Designer Brands Inc. — Call Transcript 2026

Good day, and welcome to the Designer Brands Inc. Q4 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Matthew Crummy, SVP of Strategy and FP&A. Please go ahead. Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week and 52-week periods ended January 31, 2026 to the 13-week and 52-week periods ended February 1, 2025. Please note that the financial results that we will be referencing during the remainder of today's call exclude certain adjustments recorded under GAAP, unless specified otherwise. For a complete reconciliation of GAAP to adjusted earnings, please reference our press release. Additionally, please note that remarks made about the future expectations, plans, and prospects of the company constitute forward-looking statements. Results may differ materially due to the factors listed in today's press release in the company's public filings with the SEC. Except as may be required by applicable law, the Company assumes no obligation to update any forward-looking statements. Joining us today are Doug Howe, Chief Executive Officer, and Sheamus Toal, Chief Financial Officer. I'll now turn the call over to Doug. Good morning, and thank you everyone for joining us today. I'm very proud that our Q4 and full fiscal 2025 results reflect disciplined execution and the meaningful progress we've made in strengthening our business. I want to recognize the commitment of our Designer Brands associates who have remained focused on serving our customers and advancing our strategy. Before discussing our results, I want to give a warm welcome to Sheamus Toal, our new Executive Vice President and Chief Financial Officer, who joined us last month. Sheamus brings decades of financial and operational leadership experience across complex organizations, and his expertise will be critical as we advance our strategic priorities and drive long-term shareholder value. I'm pleased to have him with us today. Building on the momentum we established throughout the year, we were pleased to deliver another consecutive quarter of sequential improvement. Net sales were flat year-over-year in the Q4, and consolidated comparable sales improved sequentially by 50 basis points. For the full year, total company sales declined 3.9% compared to last year, coming in towards the high end of our guidance range, and comp sales were down 4.3%. Notably, we delivered full year adjusted operating income of $65 million, significantly above our guidance range of $50 million-$55 million, driven by an improvement in Q4 sales trends, continued gross profit expansion, and disciplined expense management that resulted in a $26 million reduction in adjusted operating expenses compared to last year. As I reflect on 2025, I want to acknowledge that the year began with a level of macroeconomic volatility and pressured consumer sentiment that few could have anticipated. I am proud of how our team responded. We executed disciplined pivots to meet the needs of our business while remaining committed to our strategy, ultimately closing the year on a strong note. Over the last year, we continued to enhance our retail product strategy by elevating our assortment, improving inventory productivity, and cultivating our relationships with strategic national brand partners. We launched a new DSW brand positioning campaign this past fall and are highly encouraged that it is resonating meaningfully with customers, strengthening brand perception and driving engagement. In 2025, the DSW brand generated 79 billion total impressions, up 10% year-over-year, signaling strong, sustained interest. Our new brand positioning is beginning to come to life in stores as well, with several remodels and new store openings completed this past fall that incorporate updated creative and visual elements. Customer feedback and financial performance in these locations have been encouraging. In our brand portfolio segment, we are pleased with the progress we've made to refine our go-to-market strategies and improve the profitability of the business, driving a $8 million increase in segment operating income for the year as we navigated an incredibly complex tariff environment. Before turning to review of our financial performance, I'd like to share an update on a recent organizational change we implemented in the business designed to accelerate execution across key priorities while maintaining a focus on reducing operating expenses. We recently brought our U.S. and Canada retail businesses under a streamlined reporting structure, which will enable better collaboration and integration of operations across our businesses. As part of these changes, we have right-sized our shared services organization to appropriately support the business moving forward. Now let's review the financial highlights from the Q4 and full year. Starting with our retail segment, which reflects the aggregation of our U.S. retail and Canada retail operating segments, our total sales for the Q4 were flat year-over-year, with comparable sales down 1.7%, an improvement from down 2.1% in the Q4. This improvement was driven by strength in the boots category, affordable luxury, and accessories. For the full year, total sales declined 3.4%, with comparable sales declining 3.9%. Comp sales improved throughout the year, driven by positive in-store sales trends. In addition to the momentum we saw in existing stores, we were encouraged by the early learnings from our new stores that opened in 2025. Over the course of the year, we opened 13 stores and remodeled four stores in total. While not all of these projects included the full suite of experimental features, each incorporated enhancements to improve merchandise, customer flow, and overall store experience. The initial customer reaction has been strong, with notably higher conversion and traffic. We will continue refining these concepts as we move forward by leveraging data and customer feedback to scale what works to further elevate the DSW in-store experience across our footprint. In the Q4, we delivered retail operating profit expansion, driven by a gross margin improvement of 140 basis points compared to Q4 of 2024. For the full year, gross margin improved 30 basis points. Turning to our brand portfolio segment, in the early phases, our focus was on margin enhancement and cost discipline. In 2024, we achieved profitability in the segment for the first time. 2025 was centered on foundational work to refine go-to-market strategies. Despite significant tariff-related disruption, we drove an $8 million increase in segment operating income. On the top line, Q4 sales were up over 5%, driven by Topo, which was up 42%, and Jessica Simpson, which grew 17% versus last year. We remain encouraged by the underlying growth trajectory inherent in each of these brands. For the full year, total sales were down 9%, reflecting headwinds in the first half of the year, with performance improving as the year progressed. A clear standout was Topo, which continued to drive impressive growth, up 46% on the year and more than doubling the size of the business compared to two years ago. We further strengthened and diversified our supply chain this year, which enabled us to proactively mitigate the impact of tariffs and external cost pressures and deliver an 80 basis points expansion in brand gross margin for the year. Now I'd like to spend a few minutes discussing our strategic priorities for 2026. As we move forward, we are laser-focused on the following. First, winning with the merchandise that matters most to our customers. Second, amplifying and expanding our DSW brand positioning. Third, elevating our in-store customer experience. Finally, building and scaling our brand portfolio. Let's start with our product strategy and winning with the merchandise that matters most. Our refreshed merchant leadership team has made incredible progress in shaping our 2026 assortment. We are doubling down in areas of strength and leaning into encouraging trends in fashion across dress, boots, and affordable luxury. These categories are resonating with our customers. This will be supplemented by our efforts to build and scale our brand portfolio. We are also planning strong growth in categories adjacent to footwear, such as beauty, wellness, hydration, socks, and sunglasses. To further support our initiative to add newness to our product offerings, we're excited to be working closely with a consumer-focused investment bank focused on emerging consumer brands called Consensus, which runs the Consensus Great Brands program, the preeminent platform for emerging consumer brands in North America. This partnership enables us to thoughtfully identify and introduce new, relevant brands within our leading categories while also expanding into adjacent non-footwear categories that encourage customer discovery and exploration. Through this relationship, we gain early access to emerging brands that align closely with our customer and our brand vision. By infusing our assortment with this targeted newness, we reinforce our Let Us Surprise You brand positioning, strengthen differentiation, and ensure our assortment remains dynamic and aligned with evolving customer preferences. These product strategies are enabled by a heightened focus on end-to-end inventory optimization across planning, allocations, and digital order fulfillment. These efforts are designed to drive healthier margins, improve in-stock rates, support store conversion, and lower supply chain costs in 2026. We've made great strides in amplifying and expanding our DSW brand positioning, energized by the success of last fall's DSW brand campaign. To open 2026, we launched our Let Us Surprise You campaign for spring, designed to broaden our reach, strengthen customer connections, and ignite meaningful brand engagement, anchored by new, fresh creative that debuted on March first. At the same time, we continue to invest in strengthening relationships with our most loyal customers. This fall, we are relaunching our loyalty program, which continues to represent roughly 90% of our transactions. With this revamp, we're poised to deliver an even more compelling, differentiated experience that drives long-term engagement and growth. Our stores remain the foundation and an important point of differentiation in our strategy, and we are continuously working to elevate the in-store experience. In 2026, we are bringing our brand positioning and product strategies to life in new and exciting ways across our store base. We're also planning new store openings as well as several remodels. Early indications from last year's work are encouraging, demonstrating how we can deepen engagement through a more immersive, differentiated shopping experience. Finally, turning to our brands portfolio, we are now entering the third year of the transformation journey that we outlined in 2024. In 2026, we will continue to build and scale our portfolio, a strategy which will in turn supplement our strategic priority of focusing on merchandise that matters. We're very excited about the renewed focus on our exclusive brands, which are only sold at DSW. These brands serve as a strategic tool for us to increase profitability via vertical integration and strengthen the DSW brand. We believe we are well-positioned to deliver meaningful sales growth in 2026, highlighted by opportunities to amplify trends in the dress and boot categories. Topo’s sales trajectory continues to be strong as the brand executes against ambitious growth plans. We’re confident this momentum will continue in 2026. Growth will be driven by core franchises as well as new product launches that further elevate Topo’s brand positioning. We expect to continue expansion of the brand’s footprint within existing partners, as well as opening additional points of distribution with new customers, with a particular focus on specialty running. With Keds, 2025 was a year where we sharpened our product design to improve comfort and fit across the assortment, while also focusing on building the profitability of the brand. We’re now looking forward to accelerated growth in 2026. We plan to drive this through expanded wholesale distribution with a focus on value, as well as from our direct-to-consumer digital business, where we are seeing positive signs so far this year. Jessica Simpson has capitalized on the recent resurgence of trends in the dress category. Additionally, we have diversified into the boot category and lowered heel heights in key dress styles in an effort to strategically appeal to a larger audience. We are confident that this evolved product strategy will continue to drive momentum with this brand in 2026. Throughout the brand's portfolio, we are pleased with the progress we've made in building a profitable foundation and are looking forward to advancing our efforts to drive sustainable growth in 2026 and beyond. Before I conclude, I want to share a few thoughts on our 2026 guidance. We are currently operating in a volatile macro environment that includes evolving tariff dynamics and conflict in the Middle East, the latter of which may introduce increased inflationary pressure moving forward. We will continue to monitor these situations closely and remain nimble and adaptable as the year progresses. While there is some uncertainty in the current external environment, in 2026, we do expect to build on the improving trends we generated in the back half of 2025. We anticipate that total sales will be between -1% and +1%, driven by strength in our brand portfolio sales, which are anticipated to grow double digits. We also expect to deliver meaningful operating income and EPS growth on the year. Sheamus will take you through our 2026 outlook in more detail. Before I close, I want to reiterate how proud I am of our team's disciplined execution and unwavering commitment, which drove sustained sequential improvement throughout the year. Despite a dynamic operating environment, we stayed focused on what we can control and executed against our priorities, and I'm excited to see this momentum continue in 2026. With that, I'll turn it over to Sheamus. Thank you, Doug, and good morning, everyone. I'd like to begin by expressing my excitement about joining the team as Chief Financial Officer and thanking the Designer Brands board and the leadership team for their trust and warm welcome. My first month has been exciting, and I look forward to supporting our strategy to drive long-term growth and value creation. I'm eager to engage with our investor community and hear your perspectives as we continue to execute our strategy. I'm pleased to share Designer Brands' Q4 and full year results. The team successfully executed against its strategic priorities and delivered significantly improved performance as the year progressed. Let me provide a little bit more detail on the financial results. We were pleased to see another quarter of continued sequential improvement, with net sales of $713.6 million, flat to last year, and comps down 1.9%. Full year net sales decreased 3.9% to $2.9 billion, and comps were down 4.3%. In our retail segment, sales were roughly flat to last year, and comps were down 1.7% in the Q4. From a category perspective, boots, affordable luxury, and accessories were our top performers. In our brand portfolio segment, sales were up 5.3% in the Q4, driven by strong performance in both Topo and Jessica Simpson. Consolidated gross margin in the Q4 was 42.4%, a 280 basis point improvement year-over-year, driven by stronger IMU, fewer markdowns, and lower shipping costs. This resulted in a $20.1 million gross margin dollar improvement compared to last year. Full year consolidated gross margin was 43.6%, a 90 basis point improvement year-over-year, driven by favorable merchandise margin and increased efficiency in our digital order fulfillment operations. For the Q4, adjusted operating expenses were up $6.4 million compared to last year, representing 44.4% of sales. This reflects a deleverage of 90 basis points over last year on lower sales. It's also worth noting that the Q4 operating expenses were impacted by $9 million of incentive compensation in the quarter compared to none in the Q4 of last year. Absent the impact of incentive compensation, Q4 operating expenses would have leveraged 40 basis points versus last year. For the full year, adjusted operating expenses represented 41.7% of sales, an 80 basis point deleverage from last year. Amid a challenging macro backdrop, we remained focused on disciplined cost management across operating expenses, inventory and capital allocation throughout the year. Our total adjusted operating expenses declined by approximately $26 million for fiscal 2025 compared to 2024. We also ended the Q4 with total inventories down mid-single digits from prior year and decreased our debt by nearly $60 million compared to last year. For the Q4, adjusted operating loss was $11 million, compared to a loss of $23.5 million last year. The improvement was mainly driven by gross margin expansion of 280 basis points. For the full year, adjusted operating profit was $65.2 million, compared to $67.3 million last year. While full year adjusted operating income declined slightly year-over-year, we were encouraged by the progress we made in the back half of 2025, delivering an increase in adjusted operating income of over $15 million versus 2024 across Q3 and Q4 collectively to come in at above the high end of our guidance range for the full year. In the Q4 of 2025, we had $10.4 million of net interest expense, compared to $11.1 million last year. For the full year, net interest expense was $45.3 million, flat to last year. Our effective tax rate in the Q4 on our adjusted results was 31.3%, compared to 38.6% last year. For the year, our effective tax rate was 54.3% versus 31.6% last year. Q4 adjusted net loss was $15.6 million or 31 cents per diluted share, compared to a loss of $21.3 million or 44 cents per diluted share in the prior year. Our full year adjusted net income was $8.3 million or 16 cents per diluted share, compared to $15 million or 27 cents per diluted share in fiscal 2024. The full year decrease was largely driven by higher taxes as 2024 included one-time reversals of tax reserves. Turning to our inventory, we ended the Q4 with total inventories down 6% versus the prior year. We are planning to tightly manage inventory throughout the year as we focus on the brands, styles, and choices that matter most to our customers. We ended fiscal 2025 with $50.9 million in cash. Our total liquidity, which includes cash and availability under our ABL revolver, was $152 million at the end of the year. We continued to prioritize balance sheet strength in the quarter, applying excess cash towards debt repayments and closing the year with total debt outstanding of $435 million, a decrease of nearly $60 million compared to the prior year. Turning to our guidance for the full year. As Doug mentioned, the macro environment remains dynamic, with the conflict in the Middle East introducing uncertainty that could drive inflationary pressures and impact consumer sentiment. Conversely, while there may be some net upside for our business performance as a result of tariff policy evolution, this is not currently contemplated in our guidance. We currently anticipate net sales to be in the range of down 1% to up 1% for the year, with sales in the retail segment flat to declining slightly, offset by double-digit growth in the brand portfolio segment. In 2026, we expect to drive operating income growth through gross profit expansion and a continued focus on increasing efficiency in the business. Our guidance contemplates actions taken to rightsize our workforce in 2025, partially offset by a return to a normalized level of incentive-based compensation in 2026. This guidance assumes an effective tax rate of approximately 40% for the year. We plan to deliver EPS between $0.28 and $0.38 per diluted share on an average diluted share count of 58 million shares, compared to an adjusted EPS of $0.16 in 2025. I'd also like to provide some commentary on intra-year performance. Aside from some unfavorable weather impacts early in the quarter, we have seen a continuation of the positive momentum in Q1. We anticipate sales to be flat to up low single digits% and EPS to be breakeven to slightly positive in the quarter. As we look across the year, we're anticipating sales and earnings growth to be stronger in the first half of the year. As we shift into the back half of the year and anniversary actions implemented during 2025 that drove margin expansion and cost reductions last year, the comparisons become more difficult. To conclude, I'm proud of the progress we've delivered in the Q4 and across the full year. I am confident in the foundation that has been built and our ability to continue building momentum throughout 2026, and I'm excited to be working alongside such a disciplined and strong team. With that, we will open up the call for questions. Operator. Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If your question has already been addressed, you'd like to remove yourself from queue, please press star then two. Once again, that's star then one if you have a question. Today's first question comes from Mauricio Serna with UBS. Please go ahead. Great. Good morning. Thanks for taking my question. A couple of things. First, could you comment on what you saw in performance in the top eight national brands? I believe that had been a focus for the company in the previous quarters. Then maybe just to understand the shape of the revenue guide. You mentioned Q1 revenue should be flat to up slightly, but then, like, up to those single digits. Then, like, the guidance for the year is actually calls for like flat at the midpoint. Just trying to understand like what drives like this implied slowdown as you move on through after Q1. Thanks so much. Yeah, Mauricio, this is Doug. Let me take the first question on the top eight brands. We're actually going to be evolving that to top ten brands for 2026. It'd be those brands plus our three exclusive brands, which we sell only at DSW, and we're really excited about the growth that those brands represent, given they're only sold in our channels of distribution. Those top eight brands for 2025 drove a comp increase. We were very happy with that, roughly 40% of the total business. The team's continued focus on deepening those relationships with the merchandise that matters most and deepening our planning with those strategic brand partners has definitely paid off, and we see that continuing to pay dividends into 2026 as well. It relates to your second question on guidance. I'm the eternal optimist. There could be some upside in there. We just want to acknowledge that given the uncertainty of the macro environment we wanna be mindful of that, particularly as it relates to the back half, which as Sheamus said in his prepared remarks, we come up against stronger comps. Very encouraged by quarter to date trends that we're seeing in Q1. That momentum that we experienced in Q4 has continued, particularly in the store channel, which has been a big focus for the teams. We feel like that's our biggest point of differentiation. We had a little bit of challenging weather impacts as we started the quarter, but kind of came around that and coming up against the shift of Easter, we feel really encouraged by that. In large part just a little bit of a conservatism probably in the back half when we come up against those higher comps. On the overall side, obviously, we're gonna see a strong double-digit increase on the wholesale business throughout the year. That's kind of how it balances out for total. Got it. The increase in wholesale is just driven by the strength in, like, some of the exclusive brands that you sell, right? Topo, Jessica, is that the right way to think about it? Yeah. The whole portfolio is gonna drive significant growth. Obviously, Topo is a significant driver of that growth. Jessica Simpson is a big growth driver. Ted will have a nice increase in 2026 as well. Again, those are largely their largest clients are either not DSW at all or their largest customers are outside DSW. Then the exclusive brands piece will be driving growth in our channels of distribution. It's pretty well-rounded growth, internal and external. Got it. One last housekeeping item. In the guidance you included share count being 58 million shares outstanding for fiscal 2026. That's like 8 million higher, 16% versus last year. Just wanna understand what drove that increase and how should we think about the interest expenses for the year. Thank you. Hi, Mauricio. It's Sheamus. I'll take those questions. First, in terms of the share count, I think if you look back at the history, the lower share counts were in periods in which we had a loss. In those periods, from a GAAP accounting standpoint, we do not include the full impact of potential dilutive shares. As we move into the future, we are anticipating and based upon our guidance, anticipating that we will shift back into profitability. As such, we need to include the full impact of potentially dilutive shares in our diluted share calculation. That's what's driving the increase. It's not really incremental shares. It's just the fact that now they are included in periods of income. In terms of the interest for the year, I think as we disclosed on the call, we're expecting to see significant reductions in debt levels, as you know, we've completed this year. We completed this year with debt levels down approximately $60 million to last year. That is helping us certainly from an interest perspective, in controlling interest costs as we move into the fiscal year this year. Those expectations are built into our numbers for the year. In terms of the total dollar value, we're anticipating about $40 million of interest for the full fiscal year, which takes into account that lower level of debt. Also, I would point out in terms of our interest calc, you might have noticed that we have tremendous partnership with our banking partners. We negotiated an extension of our ABL revolver. So we're really pleased with those partnerships, and that will continue for us into the future. Very helpful. Thanks so much. Thank you. As a reminder, if you'd like to ask a question, please press star then one at this time. We'll pause for just a moment to assemble our roster. Our next question today comes from Dana Telsey at Telsey Advisory Group. Please go ahead. Hi. Good morning, everyone. Can you talk a little bit about on the inventory side and tariffs? As you're bringing in inventory now, what rate are the tariffs being brought in by and how you're thinking about the tariff impact flowing through with rates where they are and how they were, how is that changing and the impact on margins? Then just lastly, Doug, category-wise, what are you seeing category-wise? How is it shifting and promotional landscape of how you're seeing the environment? Thank you. Thanks, Dana. Appreciate your questions. First of all, those are such tariff questions. You know, it's still an evolving tariff environment. We thought we had, you know, kind of, gotten through all of that in 2025, but there's still, you know, quite a bit of evolution that's happening there. Our guidance is built on the assumption that the new tariffs are largely gonna be enacted. We'll replace the IEEPA tariffs. You know, there's definitely favorability that we're seeing right now with regards to year-over-year comparisons, but there potentially could be some upside if, you know, the, enacted tariffs don't replace those IEEPA tariffs. That could prove to be conservative, but we wanna just be, you know, clear about the fact that there's ever-changing dynamics there. We wanna stay close to that. Again, could be some net upside in there, but again, just continues to be so much volatility. On the category perspective, I'd say it's pretty broad based. We feel really good about the dress category. We've always had, you know, leading market share penetration in that category. We're seeing nice increases there. For fall, you know, we planned boots down significantly. We actually had an increase, so that was a big rebound. Sandals for spring are off to a really good start. It's pretty broad based. We talked about affordable luxury. It's a business that is providing incredible growth for us and fits into that, you know, let us surprise you component of our product assortment. Then the accessory business in adjacent categories has given us very significant growth as well. We feel really good about all those continuing momentum through 2026. From a promotional perspective, I'm really proud of the team and the evolution that the new refreshed merchandising team has made on the product assortment. You heard about our margin expansion of 280 basis points in for last year's performance. We are being much more surgical with regards to promotions. We've focused a lot on channel profitability, specifically on digital, pulling back on some of those unprofitable promotions. As a result, we've reduced our markdown rate tied to the fact that we're very conservatively managing our inventories. We ended with inventories down 6%. You know, all that has led to a pretty nice expansion in margin that we feel really good about. Thank you. Thank you. That concludes our question and answer session. I'd like to turn the conference back over to Doug Howe for any closing remarks. Thank you all for your continued interest in Designer Brands. Before we close, I just want to again recognize the dedication and the commitment of our teams. Really proud of the determination and the resilience that they demonstrated this past year. I'd also share that we continue to be encouraged by the momentum we're building in the business, driven by the strategic priorities that we shared. We look forward to continuing to update you on our progression throughout the year. Thank you. Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day.

Speaker 5: Good day, and welcome to the Designer Brands Inc. Q4 2025 Earnings Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. Please note today's event is being recorded. I would now like to turn the conference over to Matthew Crummy, SVP of Strategy and FP&A. Please go ahead. Good day, and welcome to the Designer Brands Inc. Q4 2025 Earnings Conference Call. good day and welcome to the designer brands inc q4 2025 earnings conference call All participants will be in listen-only mode. all participants will be in listen-only mode Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. should you need assistance please signal a conference specialist by pressing the star key followed by zero After today's presentation, there will be an opportunity to ask questions. after today's presentation there will be an opportunity to ask questions To ask a question, you may press star then one on your telephone keypad, and to withdraw your question, please press star then two. to ask a question you may press star then one on your telephone keypad and to withdraw your question please press star then two Please note today's event is being recorded. please note today's event is being recorded I would now like to turn the conference over to Matthew Crummy, SVP of Strategy and FP&A. i would now like to turn the conference over to matthew crummy svp of strategy and fp&a Please go ahead. please go ahead

Speaker 3: Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week and 52-week periods ended January 31, 2026 to the 13-week and 52-week periods ended February 1, 2025. Please note that the financial results that we will be referencing during the remainder of today's call exclude certain adjustments recorded under GAAP, unless specified otherwise. For a complete reconciliation of GAAP to adjusted earnings, please reference our press release. Additionally, please note that remarks made about the future expectations, plans, and prospects of the company constitute forward-looking statements. Results may differ materially due to the factors listed in today's press release in the company's public filings with the SEC. Except as may be required by applicable law, the Company assumes no obligation to update any forward-looking statements. Good morning. good morning Earlier today, the company issued a press release comparing results of operations for the 13-week and 52-week periods ended January 31, 2026 to the 13-week and 52-week periods ended February 1, 2025. earlier today the company issued a press release comparing results of operations for the 13-week and 52-week periods ended january 31 2026 to the 13-week and 52-week periods ended february 1 2025 Please note that the financial results that we will be referencing during the remainder of today's call exclude certain adjustments recorded under GAAP, unless specified otherwise. please note that the financial results that we will be referencing during the remainder of today's call exclude certain adjustments recorded under gaap unless specified otherwise For a complete reconciliation of GAAP to adjusted earnings, please reference our press release. for a complete reconciliation of gaap to adjusted earnings please reference our press release Additionally, please note that remarks made about the future expectations, plans, and prospects of the company constitute forward-looking statements. additionally please note that remarks made about the future expectations plans and prospects of the company constitute forward-looking statements Results may differ materially due to the factors listed in today's press release in the company's public filings with the SEC. results may differ materially due to the factors listed in today's press release in the company's public filings with the sec Except as may be required by applicable law, the Company assumes no obligation to update any forward-looking statements. except as may be required by applicable law the company assumes no obligation to update any forward-looking statements Joining us today are Doug Howe, Chief Executive Officer, and Sheamus Toal, Chief Financial Officer. I'll now turn the call over to Doug. Joining us today are Doug Howe, Chief Executive Officer, and Sheamus Toal, Chief Financial Officer. joining us today are doug howe chief executive officer and sheamus toal chief financial officer I'll now turn the call over to Doug. i'll now turn the call over to doug

Speaker 2: Good morning, and thank you everyone for joining us today. I'm very proud that our Q4 and full fiscal 2025 results reflect disciplined execution and the meaningful progress we've made in strengthening our business. I want to recognize the commitment of our Designer Brands associates who have remained focused on serving our customers and advancing our strategy. Before discussing our results, I want to give a warm welcome to Sheamus Toal, our new Executive Vice President and Chief Financial Officer, who joined us last month. Sheamus brings decades of financial and operational leadership experience across complex organizations, and his expertise will be critical as we advance our strategic priorities and drive long-term shareholder value. I'm pleased to have him with us today. Building on the momentum we established throughout the year, we were pleased to deliver another consecutive quarter of sequential improvement. Good morning, and thank you everyone for joining us today. good morning and thank you everyone for joining us today I'm very proud that our Q4 and full fiscal 2025 results reflect disciplined execution and the meaningful progress we've made in strengthening our business. i'm very proud that our q4 and full fiscal 2025 results reflect disciplined execution and the meaningful progress we've made in strengthening our business I want to recognize the commitment of our Designer Brands associates who have remained focused on serving our customers and advancing our strategy. i want to recognize the commitment of our designer brands associates who have remained focused on serving our customers and advancing our strategy Before discussing our results, I want to give a warm welcome to Sheamus Toal, our new Executive Vice President and Chief Financial Officer, who joined us last month. before discussing our results i want to give a warm welcome to sheamus toal our new executive vice president and chief financial officer who joined us last month Sheamus brings decades of financial and operational leadership experience across complex organizations, and his expertise will be critical as we advance our strategic priorities and drive long-term shareholder value. sheamus brings decades of financial and operational leadership experience across complex organizations and his expertise will be critical as we advance our strategic priorities and drive long-term shareholder value I'm pleased to have him with us today. i'm pleased to have him with us today Building on the momentum we established throughout the year, we were pleased to deliver another consecutive quarter of sequential improvement. building on the momentum we established throughout the year we were pleased to deliver another consecutive quarter of sequential improvement Net sales were flat year-over-year in the Q4, and consolidated comparable sales improved sequentially by 50 basis points. For the full year, total company sales declined 3.9% compared to last year, coming in towards the high end of our guidance range, and comp sales were down 4.3%. Notably, we delivered full year adjusted operating income of $65 million, significantly above our guidance range of $50 million-$55 million, driven by an improvement in Q4 sales trends, continued gross profit expansion, and disciplined expense management that resulted in a $26 million reduction in adjusted operating expenses compared to last year. As I reflect on 2025, I want to acknowledge that the year began with a level of macroeconomic volatility and pressured consumer sentiment that few could have anticipated. Net sales were flat year- over- year in the Q4 , and consolidated comparable sales improved sequentially by 50 basis points. net sales were flat year- over- year in the q4 and consolidated comparable sales improved sequentially by 50 basis points For the full year, total company sales declined 3.9% compared to last year, coming in towards the high end of our guidance range, and comp sales were down 4.3%. for the full year total company sales declined 3.9% compared to last year coming in towards the high end of our guidance range and comp sales were down 4.3% Notably, we delivered full year adjusted operating income of $65 million, significantly above our guidance range of $50 million-$55 million, driven by an improvement in Q4 sales trends, continued gross profit expansion, and disciplined expense management that resulted in a $26 million reduction in adjusted operating expenses compared to last year. notably we delivered full year adjusted operating income of $65 million significantly above our guidance range of $50 million-$55 million driven by an improvement in q4 sales trends continued gross profit expansion and disciplined expense management that resulted in a $26 million reduction in adjusted operating expenses compared to last year As I reflect on 2025, I want to acknowledge that the year began with a level of macroeconomic volatility and pressured consumer sentiment that few could have anticipated. as i reflect on 2025 i want to acknowledge that the year began with a level of macroeconomic volatility and pressured consumer sentiment that few could have anticipated I am proud of how our team responded. We executed disciplined pivots to meet the needs of our business while remaining committed to our strategy, ultimately closing the year on a strong note. Over the last year, we continued to enhance our retail product strategy by elevating our assortment, improving inventory productivity, and cultivating our relationships with strategic national brand partners. We launched a new DSW brand positioning campaign this past fall and are highly encouraged that it is resonating meaningfully with customers, strengthening brand perception and driving engagement. In 2025, the DSW brand generated 79 billion total impressions, up 10% year-over-year, signaling strong, sustained interest. Our new brand positioning is beginning to come to life in stores as well, with several remodels and new store openings completed this past fall that incorporate updated creative and visual elements. I am proud of how our team responded. i am proud of how our team responded We executed disciplined pivots to meet the needs of our business while remaining committed to our strategy, ultimately closing the year on a strong note. we executed disciplined pivots to meet the needs of our business while remaining committed to our strategy ultimately closing the year on a strong note Over the last year, we continued to enhance our retail product strategy by elevating our assortment, improving inventory productivity, and cultivating our relationships with strategic national brand partners. over the last year we continued to enhance our retail product strategy by elevating our assortment improving inventory productivity and cultivating our relationships with strategic national brand partners We launched a new DSW brand positioning campaign this past fall and are highly encouraged that it is resonating meaningfully with customers, strengthening brand perception and driving engagement. we launched a new dsw brand positioning campaign this past fall and are highly encouraged that it is resonating meaningfully with customers strengthening brand perception and driving engagement In 2025, the DSW brand generated 79 billion total impressions, up 10% year-over-year, signaling strong, sustained interest. in 2025 the dsw brand generated 79 billion total impressions up 10% year-over-year signaling strong sustained interest Our new brand positioning is beginning to come to life in stores as well, with several remodels and new store openings completed this past fall that incorporate updated creative and visual elements. our new brand positioning is beginning to come to life in stores as well with several remodels and new store openings completed this past fall that incorporate updated creative and visual elements Customer feedback and financial performance in these locations have been encouraging. In our brand portfolio segment, we are pleased with the progress we've made to refine our go-to-market strategies and improve the profitability of the business, driving a $8 million increase in segment operating income for the year as we navigated an incredibly complex tariff environment. Before turning to review of our financial performance, I'd like to share an update on a recent organizational change we implemented in the business designed to accelerate execution across key priorities while maintaining a focus on reducing operating expenses. We recently brought our U.S. and Canada retail businesses under a streamlined reporting structure, which will enable better collaboration and integration of operations across our businesses. As part of these changes, we have right-sized our shared services organization to appropriately support the business moving forward. Customer feedback and financial performance in these locations have been encouraging. customer feedback and financial performance in these locations have been encouraging In our brand portfolio segment, we are pleased with the progress we've made to refine our go-to-market strategies and improve the profitability of the business, driving a $8 million increase in segment operating income for the year as we navigated an incredibly complex tariff environment. in our brand portfolio segment we are pleased with the progress we've made to refine our go-to-market strategies and improve the profitability of the business driving a $8 million increase in segment operating income for the year as we navigated an incredibly complex tariff environment Before turning to review of our financial performance, I'd like to share an update on a recent organizational change we implemented in the business designed to accelerate execution across key priorities while maintaining a focus on reducing operating expenses. before turning to review of our financial performance i'd like to share an update on a recent organizational change we implemented in the business designed to accelerate execution across key priorities while maintaining a focus on reducing operating expenses We recently brought our U.S. and Canada retail businesses under a streamlined reporting structure, which will enable better collaboration and integration of operations across our businesses. we recently brought our u.s and canada retail businesses under a streamlined reporting structure which will enable better collaboration and integration of operations across our businesses As part of these changes, we have right-sized our shared services organization to appropriately support the business moving forward. as part of these changes we have right-sized our shared services organization to appropriately support the business moving forward Now let's review the financial highlights from the Q4 and full year. Starting with our retail segment, which reflects the aggregation of our U.S. retail and Canada retail operating segments, our total sales for the Q4 were flat year-over-year, with comparable sales down 1.7%, an improvement from down 2.1% in the Q4. This improvement was driven by strength in the boots category, affordable luxury, and accessories. For the full year, total sales declined 3.4%, with comparable sales declining 3.9%. Comp sales improved throughout the year, driven by positive in-store sales trends. In addition to the momentum we saw in existing stores, we were encouraged by the early learnings from our new stores that opened in 2025. Now let's review the financial highlights from the Q4 and full year. now let's review the financial highlights from the q4 and full year Starting with our retail segment, which reflects the aggregation of our U.S. retail and Canada retail operating segments, our total sales for the Q4 were flat year-over-year, with comparable sales down 1.7%, an improvement from down 2.1% in the Q4 . starting with our retail segment which reflects the aggregation of our u.s retail and canada retail operating segments our total sales for the q4 were flat year-over-year with comparable sales down 1.7% an improvement from down 2.1% in the q4 This improvement was driven by strength in the boots category, affordable luxury, and accessories. this improvement was driven by strength in the boots category affordable luxury and accessories For the full year, total sales declined 3.4%, with comparable sales declining 3.9%. for the full year total sales declined 3.4% with comparable sales declining 3.9% Comp sales improved throughout the year, driven by positive in-store sales trends. In addition to the momentum we saw in existing stores, we were encouraged by the early learnings from our new stores that opened in 2025. comp sales improved throughout the year driven by positive in-store sales trends. in addition to the momentum we saw in existing stores we were encouraged by the early learnings from our new stores that opened in 2025 Over the course of the year, we opened 13 stores and remodeled four stores in total. While not all of these projects included the full suite of experimental features, each incorporated enhancements to improve merchandise, customer flow, and overall store experience. The initial customer reaction has been strong, with notably higher conversion and traffic. We will continue refining these concepts as we move forward by leveraging data and customer feedback to scale what works to further elevate the DSW in-store experience across our footprint. In the Q4, we delivered retail operating profit expansion, driven by a gross margin improvement of 140 basis points compared to Q4 of 2024. For the full year, gross margin improved 30 basis points. Turning to our brand portfolio segment, in the early phases, our focus was on margin enhancement and cost discipline. Over the course of the year, we opened 13 stores and remodeled four stores in total. over the course of the year we opened 13 stores and remodeled four stores in total While not all of these projects included the full suite of experimental features, each incorporated enhancements to improve merchandise, customer flow, and overall store experience. while not all of these projects included the full suite of experimental features each incorporated enhancements to improve merchandise customer flow and overall store experience The initial customer reaction has been strong, with notably higher conversion and traffic. the initial customer reaction has been strong with notably higher conversion and traffic We will continue refining these concepts as we move forward by leveraging data and customer feedback to scale what works to further elevate the DSW in-store experience across our footprint. we will continue refining these concepts as we move forward by leveraging data and customer feedback to scale what works to further elevate the dsw in-store experience across our footprint In the Q4 , we delivered retail operating profit expansion, driven by a gross margin improvement of 140 basis points compared to Q4 of 2024. in the q4 we delivered retail operating profit expansion driven by a gross margin improvement of 140 basis points compared to q4 of 2024 For the full year, gross margin improved 30 basis points. for the full year gross margin improved 30 basis points Turning to our brand portfolio segment, in the early phases, our focus was on margin enhancement and cost discipline. turning to our brand portfolio segment in the early phases our focus was on margin enhancement and cost discipline In 2024, we achieved profitability in the segment for the first time. 2025 was centered on foundational work to refine go-to-market strategies. Despite significant tariff-related disruption, we drove an $8 million increase in segment operating income. On the top line, Q4 sales were up over 5%, driven by Topo, which was up 42%, and Jessica Simpson, which grew 17% versus last year. We remain encouraged by the underlying growth trajectory inherent in each of these brands. For the full year, total sales were down 9%, reflecting headwinds in the first half of the year, with performance improving as the year progressed. A clear standout was Topo, which continued to drive impressive growth, up 46% on the year and more than doubling the size of the business compared to two years ago. In 2024, we achieved profitability in the segment for the first time. 2025 was centered on foundational work to refine go-to-market strategies. in 2024 we achieved profitability in the segment for the first time 2025 was centered on foundational work to refine go-to-market strategies Despite significant tariff-related disruption, we drove an $8 million increase in segment operating income. despite significant tariff-related disruption we drove an $8 million increase in segment operating income On the top line, Q4 sales were up over 5%, driven by Topo, which was up 42%, and Jessica Simpson, which grew 17% versus last year. on the top line q4 sales were up over 5% driven by topo which was up 42% and jessica simpson which grew 17% versus last year We remain encouraged by the underlying growth trajectory inherent in each of these brands. we remain encouraged by the underlying growth trajectory inherent in each of these brands For the full year, total sales were down 9%, reflecting headwinds in the first half of the year, with performance improving as the year progressed. for the full year total sales were down 9% reflecting headwinds in the first half of the year with performance improving as the year progressed A clear standout was Topo, which continued to drive impressive growth, up 46% on the year and more than doubling the size of the business compared to two years ago. a clear standout was topo which continued to drive impressive growth up 46% on the year and more than doubling the size of the business compared to two years ago We further strengthened and diversified our supply chain this year, which enabled us to proactively mitigate the impact of tariffs and external cost pressures and deliver an 80 basis points expansion in brand gross margin for the year. Now I'd like to spend a few minutes discussing our strategic priorities for 2026. As we move forward, we are laser-focused on the following. First, winning with the merchandise that matters most to our customers. Second, amplifying and expanding our DSW brand positioning. Third, elevating our in-store customer experience. Finally, building and scaling our brand portfolio. Let's start with our product strategy and winning with the merchandise that matters most. Our refreshed merchant leadership team has made incredible progress in shaping our 2026 assortment. We are doubling down in areas of strength and leaning into encouraging trends in fashion across dress, boots, and affordable luxury. We further strengthened and diversified our supply chain this year, which enabled us to proactively mitigate the impact of tariffs and external cost pressures and deliver an 80 basis points expansion in brand gross margin for the year. we further strengthened and diversified our supply chain this year which enabled us to proactively mitigate the impact of tariffs and external cost pressures and deliver an 80 basis points expansion in brand gross margin for the year Now I'd like to spend a few minutes discussing our strategic priorities for 2026. now i'd like to spend a few minutes discussing our strategic priorities for 2026 As we move forward, we are laser-focused on the following. as we move forward we are laser-focused on the following First, winning with the merchandise that matters most to our customers. first winning with the merchandise that matters most to our customers Second, amplifying and expanding our DSW brand positioning. second amplifying and expanding our dsw brand positioning Third, elevating our in-store customer experience. third elevating our in-store customer experience Finally, building and scaling our brand portfolio. finally building and scaling our brand portfolio Let's start with our product strategy and winning with the merchandise that matters most. let's start with our product strategy and winning with the merchandise that matters most Our refreshed merchant leadership team has made incredible progress in shaping our 2026 assortment. our refreshed merchant leadership team has made incredible progress in shaping our 2026 assortment We are doubling down in areas of strength and leaning into encouraging trends in fashion across dress, boots, and affordable luxury. we are doubling down in areas of strength and leaning into encouraging trends in fashion across dress boots and affordable luxury These categories are resonating with our customers. This will be supplemented by our efforts to build and scale our brand portfolio. We are also planning strong growth in categories adjacent to footwear, such as beauty, wellness, hydration, socks, and sunglasses. To further support our initiative to add newness to our product offerings, we're excited to be working closely with a consumer-focused investment bank focused on emerging consumer brands called Consensus, which runs the Consensus Great Brands program, the preeminent platform for emerging consumer brands in North America. This partnership enables us to thoughtfully identify and introduce new, relevant brands within our leading categories while also expanding into adjacent non-footwear categories that encourage customer discovery and exploration. Through this relationship, we gain early access to emerging brands that align closely with our customer and our brand vision. These categories are resonating with our customers. these categories are resonating with our customers This will be supplemented by our efforts to build and scale our brand portfolio. this will be supplemented by our efforts to build and scale our brand portfolio We are also planning strong growth in categories adjacent to footwear, such as beauty, wellness, hydration, socks, and sunglasses. we are also planning strong growth in categories adjacent to footwear such as beauty wellness hydration socks and sunglasses To further support our initiative to add newness to our product offerings, we're excited to be working closely with a consumer-focused investment bank focused on emerging consumer brands called Consensus, which runs the Consensus Great Brands program, the preeminent platform for emerging consumer brands in North America. to further support our initiative to add newness to our product offerings we're excited to be working closely with a consumer-focused investment bank focused on emerging consumer brands called consensus which runs the consensus great brands program the preeminent platform for emerging consumer brands in north america This partnership enables us to thoughtfully identify and introduce new, relevant brands within our leading categories while also expanding into adjacent non-footwear categories that encourage customer discovery and exploration. this partnership enables us to thoughtfully identify and introduce new relevant brands within our leading categories while also expanding into adjacent non-footwear categories that encourage customer discovery and exploration Through this relationship, we gain early access to emerging brands that align closely with our customer and our brand vision. through this relationship we gain early access to emerging brands that align closely with our customer and our brand vision By infusing our assortment with this targeted newness, we reinforce our Let Us Surprise You brand positioning, strengthen differentiation, and ensure our assortment remains dynamic and aligned with evolving customer preferences. These product strategies are enabled by a heightened focus on end-to-end inventory optimization across planning, allocations, and digital order fulfillment. These efforts are designed to drive healthier margins, improve in-stock rates, support store conversion, and lower supply chain costs in 2026. We've made great strides in amplifying and expanding our DSW brand positioning, energized by the success of last fall's DSW brand campaign. To open 2026, we launched our Let Us Surprise You campaign for spring, designed to broaden our reach, strengthen customer connections, and ignite meaningful brand engagement, anchored by new, fresh creative that debuted on March first. By infusing our assortment with this targeted newness, we reinforce our Let Us Surprise You brand positioning, strengthen differentiation, and ensure our assortment remains dynamic and aligned with evolving customer preferences. by infusing our assortment with this targeted newness we reinforce our let us surprise you brand positioning strengthen differentiation and ensure our assortment remains dynamic and aligned with evolving customer preferences These product strategies are enabled by a heightened focus on end-to-end inventory optimization across planning, allocations, and digital order fulfillment. these product strategies are enabled by a heightened focus on end-to-end inventory optimization across planning allocations and digital order fulfillment These efforts are designed to drive healthier margins, improve in-stock rates, support store conversion, and lower supply chain costs in 2026. these efforts are designed to drive healthier margins improve in-stock rates support store conversion and lower supply chain costs in 2026 We've made great strides in amplifying and expanding our DSW brand positioning, energized by the success of last fall's DSW brand campaign. we've made great strides in amplifying and expanding our dsw brand positioning energized by the success of last fall's dsw brand campaign To open 2026, we launched our Let Us Surprise You campaign for spring, designed to broaden our reach, strengthen customer connections, and ignite meaningful brand engagement, anchored by new, fresh creative that debuted on March first. to open 2026 we launched our let us surprise you campaign for spring designed to broaden our reach strengthen customer connections and ignite meaningful brand engagement anchored by new fresh creative that debuted on march first At the same time, we continue to invest in strengthening relationships with our most loyal customers. This fall, we are relaunching our loyalty program, which continues to represent roughly 90% of our transactions. With this revamp, we're poised to deliver an even more compelling, differentiated experience that drives long-term engagement and growth. Our stores remain the foundation and an important point of differentiation in our strategy, and we are continuously working to elevate the in-store experience. In 2026, we are bringing our brand positioning and product strategies to life in new and exciting ways across our store base. We're also planning new store openings as well as several remodels. At the same time, we continue to invest in strengthening relationships with our most loyal customers. at the same time we continue to invest in strengthening relationships with our most loyal customers This fall, we are relaunching our loyalty program, which continues to represent roughly 90% of our transactions. this fall we are relaunching our loyalty program which continues to represent roughly 90% of our transactions With this revamp, we're poised to deliver an even more compelling, differentiated experience that drives long-term engagement and growth. with this revamp we're poised to deliver an even more compelling differentiated experience that drives long-term engagement and growth Our stores remain the foundation and an important point of differentiation in our strategy, and we are continuously working to elevate the in-store experience. our stores remain the foundation and an important point of differentiation in our strategy and we are continuously working to elevate the in-store experience In 2026, we are bringing our brand positioning and product strategies to life in new and exciting ways across our store base. in 2026 we are bringing our brand positioning and product strategies to life in new and exciting ways across our store base We're also planning new store openings as well as several remodels. we're also planning new store openings as well as several remodels Early indications from last year's work are encouraging, demonstrating how we can deepen engagement through a more immersive, differentiated shopping experience. Finally, turning to our brands portfolio, we are now entering the third year of the transformation journey that we outlined in 2024. In 2026, we will continue to build and scale our portfolio, a strategy which will in turn supplement our strategic priority of focusing on merchandise that matters. We're very excited about the renewed focus on our exclusive brands, which are only sold at DSW. These brands serve as a strategic tool for us to increase profitability via vertical integration and strengthen the DSW brand. We believe we are well-positioned to deliver meaningful sales growth in 2026, highlighted by opportunities to amplify trends in the dress and boot categories. Early indications from last year's work are encouraging, demonstrating how we can deepen engagement through a more immersive, differentiated shopping experience. Finally, turning to our brands portfolio, we are now entering the third year of the transformation journey that we outlined in 2024. early indications from last year's work are encouraging demonstrating how we can deepen engagement through a more immersive differentiated shopping experience. finally turning to our brands portfolio we are now entering the third year of the transformation journey that we outlined in 2024 In 2026, we will continue to build and scale our portfolio, a strategy which will in turn supplement our strategic priority of focusing on merchandise that matters. in 2026 we will continue to build and scale our portfolio a strategy which will in turn supplement our strategic priority of focusing on merchandise that matters We're very excited about the renewed focus on our exclusive brands, which are only sold at DSW. we're very excited about the renewed focus on our exclusive brands which are only sold at dsw These brands serve as a strategic tool for us to increase profitability via vertical integration and strengthen the DSW brand. these brands serve as a strategic tool for us to increase profitability via vertical integration and strengthen the dsw brand We believe we are well-positioned to deliver meaningful sales growth in 2026, highlighted by opportunities to amplify trends in the dress and boot categories. we believe we are well-positioned to deliver meaningful sales growth in 2026 highlighted by opportunities to amplify trends in the dress and boot categories Topo’s sales trajectory continues to be strong as the brand executes against ambitious growth plans. We’re confident this momentum will continue in 2026. Growth will be driven by core franchises as well as new product launches that further elevate Topo’s brand positioning. We expect to continue expansion of the brand’s footprint within existing partners, as well as opening additional points of distribution with new customers, with a particular focus on specialty running. With Keds, 2025 was a year where we sharpened our product design to improve comfort and fit across the assortment, while also focusing on building the profitability of the brand. We’re now looking forward to accelerated growth in 2026. Topo’s sales trajectory continues to be strong as the brand executes against ambitious growth plans. topo’s sales trajectory continues to be strong as the brand executes against ambitious growth plans We’re confident this momentum will continue in 2026. we’re confident this momentum will continue in 2026 Growth will be driven by core franchises as well as new product launches that further elevate Topo’s brand positioning. growth will be driven by core franchises as well as new product launches that further elevate topo’s brand positioning We expect to continue expansion of the brand’s footprint within existing partners, as well as opening additional points of distribution with new customers, with a particular focus on specialty running. we expect to continue expansion of the brand’s footprint within existing partners as well as opening additional points of distribution with new customers with a particular focus on specialty running With Keds, 2025 was a year where we sharpened our product design to improve comfort and fit across the assortment, while also focusing on building the profitability of the brand. with keds 2025 was a year where we sharpened our product design to improve comfort and fit across the assortment while also focusing on building the profitability of the brand We’re now looking forward to accelerated growth in 2026. we’re now looking forward to accelerated growth in 2026 We plan to drive this through expanded wholesale distribution with a focus on value, as well as from our direct-to-consumer digital business, where we are seeing positive signs so far this year. Jessica Simpson has capitalized on the recent resurgence of trends in the dress category. Additionally, we have diversified into the boot category and lowered heel heights in key dress styles in an effort to strategically appeal to a larger audience. We are confident that this evolved product strategy will continue to drive momentum with this brand in 2026. Throughout the brand's portfolio, we are pleased with the progress we've made in building a profitable foundation and are looking forward to advancing our efforts to drive sustainable growth in 2026 and beyond. Before I conclude, I want to share a few thoughts on our 2026 guidance. We plan to drive this through expanded wholesale distribution with a focus on value, as well as from our direct-to-consumer digital business, where we are seeing positive signs so far this year. we plan to drive this through expanded wholesale distribution with a focus on value as well as from our direct-to-consumer digital business where we are seeing positive signs so far this year Jessica Simpson has capitalized on the recent resurgence of trends in the dress category. jessica simpson has capitalized on the recent resurgence of trends in the dress category Additionally, we have diversified into the boot category and lowered heel heights in key dress styles in an effort to strategically appeal to a larger audience. additionally we have diversified into the boot category and lowered heel heights in key dress styles in an effort to strategically appeal to a larger audience We are confident that this evolved product strategy will continue to drive momentum with this brand in 2026. we are confident that this evolved product strategy will continue to drive momentum with this brand in 2026 Throughout the brand's portfolio, we are pleased with the progress we've made in building a profitable foundation and are looking forward to advancing our efforts to drive sustainable growth in 2026 and beyond. throughout the brand's portfolio we are pleased with the progress we've made in building a profitable foundation and are looking forward to advancing our efforts to drive sustainable growth in 2026 and beyond Before I conclude, I want to share a few thoughts on our 2026 guidance. before i conclude i want to share a few thoughts on our 2026 guidance We are currently operating in a volatile macro environment that includes evolving tariff dynamics and conflict in the Middle East, the latter of which may introduce increased inflationary pressure moving forward. We will continue to monitor these situations closely and remain nimble and adaptable as the year progresses. While there is some uncertainty in the current external environment, in 2026, we do expect to build on the improving trends we generated in the back half of 2025. We anticipate that total sales will be between -1% and +1%, driven by strength in our brand portfolio sales, which are anticipated to grow double digits. We also expect to deliver meaningful operating income and EPS growth on the year. Sheamus will take you through our 2026 outlook in more detail. We are currently operating in a volatile macro environment that includes evolving tariff dynamics and conflict in the Middle East, the latter of which may introduce increased inflationary pressure moving forward. we are currently operating in a volatile macro environment that includes evolving tariff dynamics and conflict in the middle east the latter of which may introduce increased inflationary pressure moving forward We will continue to monitor these situations closely and remain nimble and adaptable as the year progresses. we will continue to monitor these situations closely and remain nimble and adaptable as the year progresses While there is some uncertainty in the current external environment, in 2026, we do expect to build on the improving trends we generated in the back half of 2025. while there is some uncertainty in the current external environment in 2026 we do expect to build on the improving trends we generated in the back half of 2025 We anticipate that total sales will be between -1% and +1%, driven by strength in our brand portfolio sales, which are anticipated to grow double digits. we anticipate that total sales will be between -1% and +1% driven by strength in our brand portfolio sales which are anticipated to grow double digits We also expect to deliver meaningful operating income and EPS growth on the year. we also expect to deliver meaningful operating income and eps growth on the year Sheamus will take you through our 2026 outlook in more detail. sheamus will take you through our 2026 outlook in more detail Before I close, I want to reiterate how proud I am of our team's disciplined execution and unwavering commitment, which drove sustained sequential improvement throughout the year. Despite a dynamic operating environment, we stayed focused on what we can control and executed against our priorities, and I'm excited to see this momentum continue in 2026. With that, I'll turn it over to Sheamus. Before I close, I want to reiterate how proud I am of our team's disciplined execution and unwavering commitment, which drove sustained sequential improvement throughout the year. before i close i want to reiterate how proud i am of our team's disciplined execution and unwavering commitment which drove sustained sequential improvement throughout the year Despite a dynamic operating environment, we stayed focused on what we can control and executed against our priorities, and I'm excited to see this momentum continue in 2026. despite a dynamic operating environment we stayed focused on what we can control and executed against our priorities and i'm excited to see this momentum continue in 2026 With that, I'll turn it over to Sheamus. with that i'll turn it over to sheamus

Speaker 6: Thank you, Doug, and good morning, everyone. I'd like to begin by expressing my excitement about joining the team as Chief Financial Officer and thanking the Designer Brands board and the leadership team for their trust and warm welcome. My first month has been exciting, and I look forward to supporting our strategy to drive long-term growth and value creation. I'm eager to engage with our investor community and hear your perspectives as we continue to execute our strategy. I'm pleased to share Designer Brands' Q4 and full year results. The team successfully executed against its strategic priorities and delivered significantly improved performance as the year progressed. Let me provide a little bit more detail on the financial results. Thank you, Doug, and good morning, everyone. thank you doug and good morning everyone I'd like to begin by expressing my excitement about joining the team as Chief Financial Officer and thanking the Designer Brands board and the leadership team for their trust and warm welcome. i'd like to begin by expressing my excitement about joining the team as chief financial officer and thanking the designer brands board and the leadership team for their trust and warm welcome My first month has been exciting, and I look forward to supporting our strategy to drive long-term growth and value creation. my first month has been exciting and i look forward to supporting our strategy to drive long-term growth and value creation I'm eager to engage with our investor community and hear your perspectives as we continue to execute our strategy. i'm eager to engage with our investor community and hear your perspectives as we continue to execute our strategy I'm pleased to share Designer Brands' Q4 and full year results. i'm pleased to share designer brands' q4 and full year results The team successfully executed against its strategic priorities and delivered significantly improved performance as the year progressed. the team successfully executed against its strategic priorities and delivered significantly improved performance as the year progressed Let me provide a little bit more detail on the financial results. let me provide a little bit more detail on the financial results We were pleased to see another quarter of continued sequential improvement, with net sales of $713.6 million, flat to last year, and comps down 1.9%. Full year net sales decreased 3.9% to $2.9 billion, and comps were down 4.3%. In our retail segment, sales were roughly flat to last year, and comps were down 1.7% in the Q4. From a category perspective, boots, affordable luxury, and accessories were our top performers. In our brand portfolio segment, sales were up 5.3% in the Q4, driven by strong performance in both Topo and Jessica Simpson. We were pleased to see another quarter of continued sequential improvement, with net sales of $713.6 million, flat to last year, and comps down 1.9%. we were pleased to see another quarter of continued sequential improvement with net sales of $713.6 million flat to last year and comps down 1.9% Full year net sales decreased 3.9% to $2.9 billion, and comps were down 4.3%. full year net sales decreased 3.9% to $2.9 billion and comps were down 4.3% In our retail segment, sales were roughly flat to last year, and comps were down 1.7% in the Q4 . in our retail segment sales were roughly flat to last year and comps were down 1.7% in the q4 From a category perspective, boots, affordable luxury, and accessories were our top performers. from a category perspective boots affordable luxury and accessories were our top performers In our brand portfolio segment, sales were up 5.3% in the Q4 , driven by strong performance in both Topo and Jessica Simpson. in our brand portfolio segment sales were up 5.3% in the q4 driven by strong performance in both topo and jessica simpson Consolidated gross margin in the Q4 was 42.4%, a 280 basis point improvement year-over-year, driven by stronger IMU, fewer markdowns, and lower shipping costs. This resulted in a $20.1 million gross margin dollar improvement compared to last year. Full year consolidated gross margin was 43.6%, a 90 basis point improvement year-over-year, driven by favorable merchandise margin and increased efficiency in our digital order fulfillment operations. For the Q4, adjusted operating expenses were up $6.4 million compared to last year, representing 44.4% of sales. This reflects a deleverage of 90 basis points over last year on lower sales. It's also worth noting that the Q4 operating expenses were impacted by $9 million of incentive compensation in the quarter compared to none in the Q4 of last year. Consolidated gross margin in the Q4 was 42.4%, a 280 basis point improvement year-over-year, driven by stronger IMU, fewer markdowns, and lower shipping costs. consolidated gross margin in the q4 was 42.4% a 280 basis point improvement year-over-year driven by stronger imu fewer markdowns and lower shipping costs This resulted in a $20.1 million gross margin dollar improvement compared to last year. Full year consolidated gross margin was 43.6%, a 90 basis point improvement year-over-year, driven by favorable merchandise margin and increased efficiency in our digital order fulfillment operations. this resulted in a $20.1 million gross margin dollar improvement compared to last year. full year consolidated gross margin was 43.6% a 90 basis point improvement year-over-year driven by favorable merchandise margin and increased efficiency in our digital order fulfillment operations For the Q4 , adjusted operating expenses were up $6.4 million compared to last year, representing 44.4% of sales. for the q4 adjusted operating expenses were up $6.4 million compared to last year representing 44.4% of sales This reflects a deleverage of 90 basis points over last year on lower sales. this reflects a deleverage of 90 basis points over last year on lower sales It's also worth noting that the Q4 operating expenses were impacted by $9 million of incentive compensation in the quarter compared to none in the Q4 of last year. it's also worth noting that the q4 operating expenses were impacted by $9 million of incentive compensation in the quarter compared to none in the q4 of last year Absent the impact of incentive compensation, Q4 operating expenses would have leveraged 40 basis points versus last year. For the full year, adjusted operating expenses represented 41.7% of sales, an 80 basis point deleverage from last year. Amid a challenging macro backdrop, we remained focused on disciplined cost management across operating expenses, inventory and capital allocation throughout the year. Our total adjusted operating expenses declined by approximately $26 million for fiscal 2025 compared to 2024. We also ended the Q4 with total inventories down mid-single digits from prior year and decreased our debt by nearly $60 million compared to last year. For the Q4, adjusted operating loss was $11 million, compared to a loss of $23.5 million last year. The improvement was mainly driven by gross margin expansion of 280 basis points. Absent the impact of incentive compensation, Q4 operating expenses would have leveraged 40 basis points versus last year. absent the impact of incentive compensation q4 operating expenses would have leveraged 40 basis points versus last year For the full year, adjusted operating expenses represented 41.7% of sales, an 80 basis point deleverage from last year. for the full year adjusted operating expenses represented 41.7% of sales an 80 basis point deleverage from last year Amid a challenging macro backdrop, we remained focused on disciplined cost management across operating expenses, inventory and capital allocation throughout the year. amid a challenging macro backdrop we remained focused on disciplined cost management across operating expenses inventory and capital allocation throughout the year Our total adjusted operating expenses declined by approximately $26 million for fiscal 2025 compared to 2024. our total adjusted operating expenses declined by approximately $26 million for fiscal 2025 compared to 2024 We also ended the Q4 with total inventories down mid-single digits from prior year and decreased our debt by nearly $60 million compared to last year. we also ended the q4 with total inventories down mid-single digits from prior year and decreased our debt by nearly $60 million compared to last year For the Q4 , adjusted operating loss was $11 million, compared to a loss of $23.5 million last year. for the q4 adjusted operating loss was $11 million compared to a loss of $23.5 million last year The improvement was mainly driven by gross margin expansion of 280 basis points. the improvement was mainly driven by gross margin expansion of 280 basis points For the full year, adjusted operating profit was $65.2 million, compared to $67.3 million last year. While full year adjusted operating income declined slightly year-over-year, we were encouraged by the progress we made in the back half of 2025, delivering an increase in adjusted operating income of over $15 million versus 2024 across Q3 and Q4 collectively to come in at above the high end of our guidance range for the full year. In the Q4 of 2025, we had $10.4 million of net interest expense, compared to $11.1 million last year. For the full year, net interest expense was $45.3 million, flat to last year. For the full year, adjusted operating profit was $65.2 million, compared to $67.3 million last year. for the full year adjusted operating profit was $65.2 million compared to $67.3 million last year While full year adjusted operating income declined slightly year-over-year, we were encouraged by the progress we made in the back half of 2025, delivering an increase in adjusted operating income of over $15 million versus 2024 across Q3 and Q4 collectively to come in at above the high end of our guidance range for the full year. while full year adjusted operating income declined slightly year-over-year we were encouraged by the progress we made in the back half of 2025 delivering an increase in adjusted operating income of over $15 million versus 2024 across q3 and q4 collectively to come in at above the high end of our guidance range for the full year In the Q4 of 2025, we had $10.4 million of net interest expense, compared to $11.1 million last year. in the q4 of 2025 we had $10.4 million of net interest expense compared to $11.1 million last year For the full year, net interest expense was $45.3 million, flat to last year. for the full year net interest expense was $45.3 million flat to last year Our effective tax rate in the Q4 on our adjusted results was 31.3%, compared to 38.6% last year. For the year, our effective tax rate was 54.3% versus 31.6% last year. Q4 adjusted net loss was $15.6 million or 31 cents per diluted share, compared to a loss of $21.3 million or 44 cents per diluted share in the prior year. Our full year adjusted net income was $8.3 million or 16 cents per diluted share, compared to $15 million or 27 cents per diluted share in fiscal 2024. The full year decrease was largely driven by higher taxes as 2024 included one-time reversals of tax reserves. Our effective tax rate in the Q4 on our adjusted results was 31.3%, compared to 38.6% last year. our effective tax rate in the q4 on our adjusted results was 31.3% compared to 38.6% last year For the year, our effective tax rate was 54.3% versus 31.6% last year. for the year our effective tax rate was 54.3% versus 31.6% last year Q4 adjusted net loss was $15.6 million or 31 cents per diluted share, compared to a loss of $21.3 million or 44 cents per diluted share in the prior year. q4 adjusted net loss was $15.6 million or 31 cents per diluted share compared to a loss of $21.3 million or 44 cents per diluted share in the prior year Our full year adjusted net income was $8.3 million or 16 cents per diluted share, compared to $15 million or 27 cents per diluted share in fiscal 2024. our full year adjusted net income was $8.3 million or 16 cents per diluted share compared to $15 million or 27 cents per diluted share in fiscal 2024 The full year decrease was largely driven by higher taxes as 2024 included one-time reversals of tax reserves. the full year decrease was largely driven by higher taxes as 2024 included one-time reversals of tax reserves Turning to our inventory, we ended the Q4 with total inventories down 6% versus the prior year. We are planning to tightly manage inventory throughout the year as we focus on the brands, styles, and choices that matter most to our customers. We ended fiscal 2025 with $50.9 million in cash. Our total liquidity, which includes cash and availability under our ABL revolver, was $152 million at the end of the year. We continued to prioritize balance sheet strength in the quarter, applying excess cash towards debt repayments and closing the year with total debt outstanding of $435 million, a decrease of nearly $60 million compared to the prior year. Turning to our guidance for the full year. Turning to our inventory, we ended the Q4 with total inventories down 6% versus the prior year. turning to our inventory we ended the q4 with total inventories down 6% versus the prior year We are planning to tightly manage inventory throughout the year as we focus on the brands, styles, and choices that matter most to our customers. we are planning to tightly manage inventory throughout the year as we focus on the brands styles and choices that matter most to our customers We ended fiscal 2025 with $50.9 million in cash. we ended fiscal 2025 with $50.9 million in cash Our total liquidity, which includes cash and availability under our ABL revolver, was $152 million at the end of the year. our total liquidity which includes cash and availability under our abl revolver was $152 million at the end of the year We continued to prioritize balance sheet strength in the quarter, applying excess cash towards debt repayments and closing the year with total debt outstanding of $435 million, a decrease of nearly $60 million compared to the prior year. we continued to prioritize balance sheet strength in the quarter applying excess cash towards debt repayments and closing the year with total debt outstanding of $435 million a decrease of nearly $60 million compared to the prior year Turning to our guidance for the full year. turning to our guidance for the full year As Doug mentioned, the macro environment remains dynamic, with the conflict in the Middle East introducing uncertainty that could drive inflationary pressures and impact consumer sentiment. Conversely, while there may be some net upside for our business performance as a result of tariff policy evolution, this is not currently contemplated in our guidance. We currently anticipate net sales to be in the range of down 1% to up 1% for the year, with sales in the retail segment flat to declining slightly, offset by double-digit growth in the brand portfolio segment. In 2026, we expect to drive operating income growth through gross profit expansion and a continued focus on increasing efficiency in the business. As Doug mentioned, the macro environment remains dynamic, with the conflict in the Middle East introducing uncertainty that could drive inflationary pressures and impact consumer sentiment. as doug mentioned the macro environment remains dynamic with the conflict in the middle east introducing uncertainty that could drive inflationary pressures and impact consumer sentiment Conversely, while there may be some net upside for our business performance as a result of tariff policy evolution, this is not currently contemplated in our guidance. conversely while there may be some net upside for our business performance as a result of tariff policy evolution this is not currently contemplated in our guidance We currently anticipate net sales to be in the range of down 1% to up 1% for the year, with sales in the retail segment flat to declining slightly, offset by double-digit growth in the brand portfolio segment. we currently anticipate net sales to be in the range of down 1% to up 1% for the year with sales in the retail segment flat to declining slightly offset by double-digit growth in the brand portfolio segment In 2026, we expect to drive operating income growth through gross profit expansion and a continued focus on increasing efficiency in the business. in 2026 we expect to drive operating income growth through gross profit expansion and a continued focus on increasing efficiency in the business Our guidance contemplates actions taken to rightsize our workforce in 2025, partially offset by a return to a normalized level of incentive-based compensation in 2026. This guidance assumes an effective tax rate of approximately 40% for the year. We plan to deliver EPS between $0.28 and $0.38 per diluted share on an average diluted share count of 58 million shares, compared to an adjusted EPS of $0.16 in 2025. I'd also like to provide some commentary on intra-year performance. Aside from some unfavorable weather impacts early in the quarter, we have seen a continuation of the positive momentum in Q1. We anticipate sales to be flat to up low single digits% and EPS to be breakeven to slightly positive in the quarter. Our guidance contemplates actions taken to rightsize our workforce in 2025, partially offset by a return to a normalized level of incentive-based compensation in 2026. our guidance contemplates actions taken to rightsize our workforce in 2025 partially offset by a return to a normalized level of incentive-based compensation in 2026 This guidance assumes an effective tax rate of approximately 40% for the year. this guidance assumes an effective tax rate of approximately 40% for the year We plan to deliver EPS between $0.28 and $0.38 per diluted share on an average diluted share count of 58 million shares, compared to an adjusted EPS of $0.16 in 2025. we plan to deliver eps between $0.28 and $0.38 per diluted share on an average diluted share count of 58 million shares compared to an adjusted eps of $0.16 in 2025 I'd also like to provide some commentary on intra-year performance. i'd also like to provide some commentary on intra-year performance Aside from some unfavorable weather impacts early in the quarter, we have seen a continuation of the positive momentum in Q1. aside from some unfavorable weather impacts early in the quarter we have seen a continuation of the positive momentum in q1 We anticipate sales to be flat to up low single digits% and EPS to be breakeven to slightly positive in the quarter. we anticipate sales to be flat to up low single digits% and eps to be breakeven to slightly positive in the quarter As we look across the year, we're anticipating sales and earnings growth to be stronger in the first half of the year. As we shift into the back half of the year and anniversary actions implemented during 2025 that drove margin expansion and cost reductions last year, the comparisons become more difficult. To conclude, I'm proud of the progress we've delivered in the Q4 and across the full year. I am confident in the foundation that has been built and our ability to continue building momentum throughout 2026, and I'm excited to be working alongside such a disciplined and strong team. With that, we will open up the call for questions. Operator. As we look across the year, we're anticipating sales and earnings growth to be stronger in the first half of the year. as we look across the year we're anticipating sales and earnings growth to be stronger in the first half of the year As we shift into the back half of the year and anniversary actions implemented during 2025 that drove margin expansion and cost reductions last year, the comparisons become more difficult. as we shift into the back half of the year and anniversary actions implemented during 2025 that drove margin expansion and cost reductions last year the comparisons become more difficult To conclude, I'm proud of the progress we've delivered in the Q4 and across the full year. to conclude i'm proud of the progress we've delivered in the q4 and across the full year I am confident in the foundation that has been built and our ability to continue building momentum throughout 2026, and I'm excited to be working alongside such a disciplined and strong team. i am confident in the foundation that has been built and our ability to continue building momentum throughout 2026 and i'm excited to be working alongside such a disciplined and strong team With that, we will open up the call for questions. with that we will open up the call for questions Operator. operator

Speaker 5: Thank you. We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If your question has already been addressed, you'd like to remove yourself from queue, please press star then two. Once again, that's star then one if you have a question. Today's first question comes from Mauricio Serna with UBS. Please go ahead. Thank you. thank you We will now begin the question and answer session. we will now begin the question and answer session To ask a question, you may press star then one on your telephone keypad. to ask a question you may press star then one on your telephone keypad If your question has already been addressed, you'd like to remove yourself from queue, please press star then two. if your question has already been addressed you'd like to remove yourself from queue please press star then two Once again, that's star then one if you have a question. once again that's star then one if you have a question Today's first question comes from Mauricio Serna with UBS. today's first question comes from mauricio serna with ubs Please go ahead. please go ahead

Speaker 4: Great. Good morning. Thanks for taking my question. A couple of things. First, could you comment on what you saw in performance in the top eight national brands? I believe that had been a focus for the company in the previous quarters. Then maybe just to understand the shape of the revenue guide. You mentioned Q1 revenue should be flat to up slightly, but then, like, up to those single digits. Then, like, the guidance for the year is actually calls for like flat at the midpoint. Just trying to understand like what drives like this implied slowdown as you move on through after Q1. Thanks so much. Great. great Good morning. good morning Thanks for taking my question. thanks for taking my question A couple of things. a couple of things First, could you comment on what you saw in performance in the top eight national brands? first could you comment on what you saw in performance in the top eight national brands I believe that had been a focus for the company in the previous quarters. i believe that had been a focus for the company in the previous quarters Then maybe just to understand the shape of the revenue guide. then maybe just to understand the shape of the revenue guide You mentioned Q1 revenue should be flat to up slightly, but then, like, up to those single digits. you mentioned q1 revenue should be flat to up slightly but then like up to those single digits Then, like, the guidance for the year is actually calls for like flat at the midpoint. then like the guidance for the year is actually calls for like flat at the midpoint Just trying to understand like what drives like this implied slowdown as you move on through after Q1. just trying to understand like what drives like this implied slowdown as you move on through after q1 Thanks so much. thanks so much

Speaker 2: Yeah, Mauricio, this is Doug. Let me take the first question on the top eight brands. We're actually going to be evolving that to top ten brands for 2026. It'd be those brands plus our three exclusive brands, which we sell only at DSW, and we're really excited about the growth that those brands represent, given they're only sold in our channels of distribution. Those top eight brands for 2025 drove a comp increase. We were very happy with that, roughly 40% of the total business. The team's continued focus on deepening those relationships with the merchandise that matters most and deepening our planning with those strategic brand partners has definitely paid off, and we see that continuing to pay dividends into 2026 as well. Yeah, Mauricio, this is Doug. yeah mauricio this is doug Let me take the first question on the top eight brands. let me take the first question on the top eight brands We're actually going to be evolving that to top ten brands for 2026. we're actually going to be evolving that to top ten brands for 2026 It'd be those brands plus our three exclusive brands, which we sell only at DSW, and we're really excited about the growth that those brands represent, given they're only sold in our channels of distribution. it'd be those brands plus our three exclusive brands which we sell only at dsw and we're really excited about the growth that those brands represent given they're only sold in our channels of distribution Those top eight brands for 2025 drove a comp increase. those top eight brands for 2025 drove a comp increase We were very happy with that, roughly 40% of the total business. we were very happy with that roughly 40% of the total business The team's continued focus on deepening those relationships with the merchandise that matters most and deepening our planning with those strategic brand partners has definitely paid off, and we see that continuing to pay dividends into 2026 as well. the team's continued focus on deepening those relationships with the merchandise that matters most and deepening our planning with those strategic brand partners has definitely paid off and we see that continuing to pay dividends into 2026 as well It relates to your second question on guidance. I'm the eternal optimist. There could be some upside in there. We just want to acknowledge that given the uncertainty of the macro environment we wanna be mindful of that, particularly as it relates to the back half, which as Sheamus said in his prepared remarks, we come up against stronger comps. Very encouraged by quarter to date trends that we're seeing in Q1. That momentum that we experienced in Q4 has continued, particularly in the store channel, which has been a big focus for the teams. We feel like that's our biggest point of differentiation. It relates to your second question on guidance. I'm the eternal optimist. it relates to your second question on guidance i'm the eternal optimist There could be some upside in there. there could be some upside in there We just want to acknowledge that given the uncertainty of the macro environment we wanna be mindful of that, particularly as it relates to the back half, which as Sheamus said in his prepared remarks, we come up against stronger comps. we just want to acknowledge that given the uncertainty of the macro environment we wanna be mindful of that particularly as it relates to the back half which as sheamus said in his prepared remarks we come up against stronger comps Very encouraged by quarter to date trends that we're seeing in Q1. very encouraged by quarter to date trends that we're seeing in q1 That momentum that we experienced in Q4 has continued, particularly in the store channel, which has been a big focus for the teams. that momentum that we experienced in q4 has continued particularly in the store channel which has been a big focus for the teams We feel like that's our biggest point of differentiation. we feel like that's our biggest point of differentiation We had a little bit of challenging weather impacts as we started the quarter, but kind of came around that and coming up against the shift of Easter, we feel really encouraged by that. In large part just a little bit of a conservatism probably in the back half when we come up against those higher comps. On the overall side, obviously, we're gonna see a strong double-digit increase on the wholesale business throughout the year. That's kind of how it balances out for total. We had a little bit of challenging weather impacts as we started the quarter, but kind of came around that and coming up against the shift of Easter, we feel really encouraged by that. we had a little bit of challenging weather impacts as we started the quarter but kind of came around that and coming up against the shift of easter we feel really encouraged by that In large part just a little bit of a conservatism probably in the back half when we come up against those higher comps. in large part just a little bit of a conservatism probably in the back half when we come up against those higher comps On the overall side, obviously, we're gonna see a strong double-digit increase on the wholesale business throughout the year. on the overall side obviously we're gonna see a strong double-digit increase on the wholesale business throughout the year That's kind of how it balances out for total. that's kind of how it balances out for total

Speaker 4: Got it. The increase in wholesale is just driven by the strength in, like, some of the exclusive brands that you sell, right? Topo, Jessica, is that the right way to think about it? Got it. got it The increase in wholesale is just driven by the strength in, like, some of the exclusive brands that you sell, right? the increase in wholesale is just driven by the strength in like some of the exclusive brands that you sell right Topo, Jessica, is that the right way to think about it? topo jessica is that the right way to think about it

Speaker 2: Yeah. The whole portfolio is gonna drive significant growth. Obviously, Topo is a significant driver of that growth. Jessica Simpson is a big growth driver. Ted will have a nice increase in 2026 as well. Again, those are largely their largest clients are either not DSW at all or their largest customers are outside DSW. Then the exclusive brands piece will be driving growth in our channels of distribution. It's pretty well-rounded growth, internal and external. Yeah. yeah The whole portfolio is gonna drive significant growth. the whole portfolio is gonna drive significant growth Obviously, Topo is a significant driver of that growth. obviously topo is a significant driver of that growth Jessica Simpson is a big growth driver. jessica simpson is a big growth driver Ted will have a nice increase in 2026 as well. ted will have a nice increase in 2026 as well Again, those are largely their largest clients are either not DSW at all or their largest customers are outside DSW. again those are largely their largest clients are either not dsw at all or their largest customers are outside dsw Then the exclusive brands piece will be driving growth in our channels of distribution. then the exclusive brands piece will be driving growth in our channels of distribution It's pretty well-rounded growth, internal and external. it's pretty well-rounded growth internal and external

Speaker 4: Got it. One last housekeeping item. In the guidance you included share count being 58 million shares outstanding for fiscal 2026. That's like 8 million higher, 16% versus last year. Just wanna understand what drove that increase and how should we think about the interest expenses for the year. Thank you. Got it. got it One last housekeeping item. one last housekeeping item I n the guidance you included share count being 58 million shares outstanding for fiscal 2026. i n the guidance you included share count being 58 million shares outstanding for fiscal 2026 That's like 8 million higher, 16% versus last year. that's like 8 million higher 16% versus last year Just wanna understand what drove that increase and how should we think about the interest expenses for the year. just wanna understand what drove that increase and how should we think about the interest expenses for the year Thank you. thank you

Speaker 6: Hi, Mauricio. It's Sheamus. I'll take those questions. First, in terms of the share count, I think if you look back at the history, the lower share counts were in periods in which we had a loss. In those periods, from a GAAP accounting standpoint, we do not include the full impact of potential dilutive shares. As we move into the future, we are anticipating and based upon our guidance, anticipating that we will shift back into profitability. As such, we need to include the full impact of potentially dilutive shares in our diluted share calculation. That's what's driving the increase. It's not really incremental shares. It's just the fact that now they are included in periods of income. Hi, Mauricio. hi mauricio It's Sheamus. it's sheamus I'll take those questions. i'll take those questions First, in terms of the share count, I think if you look back at the history, the lower share counts were in periods in which we had a loss. first in terms of the share count i think if you look back at the history the lower share counts were in periods in which we had a loss In those periods, from a GAAP accounting standpoint, we do not include the full impact of potential dilutive shares. in those periods from a gaap accounting standpoint we do not include the full impact of potential dilutive shares As we move into the future, we are anticipating and based upon our guidance, anticipating that we will shift back into profitability. as we move into the future we are anticipating and based upon our guidance anticipating that we will shift back into profitability As such, we need to include the full impact of potentially dilutive shares in our diluted share calculation. as such we need to include the full impact of potentially dilutive shares in our diluted share calculation That's what's driving the increase. that's what's driving the increase It's not really incremental shares. it's not really incremental shares It's just the fact that now they are included in periods of income. it's just the fact that now they are included in periods of income In terms of the interest for the year, I think as we disclosed on the call, we're expecting to see significant reductions in debt levels, as you know, we've completed this year. We completed this year with debt levels down approximately $60 million to last year. That is helping us certainly from an interest perspective, in controlling interest costs as we move into the fiscal year this year. Those expectations are built into our numbers for the year. In terms of the total dollar value, we're anticipating about $40 million of interest for the full fiscal year, which takes into account that lower level of debt. In terms of the interest for the year, I think as we disclosed on the call, we're expecting to see significant reductions in debt levels, as you know, we've completed this year. in terms of the interest for the year i think as we disclosed on the call we're expecting to see significant reductions in debt levels as you know we've completed this year We completed this year with debt levels down approximately $60 million to last year. we completed this year with debt levels down approximately $60 million to last year That is helping us certainly from an interest perspective, in controlling interest costs as we move into the fiscal year this year. that is helping us certainly from an interest perspective in controlling interest costs as we move into the fiscal year this year Those expectations are built into our numbers for the year. those expectations are built into our numbers for the year I n terms of the total dollar value, we're anticipating about $40 million of interest for the full fiscal year, which takes into account that lower level of debt. i n terms of the total dollar value we're anticipating about $40 million of interest for the full fiscal year which takes into account that lower level of debt Also, I would point out in terms of our interest calc, you might have noticed that we have tremendous partnership with our banking partners. We negotiated an extension of our ABL revolver. So we're really pleased with those partnerships, and that will continue for us into the future. Also, I would point out in terms of our interest calc, you might have noticed that we have tremendous partnership with our banking partners. also i would point out in terms of our interest calc you might have noticed that we have tremendous partnership with our banking partners We negotiated an extension of our ABL revolver. we negotiated an extension of our abl revolver So we're really pleased with those partnerships, and that will continue for us into the future. so we're really pleased with those partnerships and that will continue for us into the future

Speaker 4: Very helpful. Thanks so much. Very helpful. very helpful Thanks so much. thanks so much

Speaker 5: Thank you. As a reminder, if you'd like to ask a question, please press star then one at this time. We'll pause for just a moment to assemble our roster. Our next question today comes from Dana Telsey at Telsey Advisory Group. Please go ahead. Thank you. thank you As a reminder, if you'd like to ask a question, please press star then one at this time. as a reminder if you'd like to ask a question please press star then one at this time We'll pause for just a moment to assemble our roster. we'll pause for just a moment to assemble our roster Our next question today comes from Dana Telsey at Telsey Advisory Group. our next question today comes from dana telsey at telsey advisory group Please go ahead. please go ahead

Speaker 1: Hi. Good morning, everyone. Can you talk a little bit about on the inventory side and tariffs? As you're bringing in inventory now, what rate are the tariffs being brought in by and how you're thinking about the tariff impact flowing through with rates where they are and how they were, how is that changing and the impact on margins? Then just lastly, Doug, category-wise, what are you seeing category-wise? How is it shifting and promotional landscape of how you're seeing the environment? Thank you. Hi. hi Good morning, everyone. good morning everyone Can you talk a little bit about on the inventory side and tariffs? can you talk a little bit about on the inventory side and tariffs As you're bringing in inventory now, what rate are the tariffs being brought in by and how you're thinking about the tariff impact flowing through with rates where they are and how they were, how is that changing and the impact on margins? as you're bringing in inventory now what rate are the tariffs being brought in by and how you're thinking about the tariff impact flowing through with rates where they are and how they were how is that changing and the impact on margins Then just lastly, Doug, category-wise, what are you seeing category-wise? then just lastly doug category-wise what are you seeing category-wise How is it shifting and promotional landscape of how you're seeing the environment? how is it shifting and promotional landscape of how you're seeing the environment Thank you. thank you

Speaker 2: Thanks, Dana. Appreciate your questions. First of all, those are such tariff questions. You know, it's still an evolving tariff environment. We thought we had, you know, kind of, gotten through all of that in 2025, but there's still, you know, quite a bit of evolution that's happening there. Our guidance is built on the assumption that the new tariffs are largely gonna be enacted. We'll replace the IEEPA tariffs. You know, there's definitely favorability that we're seeing right now with regards to year-over-year comparisons, but there potentially could be some upside if, you know, the, enacted tariffs don't replace those IEEPA tariffs. That could prove to be conservative, but we wanna just be, you know, clear about the fact that there's ever-changing dynamics there. We wanna stay close to that. Thanks, Dana. thanks dana Appreciate your questions. appreciate your questions First of all, those are such tariff questions. first of all those are such tariff questions You know, it's still an evolving tariff environment. you know it's still an evolving tariff environment We thought we had, you know, kind of, gotten through all of that in 2025, but there's still, you know, quite a bit of evolution that's happening there. we thought we had you know kind of gotten through all of that in 2025 but there's still you know quite a bit of evolution that's happening there Our guidance is built on the assumption that the new tariffs are largely gonna be enacted. our guidance is built on the assumption that the new tariffs are largely gonna be enacted We'll replace the IEEPA tariffs. we'll replace the ieepa tariffs You know, there's definitely favorability that we're seeing right now with regards to year-over-year comparisons, but there potentially could be some upside if, you know, the, enacted tariffs don't replace those IEEPA tariffs. you know there's definitely favorability that we're seeing right now with regards to year-over-year comparisons but there potentially could be some upside if you know the enacted tariffs don't replace those ieepa tariffs That could prove to be conservative, but we wanna just be, you know, clear about the fact that there's ever-changing dynamics there. that could prove to be conservative but we wanna just be you know clear about the fact that there's ever-changing dynamics there We wanna stay close to that. we wanna stay close to that Again, could be some net upside in there, but again, just continues to be so much volatility. On the category perspective, I'd say it's pretty broad based. We feel really good about the dress category. We've always had, you know, leading market share penetration in that category. We're seeing nice increases there. For fall, you know, we planned boots down significantly. We actually had an increase, so that was a big rebound. Sandals for spring are off to a really good start. It's pretty broad based. We talked about affordable luxury. It's a business that is providing incredible growth for us and fits into that, you know, let us surprise you component of our product assortment. Then the accessory business in adjacent categories has given us very significant growth as well. Again, could be some net upside in there, but again, just continues to be so much volatility. again could be some net upside in there but again just continues to be so much volatility On the category perspective, I'd say it's pretty broad based. on the category perspective i'd say it's pretty broad based We feel really good about the dress category. we feel really good about the dress category We've always had, you know, leading market share penetration in that category. we've always had you know leading market share penetration in that category We're seeing nice increases there. we're seeing nice increases there For fall, you know, we planned boots down significantly. for fall you know we planned boots down significantly We actually had an increase, so that was a big rebound. we actually had an increase so that was a big rebound Sandals for spring are off to a really good start. sandals for spring are off to a really good start It's pretty broad based. it's pretty broad based We talked about affordable luxury. we talked about affordable luxury It's a business that is providing incredible growth for us and fits into that, you know, let us surprise you component of our product assortment. it's a business that is providing incredible growth for us and fits into that you know let us surprise you component of our product assortment Then the accessory business in adjacent categories has given us very significant growth as well. then the accessory business in adjacent categories has given us very significant growth as well We feel really good about all those continuing momentum through 2026. From a promotional perspective, I'm really proud of the team and the evolution that the new refreshed merchandising team has made on the product assortment. You heard about our margin expansion of 280 basis points in for last year's performance. We are being much more surgical with regards to promotions. We've focused a lot on channel profitability, specifically on digital, pulling back on some of those unprofitable promotions. As a result, we've reduced our markdown rate tied to the fact that we're very conservatively managing our inventories. We ended with inventories down 6%. You know, all that has led to a pretty nice expansion in margin that we feel really good about. We feel really good about all those continuing momentum through 2026. we feel really good about all those continuing momentum through 2026 From a promotional perspective, I'm really proud of the team and the evolution that the new refreshed merchandising team has made on the product assortment. from a promotional perspective i'm really proud of the team and the evolution that the new refreshed merchandising team has made on the product assortment You heard about our margin expansion of 280 basis points in for last year's performance. you heard about our margin expansion of 280 basis points in for last year's performance We are being much more surgical with regards to promotions. we are being much more surgical with regards to promotions We've focused a lot on channel profitability, specifically on digital, pulling back on some of those unprofitable promotions. we've focused a lot on channel profitability specifically on digital pulling back on some of those unprofitable promotions As a result, we've reduced our markdown rate tied to the fact that we're very conservatively managing our inventories. as a result we've reduced our markdown rate tied to the fact that we're very conservatively managing our inventories We ended with inventories down 6%. we ended with inventories down 6% You know, all that has led to a pretty nice expansion in margin that we feel really good about. you know all that has led to a pretty nice expansion in margin that we feel really good about

Speaker 1: Thank you. Thank you. thank you

Speaker 5: Thank you. That concludes our question and answer session. I'd like to turn the conference back over to Doug Howe for any closing remarks. Thank you. thank you That concludes our question and answer session. that concludes our question and answer session I'd like to turn the conference back over to Doug Howe for any closing remarks. i'd like to turn the conference back over to doug howe for any closing remarks

Speaker 2: Thank you all for your continued interest in Designer Brands. Before we close, I just want to again recognize the dedication and the commitment of our teams. Really proud of the determination and the resilience that they demonstrated this past year. I'd also share that we continue to be encouraged by the momentum we're building in the business, driven by the strategic priorities that we shared. We look forward to continuing to update you on our progression throughout the year. Thank you. Thank you all for your continued interest in Designer Brands. thank you all for your continued interest in designer brands Before we close, I just want to again recognize the dedication and the commitment of our teams. before we close i just want to again recognize the dedication and the commitment of our teams Really proud of the determination and the resilience that they demonstrated this past year. really proud of the determination and the resilience that they demonstrated this past year I'd also share that we continue to be encouraged by the momentum we're building in the business, driven by the strategic priorities that we shared. i'd also share that we continue to be encouraged by the momentum we're building in the business driven by the strategic priorities that we shared We look forward to continuing to update you on our progression throughout the year. we look forward to continuing to update you on our progression throughout the year Thank you. thank you

Speaker 5: Thank you. That concludes today's conference call. We thank you all for attending today's presentation. You may now disconnect your lines and have a wonderful day. Thank you. thank you That concludes today's conference call. that concludes today's conference call We thank you all for attending today's presentation. we thank you all for attending today's presentation You may now disconnect your lines and have a wonderful day. you may now disconnect your lines and have a wonderful day