Cover Page
Cover Page - shares | 3 Months Ended | |
Apr. 29, 2023 | Jun. 02, 2023 | |
Class of Stock [Line Items] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Apr. 29, 2023 | |
Document Transition Report | false | |
Entity File Number | 1-32545 | |
Entity Registrant Name | DESIGNER BRANDS INC. | |
Entity Incorporation, State or Country Code | OH | |
Entity Tax Identification Number | 31-0746639 | |
Entity Address, Address Line One | 810 DSW Drive, | |
Entity Address, City or Town | Columbus, | |
Entity Address, State or Province | OH | |
Entity Address, Postal Zip Code | 43219 | |
City Area Code | (614) | |
Local Phone Number | 237-7100 | |
Title of 12(b) Security | Class A Common Shares, without par value | |
Trading Symbol | DBI | |
Security Exchange Name | NYSE | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Entity Small Business | false | |
Entity Emerging Growth Company | false | |
Entity Shell Company | false | |
Current Fiscal Year End Date | --02-03 | |
Entity Central Index Key | 0001319947 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Class A Common Shares | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 58,073,011 | |
Class B Common Shares | ||
Class of Stock [Line Items] | ||
Entity Common Stock, Shares Outstanding | 7,732,733 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Net sales | $ 742,082 | $ 830,543 |
Gross profit | 237,739 | 275,745 |
Operating expenses | (220,119) | (223,426) |
Income from equity investments | 2,331 | 1,945 |
Impairment charges | (341) | (1,072) |
Operating profit | 19,610 | 53,192 |
Interest expense, net | (6,597) | (2,952) |
Loss on extinguishment of debt and write-off of debt issuance costs | 0 | (12,862) |
Non-operating income (expenses), net | (334) | 6 |
Income before income taxes | 12,679 | 37,384 |
Income tax provision | (1,306) | (11,202) |
Net income | 11,373 | 26,182 |
Net loss attributable to redeemable noncontrolling interest | 42 | 0 |
Net income attributable to Designer Brands Inc. | $ 11,415 | $ 26,182 |
Earnings per share attributable to Designer Brands Inc.: | ||
Basic earnings per share | $ 0.18 | $ 0.36 |
Diluted earnings per share | $ 0.17 | $ 0.34 |
Weighted average shares used in per share calculations: | ||
Basic shares | 64,371 | 72,923 |
Diluted shares | 67,042 | 76,924 |
Product | ||
Net sales | $ 742,082 | $ 830,543 |
Cost of sales | $ (504,343) | $ (554,798) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Other Comprehensive Income (Loss), Net of Tax, Portion Attributable to Parent [Abstract] | ||
Net income | $ 11,373 | $ 26,182 |
Other comprehensive loss- | ||
Foreign currency translation loss | (817) | (81) |
Comprehensive income | 10,556 | 26,101 |
Comprehensive loss attributable to redeemable noncontrolling interest | 42 | 0 |
Comprehensive income attributable to Designer Brands Inc. | $ 10,598 | $ 26,101 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 |
ASSETS | |||
Cash and cash equivalents | $ 50,569 | $ 58,766 | $ 54,802 |
Receivables, net | 100,237 | 77,763 | 222,297 |
Inventories | 637,396 | 605,652 | 672,490 |
Prepaid expenses and other current assets | 43,598 | 47,750 | 49,836 |
Total current assets | 831,800 | 789,931 | 999,425 |
Property and equipment, net | 227,692 | 235,430 | 250,123 |
Operating lease assets | 701,670 | 700,373 | 635,334 |
Goodwill | 134,770 | 97,115 | 93,655 |
Intangible assets, net | 75,450 | 31,866 | 20,355 |
Deferred tax assets | 50,111 | 48,285 | 0 |
Equity investments | 66,151 | 63,820 | 55,118 |
Other assets | 46,851 | 42,798 | 33,734 |
Total assets | 2,134,495 | 2,009,618 | 2,087,744 |
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST, AND SHAREHOLDERS' EQUITY | |||
Accounts payable | 288,526 | 255,364 | 369,147 |
Accrued expenses | 170,759 | 190,676 | 208,282 |
Current operating lease liabilities | 183,074 | 190,086 | 179,870 |
Total current liabilities | 642,359 | 636,126 | 757,299 |
Long-term debt | 390,302 | 281,035 | 306,861 |
Non-current operating lease liabilities | 635,245 | 631,412 | 579,839 |
Other non-current liabilities | 23,342 | 24,989 | 26,952 |
Total liabilities | 1,691,248 | 1,573,562 | 1,670,951 |
Commitments and contingencies | |||
Redeemable noncontrolling interest | 3,093 | 3,155 | 0 |
Shareholders' equity: | |||
Common shares paid in-capital, no par value | 1,018,773 | 1,018,872 | 1,006,384 |
Treasury shares, at cost | (662,614) | (662,614) | (537,771) |
Retained earnings (deficit) | 90,162 | 81,993 | (48,122) |
Accumulated other comprehensive loss | (6,167) | (5,350) | (3,698) |
Total shareholders' equity | 440,154 | 432,901 | 416,793 |
Total liabilities, redeemable noncontrolling interest, and shareholders' equity | $ 2,134,495 | $ 2,009,618 | $ 2,087,744 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Shareholders' Equity - USD ($) shares in Thousands, $ in Thousands | Total | Treasury Shares | Common Shares Paid in Capital | Retained Earnings (Deficit) | Accumulated Other Comprehensive Loss | Class A Common Shares | Class A Common Shares Common shares | Class B Common Shares | Class B Common Shares Common shares | Treasury Shares | Treasury Shares Treasury Shares |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common Shares, outstanding (in shares) | 65,624 | 7,733 | 22,169 | ||||||||
Balance at Jan. 29, 2022 | $ 412,396 | $ (515,065) | $ 1,005,382 | $ (74,304) | $ (3,617) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 26,182 | 26,182 | |||||||||
Stock-based compensation activity (in shares) | 482 | ||||||||||
Stock-based compensation activity | 4,594 | 4,594 | |||||||||
Repurchase of Class A common shares (in shares) | (1,656) | ||||||||||
Repurchase of Class A common shares (in shares) | 1,656 | ||||||||||
Repurchase of Class A common shares | (22,706) | (22,706) | |||||||||
Dividends paid | (3,592) | (3,592) | 0 | ||||||||
Foreign currency translation loss | (81) | (81) | |||||||||
Balance at Apr. 30, 2022 | 416,793 | (537,771) | 1,006,384 | (48,122) | (3,698) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common Shares, outstanding (in shares) | 64,450 | 64,450 | 7,733 | 7,733 | 23,825 | ||||||
Common Shares, outstanding (in shares) | 55,921 | 55,921 | 7,733 | 7,733 | 32,882 | ||||||
Balance at Jan. 28, 2023 | 432,901 | (662,614) | 1,018,872 | 81,993 | (5,350) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net income | 11,415 | 11,415 | |||||||||
Stock-based compensation activity (in shares) | 2,057 | ||||||||||
Stock-based compensation activity | (99) | (99) | |||||||||
Dividends paid | (3,246) | 0 | (3,246) | ||||||||
Foreign currency translation loss | (817) | (817) | |||||||||
Balance at Apr. 29, 2023 | $ 440,154 | $ (662,614) | $ 1,018,773 | $ 90,162 | $ (6,167) | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Common Shares, outstanding (in shares) | 57,978 | 57,978 | 7,733 | 7,733 | 32,882 |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Shareholders' Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Statement of Stockholders' Equity [Abstract] | ||
Dividends per share (in dollars per share) | $ 0.05 | $ 0.05 |
Condensed Consolidated Statem_5
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Cash flows from operating activities: | ||
Net income | $ 11,373 | $ 26,182 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 16,565 | 21,384 |
Stock-based compensation expense | 11,654 | 8,594 |
Deferred income taxes | (1,826) | (87) |
Income from equity investments | (2,331) | (1,945) |
Distributions received from equity investments | 0 | 2,405 |
Impairment charges | 341 | 1,072 |
Loss on extinguishment of debt and write-off of debt issuance costs | 0 | 12,862 |
Other | (1,774) | 3,485 |
Change in operating assets and liabilities, net of acquired amounts: | ||
Accounts receivables | (20,985) | (21,941) |
Income tax receivable | 2,003 | (548) |
Inventories | 14,168 | (86,240) |
Prepaid expenses and other current assets | 45 | 4,784 |
Accounts payable | 16,745 | 25,713 |
Accrued expenses | (19,246) | (11,406) |
Operating lease assets and liabilities, net | (4,186) | (24,986) |
Net cash provided by (used in) operating activities | 22,546 | (40,672) |
Cash flows from investing activities: | ||
Cash paid for property and equipment | (14,382) | (12,248) |
Cash paid for business acquisitions | (109,553) | 0 |
Other | 0 | (4,853) |
Net cash used in investing activities | (123,935) | (17,101) |
Cash flows from financing activities: | ||
Borrowing on revolving credit facility | 452,680 | 757,640 |
Payments on revolving credit facility | (343,263) | (450,779) |
Payments for borrowings and prepayment premium under Term Loan | 0 | (238,196) |
Cash paid for treasury shares | 0 | (22,706) |
Dividends paid | (3,246) | 0 |
Cash paid for taxes for stock-based compensation shares withheld | (11,753) | (4,000) |
Other | (911) | (2,191) |
Net cash provided by financing activities | 93,507 | 39,768 |
Effect of exchange rate changes on cash balances | (315) | 115 |
Net decrease in cash, cash equivalents, and restricted cash | (8,197) | (17,890) |
Cash, cash equivalents, and restricted cash, beginning of period | 58,766 | 74,459 |
Cash, cash equivalents, and restricted cash, end of period | 50,569 | 56,569 |
Supplemental disclosures of cash flow information: | ||
Cash paid (received) for income taxes | (2,887) | 62 |
Cash paid for interest on debt | 6,154 | 4,097 |
Cash paid for operating lease liabilities | 52,974 | 73,621 |
Non-cash investing and financing activities: | ||
Property and equipment purchases not yet paid | 4,397 | 7,069 |
Operating lease liabilities arising from lease asset additions | 4,711 | 4,143 |
Net increase to operating lease assets and lease liabilities for modifications | $ 38,344 | $ 27,621 |
Description of Business and Sig
Description of Business and Significant Accounting Policies | 3 Months Ended |
Apr. 29, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES | DESCRIPTION OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES DESCRIPTION OF BUSINESS Business Operations- Designer Brands Inc. is one of the world's largest designers, producers, and retailers of footwear and accessories. We operate in three reportable segments: the U.S. Retail segment, the Canada Retail segment, and the Brand Portfolio segment. The U.S. Retail segment operates the DSW Designer Shoe Warehouse ("DSW") banner through its direct-to-consumer U.S. stores and e-commerce site (www.dsw.com). The Canada Retail segment operates The Shoe Company and DSW banners through its direct-to-consumer Canada stores and e-commerce sites (www.theshoecompany.ca and www.dsw.ca). The Brand Portfolio segment earns revenue from the wholesale of products to retailers and international distributors, commission for serving retailers as the design and buying agent for products under private labels, and the sale of our branded products through direct-to-consumer e-commerce sites (www.vincecamuto.com, www.keds.com, www.keds.ca, and www.topoathletic.com). Our equity investments in ABG-Camuto, LLC ("ABG-Camuto") and Le Tigre 360 Global LLC ("Le Tigre") are an integral part of the Brand Portfolio segment. We have a 40% ownership interest in ABG-Camuto, a joint venture that owns the intellectual property rights of Vince Camuto and other brands. We are party to a licensing agreement with ABG-Camuto, which provides for the exclusive right to design, source, and sell footwear and handbags under the brands that ABG-Camuto owns. In July 2022, we acquired a 33.3% ownership interest in Le Tigre, which manages the Le Tigre brand. We are also party to a license agreement with Le Tigre, which provides for the exclusive right to design, source, and sell Le Tigre-branded footwear. In addition, we own the licensing rights for footwear of the Jessica Simpson brand and for footwear and handbags of the Lucky Brand. On February 4, 2023, we completed the acquisition of the Keds business from Wolverine World Wide, Inc. This expanded the reach of our Owned Brands offerings, which refers to those brands that we have rights to sell through ownership or license arrangements, into casual and athleisure footwear in the wholesale and direct-to-consumer e-commerce channels, complementing the additions of Le Tigre and Topo Athletic LLC ("Topo") during 2022. Basis of Presentation- The accompanying unaudited, condensed consolidated financial statements have been prepared by management in accordance with accounting principles generally accepted in the U.S. ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, we do not include all of the information and footnotes required by GAAP for complete financial statements. The accompanying financial statements reflect all adjustments that are, in the opinion of management, necessary for a fair presentation of the results for the interim periods presented. All such adjustments are of a normal, recurring nature. The condensed consolidated financial position, results of operations, and cash flows for these interim periods are not necessarily indicative of the results that may be expected in future periods. The balance sheet as of January 28, 2023 has been derived from the audited financial statements at that date. The financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in the 2022 Form 10-K. Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year (e.g., "2023") refer to the calendar year in which the fiscal year begins. This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year (including 2022), but occasionally will contain an additional week resulting in a 53-week fiscal year (including 2023). SIGNIFICANT ACCOUNTING POLICIES Accounting Policies- The complete summary of significant accounting policies is included in the notes to the consolidated financial statements as presented in our 2022 Form 10-K. Principles of Consolidation- The condensed consolidated financial statements include the accounts of Designer Brands Inc. and its subsidiaries, including any variable interest entities. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in United States ("U.S.") dollars. Use of Estimates- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of net sales and expenses during the repor ting periods. Certain estimates and assumptions use forecasted financial information based on information reasonably available to us. Significant estimates and assumptions are required as a part of accounting for sales returns allowances, customer allowances and discounts reserve, gift card breakage income, deferred revenue associated with loyalty programs, valuation of inventories, depreciation and amortization, impairments of long-lived assets, intangibles and goodwill, lease accounting, redeemable noncontrolling interest, income taxes and valuation allowances on deferred tax assets, self-insurance reserves, and acquisitions. Although we believe these estimates and assumptions are reasonable, they are based on management's knowledge of current events and actions we may undertake in the future. Changes in facts and circumstances may result in revised estimates and assumptions, and actual results could differ from these estimates. Chief Executive Officer Transition- In January 2023, we announced our planned succession process relating to the Company's CEO role, whereby our former CEO, Roger Rawlins, stepped down from his role as CEO and as a member of the Board of Directors (the "Board") effective April 1, 2023, at which time Doug Howe, who previously served as Executive Vice President of the Company and President of DSW, assumed the CEO role and joined the Board. As previously disclosed, Mr. Rawlins commenced service as a strategic advisor to the Company and the Board effective April 1, 2023 through April 1, 2024 under the terms of a transition and consulting agreement. In conjunction with the CEO transition, we estimate CEO transition costs will total $8.1 million, consisting of $2.2 million in severance costs, $2.8 million in accelerated stock-based compensation (net of stock awards forfeited), and $3.1 million in retention stock awards to certain members of our leadership team and other related professional fees. During the fourth quarter of 2022 and the first quarter of 2023, we recognized $3.7 million and $2.2 million, respectively, in operating expenses on the consolidated statements of operations, with the remaining estimated $2.2 million to be recorded during the remainder of 2023. Severance- During the three months ended April 29, 2023 and April 30, 2022, we incurred severance costs, excluding the severance related to the CEO transition, of $2.1 million and $0.7 million, respectively. These costs are included in operating expenses in the condensed consolidated statements of operations. As of April 29, 2023, January 28, 2023, and April 30, 2022, we had $4.7 million, $5.7 million, and $1.1 million, respectively, of severance liability, including the severance related to the CEO transition, included in accrued expenses on the condensed consolidated balance sheets. Income Taxes- For the three months ended April 29, 2023 and April 30, 2022, our effective tax rate was 10.3% and 30.0%, respectively. The rate for the three months ended April 29, 2023 was impacted by net discrete tax benefits, including federal and state valuation allowance adjustments, partially offset by permanent non-deductible compensation. The rate for the three months ended April 30, 2022 was impacted by permanent non-deductible compensation. Cash, Cash Equivalents, and Restricted Cash- Cash and cash equivalents represent cash, money market funds, and credit card receivables that generally settle within three days. Restricted cash represented cash that was restricted as to withdrawal or usage and consisted of a mandatory cash deposit maintained for certain insurance policies and letters of credit. The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Cash and cash equivalents $ 50,569 $ 58,766 $ 54,802 Restricted cash, included in prepaid expenses and other current assets — — 1,767 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $ 50,569 $ 58,766 $ 56,569 Fair Value- Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows: • Level 1 - Quoted prices in active markets for identical assets or liabilities. • Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable. • Level 3 - Unobservable inputs in which little or no market activity exists. The carrying value of cash and cash equivalents, restricted cash, receivables, and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowings under our senior secured asset-based revolving credit facility ("ABL Revolver") approximated fair value based on the terms and variable interest rates. |
Acquisitions
Acquisitions | 3 Months Ended |
Apr. 29, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITIONS | ACQUISITIONS Acquisition of Topo- On December 13, 2022, we acquired a 79.4% ownership interest in Topo for $19.3 million in cash. We have an exclusive call option to purchase the remaining 20.6% ownership interest in Topo upon the occurrence of certain events or after a period of two years following the close of the transaction. The noncontrolling interest holders also have a put option with respect to the remaining 20.6% ownership interest in Topo upon the occurrence of certain events or after a period of three years following the close of the transaction. The redemption price is defined in the operating agreement and is based primarily on a fixed multiple of Topo's trailing 12 months of adjusted earnings before interest, taxes, depreciation, amortization, and other agreed upon adjustments. The final purchase price and the allocation of the total consideration to the fair values of the assets, liabilities, and redeemable noncontrolling interest consisted of the following: (in thousands) Preliminary Purchase Price and Allocation as of December 13, 2022 Measurement Period Adjustments Final Purchase Price Allocation as of April 29, 2023 Purchase price cash consideration $ 19,062 $ 193 $ 19,255 Fair value of assets and liabilities acquired: Accounts receivables $ 3,195 $ (150) $ 3,045 Inventories 5,612 (20) 5,592 Goodwill 3,460 868 4,328 Intangible assets 12,500 (500) 12,000 Other assets 1,898 — 1,898 Accounts payable and other liabilities (4,438) (5) (4,443) Redeemable noncontrolling interest (3,165) — (3,165) $ 19,062 $ 193 $ 19,255 The fair value of the intangible assets relates to customer relationships and a tradename, which are amortized over a useful life of 10 and 15 years, respectively, and are based on the excess earnings method under the income approach. The fair value measurements are based on significant unobservable inputs, including discounted future cash flows and customer attrition rates. The fair value measurement of the redeemable noncontrolling interest was calculated by considering the implied fair value of Topo using the purchase price and an estimated amount to redeem the noncontrolling interest. The goodwill represents the excess of the purchase price over the fair value of the net assets acquired and was primarily attributable to acquiring an established design and sourcing process for athletic footwear. Goodwill is expected to be deductible for income tax purposes. During 2022, we incurred $1.3 million of acquisition-related costs in connection with the acquisition of Topo, which was included in operating expenses on the consolidated statements of operations. Acquisition of Keds- On February 4, 2023, we acquired the Keds business, including the Keds brand, inventory, and inventory-related accounts payable, from Wolverine World Wide, Inc. ("Seller") for $124.9 million. The cash portion of the purchase price was funded with available cash and borrowings on the ABL Revolver. The preliminary purchase price and the allocation of the total consideration to the fair values of the assets and liabilities consisted of the following: (in thousands) Preliminary Purchase Price and Allocation as of February 4, 2023 Purchase price: Cash Consideration $ 109,360 Due to Seller 19,040 Due from Seller for estimated contingent consideration (3,500) $ 124,900 Fair value of assets and liabilities acquired: Inventories $ 46,700 Goodwill 36,787 Intangible assets 44,800 Accounts payable (3,387) $ 124,900 We recorded an allocation of the purchase price to the tangible and identifiable intangible assets acquired and liabilities assumed based on their fair value at the acquisition date. The purchase price is subject to adjustments primarily based upon contingent considerations as provided by the purchase agreement, which are based on recognized sales and incurred marketing costs for certain identified aged inventories and may result in the Seller paying us up to $15.0 million by March 2024. We recorded an estimated amount due from Seller at fair value based on our estimated probability of the conditions being met requiring payment. The allocation of the purchase price is based on certain preliminary valuations and analysis that have not been completed as of the date of this filing. Any subsequent changes in the estimated fair values assumed upon the finalization of more detailed analysis within the measurement period will change the allocation of the purchase price and will be adjusted during the period in which the amounts are determined. We expect to finalize the valuations as soon as practicable, but not later than one year from the acquisition date. The fair value of inventories, which is made up of finished goods, was determined based on market assumptions for realizing a reasonable profit after selling costs. The fair value of the intangible assets relates to $40.1 million of an indefinite lived tradename and $4.7 million of customer relationships, which is amortized over a useful life of 10 years, and are based on the excess earnings method under the income approach. The fair value measurements are based on significant unobservable inputs, including discounted future cash flows and customer attrition rates. The goodwill represents the excess of the purchase price over the fair value of the net assets acquired and was primarily attributable to acquiring an established design and sourcing process for casual footwear, including kids' footwear, with international distribution. We determined that goodwill should be allocated to reporting units within the U.S. Retail and Brand Portfolio segments based on each reporting unit’s estimated benefit from the expected synergies from the Keds business acquisition. We recorded a preliminary allocation of goodwill of $25.5 million to the U.S. Retail segment based primarily on a discounted cash flow of the sourcing benefit. The remaining $11.3 million of goodwill was allocated to the Brand Portfolio segment. Goodwill is expected to be deductible for income tax purposes. We incurred $2.9 million of acquisition-related costs in connection with the acquisition of the Keds business, which was included in operating expenses on the condensed consolidated statements of operations. |
Revenue
Revenue | 3 Months Ended |
Apr. 29, 2023 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE DISAGGREGATION OF NET SALES Net Sales by Brand Categories- The following table presents net sales disaggregated by brand categories for each segment: (in thousands) U.S. Retail Canada Retail Brand Portfolio Eliminations Consolidated Three months ended April 29, 2023 Owned Brands: (1) Direct-to-consumer $ 123,209 $ — $ 10,624 $ — $ 133,833 External customer wholesale, commission income, and other — — 64,617 — 64,617 Intersegment wholesale and commission income — — 17,742 (17,742) — Total Owned Brands 123,209 — 92,983 (17,742) 198,450 National brands 489,677 — — — 489,677 Canada Retail (2) — 53,955 — — 53,955 Total net sales $ 612,886 $ 53,955 $ 92,983 $ (17,742) $ 742,082 Three months ended April 30, 2022 Owned Brands: (1) Direct-to-consumer $ 139,155 $ — $ 6,527 $ — $ 145,682 External customer wholesale, commission income, and other — — 64,956 — 64,956 Intersegment wholesale and commission income — — 25,973 (25,973) — Total Owned Brands 139,155 — 97,456 (25,973) 210,638 National brands 563,590 — — — 563,590 Canada Retail (2) — 56,315 — — 56,315 Total net sales $ 702,745 $ 56,315 $ 97,456 $ (25,973) $ 830,543 (1) "Owned Brands" refers to those brands we have rights to sell through ownership or license arrangements. Beginning in the first quarter of 2023, sales of the Keds brand are included in Owned Brands as a result of our acquisition of the Keds business. Sales of the Keds brand in periods prior to the first quarter of 2023 are not restated as this brand was considered a national brand during those periods. (2) We currently do not report the Canada Retail segment net sales by brand categories. Net Sales by Product and Service Categories - The following table presents net sales disaggregated by product and service categories for each segment: Three months ended (in thousands) April 29, 2023 April 30, 2022 Net sales: U.S. Retail segment: Women's footwear $ 403,181 $ 469,131 Men's footwear 124,554 145,807 Kids' footwear 44,294 52,918 Accessories and other 40,857 34,889 612,886 702,745 Canada Retail segment: Women's footwear 30,514 30,004 Men's footwear 13,866 14,428 Kids' footwear 7,544 9,817 Accessories and other 2,031 2,066 53,955 56,315 Brand Portfolio segment: Wholesale 80,784 87,775 Commission income and other 1,575 3,154 Direct-to-consumer 10,624 6,527 92,983 97,456 Total segment net sales 759,824 856,516 Elimination of intersegment sales (17,742) (25,973) Total net sales $ 742,082 $ 830,543 DEFERRED REVENUE LIABILITIES We record deferred revenue liabilities, included in accrued expenses on the condensed consolidated balance sheets, for remaining obligations we have to our customers. The following table presents the changes and total balances for gift cards and loyalty programs: Three months ended (in thousands) April 29, 2023 April 30, 2022 Gift cards: Beginning of period $ 35,121 $ 36,783 Gift cards redeemed and breakage recognized to net sales (16,449) (18,260) Gift cards issued 12,261 14,321 End of period $ 30,933 $ 32,844 Loyalty programs: Beginning of period $ 16,900 $ 15,736 Loyalty certificates redeemed and expired and other adjustments recognized to net sales (7,592) (7,881) Deferred revenue for loyalty points issued 7,324 8,388 End of period $ 16,632 $ 16,243 |
Related Party Transactions
Related Party Transactions | 3 Months Ended |
Apr. 29, 2023 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS SCHOTTENSTEIN AFFILIATES We have transactions with entities owned or controlled by Jay L. Schottenstein, the executive chairman of our Board, and members of his family (collectively the "Schottenstein Affiliates"). As of April 29, 2023, the Schottenstein Affiliates beneficially owned 22% of the Company's outstanding common shares, representing 57% of the combined voting power of the Company, consisting of 6.8 million Class A common shares and 7.7 million Class B common shares. The following summarizes the related party transactions with the Schottenstein Affiliates for the relevant periods: Leases- We lease certain store and office locations that are owned by the Schottenstein Affiliates. We also leased a fulfillment center from a Schottenstein Affiliate through September 2022 that was not renewed. During the three months ended April 29, 2023 and April 30, 2022, we recorded rent expense from leases with Schottenstein Affiliates of $1.9 million and $2.5 million, respectively. As of April 29, 2023, January 28, 2023, and April 30, 2022, we had related party current operating lease liabilities of $5.2 million, $5.6 million, and $5.7 million, respectively, and non-current operating lease liabilities of $13.0 million, $14.0 million, and $10.6 million, respectively. Other Purchases and Services - For the three months ended April 29, 2023 and April 30, 2022, we had other purchases and services we incurred from the Schottenstein Affiliates of $0.6 million and $1.1 million, respectively. Due to Related Parties- Amounts due to the Schottenstein Affiliates, other than operating lease liabilities, were immaterial for all periods presented. EQUITY METHOD INVESTMENTS ABG-Camuto- We have a 40% ownership interest in ABG-Camuto. We are party to a licensing agreement with ABG-Camuto, pursuant to which we pay royalties on the net sales of the brands owned by ABG-Camuto, subject to guaranteed minimums. For the three months ended April 29, 2023 and April 30, 2022, we recorded royalty expense for amounts paid to ABG-Camuto of $4.5 million and $4.6 million, respectively. Le Tigre - In July 2022, we acquired a 33.3% ownership interest in Le Tigre. We are also party to a license agreement with Le Tigre whereby we pay royalties on our net sales of the Le Tigre brand, subject to guaranteed minimums. Activity with Le Tigre during the three months ended April 29, 2023 was immaterial. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Apr. 29, 2023 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per share is based on net income attributable to Designer Brands Inc. and the weighted average of Class A and Class B common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares adjusted for outstanding stock options and restricted stock units ("RSUs") calculated using the treasury stock method. The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings per share attributable to Designer Brands Inc.: Three Months Ended (in thousands) April 29, 2023 April 30, 2022 Weighted average basic shares outstanding 64,371 72,923 Dilutive effect of stock-based compensation awards 2,671 4,001 Weighted average diluted shares outstanding 67,042 76,924 For the three months ended April 29, 2023 and April 30, 2022, the number of shares relating to potentially dilutive stock-based compensation awards that were excluded from the computation of diluted earnings per share due to their anti-dilutive effect was 4.5 million and 3.0 million, respectively. |
Stock-based Compensation
Stock-based Compensation | 3 Months Ended |
Apr. 29, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION Stock-based compensation expense, included in operating expenses in the condensed consolidated statements of operations, consisted of the following: Three Months Ended (in thousands) April 29, 2023 April 30, 2022 Stock options $ — $ 101 Restricted and director stock units 11,654 8,493 $ 11,654 $ 8,594 The following table summarizes the stock-based compensation award share activity for RSUs for the three months ended April 29, 2023: (in thousands) Shares of Time-Based RSUs Shares of Performance-Based RSUs Outstanding - beginning of period 6,790 969 Granted 2,189 801 Vested (3,179) (249) Forfeited (147) (79) Outstanding - end of period 5,653 1,442 |
Shareholders' Equity
Shareholders' Equity | 3 Months Ended |
Apr. 29, 2023 | |
Shareholders' Equity [Abstract] | |
SHAREHOLDERS' EQUITY | SHAREHOLDERS' EQUITY Shares- Our Class A common shares are listed for trading under the ticker symbol "DBI" on the New York Stock Exchange. There is currently no public market for the Company's Class B common shares, but the Class B common shares can be converted into the Company's Class A common shares at the election of the holder on a share-for-share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval. The following table provides additional information for our common shares: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Class A Class B Class A Class B Class A Class B Authorized shares 250,000 100,000 250,000 100,000 250,000 100,000 Issued shares 90,860 7,733 88,803 7,733 88,275 7,733 Outstanding shares 57,978 7,733 55,921 7,733 64,450 7,733 Treasury shares 32,882 — 32,882 — 23,825 — We have authorized 100 million shares of no par value preferred shares, with no shares issued for any of the periods presented. Share Repurchases- On August 17, 2017, the Board authorized the repurchase of an additional $500 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. A s of April 29, 2023, $187.4 million of Class A common shares remained available for repurchase under the program. The share repurchase program may be suspended, modified, or discontinued at any time, and we have no obligation to repurchase any amount of our Class A common shares under the program. Under this share repurchase program, shares will be repurchased in the open market at times and in amounts considered appropriate based on price and market conditions. |
Receivables
Receivables | 3 Months Ended |
Apr. 29, 2023 | |
Receivables [Abstract] | |
RECEIVABLES | RECEIVABLES Receivables, net, consisted of the following: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Customer accounts receivables: Serviced by third-party provider with guaranteed payment $ 35,132 $ 19,539 $ 50,591 Serviced by third-party provider without guaranteed payment 250 103 232 Serviced in-house 12,535 5,138 3,246 Income tax receivable 42,018 44,021 162,788 Other receivables 10,763 9,274 6,573 Total receivables 100,698 78,075 223,430 Allowance for doubtful accounts (461) (312) (1,133) $ 100,237 $ 77,763 $ 222,297 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets | 3 Months Ended |
Apr. 29, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND INTANGIBLE ASSETS | GOODWILL AND INTANGIBLE ASSETS GOODWILL The following table presents the changes to goodwill by segment: Three months ended (in thousands) April 29, 2023 April 30, 2022 Goodwill Accumulated Impairments Net Goodwill Accumulated Impairments Net Beginning of period by segment: U.S. Retail $ 93,655 $ — $ 93,655 $ 93,655 $ — $ 93,655 Canada Retail 41,357 (41,357) — 43,114 (43,114) — Brand Portfolio 23,449 (19,989) 3,460 19,989 (19,989) — 158,461 (61,346) 97,115 156,758 (63,103) 93,655 Activity by Segment: U.S. Retail- Acquired Keds goodwill 25,518 — 25,518 — — — Canada Retail- Currency translation adjustment (805) 805 — (72) 72 — Brand Portfolio: Purchase price and allocation adjustments 868 — 868 — — — Acquired Keds goodwill 11,269 — 11,269 — — — 36,850 805 37,655 (72) 72 — End of period by segment: U.S. Retail 119,173 — 119,173 93,655 — 93,655 Canada Retail 40,552 (40,552) — 43,042 (43,042) — Brand Portfolio 35,586 (19,989) 15,597 19,989 (19,989) — $ 195,311 $ (60,541) $ 134,770 $ 156,686 $ (63,031) $ 93,655 INTANGIBLE ASSETS Intangible assets consisted of the following: (in thousands) Cost Accumulated Amortization Net April 29, 2023 Definite-lived customer relationships $ 12,426 $ (3,178) $ 9,248 Definite-lived tradename 11,953 (501) 11,452 Indefinite-lived trademarks and tradenames 54,750 — 54,750 $ 79,129 $ (3,679) $ 75,450 January 28, 2023 Definite-lived customer relationships $ 7,852 $ (1,454) $ 6,398 Definite-lived tradename 10,853 (292) 10,561 Indefinite-lived trademarks and tradenames 14,907 — 14,907 $ 33,612 $ (1,746) $ 31,866 April 30, 2022 Definite-lived customer relationships $ 1,407 $ (1,407) $ — Definite-lived tradename 4,853 — 4,853 Indefinite-lived trademarks and tradenames 15,502 — 15,502 $ 21,762 $ (1,407) $ 20,355 |
Accrued Expenses
Accrued Expenses | 3 Months Ended |
Apr. 29, 2023 | |
Payables and Accruals [Abstract] | |
ACCRUED EXPENSES | ACCRUED EXPENSES Accrued expenses consisted of the following: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Gift cards $ 30,933 $ 35,121 $ 32,844 Accrued compensation and related expenses 19,645 45,019 26,693 Accrued taxes 23,122 19,419 32,526 Loyalty programs deferred revenue 16,632 16,900 16,243 Sales returns allowances 21,034 18,107 20,855 Customer allowances and discounts 1,185 1,230 2,175 Other 58,208 54,880 76,946 $ 170,759 $ 190,676 $ 208,282 |
Debt
Debt | 3 Months Ended |
Apr. 29, 2023 | |
Debt Disclosure [Abstract] | |
DEBT | DEBT ABL Revolver- On March 30, 2022, we replaced our previous senior secured asset-based revolving credit facility with our current ABL Revolver, which was subsequently amended on February 28, 2023. The amended ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes a first-in last-out term loan ("FILO Term Loan") of up to $30.0 million, which was drawn in full on the date of the amendment. The FILO Term Loan may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. Our ABL Revolver matures in March 2027 and is secured by a first-priority lien on substantially all of our personal property assets, including credit card receivables and inventory. The ABL Revolver may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of April 29, 2023, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $565.8 million, with $360.5 million in outstanding borrowings a nd $5.0 million in letters of credit issued, resulting in $200.3 million av ailable for borrowings. Borrowings under the revolving line of credit and letters of credit issued under the ABL Revolver accrue interest, at our option, at a rate equal to: (A) a base rate per annum equal to the greatest of (i) the prime rate, (ii) the Fed Funds Rate (as defined in the credit facility agreement and subject to a floor of 0%) plus 0.5%, and (iii) the one-month Adjusted Term SOFR (as defined in the credit facility agreement) plus 1.0%; or (B) a one-month, three-month, or six-month Adjusted Term SOFR per annum (subject to a floor of 0%), plus, in each instance, an applicable rate to be determined based on average availability. The FILO Term Loan accrues interest, at our option, at a rate equal to (A) a fluctuating interest rate per annum equal to the greatest of (i) the prime rate, (ii) the Fed Funds Rate plus 0.5%, or (iii) Adjusted Term SOFR plus 1.0%, plus 2.25%; or (B) Adjusted Term SOFR for the interest period in effect for such borrowing plus 3.25%. Commitment fees are based on the unused portion of the ABL Revolver available for borrowings. Interest expense related to the ABL Revolver includes interest on borrowings and letters of credit, with an interest rate of 6.8% as of April 29, 2023, commitment fees, and the amortization of debt issuance costs. Debt Covenants- As of April 29, 2023, the ABL Revolver required us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. The ABL Revolver also contains customary covenants restricting certain activities, including limitations on our ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. The ABL Revolver contains customary events of default, including failure to comply with certain financial and other covenants. Upon an event of default that is not cured or waived within the cure periods, in addition to other remedies that may be available to the lenders, our obligations under the ABL Revolver may be accelerated, outstanding letters of credit may be required to be cash collateralized, and remedies may be exercised against the collateral. As of April 29, 2023, we were in compliance with all financial covenants contained in the ABL Revolver. Termination of Term Loan - On February 8, 2022, we settled in full the $231.3 million principal amount outstanding on that date under our senior secured term loan agreement ("Term Loan"). In connection with this settlement, during the three months ended April 30, 2022 we incurred a $12.7 million loss on extinguishment of debt, composed of a $6.9 million prepayment premium and a $5.7 million write-off of unamortized debt issuance costs. |
Commitments and Contingencies
Commitments and Contingencies | 3 Months Ended |
Apr. 29, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES Legal Proceedings- We are involved in various legal proceedings that are incidental to the conduct of our business. Although it is not possible to predict with certainty the eventual outcome of any litigation, we believe the amount of any potential liability with respect to current legal proceedings will not be material to our results of operations or financial condition. As additional information becomes available, we will assess any potential liability related to pending litigation and revise the estimates as needed. Guarantees- We provide guarantees for lease obligations that are scheduled to expire in 2025 for locations that have been leased to third parties. If a third party does not pay the rent or vacates the premise, we may be required to make full rent payments to the landlord. As of April 29, 2023, the total future payment requirements for these guarantees were approximately $7.4 million. |
Segment Reporting
Segment Reporting | 3 Months Ended |
Apr. 29, 2023 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING The following table provides certain financial da ta by segment reconciled to the condensed consolidated financial statements: (in thousands) U.S. Retail Canada Retail Brand Portfolio Eliminations Consolidated Three months ended April 29, 2023 Net sales: External customer sales $ 612,886 $ 53,955 $ 75,241 $ — $ 742,082 Intersegment sales — — 17,742 (17,742) — Total net sales $ 612,886 $ 53,955 $ 92,983 $ (17,742) $ 742,082 Gross profit $ 196,814 $ 17,174 $ 22,085 $ 1,666 $ 237,739 Income from equity investments $ — $ — $ 2,331 $ — $ 2,331 Three months ended April 30, 2022 Net sales: External customer sales $ 702,745 $ 56,315 $ 71,483 $ — $ 830,543 Intersegment sales — — 25,973 (25,973) — Total net sales $ 702,745 $ 56,315 $ 97,456 $ (25,973) $ 830,543 Gross profit $ 233,067 $ 18,873 $ 23,842 $ (37) $ 275,745 Income from equity investment $ — $ — $ 1,945 $ — $ 1,945 |
Subsequent Event
Subsequent Event | 3 Months Ended |
Apr. 29, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENT | SUBSEQUENT EVENTTender Offer and New Term Loan- On June 8, 2023, we announced that our Board has authorized the repurchase of up to $100.0 million of the Company's Class A common shares through a modified "Dutch Auction" tender offer ("Tender Offer"), at an anticipated cash purchase price of not less than $7.00 per share and not more than $8.00 per share, less any applicable withholding taxes and without interest. We intend to enter into a $135.0 million term loan agreement to be used principally to fund the Tender Offer, together with fees and expenses, with the remaining availability to be used for general corporate purposes. |
Description of Business and S_2
Description of Business and Significant Accounting Policies (Policies) | 3 Months Ended |
Apr. 29, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Fiscal Year | Fiscal Year- Our fiscal year ends on the Saturday nearest to January 31. References to a fiscal year (e.g., "2023") refer to the calendar year in which the fiscal year begins. This reporting schedule is followed by many national retail companies and typically results in a 52-week fiscal year (including 2022), but occasionally will contain an additional week resulting in a 53-week fiscal year (including 2023). |
Principles of Consolidation | Principles of Consolidation- The condensed consolidated financial statements include the accounts of Designer Brands Inc. and its subsidiaries, including any variable interest entities. All intercompany accounts and transactions have been eliminated in consolidation. All amounts are in United States ("U.S.") dollars. |
Use of Estimates | Use of Estimates- The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and reported amounts of net sales and expenses during the repor ting periods. Certain estimates and assumptions use forecasted financial information based on information reasonably available to us. Significant estimates and assumptions are required as a part of accounting for sales returns allowances, customer allowances and discounts reserve, gift card breakage income, deferred revenue associated with loyalty programs, valuation of inventories, depreciation and amortization, impairments of long-lived assets, intangibles and goodwill, lease accounting, redeemable noncontrolling interest, income taxes and valuation allowances on deferred tax assets, self-insurance reserves, and acquisitions. Although we believe these estimates and assumptions are reasonable, they are based on management's knowledge of current events and actions we may undertake in the future. Changes in facts and circumstances may result in revised estimates and assumptions, and actual results could differ from these estimates. |
Chief Executive Officer Transition and Restructuring Costs | Chief Executive Officer Transition- In January 2023, we announced our planned succession process relating to the Company's CEO role, whereby our former CEO, Roger Rawlins, stepped down from his role as CEO and as a member of the Board of Directors (the "Board") effective April 1, 2023, at which time Doug Howe, who previously served as Executive Vice President of the Company and President of DSW, assumed the CEO role and joined the Board. As previously disclosed, Mr. Rawlins commenced service as a strategic advisor to the Company and the Board effective April 1, 2023 through April 1, 2024 under the terms of a transition and consulting agreement. In conjunction with the CEO transition, we estimate CEO transition costs will total $8.1 million, consisting of $2.2 million in severance costs, $2.8 million in accelerated stock-based compensation (net of stock awards forfeited), and $3.1 million in retention stock awards to certain members of our leadership team and other related professional fees. During the fourth quarter of 2022 and the first quarter of 2023, we recognized $3.7 million and $2.2 million, respectively, in operating expenses on the consolidated statements of operations, with the remaining estimated $2.2 million to be recorded during the remainder of 2023. Severance- During the three months ended April 29, 2023 and April 30, 2022, we incurred severance costs, excluding the severance related to the CEO transition, of $2.1 million and $0.7 million, respectively. These costs are included in operating expenses in the condensed consolidated statements of operations. As of April 29, 2023, January 28, 2023, and April 30, 2022, we had $4.7 million, $5.7 million, and $1.1 million, respectively, of severance liability, including the severance related to the CEO transition, included in accrued expenses on the condensed consolidated balance sheets. |
Income Taxes | Income Taxes- For the |
Cash, Cash Equivalents, and Restricted Cash | Cash, Cash Equivalents, and Restricted Cash- Cash and cash equivalents represent cash, money market funds, and credit card receivables that generally settle within three days. Restricted cash represented cash that was restricted as to withdrawal or usage and consisted of a mandatory cash deposit maintained for certain insurance policies and letters of credit. |
Fair Value | Fair Value- Fair value is defined as the price that would be received in the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels related to the subjectivity associated with the inputs to fair value measurements as follows: • Level 1 - Quoted prices in active markets for identical assets or liabilities. • Level 2 - Quoted prices for similar assets or liabilities in active markets or inputs that are observable. • Level 3 - Unobservable inputs in which little or no market activity exists. The carrying value of cash and cash equivalents, restricted cash, receivables, and accounts payables approximated their fair values due to their short-term nature. The carrying value of borrowings under our senior secured asset-based revolving credit facility ("ABL Revolver") approximated fair value based on the terms and variable interest rates. |
Revenue Recognition | We record deferred revenue liabilities, included in accrued expenses on the condensed consolidated balance sheets, for remaining obligations we have to our customers. |
Earnings Per Share | Basic earnings per share is based on net income attributable to Designer Brands Inc. and the weighted average of Class A and Class B common shares outstanding. Diluted earnings per share reflects the potential dilution of common shares adjusted for outstanding stock options and restricted stock units ("RSUs") calculated using the treasury stock method. |
Shareholders' Equity | Shares- Our Class A common shares are listed for trading under the ticker symbol "DBI" on the New York Stock Exchange. There is currently no public market for the Company's Class B common shares, but the Class B common shares can be converted into the Company's Class A common shares at the election of the holder on a share-for-share basis. Holders of Class A common shares are entitled to one vote per share and holders of Class B common shares are entitled to eight votes per share on matters submitted to shareholders for approval. |
Share Repurchases | Share Repurchases- On August 17, 2017, the Board authorized the repurchase of an additional $500 million of Class A common shares under our share repurchase program, which was added to the $33.5 million remaining from the previous authorization. A s of April 29, 2023, $187.4 million of Class A common shares remained available for repurchase under the program. The share repurchase program may be suspended, modified, or discontinued at any time, and we have no obligation to repurchase any amount of our Class A common shares under the program. Under this share repurchase program, shares will be repurchased in the open market at times and in amounts considered appropriate based on price and market conditions. |
Description of Business and S_3
Description of Business and Significant Accounting Policies (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Restrictions on Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the condensed consolidated balance sheets that sum to the total of the same such amounts shown on the condensed consolidated statements of cash flows: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Cash and cash equivalents $ 50,569 $ 58,766 $ 54,802 Restricted cash, included in prepaid expenses and other current assets — — 1,767 Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows $ 50,569 $ 58,766 $ 56,569 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Allocation of Consideration | The final purchase price and the allocation of the total consideration to the fair values of the assets, liabilities, and redeemable noncontrolling interest consisted of the following: (in thousands) Preliminary Purchase Price and Allocation as of December 13, 2022 Measurement Period Adjustments Final Purchase Price Allocation as of April 29, 2023 Purchase price cash consideration $ 19,062 $ 193 $ 19,255 Fair value of assets and liabilities acquired: Accounts receivables $ 3,195 $ (150) $ 3,045 Inventories 5,612 (20) 5,592 Goodwill 3,460 868 4,328 Intangible assets 12,500 (500) 12,000 Other assets 1,898 — 1,898 Accounts payable and other liabilities (4,438) (5) (4,443) Redeemable noncontrolling interest (3,165) — (3,165) $ 19,062 $ 193 $ 19,255 The preliminary purchase price and the allocation of the total consideration to the fair values of the assets and liabilities consisted of the following: (in thousands) Preliminary Purchase Price and Allocation as of February 4, 2023 Purchase price: Cash Consideration $ 109,360 Due to Seller 19,040 Due from Seller for estimated contingent consideration (3,500) $ 124,900 Fair value of assets and liabilities acquired: Inventories $ 46,700 Goodwill 36,787 Intangible assets 44,800 Accounts payable (3,387) $ 124,900 |
Revenue (Tables)
Revenue (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table presents net sales disaggregated by brand categories for each segment: (in thousands) U.S. Retail Canada Retail Brand Portfolio Eliminations Consolidated Three months ended April 29, 2023 Owned Brands: (1) Direct-to-consumer $ 123,209 $ — $ 10,624 $ — $ 133,833 External customer wholesale, commission income, and other — — 64,617 — 64,617 Intersegment wholesale and commission income — — 17,742 (17,742) — Total Owned Brands 123,209 — 92,983 (17,742) 198,450 National brands 489,677 — — — 489,677 Canada Retail (2) — 53,955 — — 53,955 Total net sales $ 612,886 $ 53,955 $ 92,983 $ (17,742) $ 742,082 Three months ended April 30, 2022 Owned Brands: (1) Direct-to-consumer $ 139,155 $ — $ 6,527 $ — $ 145,682 External customer wholesale, commission income, and other — — 64,956 — 64,956 Intersegment wholesale and commission income — — 25,973 (25,973) — Total Owned Brands 139,155 — 97,456 (25,973) 210,638 National brands 563,590 — — — 563,590 Canada Retail (2) — 56,315 — — 56,315 Total net sales $ 702,745 $ 56,315 $ 97,456 $ (25,973) $ 830,543 (1) "Owned Brands" refers to those brands we have rights to sell through ownership or license arrangements. Beginning in the first quarter of 2023, sales of the Keds brand are included in Owned Brands as a result of our acquisition of the Keds business. Sales of the Keds brand in periods prior to the first quarter of 2023 are not restated as this brand was considered a national brand during those periods. (2) We currently do not report the Canada Retail segment net sales by brand categories. Net Sales by Product and Service Categories - The following table presents net sales disaggregated by product and service categories for each segment: Three months ended (in thousands) April 29, 2023 April 30, 2022 Net sales: U.S. Retail segment: Women's footwear $ 403,181 $ 469,131 Men's footwear 124,554 145,807 Kids' footwear 44,294 52,918 Accessories and other 40,857 34,889 612,886 702,745 Canada Retail segment: Women's footwear 30,514 30,004 Men's footwear 13,866 14,428 Kids' footwear 7,544 9,817 Accessories and other 2,031 2,066 53,955 56,315 Brand Portfolio segment: Wholesale 80,784 87,775 Commission income and other 1,575 3,154 Direct-to-consumer 10,624 6,527 92,983 97,456 Total segment net sales 759,824 856,516 Elimination of intersegment sales (17,742) (25,973) Total net sales $ 742,082 $ 830,543 |
Contract with Customer, Asset and Liability | The following table presents the changes and total balances for gift cards and loyalty programs: Three months ended (in thousands) April 29, 2023 April 30, 2022 Gift cards: Beginning of period $ 35,121 $ 36,783 Gift cards redeemed and breakage recognized to net sales (16,449) (18,260) Gift cards issued 12,261 14,321 End of period $ 30,933 $ 32,844 Loyalty programs: Beginning of period $ 16,900 $ 15,736 Loyalty certificates redeemed and expired and other adjustments recognized to net sales (7,592) (7,881) Deferred revenue for loyalty points issued 7,324 8,388 End of period $ 16,632 $ 16,243 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share Reconciliation | The following is a reconciliation between basic and diluted weighted average shares outstanding, as used in the calculation of earnings per share attributable to Designer Brands Inc.: Three Months Ended (in thousands) April 29, 2023 April 30, 2022 Weighted average basic shares outstanding 64,371 72,923 Dilutive effect of stock-based compensation awards 2,671 4,001 Weighted average diluted shares outstanding 67,042 76,924 |
Stock-based Compensation (Table
Stock-based Compensation (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Payment Arrangement, Cost by Plan | Stock-based compensation expense, included in operating expenses in the condensed consolidated statements of operations, consisted of the following: Three Months Ended (in thousands) April 29, 2023 April 30, 2022 Stock options $ — $ 101 Restricted and director stock units 11,654 8,493 $ 11,654 $ 8,594 |
Restricted Stock Unit Activity | The following table summarizes the stock-based compensation award share activity for RSUs for the three months ended April 29, 2023: (in thousands) Shares of Time-Based RSUs Shares of Performance-Based RSUs Outstanding - beginning of period 6,790 969 Granted 2,189 801 Vested (3,179) (249) Forfeited (147) (79) Outstanding - end of period 5,653 1,442 |
Shareholders' Equity (Tables)
Shareholders' Equity (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Shareholders' Equity [Abstract] | |
Schedule of Stock by Class | The following table provides additional information for our common shares: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Class A Class B Class A Class B Class A Class B Authorized shares 250,000 100,000 250,000 100,000 250,000 100,000 Issued shares 90,860 7,733 88,803 7,733 88,275 7,733 Outstanding shares 57,978 7,733 55,921 7,733 64,450 7,733 Treasury shares 32,882 — 32,882 — 23,825 — |
Receivables (Tables)
Receivables (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Receivables [Abstract] | |
Schedule of Accounts, Notes, Loans and Financing Receivable | Receivables, net, consisted of the following: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Customer accounts receivables: Serviced by third-party provider with guaranteed payment $ 35,132 $ 19,539 $ 50,591 Serviced by third-party provider without guaranteed payment 250 103 232 Serviced in-house 12,535 5,138 3,246 Income tax receivable 42,018 44,021 162,788 Other receivables 10,763 9,274 6,573 Total receivables 100,698 78,075 223,430 Allowance for doubtful accounts (461) (312) (1,133) $ 100,237 $ 77,763 $ 222,297 |
Goodwill and Intangible Assets
Goodwill and Intangible Assets (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Goodwill | GOODWILL The following table presents the changes to goodwill by segment: Three months ended (in thousands) April 29, 2023 April 30, 2022 Goodwill Accumulated Impairments Net Goodwill Accumulated Impairments Net Beginning of period by segment: U.S. Retail $ 93,655 $ — $ 93,655 $ 93,655 $ — $ 93,655 Canada Retail 41,357 (41,357) — 43,114 (43,114) — Brand Portfolio 23,449 (19,989) 3,460 19,989 (19,989) — 158,461 (61,346) 97,115 156,758 (63,103) 93,655 Activity by Segment: U.S. Retail- Acquired Keds goodwill 25,518 — 25,518 — — — Canada Retail- Currency translation adjustment (805) 805 — (72) 72 — Brand Portfolio: Purchase price and allocation adjustments 868 — 868 — — — Acquired Keds goodwill 11,269 — 11,269 — — — 36,850 805 37,655 (72) 72 — End of period by segment: U.S. Retail 119,173 — 119,173 93,655 — 93,655 Canada Retail 40,552 (40,552) — 43,042 (43,042) — Brand Portfolio 35,586 (19,989) 15,597 19,989 (19,989) — $ 195,311 $ (60,541) $ 134,770 $ 156,686 $ (63,031) $ 93,655 |
Schedule of Definite-Lived Intangible Assets | INTANGIBLE ASSETS Intangible assets consisted of the following: (in thousands) Cost Accumulated Amortization Net April 29, 2023 Definite-lived customer relationships $ 12,426 $ (3,178) $ 9,248 Definite-lived tradename 11,953 (501) 11,452 Indefinite-lived trademarks and tradenames 54,750 — 54,750 $ 79,129 $ (3,679) $ 75,450 January 28, 2023 Definite-lived customer relationships $ 7,852 $ (1,454) $ 6,398 Definite-lived tradename 10,853 (292) 10,561 Indefinite-lived trademarks and tradenames 14,907 — 14,907 $ 33,612 $ (1,746) $ 31,866 April 30, 2022 Definite-lived customer relationships $ 1,407 $ (1,407) $ — Definite-lived tradename 4,853 — 4,853 Indefinite-lived trademarks and tradenames 15,502 — 15,502 $ 21,762 $ (1,407) $ 20,355 |
Schedule of Indefinite-Lived Intangible Assets | INTANGIBLE ASSETS Intangible assets consisted of the following: (in thousands) Cost Accumulated Amortization Net April 29, 2023 Definite-lived customer relationships $ 12,426 $ (3,178) $ 9,248 Definite-lived tradename 11,953 (501) 11,452 Indefinite-lived trademarks and tradenames 54,750 — 54,750 $ 79,129 $ (3,679) $ 75,450 January 28, 2023 Definite-lived customer relationships $ 7,852 $ (1,454) $ 6,398 Definite-lived tradename 10,853 (292) 10,561 Indefinite-lived trademarks and tradenames 14,907 — 14,907 $ 33,612 $ (1,746) $ 31,866 April 30, 2022 Definite-lived customer relationships $ 1,407 $ (1,407) $ — Definite-lived tradename 4,853 — 4,853 Indefinite-lived trademarks and tradenames 15,502 — 15,502 $ 21,762 $ (1,407) $ 20,355 |
Accrued Expenses (Tables)
Accrued Expenses (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Payables and Accruals [Abstract] | |
Accrued Expenses | Accrued expenses consisted of the following: (in thousands) April 29, 2023 January 28, 2023 April 30, 2022 Gift cards $ 30,933 $ 35,121 $ 32,844 Accrued compensation and related expenses 19,645 45,019 26,693 Accrued taxes 23,122 19,419 32,526 Loyalty programs deferred revenue 16,632 16,900 16,243 Sales returns allowances 21,034 18,107 20,855 Customer allowances and discounts 1,185 1,230 2,175 Other 58,208 54,880 76,946 $ 170,759 $ 190,676 $ 208,282 |
Segment Reporting (Tables)
Segment Reporting (Tables) | 3 Months Ended |
Apr. 29, 2023 | |
Segment Reporting [Abstract] | |
Segment Information | The following table provides certain financial da ta by segment reconciled to the condensed consolidated financial statements: (in thousands) U.S. Retail Canada Retail Brand Portfolio Eliminations Consolidated Three months ended April 29, 2023 Net sales: External customer sales $ 612,886 $ 53,955 $ 75,241 $ — $ 742,082 Intersegment sales — — 17,742 (17,742) — Total net sales $ 612,886 $ 53,955 $ 92,983 $ (17,742) $ 742,082 Gross profit $ 196,814 $ 17,174 $ 22,085 $ 1,666 $ 237,739 Income from equity investments $ — $ — $ 2,331 $ — $ 2,331 Three months ended April 30, 2022 Net sales: External customer sales $ 702,745 $ 56,315 $ 71,483 $ — $ 830,543 Intersegment sales — — 25,973 (25,973) — Total net sales $ 702,745 $ 56,315 $ 97,456 $ (25,973) $ 830,543 Gross profit $ 233,067 $ 18,873 $ 23,842 $ (37) $ 275,745 Income from equity investment $ — $ — $ 1,945 $ — $ 1,945 |
Description of Business and S_4
Description of Business and Significant Accounting Policies - Narrative (Details) $ in Millions | 3 Months Ended | |||
Apr. 29, 2023 USD ($) segment | Jan. 28, 2023 USD ($) | Apr. 30, 2022 USD ($) | Jul. 31, 2022 | |
Entity Information [Line Items] | ||||
Number of reportable segments | segment | 3 | |||
Estimated costs | $ 8.1 | |||
Restructuring charges | 2.2 | $ 3.7 | ||
Remaining estimated costs | 2.2 | |||
Severance costs | 2.1 | $ 0.7 | ||
Severance liability | $ 4.7 | $ 5.7 | $ 1.1 | |
Effective tax rate | 10.30% | 30% | ||
Employee Severance | ||||
Entity Information [Line Items] | ||||
Estimated costs | $ 2.2 | |||
Accelerated Stock Based Compensation | ||||
Entity Information [Line Items] | ||||
Estimated costs | 2.8 | |||
Retention Stock Award Cost | ||||
Entity Information [Line Items] | ||||
Estimated costs | $ 3.1 | |||
Le Tigre | ||||
Entity Information [Line Items] | ||||
Ownership percentage | 33.30% | |||
Designer Brands Inc. | ABG-Camuto, LLC | ||||
Entity Information [Line Items] | ||||
Noncontrolling interest, ownership percentage by parent | 40% |
Description of Business and S_5
Description of Business and Significant Accounting Policies - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 | Jan. 29, 2022 |
Receivables [Abstract] | ||||
Cash and cash equivalents | $ 50,569 | $ 58,766 | $ 54,802 | |
Restricted cash, included in prepaid expenses and other current assets | 0 | 0 | 1,767 | |
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ 50,569 | $ 58,766 | $ 56,569 | $ 74,459 |
Acquisitions - Narrative (Detai
Acquisitions - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |||||
Apr. 29, 2023 | Feb. 04, 2023 | Dec. 13, 2022 | Apr. 29, 2023 | Apr. 30, 2022 | Jan. 28, 2023 | Jan. 29, 2022 | |
Business Acquisition [Line Items] | |||||||
Purchase price cash consideration | $ 109,553 | $ 0 | |||||
Goodwill | $ 134,770 | 134,770 | 93,655 | $ 97,115 | $ 93,655 | ||
U.S. Retail | |||||||
Business Acquisition [Line Items] | |||||||
Goodwill | 119,173 | 119,173 | $ 93,655 | 93,655 | $ 93,655 | ||
Topo Athletica LLC | |||||||
Business Acquisition [Line Items] | |||||||
Ownership interest acquired | 79.40% | ||||||
Purchase price cash consideration | 19,300 | ||||||
Call option period | 2 years | ||||||
Put option period | 3 years | ||||||
Acquisition-related costs | $ 1,300 | ||||||
Goodwill | $ 4,328 | $ 3,460 | 4,328 | ||||
Topo Athletica LLC | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 10 years | ||||||
Topo Athletica LLC | Tradename | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 15 years | ||||||
Keds | |||||||
Business Acquisition [Line Items] | |||||||
Acquisition-related costs | $ 2,900 | ||||||
Total consideration transferred | $ 124,900 | ||||||
Contingent consideration asset | 15,000 | ||||||
Indefinite lived intangible assets | 40,100 | ||||||
Finite lived intangible assets | 4,700 | ||||||
Goodwill | 36,787 | ||||||
Keds | U.S. Retail | |||||||
Business Acquisition [Line Items] | |||||||
Goodwill | 25,500 | ||||||
Keds | Brand Portfolio | |||||||
Business Acquisition [Line Items] | |||||||
Goodwill | $ 11,300 | ||||||
Keds | Customer relationships | |||||||
Business Acquisition [Line Items] | |||||||
Intangible assets useful life | 10 years | ||||||
Topo Athletica LLC | |||||||
Business Acquisition [Line Items] | |||||||
Ownership interest by noncontrolling owners | 20.60% |
Acquisitions - Allocation of Co
Acquisitions - Allocation of Consideration (Details) - USD ($) $ in Thousands | 5 Months Ended | ||||||
Apr. 29, 2023 | Feb. 04, 2023 | Dec. 13, 2022 | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 | Jan. 29, 2022 | |
Fair value of assets and liabilities acquired: | |||||||
Goodwill | $ 134,770 | $ 134,770 | $ 97,115 | $ 93,655 | $ 93,655 | ||
Topo Athletica LLC | |||||||
Business Acquisition [Line Items] | |||||||
Cash Consideration | 19,255 | $ 19,062 | |||||
Fair value of assets and liabilities acquired: | |||||||
Accounts receivables | 3,045 | 3,195 | 3,045 | ||||
Inventories | 5,592 | 5,612 | 5,592 | ||||
Goodwill | 4,328 | 3,460 | 4,328 | ||||
Intangible assets | 12,000 | 12,500 | 12,000 | ||||
Other assets | 1,898 | 1,898 | 1,898 | ||||
Accounts payable and other liabilities | (4,443) | (4,438) | (4,443) | ||||
Redeemable noncontrolling interest | (3,165) | (3,165) | (3,165) | ||||
Fair value of assets acquired, net of liabilities assumed and redeemable noncontrolling interest | $ 19,255 | $ 19,062 | 19,255 | ||||
Measurement Period Adjustments | |||||||
Purchase price cash consideration | 193 | ||||||
Accounts receivables | (150) | ||||||
Inventories | (20) | ||||||
Goodwill | 868 | ||||||
Intangible assets | (500) | ||||||
Accounts payable and other liabilities | (5) | ||||||
Fair value of assets acquired, net of liabilities assumed | $ 193 | ||||||
Keds | |||||||
Business Acquisition [Line Items] | |||||||
Cash Consideration | $ 109,360 | ||||||
Due to Seller | 19,040 | ||||||
Due from Seller for estimated contingent consideration | (3,500) | ||||||
Total consideration transferred | 124,900 | ||||||
Fair value of assets and liabilities acquired: | |||||||
Inventories | 46,700 | ||||||
Goodwill | 36,787 | ||||||
Intangible assets | 44,800 | ||||||
Accounts payable and other liabilities | (3,387) | ||||||
Fair value of assets acquired, net of liabilities assumed and redeemable noncontrolling interest | $ 124,900 |
Revenue - by Brand Categories (
Revenue - by Brand Categories (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total net sales | $ 742,082 | $ 830,543 |
Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | (17,742) | (25,973) |
U.S. Retail | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 612,886 | 702,745 |
U.S. Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 612,886 | 702,745 |
Canada Retail | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 92,983 | 97,456 |
Owned Brands | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 198,450 | 210,638 |
Owned Brands | Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | (17,742) | (25,973) |
Owned Brands | U.S. Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 123,209 | 139,155 |
Owned Brands | Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
Owned Brands | Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 92,983 | 97,456 |
Owned Brands | Direct-to-consumer | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 133,833 | 145,682 |
Owned Brands | Direct-to-consumer | U.S. Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 123,209 | 139,155 |
Owned Brands | Direct-to-consumer | Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
Owned Brands | Direct-to-consumer | Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 10,624 | 6,527 |
Owned Brands | External customer wholesale and commission income | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 64,617 | 64,956 |
Owned Brands | External customer wholesale and commission income | U.S. Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
Owned Brands | External customer wholesale and commission income | Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
Owned Brands | External customer wholesale and commission income | Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 64,617 | 64,956 |
Owned Brands | Intersegment wholesale and commission income | Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | (17,742) | (25,973) |
Owned Brands | Intersegment wholesale and commission income | Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 17,742 | 25,973 |
National Brands | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 489,677 | 563,590 |
National Brands | U.S. Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 489,677 | 563,590 |
National Brands | Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
National Brands | Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
Canada Retail | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Canada Retail | U.S. Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 0 | 0 |
Canada Retail | Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Canada Retail | Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | $ 0 | $ 0 |
Revenue - Disaggregation of Net
Revenue - Disaggregation of Net Sales (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total net sales | $ 742,082 | $ 830,543 |
Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | (17,742) | (25,973) |
Product | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 742,082 | 830,543 |
Product | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 759,824 | 856,516 |
U.S. Retail Segment | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 612,886 | 702,745 |
U.S. Retail Segment | Women's footwear | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 403,181 | 469,131 |
U.S. Retail Segment | Men's footwear | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 124,554 | 145,807 |
U.S. Retail Segment | Kids' footwear | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 44,294 | 52,918 |
U.S. Retail Segment | Accessories and other | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 40,857 | 34,889 |
Canada Retail | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Canada Retail | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Canada Retail | Women's footwear | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 30,514 | 30,004 |
Canada Retail | Men's footwear | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 13,866 | 14,428 |
Canada Retail | Kids' footwear | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 7,544 | 9,817 |
Canada Retail | Accessories and other | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 2,031 | 2,066 |
Canada Retail | Product | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 53,955 | 56,315 |
Brand Portfolio | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 92,983 | 97,456 |
Brand Portfolio | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 92,983 | 97,456 |
Brand Portfolio | Eliminations | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 17,742 | 25,973 |
Brand Portfolio | Wholesale | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 80,784 | 87,775 |
Brand Portfolio | Commission income | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 1,575 | 3,154 |
Brand Portfolio | Direct-to-consumer | Operating Segments | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | 10,624 | 6,527 |
Brand Portfolio | Product | ||
Disaggregation of Revenue [Line Items] | ||
Total net sales | $ 75,241 | $ 71,483 |
Revenue - Deferred Revenue Liab
Revenue - Deferred Revenue Liabilities (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Contract With Customer Liability [Roll Forward] | ||
Gift cards and merchandise credits, beginning balance | $ 35,121 | $ 36,783 |
Gift cards and merchandise credits, ending balance | 30,933 | 32,844 |
Loyalty programs deferred revenue, beginning balance | 16,900 | 15,736 |
Loyalty programs deferred revenue, ending balance | 16,632 | 16,243 |
Loyalty certificates redeemed and expired and other adjustments recognized to net sales | ||
Contract With Customer Liability [Roll Forward] | ||
Increase (decrease) in contract with customer, liability | (7,592) | (7,881) |
Deferred revenue for loyalty points issued | ||
Contract With Customer Liability [Roll Forward] | ||
Increase (decrease) in contract with customer, liability | 7,324 | 8,388 |
Gift cards redeemed and breakage recognized to net sales | ||
Contract With Customer Liability [Roll Forward] | ||
Increase (decrease) in contract with customer, liability | (16,449) | (18,260) |
Gift cards issued | ||
Contract With Customer Liability [Roll Forward] | ||
Increase (decrease) in contract with customer, liability | $ 12,261 | $ 14,321 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Thousands, shares in Millions | 3 Months Ended | |||
Apr. 29, 2023 | Apr. 30, 2022 | Jan. 28, 2023 | Jul. 31, 2022 | |
Related Party Transaction [Line Items] | ||||
Outstanding common shares owned (in hundredths) | 22% | |||
Combined voting power of outstanding common shares (in hundredths) | 57% | |||
Current operating lease liabilities | $ 183,074 | $ 179,870 | $ 190,086 | |
Non-current operating lease liabilities | 635,245 | 579,839 | 631,412 | |
Related Party | ||||
Related Party Transaction [Line Items] | ||||
Current operating lease liabilities | 5,200 | 5,700 | 5,600 | |
Non-current operating lease liabilities | 13,000 | 10,600 | $ 14,000 | |
Related Party | ||||
Related Party Transaction [Line Items] | ||||
Lease expense | $ 1,900 | 2,500 | ||
Class A Common Shares | ||||
Related Party Transaction [Line Items] | ||||
Number of common shares owned by related party (in shares) | 6.8 | |||
Class B Common Shares | ||||
Related Party Transaction [Line Items] | ||||
Number of common shares owned by related party (in shares) | 7.7 | |||
Affiliated Entity | ||||
Related Party Transaction [Line Items] | ||||
Royalty expense | $ 4,500 | 4,600 | ||
Affiliated Entity | Schottenstein Affiliates | ||||
Related Party Transaction [Line Items] | ||||
Other purchases and services | $ 600 | $ 1,100 | ||
Le Tigre | ||||
Related Party Transaction [Line Items] | ||||
Ownership percentage | 33.30% | |||
Designer Brands Inc. | ABG-Camuto, LLC | ||||
Related Party Transaction [Line Items] | ||||
Noncontrolling interest, ownership percentage by parent | 40% |
Earnings Per Share (Details)
Earnings Per Share (Details) - shares shares in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Earnings Per Share [Abstract] | ||
Basic shares | 64,371 | 72,923 |
Weighted average basic shares outstanding | 2,671 | 4,001 |
Diluted shares | 67,042 | 76,924 |
Earnings Per Share - Anti-Dilut
Earnings Per Share - Anti-Dilutive Securities (Details) - shares shares in Millions | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share, amount (in shares) | 4.5 | 3 |
Stock-based Compensation - Expe
Stock-based Compensation - Expense (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 11,654 | $ 8,594 |
Stock Options | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | 0 | 101 |
Restricted Stock Units (RSUs) | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Stock-based compensation expense | $ 11,654 | $ 8,493 |
Stock-based Compensation - Rest
Stock-based Compensation - Restricted Stock Units (Details) shares in Thousands | 3 Months Ended |
Apr. 29, 2023 shares | |
Time-Based Restricted Stock Units | |
Equity instruments other than options [Roll forward] | |
Outstanding, beginning of period (in units) | 6,790 |
Granted (in units) | 2,189 |
Vested (in units) | (3,179) |
Forfeited (in units) | (147) |
Outstanding, end of period (in units) | 5,653 |
Performance Shares | |
Equity instruments other than options [Roll forward] | |
Outstanding, beginning of period (in units) | 969 |
Granted (in units) | 801 |
Vested (in units) | (249) |
Forfeited (in units) | (79) |
Outstanding, end of period (in units) | 1,442 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) $ in Millions | Apr. 29, 2023 USD ($) $ / shares shares | Jan. 28, 2023 shares | Apr. 30, 2022 shares | Aug. 17, 2017 USD ($) |
Class of Stock [Line Items] | ||||
Preferred Stock, Shares Authorized | 100,000,000 | |||
Preferred Stock, Par or Stated Value Per Share | $ / shares | $ 0 | |||
Preferred Stock, Shares Issued | 0 | |||
Authorized repurchase amount | $ | $ 500 | |||
Remaining authorized repurchase amount | $ | $ 187.4 | $ 33.5 | ||
Class A Common Shares | ||||
Class of Stock [Line Items] | ||||
Common Stock, Voting Rights, Number Of Votes | $ / shares | 1 | |||
Common Stock, Shares Authorized | 250,000,000 | 250,000,000 | 250,000,000 | |
Common Stock, Shares, Issued | 90,860,000 | 88,803,000 | 88,275,000 | |
Common Shares, outstanding (in shares) | 57,978,000 | 55,921,000 | 64,450,000 | |
Treasury Stock, Common, Shares | 32,882,000 | 32,882,000 | 23,825,000 | |
Class B Common Shares | ||||
Class of Stock [Line Items] | ||||
Common Stock, Voting Rights, Number Of Votes | $ / shares | 8 | |||
Common Stock, Shares Authorized | 100,000,000 | 100,000,000 | 100,000,000 | |
Common Stock, Shares, Issued | 7,733,000 | 7,733,000 | 7,733,000 | |
Common Shares, outstanding (in shares) | 7,733,000 | 7,733,000 | 7,733,000 | |
Treasury Stock, Common, Shares | 0 | 0 | 0 |
Receivables (Details)
Receivables (Details) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 |
Receivables [Abstract] | |||
Serviced by third-party provider with guaranteed payment | $ 35,132 | $ 19,539 | $ 50,591 |
Serviced by third-party provider without guaranteed payment | 250 | 103 | 232 |
Serviced in-house | 12,535 | 5,138 | 3,246 |
Income tax receivable | 42,018 | 44,021 | 162,788 |
Other receivables | 10,763 | 9,274 | 6,573 |
Total receivables | 100,698 | 78,075 | 223,430 |
Allowance for doubtful accounts | (461) | (312) | (1,133) |
Receivables, net | $ 100,237 | $ 77,763 | $ 222,297 |
Goodwill and Intangible Asset_2
Goodwill and Intangible Assets - Activity Related to Goodwill (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Apr. 29, 2023 | Apr. 30, 2022 | Jan. 28, 2023 | Jan. 29, 2022 | |
Goodwill [Roll Forward] | ||||
Goodwill, Gross | $ 195,311 | $ 156,686 | $ 158,461 | $ 156,758 |
Goodwill, Impaired, Accumulated Impairment Loss | (60,541) | (63,031) | (61,346) | (63,103) |
Goodwill | 134,770 | 93,655 | 97,115 | 93,655 |
Goodwill, period increase (decrease) | 36,850 | (72) | ||
Goodwill, Impaired, Accumulated Impairment Loss, Period Increase (Decrease) | 805 | 72 | ||
Goodwill, Other Increase (Decrease) | 37,655 | 0 | ||
U.S. Retail | ||||
Goodwill [Roll Forward] | ||||
Goodwill, Gross | 119,173 | 93,655 | 93,655 | 93,655 |
Goodwill, Impaired, Accumulated Impairment Loss | 0 | 0 | 0 | 0 |
Goodwill | 119,173 | 93,655 | 93,655 | 93,655 |
Goodwill, Acquired During Period | 25,518 | 0 | ||
Canada Retail | ||||
Goodwill [Roll Forward] | ||||
Goodwill, Gross | 40,552 | 43,042 | 41,357 | 43,114 |
Goodwill, Impaired, Accumulated Impairment Loss | (40,552) | (43,042) | (41,357) | (43,114) |
Goodwill | 0 | 0 | 0 | 0 |
Goodwill, Foreign Currency Translation Gain (Loss) | (805) | (72) | ||
Goodwill, Impaired, Accumulated Impairment Loss, Foreign Currency Translation Gain (Loss) | 805 | 72 | ||
Goodwill, Foreign Currency Translation Gain (Loss), Net | 0 | 0 | ||
Brand Portfolio | ||||
Goodwill [Roll Forward] | ||||
Goodwill, Gross | 35,586 | 19,989 | 23,449 | 19,989 |
Goodwill, Impaired, Accumulated Impairment Loss | (19,989) | (19,989) | (19,989) | (19,989) |
Goodwill | 15,597 | 0 | $ 3,460 | $ 0 |
Goodwill, Purchase Accounting Adjustments | 868 | 0 | ||
Goodwill, Acquired During Period | $ 11,269 | $ 0 |
Goodwill and Intangible Asset_3
Goodwill and Intangible Assets - Intangible Assets (Details) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 |
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Accumulated Amortization | $ (3,679) | $ (1,746) | $ (1,407) |
Indefinite-Lived Trademarks | 54,750 | 14,907 | 15,502 |
Intangible Assets, Gross (Excluding Goodwill) | 79,129 | 33,612 | 21,762 |
Intangible Assets, Current | 75,450 | 31,866 | 20,355 |
Customer relationships | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Cost | 12,426 | 7,852 | 1,407 |
Finite-Lived Intangible Assets, Accumulated Amortization | (3,178) | (1,454) | (1,407) |
Finite-Lived Intangible Assets, Net | 9,248 | 6,398 | 0 |
Tradename | |||
Finite-Lived Intangible Assets [Line Items] | |||
Finite-Lived Intangible Assets, Cost | 11,953 | 10,853 | 4,853 |
Finite-Lived Intangible Assets, Accumulated Amortization | (501) | (292) | 0 |
Finite-Lived Intangible Assets, Net | $ 11,452 | $ 10,561 | $ 4,853 |
Accrued Expenses (Details)
Accrued Expenses (Details) - USD ($) $ in Thousands | Apr. 29, 2023 | Jan. 28, 2023 | Apr. 30, 2022 | Jan. 29, 2022 |
Payables and Accruals [Abstract] | ||||
Gift cards | $ 30,933 | $ 35,121 | $ 32,844 | $ 36,783 |
Accrued compensation and related expenses | 19,645 | 45,019 | 26,693 | |
Accrued taxes | 23,122 | 19,419 | 32,526 | |
Loyalty programs deferred revenue | 16,632 | 16,900 | 16,243 | $ 15,736 |
Sales returns allowances | 21,034 | 18,107 | 20,855 | |
Customer allowances and discounts | 1,185 | 1,230 | 2,175 | |
Other | 58,208 | 54,880 | 76,946 | |
Total accrued expenses | $ 170,759 | $ 190,676 | $ 208,282 |
Debt (Details)
Debt (Details) $ in Thousands | 3 Months Ended | |||
Feb. 08, 2022 USD ($) | Apr. 29, 2023 USD ($) | Apr. 30, 2022 USD ($) | Feb. 28, 2023 USD ($) | |
Debt Instrument [Line Items] | ||||
Loss on extinguishment of debt and write-off of debt issuance costs | $ 0 | $ 12,862 | ||
Revolving Credit Facility | ||||
Debt Instrument [Line Items] | ||||
Credit Facility, maximum capacity | $ 600,000 | |||
Line of Credit Facility, Current Borrowing Capacity | 565,800 | |||
Long-Term Debt, Gross | 360,500 | |||
Letters of Credit Outstanding, Amount | 5,000 | |||
Line of Credit Facility, Remaining Borrowing Capacity | $ 200,300 | |||
Debt Instrument, Basis Spread on Variable Rate | 6.80% | |||
Debt Instrument, Covenant, Fixed Charge Coverage Ratio | 1 | |||
Debt Instrument, Covenant, Availability Covenant, Minimum, Amount | $ 47,300 | |||
Debt Instrument, Covenant, Availability Covenant, Minimum, Percent | 10% | |||
Revolving Credit Facility | Federal Funds Rate | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||
Revolving Credit Facility | Federal Funds Rate | Interest Rate Floor | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0% | |||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1% | |||
Revolving Credit Facility | Secured Overnight Financing Rate (SOFR) | Interest Rate Floor | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0% | |||
Revolving Credit Facility | Foreign | ||||
Debt Instrument [Line Items] | ||||
Credit Facility, maximum capacity | 60,000 | |||
Letter of Credit | ||||
Debt Instrument [Line Items] | ||||
Credit Facility, maximum capacity | 75,000 | |||
Domestic Line of Credit | United States | ||||
Debt Instrument [Line Items] | ||||
Credit Facility, maximum capacity | 60,000 | |||
Foreign Line of Credit | Non-US | ||||
Debt Instrument [Line Items] | ||||
Credit Facility, maximum capacity | 6,000 | |||
Term Loan | ||||
Debt Instrument [Line Items] | ||||
Debt face amount | $ 30,000 | |||
Term Loan | Federal Funds Rate | Interest Rate Scenario One | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 0.50% | |||
Term Loan | Secured Overnight Financing Rate (SOFR) | Interest Rate Scenario One | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 1% | |||
Debt Instrument, Additional Basis Spread On Variable Rate | 2.25% | |||
Term Loan | Secured Overnight Financing Rate (SOFR) | Interest Rate Scenario Two | ||||
Debt Instrument [Line Items] | ||||
Debt Instrument, Basis Spread on Variable Rate | 3.25% | |||
Debt | ||||
Debt Instrument [Line Items] | ||||
Repayment of debt | $ 231,300 | |||
Loss on extinguishment of debt and write-off of debt issuance costs | 12,700 | |||
Prepayment premium | 6,900 | |||
Write-off of unamortized debt issuance costs | $ 5,700 |
Commitments and Contingencies (
Commitments and Contingencies (Details) $ in Millions | Apr. 29, 2023 USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Future payments for guarantees | $ 7.4 |
Segment Reporting (Details)
Segment Reporting (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Apr. 29, 2023 | Apr. 30, 2022 | |
Segment information [Abstract] | ||
Net sales | $ 742,082 | $ 830,543 |
Gross profit | 237,739 | 275,745 |
Income from equity investments | 2,331 | 1,945 |
U.S. Retail | ||
Segment information [Abstract] | ||
Net sales | 612,886 | 702,745 |
Gross profit | 196,814 | 233,067 |
Income from equity investments | 0 | 0 |
Canada Retail | ||
Segment information [Abstract] | ||
Net sales | 53,955 | 56,315 |
Gross profit | 17,174 | 18,873 |
Income from equity investments | 0 | 0 |
Brand Portfolio | ||
Segment information [Abstract] | ||
Net sales | 92,983 | 97,456 |
Gross profit | 22,085 | 23,842 |
Income from equity investments | 2,331 | 1,945 |
Product | ||
Segment information [Abstract] | ||
Net sales | 742,082 | 830,543 |
Product | U.S. Retail | ||
Segment information [Abstract] | ||
Net sales | 612,886 | 702,745 |
Product | Canada Retail | ||
Segment information [Abstract] | ||
Net sales | 53,955 | 56,315 |
Product | Brand Portfolio | ||
Segment information [Abstract] | ||
Net sales | 75,241 | 71,483 |
Eliminations | ||
Segment information [Abstract] | ||
Net sales | (17,742) | (25,973) |
Gross profit | 1,666 | (37) |
Eliminations | Brand Portfolio | ||
Segment information [Abstract] | ||
Net sales | $ 17,742 | $ 25,973 |
Subsequent Event (Details)
Subsequent Event (Details) - Subsequent Event $ / shares in Units, $ in Millions | Jun. 08, 2023 USD ($) $ / shares |
Subsequent Event [Line Items] | |
Tender offer, value | $ | $ 100 |
Minimum | |
Subsequent Event [Line Items] | |
Tender offer, price (in dollars per share) | $ / shares | $ 7 |
Maximum | |
Subsequent Event [Line Items] | |
Tender offer, price (in dollars per share) | $ / shares | $ 8 |
Term Loan | Term Loan | |
Subsequent Event [Line Items] | |
Debt face amount | $ | $ 135 |