~40.4% for~~continue in the ~~third~~fourth quarter of ~~2019, primarily reflecting a higher mix of e-commerce sales~~2021 and ~~the promotional actions taken~~into 2022, which may continue to drive sales volume and manage inventory levels in this uncertain environment. Our e-commerce sales generally result in lower margins than traditional retail sales as a result of the incremental shipping and handling required. Our direct-to-consumer sales represented 71.4% of consolidated net sales for the quarter.impact our gross profit if we are unable to mitigate or fully recover these additional costs through price increases.

Gross profit ~~decreased $344.1~~increased $371.0 million, or ~~38.0%~~66.1%, to $932.5 million for the nine months ended October 30, 2021, compared to $561.5 million for the nine months ended October 31, 2020, ~~compared~~primarily due to ~~$905.6 million for~~higher net sales and a reduction in promotional activity at Famous Footwear. For the nine months ended ~~November 2, 2019, primarily reflecting lower net sales and~~October 31, 2020, our gross profit was impacted by higher incremental cost of goods sold ~~in the first nine months of 2020 driven by an increase~~primarily due to $33.4 million in inventory markdowns reflecting the difficult retail environment driven by the COVID-19 pandemic, ~~and~~as well as $1.6 million in inventory markdowns related to the decision ~~during the first quarter of 2020~~ to exit ~~the~~our Fergie brand. Cost of goods sold in the nine months ended November 2, 2019 included $7.2 million related to the amortization of the inventory adjustment required by purchase accounting for our acquisition of Vionic and incremental markdowns related to the Carlos brand exit. As a percentage of net sales, gross profit ~~decreased~~increased to 44.4% for the nine months ended October 30, 2021, compared to 36.3% for the nine months ended October 31, 2020, compared to 40.7% for the nine months ended November 2, 2019. The gross profit rate primarily reflects a decline at the Famous Footwear segment due to the promotional environment and higher e-2020.

3130

Table of Contents

commerce sales. The mix of retail versus wholesale net sales increased to 64% and 36% in the nine months ended October 31, 2020, compared to 61% and 39%, respectively, in the nine months ended November 2, 2019.

We classify certain warehousing, distribution, sourcing and other inventory procurement costs in selling and administrative expenses. Accordingly, our gross profit and selling and administrative expense rates, as a percentage of net sales, may not be comparable to other companies.

Selling and Administrative Expenses

Selling and administrative expenses ~~decreased $38.4~~increased $17.2 million, or ~~14.0%~~7.2%, to $254.1 million for the third quarter of 2021, compared to $236.9 million for the third quarter of ~~2020, compared~~2020. The increase was primarily due to ~~$275.3 million~~higher marketing expenses, due in part to the return to television advertising for our Famous Footwear segment; higher salary expenses and higher expenses associated with our cash and stock-based incentive compensation plan for certain employees. This increase was partially offset by lower rent and facilities expenses, primarily associated with the Naturalizer retail store closures. Salary expenses were lower in the third quarter of ~~2019. The decrease was driven by lower salaries expense~~2020, primarily attributable to the steps taken in the first quarter of 2020 to reduce expenses, including workforce reductions, and reduced hours at our retail stores ~~as well as lower marketing and facilities expenses.~~ . As a percentage of net sales, selling and administrative expenses ~~increased~~decreased to 32.4% for the third quarter of 2021, from 36.6% for the third quarter of 2020, ~~from 34.8% for the third quarter of 2019,~~ reflecting ~~the deleveraging~~better leveraging of expenses over ~~a smaller sales base.~~higher net sales.

Selling and administrative expenses ~~decreased $141.5~~increased $93.5 million, or ~~17.6%~~14.1%, to $757.0 million for the nine months ended October 30, 2021, compared to $663.5 million for the nine months ended October 31, ~~2020, compared to $805.0 million~~2020. The increase for the nine months ended ~~November 2, 2019. The decrease~~October 30, 2021 was primarily ~~driven by~~due to higher expenses for our cash-based incentive compensation plans for certain employees, and higher salary and marketing expenses. Salary expenses were lower ~~salaries and benefits expense; lower variable expenses associated with~~during the ~~temporary retail store closures; and lower marketing, travel and logistics expenses.~~nine months ended October 31, 2020 as a result of the actions taken to mitigate the impact of the pandemic on our financial results. As a percentage of net sales, selling and administrative expenses ~~increased~~decreased to 36.1% for the nine months ended October 30, 2021, from 42.9% for the nine months ended October 31, 2020, ~~from 36.2% for the nine months ended November 2, 2019,~~ reflecting ~~the deleveraging~~better leveraging of expenses over ~~a smaller sales base.~~higher net sales.

Impairment of Goodwill and Intangible Assets

During the ~~first quarter of~~nine months ended October 31, 2020, ~~as a result of the unfavorable business climate and our lower stock price and market capitalization, due in part to the economic impacts of the COVID-19 pandemic,~~ we recorded non-cash impairment charges of $262.7 million ($218.5 million on an after-tax basis), including $240.3 million associated with goodwill and $22.4 million associated with the indefinite-lived Allen Edmonds and Via Spiga ~~trademarks.~~trade names. There were no corresponding charges for the ~~third quarter of 2020 or for the~~ nine months ended ~~November 2, 2019.~~October 30, 2021. Refer to ~~Note 5 and~~ Note 8 to the condensed consolidated financial statements for further discussion of these charges.

Restructuring and Other Special Charges, Net

~~Restructuring~~We incurred restructuring and other special charges of ~~$1.0~~$13.5 million ($~~0.7~~11.9 million on an after-tax basis, or ~~$0.02~~$0.31 per diluted share) ~~were incurred~~during the nine months ended October 30, 2021, reflecting expenses associated with the decision to close all Naturalizer retail stores in North America with the exception of two Naturalizer flagship retail stores in the ~~third quarter of 2019 associated with integration-related costs for Vionic. There were no corresponding charges in~~United States. During the ~~third quarter of 2020. Refer to Note 5 to the condensed consolidated financial statements for further discussion of these charges.~~

Wenine months ended October 31, 2020, we incurred restructuring and other special charges of $65.6 million ($52.5 million on an after-tax basis) ~~for the nine months ended October 31, 2020~~ related to the unfavorable business climate, driven by the impact of the ~~COVID-19~~ pandemic on our business operations. These charges were primarily for impairment associated with lease ~~right-of use~~right-of-use assets and retail store furniture and fixtures, liabilities associated with factory order cancellations and severance. Restructuring and other special charges of $2.5 million ($1.8 million on an after-tax basis, or $0.04 per diluted share) were incurred for the nine months ended November 2, 2019, associated with the exit of our Carlos brand and integration-related costs for Vionic. The integration is ongoing and we anticipate additional integration-related costs as we complete this initiative in the fourth quarter of 2020. Refer to Note 5 to the condensed consolidated financial statements for further discussion of these charges.

Operating Earnings (Loss)

Operating earnings ~~decreased $23.4~~increased $61.2 million to $81.3 million for the third quarter of 2021, compared to $20.1 million for the third quarter of 2020, ~~compared to $43.5 million for the third quarter of 2019,~~ primarily reflecting ~~lower~~higher net sales and gross ~~profit, partially offset by lower selling and administrative expenses as a result of the actions we took to mitigate the impact of COVID-19 on our financial results.~~profit. As a percentage of net sales, operating earnings were 10.4% for the third quarter of 2021, compared to 3.1% for the third quarter of ~~2020, compared~~2020.

Operating earnings increased $592.3 million to ~~5.5%~~$162.0 million for the ~~third quarter of 2019.~~

~~Operating (loss) earnings decreased $528.4 million~~nine months ended October 30, 2021, compared to an operating loss of $430.3 million for the nine months ended October 31, 2020, ~~compared to operating earnings of $98.1 million for the nine months ended November 2, 2019,~~ primarily reflecting ~~lower~~higher net sales and gross profit, lower impairment charges and better leveraging of expenses over a higher ~~impairment and restructuring charges described above.~~net sales base. As a percentage of net sales, operating earnings were 7.7% for the nine months ended October 30, 2021, compared to an operating loss ~~was~~of 27.8% for the nine months ended October 31, ~~2020, compared to operating earnings of4.4% for the nine months ended November 2, 2019.~~2020.

Interest Expense, Net

Interest expense, net ~~increased $0.4~~decreased $5.8 million, or ~~3.0%~~53.4%, to $5.1 million for the third quarter of 2021, compared to $10.9 million for the third quarter of 2020, ~~compared~~primarily due to ~~$10.5 million for the third quarter of 2019, reflecting the~~a lower fair value adjustment to the Blowfish Malibu mandatory purchase ~~obligation~~obligation. We recognized a final fair value adjustment of $1.9 million in the third quarter of 2021, compared to an adjustment of $5.1 million in the third quarter of 2020. The adjustment during the third quarter of 2021 reflects the settlement of the purchase of the remaining interest in Blowfish Malibu. The purchase obligation of $54.6 million was paid on November 4, 2021. The decrease in interest expense also reflects lower average borrowings under our revolving credit agreement and a $100.0 million reduction in our outstanding Senior Notes in August 2021, as further discussed below.

3231

Table of Contents

~~quarter of 2020,~~Interest expense, net decreased $4.9 million, or 14.7%, to $28.8 million for the nine months ended October 30, 2021, compared to ~~$3.9~~$33.7 million infor the ~~third quarter of 2019. The increase associated with the mandatory purchase obligation was partially offset by~~nine months ended October 31, 2020, primarily due to lower average borrowings under our revolving credit ~~agreement. We made debt~~agreement and a reduction ~~the main priority~~ in our ~~capital allocation process during the third quarter of 2020 and~~outstanding Senior Notes. We continued to ~~repay~~utilize our strong cash generation to reduce the incremental borrowings ~~from March 2020~~ that were used to preserve financial flexibility at the onset of the ~~pandemic. We had net repayments of $50.0 million during~~pandemic, reducing the ~~third quarter of 2020, ending the quarter with $300.0 million of~~ borrowings under our revolving credit ~~facility.~~

Interest expense, net increased $8.5 million, or 33.5%, to $33.7 million for the nine months ended October 31, 2020, compared to $25.2 million for the nine months ended November 2, 2019, reflecting the fair value adjustment to the Blowfish Malibu mandatory purchase obligation of $14.9agreement from $440.0 million in ~~the nine months ended~~March 2020 to $175.0 million at October ~~31, 2020 compared~~30, 2021. In addition, we redeemed $100.0 million of our Senior Notes in August 2021, shifting this higher interest debt to ~~accretion and remeasurement adjustments of $4.4 million for the nine months ended November 2, 2019, partially offset by lower average~~ borrowings under our revolving credit agreement. We also notified our bondholders on November 18, 2021 that we would be redeeming the remaining $100.0 million of our Senior Notes in January 2022. We believe these actions will result in approximately a $12 million decline in annual interest expense in 2022.

Loss on Early Extinguishment of Debt

The loss on early extinguishment of debt was $0.6 million for the three and nine months ended October 30, 2021, reflecting the redemption of $100 million of Senior Notes prior to maturity and the amendment of our revolving credit facility. Refer to Note 1510 to the condensed consolidated financial statements for further ~~discussion regarding the mandatory purchase obligation.~~discussion.

Other Income, Net

Other income, net ~~increased $2.9~~decreased $1.7 million, or ~~107.4%~~29.6%, to $3.8 million for the third quarter of 2021, compared to $5.5 million for the third quarter of 2020, which reflects a reduction of certain components of net periodic benefit income in 2021, as compared to ~~$2.6 million~~2020. Refer to Note 13 of the condensed consolidated financial statements for further detail regarding the ~~third quarter~~components of ~~2019, driven by a lower discount rate and a higher expected return on assets for our domestic pension plan.~~net periodic benefit income.

Other income, net ~~increased $4.8~~decreased $1.2 million, or ~~60.9%~~9.3%, to $11.5 million for nine months ended October 30, 2021, compared to $12.7 million for the nine months ended October 31, 2020, which reflects a reduction of certain components of net periodic benefit income in 2021, as compared to ~~$7.9 million for the nine months ended November 2, 2019 reflecting a higher expected return on assets and lower discount rate on our domestic pension plan.~~2020. Refer to Note 13 toof the condensed consolidated financial statements for ~~additional information related to our retirement plans.~~further detail regarding the components of net periodic benefit income.

Income Tax (Provision) Benefit ~~(Provision)~~

Our effective tax rate can vary considerably from period to period, depending on a number of factors. Our consolidated effective tax rate was ~~(1.9%)~~a provision of 24.9% for the third quarter of ~~2020,~~2021, compared to ~~21.9%~~a benefit of 1.9% for the third quarter of ~~2019. Our~~2020. The lower effective tax rate infor the third quarter ~~primarily~~of 2020 reflects the impact of a higher anticipated full year tax benefit, driven by the impact of the CARES Act, which ~~permits~~permitted us to carry back 2020 losses to years with a higher federal tax rate, and the mix of projected earnings between international and domestic jurisdictions.

For the nine months ended October ~~31, 2020,~~30, 2021, our consolidated effective tax rate was ~~19.8%~~27.7%, compared to ~~23.1%~~19.8% for the nine months ended ~~November 2, 2019.~~October 31, 2020. Our higher tax rate for the nine months ended October 30, 2021 primarily reflects strong domestic earnings and incremental valuation allowances for our deferred tax assets for certain jurisdictions. The rate also reflects the non-deductibility of losses at our Canadian business division, which were driven by exit-related costs associated with Naturalizer retail stores during the first quarter. Our effective tax rate for the nine months ended October 31, 2020 was impacted by several discrete tax items, ~~during the nine months ended October 31, 2020,~~ including the non-deductibility of a portion of our intangible asset impairment charges, the provision of a valuation allowance related to certain state and ~~Canada~~Canadian deferred tax assets, and the incremental tax provision related to the vesting of stock awards. IfOffsetting these ~~discrete tax items had not been recognized, our effective tax rate would have been 23.5% for the nine months ended October 31, 2020. As discussed above, our tax~~impacts was a benefit ~~also includes the favorable impact of~~associated with the CARES Act, which ~~permits us~~permitted the Company to carry back 2020 losses to years with a higher federal tax rate. ~~Discrete tax items recognized during the nine months ended November 2, 2019 were immaterial.~~

Net Earnings (Loss) Attributable to Caleres, Inc.

Net earnings attributable to Caleres, Inc. were ~~$14.4~~$59.6 million and $103.2 for the third quarter ~~of 2020, with net losses of $362.1 million for the~~and nine months ended October ~~31, 2020,~~30, 2021, respectively, compared to net earnings of ~~$28.0~~$14.4 million and ~~$62.4~~net losses of $362.1 million for the third quarter and nine months ended ~~November 2, 2019,~~October 31, 2020, respectively, as a result of the factors described above.

3332

Table of Contents

FAMOUS FOOTWEAR


	Thirteen Weeks Ended										Thirty-Nine Weeks Ended										Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	October 31, 2020					November 2, 2019					October 31, 2020					November 2, 2019					October 30, 2021					October 31, 2020					October 30, 2021					October 31, 2020
				% of					% of					% of					% of					% of					% of					% of					% of
($ millions, except sales per square foot)				Net Sales					Net Sales					Net Sales					Net Sales					Net Sales					Net Sales					Net Sales					Net Sales
Operating Results
Net sales	$	391.7		100.0	%	$	446.6		100.0	%	$	916.9		100.0	%	$	1,218.6		100.0	%	$	494.7		100.0	%	$	391.7		100.0	%	$	1,346.4		100.0	%	$	916.9		100.0	%
Cost of goods sold		231.7		59.1	%		263.3		59.0	%		568.6		62.0	%		700.3		57.5	%		259.2		52.4	%		231.7		59.1	%		703.7		52.3	%		568.6		62.0	%
Gross profit		160.0		40.9	%	$	183.3		41.0	%		348.3		38.0	%	$	518.3		42.5	%		235.5		47.6	%	$	160.0		40.9	%		642.7		47.7	%	$	348.3		38.0	%
Selling and administrative expenses		132.2		33.8	%		155.6		34.8	%		370.4		40.4	%		448.3		36.8	%		148.1		29.9	%		132.2		33.8	%		422.0		31.3	%		370.4		40.4	%
Restructuring and other special charges, net		—		—	%		—		—			16.6		1.8	%		—		—			—		—	%		—		—	%		—		—	%		16.6		1.8	%
Operating earnings (loss)	$	27.8		7.1	%	$	27.7		6.2	%	$	(38.7)		(4.2)	%	$	70.0		5.7	%	$	87.4		17.7	%	$	27.8		7.1	%	$	220.7		16.4	%	$	(38.7)		(4.2)	%

Key Metrics
Same-store sales % change		(9.1)	%				2.5	%				3.0	%				1.1	%				26.5	%				(9.1)	%				11.5	%				3.0	%
Same-store sales $ change	$	(38.3)				$	10.6				$	26.2				$	13.6				$	100.1				$	(38.3)				$	102.7				$	26.2
Impact of retail calendar shift							—										—
Sales change from new and closed stores, net	$	(16.6)				$	(12.6)				$	(327.7)				$	(36.0)				$	2.3				$	(16.6)				$	325.1				$	(327.7)
Impact of changes in Canadian exchange rate on sales	$	—				$	(0.2)				$	(0.2)				$	(0.6)				$	0.6				$	—				$	1.7				$	(0.2)

Sales per square foot, excluding e-commerce (thirteen and thirty-nine weeks ended)	$	53				$	63				$	115				$	172				$	72				$	53				$	194				$	115
Sales per square foot, excluding e-commerce (trailing twelve months)	$	166				$	221				$	166				$	221				$	238				$	166				$	238				$	166
Square footage (thousand sq. ft.)		6,135					6,349					6,135					6,349					5,977					6,135					5,977					6,135

Stores opened		—					4					3					11					1					—					9					3
Stores closed		11					17					27					43					8					11					20					27
Ending stores		925					960					925					960					905					925					905					925

Net Sales

Net sales ~~decreased $54.9~~of $494.7 million in the third quarter of 2021 increased $103.0 million, or ~~12.3%~~26.3%, compared to ~~$391.7 million for~~the third quarter of 2020. We achieved the highest quarterly net sales in our history, driven by an extremely successful back-to-school season. Even after the back-to-school season concluded, sales momentum continued, driven by strong growth from brick-and-mortar as consumers returned to in-store shopping. E-commerce penetration in the third quarter of 2021 was approximately 13% of net sales, compared to approximately 17% in the third quarter of 2020 ~~compared~~when retail store traffic was negatively impacted by the pandemic. Although supply chain disruptions led to ~~$446.6 million for~~a delay in inventory receipts, our athletic, casual and sandals categories of footwear performed very well during the quarter. During the third quarter of ~~2019. Despite ongoing challenges~~2021, we opened one store and closed eight stores, resulting in 905 stores and total square footage of 6.0 million at the retail environment driven by the COVID-19 pandemic, we experienced strong sequential sales growth by adjusting to and capitalizing on the extended back-to-school season. We also experienced strong growth in our e-commerce business, which increased approximately 48% forend of the third quarter of ~~2020, with e-commerce penetration increasing~~2021, compared to approximately 17% of net sales, from 10% in the third quarter of 2019. Our casual, athletic and sport-inspired assortments continue to resonate with consumers in the work-from-home environment. We closed 11 stores during the third quarter of 2020, resulting in 925 stores and total square footage of 6.1 million at the end of the third quarter of ~~2020, compared to 960 stores and total square footage of 6.3 million at the end of the third quarter of 2019.~~2020. Sales to members of our customer loyalty program, Famously You Rewards ("Rewards"), continue to account for a majority of the segment’s sales, with approximately ~~80%~~78% of our net sales made to program members in the third quarter of ~~2020,~~2021, compared to ~~79%~~80% in the third quarter of ~~2019.~~ 2020.

Net sales ~~decreased $301.7~~of $1,346.4 million for the nine months ended October 30, 2021 increased $429.5 million, or ~~24.8%~~46.8%, compared to $916.9 million for the nine months ended October 31, ~~2020, compared to $1,218.6 million for~~2020. Our strong performance during the nine months ended ~~November 2, 2019. The sales decrease~~October 30, 2021 was ~~driven by the temporary closure~~attributable to a number of ~~all Famous Footwear stores for an average of 10 weeks~~factors. As COVID-19 vaccines became more widely available and government restrictions eased, we experienced strong growth in consumer demand, which led to a significant increase in retail store traffic and conversion rates during the ~~first half~~nine months ended October 30, 2021. E-commerce penetration has remained strong in 2021 at approximately 13% of ~~2020 due~~net sales in the nine months ended October 30, 2021, compared to ~~the COVID-19 pandemic. Despite the store closures, Famous Footwear continued to serve customers through its e-commerce business, which generated an 85% increase~~approximately 22% in ~~sales for~~ the nine months ended October 31, ~~2020. We experienced strong sales~~2020 when our retail stores were temporarily closed from mid-March, with a phased reopening beginning in May. While supply chain disruptions have resulted in delays and lower receipts, our well-positioned inventory drove our record-setting results. Our casual, athletic and sport categories of ~~athletics and casual styles, as~~footwear continued to be the ~~consumer adjusted to their work-from-home environment and limited social gatherings. We opened three stores and closed 27 stores during~~strongest performers. During the nine months ended October ~~31, 2020.~~30, 2021, we opened nine stores and closed 20 stores.

Gross Profit

Gross profit ~~decreased $23.3~~increased $75.5 million, or ~~12.7%~~47.2%, to $235.5 million for the third quarter of 2021, compared to $160.0 million for the third quarter of 2020, ~~compared to $183.3 million for the third quarter of 2019,~~ driven by the sales ~~decline. Both our retail stores~~increase and ~~e-commerce business reported~~a higher ~~margin rates than last year. However, the higher mix of e-commerce sales reduced the overall~~ gross profit ~~rate as a result of the higher associated freight expenses.~~rate. As a percentage of net sales, our gross profit ~~decreased slightly~~increased to 47.6% for the third quarter of 2021, compared to 40.9% for the third quarter of ~~2020, compared~~2020. Due to ~~41.0%~~strong consumer demand and having the right level of inventory for our key brands and styles, we significantly reduced promotional activity, resulting in higher gross margins in both our retail stores and e-commerce business during the third quarter of ~~2019.~~2021.

Gross profit ~~decreased $170.0~~increased $294.4 million, or ~~32.8%~~84.5%, to $642.7 million for the nine months ended October 30, 2021, compared to $348.3 million for the nine months ended October 31, 2020, ~~compared to $518.3 million for the nine months ended November 2, 2019~~ reflecting ~~lower~~both higher net sales and ~~higher inventory markdowns as a result of the difficult retail environment driven by the COVID-19 pandemic.~~gross profit rate. As a percentage of net sales, our gross ~~profit decreased to 38.0% for the nine months~~

3433

Table of Contents

~~ended October 31, 2020, compared~~profit increased to ~~42.5%~~47.7% for the nine months ended ~~November 2, 2019,~~October 30, 2021, compared to 38.0% for the nine months ended October 31, 2020, reflecting a reduction in promotional activity driven by strong consumer demand and our well-positioned inventory. In addition, our gross profit margin in the nine months ended October 31, 2020 was adversely impacted by $6.0 million in incremental inventory markdowns, reflecting the difficult retail environment in 2020 driven by the ~~impact of increased promotional activity to drive sales volume, higher freight expenses associated with the growth in e-commerce business and the incremental inventory markdowns.~~pandemic.

Selling and Administrative Expenses

Selling and administrative expenses ~~decreased $23.4~~increased $15.9 million, or ~~15.0%~~12.1%, to $148.1 million for the third quarter of 2021, compared to $132.2 million for the third quarter of ~~2020, compared~~2020. The increase was primarily due to ~~$155.6 million for~~higher payroll in the third quarter of ~~2019. The decrease was a result~~2021 associated with our retail store associates, as well as an increase in marketing expenses, as we resumed our television advertising campaigns. Salary expenses were lower in the third quarter of ~~our strategic efforts to mitigate the impact of COVID-19, including lower salaries expense,~~2020, primarily attributable to reduced hours at our retail stores during the third quarter of 2020. We also reduced expenses in the third quarter of 2020 related to our retail facilities, including certain rent reductions and abatements, as well as marketing and logistics.stores. As a percentage of net sales, selling and administrative expenses decreased to 29.9% for the third quarter of 2021, compared to 33.8% for the third quarter of 2020, ~~compared to 34.8% for the third quarter~~reflecting better leveraging of ~~2019.~~expenses over a higher net sales base.

Selling and administrative expenses ~~decreased $77.9~~increased $51.6 million, or ~~17.4%~~13.9%, to $422.0 million for the nine months ended October 30, 2021, compared to $370.4 million for the nine months ended October 31, ~~2020, compared~~2020. The increase was primarily due to ~~$448.3 million for~~higher payroll expenses associated with our retail store associates. Salary expenses were lower in the nine months ended ~~November 2, 2019. The decrease was primarily driven by lower salaries expense attributable~~October 31, 2020 as a result of our retail stores being temporarily closed for a portion of 2020. Variable expenses, including marketing and logistics, were also higher, reflecting the increase in sales volume in the nine months ended October 30, 2021. In addition, strategic actions were taken to ~~the actions we took during~~reduce expenses in the first ~~half~~nine months of 2020, particularly to mitigate the impact of ~~COVID-19~~the pandemic during the period of retail store closures ~~as well as lower variable expenses associated with~~in the ~~temporary retail store closures, including certain rent reductions and abatements.~~first half of the year. As a percentage of net sales, selling and administrative expenses ~~increased~~decreased to 31.3% for the nine months ended October 30, 2021, compared to 40.4% for the nine months ended October 31, 2020, ~~compared to 36.8% for the nine months ended November 2, 2019.~~reflecting better leveraging of our expenses over higher net sales.

Restructuring and Other Special Charges, Net

Restructuring and other special charges were $16.6 million for the nine months ended October 31, 2020, consisting primarily of impairment charges on furniture and fixtures in our retail stores and lease ~~right-of-use~~right-of use assets reflecting the impact of ~~COVID-19~~the pandemic on our business operations. ~~There were no corresponding charges for the three months ended October 31, 2020 or for the three or nine months ended November 2, 2019.~~ Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges. There were no corresponding charges during the three months ended October 31, 2020 or nine months ended October 30, 2021.

Operating Earnings (Loss)

~~Despite the reduction in net sales, our~~Operating earnings increased $59.6 million to operating earnings ~~increased $0.1~~of $87.4 million for the third quarter of 2021, compared to $27.8 million for the third quarter of ~~2020, compared to $27.7 million~~2020. Our operating earnings for the third quarter of 2021 exceeded our full year 2019 ~~reflecting the actions taken to reduce our~~ operating ~~expenses and the other factors described above.~~earnings. As a percentage of net sales, operating earnings ~~increased~~were 17.7% for the third quarter of 2021, compared to 7.1% for the third quarter of ~~2020, compared to 6.2% for the third quarter of 2019.~~2020.

Operating earnings (loss) ~~decreased $108.7~~increased $259.4 million to operating earnings of $220.7 million for the nine months ended October 30, 2021, compared to an operating loss of $38.7 million for the nine months ended October 31, ~~2020, compared to operating earnings of $70.0 million for the nine months ended November 2, 2019, reflecting the factors described above.~~2020. As a percentage of net sales, operating earnings were 16.4% for the nine months ended October 30, 2021, compared to an operating loss ~~was~~of 4.2% for the nine months ended October 31, ~~2020, compared to operating earnings of 5.7% for the nine months ended November 2, 2019.~~2020.

3534

Table of Contents

BRAND PORTFOLIO


	Thirteen Weeks Ended										Thirty-Nine Weeks Ended										Thirteen Weeks Ended										Thirty-Nine Weeks Ended
	October 31, 2020					November 2, 2019					October 31, 2020					November 2, 2019					October 30, 2021					October 31, 2020					October 30, 2021					October 31, 2020
				% of					% of					% of					% of					% of					% of					% of					% of
($ millions, except sales per square foot)				Net Sales					Net Sales					Net Sales					Net Sales					Net Sales					Net Sales					Net Sales					Net Sales
Operating Results
Net sales	$	267.6		100.0	%	$	359.9		100.0	%	$	668.4		100.0	%	$	1,060.5		100.0	%	$	300.5		100.0	%	$	267.6		100.0	%	$	789.8		100.0	%	$	668.4		100.0	%
Cost of goods sold		173.3		64.8	%		226.1		62.8	%		456.7		68.3	%		675.0		63.7	%		201.6		67.1	%		173.3		64.8	%		502.0		63.6	%		456.7		68.3	%
Gross profit		94.3		35.2	%		133.8		37.2	%		211.7		31.7	%		385.5		36.3	%		98.9		32.9	%		94.3		35.2	%		287.8		36.4	%		211.7		31.7	%
Selling and administrative expenses		87.0		32.5	%		114.4		31.8	%		253.2		37.9	%		338.7		31.9	%		87.5		29.1	%		87.0		32.5	%		249.2		31.5	%		253.2		37.9	%
Impairment of goodwill and intangible assets		—		—			—		—			262.7		39.3	%		—		—			—		—	%		—		—	%		—		—	%		262.7		39.3	%
Restructuring and other special charges, net		—		—	%		—		—	%		48.4		7.2	%		0.6		0.0	%		—		—	%		—		—	%		13.5		1.7	%		48.4		7.2	%
Operating earnings (loss)	$	7.3		2.7	%	$	19.4		5.4	%	$	(352.6)		(52.7)	%	$	46.2		4.4	%	$	11.4		3.8	%	$	7.3		2.7	%	$	25.1		3.2	%	$	(352.6)		(52.7)	%

Key Metrics
Direct-to-consumer (% of net sales) ⁽¹⁾		26	%				45	%				31	%				41	%				28	%				26	%				31	%				31	%
Wholesale/retail sales mix (%)		85%/15	%				80%/20	%				84%/16	%				81%/19	%
Change in wholesale net sales ($)	$	(60.9)				$	20.2				$	(298.3)				$	143.7				$	16.5				$	(60.9)				$	66.2				$	(298.3)
Unfilled order position at end of period	$	234.7				$	354.4														$	380.7				$	234.7

Same-store sales % change		(41.0)	%				(5.1)	%				(32.3)	%				(7.6)	%				45.8	%				(41.0)	%				24.3	%				(32.3)	%
Same-store sales $ change	$	(25.2)				$	(3.5)				$	(42.8)				$	(15.1)				$	13.8				$	(25.2)				$	18.6				$	(42.8)
Sales change from new and closed stores, net	$	(6.2)				$	0.4				$	(50.8)				$	1.1				$	2.5				$	(6.2)				$	36.0				$	(50.8)
Impact of changes in Canadian exchange rate on retail sales	$	0.0				$	(0.2)				$	(0.2)				$	(0.8)				$	0.1				$	0.0				$	0.6				$	(0.2)

Sales per square foot, excluding e-commerce (thirteen and thirty-nine weeks ended)	$	41				$	102				$	92				$	292				$	236				$	41				$	669				$	92
Sales per square foot, excluding e-commerce (trailing twelve months)	$	190				$	394				$	190				$	394				$	756				$	190				$	756				$	190
Square footage (thousands sq. ft.)		345					400					345					400					124					345					124					345

Stores opened		—					2					—					5					4					—					6					—
Stores closed		5					1					25					2					1					5					86					25
Ending stores		197					232					197					232					90					197					90					197

(1)	Direct-to-consumer includes sales of our retail stores and e-commerce sites and sales through our customers’ websites that we fulfill on a drop-ship basis.

Net Sales

Net sales ~~decreased $92.3~~increased $32.9 million, or ~~25.6%~~12.3%, to $300.5 million for the third quarter of 2021, compared to $267.6 million for the third quarter of ~~2020, compared~~2020. We continued to ~~$359.9 million for~~experience strong sales growth from our Blowfish Malibu, Sam Edelman, Allen Edmonds and Vionic brands, which carry a large assortment of athletic and casual styles. Both Sam Edelman and Allen Edmonds reported growth in the dress shoe category, as more people return to the workplace and attend special occasion events. While the segment experienced sequential sales improvement, our net sales in the third quarter of ~~2019. The sales decrease reflects the difficult retail environment and lower wholesale demand in the quarter driven~~2021 continued to be adversely impacted by the ~~ongoing COVID-19 pandemic, in particular for dress footwear categories. In response, we have augmented our product offerings with an increased mix~~delayed receipt of ~~casual, athletic~~inventory due to supply chain disruptions, including port congestion and sport-inspired styles, which were our strongest categories for the third quarter, as consumers reacted positively to our assortment that aligned with their current stay-at-home, work-from-home environment. We are also experiencing high demand for boots during the fall season, including lug soles, casual booties and our weatherproof styles. In addition, certain of our customers requested accelerated shipments, which shifted some sales to the third quarter that were originally planned for the fourth quarter, as those customers sought to align inventory levels with consumer demand. We closed five stores duringfactory closures. During the third quarter of ~~2020,~~2021, we closed one store and opened four stores, resulting in a total of 90 stores and total square footage of 0.1 million at the end of the third quarter of 2021, compared to 197 stores and total square footage of 0.3 million at the end of the third quarter of ~~2020,~~2020.

Net sales increased $121.4 million, or 18.2%, to $789.8 for the nine months ended October 30, 2021, compared to ~~232~~$668.4 million for the nine months ended October 31, 2020, reflecting the same factors as described above. During the nine months ended October 30, 2021, we experienced strong sales growth from our Sam Edelman, Blowfish Malibu, Vionic and Allen Edmonds brands.

In the first quarter of 2021, we closed the remaining 73 Naturalizer stores in North America that were scheduled for closure as part of our strategic realignment of the Naturalizer retail store operations. We remain focused on growing the brand’s e-commerce business through naturalizer.com, our retail partners and their websites, and the two flagship stores in the United States and three stores in China that we continue to operate. Including the Naturalizer closures, we closed 86 stores and ~~total square footage of 0.4 million at~~opened six stores during the ~~end of the third quarter of 2019.~~nine months ended October 30, 2021. On a trailing twelve-month basis, sales per square foot, excluding e-commerce sales, ~~decreased~~increased to $756 for the twelve months ended October 30, 2021, compared to $190 for the twelve months ended October 31, ~~2020,~~2020.

Our unfilled order position for our wholesale sales increased $146.0 million, or 62.2%, to $380.7 million at October 30, 2021, compared to ~~$394 for the twelve months ended November 2, 2019. E-commerce sales continued to grow as a percentage of the business during the third quarter, and we expect this trend to continue.~~

~~Net sales decreased $392.1~~$234.7 million ~~or 37.0%, to $668.4 million for the nine months ended~~at October 31, ~~2020, compared to $1,060.5 million for~~2020. The increase in our backlog order levels reflects increased consumer demand trends. In addition, the nine months ended November 2, 2019. The sales decrease is a result of the difficult retail environment driven by the COVID-19 pandemic, which led to a reduction in wholesale shipments as many of our wholesale customers canceled orders and temporarily closed their stores for several weeks during the first half of 2020 combined with the temporary closure of our retail stores for an average of 10 weeks during the first half of the year. E-commerce sales continue to grow as a percentage of the business, with strong growth in the first nine months of 2020. During the nine months ended October 31, 2020, we closed 25 stores.

3635

Table of Contents

~~Subsequent to quarter-end, we announced that we were commencing~~global supply chain disruptions have caused a ~~strategic realignment related to our Naturalizer retail operations~~delay in the ~~United States~~receipt of inventory due to port congestion, reduced shipping vessel and ~~Canada. In an effort~~container availability. We are actively working to diversify and leverage our sourcing model to help offset the impact of these supply chain challenges, but expect the disruptions to continue to improve future profitability and allow greater focus on high-growth, digital channels, we plan to close all Naturalizer stores, with the exception of a limited number of flagship locations, by the end of fiscal 2020. We continue to view the Naturalizer brand as a strong and value-driving component of our portfolio. Therefore, we will be focusing on growing the brand’s e-commerce through naturalizer.com, our retail partners and their websites, and the flagship stores.

Our unfilled order position for our wholesale sales decreased $119.7 million, or 33.8%, to $234.7 million at October 31, 2020, compared to $354.4 million at November 2, 2019. The decrease in our backlog order levels reflect fewer orders as our wholesale customers shift to responding to consumer demand in-season, resulting in fewer up-front orders, as well as the economic impact of the COVID-19 pandemic.into 2022.

Gross Profit

Gross profit ~~decreased $39.5~~increased $4.6 million, or ~~29.5%~~4.9%, to $98.9 million for the third quarter of 2021, compared to $94.3 million for the third quarter of 2020, ~~compared to $133.8 million for the third quarter of 2019,~~ reflecting ~~the difficult retail environment driven~~higher net sales, partially offset by ~~the COVID-19 pandemic.~~a lower gross profit rate. As a percentage of net sales, our gross profit decreased to 32.9% for the third quarter of 2021, compared to 35.2% for the third quarter of 2020, ~~compared~~reflecting higher inbound freight costs. In connection with the supply chain disruptions described earlier, our freight costs have risen significantly. We anticipate the higher inbound freight costs to ~~37.2% for the third quarter of 2019.~~continue into 2022, which may continue to impact our gross profit if we are unable to mitigate or fully recover these additional costs from price increases.

Gross profit ~~decreased $173.8~~increased $76.1 million, or ~~45.1%~~35.9%, to $287.8 million for the nine months ended October 30, 2021, compared to $211.7 million for the nine months ended October 31, 2020, ~~compared~~due to ~~$385.5 million for the nine months ended November 2, 2019, primarily reflecting lower~~higher net sales and ~~higher incremental cost of goods sold~~improved gross profit rate. Our gross profit in the nine months ended October 31, 2020 ~~driven~~was impacted by higher incremental cost of goods sold primarily due to $27.5 million in inventory markdowns reflecting the difficult retail environment driven by the ~~COVID-19~~ pandemic, as well as $1.6 million in inventory markdowns related to the decision ~~during the first quarter of 2020~~ to exit our Fergie brand. As a percentage of net sales, our gross profit ~~decreased~~increased to 36.4% for the nine months ended October 30, 2021, compared to 31.7% for the nine months ended October 31, ~~2020, compared to 36.3% for the nine months ended November 2, 2019, primarily reflecting the incremental markdowns described above.~~2020.

Selling and Administrative Expenses

Selling and administrative expenses ~~decreased $27.4~~increased $0.5 million, or ~~23.9%~~0.6%, to $87.5 million for the third quarter of 2021, compared to $87.0 million for the third quarter of ~~2020, compared to $114.4 million for the third quarter of 2019.~~2020. The ~~decrease~~increase was ~~primarily~~ driven by higher salary and marketing expenses, partially offset by lower ~~salaries expense attributable~~rent and facilities expenses, primarily due to the ~~ongoing impact of the workforce reductions implemented in the first half of 2020, as well as~~ lower ~~marketing expense.~~store count. As a percentage of net sales, selling and administrative expenses ~~increased~~decreased to 29.1% for the third quarter of 2021, compared to 32.5% for the third quarter of ~~2020, compared to 31.8% for the third quarter of 2019.~~2020.

Selling and administrative expenses decreased ~~$85.5~~$4.0 million, or ~~25.2%~~1.6%, to $249.2 million for the nine months ended October 30, 2021, compared to $253.2 million for the nine months ended October 31, ~~2020, compared to $338.7 million for the nine months ended November 2, 2019.~~2020. The decrease was ~~primarily~~ driven by lower ~~salaries expense reflecting~~retail facilities costs, primarily due to the ~~strategic actions taken during the first half of 2020 to mitigate the impact of COVID-19. The decrease also reflects~~ lower ~~logistics expenses and a reduction in variable expenses associated with the retail~~ store ~~closures during a portion of the first half of 2020 and the declining store base.~~count, partially offset by higher marketing expenses. As a percentage of net sales, selling and administrative expenses ~~increased~~decreased to 31.5% for the nine months ended October 30, 2021, compared to 37.9% for the nine months ended October 31, ~~2020, compared to 31.9% for the nine months ended November 2, 2019.~~2020.

Impairment of Goodwill and Intangible Assets

~~As a result~~During the first quarter of ~~the deterioration of general economic conditions and the resulting decline in our share price and market capitalization,~~2020, we ~~recorded~~incurred impairment charges of $262.7 million, ~~during the first quarter of 2020,~~ including $240.3 million associated with goodwill and $22.4 million associated with intangible assets, including $12.2 million for the ~~indefinite-lived~~ Allen Edmonds trade name and $10.2 million for the Via Spiga ~~trademarks.~~trade name. There were no corresponding charges ~~for~~in the third quarter of 2020 or for the nine months ended ~~November 2, 2019.~~October 30, 2021. Refer to ~~Note 5 and~~ Note 8 to the condensed consolidated financial statements for further discussion of these charges.

Restructuring and Other Special Charges, Net

Restructuring and other special charges of $13.5 million were ~~$48.4 million for~~recorded during the nine months ended October 30, 2021, reflecting expenses associated with the decision to close all but two flagship Naturalizer retail stores in the United States. These costs primarily represented lease termination and other store closure costs, including employee severance. For the nine months ended October 31, 2020, we recorded restructuring and other special charges of $48.4 million, reflecting expenses associated with the impact of ~~COVID-19~~the pandemic on our business operations, primarily impairment charges on store furniture and fixtures and lease right-of-use assets, liabilities due to our factories for order cancellations and severance expense. Restructuring and other special charges were $0.6 million for the nine months ended November 2, 2019, primarily related to the integration of Vionic. There were no restructuring and other special charges during the third quarter of 2020 or 2019.severance. Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges.

Operating Earnings (Loss)

Operating earnings ~~decreased $12.1~~increased $4.1 million to $11.4 million for the third quarter of 2021, compared to $7.3 million for the third quarter of 2020, ~~compared to $19.4 million for the third quarter of 2019~~ as a result of the factors described above. As a percentage of net sales, operating earnings ~~decreased to 2.7%~~were 3.8% for the third quarter of ~~2020,~~2021, compared to ~~5.4%~~2.7% in the third quarter of ~~2019.~~2020.

~~Table of Contents~~

Operating earnings (loss) ~~decreased $398.8~~increased $377.7 million to operating earnings of $25.1 million for the nine months ended October 30, 2021, compared to an operating loss of $352.6 million for the nine months ended October 31, 2020, ~~compared to operating earnings of $46.2 million for the nine months ended November 2, 2019~~ as a result of the factors described above. As a percentage of net sales, operating earnings were 3.2% for the nine months ended October 30, 2021, compared to an operating loss ~~was~~of 52.7% for the nine months ended October 31, ~~2020, compared to operating earnings~~2020.

Table of~~4.4%in the nine months ended November 2, 2019.~~ Contents

ELIMINATIONS AND OTHER


	Thirteen Weeks Ended								Thirty-Nine Weeks Ended								Thirteen Weeks Ended								Thirty-Nine Weeks Ended
	October 31, 2020				November 2, 2019				October 31, 2020				November 2, 2019				October 30, 2021				October 31, 2020				October 30, 2021				October 31, 2020
			% of				% of				% of				% of				% of				% of				% of				% of
($ millions)			Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales
Operating Results
Net sales	$	(11.8)	100.0	%	$	(14.1)	100.0	%	$	(39.2)	100.0	%	$	(56.5)	100.0	%	$	(11.0)	100.0	%	$	(11.8)	100.0	%	$	(37.9)	100.0	%	$	(39.2)	100.0	%
Cost of goods sold		(14.4)	122.4	%		(16.8)	119.5	%		(40.7)	103.9	%		(58.3)	103.2	%		(12.0)	108.8	%		(14.4)	122.4	%		(39.9)	105.3	%		(40.7)	103.9	%
Gross profit		2.6	(22.4)	%		2.7	(19.5)	%		1.5	(3.9)	%		1.8	(3.2)	%		1.0	(8.8)	%		2.6	(22.4)	%		2.0	(5.3)	%		1.5	(3.9)	%
Selling and administrative expenses		17.7	(150.0)	%		5.4	(38.2)	%		40.0	(101.9)	%		18.1	(32.1)	%		18.4	(167.1)	%		17.7	(150.0)	%		85.9	(226.5)	%		40.0	(101.9)	%
Restructuring and other special charges, net		—	—	%		0.9	(6.9)	%		0.6	(1.6)	%		1.8	(3.2)	%		—	—	%		—	—	%		—	—	%		0.6	(1.6)	%
Operating loss	$	(15.1)	127.6	%	$	(3.6)	25.6	%	$	(39.1)	99.6	%	$	(18.1)	32.1	%	$	(17.4)	158.3	%	$	(15.1)	127.6	%	$	(83.9)	221.2	%	$	(39.1)	99.6	%

The Eliminations and Other category includes the elimination of intersegment sales and profit, unallocated corporate administrative expenses, and other costs and recoveries.

The net sales elimination of ~~$11.8~~$11.0 million for the third quarter of ~~2020~~2021 is ~~$2.3~~$0.8 million, or ~~16.0%~~6.7%, lower than the third quarter of ~~2019.~~2020, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear. The net sales elimination of ~~$39.2~~$37.9 million for the nine months ended October ~~31, 2020~~30, 2021 is ~~$17.3~~$1.3 million, or ~~30.5%~~3.3%, lower than the nine months ended ~~November 2, 2019. The net sales elimination decreases for both periods reflect~~October 31, 2020, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear.

Selling and administrative expenses increased ~~$12.3~~$0.7 million, to ~~$17.7~~$18.4 million in the third quarter of ~~2020,~~2021, compared to ~~$5.4~~$17.7 million for the third quarter of ~~2019.~~2020. The increase ~~was~~ primarily ~~driven by~~reflects higher ~~unallocated logistics~~expenses for our cash and ~~benefits expenses.~~stock-based incentive compensation plans for certain employees. Selling and administrative expenses increased ~~$21.9~~$45.9 million, to ~~$40.0~~$85.9 million in the nine months ended October ~~31, 2020,~~30, 2021, compared to ~~$18.1~~$40.0 million for the nine months ended ~~November 2, 2019.~~October 31, 2020, reflecting higher expenses for our cash and stock-based incentive compensation plans for certain employees and higher expenses associated with certain cash-based director compensation plans that are variable based on our stock price. The increase ~~was primarily driven by higher insurance and consulting expenses.~~in the cash-based director compensation plans reflects growth in our stock price during the nine months ended October 30, 2021, compared to a decline in the nine months ended October 31, 2020.

Restructuring and other special charges ~~were~~of $0.6 million for the nine months ended October 31, 2020 ~~with no costs incurred during the third quarter of 2020. The expenses incurred during the nine months ended October 31, 2020~~ were ~~comprised primarily of costs~~ associated with workforce reductions as we sought to minimize our expense structure during the ~~COVID-19~~ pandemic, ~~combined with~~as well as incremental expenses associated with deep cleaning our facilities and related supplies. ~~During the three and nine months ended November 2, 2019, restructuring and other special charges of $0.9 million and $1.8 million, respectively, were incurred for Vionic integration-related costs.~~ Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges. There were no corresponding expenses for the nine months ended October 30, 2021.

~~LIQUIDITY AND CAPITAL RESOURCES~~

~~Borrowings~~

($ millions)

October 31, 2020

November 2, 2019

February 1, 2020
Borrowings under revolving credit agreement

$
300.0

$
295.0

$
275.0
Long-term debt

198.7

198.3

198.4
Total debt

$
498.7

$
493.3

$
473.4

Total debt obligations of $498.7 million at October 31, 2020 increased $5.4 million, from $493.3 million at November 2, 2019, and increased $25.3 million, from $473.4 million at February 1, 2020. The increases from both November 2, 2019 and February 1, 2020 reflect higher net borrowings under our Credit Agreement taken as a precautionary measure during the first quarter of 2020 to increase our cash position and preserve financial flexibility given the uncertainty of the impact of COVID-19 on our business. We have made significant progress reducing our borrowings from the first quarter of 2020, using cash from operations to reduce overall indebtedness to a level approximating levels prior to the onset of the pandemic. Net interest expense for the third quarter of 2020 increased $0.4 million to $10.9 million, compared to $10.5 million for the third quarter of 2019. The increase is primarily attributable to the fair value adjustment for

3837

Table of Contents

LIQUIDITY AND CAPITAL RESOURCES

Borrowings


($ millions)	October 30, 2021		October 31, 2020		January 30, 2021
Borrowings under revolving credit agreement	$	175.0	$	300.0	$	250.0
Current portion of long-term debt		99.6		—		—
Long-term debt		—		198.7		198.9
Total debt ⁽¹⁾	$	274.6	$	498.7	$	448.9

(1)

As presented here, total debt excludes the Blowfish Malibu mandatory purchase obligation, which was valued at $54.6 million, $30.1 million and $39.1 million as of October 30, 2021, October 31, 2020 and January 30, 2021, respectively. The mandatory purchase obligation of $54.6 million was paid on November 4, 2021.

Total debt obligations of $274.6 million at October 30, 2021 decreased $224.1 million, from $498.7 million at October 31, 2020, and decreased $174.3 million, from $448.9 million at January 30, 2021. The decreases from both October 31, 2020 and January 30, 2021 reflect continued progress toward reducing our debt levels. In August 2021, we redeemed $100.0 million aggregate principal amount of our Senior Notes using borrowings under the revolving credit agreement. Due to this redemption, borrowings under our revolving credit facility increased by $75.0 million during the third quarter of 2021, ending the quarter with an outstanding balance of $175.0 million. We continued to utilize our strong cash generation to reduce the incremental borrowings that were used to preserve financial flexibility at the onset of the pandemic, reducing the borrowings under our revolving credit agreement from $440.0 million in March 2020 to $175.0 million at October 30, 2021. Net interest expense for the third quarter of 2021 decreased $5.8 million to $5.1 million, compared to $10.9 million for the third quarter of 2020. The decrease is primarily attributable to a $3.2 million decrease in the fair value adjustment for the mandatory purchase obligation associated with the Blowfish Malibu acquisition, as further discussed in Note 155 and Note 14 to the condensed consolidated financial ~~statements, partially offset by~~statements. In addition, the redemption of $100.0 million of our Senior Notes in August 2021 and lower average borrowings under our revolving credit ~~agreement.~~agreement contributed to the decrease in interest expense. As further discussed below, we notified the holders of the Senior Notes that we will be redeeming the remaining $100.0 million aggregate principal amount of Senior Notes in January 2022. The extinguishment of Senior Notes will result in a reduction of annual interest expense of approximately $12 million.

Credit Agreement

As further discussed in Note 10 to the condensed consolidated financial statements, the Company maintains a revolving credit facility for working capital needs. On ~~April 14, 2020,~~October 5, 2021, we entered into a ~~Fourth~~Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the ~~"Credit Agreement"~~“Credit Agreement”) which, among other modifications, ~~increased~~extends the maturity date of the credit facility from January 18, 2024, to October 5, 2026, and decreases the amount available under the revolving credit facility by $100.0 million to an aggregate amount of up to ~~$600.0~~$500.0 million, subject to borrowing base restrictions, and may be further increased by up to ~~$150.0~~$250.0 million. Interest on the borrowings is at variable rates based on the London Interbank Offered Rate ("LIBOR") (with a floor of ~~1.0% imposed by the Credit Agreement)~~0.0%), or the prime rate (as defined in the Credit Agreement), plus a spread. The Credit Agreement ~~increased~~decreased the spread applied to the LIBOR or prime rate by a total of 75 basis ~~points and increased the unused line fee by 5 basis~~ points. At October ~~31, 2020,~~30, 2021, we had ~~$300.0~~$175.0 million in borrowings and ~~$11.2~~$12.5 million in letters of credit outstanding under the Credit Agreement. Total borrowing availability was ~~$170.6~~$312.5 million at October ~~31, 2020.~~30, 2021. We were in compliance with all covenants and restrictions under the Credit Agreement as of October ~~31, 2020.~~30, 2021.

~~$200 Million~~ Senior Notes

On July 27, 2015, we issued $200.0 million aggregate principal amount of ~~Senior Notes~~senior notes due on August 15, 2023 (the "Senior Notes"). The Senior Notes bear interest at 6.25%, which is payable on February 15 and August 15 of each year. ~~We may redeem some or all~~On August 16, 2021, we redeemed $100.0 million of the Senior Notes at ~~various redemption prices.~~ 100.0%, shifting this higher interest debt to borrowings under the revolving credit agreement. Additionally, during the third quarter of 2021, we determined that we would redeem the remaining $100.0 million aggregate principal amount of Senior Notes in the fourth quarter of 2021. On November 18, 2021, we notified the holders of our Senior Notes that we would be redeeming the remaining $100.0 million in January 2022.

The Senior Notes ~~also~~ contain covenants and restrictions that limit certain activities including, among other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments, common stock repurchases, mergers and acquisitions and sales of assets. As of October ~~31, 2020,~~30, 2021, we were in compliance with all covenants and restrictions relating to the Senior Notes.

3938

Table of Contents

Supplemental Guarantor Financial Information

The Senior Notes are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by all of its existing and future subsidiaries that are guarantors under the Company’s ~~revolving credit facility ("~~Credit ~~Agreement").~~Agreement. The guarantors are 100% owned by Caleres, Inc. ("Parent"). On October 31, 2018, Vionic was joined to the Credit Agreement as a guarantor. After giving effect to the joinder, the Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds, LLC, Vionic Group, LLC and Vionic International, LLC are each co-borrowers and guarantors under the Credit Agreement. ~~During the second quarter of 2020, we adopted SEC Release No. 33-10762,~~ ~~Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities,~~ ~~as further discussed in Note 2 to the condensed consolidated financial statements.~~ The following tables present summarized financial information for the Parent and guarantors on a combined basis after elimination of intercompany transactions between entities and amounts related to investments in any subsidiary that is a non-guarantor:


($ millions)		October 31, 2020	February 1, 2020		October 30, 2021		January 30, 2021
Current assets	$	789.7	$	783.6	$	781.9	$	686.3
Non-current assets		1,067.1		1,402.4		959.1		1,029.5
Current liabilities		888.9		781.8		992.2		818.4
Non-current liabilities		780.9		901.8		482.2		740.0


	Thirty-Nine Weeks		Thirty-Nine Weeks
	Ended		Ended
($ millions)	October 31, 2020		October 30, 2021
Net sales ⁽¹⁾	$	1,426.5	$	1,927.0
Gross profit		519.0		871.1
Operating loss		(390.6)
Net loss		(315.4)
Net loss attributable to Caleres, Inc.		(315.4)
Operating earnings				123.4
Net earnings				109.2
Net earnings attributable to Caleres, Inc.				109.2

(1)	Intercompany activity with the non-guarantor entities for the thirty-nine weeks ended October ~~31, 2020~~30, 2021 was not material.

~~Table of Contents~~

Working Capital and Cash Flow


	Thirty-Nine Weeks Ended						Thirty-Nine Weeks Ended
($ millions)	October 31, 2020		November 2, 2019		Change		October 30, 2021		October 31, 2020		Change
Net cash provided by operating activities	$	101.8	$	145.7	$	(43.9)	$	189.7	$	101.8	$	87.9
Net cash used for investing activities		(15.5)		(41.6)		26.1		(14.6)		(15.5)		0.9
Net cash used for financing activities		(7.1)		(81.9)		74.8		(188.6)		(7.1)		(181.5)
Effect of exchange rate changes on cash and cash equivalents		(0.1)		0.1		(0.2)		(0.0)		(0.1)		0.1
Increase in cash and cash equivalents	$	79.1	$	22.3	$	56.8
(Decrease) increase in cash and cash equivalents							$	(13.5)	$	79.1	$	(92.6)

Reasons for the major variances in cash provided (used) in the table above are as follows:

Cash provided by operating activities was ~~$43.9~~$87.9 million ~~lower~~higher in the nine months ended October ~~31, 2020~~30, 2021 as compared to the nine months ended ~~November 2, 2019,~~October 31, 2020, primarily reflecting the following factors:

●

~~A decrease~~An increase in net earnings, after consideration of non-cash items, in the nine months ended October ~~31, 2020,~~30, 2021, compared to the comparable period in ~~2019;~~2020, primarily driven by the strong consumer demand and positive financial results of our Famous Footwear segment; and

●

AnA larger increase in ~~income tax receivables~~accounts payable in the nine months ended October ~~31, 2020,~~30, 2021, compared to ~~a decrease in~~ the nine months ended ~~November 2, 2019;~~October 31, 2020; partially offset by

●

An increase in ~~accrued expenses and other liabilities~~inventory during the nine months ended October 30, 2021, primarily reflecting the increase in our in-transit inventory due to supply chain disruptions, compared to a decrease during the nine months ended October 31, ~~2020, compared to a decrease in the nine months ended November 2, 2019;~~2020; and

●

A ~~larger decrease~~smaller increase in ~~inventory for~~accrued expenses and other liabilities during the nine months ended October 30, 2021 compared to the nine months ended October 31, ~~2020, compared to the nine months ended November 2, 2019, due in part to our disciplined management of inventory during the pandemic.~~2020.

Supply chain financing: Certain of our suppliers are given the opportunity to sell receivables from us related to products that we’ve purchased to participating financial institutions at a rate that leverages our credit rating, which may be more beneficial to the suppliers than the rate

Table of Contents

they can obtain based upon their own credit rating. We negotiate payment and other terms with our suppliers, regardless of whether the supplier participates in the program, and our responsibility is limited to making payment based on the terms originally negotiated with the supplier. These liabilities continue to be presented as accounts payable in our condensed consolidated balance sheets, with changes reflected within cash flows from operating activities when settled. As of October 30, 2021 and October 31, 2020, we had $64.0 million and $17.9 million, respectively, of accounts payable subject to supply chain financing arrangements.

Cash used for investing activities was ~~$26.1~~$0.9 million lower infor the nine months ended October 30, 2021 as compared to the nine months ended October 31, 2020, ~~as compared to the nine months ended November 2, 2019,~~ reflecting slightly lower capital expenditures in the nine months ended October ~~31, 2020 as a result of the steps taken to reduce and/or defer capital expenditures to preserve financial flexibility during the pandemic.~~30, 2021. In ~~2020,~~2021, we expect ~~to reduce~~ our purchases of property and equipment and capitalized software to be between $20 million and $30 million, as compared to ~~$50.2~~$22.1 million in ~~2019.~~2020.

Cash used for financing activities was ~~$74.8~~$181.5 million ~~lower~~higher for the nine months ended October 30, 2021 as compared to the nine months ended October 31, 2020, ~~as compared to the nine months ended November 2, 2019,~~ primarily due to ~~$25.0~~the redemption of $100.0 million of senior notes and $75.0 million of net ~~borrowings under~~repayments on our revolving credit agreement in the nine months ended October ~~31, 2020,~~30, 2021, compared to net ~~repayments~~borrowings of ~~$40.0~~$25.0 million in the comparable period in ~~2019.~~2020. In addition, we did not repurchase any shares under our share repurchase programs during the nine months ended October 30, 2021, compared to $23.3 million in the nine months ended October 31, 2020.

A summary of key financial data and ratios at the dates indicated is as follows:


	October 31, 2020			November 2, 2019			February 1, 2020			October 30, 2021			October 31, 2020			January 30, 2021
Working capital ($ millions) ⁽¹⁾	$	(87.8)		$	7.4		$	31.3
Operating working capital ($ millions) ⁽¹⁾										$	120.6		$	244.1		$	191.8
Current ratio ⁽²⁾		0.91:1			1.01:1			1.04:1			0.81:1			0.91:1			0.86:1
Debt-to-capital ratio⁽³⁾		65.6	%		43.8	%		42.2	%		47.3	%		65.6	%		68.8	%

(1)	~~Working~~Operating working capital has been computed as total current assets, excluding cash, less total current ~~liabilities.~~liabilities, excluding borrowings under revolving credit agreement, current portion of long-term debt and lease obligations.

(2)	The current ratio has been computed by dividing total current assets by total current liabilities.

(3)

The debt-to-capital ratio has been computed by dividing total debt by total capitalization. Total debt is defined as long-term debt (including the current portion) and borrowings under ~~the Credit Agreement.~~revolving credit agreement. Total capitalization is defined as total debt and total ~~equity.~~equity.

~~Working~~Operating working capital at October 30, 2021 was $120.6 million, which was $123.5 million lower than at October 31, 2020 ~~was a deficit of $87.8 million, which was $95.2 million~~ and ~~$119.1~~$71.2 million lower than at ~~November 2, 2019 and February 1, 2020, respectively.~~January 30, 2021. Our current ratio was ~~0.91~~0.81 to 1 as of October ~~31, 2020,~~30, 2021, compared to ~~1.01~~0.91 to 1 at ~~November 2, 2019~~October 31, 2020 and ~~1.04:~~0.86:1 at ~~February 1, 2020.~~January 30, 2021. The ~~decrease~~decreases in ~~both~~operating working capital and the current ratio from ~~November 2, 2019~~both October 31, 2020 and ~~February 1, 2020~~January 30, 2021 primarily reflects ~~lower inventories driven by disciplined inventory management during~~higher trade accounts payable and accrued expenses, and an increase in the ~~first nine months of 2020, as well as the reclassification of the~~Blowfish Malibu mandatory purchase obligation attributable to ~~current liabilities, reflecting the anticipated settlement~~strong growth in the ~~third quarter of 2021.~~brand, partially offset by higher inventory. Our debt-to-capital ratio was 47.3% as of October 30, 2021, compared to 65.6% as of October 31, 2020 ~~compared to 43.8% as of November 2, 2019~~ and ~~42.2%~~68.8% at ~~February 1, 2020.~~

~~Table of Contents~~

January 30, 2021. The ~~increase~~decrease in our debt-to-capital ratio from ~~November 2, 2019~~October 31, 2020 and ~~February 1, 2020~~January 30, 2021 primarily reflects lower ~~shareholders’ equity due to the impact~~borrowings on our revolving credit facility and a lower outstanding amount of ~~the net loss recorded in the first nine months of 2020.~~senior notes at October 30, 2021. We believe ~~our current~~the cash ~~flows from~~provided by our operations, as well as ~~more than $170~~$312.5 million in borrowing availability under the Credit Agreement, provide ample liquidity to meet the Company’s working capital needs for the foreseeable future. In addition, the amendment to the revolving credit facility agreement increased the amount by which the Credit Agreement may be further increased from $150.0 million to $250.0 million.

We declared and paid dividends of $0.07 per share in ~~both~~ the third quarter of ~~2020~~both 2021 and ~~2019.~~2020. The declaration and payment of any future dividend is at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors. However, we presently expect that dividends will continue to be paid.

As discussed above, as a precautionary measure to increase our cash position and preserve financial flexibility given the uncertainty of the COVID-19 pandemic on our operations, we expanded the borrowing capacity on our Credit Agreement in April 2020. We have also focused on managing costs, reducing both capital expenditures and inventory levels. During the third quarter of 2020, debt reduction was a priority in our capital allocation process. We reduced the borrowings under our revolving credit facility by $50.0 million, ending the third quarter with an outstanding balance of $300.0 million. We anticipate that our solid financial position will allow us to make continued progress towards repaying our outstanding borrowings under our Credit Agreement.

CONTRACTUAL OBLIGATIONS

Our contractual obligations primarily consist of purchase obligations, operating lease commitments, the current portion of our long-term debt and related interest, ~~on long-term debt,~~ minimum license commitments, financial instruments, mandatory purchase obligation associated with the acquisition of Blowfish Malibu, one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings, obligations for our supplemental executive retirement plan and other postretirement benefits and obligations.

~~During the first half~~

Table of ~~2020, we deferred certain landlord payments, as~~Contents

As further discussed in Note 910 to the condensed consolidated financial statements, during the third quarter of 2021, we redeemed $100.0 million of Senior Notes. We also made the decision during the third quarter of 2021 to redeem the remaining $100.0 million of Senior Notes during the fourth quarter of 2021, prior to the maturity date of August 15, 2023, and have presented those notes as a current liability on the condensed consolidated balance sheet as of October ~~31, 2020, we have accrued liabilities for factory order cancellations, as further described~~30, 2021.

As discussed in Note 5 to the condensed consolidated financial ~~statements. These obligations are expected to be settled within~~statements, on November 4, 2021, we paid the ~~next year.~~ mandatory purchase obligation totaling $54.6 million, which was associated with the acquisition of Blowfish Malibu in July 2018.

Except for these items and changes within the normal course of business (primarily changes in purchase obligations, which fluctuate throughout the year as a result of the seasonal nature of our operations, changes in borrowings under our revolving credit agreement ~~changes in the mandatory purchase obligation associated with the acquisition of Blowfish Malibu~~ and changes in operating lease commitments as a result of new stores, store closures and lease renewals), there have been no other significant changes to the contractual obligations identified in our Annual Report on Form 10-K for the year ended ~~February 1, 2020.~~January 30, 2021.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

No material changes have occurred related to critical accounting policies and estimates since the end of the most recent fiscal ~~year other than the adoption of ASC 326, as further described in Note 2 to the condensed consolidated financial statements.~~year. For further information on the Company’s critical accounting policies and estimates, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended ~~February 1, 2020.~~January 30, 2021.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

Recently issued accounting pronouncements and their impact on the Company are described in Note 2 to the condensed consolidated financial statements.

INFLATION

We have experienced inflationary pressures on our product costs for most of 2021. We believe that the rates of inflation we have experienced have not had a significant effect on our net sales or operating earnings for the three and nine months ended October 30, 2021. While we have historically been able to offset our product cost increases by increasing prices, negotiating costs, or changing suppliers, we may not be able to offset price increases in the future, which may have an adverse effect on our results of operations and financial condition. However, we are actively working to mitigate these cost pressures and recover a portion of the increased costs through price increases.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements and expectations regarding the Company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) the coronavirus outbreak and its adverse impact on our business operations, store traffic and financial condition; (ii) changing consumer demands, which may be influenced by consumers’ disposable income, which in turn can be influenced by general economic conditions; (iii) impairment charges resulting from a long-term decline in our stock price; (iv) rapidly changing fashion trends and purchasing patterns; (v) intense competition within the footwear industry; (vi) political and economic conditions, orsupply chain disruptions and other threats to the continued and uninterrupted flow of inventory from China and other countries, where the ~~Company~~company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (ii) the coronavirus pandemic and its adverse impact on our business operations, store traffic and financial condition; (iii) changing consumer demands, which may be influenced by consumers' disposable income, which in turn can be influenced by general economic conditions and other factors; (iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; (v) intense competition within the footwear industry; (vi) customer concentration and increased consolidation in the retail industry; (vii) ~~imposition of tariffs;~~foreign currency fluctuations; (viii) ~~the ability to accurately forecast sales and~~

~~Table of Contents~~

~~manage inventory levels;~~impairment charges resulting from a long-term decline in our stock price; (ix) cybersecurity threats or other major disruption to the ~~Company’s~~company’s information technology systems; (x) ~~customer concentration~~the ability to accurately forecast sales and ~~increased consolidation in the retail industry;~~manage inventory levels; (xi) ~~transitional challenges with acquisitions; (xii)~~ a disruption in the ~~Company’s~~company’s distribution centers; ~~(xiii) foreign currency fluctuations; (xiv) changes to tax laws, policies and treaties; (xv)~~(xii) the ability to recruit and retain senior management and other key associates; (xiii) the ability to maintain relationships with current suppliers; (xiv) the ability to secure/exit leases on favorable terms; (xv) transitional challenges with acquisitions and divestitures; (xvi) changes to tax laws, policies and treaties; (xvii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; ~~(xvii) the ability to maintain relationships with current suppliers;~~and (xviii) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property ~~rights; and (xix) the ability to secure/exit leases on favorable terms.~~rights. The Company’s reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended ~~February 1, 2020,~~January 30, 2021, which information is incorporated by reference herein and updated by the Company’s Quarterly Reports on Form 10-Q. The Company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

Table of Contents

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No material changes have taken place in the quantitative and qualitative information about market risk since the end of the most recent fiscal year. For further information, see Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended ~~February 1, 2020.~~January 30, 2021.

ITEM 4 CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

It is the Chief Executive Officer’s and Chief Financial Officer’s ultimate responsibility to ensure we maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and procedures include mandatory communication of material events, automated accounting processing and reporting, management review of monthly, quarterly and annual results, an established system of internal controls and ongoing monitoring by our internal auditors.

A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to errors or fraud may occur and not be detected. Our disclosure controls and procedures are designed to provide a reasonable level of assurance that their objectives are achieved. As of October ~~31, 2020,~~30, 2021, management of the Company, including the Chief Executive Officer and Chief Financial Officer, conducted 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). Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the evaluation of internal control over financial reporting, the Chief Executive Officer and Chief Financial Officer have concluded that there have been no changes in the Company’s internal controls over financial reporting during the quarter ended October ~~31, 2020~~30, 2021 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

~~Table of Contents~~

PART II OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

We are involved in legal proceedings and litigation arising in the ordinary course of business. In the opinion of management, the outcome of such ordinary course of business proceedings and litigation currently pending will not have a material adverse effect on our results of operations or financial position. All legal costs associated with litigation are expensed as incurred.

Information regarding Legal Proceedings is set forth within Note 1716 to the condensed consolidated financial statements and incorporated by reference herein.

ITEM 1A RISK FACTORS

~~There~~Except as disclosed below, there have been no material changes that have occurred related to our risk factors since the end of the most recent fiscal year. For further information, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended ~~February 1, 2020.~~January 30, 2021.

Table of Contents

Werelyprimarilyoninternationalsourcesofproduction,whichsubjectsourbusinesstorisksassociatedwith internationaltrade.

We rely primarily on international sourcing for our footwear products through third-party manufacturing facilities located outside the United States. As is common in the industry, we do not have any long-term contracts with our third-party international manufacturers. International sourcing is subject to numerous risks, including trade relations, work stoppages, transportation delays (including delays at international and domestic ports) and costs (including customs duties, quotas, tariffs, anti-dumping duties, safeguard measures, cargo restrictions or other trade restrictions), domestic and international political instability, foreign currency fluctuations, variable economic conditions, expropriation, nationalization, natural disasters, terrorist acts and military conflict, changes in governmental regulations (including the U.S. Foreign Corrupt Practices Act) and geo-political events.

During 2021, wehaveexperiencedsupplychaindisruptions,portcongestion and inflationary pressures, leading todelays in thereceiptofinventory and significantly higher freight costs. Our in-transit inventory, which is not yet available to sell, has risen significantly as compared to historical levels. Depending on the timing of receipt of this inventory, certain customers may request price concessions or choose to cancel their orders altogether, which may negatively impact gross margins. If we are unable to sell this inventory as planned, we may have to liquidate it through other less profitable channels, which may result in a lower gross margin on those products. In addition, the extent and duration of these supply chain disruptions and inflationary cost pressures are uncertain and may limit our ability to meet incremental consumer demand, potentially impacting our net sales during the fourth quarter of 2021 and into 2022. While we are actively working to mitigate these cost pressures and recover our increased costs through price increases, there is no guarantee that we will be successful doing so.

In addition, the imposition of tariffs or other costs on imported products may result in an increase in product prices, which may in turn adversely impact our gross margins if we are unable to mitigate the impact of the costs. There is also uncertainty surrounding the impact of any changes to trade legislation as a result of the shift in the U.S. presidential administration and control of the U.S. Congress. At the same time, potential changes in manufacturing preferences, including, but not limited to the following, pose additional risk and uncertainty:

•

Manufacturingcapacitymayshiftfromfootweartootherindustrieswithmanufacturingmarginsthatare perceivedtobehigher.

•

Somefootwearmanufacturersmayfacelaborshortagesasworkersseekbetterwagesandworkingconditionsinotherindustriesandlocations.

Asaresultoftheserisks,therecanbenoassurancethatwewillnotexperiencereductionsinavailableproductioncapacity, increasesinourproductcosts,latedeliveriesorterminationsofoursupplierrelationships.Furthermore,thesesourcing risksarecompoundedbythelackofdiversificationinthegeographiclocationofourinternationalsourcingand manufacturing.Withthemajorityofoursupply originatinginChina,asubstantialportionofoursupplycouldbeatriskintheeventofanysignificantnegative developmentrelatedtorelationsbetweenUnitedStatesandChina.

Althoughwebelievewecouldfindalternativemanufacturingsourcesfortheproductsthatwecurrentlysourcefromthird-partymanufacturingfacilitiesinChinaorothercountries,wemaynotbeabletolocatealternativemanufacturersontermsasfavorableasourcurrentterms,includingpricing,paymentterms,manufacturingcapacity,qualitystandardsandlead timesfordelivery.Inaddition,thereissubstantialcompetitioninthefootwearindustryforqualityfootwearmanufacturers.Accordingly,ourfutureresultswillpartlydependonourabilitytomaintainpositiveworkingrelationshipswith,andoffer competitivetermsto,ourinternationalmanufacturers.Ifsupplyissuescauseustobeunabletoprovideproductsconsistentwithourstandardsormanufactureourfootwearinanefficientandcost-effectivemanner,ourcustomersmaycancelorders, ordemandreductionsinpurchaseprices,anyofwhichcouldhavea materialadverse effecton our business and resultsofoperations.

Table of Contents

ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information relating to our repurchases of common stock during the third quarter of ~~2020:~~2021:


				Total Number	Maximum Number				Total Number	Maximum Number
				Purchased as Part	of Shares that May				Purchased as Part	of Shares that May
	Total Number of			of Publicly	Yet be Purchased	Total Number of			of Publicly	Yet be Purchased
	Shares	Average Price Paid		Announced	Under the	Shares	Average Price Paid		Announced	Under the
Fiscal Period	Purchased⁽¹⁾		per Share ⁽¹⁾	Program ⁽²⁾	Program ⁽²⁾	Purchased⁽¹⁾		per Share ⁽¹⁾	Program ⁽²⁾	Program ⁽²⁾
August 2, 2020 - August 29, 2020	—	$	—	—	2,651,489
August 1, 2021 - August 28, 2021						—	$	—	—	2,651,489

August 30, 2020 - October 3, 2020	2,107		8.18	—	2,651,489
August 29, 2021 - October 2, 2021						887		24.30	—	2,651,489

October 4, 2020 - October 31, 2020	—		—	—	2,651,489
October 3, 2021 - October 30, 2021						167		22.31	—	2,651,489

Total	2,107	$	8.18	—	2,651,489	1,054	$	23.98	—	2,651,489

(1)

Includes shares purchased as part of our publicly announced stock repurchase programs and shares that were tendered by employees related to certain share-based awards. The employee shares were tendered in satisfaction of the exercise price of stock options and/or to satisfy tax withholding amounts for non-qualified stock options, restricted stock and stock performance awards.

(2)

On December 14, 2018, the Board of Directors approved a stock repurchase program ("2018 Program") authorizing the repurchase of 2,500,000 shares of our outstanding common stock. In addition, on September 2, 2019, the Board of Directors approved a stock repurchase program ("2019 Program") authorizing the repurchase of an additional 5,000,000 shares of our outstanding common stock. We can use the repurchase programs to repurchase shares on the open market or in private transactions from time to time, depending on market conditions. The repurchase programs do not have an expiration date. ~~Under~~The Company did not repurchase any shares under these plans during the ~~Company repurchased zero and 2,902,122 shares during~~thirty-nine weeks ended October 30, 2021. During the thirteen and thirty-nine weeks ended October 31, 2020, ~~respectively. During the thirteen and thirty-nine weeks ended October 31, 2019,~~ the Company repurchased ~~58,263~~zero and ~~1,588,741 shares.~~2,902,122 shares, respectively. As of October ~~31, 2020,~~30, 2021, there were 2,651,489 shares authorized to be repurchased under the repurchase programs. Our repurchases of common stock are limited under our debt agreements.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

~~Table of Contents~~

ITEM 5 OTHER INFORMATION

None.

4544

Table of Contents

ITEM 6 EXHIBITS


Exhibit No.
3.1		Restated Certificate of Incorporation of Caleres, Inc. (the “Company”) incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed May 29, 2020.
3.2		Bylaws of the Company as amended through May 28, 2020, incorporated herein by reference to Exhibit 3.2 to the Company’s Form 8-K filed May 29, 2020.
10.4a*	†	~~Form of Performance Award Agreement (for 2020-2022 performance period) under the Company’s Incentive and Stock Compensation Plan of 2017, filed herewith.~~
22	†	List of Guarantor Subsidiaries, incorporated herein by reference to Exhibit 22 to the Company’s Form 10-Q for the quarter ended October 31, 2020, and filed December 9, 2020.
10.1		Fifth Amendment to Fourth Amended and Restated Credit Agreement dated as of October 5, 2021, by and among the Company, certain of its subsidiaries party thereto, the financial institutions party thereto, as lenders, and Bank of America, N.A., as administrative agent and collateral agent, incorporated herein by reference to Exhibit 10.1 to the Company’s Form 8-K filed October 7, 2021.
31.1	†	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	†	iXBRL Instance Document
101.SCH	†	iXBRL Taxonomy Extension Schema Document
101.CAL	†	iXBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	†	iXBRL Taxonomy Extension Label Linkbase Document
101.PRE	†	iXBRL Taxonomy Presentation Linkbase Document
101.DEF	†	iXBRL Taxonomy Definition Linkbase Document
104	†	Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.

* Denotes management contract or compensatory plan arrangements.

†	Denotes exhibit is filed with this Form 10-Q.

4645

Table of Contents

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.

		CALERES, INC.

Date: December ~~9, 2020~~7, 2021		/s/ Kenneth H. Hannah
		Kenneth H. Hannah Senior Vice President and Chief Financial Officer on behalf of the Registrant and as the Principal Financial Officer

4746

INDEX

PART I		Page
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2928
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4342
Item 4	Controls and Procedures	4342

PART II		4442
Item 1	Legal Proceedings	4442
Item 1A	Risk Factors	4442
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	44
Item 3	Defaults Upon Senior Securities	44
Item 4	Mine Safety Disclosures	44
Item 5	Other Information	4544
Item 6	Exhibits	4645
	Signature	4746


($ thousands)
Balance at February 1, 2020	$	1,813
Adjustment upon adoption of ASU 2016-13		2,521
Provision for expected credit losses		10,663
Uncollectible accounts written off, net of recoveries		221
Balance at October 31, 2020	$	15,218


(U.S. $equivalent in thousands)	October 31, 2020		November 2, 2019		February 1, 2020
Financial Instruments
U.S. dollars (purchased by the Company’s Canadian division with Canadian dollars)	$	0	$	3,235	$	3,963
Euro		0		5,763		1,251
Chinese yuan		0		2,905		2,355
New Taiwanese dollars		0		—		0
Other currencies		0		139		69
Total financial instruments	$	0	$	12,042	$	7,638


	Asset Derivatives		Liability Derivatives
($ thousands)	Balance Sheet Location	Fair Value	Balance Sheet Location	Fair Value
Foreign Exchange Forward Contracts
October 31, 2020	Prepaid expenses and other current assets	0	Other accrued expenses	0
November 2, 2019	Prepaid expenses and other current assets	17	Other accrued expenses	325
February 1, 2020	Prepaid expenses and other current assets	0	Other accrued expenses	103