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DESCRIPTION OF BUSINESS

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

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

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

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

SIGNIFICANT ACCOUNTING POLICIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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DISAGGREGATION OF NET SALES

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

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

DEFERRED REVENUE LIABILITIES

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

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

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SCHOTTENSTEIN AFFILIATES

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

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

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

ABG-CAMUTO

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

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

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

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

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

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

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

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

The following table provides additional information for our common shares:

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

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

DIVIDENDS

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

Receivables, net, consisted of the following:

(in thousands)			August 1, 2026						January 31, 2026						August 2, 2025
Customer accounts receivables:
Receivables with payment guarantee by third-party provider			$	26,818					$	22,514					$	23,210
Receivables without payment guarantee			16,055						14,101						11,849
Other receivables			37,955						25,689						23,394
Total receivables			80,828						62,304						58,453
Allowance for credit losses			(431)						(588)						(846)
			$	80,397					$	61,716					$	57,607

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Accrued expenses consisted of the following:

(in thousands)			August 1, 2026						January 31, 2026						August 2, 2025
Gift cards			$	23,208					$	27,730					$	24,168
Accrued compensation and related expenses			33,653						29,294						20,875
Accrued taxes			24,810						21,096						26,989
Customer returns and allowances			16,783						16,294						17,667
Reward programs deferred revenue			12,706						12,845						12,918
Other			81,053						71,171						74,874
			$	192,213					$	178,430					$	177,491

Debt consisted of the following:

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

On March 30, 2022, we replaced our previous senior secured asset-based revolving credit facility with our current ABL Revolver, which was subsequently amended on February 28, 2023, June 23, 2023, and February 27, 2026. The amended ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes a first-in last-out term loan ("FILO Term Loan") with $29.5 million borrowed. The FILO Term Loan may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. The ABL Revolver matures on the earlier of the maturity date of the Term Loan (currently June 2028) or February 2031 and is secured by a first-priority lien on substantially all of our personal property assets, including credit card receivables and inventory. The ABL Revolver may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of August 1, 2026, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $437.0 million, with $280.2 million in outstanding borrowings and $10.6 million in letters of credit issued, resulting in $146.2 million available for borrowings.

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

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TERM LOAN

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

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

DEBT COVENANTS

The ABL Revolver requires us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. At any time that liquidity is less than $100.0 million, the Term Loan requires the consolidated net leverage ratio to be no greater than 2.50 to 1.00, calculated on a trailing twelve-month basis and measured on the last day of each fiscal month. Testing of the consolidated net leverage ratio ends after liquidity has been greater than or equal to $100.0 million for a period of 45 consecutive days. The ABL Revolver and Term Loan also contain customary covenants restricting certain activities, including limitations on our ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. The ABL Revolver and Term Loan contain customary events of default, including failure to comply with certain financial and other covenants. Upon an event of default that is not cured or waived within the applicable cure period, in addition to other remedies that may be available to the lenders, our obligations may be accelerated, outstanding letters of credit may be required to be cash collateralized, and remedies may be exercised against the collateral. As of August 1, 2026, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan.

LEGAL MATTERS

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

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IEEPA TARIFF RECOVERIES

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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