UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)



☒	Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended July ~~31, 2021~~30, 2022

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

Commission file number: 1-2191


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

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

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

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

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


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

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

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

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


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

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

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

Yes ☐ No ☑

As of August ~~27, 2021, 38,268,064~~26, 2022, 36,464,180 common shares were outstanding.

Table of Contents

PART IFINANCIAL INFORMATION

ITEM 1FINANCIAL STATEMENTS

CALERES, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS



	(Unaudited)						(Unaudited)
($ thousands)	July 31, 2021		August 1, 2020		January 30, 2021		July 30, 2022		July 31, 2021		January 29, 2022
Assets
Current assets:
Cash and cash equivalents	$	54,684	$	148,544	$	88,295	$	45,955	$	54,684	$	30,115
Receivables, net		110,522		110,249		126,994		127,580		110,522		122,236
Inventories, net		565,512		574,830		487,955		770,652		565,512		596,807
Income taxes		35,026		52,658		33,925		12,129		35,026		33,073
Property and equipment, held for sale								16,777		—		5,455
Prepaid expenses and other current assets		41,619		43,768		45,387		45,698		41,619		48,790
Total current assets		807,363		930,049		782,556		1,018,791		807,363		836,476

Prepaid pension costs		94,083		55,431		88,833		104,214		94,083		99,139
Lease right-of-use assets		508,597		624,881		554,303		516,486		508,597		503,430
Property and equipment, net		161,066		193,593		172,437		137,007		161,066		150,238
Deferred income taxes		0		9,456		0
Goodwill and intangible assets, net		233,777		270,361		240,071		221,447		233,777		227,503
Other assets		28,012		28,623		28,850		27,263		28,012		27,140
Total assets	$	1,832,898	$	2,112,394	$	1,867,050	$	2,025,208	$	1,832,898	$	1,843,926

Liabilities and Equity
Current liabilities:
Borrowings under revolving credit agreement	$	100,000	$	350,000	$	250,000	$	348,500	$	100,000	$	290,000
Current portion of long-term debt		99,540		0		0		—		99,540		—
Mandatory purchase obligation - Blowfish Malibu		52,639		0		39,134		—		52,639		—
Trade accounts payable		348,795		280,319		280,501		399,265		348,795		331,470
Income taxes		17,311		8,310		5,069		20,139		17,311		22,622
Lease obligations		126,820		171,247		153,060		131,601		126,820		128,495
Other accrued expenses		233,564		208,024		177,745		240,295		233,564		253,026
Total current liabilities		978,669		1,017,900		905,509		1,139,800		978,669		1,025,613

Other liabilities:
Noncurrent lease obligations		463,746		579,399		518,942		451,657		463,746		452,909
Long-term debt		99,540		198,621		198,851		—		99,540		—
Income taxes		2,464		7,786		5,038		7,786		2,464		2,464
Deferred income taxes		13,574		13,051		8,244		14,939		13,574		14,731
Other liabilities		29,614		50,503		26,612		26,149		29,614		24,822
Total other liabilities		608,938		849,360		757,687		500,531		608,938		494,926

Equity:
Common stock		383		379		380		364		383		376
Additional paid-in capital		162,122		156,913		160,446		173,246		162,122		168,830
Accumulated other comprehensive loss		(8,572)		(31,437)		(9,136)		(7,280)		(8,572)		(8,606)
Retained earnings		86,764		116,385		48,557		212,803		86,764		157,970
Total Caleres, Inc. shareholders’ equity		240,697		242,240		200,247		379,133		240,697		318,570
Noncontrolling interests		4,594		2,894		3,607		5,744		4,594		4,817
Total equity		245,291		245,134		203,854		384,877		245,291		323,387
Total liabilities and equity	$	1,832,898	$	2,112,394	$	1,867,050	$	2,025,208	$	1,832,898	$	1,843,926

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS ~~(LOSS)~~

(Unaudited)


Thirteen Weeks Ended

Twenty-Six Weeks Ended

($ thousands, except per share amounts)

July 31,2021

August 1,2020

July 31, 2021

August 1, 2020

Net sales

$
675,531

$
501,448

$
1,314,167

$
898,632

Cost of goods sold

353,238

318,828

716,987

594,114

Gross profit

322,293

182,620

597,180

304,518

Selling and administrative expenses

259,501

201,331

503,036

426,524

Impairment of goodwill and intangible assets

0

0

0

262,719

Restructuring and other special charges, net

0

5,429

13,482

65,625

Operating earnings (loss)

62,792

(24,140)

80,662

(450,350)

Interest expense, net

(11,941)

(13,387)

(23,734)

(22,866)

Other income, net

3,860

3,672

7,688

7,257

Earnings (loss) before income taxes

54,711

(33,855)

64,616

(465,959)

Income tax (provision) benefit

(16,559)

3,186

(20,080)

89,118

Net earnings (loss)

38,152

(30,669)

44,536

(376,841)

Net earnings (loss) attributable to noncontrolling interests

756

48

993

(286)

Net earnings (loss) attributable to Caleres, Inc.

$
37,396

$
(30,717)

$
43,543

$
(376,555)

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

$
0.98

$
(0.83)

$
1.14

$
(9.94)

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

$
0.97

$
(0.83)

$
1.13

$
(9.94)


	(Unaudited)
	Thirteen Weeks Ended				Twenty-Six Weeks Ended
($ thousands, except per share amounts)	July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Net sales	$	738,330	$	675,531	$	1,473,445	$	1,314,167
Cost of goods sold		401,515		353,238		809,636		716,987
Gross profit		336,815		322,293		663,809		597,180
Selling and administrative expenses		268,395		259,501		529,194		503,036
Restructuring and other special charges, net		—		—		—		13,482
Operating earnings		68,420		62,792		134,615		80,662
Interest expense, net		(2,584)		(11,941)		(4,883)		(23,734)
Other income, net		3,217		3,860		6,639		7,688
Earnings before income taxes		69,053		54,711		136,371		64,616
Income tax provision		(17,500)		(16,559)		(34,833)		(20,080)
Net earnings		51,553		38,152		101,538		44,536
Net earnings (loss) attributable to noncontrolling interests		375		756		(149)		993
Net earnings attributable to Caleres, Inc.	$	51,178	$	37,396	$	101,687	$	43,543

Basic earnings per common share attributable to Caleres, Inc. shareholders	$	1.40	$	0.98	$	2.74	$	1.14

Diluted earnings per common share attributable to Caleres, Inc. shareholders	$	1.38	$	0.97	$	2.70	$	1.13

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ~~(LOSS)~~


	(Unaudited)								(Unaudited)
	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended
($ thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Net earnings (loss)	$	38,152	$	(30,669)	$	44,536	$	(376,841)
Net earnings									$	51,553	$	38,152	$	101,538	$	44,536
Other comprehensive income (loss) ("OCI"), net of tax:
Foreign currency translation adjustment		68		740		(155)		(810)		42		68		(121)		(155)
Pension and other postretirement benefits adjustments		347		1,058		713		1,124		583		347		1,023		713
Derivative financial instruments		0		0		0		92
Other comprehensive income, net of tax		415		1,798		558		406		625		415		902		558
Comprehensive income (loss)		38,567		(28,871)		45,094		(376,435)
Comprehensive income (loss) attributable to noncontrolling interests		807		67		987		(286)
Comprehensive income (loss) attributable to Caleres, Inc.	$	37,760	$	(28,938)	$	44,107	$	(376,149)
Comprehensive income										52,178		38,567		102,440		45,094
Comprehensive (loss) income attributable to noncontrolling interests										(48)		807		(573)		987
Comprehensive income attributable to Caleres, Inc.									$	52,226	$	37,760	$	103,013	$	44,107

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

Twenty-Six Weeks Ended
($ thousands)

July 31, 2021

August 1, 2020
Operating Activities




Net earnings (loss)

$
44,536

$
(376,841)
Adjustments to reconcile net earnings (loss) to net cash provided by operating activities:


Depreciation

17,341

21,875
Amortization of capitalized software

2,984

2,939
Amortization of intangible assets

6,294

6,499
Amortization of debt issuance costs and debt discount

682

673
Fair value adjustments to Blowfish mandatory purchase obligation

13,505

9,822
Share-based compensation expense

5,431

4,401
Loss on disposal of property and equipment

551

684
Impairment charges for property, equipment, and lease right-of-use assets

2,288

35,222
Impairment of goodwill and intangible assets

0

262,719
Provision/adjustment for expected credit losses

(2,543)

8,525
Deferred income taxes

5,330

(41,683)
Changes in operating assets and liabilities:


Receivables

19,014

41,275
Inventories

(77,278)

43,372
Prepaid expenses and other current and noncurrent assets

(1,045)

(7,640)
Trade accounts payable

68,197

13,399
Accrued expenses and other liabilities

22,121

88,218
Income taxes, net

8,567

(45,347)
Other, net

(428)

(592)
Net cash provided by operating activities

135,547

67,520

Investing Activities




Purchases of property and equipment

(6,816)

(6,394)
Capitalized software

(2,581)

(2,220)
Net cash used for investing activities

(9,397)

(8,614)

Financing Activities




Borrowings under revolving credit agreement

164,500

250,500
Repayments under revolving credit agreement

(314,500)

(175,500)
Dividends paid

(5,336)

(5,495)
Acquisition of treasury stock

0

(23,348)
Issuance of common stock under share-based plans, net

(3,752)

(973)
Other

(677)

(649)
Net cash (used for) provided by financing activities

(159,765)

44,535
Effect of exchange rate changes on cash and cash equivalents

4

(115)
(Decrease) increase in cash and cash equivalents

(33,611)

103,326
Cash and cash equivalents at beginning of period

88,295

45,218
Cash and cash equivalents at end of period

$
54,684

$
148,544


	(Unaudited)
	Twenty-Six Weeks Ended
($ thousands)	July 30, 2022		July 31, 2021
Operating Activities
Net earnings	$	101,538	$	44,536
Adjustments to reconcile net earnings to net cash provided by operating activities:
Depreciation		15,882		17,341
Amortization of capitalized software		2,420		2,984
Amortization of intangible assets		6,052		6,294
Amortization of debt issuance costs and debt discount		204		682
Fair value adjustments to Blowfish mandatory purchase obligation		—		13,505
Share-based compensation expense		8,236		5,431
Loss on disposal of property and equipment		1,023		551
Impairment charges for property, equipment, and lease right-of-use assets		1,979		2,288
Adjustment to expected credit losses		(1,004)		(2,543)
Deferred income taxes		208		5,330
Changes in operating assets and liabilities:
Receivables		(4,340)		19,014
Inventories		(173,484)		(77,278)
Prepaid expenses and other current and noncurrent assets		204		(1,045)
Trade accounts payable		67,805		68,197
Accrued expenses and other liabilities		(22,619)		22,121
Income taxes, net		23,783		8,567
Other, net		(636)		(428)
Net cash provided by operating activities		27,251		135,547

Investing Activities
Purchases of property and equipment		(16,820)		(6,816)
Capitalized software		(3,906)		(2,581)
Net cash used for investing activities		(20,726)		(9,397)

Financing Activities
Borrowings under revolving credit agreement		437,500		164,500
Repayments under revolving credit agreement		(379,000)		(314,500)
Dividends paid		(5,200)		(5,336)
Acquisition of treasury stock		(41,672)		—
Issuance of common stock under share-based plans, net		(3,814)		(3,752)
Contributions by noncontrolling interests		1,500		—
Other		—		(677)
Net cash provided by (used for) financing activities		9,314		(159,765)
Effect of exchange rate changes on cash and cash equivalents		1		4
Increase (decrease) in cash and cash equivalents		15,840		(33,611)
Cash and cash equivalents at beginning of period		30,115		88,295
Cash and cash equivalents at end of period	$	45,955	$	54,684

See notes to condensed consolidated financial statements.

Table of Contents

CALERES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Accumulated

Total

Other

Caleres, Inc.

Non-

(Unaudited)

Common Stock

Additional

Comprehensive

Retained

Shareholders’

controlling

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

Shares

Dollars

Paid-In Capital

(Loss) Income

Earnings

Equity

Interests

Total Equity
BALANCE MAY 1, 2021

38,293,472

$
383

$
159,381

$
(8,936)

$
52,041

$
202,869

$
3,787

$
206,656
Net earnings

37,396

37,396

756

38,152
Foreign currency translation adjustment

17



17

51

68
Pension and other postretirement benefits adjustments, net of tax of $85

347



347



347
Comprehensive income

364

37,396

37,760

807

38,567
Dividends ($0.07 per share)



(2,673)

(2,673)



(2,673)
Issuance of common stock under share-based plans, net

(25,408)

(0)

(251)

(251)



(251)
Share-based compensation expense

2,992





2,992



2,992
BALANCE JULY 31, 2021

38,268,064

$
383

$
162,122

$
(8,572)

$
86,764

$
240,697

$
4,594

$
245,291

BALANCE MAY 2, 2020

39,299,990

$
393

$
154,930

$
(33,216)

$
160,189

$
282,296

$
2,827

$
285,123
Net (loss) earnings

(30,717)

(30,717)

48

(30,669)
Foreign currency translation adjustment

721



721

19

740
Pension and other postretirement benefits adjustments, net of tax of $248

1,058



1,058

1,058
Comprehensive income (loss)

1,779

(30,717)

(28,938)

67

(28,871)
Dividends ($0.07 per share)



(2,685)

(2,685)

(2,685)
Acquisition of treasury stock

(1,391,234)

(14)

(10,402)

(10,416)



(10,416)
Issuance of common stock under share-based plans, net

3,400

0

(67)



(67)



(67)
Share-based compensation expense

2,050





2,050



2,050
BALANCE AUGUST 1, 2020

37,912,156

$
379

$
156,913

$
(31,437)

$
116,385

$
242,240

$
2,894

$
245,134


						Accumulated				Total
						Other				Caleres, Inc.		Non-
(Unaudited)	Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling
($ thousands, except number of shares and per share amounts)	Shares	Dollars		Paid-In Capital		Loss		Earnings		Equity		Interests		Total Equity
BALANCE APRIL 30, 2022	37,446,329	$	374	$	169,025	$	(8,328)	$	191,165	$	352,236	$	5,792	$	358,028
Net earnings									51,178		51,178		375		51,553
Foreign currency translation adjustment							465				465		(423)		42
Pension and other postretirement benefits adjustments, net of tax of $190							583				583				583
Comprehensive income (loss)							1,048		51,178		52,226		(48)		52,178
Dividends ($0.07 per share)									(2,552)		(2,552)				(2,552)
Acquisition of treasury stock	(1,083,496)		(11)						(26,988)		(26,999)				(26,999)
Issuance of common stock under share-based plans, net	87,947		1		(216)						(215)				(215)
Share-based compensation expense					4,437						4,437				4,437
BALANCE JULY 30, 2022	36,450,780	$	364	$	173,246	$	(7,280)	$	212,803	$	379,133	$	5,744	$	384,877

BALANCE MAY 1, 2021	38,293,472	$	383	$	159,381	$	(8,936)	$	52,041	$	202,869	$	3,787	$	206,656
Net earnings									37,396		37,396		756		38,152
Foreign currency translation adjustment							17				17		51		68
Pension and other postretirement benefits adjustments, net of tax of $85							347				347				347
Comprehensive income							364		37,396		37,760		807		38,567
Dividends ($0.07 per share)									(2,673)		(2,673)				(2,673)
Issuance of common stock under share-based plans, net	(25,408)		(0)		(251)						(251)				(251)
Share-based compensation expense					2,992						2,992				2,992
BALANCE JULY 31, 2021	38,268,064	$	383	$	162,122	$	(8,572)	$	86,764	$	240,697	$	4,594	$	245,291


						Accumulated															Accumulated
						Other				Total Caleres, Inc.		Non-									Other				Total Caleres, Inc.		Non-
(Unaudited)	Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling				Common Stock			Additional		Comprehensive		Retained		Shareholders’		controlling
($ thousands, except number of shares and per share amounts)	Shares	Dollars		Paid-In Capital		(Loss) Income		Earnings		Equity		Interests		Total Equity		Shares	Dollars		Paid-In Capital		Loss		Earnings		Equity		Interests		Total Equity
BALANCE AS OF JANUARY 31, 2021	37,966,204	$	380	$	160,446	$	(9,136)	$	48,557	$	200,247	$	3,607	$	203,854
BALANCE JANUARY 29, 2022																37,635,145	$	376	$	168,830	$	(8,606)	$	157,970	$	318,570	$	4,817	$	323,387
Net earnings (loss)																								101,687		101,687		(149)		101,538
Foreign currency translation adjustment																						303				303		(424)		(121)
Pension and other postretirement benefits adjustments, net of tax of $331																						1,023				1,023		—		1,023
Comprehensive income (loss)																						1,326		101,687		103,013		(573)		102,440
Contributions by noncontrolling interests																										—		1,500		1,500
Dividends ($0.14 per share)																								(5,200)		(5,200)				(5,200)
Acquisition of treasury stock																(1,784,820)		(18)						(41,654)		(41,672)				(41,672)
Issuance of common stock under share-based plans, net																600,455		6		(3,820)						(3,814)				(3,814)
Share-based compensation expense																				8,236						8,236				8,236
BALANCE JULY 30, 2022																36,450,780	$	364	$	173,246	$	(7,280)	$	212,803	$	379,133	$	5,744	$	384,877

BALANCE JANUARY 30, 2021																37,966,204	$	380	$	160,446	$	(9,136)	$	48,557	$	200,247	$	3,607	$	203,854
Net earnings									43,543		43,543		993		44,536									43,543		43,543		993		44,536
Foreign currency translation adjustment							(149)				(149)		(6)		(155)							(149)				(149)		(6)		(155)
Pension and other postretirement benefits adjustments, net of tax of $182							713				713				713							713				713				713
Comprehensive income							564		43,543		44,107		987		45,094							564		43,543		44,107		987		45,094
Dividends ($0.14 per share)									(5,336)		(5,336)				(5,336)									(5,336)		(5,336)				(5,336)
Issuance of common stock under share-based plans, net	301,860		3		(3,755)						(3,752)				(3,752)	301,860		3		(3,755)						(3,752)				(3,752)
Share-based compensation expense					5,431						5,431				5,431					5,431						5,431				5,431
BALANCE JULY 31, 2021	38,268,064	$	383	$	162,122	$	(8,572)	$	86,764	$	240,697	$	4,594	$	245,291	38,268,064	$	383	$	162,122	$	(8,572)	$	86,764	$	240,697	$	4,594	$	245,291

BALANCE FEBRUARY 1, 2020	40,396,757	$	404	$	153,489	$	(31,843)	$	523,900	$	645,950	$	3,180	$	649,130
Net loss									(376,555)		(376,555)		(286)		(376,841)
Foreign currency translation adjustment							(810)				(810)		—		(810)
Unrealized loss on derivative financial instruments, net of tax of $31							92				92				92
Pension and other postretirement benefits adjustments, net of tax of $380							1,124				1,124				1,124
Comprehensive income (loss)							406		(376,555)		(376,149)		(286)		(376,435)
Dividends ($0.14 per share)									(5,495)		(5,495)				(5,495)
Acquisition of treasury stock	(2,902,122)		(29)						(23,319)		(23,348)				(23,348)
Issuance of common stock under share-based plans, net	417,521		4		(977)						(973)				(973)
Cumulative-effect adjustment from adoption of ASC 326									(2,146)		(2,146)				(2,146)
Share-based compensation expense					4,401						4,401				4,401
BALANCE AUGUST 1, 2020	37,912,156	$	379	$	156,913	$	(31,437)	$	116,385	$	242,240	$	2,894	$	245,134

See notes to condensed consolidated financial statements.

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CALERES, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

Note 1 Basis of Presentation and General

Basis of Presentation

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

The Company’s business is seasonal in nature due to consumer spending patterns, with higher back-to-school and holiday season sales. ~~Traditionally,~~Although the third fiscal quarter ~~accounts~~has historically accounted for a substantial portion of the Company’s earnings for the ~~year.~~year, the Company is beginning to experience more equal distribution among the quarters. Interim results may not necessarily be indicative of results which may be expected for any other interim period or for the year as a whole.

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

The accompanying condensed consolidated financial statements and footnotes should be read in conjunction with the consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K for the year ended January ~~30, 2021.~~29, 2022.

Noncontrolling Interests

During 2019, the Company entered into a joint venture with Brand Investment Holding Limited (“Brand Investment Holding”), a member of the Gemkell ~~Group.~~Group, to sell Sam Edelman, Naturalizer and other branded footwear in China. The Company and Brand Investment Holding are each 50% owners of the joint venture, which is named CLT Brand Solutions (“CLT”). During the twenty-six weeks ended July 30, 2022, capital contributions of $3.0 million were made to CLT, including $1.5 million received from Brand Investment Holding. Net sales were $4.8 million and $7.7 million for the thirteen and twenty-six weeks ended July 30, 2022, respectively. Operating earnings were $0.5 million and operating losses were $0.3 million for the thirteen and twenty-six weeks ended July 30, 2022, respectively. Net sales and operating earnings were not significant during the thirteen or twenty-six weeks ended July 31, ~~2021 and August 1, 2020.~~2021.

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

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

Use of Estimates

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

~~Derivative Financial Instruments~~CARES Act

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

~~COVID-19 Pandemic~~

The United States economy and the retail industry have begun to recover from the adverse impact of the coronavirus (“COVID-19”) pandemic. The Company’s financial results were negatively impacted during the first half of 2020 as a result of the temporary closure of all retail stores beginning in mid-March. The Company experienced sequential improvement in sales in the second half of 2020, driven by the reopening of the retail stores, and continued solid growth of the e-commerce business. During the first half of 2021, as the vaccines became

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widely distributed and governments continued to ease restrictions, consumer sentiment and spending began to improve. In addition, the additional stimulus measures approved by the federal government provided a boost in consumer spending. These factors strengthened demand for our products in the first half of 2021, which contributed to higher store traffic and strong growth in the Company’s net sales and operating earnings.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security ("CARES") Act was enacted. The CARES Act includes a provision that allows the Company to defer the employer portion of social security payroll tax payments that would have been paid between the enactment date and December 31, 2020, with 50% payable by December 31, 2021 and 50% payable by December 31, 2022. During 2020, the Company deferred approximately $9.4 million of employer social security payroll taxes. As of July 30, 2022, employer social security payroll taxes totaling $5.0 million, which are payable by December 31, 2022, are presented in other accrued expenses on the condensed

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consolidated balance sheet. As of July 31, 2021, approximately $4.7 million isof deferred employer social security payroll taxes was recorded in other accrued expenses and $4.7 million iswas recorded in other liabilities on the condensed consolidated balance ~~sheets.~~ sheet.

~~Corporate Headquarters Campus~~Property and Equipment, Held for Sale

In April 2021, the Company announced that it would begin marketing for sale its nine-acre corporate headquarters campus ~~(“campus”~~(the “Campus”) located in Clayton, Missouri. In January 2022, the Company classified a portion of the Campus as property and equipment, held for sale on the consolidated balance sheet as of January 29, 2022. During the first quarter of 2022, the Company continued its negotiations and an agreement for the sale of the Campus was signed on April 27, 2022, subject to certain closing conditions. The ~~Company~~sale of the Campus is ~~in the process of evaluating offers as well as exploring relocation options. The Company does not anticipate the campus~~expected to close and qualify as a completed sale ~~within~~during fiscal 2022. Accordingly, the ~~next twelve months. Accordingly,~~Campus has been classified as ~~of July 31, 2021, the campus is considered held and used and classified within~~ property and equipment, ~~net~~held for sale on the condensed consolidated balance ~~sheets. In addition,~~sheet as of July 30, 2022 and is reflected within the Eliminations and Other category. The Company evaluated the ~~campus~~Campus asset group for impairment indicators and determined that no indicators were present. The Company intends to execute a lease agreement for a portion of a new office building to be built on a parcel of the headquarters campus, as well as a lease agreement for the existing headquarters building during the period of construction. These lease agreements are expected to be finalized during fiscal 2022.

Note 2 Impact of New ~~Accounting Pronouncements~~

~~Impact of Recently Adopted Accounting Pronouncements~~

~~In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-14,~~ ~~Compensation — Retirement Benefits — Defined Benefit Plans — General (Subtopic 715-20), Disclosure Framework — Changes to the Disclosure Requirements for Defined Benefit Plans~~. The guidance changes the disclosure requirements for employers that sponsor defined benefit pension or other postretirement benefit plans, eliminating the requirements for certain disclosures that are no longer considered cost beneficial and requiring new disclosures that the FASB considers pertinent. The Company adopted the ASU during the first quarter of 2021, which did not have a material impact on the Company’s financial statement disclosures.

~~In December 2019, the FASB issued ASU 2019-12,~~ ~~Simplifying the Accounting for Income Taxes~~. ASU 2019-12 eliminates certain exceptions in Accounting Standards Codification (“ASC”) 740 related to intraperiod tax allocation, simplifies certain elements of accounting for basis differences and deferred tax liabilities during a business combination, and standardizes the classification of franchise taxes. The Company adopted ASU 2019-12 during the first quarter of 2021, which did not have a material impact on the Company’s condensed consolidated financial statements.

~~Impact of Prospective~~ Accounting Pronouncements

The Company has evaluated all recently issued, ~~accounting pronouncements. There are no prospective~~but not yet effective, accounting pronouncements ~~that are expected~~and does not expect any of the pronouncements to have a material impact on the Company’s condensed consolidated financial statements or disclosures.

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Note 3 Revenues

Disaggregation of Revenues

The following table disaggregates revenue by segment and major source for the periods ended July 30, 2022 and July 31, ~~2021 and August 1, 2020:~~2021:

Thirteen Weeks Ended July 31,2021

Thirteen Weeks Ended July 30, 2022

Eliminations and

Eliminations and

($ thousands)

Famous Footwear

Brand Portfolio

Other

Total

Famous Footwear

Brand Portfolio

Other

Total

Retail stores

402,178

12,003

414,181

385,610

14,344

—

399,954

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

19,661

(439)

19,222

E-commerce - Company websites ⁽¹⁾

51,281

49,619

100,900

50,116

49,527

—

99,643

E-commerce - wholesale drop ship ⁽¹⁾

—

33,903

(907)

32,996

Total direct-to-consumer sales

453,459

81,283

(439)

534,303

435,726

97,774

(907)

532,593

First-cost wholesale - e-commerce ⁽¹⁾

869

Landed wholesale - e-commerce ⁽¹⁾

31,190

Landed wholesale - other

99,437

(16,692)

82,745

First-cost wholesale

23,618

Wholesale - e-commerce ⁽¹⁾

—

49,539

—

49,539

Wholesale - landed

—

131,056

(21,198)

109,858

Wholesale - first cost

—

41,705

—

41,705

Licensing and royalty

2,602

515

3,969

—

4,484

Other ⁽²⁾

190

204

134

—

151

Net sales

453,649

239,013

(17,131)

675,531

436,375

324,060

(22,105)

738,330


	Thirteen Weeks Ended August 1, 2020								Thirteen Weeks Ended July 31, 2021
					Eliminations and								Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total		Famous Footwear		Brand Portfolio		Other		Total

Retail stores	$	250,143	$	7,060	$	0	$	257,203	$	402,178	$	12,003	$	—	$	414,181
Landed wholesale - e-commerce - drop ship ⁽¹⁾		0		20,748		0		20,748
E-commerce - Company websites ⁽¹⁾		83,652		40,836		0		124,488		51,281		49,619		—		100,900
E-commerce - wholesale drop ship ⁽¹⁾										—		19,661		(439)		19,222
Total direct-to-consumer sales		333,795		68,644		0		402,439		453,459		81,283		(439)		534,303
First-cost wholesale - e-commerce ⁽¹⁾		0		256		0		256
Landed wholesale - e-commerce ⁽¹⁾		0		23,234		0		23,234
Landed wholesale - other		0		78,127		(16,109)		62,018
First-cost wholesale		0		11,850		0		11,850
Wholesale - e-commerce ⁽¹⁾										—		32,059		—		32,059
Wholesale - landed										—		99,437		(16,692)		82,745
Wholesale - first cost										—		23,618		—		23,618
Licensing and royalty		0		1,469		0		1,469		—		2,602		—		2,602
Other ⁽²⁾		140		42		0		182		190		14		—		204
Net sales	$	333,935	$	183,622	$	(16,109)	$	501,448	$	453,649	$	239,013	$	(17,131)	$	675,531

Twenty-Six Weeks Ended July 30, 2022

Eliminations and

($ thousands)

Famous Footwear

Brand Portfolio

Other

Total

Retail stores

717,598

28,561

—

746,159

E-commerce - Company websites ⁽¹⁾

102,054

102,025

—

204,079

E-commerce - wholesale drop ship ⁽¹⁾

—

65,676

(1,905)

63,771

Total direct-to-consumer sales

819,652

196,262

(1,905)

1,014,009

Wholesale - e-commerce ⁽¹⁾

—

108,459

—

108,459

Wholesale - landed

—

306,383

(35,327)

271,056

Wholesale - first cost

—

71,781

—

71,781

Licensing and royalty

937

6,875

—

7,812

Other ⁽²⁾

288

—

328

Total net sales

820,877

689,800

(37,232)

1,473,445

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Twenty-Six Weeks Ended July 31, 2021

Eliminations and

($ thousands)

Famous Footwear

Brand Portfolio

Other

Total

Retail stores

$
736,923

$
27,011

$
0

$
763,934
Landed wholesale - e-commerce - drop ship ⁽¹⁾

0

40,475

(833)

39,642
E-commerce - Company websites ⁽¹⁾

114,403

92,357

0

206,760
Total direct-to-consumer sales

$
851,326

$
159,843

$
(833)

$
1,010,336
First-cost wholesale - e-commerce ⁽¹⁾

0

1,773

0

1,773
Landed wholesale - e-commerce ⁽¹⁾

0

67,766

0

67,766
Landed wholesale - other

0

214,784

(26,072)

188,712
First-cost wholesale

0

40,336

0

40,336
Licensing and royalty

0

4,766

0

4,766
Other ⁽²⁾

428

50

0

478
Total net sales

$
851,754

$
489,318

$
(26,905)

$
1,314,167


	Twenty-Six Weeks Ended August 1, 2020								Twenty-Six Weeks Ended July 31, 2021
					Eliminations and								Eliminations and
($ thousands)	Famous Footwear		Brand Portfolio		Other		Total		Famous Footwear		Brand Portfolio		Other		Total

Retail stores	$	387,260	$	18,881	$	0	$	406,141	$	736,923	$	27,011	$	—	$	763,934
Landed wholesale - e-commerce - drop ship ⁽¹⁾		0		39,979		0		39,979
E-commerce - Company websites ⁽¹⁾		137,830		73,826		0		211,656		114,403		92,357		—		206,760
E-commerce - wholesale drop ship ⁽¹⁾										—		40,475		(833)		39,642
Total direct-to-consumer sales	$	525,090	$	132,686	$	0	$	657,776	$	851,326	$	159,843	$	(833)	$	1,010,336
First-cost wholesale - e-commerce ⁽¹⁾		0		502		0		502
Landed wholesale - e-commerce ⁽¹⁾		0		49,476		0		49,476
Landed wholesale - other		0		190,695		(27,415)		163,280
First-cost wholesale		0		23,771		0		23,771
Wholesale - e-commerce ⁽¹⁾										—		69,539		—		69,539
Wholesale - landed										—		214,784		(26,072)		188,712
Wholesale - first cost										—		40,336		—		40,336
Licensing and royalty		0		3,655		0		3,655		—		4,766		—		4,766
Other ⁽²⁾		97		75		0		172		428		50		—		478
Net sales	$	525,187	$	400,860	$	(27,415)	$	898,632	$	851,754	$	489,318	$	(26,905)	$	1,314,167

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

(2)	Includes breakage revenue from unredeemed gift cards

Retail stores

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

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

E-commerce

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

Landed wholesale

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

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First-cost wholesale

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

~~E-commerce~~

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

Licensing and royalty

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

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

Contract Balances

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

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


($ thousands)	July 31, 2021		August 1, 2020		January 30, 2021		July 30, 2022		July 31, 2021		January 29, 2022
Customer allowances and discounts	$	15,867	$	18,464	$	17,043	$	19,357	$	15,867	$	20,328
Loyalty programs liability		17,782		16,450		13,986		17,492		17,782		18,814
Returns reserve		11,858		14,453		11,040		13,172		11,858		12,468
Gift card liability		5,372		5,332		6,091		5,987		5,372		6,804

Changes in contract balances with customers generally reflect differences in relative sales volume for the periods presented. In addition, during the twenty-six weeks ended July 30, 2022, the loyalty programs liability increased $24.5 million due to points and material rights earned on purchases and decreased $25.8 million due to expirations and redemptions. During the twenty-six weeks ended July 31, 2021, the loyalty programs liability increased $17.1 million due to points and material rights earned on purchases and decreased $13.3 million due to expirations and redemptions. ~~During the twenty-six weeks ended August 1, 2020, the~~The liability for loyalty programs is presented within other accrued expenses when earned and is generally expected to be recognized as revenue within one year. The gift card liability ~~increased $14.1 million due to points~~is established upon the sale of a gift card and ~~material rights earned on purchases and decreased $14.0 million due to expirations and redemptions.~~revenue is recognized either upon redemption of the gift card by the consumer or based upon the gift card breakage rate, which is generally within the 24-month period following the sale of the gift card.

The following table summarizes the activity in the Company’s allowance for expected credit losses during the twenty-six weeks ended July 30, 2022 and July 31, ~~2021 and August 1, 2020:~~2021:

Twenty-Six Weeks Ended
($ thousands)

July 31, 2021

August 1, 2020
Balance, beginning of period

$
14,928

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

—

2,521
Provision/adjustment for expected credit losses ⁽¹⁾

(2,543)

8,525
Uncollectible accounts written off, net of recoveries

(2,500)

215
Balance, end of period

$
9,885

$
13,074

~~(1)~~

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


	Twenty-Six Weeks Ended
($ thousands)	July 30, 2022		July 31, 2021
Balance, beginning of period	$	9,601	$	14,928
Adjustment to expected credit losses		(1,004)		(2,543)
Uncollectible accounts written off, net of recoveries		(209)		(2,500)
Balance, end of period	$	8,388	$	9,885

Note 4 Earnings Per Share

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

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~~Note 4 Earnings (Loss) Per Share~~

The Company uses the two-class method to compute basic and diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders. In periods of net loss, no effect is given to the Company’s participating securities since they do not contractually participate in the losses of the Company. The following table sets forth the computation of basic and diluted earnings ~~(loss)~~ per common share attributable to Caleres, Inc. shareholders for the periods ended July 30, 2022 and July 31, ~~2021 and August 1, 2020:~~2021:


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended
($ thousands, except per share amounts)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021

NUMERATOR
Net earnings (loss)	$	38,152	$	(30,669)	$	44,536	$	(376,841)
Net earnings									$	51,553	$	38,152	$	101,538	$	44,536
Net (earnings) loss attributable to noncontrolling interests		(756)		(48)		(993)		286		(375)		(756)		149		(993)
Net earnings (loss) attributable to Caleres, Inc.	$	37,396	$	(30,717)	$	43,543	$	(376,555)
Net earnings attributable to Caleres, Inc.									$	51,178	$	37,396	$	101,687	$	43,543
Net earnings allocated to participating securities		(1,360)		—		(1,575)		—		(2,226)		(1,360)		(4,216)		(1,575)
Net earnings (loss) attributable to Caleres, Inc. after allocation of earnings to participating securities	$	36,036	$	(30,717)	$	41,968	$	(376,555)
Net earnings attributable to Caleres, Inc. after allocation of earnings to participating securities									$	48,952	$	36,036	$	97,471	$	41,968

DENOMINATOR
Denominator for basic earnings (loss) per common share attributable to Caleres, Inc. shareholders		36,880		37,113		36,794		37,881
Denominator for basic earnings per common share attributable to Caleres, Inc. shareholders										35,031		36,880		35,620		36,794
Dilutive effect of share-based awards		267		—		212		—		467		267		467		212
Denominator for diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders		37,147		37,113		37,006		37,881
Denominator for diluted earnings per common share attributable to Caleres, Inc. shareholders										35,498		37,147		36,087		37,006

Basic earnings (loss) per common share attributable to Caleres, Inc. shareholders	$	0.98	$	(0.83)	$	1.14	$	(9.94)
Basic earnings per common share attributable to Caleres, Inc. shareholders									$	1.40	$	0.98	$	2.74	$	1.14

Diluted earnings (loss) per common share attributable to Caleres, Inc. shareholders	$	0.97	$	(0.83)	$	1.13	$	(9.94)
Diluted earnings per common share attributable to Caleres, Inc. shareholders									$	1.38	$	0.97	$	2.70	$	1.13

Options to purchase 16,667 shares of common stock for both the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021 were not included in the denominator for diluted earnings ~~(loss)~~ per common share attributable to Caleres, Inc. shareholders because the effect would be anti-dilutive. ~~Options to purchase 24,667 shares of common stock were excluded from the denominator for both the thirteen and twenty-six weeks ended August 1, 2020.~~

During the thirteen and twenty-six weeks ended ~~August 1, 2020,~~July 30, 2022, the Company repurchased ~~1,391,234~~1,083,496 and ~~2,902,122~~1,784,820 shares, respectively, under the ~~2018~~2019 and ~~2019~~2022 publicly announced share repurchase programs, which ~~permits~~permit repurchases of up to ~~2.5~~5.0 million and ~~5.0~~7.0 million shares, respectively. The Company did not repurchase any shares under the share repurchase programs during the twenty-six weeks ended July 31, 2021. Refer to further discussion in Item 2, Unregistered Sales of Equity Securities and Use of Proceeds. Subsequent to quarter-end, the Company has repurchased approximately 538,000 shares of shares at an aggregate price of $13.9 million, bringing our fiscal year-to-date total to approximately 2.3 million shares at an aggregate price of $55.6 million.

Note 5 Restructuring and Other Special Charges

~~Blowfish Mandatory Purchase Obligation~~

In 2018, the Company acquired a controlling interest in Blowfish Malibu. The noncontrolling interest is subject to a mandatory purchase obligation after a three-year period, which ended on July 31, 2021, based upon an earnings multiple formula as specified in the purchase agreement. Approximately $9.0 million was initially assigned to the mandatory purchase obligation and remeasurement adjustments are recorded as interest expense. The fair value adjustments on the mandatory purchase obligation totaled $7.1 million ($5.3 million on an after-tax basis, or $0.14 per diluted share) and $13.5 million ($10.0 million on an after-tax basis, or $0.26 per diluted share) for the thirteen and twenty-six weeks ended July 31, 2021, respectively. The fair value adjustments totaled $6.6 million ($4.9 million on an after-tax basis, or $0.13 per diluted share) and $9.8 million ($7.3 million on an after-tax basis, or $0.19 per diluted share) for the thirteen and twenty-six weeks ended and August 1, 2020, respectively. As of July 31, 2021, the mandatory purchase obligation was valued at $52.6 million. The mandatory

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purchase obligation is expected to be settled during the third quarter of 2021. Refer to further discussion regarding the mandatory purchase obligation in Note 14 to the condensed consolidated financial statements.

Brand Portfolio – Business Exits

During the twenty-six weeks ended July 31, 2021, the Company incurred costs of $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share) related to the strategic realignment of the Naturalizer retail store operations. These costs primarily represented lease termination and other store closure costs, including employee severance, for the 73 stores that were closed during the first quarter of 2021. These charges are presented in restructuring and special charges on the condensed consolidated ~~statements~~statement of earnings ~~(loss)~~ within the Brand Portfolio segment for the twenty-six weeks ended July 31, 2021. There were no corresponding charges during the twenty-six weeks ended July 30, 2022. As of July 30, 2022 and July 31, 2021, reserves of $0.0 million and $3.3 million, respectively, were included on the condensed consolidated balance sheets.

~~During the twenty-six weeks ended August 1, 2020,~~

Blowfish Mandatory Purchase Obligation

In 2018, the Company ~~incurred costs of $1.6~~acquired a controlling interest in Blowfish Malibu. The remaining interest was subject to a mandatory purchase obligation after a three-year period, which ended on July 31, 2021, based upon an earnings multiple formula as specified in the purchase agreement. Approximately $9.0 million was initially assigned to the mandatory purchase obligation and fair value adjustments were recorded as interest expense. The fair value adjustments on the mandatory purchase obligation totaled $7.1 million ($~~1.2~~5.3 million on an after-tax basis, or ~~$0.03~~$0.14 per diluted share) related to the decision to exit the Fergie brand. These charges, which represented inventory markdowns required to reduce the value of inventory to net realizable value, are presented in cost of goods sold on the condensed consolidated statements of earnings (loss) within the Brand Portfolio segment for the twenty-six weeks ended August 1, 2020.

~~COVID-19-Related Expenses~~

~~During the thirteen weeks ended August 1, 2020, the Company incurred costs associated with the COVID-19 pandemic~~ and ~~related impacts on the Company’s business, totaling $5.4~~$13.5 million ($~~4.7~~10.0 million on an after-tax basis, or ~~$0.13~~$0.26 per diluted share). These costs were primarily for employee severance and related costs, as well as the cost of supplies and deep cleaning of the Company’s facilities. Of the $5.4 million reflected as restructuring and other special charges, $4.5 million is reflected in the Brand Portfolio segment, $0.6 million is reflected in the Famous Footwear segment and $0.3 million is reflected within the Eliminations and Other category.

During the twenty-six weeks ended August 1, 2020, the Company incurred costs associated with the COVID-19 pandemic and related impacts on the Company’s business totaling $99.0 million ($78.0 million on an after-tax basis, or $2.17 per diluted share). These costs included non-cash impairment of property and equipment and lease right-of-use assets, incremental inventory markdowns, employee severance and other direct expenses specific to the impact of COVID-19 on the Company’s operations. Of the $99.0 million in charges, $65.6 million is presented as restructuring and other special charges, net and $33.4 million is reflected as cost of goods sold in the condensed consolidated statements of earnings (loss). Of the $65.6 million reflected as restructuring and other special charges, $48.4 million is reflected in the Brand Portfolio segment, $16.6 million is reflected in the Famous Footwear segment and $0.6 million is reflected within the Eliminations and Other category. The $33.4 million reflected as cost of goods sold represents incremental inventory markdowns, of which $27.4 million is reflected in the Brand Portfolio segment and $6.0 million is reflected in the Famous Footwear segment. There were 0 corresponding special charges for the ~~twenty-six weeks ended July 31, 2021. Refer to Note 9 to the condensed consolidated financial statements for additional information regarding the impact of COVID-19 on the Company’s leases.~~

thirteen and

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twenty-six weeks ended July 31, 2021. There were no corresponding charges during the twenty-six weeks ended July 30, 2022. The mandatory purchase obligation was settled for $54.6 million on November 4, 2021. Refer to further discussion regarding the mandatory purchase obligation in Note 14 to the condensed consolidated financial statements.

Note 6 Business Segment Information

Following is a summary of certain key financial measures for the Company’s business segments for the periods ended July 30, 2022 and July 31, ~~2021 and August 1, 2020:~~2021:


	Famous		Brand		Eliminations				Famous		Brand		Eliminations
($ thousands)	Footwear		Portfolio		and Other		Total		Footwear		Portfolio		and Other		Total
Thirteen Weeks Ended July 31, 2021
Net sales	$	453,649	$	239,013	$	(17,131)	$	675,531
Intersegment sales ⁽¹⁾		—		17,131		—		17,131
Operating earnings		85,498		16,554		(39,260)		62,792
Segment assets		799,324		838,236		195,338		1,832,898

Thirteen Weeks Ended August 1, 2020
Thirteen Weeks Ended July 30, 2022
Net sales	$	333,935	$	183,622	$	(16,109)	$	501,448	$	436,375	$	324,060	$	(22,105)	$	738,330
Intersegment sales⁽¹⁾		—		16,109		—		16,109		—		22,105		—		22,105
Operating earnings (loss)		1,045		(14,111)		(11,074)		(24,140)		62,496		29,410		(23,486)		68,420
Segment assets		885,168		952,028		275,198		2,112,394		882,303		992,238		150,667		2,025,208

Thirteen Weeks Ended July 31, 2021
Net sales									$	453,649	$	239,013	$	(17,131)	$	675,531
Intersegment sales⁽¹⁾										—		17,131		—		17,131
Operating earnings (loss)										85,498		16,554		(39,260)		62,792
Segment assets										799,324		838,236		195,338		1,832,898

Twenty-Six Weeks Ended July 30, 2022
Net sales									$	820,877	$	689,800	$	(37,232)	$	1,473,445
Intersegment sales ⁽¹⁾										—		37,232		—		37,232
Operating earnings (loss)										112,184		70,760		(48,329)		134,615

Twenty-Six Weeks Ended July 31, 2021
Net sales	$	851,754	$	489,318	$	(26,905)	$	1,314,167	$	851,754	$	489,318	$	(26,905)	$	1,314,167
Intersegment sales ⁽¹⁾		—		26,905		—		26,905		—		26,905		—		26,905
Operating earnings		133,371		13,733		(66,442)		80,662

Twenty-Six Weeks Ended August 1, 2020
Net sales	$	525,187	$	400,860	$	(27,415)	$	898,632
Intersegment sales ⁽¹⁾		—		27,415		—		27,415
Operating loss		(66,495)		(359,860)		(23,995)		(450,350)
Operating earnings (loss)										133,371		13,733		(66,442)		80,662

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

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

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


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended
($ thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Operating earnings (loss)	$	62,792	$	(24,140)	$	80,662	$	(450,350)
Operating earnings									$	68,420	$	62,792	$	134,615	$	80,662
Interest expense, net		(11,941)		(13,387)		(23,734)		(22,866)		(2,584)		(11,941)		(4,883)		(23,734)
Other income, net		3,860		3,672		7,688		7,257		3,217		3,860		6,639		7,688
Earnings (loss) before income taxes	$	54,711	$	(33,855)	$	64,616	$	(465,959)
Earnings before income taxes									$	69,053	$	54,711	$	136,371	$	64,616

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Note 7 Inventories

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


($ thousands)	July 31, 2021		August 1, 2020		January 30, 2021		July 30, 2022		July 31, 2021		January 29, 2022
Raw materials	$	14,886	$	16,494	$	14,592	$	18,159	$	14,886	$	16,764
Work-in-process		394		158		349		714		394		614
Finished goods		550,232		558,178		473,014		751,779		550,232		579,429
Inventories, net	$	565,512	$	574,830	$	487,955	$	770,652	$	565,512	$	596,807

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Note 8 Goodwill and Intangible Assets

Goodwill and intangible assets were as follows:


($ thousands)	July 31, 2021		August 1, 2020		January 30, 2021		July 30, 2022		July 31, 2021		January 29, 2022
Intangible Assets
Famous Footwear	$	2,800	$	2,800	$	2,800	$	2,800	$	2,800	$	2,800
Brand Portfolio		342,083		365,888		342,083		342,083		342,083		342,083
Total intangible assets		344,883		368,688		344,883		344,883		344,883		344,883
Accumulated amortization		(116,062)		(103,283)		(109,768)		(128,392)		(116,062)		(122,336)
Total intangible assets, net		228,821		265,405		235,115		216,491		228,821		222,547
Goodwill
Brand Portfolio ⁽¹⁾		4,956		4,956		4,956		4,956		4,956		4,956
Total goodwill		4,956		4,956		4,956		4,956		4,956		4,956
Goodwill and intangible assets, net	$	233,777	$	270,361	$	240,071	$	221,447	$	233,777	$	227,503

(1)	The carrying amount of goodwill as of July 30, 2022, July 31, 2021 ~~August 1, 2020~~ and January ~~30, 2021~~29, 2022 is presented net of accumulated impairment charges of $415.7 million.

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The Company’s intangible assets as of July 30, 2022, July 31, 2021 ~~August 1, 2020~~ and January ~~30, 2021~~29, 2022 were as follows:

($ thousands)

July 31, 2021

Estimated Useful Lives

Accumulated

Accumulated

(In Years)

Cost Basis ⁽²⁾

Amortization

Impairment

Net Carrying Value
Trade names

2 - 40

$
299,488

$
107,000

$
10,200

$
182,288
Trade names

Indefinite

107,400

—

92,000

15,400
Customer relationships

15 - 16


44,200


9,062


4,005


31,133

$
451,088

$
116,062

$
106,205

$
228,821


August 1, 2020

Estimated Useful Lives

Accumulated

Accumulated

(In Years)

Cost Basis ⁽²⁾

Amortization

Impairment

Net Carrying Value
Trade names

2 - 40

$
299,488

$
96,835

$
10,200

$
192,453
Trade names

Indefinite

107,400

—

72,200

35,200
Customer relationships

15 - 16


44,200


6,448


—


37,752

$
451,088

$
103,283

$
82,400

$
265,405


January 30, 2021

Estimated Useful Lives

Accumulated

Accumulated

(In Years)

Cost Basis ⁽²⁾

Amortization

Impairment

Net Carrying Value
Trade names

2 - 40

$
299,488

$
101,919

$
10,200

$
187,369
Trade names

Indefinite

107,400

—

92,000

15,400
Customer relationships

15 - 16


44,200


7,849


4,005


32,346

$
451,088

$
109,768

$
106,205

$
235,115

~~(2)~~

The Via Spiga trade name was reclassified from indefinite-lived trade names to definite-lived trade names. The remaining carrying value of $0.1 million as of July 31, 2021 will be fully amortized by the end of fiscal 2021.


($ thousands)	July 30, 2022
	Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis		Amortization		Impairment		Net Carrying Value
Trade names	2 - 40	$	299,488	$	116,995	$	10,200	$	172,293
Trade names	Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200		11,397		4,005		28,798
		$	451,088	$	128,392	$	106,205	$	216,491


	July 31, 2021
	Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis		Amortization		Impairment		Net Carrying Value
Trade names	2 - 40	$	299,488	$	107,000	$	10,200	$	182,288
Trade names	Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200		9,062		4,005		31,133
		$	451,088	$	116,062	$	106,205	$	228,821

	January 29, 2022
	Estimated Useful Lives			Accumulated		Accumulated
	(In Years)	Cost Basis		Amortization		Impairment		Net Carrying Value
Trade names	2 - 40	$	299,488	$	112,061	$	10,200	$	177,227
Trade names	Indefinite		107,400		—		92,000		15,400
Customer relationships	15 - 16		44,200		10,275		4,005		29,920
		$	451,088	$	122,336	$	106,205	$	222,547

Amortization expense related to intangible assets was ~~$3.1~~$3.0 million and ~~$3.3~~$3.1 million for the thirteen weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively, and ~~$6.3~~$6.1 million and ~~$6.5~~$6.3 million for the twenty-six weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively. The Company estimates that amortization expense related to intangible assets will be approximately ~~$12.6 million in 2021,~~ $12.1 million in 2022, $11.9 million in 2023 and $11.0 million in each of the fiscal years 2024, 2025and ~~2025.~~2026.

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Goodwill is tested for impairment at least annually, or more frequently if events or circumstances indicate it might be impaired, using either the qualitative assessment or a quantitative fair value-based test. During the first quarter of 2020, as a result of the significant decline in the Company’s share price and market capitalization and the impact of COVID-19 on the Company’s business operations, the Company determined that an interim assessment of goodwill was required. A quantitative assessment was performed for all reporting units as of May 2, 2020. The assessment indicated that the carrying value of the goodwill associated with the Brand Portfolio and Vionic reporting units was impaired, resulting in total goodwill impairment charges of $240.3 million. The Company recorded 0no goodwill impairment charges during the twenty-six weeks ended July 30, 2022 or July 31, ~~2021 or the thirteen weeks ended August 1, 2020.~~2021.

Indefinite-lived intangible assets are tested for impairment as of the first day of the fourth quarter of each fiscal year unless events or circumstances indicate an interim test is required. As a result of the triggering event from the economic impacts of COVID-19, an interim assessment was performed as of May 2, 2020. The indefinite-lived intangible asset impairment review resulted in total impairment charges of $22.4 million during the first quarter of 2020, including $12.2 million associated with the indefinite-lived Allen Edmonds trade name and $10.2 million of impairment associated with the indefinite-lived Via Spiga trade name. The carrying value of the Via Spiga trade name of $0.5 million is being amortized over approximately two years. In addition to the interim assessment, the Company tested the indefinite-lived intangible assets as of the first day of the fourth fiscal quarter. As a result of the impairment indicator for Allen Edmonds, the Company also tested the definite-lived Allen Edmonds customer relationships intangible asset. Those assessments resulted in additional impairment totaling $23.8 million, consisting of $19.8 million associated with the Allen Edmonds trade name and $4.0 million associated with the Allen Edmonds customer relationships intangible asset. The Company recorded 0no impairment charges for indefinite-lived intangible assets during the twenty-six weeks ended July 30, 2022 or July 31, ~~2021 or the thirteen weeks ended August 1, 2020.~~2021.

Note 9 Leases

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

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

The Company regularly analyzes the results of all of its stores and assesses the viability of underperforming stores to determine whether events or circumstances exist that indicate the stores should be closed or whether the carrying amount of their long-lived assets may not be

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recoverable. After allowing for an appropriate start-up period and consideration of any unusual nonrecurring events, property and equipment at stores and the lease right-of-use assets indicated as impaired are written down to fair value as calculated using a discounted cash flow method. The fair value of the lease right-of-use assets is determined utilizing projected cash flows for each store location, discounted using a risk-adjusted discount rate, subject to a market floor based on current market lease rates. The Company recorded asset impairment charges of $0.2 million and $0.4 million during the thirteen weeks ~~ended July 31, 2021. The Company did 0t record any impairment charges during the thirteen weeks ended August 1, 2020. The Company recorded asset impairment charges of $2.3~~and $2.0 million and ~~$35.2~~$2.3 million during the twenty-six weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively. The impairment charges ~~recorded in the thirteen and twenty-six weeks ended July 31, 2021~~ are primarily related to capitalized software and underperforming retail stores. The impairment charges recorded in the twenty-six weeks ended August 1, 2020, including $20.4 million associated with operating lease right-of-use assets and $14.8 million associated with property and equipment, reflect the impact of the COVID-19 pandemic on the Company’s retail operations and estimates of remaining cash flows for each store. Refer to ~~Note 5 and~~ Note 14 to the condensed consolidated financial statements for further discussion on these impairment charges.

As a result of the temporary store closures during the first half of 2020 associated with the ~~COVID-19~~ pandemic, certain leases were amended to provide rent abatements and/or deferral of lease payments. Deferred payments continue to be reflected in lease obligations on the condensed consolidated balance sheets. Under relief provided by the FASB, entities could make a policy election to account for ~~COVID-19 related~~COVID-19-related lease concessions as if the enforceable rights existed under the original contract, accounting for them as variable rent rather than lease modifications. The Company made a policy election to account for rent abatements as variable rent. Accordingly, during the thirteen and twenty-six weeks ended July 31, 2021, the Company recorded $0.3 million and $1.6 million, respectively, in lease concessions as a reduction of rent expense within selling and administrative expenses in the condensed consolidated statements of ~~earnings (loss). The Company recorded $2.0 million in lease concessions during the thirteen and twenty-six weeks ended August 1, 2020.~~earnings. Rent concessions for leases that were extended were recognized as a lease modification.

During the twenty-six weeks ended July 30, 2022, the Company entered into new or amended leases that resulted in the recognition of right-of-use assets and lease obligations of $87.8 million on the condensed consolidated balance sheets. As of July 30, 2022, the Company has entered into lease commitments for five retail locations for which the leases have not yet commenced. The Company anticipates that three leases will begin in the current fiscal year and two leases will begin in the next fiscal year. Upon commencement, right-of-use assets and lease liabilities of approximately $2.7 million will be recorded in the current fiscal year and $2.0 million will be recorded in the next fiscal year on the condensed consolidated balance sheets. In addition, as further discussed in Note 1 to the condensed consolidated financial statements, the Company intends to execute a lease agreement during the second half of 2022 for a portion of a new office building to be built on a parcel of the headquarters campus, as well as a lease agreement for the existing headquarters building during the period of construction.

The components of lease expense for the thirteen and twenty-six weeks ended July 30, 2022 and July 31, 2021 were as follows:


	Thirteen Weeks Ended
($ thousands)	July 30, 2022		July 31, 2021
Operating lease expense	$	33,630	$	37,121
Variable lease expense		9,872		8,513
Short-term lease expense		1,176		708
Sublease income		—		(29)
Total lease expense	$	44,678	$	46,313


	Twenty-Six Weeks Ended
($ thousands)	July 30, 2022		July 31, 2021
Operating lease expense	$	71,694	$	77,698
Variable lease expense		18,888		20,003
Short-term lease expense		2,371		1,273
Sublease income		(59)		(58)
Total lease expense	$	92,894	$	98,916

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During the twenty-six weeks ended July 31, 2021, the Company entered into new or amended leases that resulted in the recognition of right-of-use assets and lease obligations of $45.5 million on the condensed consolidated balance sheets. As of July 31, 2021, the Company has entered into lease commitments for 2 retail locations for which the leases have not yet commenced. The Company anticipates that both leases will begin in the next fiscal year. Upon commencement, right-of-use assets and lease liabilities of approximately $1.3 million will be recorded in the ~~next~~ ~~fiscal year on the condensed consolidated balance sheets.~~

~~The components of lease expense for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 were as follows:~~

Thirteen Weeks Ended
($ thousands)

July 31, 2021

August 1, 2020
Operating lease expense

$
37,121

$
41,088
Variable lease expense

8,513

12,007
Short-term lease expense

708

1,385
Sublease income

(29)

(28)
Total lease expense

$
46,313

$
54,452

Twenty-Six Weeks Ended
($ thousands)

July 31, 2021

August 1, 2020
Operating lease expense

$
77,698

$
86,338
Variable lease expense

20,003

23,331
Short-term lease expense

1,273

2,097
Sublease income

(58)

(47)
Total lease expense

$
98,916

$
111,719

Supplemental cash flow information related to leases is as follows:

Twenty-Six Weeks Ended
($ thousands)

July 31, 2021

August 1, 2020
Cash paid for lease liabilities⁽¹⁾

$
104,384

$
43,150
Cash received from sublease income

58

47

(1)

Cash paid for lease liabilities for the twenty-six weeks ended July 31, 2021 includes payment of certain lease payments deferred in 2020, as described above, as well as lease termination costs associated with the Naturalizer retail store closings, as further discussed in Note 5 to the condensed consolidated financial statements. In addition, cash paid for lease liabilities during the twenty-six weeks ended August 1, 2020 was significantly lower than comparable periods, reflecting the deferral of lease payments during the onset of the pandemic.

Note 10 ~~Long-term and Short-term~~ Financing Arrangements

Credit Agreement

The Company maintains a revolving credit facility for working capital needs. The Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds LLC, Vionic Group LLC and Vionic International LLC are each co-borrowers and guarantors. On April ~~14, 2020,~~8, 2022, Blowfish, LLC was joined to the Credit Agreement as a co-borrower and guarantor.

On October 5, 2021, the Company entered into a ~~Fourth~~Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the "Credit Agreement") which, among other modifications, ~~increased~~decreased the amount available under the revolving credit facility by $100.0 million to an aggregate amount of up to ~~$600.0~~$500.0 million, subject to borrowing base restrictions, and may be ~~further~~ increased by up to ~~$150.0~~$250.0 million. The Credit Agreement ~~increased~~also decreased the spread applied to the ~~LIBOR~~London Interbank Offered Rate (“LIBOR”) or prime rate by a total of 75 basis ~~points and increased the unused line fee by 5 basis~~ points.

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

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

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

The Credit Agreement contains customary events of default, including, without limitation, payment defaults, breaches of representations and warranties, covenant defaults, cross-defaults to similar obligations, certain events of bankruptcy and insolvency, judgment defaults and the failure of any guaranty or security document supporting the agreement to be in full force and effect. If an event of default occurs, the collateral agent may assume dominion and control over the Company’s cash (a “cash dominion event”) until such event of default is cured or waived or the excess availability exceeds such amount for 30 consecutive days, provided that a cash dominion event shall be deemed continuing (even if an event of default is no longer continuing and/or excess availability exceeds the required amount for 30 consecutive business days) after a cash dominion event has occurred and been discontinued on two occasions in any 12-month period. The Credit Agreement also contains certain other covenants and restrictions. The Company was in compliance with all covenants and restrictions under the Credit Agreement as of July ~~31, 2021.~~30, 2022.

At July ~~31, 2021,~~30, 2022, the Company had ~~$100.0~~$348.5 million of borrowings outstanding and ~~$12.5~~$10.8 million in letters of credit outstanding under the Credit Agreement. Total additional borrowing availability was ~~$364.5~~$140.7 million at July ~~31, 2021.~~30, 2022.

~~$200 Million~~ 18

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Senior Notes

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

The Company may redeem some or all of the Senior Notes at a redemption price (expressed as a percentage of principal amount) of 101.563% if redeemed prior to August 15, 2021 and 100.000% if redeemed after August 15, 2021, plus accrued and unpaid interest and Additional Interest (as defined in the Senior Notes indenture). During the thirteen weeks ended July 31, 2021, the Company determined that it would redeem a portion of its Senior Notes on August 16, 2021. Accordingly, the Company classified $100.0 million aggregate principal amount of its Senior Notes as a current liability. On August 16, 2021, the Company redeemed $100.0 million of Senior Notes at ~~100.000% using borrowings under~~100.0%. In addition, on January 3, 2022, the ~~revolving credit agreement.~~

~~If the Company experiences specific kinds~~remaining $100.0 million of ~~changes of control, it would be required to offer to purchase the~~ Senior Notes were redeemed at ~~a purchase price equal to 101% of~~100.0%, extinguishing the principal amount, plus accrued and unpaid interest and Additional Interest, if any, to, but not including, the date of repurchase. The Senior Notes also contain certain other covenants and restrictions that limit certain activities including, among other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments, common stock repurchases, mergers and acquisitions and sales of assets. As of July 31, 2021, the Company was in compliance with all covenants and restrictions relating to the Senior Notes.Company’s long-term debt.

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Note 11 Shareholders’ Equity

Accumulated Other Comprehensive Loss

The following table sets forth the changes in accumulated other comprehensive loss (OCL) by component for the periods ended July 30, 2022 and July 31, ~~2021 and August 1, 2020:~~2021:


			Pension and		Derivative
			Other		Financial		Accumulated				Pension and		Accumulated
	Foreign		Postretirement		Instrument		Other		Foreign		Other		Other
	Currency		Transactions		Transactions		Comprehensive		Currency		Postretirement		Comprehensive
($ thousands)	Translation		(1)		(2)		(Loss) Income		Translation		Transactions ⁽¹⁾		(Loss) Income
Balance at April 30, 2022									$	(950)	$	(7,378)	$	(8,328)
Other comprehensive income before reclassifications										465		—		465
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss										—		773		773
Tax benefit										—		(190)		(190)
Net reclassifications										—		583		583
Other comprehensive income										465		583		1,048
Balance at July 30, 2022									$	(485)	$	(6,795)	$	(7,280)

Balance at May 1, 2021	$	(277)	$	(8,659)	$	—	$	(8,936)	$	(277)	$	(8,659)	$	(8,936)
Other comprehensive income before reclassifications		17		—		—		17		17		—		17
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		432		—		432		—		432		432
Tax benefit		—		(85)		—		(85)		—		(85)		(85)
Net reclassifications		—		347		—		347		—		347		347
Other comprehensive income		17		347		—		364		17		347		364
Balance at July 31, 2021	$	(260)	$	(8,312)	$	—	$	(8,572)	$	(260)	$	(8,312)	$	(8,572)

Balance at May 2, 2020	$	(2,111)	$	(31,105)	$	—	$	(33,216)
Balance at January 29, 2022									$	(788)	$	(7,818)	$	(8,606)
Other comprehensive income before reclassifications		721		—		—		721		303		—		303
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		810		—		810		—		1,354		1,354
Tax provision ⁽³⁾		—		248		—		248
Tax benefit										—		(331)		(331)
Net reclassifications		—		1,058		—		1,058		—		1,023		1,023
Other comprehensive income		721		1,058		—		1,779		303		1,023		1,326
Balance at August 1, 2020	$	(1,390)	$	(30,047)	$	—	$	(31,437)
Balance at July 30, 2022									$	(485)	$	(6,795)	$	(7,280)

Balance at January 30, 2021	$	(111)	$	(9,025)	$	—	$	(9,136)	$	(111)	$	(9,025)	$	(9,136)
Other comprehensive loss before reclassifications		(149)		—		—		(149)		(149)		—		(149)
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		895		—		895		—		895		895
Tax benefit		—		(182)		—		(182)		—		(182)		(182)
Net reclassifications		—		713		—		713		—		713		713
Other comprehensive (loss) income		(149)		713		—		564		(149)		713		564
Balance at July 31, 2021	$	(260)	$	(8,312)	$	—	$	(8,572)	$	(260)	$	(8,312)	$	(8,572)

Balance at February 1, 2020	$	(580)	$	(31,171)	$	(92)	$	(31,843)
Other comprehensive (loss) income before reclassifications		(810)		—		87		(723)
Reclassifications:
Amounts reclassified from accumulated other comprehensive loss		—		1,504		6		1,510
Tax benefit ⁽³⁾		—		(380)		(1)		(381)
Net reclassifications		—		1,124		5		1,129
Other comprehensive (loss) income		(810)		1,124		92		406
Balance at August 1, 2020	$	(1,390)	$	(30,047)	$	—	$	(31,437)

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

~~(2)~~

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

~~(3)~~

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

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Note 12 Share-Based Compensation

The Company recognized share-based compensation expense of ~~$3.0~~$4.4 million and ~~$2.1~~$3.0 million during the thirteen weeks and ~~$5.4~~$8.2 million and ~~$4.4~~$5.4 million during the twenty-six weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively.

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The Company had net issuances (repurchases) ~~issuances~~ of ~~(25,408)~~87,947 and ~~3,400~~(25,408) shares of common stock during the thirteen weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively, for restricted stock grants, stock performance awards issued to employees and common and restricted stock grants issued to non-employee directors, net of forfeitures and shares withheld to satisfy the tax withholding requirement. During the twenty-six weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ the Company had net issuances of ~~301,860~~600,455 and ~~417,521~~301,860 shares of common stock, respectively, related to ~~the~~ share-based plans.

Restricted Stock

The following table summarizes restricted stock activity for the periods ended July 30, 2022 and July 31, ~~2021 and August 1, 2020:~~2021:

Thirteen Weeks Ended

Thirteen Weeks Ended

Thirteen Weeks Ended

July 31, 2021

August 1, 2020

July 30, 2022

July 31, 2021

Weighted-

Weighted-

Weighted-

Total Number

Average

Total Number

Average

Total Number

Average

Total Number

Average

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

Fair Value

Shares

Fair Value

Fair Value

May 1, 2021

1,428,844

14.04

May 2, 2020

1,421,743

18.20

April 30, 2022

1,622,777

17.51

May 1, 2021

1,428,844

14.04

Granted

6,410

27.50

Granted

12,748

10.59

10,470

27.70

Granted

6,410

27.50

Forfeited

(22,375)

13.51

Forfeited

(35,225)

20.73

(29,250)

17.10

Forfeited

(22,375)

13.51

Vested

(32,633)

15.95

Vested

(38,664)

27.37

(24,795)

21.00

Vested

(32,633)

15.95

July 31, 2021

1,380,246

14.05

August 1, 2020

1,360,602

17.81

July 30, 2022

1,579,202

17.53

July 31, 2021

1,380,246

14.05

Twenty-Six Weeks Ended

Twenty-Six Weeks Ended

Twenty-Six Weeks Ended

July 31, 2021

August 1, 2020

July 30, 2022

July 31, 2021

Weighted-

Weighted-

Weighted-

Total Number

Average

Total Number

Average

Total Number

Average

Total Number

Average

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

of Restricted

Grant Date

Fair Value

Shares

Fair Value

Fair Value

January 30, 2021

1,397,227

16.74

February 1, 2020

1,271,795

26.77

January 29, 2022

1,390,397

14.24

January 30, 2021

1,397,227

16.74

Granted

568,916

18.73

Granted

563,431

5.92

681,670

21.10

Granted

568,916

18.73

Forfeited

(68,875)

15.45

Forfeited

(67,912)

23.21

(80,216)

14.26

Forfeited

(68,875)

15.45

Vested

(517,022)

26.26

Vested

(406,712)

28.28

(412,649)

12.99

Vested

(517,022)

26.26

July 31, 2021

1,380,246

14.05

August 1, 2020

1,360,602

17.81

July 30, 2022

1,579,202

17.53

July 31, 2021

1,380,246

14.05

The Company granted 10,470 restricted shares during the thirteen weeks ended July 30, 2022, which have a cliff-vesting term of one year. Of the 681,670 restricted shares granted during the twenty-six weeks ended July 30, 2022, 671,200 restricted shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years, and 10,470 shares have a cliff-vesting term of one year. Of the 6,410 restricted shares granted during the thirteen weeks ended July 31, 2021, 4,910 shares have a cliff-vesting term of one year and 1,500 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years. Of the 568,916 restricted shares granted during the twenty-six weeks ended July 31, 2021, ~~4,910 shares have a cliff-vesting term of one year, 20,000 shares have a cliff-vesting term of two years and~~ 544,006 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three ~~years. All~~years, 20,000 shares have a cliff-vesting term of ~~the restricted~~two years and 4,910 shares ~~granted during the thirteen weeks ended August 1, 2020~~ have a cliff-vesting term of one year. Of the 563,431 restricted shares granted during the twenty-six weeks ended August 1, 2020, 12,748 shares have a cliff-vesting term of one year and 550,683 shares have a graded-vesting term of three years, with 50% vesting after two years and 50% after three years. Share-based compensation expense for graded-vesting grants is recognized ratably over the respective vesting periods.

Performance ~~Share~~ Awards

During the twenty-six weeks ended July 30, 2022, the Company granted performance share awards for a targeted 87,750 shares, with a weighted-average grant date fair value of $20.99 in connection with the 2020 performance award. During the twenty-six weeks ended July 31, 2021, the Company granted performance share awards for a targeted 175,500 shares, with a weighted-average grant date fair value of ~~$18.63 in connection with the 2020 performance award.~~$18.63. There were 0no performance-based share awards granted by the Company during the thirteen weeks ended July 30, 2022 or July 31, ~~2021 or for the twenty-six weeks ended August 1, 2020.~~2021. Vesting of performance-based awards is generally dependent upon the financial performance of the Company and the attainment of certain financial goals during the three-year period following the grant. At the end of the vesting period, the employee will have earned an amount of shares or units between 0% and 200% of the targeted award, depending on the achievement of the specified financial goals for the service period.

~~Table of Contents~~

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

Table of Contents

During the twenty-six weeks ended July 30, 2022, the Company granted long-term incentive awards payable in cash for the 2022-2024 performance period, with a target value of $8.3 million and a maximum value of $16.6 million. During the twenty-six weeks ended July 31, 2021, the Company granted long-term incentive awards payable in cash for the 2021-2023 performance period, with a target value of $6.5 million and a maximum value of $13.0 million. There were no performance-based share awards granted by the Company during the thirteen weeks ended July 30, 2022 or July 31, 2021. These awards, which vest after a three-year period, are dependent upon the attainment of certain financial goals of the Company for each of the three years and individual achievement of strategic initiatives over the cumulative period of the award. The estimated ~~value~~values of the ~~award,~~awards, which isare reflected within other liabilities on the condensed consolidated balance sheets, isare being ~~accrued~~expensed ratably over the three-year performance period. ~~There were 0 long-term incentive awards granted by the Company during the thirteen weeks ended July 31, 2021 or during the twenty-six weeks ended August 1, 2020.~~

Restricted Stock Units for Non-Employee Directors

Equity-based grants may be made to non-employee directors in the form of restricted stock units ("RSUs") payable in cash or common stock at no cost to the non-employee director. The RSUs are subject to a vesting requirement (usually one year) and earn dividend equivalents at the same rate as dividends on the Company’s common stock. The dividend equivalents, which vest immediately, are automatically re-invested in additional RSUs. Expense related to the initial grant of RSUs is recognized ratably over the vesting period based upon the fair value of the RSUs. The RSUs payable in cash are remeasured at the end of each period. Expense for the dividend equivalents is recognized at fair value when the dividend equivalents are granted. Gains and losses resulting from changes in the fair value of the RSUs payable in cash subsequent to the vesting period and through the settlement date are recognized in the Company’s condensed consolidated statements of earnings. The Company granted ~~40,729~~38,104 and ~~106,222~~40,729 RSUs to non-employee directors, including ~~1,449~~1,459 and ~~4,238~~1,449 for dividend equivalents, during the thirteen weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively, with weighted-average grant date fair values of ~~$27.48~~$27.66 and ~~$10.50,~~$27.48, respectively. The Company granted ~~42,441~~40,011 and ~~114,531~~42,441 RSUs to non-employee directors, including ~~3,161~~3,366 and ~~12,548~~3,161 for dividend equivalents, during the twenty-six weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively, with weighted-average grant date fair values of $27.33 and $27.21, ~~and $10.02,~~ respectively.

Note 13 Retirement and Other Benefit Plans

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


	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended				Thirteen Weeks Ended
($ thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Service cost	$	1,801	$	2,247	$	0	$	0	$	1,810	$	1,801	$	—	$	—
Interest cost		2,806		3,128		10		11		3,026		2,806		8		10
Expected return on assets		(7,108)		(7,432)		0		0		(7,024)		(7,108)		—		—
Amortization of:
Actuarial loss (gain)		592		1,183		(28)		(16)		883		592		(27)		(28)
Prior service income		(132)		(357)		0		0		(83)		(132)		—		—
Settlement cost		—		222		0		0
Curtailment gain		—		(189)		0		0
Total net periodic benefit income	$	(2,041)	$	(1,198)	$	(18)	$	(5)	$	(1,388)	$	(2,041)	$	(19)	$	(18)


	Pension Benefits				Other Postretirement Benefits				Pension Benefits				Other Postretirement Benefits
	Twenty-Six Weeks Ended				Twenty-Six Weeks Ended				Twenty-Six Weeks Ended				Twenty-Six Weeks Ended
($ thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Service cost	$	3,743	$	4,407	$	—	$	—	$	3,572	$	3,743	$	—	$	—
Interest cost		5,619		6,282		20		30		5,997		5,619		18		20
Expected return on assets		(14,222)		(14,875)		—		—		(14,008)		(14,222)		—		—
Amortization of:
Actuarial loss (gain)		1,207		2,266		(55)		(54)		1,564		1,207		(52)		(55)
Prior service income		(257)		(707)		—		—		(158)		(257)		—		—
Settlement cost		—		222		—		—
Curtailment gain		—		(189)		—		—
Total net periodic benefit income	$	(3,910)	$	(2,594)	$	(35)	$	(24)	$	(3,033)	$	(3,910)	$	(34)	$	(35)

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

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Note 14 Fair Value Measurements

Fair Value Hierarchy

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

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

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

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

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

Measurement of Fair Value

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

Money Market Funds

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

Non-Qualified Deferred Compensation Plan Assets and Liabilities

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

Deferred Compensation Plan for Non-Employee Directors

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

Table of Contents

~~is based on an unadjusted quoted market price for the Company’s common stock in an active market with sufficient volume and frequency on each measurement date (Level 1).~~

Restricted Stock Units for Non-Employee Directors

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

Mandatory Purchase Obligation

The Company recorded a mandatory purchase obligation of the ~~noncontrolling~~remaining interest in conjunction with the acquisition of Blowfish Malibu in July of 2018. The fair value of the mandatory purchase obligation iswas based on the earnings formula specified in the purchase agreement (Level 3). Fair value adjustments on the mandatory purchase obligation ~~are~~were recorded as interest expense. During the thirteen and twenty-six weeks ended July 31, 2021, ~~and August 1, 2020,~~ the Company recorded fair value adjustments of $7.1 million and ~~$6.6~~$13.5 million, respectively. ~~During~~The mandatory purchase obligation of $54.6 million was paid on November 4, 2021 and therefore, there were no corresponding fair value adjustments during the twenty-six weeks ended July ~~31, 2021 and August 1, 2020, the Company recorded fair value adjustments of $13.5 million and $9.8 million, respectively.~~30, 2022. Refer to further discussion of the mandatory purchase obligation in Note 5 to the condensed consolidated financial statements.

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis at July 30, 2022, July 31, 2021 ~~August 1, 2020~~ and January ~~30, 2021.~~29, 2022. During the twenty-six weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ there were 0no transfers into or out of Level 3.


	Fair Value Measurements								Fair Value Measurements
($ thousands)	Total		Level 1		Level 2		Level 3		Total		Level 1		Level 2		Level 3
Asset (Liability)
July 30, 2022:
Non-qualified deferred compensation plan assets									$	7,793	$	7,793	$	—	$	—
Non-qualified deferred compensation plan liabilities										(7,793)		(7,793)		—		—
Deferred compensation plan liabilities for non-employee directors										(1,756)		(1,756)		—		—
Restricted stock units for non-employee directors										(1,991)		(1,991)		—		—
July 31, 2021:
Cash equivalents – money market funds	$	4,000	$	4,000	$	0	$	0	$	4,000	$	4,000	$	—	$	—
Non-qualified deferred compensation plan assets		8,361		8,361		0		0		8,361		8,361		—		—
Non-qualified deferred compensation plan liabilities		(8,361)		(8,361)		0		0		(8,361)		(8,361)		—		—
Deferred compensation plan liabilities for non-employee directors		(1,991)		(1,991)		0		0		(1,991)		(1,991)		—		—
Restricted stock units for non-employee directors		(2,735)		(2,735)		0		0		(2,735)		(2,735)		—		—
Mandatory purchase obligation - Blowfish Malibu		(52,639)		0		0		(52,639)		(52,639)		—		—		(52,639)
August 1, 2020:
Cash equivalents – money market funds	$	99,001	$	99,001	$	0	$	0
January 29, 2022:
Non-qualified deferred compensation plan assets		7,690		7,690		0		0		7,463		7,463		—		—
Non-qualified deferred compensation plan liabilities		(7,690)		(7,690)		0		0		(7,463)		(7,463)		—		—
Deferred compensation plan liabilities for non-employee directors		(780)		(780)		0		0		(1,770)		(1,770)		—		—
Restricted stock units for non-employee directors		(686)		(686)		0		0		(2,568)		(2,568)		—		—
Mandatory purchase obligation - Blowfish Malibu		(25,022)		0		0		(25,022)
January 30, 2021:
Cash equivalents – money market funds	$	45,000	$	45,000	$	0	$	0
Non-qualified deferred compensation plan assets		7,918		7,918		0		0
Non-qualified deferred compensation plan liabilities		(7,918)		(7,918)		0		0
Deferred compensation plan liabilities for non-employee directors		(989)		(989)		0		0
Restricted stock units for non-employee directors		(1,661)		(1,661)		0		0
Mandatory purchase obligation - Blowfish Malibu		(39,134)		0		0		(39,134)

Impairment Charges

The Company assesses the impairment of long-lived assets whenever events or changes in circumstances indicate that the carrying value may not be recoverable. Factors the Company considers important that could trigger an impairment review include underperformance relative to historical or projected future operating results, a significant change in the manner of the use of the asset, or a negative industry or economic trend. When the Company determines that the carrying value of long-lived assets may not be recoverable based upon the existence of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method. Certain factors, such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered Level 3 inputs as defined by FASB ASC Topic 820, Fair Value Measurement. Long-lived assets held and used with a carrying amount of $555.0 million and $551.8 million at July 30, 2022 and July 31, 2021, respectively, were assessed for indicators of impairment. This assessment resulted in the

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of one or more of the aforementioned factors, impairment is measured based on a projected discounted cash flow method. Certain factors, such as estimated store sales and expenses, used for this nonrecurring fair value measurement are considered Level 3 inputs as defined by FASB ASC Topic 820, ~~Fair Value Measurement~~. Long-lived assets held and used with a carrying amount of $551.8 million and $684.9 million at July 31, 2021 and August 1, 2020, respectively, were assessed for indicators of impairment and written down to their fair value. This assessment resulted in the following impairment charges, primarily for capitalized software and operating lease right-of-use assets, leasehold improvements and furniture and fixtures in the Company’s retail stores. Higher impairment charges were recorded in the twenty-six weeks ended August 1, 2020, reflecting the deteriorating economic conditions driven in part by the COVID-19 pandemic, as further discussed in Note 5 and Note 9 to the condensed consolidated financial statements.


	Thirteen Weeks Ended				Twenty-Six Weeks Ended				Thirteen Weeks Ended				Twenty-Six Weeks Ended
($ thousands)	July 31, 2021		August 1, 2020		July 31, 2021		August 1, 2020		July 30, 2022		July 31, 2021		July 30, 2022		July 31, 2021
Long-Lived Asset Impairment Charges
Famous Footwear	$	400	$	—	$	800	$	14,896	$	50	$	400	$	419	$	800
Brand Portfolio		—		—		1,488		20,326		153		—		1,560		1,488
Total long-lived asset impairment charges	$	400	$	—	$	2,288	$	35,222	$	203	$	400	$	1,979	$	2,288

Fair Value of the Company’s Other Financial Instruments

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

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


	July 31, 2021				August 1, 2020				January 30, 2021
	Carrying				Carrying				Carrying				July 30, 2022				July 31, 2021				January 29, 2022
($ thousands)	Value ⁽¹⁾		Fair Value		Value ⁽¹⁾		Fair Value		Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value		Carrying Value ⁽¹⁾		Fair Value
Borrowings under revolving credit agreement	$	100,000	$	100,000	$	350,000	$	350,000	$	250,000	$	250,000	$	348,500	$	348,500	$	100,000	$	100,000	$	290,000	$	290,000
Current portion of long-term debt		100,000		100,000		—		—		—		—		—		—		100,000		100,000		—		—
Long-term debt		100,000		100,000		200,000		174,000		200,000		201,000		—		—		100,000		100,000		—		—
Total debt	$	300,000	$	300,000	$	550,000	$	524,000	$	450,000	$	451,000	$	348,500	$	348,500	$	300,000	$	300,000	$	290,000	$	290,000

(1)	Excludes unamortized debt issuance costs and debt discount

The fair values of borrowings under ~~the~~ revolving credit agreement and current portion of long-term debt approximate their carrying values due to the short-term nature of these borrowings (Level 1). The fair value of the Company’s long-term debt was based upon quoted prices in an inactive market as of ~~the end of the respective periods~~July 31, 2021 (Level 2).

Note 15 Income Taxes

The Company’s consolidated effective tax rate can vary considerably from period to period, depending on a number of factors. The Company’s consolidated effective tax rates were ~~a provision of~~25.3% and 30.3% ~~and a benefit of 9.4%~~ for the thirteen weeks ended July 30, 2022 and July 31, 2021, ~~and August 1, 2020,~~ respectively. The higher effective tax rate for the thirteen weeks ended July 31, 2021 was driven by discrete tax adjustments ~~totaling~~of $2.9 million, inclusive of $3.3 million of incremental valuation allowances ~~on the Company’s~~for our deferred tax assets, as ~~the Company is~~we are in a full valuation allowance position for federal, state and certain international jurisdictions. During the thirteen weeks ended August 1, 2020, the Company's effective tax rate was impacted by several discrete tax items totaling $2.7 million, including the non-deductibility of losses at the Company’s Canadian business division. Offsetting this impact was a benefit associated with the CARES Act, which permits the Company to carry back 2020 losses to years with a higher federal tax rate.

The Company’s consolidated effective tax rate was ~~a provision of 31.1%~~25.5% for the twenty-six weeks ended July ~~31, 2021,~~30, 2022, compared to ~~a benefit of 19.1%~~31.1% for the ~~twenty-six weeks~~six months ended ~~August 1, 2020.~~July 31, 2021. The higher effective tax rate for the twenty-six weeks ended July 31, 2021 primarily reflects the incremental valuation allowances recorded in the ~~second quarter,~~thirteen weeks ended July 31, 2021, as described above, and the non-deductibility of losses at the Company’s Canadian ~~business~~ division, which were driven by exit-related costs associated with Naturalizer retail stores during the first quarter. The Company's effective tax rate for the twenty-six weeks ended August 1, 2020 was impacted by several discrete tax items, including the non-deductibility of a portion of the Company's intangible asset impairment charges, the provision of a valuation allowance related to certain

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state and Canada deferred tax assets, and the incremental tax provision related to the vesting of stock awards. Offsetting these impacts was a benefit associated with the CARES ACT, which permits the Company to carry back 2020 losses to years with a higher federal tax rate.stores.

As of July ~~31, 2021, 0~~30, 2022, no deferred taxes have been provided on the accumulated unremitted earnings of the Company’s foreign subsidiaries that are not subject to United States income tax, beyond the amounts recorded for the one-time transition tax for the mandatory deemed repatriation of cumulative foreign earnings, as required by the Tax Cuts and Jobs Act. The Company periodically evaluates its ~~foreign~~international investment opportunities and plans, as well as its ~~foreign~~international working capital needs, to determine the level of investment required and, accordingly, determines the level of ~~foreign~~international earnings that is considered indefinitely reinvested. Based upon that evaluation, earnings of the Company’s ~~foreign~~international subsidiaries that are not otherwise subject to United States taxation are considered to be indefinitely reinvested, and accordingly, deferred taxes have not been provided. If changes occur in future investment opportunities and plans, those changes will be reflected when known and may result in providing residual United States deferred taxes on unremitted ~~foreign~~international earnings.

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Note 16 Commitments and Contingencies

Environmental Remediation

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

Redfield

The Company is remediating, under the oversight of Colorado authorities, the groundwater and indoor air at its owned facility in Colorado (the “Redfield site” or, when referring to remediation activities at or under the facility, the “on-site remediation”) and residential neighborhoods adjacent to and near the property (the “off-site remediation”) that have been affected by solvents previously used at the facility. The on-site remediation calls for the operation of a pump and treat system (which prevents migration of contaminated groundwater off the property) as the final remedy for the site, subject to monitoring and periodic review of the on-site conditions and other remedial technologies that may be developed in the future. In 2016, the Company submitted a revised plan to address on-site conditions, including direct treatment of source areas, and received approval from the oversight authorities to begin implementing the revised plan.

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

The cumulative expenditures for both on-site and off-site remediation through July ~~31, 2021~~30, 2022 were ~~$32.1~~$32.7 million. The Company has recovered a portion of these expenditures from insurers and other third parties. The reserve for the anticipated future remediation activities at July ~~31, 2021~~30, 2022 is $9.9 million, of which ~~$9.0~~$8.9 million is recorded within other liabilities and ~~$0.9~~$1.0 million is recorded within other accrued expenses. Of the total $9.9 million reserve, $5.1 million is for off-site remediation and $4.8 million is for on-site remediation. The liability for the on-site remediation was discounted at 4.8%. On an undiscounted basis, the on-site remediation liability would be ~~$13.6~~$13.4 million as of July ~~31, 2021.~~30, 2022. The Company expects to spend approximately ~~$0.5~~$0.6 million in 2022, $0.1 million in 2each021~~, $0.1 million in each~~ of the following fouryears and ~~$12.7~~$12.4 million in the aggregate thereafter related to the on-site remediation.

Other

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

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

Litigation

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

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

OVERVIEW

We ~~experienced better-than-anticipated consumer demand in the second quarter of 2021, recording sequential net sales growth~~delivered strong financial and significant gross margin improvement. We also achieved the highest second quarter operating earnings in our history. We experienced consistently strong sales performance throughout the quarter at Famous Footwear, which contributed to the segment’s highest second quarter net sales in its history.

In the first half of last year, our financial results were negatively impacted by the coronavirus (“COVID-19”) pandemic, including the temporary closure of all of our retail stores beginning in mid-March, with a phased re-opening beginning in mid-May. We did experience sequential improvement in sales in the second half of 2020, driven by the reopening of our retail stores, and continued solid growth of our e-commerce business. During the first half of 2021, as the vaccines became widely distributed and governments continued to ease restrictions, consumer sentiment and spending improved, which contributed to higher store traffic and strong growth in our net sales and operating earnings.

~~While we achieved strong financial~~operational results for the second quarter, with record net sales and earnings. We leveraged our lead brands to capitalize on robust demand in trending footwear categories to meet the needs of ~~2021, we continue to experience global supply chain disruptions as a result~~our core consumer and drive strong gross profit and operating margins.We also strategically augmented our inventory levels in advance of the ~~pandemic. These disruptions have caused a delay in the receipt~~fall buying and back-to-school seasons. We continued to execute on our capital return program and repurchased 1.1 million shares of inventory due to port congestion, reduced shipping vessel and container availability, and factory shutdowns as a result of the resurgence of COVID-19 infections, as well as an increase in inbound freight costs. We are actively working with our ~~suppliers to minimize these disruptions, but we anticipate higher inbound freight costs in~~common stock during the second ~~half~~quarter of ~~2021 and beyond. The extent and duration of these supply chain disruptions and higher freight costs are uncertain.~~2022.

Financial Highlights

Following is a summary of the financial highlights for the second quarter of ~~2021:~~2022:

●

~~Strong consumer demand led to a consolidated~~Consolidated net sales ~~increase of $174.1~~increased $62.8 million, or ~~34.7%~~9.3%, to $738.3 million in the second quarter of 2022, compared to $675.5 million in the second quarter of ~~2021, compared to $501.4 million in the second quarter of 2020. The sales increase was broad-based and across both segments.~~2021. Our Famous Footwear segment ~~contributed a~~continued its strong performance with net sales ~~increase~~ of ~~$119.7 million, or 35.8%.~~$436.4 million. Net sales inof our Brand Portfolio segment increased ~~by $55.4~~$85.1 million, or ~~30.2%~~35.6%, compared to the second quarter of ~~2020.~~2021. On a consolidated basis, our direct-to-consumer sales represented ~~79%~~approximately 72% of consolidated net sales for the second quarter of ~~2021,~~2022, compared to ~~80%~~79% in the second quarter of ~~2020.~~2021.

●

Consolidated gross profit increased ~~$139.7~~$14.5 million, or ~~76.5%~~4.5%, to $336.8 million in the second quarter of 2022, compared to $322.3 million in the second quarter of ~~2021, compared~~2021. Our gross profit margin decreased to ~~$182.6 million~~45.6% in the second quarter of ~~2020. Our gross profit margin increased significantly~~2022, compared to 47.7% in the second quarter of 2021, ~~compared to 36.4% in the second quarter of 2020,~~ reflecting a ~~decline~~higher mix of wholesale versus retail sales combined with higher markdowns and an increase in ~~promotional activity driven by strong consumer demand.~~ freight costs associated with e-commerce sales.

●

Consolidated operating earnings increased ~~$86.9~~$5.6 million to $68.4 million in the second quarter of 2022, compared to $62.8 million in the second quarter of ~~2021, compared to an operating loss of $24.1 million in the second quarter of 2020.~~2021.

●

Consolidated net earnings attributable to Caleres, Inc. were $51.2 million, or $1.38 per diluted share, in the second quarter of 2022, compared to $37.4 million, or $0.97 per diluted share, in the second quarter of ~~2021, compared to a net loss of $30.7 million, or $0.83 per diluted share, in the second quarter of 2020.~~2021.

The following items should be considered in evaluating the comparability of our second quarter results in ~~2021~~2022 and ~~2020:~~2021:

●

Inflationary Pressures – We continued to experience inflationary pressures on product costs and inbound freight during the second quarter of 2022. The price increases we began implementing in the second half of 2021 have mitigated the majority of these inflationary pressures related to product costs. We believe our ability to limit promotional activity and align inventory to demand will continue to mitigate the impact of these inflationary pressures on our financial results. However, ongoing general inflation continues to impact consumer sentiment and may result in lower consumer spending in the second half of 2022 and beyond.

●

Blowfish Malibu mandatory purchase obligation – As further discussed in Note 5 and Note 14 to the condensed consolidated financial statements, the remaining interest in Blowfish Malibu ~~noncontrolling interest is~~was subject to a mandatory purchase obligation after a three-year period following the 2018 acquisition, based on an earnings multiple formula. During the second quarter of 2021, we recorded a fair value adjustment of $7.1 million ($5.3 million on an after-tax basis, or $0.14 per diluted share)~~, compared to $6.6 million ($4.9 million on an after-tax basis, or $0.13 per diluted share) in the second quarter of 2020.~~. The fair value ~~adjustments are~~adjustment was recorded as interest expense, net in the condensed consolidated ~~statements~~statement of ~~earnings (loss). The three-year period following the acquisition ended on July 31, 2021, and we expect to settle the purchase obligation~~earnings. There were no corresponding charges in ~~the third quarter of 2021, utilizing borrowings under our revolving credit agreement.~~

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●

~~Deferred tax valuation allowances – During~~ the second quarter of ~~2021, we recorded incremental net deferred tax valuation allowances totaling $3.3 million ($0.08 per diluted share), as we are in a full valuation allowance position~~2022. The purchase obligation was settled for ~~federal, state and certain international jurisdictions. Refer to Note 15 to the condensed consolidated financial statements for further discussion.~~

●

~~COVID-19-related expenses – During the second quarter of 2020, we incurred $5.4 million ($4.7~~$54.6 million on an after-tax basis, or $0.13 per diluted share) in costs associated with the economic impacts of the COVID-19 pandemic, for severance and related costs, as well as the cost of supplies and deep cleaning our facilities.November 4, 2021.

Metrics Used in the Evaluation of Our Business

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

Same-store sales

The same-store sales metric is a metric commonly used in the retail industry to evaluate the revenue generated for stores that have been open for more than a year, though other retailers may calculate the metric differently. Management uses the same-store sales metric as a measure of an individual store’s success to determine whether it is performing in line with expectations. Our same-store sales metric is a ~~daily-weighted~~daily-

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weighted calculation for the period, which includes sales for stores that have been open for at least 13 months. In addition, in order to be included in the same-store sales metric, a store must be open in the current period as well as the corresponding day(s) of the comparable retail calendar in the prior year. Accordingly, closed stores ~~(whether temporary or permanent closures)~~ are excluded from the same-store sales metric for each day of the closure. Relocated stores are treated as new stores and therefore excluded from the calculation. E-commerce sales for those websites that function as an extension of a retail chain are included in the same-store sales calculation. We believe the same-store sales metric is useful to shareholders and investors in assessing our retail sales performance of existing locations with comparable prior year sales, separate from the impact of store openings or store closures.

Beginning in mid-March 2020, all of our Famous Footwear and Brand Portfolio stores in North America were temporarily closed and we began a phased reopening of retail stores in mid-May. Our same-store sales calculation excludes the impact of both permanent and temporary store closures. Accordingly, for the second quarter of 2020, our same-store sales calculation was impacted more heavily by our e-commerce sales penetration, which was higher than in prior periods, given the strong growth in that channel and the fact that our e-commerce sites continued to operate throughout the second quarter of 2020.

Sales per square foot

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

Outlook

~~We continued to execute at a high level during the second quarter of 2021, achieving another significant sequential increase in net sales~~Even with ongoing inflationary pressures and delivering operating earnings in excess of pre-pandemic levels. The new COVID-19 variants and the impact of the pandemic on the global supply chain have caused uncertainty in the macro environment. We are actively working with our suppliers to minimize these disruptions, but expect the inflationary economy and the increase in inbound freight costs to impact our financial results in the second half of 2021. Throughout the remainder of 2021,uncertainties around consumer sentiment, we ~~will remain focused on building upon our strong performance at Famous Footwear, driving inventory efficiencies, and continuing to create a strong emotional connection with our consumers. We~~ believe we are well-positioned to ~~navigate through the supply chain disruptions, responding to the variables within~~capitalize on opportunities across a broad spectrum of consumer segments by leveraging our ~~control, to improve financial results in the Brand Portfolio segment.~~diverse portfolio of brands. We will continue to ~~leverage~~utilize our core competencies in brand building, merchandising, marketing and logistics to further our strategic priorities and execute on our ~~long-term strategic priorities~~capital return program in an effort to enhance ~~long-term~~ value for our shareholders.

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Following are the consolidated results and the results by segment:

CONSOLIDATED RESULTS


	Thirteen Weeks Ended								Twenty-Six Weeks Ended								Thirteen Weeks Ended								Twenty-Six Weeks Ended
	July 31, 2021				August 1, 2020				July 31, 2021				August 1, 2020				July 30, 2022				July 31, 2021				July 30, 2022				July 31, 2021
			% of				% of				% of				% of				% of				% of				% of				% of
($ millions)			Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales
Net sales	$	675.5	100.0	%	$	501.4	100.0	%	$	1,314.2	100.0	%	$	898.6	100.0	%	$	738.3	100.0	%	$	675.5	100.0	%	$	1,473.4	100.0	%	$	1,314.2	100.0	%
Cost of goods sold		353.2	52.3	%		318.8	63.6	%		717.0	54.6	%		594.1	66.1	%		401.5	54.4	%		353.2	52.3	%		809.6	54.9	%		717.0	54.6	%
Gross profit		322.3	47.7	%		182.6	36.4	%		597.2	45.4	%		304.5	33.9	%		336.8	45.6	%		322.3	47.7	%		663.8	45.1	%		597.2	45.4	%
Selling and administrative expenses		259.5	38.4	%		201.3	40.1	%		503.0	38.3	%		426.6	47.5	%		268.4	36.3	%		259.5	38.4	%		529.2	36.0	%		503.0	38.3	%
Impairment of goodwill and intangible assets		—	—			—	—			—	—	%		262.7	29.2	%
Restructuring and other special charges, net		—	—	%		5.4	1.1	%		13.5	1.0	%		65.6	7.3	%		—	—	%		—	—	%		—	—	%		13.5	1.0	%
Operating earnings (loss)		62.8	9.3	%		(24.1)	(4.8)	%		80.7	6.1	%		(450.4)	(50.1)	%
Operating earnings																		68.4	9.3	%		62.8	9.3	%		134.6	9.1	%		80.7	6.1	%
Interest expense, net		(12.0)	(1.7)	%		(13.5)	(2.7)	%		(23.8)	(1.8)	%		(22.9)	(2.6)	%		(2.5)	(0.3)	%		(12.0)	(1.7)	%		(4.8)	(0.3)	%		(23.8)	(1.8)	%
Other income, net		3.9	0.5	%		3.7	0.7	%		7.7	0.6	%		7.3	0.8	%		3.2	0.4	%		3.9	0.5	%		6.6	0.5	%		7.7	0.6	%
Earnings (loss) before income taxes		54.7	8.1	%		(33.9)	(6.8)	%		64.6	4.9	%		(466.0)	(51.9)	%
Income tax (provision) benefit		(16.5)	(2.5)	%		3.2	0.7	%		(20.1)	(1.5)	%		89.1	10.0	%
Net earnings (loss)		38.2	5.6	%		(30.7)	(6.1)	%		44.5	3.4	%		(376.9)	(41.9)	%
Earnings before income taxes																		69.1	9.4	%		54.7	8.1	%		136.4	9.3	%		64.6	4.9	%
Income tax provision																		(17.5)	(2.4)	%		(16.5)	(2.5)	%		(34.9)	(2.4)	%		(20.1)	(1.5)	%
Net earnings																		51.6	7.0	%		38.2	5.6	%		101.5	6.9	%		44.5	3.4	%
Net earnings (loss) attributable to noncontrolling interests		0.8	0.1	%		0.0	0.0	%		1.0	0.1	%		(0.3)	(0.0)	%		0.4	0.1	%		0.8	0.1	%		(0.2)	(0.0)	%		1.0	0.1	%
Net earnings (loss) attributable to Caleres, Inc.	$	37.4	5.5	%	$	(30.7)	(6.1)	%	$	43.5	3.3	%	$	(376.6)	(41.9)	%
Net earnings attributable to Caleres, Inc.																	$	51.2	6.9	%	$	37.4	5.5	%	$	101.7	6.9	%	$	43.5	3.3	%

Net Sales

Net sales increased ~~$174.1~~$62.8 million, or ~~34.7%~~9.3%, to $738.3 million for the second quarter of 2022, compared to $675.5 million for the second quarter of 2021, compared to $501.4 million for the second quarter of 2020. Our Famous Footwear segment continued to experience strong consumer demand, with net sales increasing $119.7 million, or 35.8%, compared to the second quarter of 2020. Famous Footwear’s net sales of $453.6 million were sequentially higher than the first quarter of 2021 and the highest second quarter net sales in our history.2021. Net sales for our Brand Portfolio segment increased ~~$55.4~~$85.1 million, or ~~30.2%~~35.6% during the second quarter of ~~2021. While Brand Portfolio net sales improved over last year, they remain below pre-pandemic levels, due in part~~2022, compared to the ~~brand exits announced~~second quarter of 2021, led by strong performances by our lead brands. Net sales for our Famous Footwear segment remained strong, but decreased $17.3 million, or 3.8%, in ~~late 2019~~the second quarter of 2022 compared to the second quarter of 2021, primarily reflecting a lower store count and ~~early 2020 and~~a slower start to the ~~closure of all but two Naturalizer retail stores in North America.~~back-to-school season. On a consolidated basis, our direct-to-consumer sales represented ~~79%~~approximately 72% of total net sales for the second quarter of ~~2021. Our casual, athletic and sport footwear categories~~2022. We continued to ~~resonate with consumers, and we experienced strong sales~~experience robust growth in ~~sandals.~~our dress, casual and occasion-based styles during the quarter. While demand for our athletics footwear slowed during the quarter, it continues to be one of our top-selling categories. We remain focused on maximizing the vertical opportunity between the Famous Footwear and Brand Portfolio segments, with Dr. Scholl’s, LifeStride and Blowfish Malibu representing three of Famous Footwear’s top 15 best-selling footwear brands during the quarter.

Net sales increased ~~$415.6~~$159.2 million, or ~~46.2%~~12.1%, to $1,473.4 million for the six months ended July 30, 2022, compared to $1,314.2 million for the six months ended July 31, ~~2021,~~2021. Net sales for our Brand Portfolio segment increased $200.5 million, or 41.0% during the first six months of 2022, compared to ~~$898.6 million for~~ the first six months ~~ended August 1, 2020. Our strong performance was attributable to a number~~ of factors, including positive consumer sentiment attributable to the widespread availability of the COVID-19 vaccines and easing of government restrictions, as well as additional government stimulus measures. We believe that these factors led to a significant improvement in retail store traffic.2021. Our Famous Footwear ~~segment experienced a~~segment’s sales momentum continued. However, net sales ~~increase of $326.6~~for Famous Footwear decreased $30.9 million, or ~~62.2%~~3.6%, in the first six months of 2022 compared to the first six months of 2021, primarily

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reflecting a lower store count and a slower start to the back-to-school season. On a consolidated basis, our direct-to-consumer sales represented approximately 69% of total net sales for the six months ended July 31, 2021, with record-setting net sales of $851.8 million. Our Brand Portfolio segment reported an $88.4 million, or 22.1%, increase in net sales, with strong sales growth from our Sam Edelman, Blowfish, Vionic and Allen Edmonds brands.30, 2022.

Gross Profit

Gross profit increased ~~$139.7~~$14.5 million, or ~~76.5%~~4.5%, to $336.8 million for the second quarter of 2022, compared to $322.3 million for the second quarter of 2021, ~~compared to $182.6 million for the second quarter of 2020,~~ reflecting higher net ~~sales and a higher gross profit rate.~~sales. As a percentage of net sales, gross profit ~~increased~~decreased to 45.6% for the second quarter of 2022, compared to 47.7% for the second quarter of 2021, ~~compared to 36.4% for the second quarter of 2020,~~ reflecting a ~~decline~~higher mix of wholesale versus retail sales combined with higher markdowns and an increase in ~~promotional activity driven by strong consumer demand.~~freight costs associated with e-commerce sales.

Gross profit increased ~~$292.7~~$66.6 million, or ~~96.1%~~11.2%, to $663.8 million for the six months ended July 30, 2022, compared to $597.2 million for the six months ended July 31, 2021, ~~compared to $304.5 million for the six months ended August 1, 2020, primarily due to~~reflecting higher net sales and a reduction in promotional activity at Famous Footwear. For the six months ended August 1, 2020, our gross profit was impacted by higher incremental cost of goods sold primarily due to $33.4 million in inventory markdowns reflecting the difficult retail environment driven by the COVID-19 pandemic, as well as $1.6 million in inventory markdowns related to the decision to exit our Fergie brand.sales. As a percentage of net sales, gross profit ~~increased~~decreased slightly to 45.1% for the first half of 2022, compared to 45.4% for the ~~six months ended July 31, 2021, compared to 33.9% for the six months ended August 1, 2020.~~ first half of 2021.

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

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Selling and Administrative Expenses

Selling and administrative expenses increased ~~$58.2~~$8.9 million, or ~~28.9%~~3.4%, to $268.4 million for the second quarter of 2022, compared to $259.5 million for the second quarter of ~~2021, compared to $201.3 million for the second quarter of 2020.~~2021. The increase was ~~primarily due~~driven by higher marketing expenses as a result of our strategic investment in consumer marketing to drive deeper connections with our consumers, and higher salary and benefits expenses, partially offset by lower expenses associated with our cash-based incentive compensation plans. In 2021, our first half financial results exceeded the targets established for our annual incentive plans, which resulted in a larger portion of the anticipated plan ~~for certain employees and higher salary expenses~~payouts recorded as expense in the second quarter of 2021. ~~Salary expenses were lower~~For 2022, anticipated plan payouts are being recognized more ratably during the second quarter of 2020 as a result of the actions taken to mitigate the impact of COVID-19 on our financial results. In response to the temporary closure of our retail stores at the onset of the pandemic in the first quarter of 2020, we took steps to reduce expenses, including workforce reductions and furloughs for a significant portion of our retail store associates, as well as temporary salary reductions for most remaining employees, which continued through the end of the second quarter of 2020. Marketing and advertising expenses were also higher in the second quarter of 2021, which were partially offset by lower rent and facilities expenses, primarily associated with the Naturalizer retail store closures.year. As a percentage of net sales, selling and administrative expenses decreased to 36.4% for the second quarter of 2022, from 38.4% for the second quarter of 2021, ~~from 40.1% for the second quarter~~reflecting leveraging of ~~2020.~~expenses on higher net sales.

Selling and administrative expenses increased ~~$76.4~~$26.2 million, or ~~17.9%~~5.2%, to $529.2 million for the six months ended July 30, 2022, compared to $503.0 million for the six months ended July 31, ~~2021, compared to $426.6 million for the six months ended August 1, 2020.~~2021. The increase ~~for~~primarily reflects the six months ended July 31, 2021 was primarily due to higher expenses for our cash-based incentive compensation plan for certain employees and higher salary expenses. As discussed above, salary expenses were lower during the six months ended August 1, 2020 as a result of the actions taken to mitigate the impact of COVID-19 on our financial results.factors described above. As a percentage of net sales, selling and administrative expenses decreased to ~~38.3%~~36.0% for ~~the second quarter of 2021, from 47.5% for the second quarter of 2020, reflecting better leveraging of expenses over higher net sales.~~

~~Impairment of Goodwill and Intangible Assets~~

~~During~~ the six months ended August 1, 2020, we recorded non-cash impairment charges of $262.7 million ($218.5 million on an after-tax basis), including $240.3 million associated with goodwill and $22.4 million associated with the indefinite-lived Allen Edmonds and Via Spiga trade names. There were no corresponding chargesJuly 30, 2022, from 38.3% for the six months ended July 31, ~~2021. Refer to Note 5 and Note 8 to the condensed consolidated financial statements for further discussion~~2021, reflecting leveraging of ~~these charges.~~ expenses on higher net sales.

Restructuring and Other Special Charges, Net

We incurred restructuring and other special charges of $5.4 million ($4.7 million on an after-tax basis, or $0.13 per diluted share) in the second quarter of 2020, primarily for severance, as well as supplies and deep cleaning of our facilities, driven by the impact of the COVID-19 pandemic on our business operations. There were no corresponding charges in the second quarter of 2021. Refer to Note 5 to the condensed consolidated financial statements for further discussion of these charges.

We incurred restructuring and other special charges of $13.5 million ($11.9 million on an after-tax basis, or $0.31 per diluted share) during the six months ended July 31, 2021, reflecting expenses associated with the ~~decision to close all~~strategic realignment of the Naturalizer retail ~~stores in North America with the exception of two Naturalizer flagship retail stores in the United States. During~~store operations. There were no corresponding charges during the six months ended ~~August 1, 2020, we incurred restructuring and other special charges~~July 30, 2022 or the second quarter of $65.6 million ($52.5 million on an after-tax basis, or $1.46 per diluted share) related to the unfavorable business climate, driven by the impact of the COVID-19 pandemic on our business operations. These charges were primarily for impairment associated with lease right-of-use assets and retail store furniture and fixtures, liabilities associated with factory order cancellations and severance.2021. Refer to Note 5 to the condensed consolidated financial statements for further discussion of these charges.

Operating Earnings ~~(Loss)~~

Operating earnings increased ~~$86.9~~$5.6 million to $68.4 million for the second quarter of 2022, compared to $62.8 million for the second quarter of 2021, ~~compared to an operating loss of $24.1 million for the second quarter of 2020,~~ primarily reflecting higher net sales and gross profit. As a percentage of net sales, operating earnings were 9.3% for the second quarter of ~~2021, compared to an operating loss of 4.8% for~~2022, consistent with the second quarter of ~~2020.~~2021.

Operating earnings increased ~~$531.0~~$53.9 million to $134.6 million for the six months ended July 30, 2022, compared to $80.7 million for the six months ended July 31, 2021, ~~compared to an operating loss of $450.4 million for the six months ended August 1, 2020,~~ primarily reflecting higher net sales and gross ~~profit, lower impairment charges and better leveraging of expenses over a higher net sales base.~~profit. As a percentage of net sales, operating earnings were 9.1% for the six months ended July 30, 2022, compared to 6.1% for the six months ended July 31, ~~2021, compared to an operating loss of 50.1% for the six months ended August 1, 2020.~~2021.

Interest Expense, Net

Interest expense, net decreased ~~$1.5~~$9.5 million, or ~~11.0%~~78.4%, to $2.5 million for the second quarter of 2022, compared to $12.0 million for the second quarter of 2021, ~~compared~~primarily due to ~~$13.5~~the non-recurrence of the $7.1 million ~~for~~fair value adjustment to the Blowfish Malibu mandatory purchase obligation in the second quarter of ~~2020, reflecting lower~~2021. The purchase obligation was settled for $54.6 million on November 4, 2021. In addition, we redeemed our $200 million aggregate principal of senior notes in the second half of 2021. By retiring our senior notes, we shifted our higher-rate debt to the lower-rate borrowings under our revolving credit agreement, which reduced our interest expense by approximately $3.1 million compared to the second quarter of 2021. These decreases were partially offset by an increase in interest expense attributable to higher average borrowings under our revolving credit agreement. We continued to make debt reduction a priority during the second quarter of 2021, repaying $100.0 million of borrowings under our revolving credit facility, ending the quarter with $100.0 million of revolver borrowings. This decrease was partially offset by a $0.5 million increase in the fair value adjustment to the

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Blowfish Malibu mandatory purchase obligation, to $7.1 million in the second quarter of 2021, compared to $6.6 million in the second quarter of 2020, reflecting continued sales and earnings growth of the Blowfish Malibu brand.

Interest expense, net ~~increased $0.9~~decreased $19.0 million, or ~~3.8%~~79.4%, to $4.8 million for the six months ended July 30, 2022, compared to $23.8 million for the six months ended July 31, 2021, ~~compared~~primarily due to ~~$22.9~~the non-recurrence of the $13.5 million ~~for the six months ended August 1, 2020, reflecting a $3.7 million increase in the~~ fair value adjustment to the Blowfish Malibu mandatory purchase obligation in the six months ended July 31, 2021. In addition, after retiring our senior notes, the shift of our higher-rate debt to ~~$13.5~~the lower-rate borrowings under our revolving credit agreement reduced our interest expense by approximately $6.3 million compared to the six months ended July 31, 2021. These decreases were partially offset by an increase in interest expense attributable to higher average borrowings under our revolving credit agreement.

Other Income, Net

Other income, net decreased $0.7 million, or 16.7%, to $3.2 million for the second quarter of 2022, compared to $3.9 million for the second quarter of 2021, which reflects a reduction of certain components of net periodic benefit income.

Other income, net decreased $1.1 million, or 13.6%, to $6.6 million for the six months ended July 30, 2022, compared to $7.7 million for the six months ended July 31, 2021, from $9.8 million in the six months ended August 1, 2020. The increase associated with the mandatory purchase obligation was partially offset by lower average borrowings under our revolving credit agreement. We have continued to utilize our strong cash generation to reduce the incremental borrowings that were used to preserve financial flexibility at the onsetwhich reflects a reduction of ~~the pandemic, reducing the borrowings under our revolving credit agreement from $440.0 million in March 2020 to $100.0 million at July 31, 2021.~~

~~Other Income, Net~~

Other income, net increased $0.2 million, or 5.1%, to $3.9 million for the second quarter of 2021, compared to $3.7 million for the second quarter of 2020. Refer to Note 13 of the condensed consolidated financial statements for further detail regarding thecertain components of net periodic benefit income.

~~Other income, net increased $0.4 million, or 5.9%, to $7.7 million for six months ended July 31, 2021, compared to $7.3 million for the six months ended August 1, 2020.~~ Refer to Note 13 of the condensed consolidated financial statements for further detail regarding the components of net periodic benefit income.

Income Tax ~~(Provision) Benefit~~Provision

Our effective tax rate can vary considerably from period to period, depending on a number of factors. Our consolidated effective tax rate was 25.3% for the second quarter of 2022, compared to 30.3% for the second quarter of ~~2021, compared to 9.4% for the second quarter of 2020. Our~~2021. The higher effective tax rate for the second quarter of 2021 was driven by discrete tax adjustments of $2.9 million, inclusive of $3.3 million of incremental valuation allowances for our deferred tax assets, as we ~~are~~were in a full valuation allowance position for federal, state and certain international jurisdictions. ~~During the second quarter of 2020, our~~

Our consolidated effective tax rate was ~~impacted by several discrete tax items totaling $2.7 million, including~~25.5% for the ~~non-deductibility of losses at our Canadian business division. Offsetting this impact was a benefit associated with the CARES Act, which permits the Company~~six months ended July 30, 2022, compared to ~~carry back 2020 losses to years with a higher federal tax rate.~~

~~For~~31.1% for the six months ended July 31, ~~2021, our consolidated~~2021. The higher effective ~~tax rate was 31.1%, compared to 19.1% for the six months ended August 1, 2020. Our higher~~ tax rate for the ~~six months ended July 31,~~first half of 2021 primarily reflects the incremental valuation allowances recorded in the second quarter, as described above, and the non-deductibility of losses at our Canadian ~~business~~ division, which were driven by exit-related costs associated with our Naturalizer retail stores ~~during~~in the first ~~quarter. Our effective tax rate for the six months ended August 1, 2020 was impacted by several discrete tax items, including the non-deductibility~~quarter of a portion of our intangible asset impairment charges, the provision of a valuation allowance related to certain state and Canada deferred tax assets, and the incremental tax provision related to the vesting of stock awards. Offsetting these impacts was a benefit associated with the CARES ACT, which permits the Company to carry back 2020 losses to years with a higher federal tax rate.2021.

Net Earnings ~~(Loss)~~ Attributable to Caleres, Inc.

Net earnings attributable to Caleres, Inc. were $51.2 million and $101.7 million for the second quarter and six months ended July 30, 2022, respectively, compared to net earnings of $37.4 million and $43.5 million for the second quarter and six months ended July 31, 2021, respectively, ~~compared to net losses of $30.7 million and $376.6 million for the second quarter and six months ended August 1, 2020, respectively,~~ as a result of the factors described above.

FAMOUS FOOTWEAR


	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	July 30, 2022					July 31, 2021					July 30, 2022					July 31, 2021
				% of					% of					% of					% of
($ millions, except sales per square foot)				Net Sales					Net Sales					Net Sales					Net Sales
Net sales	$	436.4		100.0	%	$	453.6		100.0	%	$	820.9		100.0	%	$	851.8		100.0	%
Cost of goods sold		222.8		51.1	%		226.2		49.9	%		418.1		50.9	%		444.6		52.2	%
Gross profit		213.6		48.9	%	$	227.4		50.1	%		402.8		49.1	%	$	407.2		47.8	%
Selling and administrative expenses		151.1		34.6	%		141.9		31.3	%		290.6		35.4	%		273.8		32.1	%
Operating earnings	$	62.5		14.3	%	$	85.5		18.8	%	$	112.2		13.7	%	$	133.4		15.7	%

Key Metrics
Same-store sales % change		(3.1)	%				(1.1)	%				(3.5)	%				0.5	%
Same-store sales $ change	$	(13.5)				$	(3.6)				$	(29.1)				$	2.6
Sales change from new and closed stores, net	$	(3.3)				$	122.6				$	(1.4)				$	322.8
Impact of changes in Canadian exchange rate on sales	$	(0.4)				$	0.7				$	(0.4)				$	1.2

Sales per square foot, excluding e-commerce (thirteen and twenty-six weeks ended)	$	66				$	67				$	123				$	122
Sales per square foot, excluding e-commerce (trailing twelve months)	$	250				$	219				$	250				$	219
Square footage (thousand sq. ft.)		5,832					6,022					5,832					6,022

Stores opened		—					4					—					8
Stores closed		6					5					13					12
Ending stores		881					912					881					912

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~~FAMOUS FOOTWEAR~~

Thirteen Weeks Ended

Twenty-Six Weeks Ended

July 31, 2021

August 1, 2020


July 31, 2021

August 1, 2020

% of

% of

% of

% of

($ millions, except sales per square foot)



Net Sales



Net Sales




Net Sales



Net Sales

Net sales

$
453.6

100.0
%
$
333.9

100.0
%

$
851.8

100.0
%
$
525.2

100.0
%
Cost of goods sold

226.2

49.9
%

214.7

64.3
%

444.6

52.2
%

337.0

64.2
%
Gross profit

227.4

50.1
%
$
119.2

35.7
%

407.2

47.8
%
$
188.2

35.8
%
Selling and administrative expenses

141.9

31.3
%

117.6

35.2
%

273.8

32.1
%

238.1

45.3
%
Restructuring and other special charges, net

—

—
%

0.6

0.2
%

—

—
%

16.6

3.2
%
Operating earnings (loss)

$
85.5

18.8
%
$
1.0

0.3
%

$
133.4

15.7
%
$
(66.5)

(12.7)
%

















Key Metrics

















Same-store sales % change

(1.1)
%


14.7
%


0.5
%


13.9
%


Same-store sales $ change

$
(3.6)



$
42.7



$
2.6



$
64.5



Sales change from new and closed stores, net

$
122.6



$
(128.5)



$
322.8



$
(311.2)



Impact of changes in Canadian exchange rate on sales

$
0.7



$
(0.1)



$
1.2



$
(0.1)



Sales per square foot, excluding e-commerce (thirteen and twenty-six weeks ended)

$
67



$
40



$
122



$
62



Sales per square foot, excluding e-commerce (trailing twelve months)

$
219



$
176



$
219



$
176



Square footage (thousand sq. ft.)

6,022



6,210



6,022



6,210

















Stores opened

4



3



8



3



Stores closed

5



1



12



16



Ending stores

912



936



912



936

Net Sales

~~Famous Footwear achieved net~~Net sales of ~~$453.6~~$436.4 million ~~which was~~in the ~~highest~~ second quarter ~~net sales in our history. Net sales increased $119.7~~of 2022 decreased $17.3 million, or ~~35.8%~~3.8%, compared to the second quarter of ~~2020. With~~2021. The elevated consumer demand we experienced in 2021 and the increase in COVID-19 vaccination rates, we have experienced strong growth in our retail store traffic and consistently strong sales performance throughout the quarter. This trend led to higher in-store sales but a decline in e-commerce penetration infirst quarter of 2022 continued for much of the second quarter of ~~2021,~~2022. However, we began to ~~approximately 11% of net sales, compared to approximately 25%~~see consumer demand, store and e-commerce traffic and conversion moderate somewhat later in the ~~second~~quarter, reflecting cautious consumer sentiment due to inflation and other economic concerns. That trend has continued into the third quarter of ~~2020 when~~2022. We experienced improvement in our ~~retail stores were closed~~non-athletic footwear categories, and while demand slowed for ~~a portion~~our athletics footwear, it continues to be one of ~~the quarter. Our casual, athletic and sport categories of footwear continue to resonate with customers, and we also experienced strong growth in sandals.~~our top-selling categories. During the second quarter of ~~2021,~~2022, we ~~opened four~~closed six stores, resulting in 881 stores and ~~closed five stores, resulting in~~total square footage of 5.8 million at the end of the second quarter of 2022, compared to 912 stores and total square footage of 6.0 million at the end of the second quarter of ~~2021, compared to 936 stores and total square footage of 6.2 million at the end of the second quarter of 2020.~~2021. Sales to members of our customer loyalty program, Famously You Rewards ("Rewards"), continue to account for a majority of the segment’s sales, with approximately ~~78%~~77% of our net sales made to program members in the second quarter of ~~2021,~~2022, compared to ~~79%~~78% in the second quarter of ~~2020.~~2021.

Net sales ~~increased $326.6~~of $820.9 million in the six months ended July 30, 2022 decreased $30.9 million, or ~~62.2%~~3.6%, compared to the six months ended July 31, 2021, primarily due to the factors described above. Athletics and casual continue to be our top-selling categories. We remain focused on maximizing the vertical opportunity between the Famous Footwear and Brand Portfolio segments, with LifeStride, Dr. Scholl’s and Blowfish Malibu representing three of Famous Footwear’s top 15 best-selling footwear brands for the six months ended July 30, 2022. During the first half of 2022, we closed 13 stores.

Gross Profit

Gross profit decreased $13.8 million, or 6.1%, to ~~$851.8~~$213.6 million for the second quarter of 2022, compared to $227.4 million for the second quarter of 2021. As a percentage of net sales, our gross profit decreased to 48.9% for the second quarter of 2022, compared to 50.1% for the second quarter of 2021. Although the gross profit rate for the second quarter of 2022 was slightly lower than the comparable period of 2021, it remained strong with limited promotional activity for much of the second quarter of 2022.

Gross profit decreased $4.4 million, or 1.1%, to $402.8 million for the six months ended July 30, 2022, compared to $407.2 million for the six months ended July 31, 2021, ~~compared~~primarily due to ~~$525.2 million for~~ the six months ended August 1, 2020. Our strong performance during the six months ended July 31, 2021 was attributable to a number of factors. Consumer confidence improved during the six months ended July 31, 2021 as a result of the widespread availability of the COVID-19 vaccines and the easing of government restrictions, which led to a significant increasedecrease in ~~retail store traffic and conversion rates. Additional government stimulus measures also positively impacted~~ net sales. E-commerce penetration was approximately 13% of net sales in the six months ended July 31, 2021, compared to approximately 26% in the six months ended August 1, 2020 when our retail stores were temporarily closed from mid-March, with a phased reopening beginning in May. Our casual, athletic and sport categories of footwear continued to be the strongest performers. D~~uring the six months ended July 31, 2021, we opened eight stores and closed 12 stores.~~

~~Gross Profit~~

Gross profit increased $108.2 million, or 90.9%, to $227.4 million for the second quarter of 2021, compared to $119.2 million for the second quarter of 2020, driven by the sales increase and a higher gross profit rate. As a percentage of net sales, our gross profit increased to 50.1% for the second quarter of 2021, compared to 35.7% for the second quarter of 2020. Due to our well-positioned inventory and strong sell-throughs, we reduced promotional activity, resulting in higher gross margins in both our retail stores and e-commerce business during the second quarter of 2021.

~~Gross profit increased $219.0 million, or 116.3%, to $407.2 million~~49.1% for the six months ended July ~~31, 2021,~~30, 2022, compared ~~to $188.2 million for the six months ended August 1, 2020, reflecting both higher net sales and gross profit rate. As a percentage of net sales, our gross profit~~

~~Table of Contents~~

~~increased~~ to 47.8% for the six months ended July 31, ~~2021, compared to 35.8%~~2021. Our higher gross profit for the ~~six months ended August 1, 2020, reflecting a reduction in~~first half of 2022 was primarily due to less promotional activity driven by our well-positioned inventory and strong consumer demand. In addition, our gross profit margin in the six months ended August 1, 2020 was adversely impacted by $6.0 million in incremental inventory markdowns, reflecting the difficult retail environment in 2020 driven by the pandemic.activity.

Selling and Administrative Expenses

Selling and administrative expenses increased ~~$24.3~~$9.2 million, or ~~20.8%~~6.5%, to $151.1 million for the second quarter of 2022, compared to $141.9 million for the second quarter of ~~2021, compared to $117.6 million for the second quarter of 2020.~~2021. The increase was driven by higher advertising expense primarily associated with our back-to-school marketing campaign and higher salary and benefits expenses due in part to higher salaries in the second quarter of 2021, as well as an increase in marketing expenses. Salary expenses were lower in the second quarter of 2020, reflecting the actions taken at the onset of the pandemic, including workforce reductions, furloughs for a significant portion of our retail store associates and temporary salary reductions for most remaining employees.wage inflation. As a percentage of net sales, selling and administrative expenses ~~decreased~~increased to 34.6% for the second quarter of 2022, compared to 31.3% for the second quarter of ~~2021, compared to 35.2% for the second quarter of 2020, reflecting better leveraging of expenses over a higher net sales base.~~2021.

Selling and administrative expenses increased ~~$35.7~~$16.8 million, or ~~15.0%~~6.1%, to $290.6 million for the six months ended July 30, 2022, compared to $273.8 million for the six months ended July 31, ~~2021, compared to $238.1 million for the six months ended August 1, 2020.~~2021. The increase was primarily due to higher ~~salaries~~salary and benefits expenses, higher logistics costs and higher ~~variable expenses, including logistics, to support the increase~~advertising expense associated with our strategic investment in sales volume in the six months ended July 31, 2021. In addition, strategic actions were taken to reduce expenses in the first half of 2020 to mitigate the impact of COVID-19 during the period of retail store closures.consumer marketing. As a percentage of net sales, selling and administrative expenses ~~decreased~~increased to 35.4% for the six months ended July 30, 2022, compared to 32.1% for the six months ended July 31, ~~2021, compared~~2021.

Operating Earnings

Operating earnings decreased $23.0 million to ~~45.3% for the six months ended August 1, 2020, reflecting better leveraging of our expenses over higher net sales.~~

~~Restructuring and Other Special Charges, Net~~

~~Restructuring and other special charges were $0.6~~$62.5 million for the second quarter of 2020, consisting primarily of severance. For the six months ended August 1, 2020, restructuring and other special charges were $16.6 million, consisting primarily of impairment charges on furniture and fixtures in our retail stores and lease right-of use assets reflecting the impact of COVID-19 on our business operations. Refer2022, compared to Note 5 to the condensed consolidated financial statements for additional information related to these charges. There were no corresponding charges during the three or six months ended July 31, 2021.

~~Operating Earnings (Loss)~~

~~Operating earnings increased $84.5 million to operating earnings of~~ $85.5 million for the second quarter of ~~2021, compared to $1.0 million for the second quarter of 2020.~~2021. As a percentage of net sales, operating earnings were 14.3% for the second quarter of 2022, compared to 18.8% for the second quarter of ~~2021, compared to 0.3% for the second quarter of 2020.~~2021.

Operating earnings ~~(loss) increased $199.9~~decreased $21.2 million to ~~operating earnings of~~$112.2 million for the six months ended July 30, 2022, compared to $133.4 million for the six months ended July 31, ~~2021, compared to an operating loss of $66.5 million for the six months ended August 1, 2020.~~2021. As a percentage of net sales, operating earnings were 13.7% for the six months ended July 30, 2022, compared to 15.7% for the ~~second quarter of 2021, compared to an operating loss of 12.7% for the second quarter of 2020.~~six months ended July 31, 2021.

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BRAND PORTFOLIO

Thirteen Weeks Ended

Twenty-Six Weeks Ended

July 31, 2021

August 1, 2020


July 31, 2021

August 1, 2020

% of



% of

% of



% of

($ millions, except sales per square foot)



Net Sales




Net Sales




Net Sales




Net Sales

Net sales

$
239.0

100.0
%
$
183.6

100.0
%

$
489.3

100.0
%
$
400.9

100.0
%
Cost of goods sold

144.1

60.3
%

119.6

65.1
%

300.4

61.4
%

283.5

70.7
%
Gross profit

94.9

39.7
%

64.0

34.9
%

188.9

38.6
%

117.4

29.3
%
Selling and administrative expenses

78.3

32.8
%

73.5

40.1
%

161.7

33.0
%

166.2

41.5
%
Impairment of goodwill and intangible assets

—

—

—

—

—

—
%

262.7

65.5
%
Restructuring and other special charges, net

—

—
%

4.6

2.5
%

13.5

2.8
%

48.4

12.1
%
Operating earnings (loss)

$
16.6

6.9
%
$
(14.1)

(7.7)
%

$
13.7

2.8
%
$
(359.9)

(89.8)
%

















Key Metrics

















Direct-to-consumer (% of net sales) ⁽¹⁾

34
%


38
%


33
%


33
%


Change in wholesale net sales ($)

$
34.9



$
(146.3)



$
49.7



$
(237.3)



Unfilled order position at end of period

$
328.7



$
195.2















Same-store sales % change

16.3
%


(24.7)
%


10.2
%


(24.7)
%


Same-store sales $ change

$
3.4



$
(8.1)



$
4.7



$
(17.6)



Sales change from new and closed stores, net

$
17.0



$
(21.5)



$
33.5



$
(44.6)



Impact of changes in Canadian exchange rate on retail sales

$
0.1



$
(0.1)



$
0.5



$
(0.2)



















Sales per square foot, excluding e-commerce (thirteen and twenty-six weeks ended)

$
244

$
20

$
433

$
51

Sales per square foot, excluding e-commerce (trailing twelve months)

$
561



$
251



$
561



$
251



Square footage (thousands sq. ft.)

125



355



125



355



















Stores opened

1



—



2



—



Stores closed

9



1



85



20



Ending stores

87



202



87



202


	Thirteen Weeks Ended										Twenty-Six Weeks Ended
	July 30, 2022					July 31, 2021					July 30, 2022					July 31, 2021
				% of					% of					% of					% of
($ millions, except sales per square foot)				Net Sales					Net Sales					Net Sales					Net Sales
Net sales	$	324.1		100.0	%	$	239.0		100.0	%	$	689.8		100.0	%	$	489.3		100.0	%
Cost of goods sold		200.0		61.7	%		144.1		60.3	%		426.4		61.8	%		300.4		61.4	%
Gross profit		124.1		38.3	%		94.9		39.7	%		263.4		38.2	%		188.9		38.6	%
Selling and administrative expenses		94.7		29.2	%		78.3		32.8	%		192.6		27.9	%		161.7		33.0	%
Restructuring and other special charges, net		—		—	%		—		—	%		—		—	%		13.5		2.8	%
Operating earnings	$	29.4		9.1	%	$	16.6		6.9	%	$	70.8		10.3	%	$	13.7		2.8	%

Key Metrics
Direct-to-consumer (% of net sales) ⁽¹⁾		30	%				34	%				28	%				33	%
Change in wholesale net sales ($)	$	80.1				$	34.9				$	184.3				$	49.7
Unfilled order position at end of period	$	360.4				$	328.7

Same-store sales % change		23.5	%				16.3	%				43.8	%				10.2	%
Same-store sales $ change	$	7.0				$	3.4				$	24.9				$	4.7
Sales change from new and closed stores, net	$	(2.1)				$	17.0				$	(8.8)				$	33.5
Impact of changes in Canadian exchange rate on retail sales	$	0.1				$	0.1				$	0.1				$	0.5

Sales per square foot, excluding e-commerce (thirteen and twenty-six weeks ended)	$	276				$	244				$	545				$	433
Sales per square foot, excluding e-commerce (trailing twelve months)	$	1,018				$	561				$	1,018				$	561
Square footage (thousands sq. ft.)		108					125					108					125

Stores opened		3					1					4					2
Stores closed		1					9					5					85
Ending stores		85					87					85					87

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

Net Sales

Net sales ~~increased $55.4~~of $324.1 million ~~or 30.2%, to $239.0 million for~~in the second quarter of ~~2021, compared to $183.6~~2022 increased $85.1 million, ~~for the second quarter of 2020. While net sales improved~~or 35.6%, compared to the second quarter of ~~2020,~~2021 driven by strong growth in our wholesale business. The net sales ~~volume still remains below pre-pandemic levels, due~~increase was broad-based across nearly all of our brands, with our Sam Edelman, Naturalizer and LifeStride brands being the most significant contributors. We continued to experience robust growth in ~~part to the brand exits announced in late 2019~~our dress, casual and ~~early 2020~~occasion-based styles for many of our brands, including Sam Edelman and LifeStride, and the ~~closure of all but two Naturalizer retail stores in North America.~~sport-inspired category also continued to resonate with our customers. During the second quarter of ~~2021,~~2022, we ~~experienced strong sales growth from our Sam Edelman, Vionic, Blowfish Malibu,~~closed one store and ~~Ryka brands, which carry~~opened three stores, resulting in a ~~large assortment~~total of ~~athletic~~85 stores and ~~casual styles. In addition, sales from our Allen Edmonds brand have strengthened, reflecting~~total square footage of 0.1 million at the ~~increased assortment~~end of ~~casual styles, as well as improving consumer demand for dress footwear. Net sales in~~ the second quarter of ~~2021 were adversely impacted by the delayed receipt of inventory due~~2022, compared to supply chain disruptions, including port congestion and reduced shipping vessel and container availability. During the second quarter of 2021, we closed nine stores and opened one store, resulting in a total of 87 stores and total square footage of 0.1 million at the end of the second quarter of ~~2021, compared to 202 stores and total square footage of 0.4 million at the end of the second quarter of 2020.~~2021.

Net sales increased ~~$88.4~~$200.5 million, or ~~22.1%~~41.0%, to $689.8 million for the six months ended July 30, 2022, compared to $489.3 million for the six months ended July 31, 2021, ~~compared to $400.9 million for the six months ended August 1, 2020,~~ reflecting ~~the factors described above. During the six months ended July 31, 2021, we experienced~~ strong sales growth from all of our brands, with our Sam Edelman, ~~Blowfish Malibu, Vionic~~Naturalizer, LifeStride, Franco Sarto and Allen Edmonds ~~brands.~~brands being the most significant contributors.

In the first quarter of 2021, we completed the strategic realignment of our Naturalizer retail business and permanently closed the remaining 73 Naturalizer stores in North America that were scheduled for ~~closure as part of our strategic realignment of the Naturalizer retail store operations.~~closure. We ~~remain focused~~have continued to focus on growing the brand’s e-commerce business through naturalizer.com, our retail partners and their websites, and the two ongoing flagship stores in the United ~~States and two stores in China that we continue to operate. Including the Naturalizer closures, we closed 85 stores and opened two stores during the six months ended July 31, 2021.~~States. On a trailing twelve-month basis, sales per square foot, excluding e-commerce sales, increased to $1,018 for the twelve months ended July 30, 2022, compared to $561 for the twelve months ended July 31, ~~2021, compared to $251~~2021. With the closure of nearly all of our Naturalizer retail stores, the majority of the retail stores in our Brand Portfolio segment are for our Allen Edmonds brand, which have higher retail price points than the ~~twelve months ended August 1, 2020.~~ Naturalizer brand.

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Our unfilled order position for our wholesale sales increased ~~$133.5~~$31.7 million, or ~~68.4%,~~9.6 %, to $360.4 million at July 30, 2022, compared to $328.7 million at July 31, ~~2021, compared to $195.2 million at August 1, 2020.~~2021. The increase in our backlog order levels primarily reflects higher consumer demand compared to last year.

Gross Profit

Gross profit increased ~~demand~~$29.2 million, or 30.8%, to $124.1 million for ~~product as our wholesale customers have placed more orders than last year due to the economic impact of the COVID-19 pandemic in~~ the second quarter of 2020. In addition, the global supply chain disruptions have caused a delay in the receipt of inventory due to port congestion, reduced shipping vessel and container availability, and factory shutdowns as a result of the resurgence of COVID-19 infections. We are actively working with our suppliers to minimize these disruptions, but expect the disruptions to continue in the second half of 2021.

~~Gross Profit~~

~~Gross profit increased $30.9 million, or 48.3%,~~2022, compared to $94.9 million for the second quarter of 2021, ~~compared to $64.0 million for the second quarter of 2020,~~primarily reflecting higher net ~~sales and a higher gross profit rate.~~sales. As a percentage of net sales, our gross profit ~~increased~~decreased to 38.3% for the second quarter of 2022, compared to 39.7% for the second quarter of 2021, ~~compared to 34.9% for the second quarter~~primarily reflecting a higher mix of 2020, reflecting more full price selling across our portfolio of brands driven by strong consumer demand. In connection with the supply chain disruptions described earlier and the related capacity shortages, our freight costs are rising. Though the impact was not significant during the second quarter, we anticipate higher inbound freight costs in the second half of 2021, which may impact our gross profit if we are unable to mitigate or recover these additional costs. wholesale versus retail sales.

Gross profit increased ~~$71.5~~$74.5 million, or ~~60.9%~~39.5%, to $263.4 million for the six months ended July 30, 2022, compared to $188.9 million for the six months ended July 31, 2021, ~~compared to $117.4 million for the six months ended August 1, 2020, due to~~reflecting higher net sales and improved gross profit rate. Our gross profit in the six months ended August 1, 2020 was impacted by higher incremental cost of goods sold primarily due to $27.5 million in inventory markdowns reflecting the difficult retail environment driven by the COVID pandemic, as well as $1.6 million in inventory markdowns related to the decision to exit our Fergie brand.sales. As a percentage of net sales, our gross profit ~~increased~~decreased slightly to 38.2% for the six months ended July 30, 2022, compared to 38.6% for the six months ended July 31, ~~2021, compared~~2021. While we have experienced inflationary pressures related to ~~29.3% for~~product costs and inbound freight through the six months ended ~~August 1, 2020.~~July 30, 2022, we have been able to successfully offset the majority of these impacts through price increases. We anticipate inflationary pressures to continue throughout 2022 and will continue to focus on mitigating the impact.

Selling and Administrative Expenses

Selling and administrative expenses increased ~~$4.8~~$16.4 million, or ~~6.5%~~20.9%, to $94.7 million for the second quarter of 2022, compared to $78.3 million for the second quarter of ~~2021, compared to $73.5 million for the second quarter of 2020.~~2021. The increase was ~~driven by~~primarily due to higher ~~salaries, due in part to the furloughs~~variable salary expenses and ~~temporary salary reductions in the second quarter of 2020 to mitigate the impact of COVID-19 on our financial results, and~~wage inflation, higher marketing expenses ~~partially offset by lower rent~~ and ~~facilities expenses, primarily associated with the lower store count.~~higher warehouse and logistics costs. As a percentage of net sales, selling and administrative expenses decreased to 29.2% for the second quarter of 2022, compared to 32.8% for the second quarter of 2021, ~~compared to 40.1% for the second quarter~~reflecting better leveraging of ~~2020.~~expenses over a higher net sales base.

Selling and administrative expenses ~~decreased $4.5~~increased $30.9 million, or ~~2.7%~~19.2%, to $192.6 million for the six months ended July 30, 2022, compared to $161.7 million for the six months ended July 31, ~~2021, compared to $166.2 million for the six months ended August 1, 2020.~~2021. The ~~decrease~~increase was driven by ~~lower retail facilities costs, primarily associated with the lower store count, partially offset by~~higher variable salary expenses and higher marketing expenses. As a percentage of net sales, selling and administrative expenses decreased to 27.9% for the six months ended July 30, 2022, compared to 33.0% for the six months ended July 31, 2021, ~~compared to 41.5% for the six months ended August 1, 2020.~~

~~Impairment~~reflecting better leveraging of ~~Goodwill and Intangible Assets~~

During the first quarter of 2020, we incurred impairment charges of $262.7 million, including $240.3 million associated with goodwill and $22.4 million associated with intangible assets, including $12.2 million for the Allen Edmonds trade name and $10.2 million for the Via Spiga trade name. There were no corresponding charges in the second quarter of 2020 or for the six months ended July 31, 2021. Refer to Note 5 and Note 8 to the condensed consolidated financial statements for further discussion of these charges.expenses over a higher net sales base.

Restructuring and Other Special Charges, Net

Restructuring and other special charges of $4.6 million were recorded during the second quarter of 2020, primarily for severance expense, with no corresponding charges for the second quarter of 2021. RestructuringWe incurred restructuring and other special charges of $13.5 million ~~were recorded~~ during the six months ended July 31, 2021 ~~reflecting~~for expenses associated with the ~~decision to close all but two flagship~~strategic realignment of our Naturalizer retail ~~stores in the United States.~~store operations. These costs primarily represented lease termination and other store closure costs, including employee ~~severance. For~~severance, for the ~~six months ended August 1, 2020, we recorded restructuring and other special charges~~73 stores that were closed during the first quarter of $48.4 million, reflecting expenses associated with the impact of COVID-19 on our business operations, primarily impairment charges on store furniture and fixtures and lease right-of-use assets, liabilities due to our factories for order cancellations and severance.2021. Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges. There were no corresponding charges during the second quarter of 2021 or the six months ended July 30, 2022.

Operating Earnings ~~(Loss)~~

Operating earnings ~~(loss)~~increased to $29.4 million for the second quarter of ~~2021 exceeded pre-pandemic levels. Operating earnings increased $30.7 million~~2022, compared to $16.6 million for the second quarter of 2021, ~~compared to an operating loss of $14.1 million for the second quarter of 2020,~~ as a result of the factors described above. As a percentage of net sales, operating earnings were ~~6.9%~~9.1% for the second quarter of ~~2021,~~2022, compared to ~~an operating loss of 7.7%~~6.9% in the second quarter of ~~2020.~~2021.

~~Table of Contents~~

Operating earnings ~~(loss)~~ increased ~~$373.6~~to $70.8 million for the six months ended July 30, 2022, compared to ~~operating earnings of~~ $13.7 million for the six months ended July 31, 2021, ~~compared to a net loss of $359.9 million for the six months ended August 1, 2020,~~ as a result of the factors described above. As a percentage of net sales, operating earnings were ~~2.8%~~10.3% for the six months ended July ~~31, 2021,~~30, 2022, compared to ~~an operating loss of 89.8% for~~2.8% in the six months ended ~~August 1, 2020.~~July 31, 2021.

ELIMINATIONS AND OTHER


	Thirteen Weeks Ended								Twenty-Six Weeks Ended								Thirteen Weeks Ended								Twenty-Six Weeks Ended
	July 31, 2021				August 1, 2020				July 31, 2021				August 1, 2020				July 30, 2022				July 31, 2021				July 30, 2022				July 31, 2021
			% of				% of				% of				% of				% of				% of				% of				% of
($ millions)			Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales				Net Sales
Net sales	$	(17.1)	100.0	%	$	(16.1)	100.0	%	$	(26.9)	100.0	%	$	(27.4)	100.0	%	$	(22.1)	100.0	%	$	(17.1)	100.0	%	$	(37.2)	100.0	%	$	(26.9)	100.0	%
Cost of goods sold		(17.1)	100.0	%		(15.6)	96.7	%		(28.0)	103.9	%		(26.3)	95.9	%		(21.2)	95.8	%		(17.1)	100.0	%		(34.7)	93.4	%		(28.0)	103.9	%
Gross profit		—	—	%		(0.5)	3.3	%		1.1	(3.9)	%		(1.1)	4.1	%		(0.9)	4.2	%		—	—	%		(2.5)	6.6	%		1.1	(3.9)	%
Selling and administrative expenses		39.3	(229.2)	%		10.3	(63.7)	%		67.5	(250.9)	%		22.3	(81.1)	%		22.6	(102.0)	%		39.3	(229.2)	%		45.8	(123.2)	%		67.5	(250.9)	%
Restructuring and other special charges, net		—	—	%		0.3	(1.7)	%		—	—	%		0.6	(2.3)	%
Operating loss	$	(39.3)	229.2	%	$	(11.1)	68.7	%	$	(66.4)	247.0	%	$	(24.0)	87.5	%	$	(23.5)	106.2	%	$	(39.3)	229.2	%	$	(48.3)	129.8	%	$	(66.4)	247.0	%

Table of Contents

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

The net sales elimination of ~~$17.1~~$22.1 million for the second quarter of ~~2021~~2022 is ~~$1.0~~$5.0 million, or ~~6.3%~~29.0%, higher than the second quarter of ~~2020, reflecting~~2021. The net sales elimination of $37.2 million for the six months ended July 30, 2022 is $10.3 million, or 38.4%, higher than the six months ended July 31, 2021. The increases for both periods reflect an increase in product sold from our Brand Portfolio segment to Famous Footwear, as we continue to focus on maximizing the vertical opportunity between our segments.

Selling and administrative expenses decreased $16.7 million, to $22.6 million in the second quarter of 2022, compared to $39.3 million for the second quarter of 2021. The ~~net sales elimination~~decrease primarily reflects lower expenses for our cash-based incentive compensation plans and certain other employee benefits. In 2021, our first half financial results exceeded the targets established for our annual incentive plans, which resulted in a larger portion of ~~$26.9~~the anticipated plan payouts recorded as expense in the second quarter of 2021. For 2022, anticipated incentive plan payouts are being recognized more ratably during the year.

Selling and administrative expenses decreased $21.6 million, to $45.8 million for the six months ended July 30, 2022, compared to $67.5 million for the six months ended July 31, ~~2021 is $0.5 million, or 1.9%,~~2021. The decrease primarily reflects lower ~~than the six months ended August 1, 2020, reflecting a decrease in product sold from our Brand Portfolio segment to Famous Footwear.~~

Selling and administrative expenses increased $29.0 million, to $39.3 million in the second quarter of 2021, compared to $10.3 million for the second quarter of 2020. The increase was primarily driven by higher expenses for our cash-based incentive compensation ~~plan for~~plans and certain ~~employees. Selling~~other employee benefits and administrative expenses increased $45.2 million, to $67.5 million in the six months ended July 31, 2021, compared to $22.3 million for the six months ended August 1, 2020, reflecting higher expenses for our cash-based incentive compensation plan for certain employees and higherlower expenses associated with our cash-based director compensation plans reflecting lower growth in our stock price during the six months ended July ~~31, 2021,~~30, 2022 compared to ~~a decline in the six months ended August 1, 2020.~~

Restructuring and other special charges of $0.3 million and $0.6 million for the three and six months ended August 1, 2020, respectively, were associated with workforce reductions as we sought to minimize our expense structure during the COVID-19 pandemic, as well as incremental expenses associated with deep cleaning our facilities and related supplies. There were no corresponding expenses for the six months ended July 31, 2021. ~~Refer to Note 5 to the condensed consolidated financial statements for additional information related to these charges.~~

~~Table of Contents~~

LIQUIDITY AND CAPITAL RESOURCES

Borrowings

($ millions)

July 31, 2021

August 1, 2020

January 30, 2021
Borrowings under revolving credit agreement

$
100.0

$
350.0

$
250.0
Current portion of long-term debt

99.5

—

—
Long-term debt

99.5

198.6

198.9
Total debt ⁽¹⁾

$
299.0

$
548.6

$
448.9


($ millions)	July 30, 2022		July 31, 2021		⁽¹⁾	January 29, 2022
Borrowings under revolving credit agreement	$	348.5	$	100.0		$	290.0
Current portion of long-term debt		—		99.5			—
Long-term debt		—		99.5			—
Total debt	$	348.5	$	299.0		$	290.0

(1)

As presented here, total debt as of July 31, 2021 excludes the Blowfish Malibu mandatory purchase obligation, which was valued at $52.6 million. The mandatory purchase obligation of $54.6 million ~~$25.0 million and $39.1 million~~was paid on November 4, 2021, as ~~of July 31, 2021, August 1, 2020 and January 30, 2021, respectively.~~further discussed in Note 14 to the condensed consolidated financial statements.

Total debt obligations of ~~$299.1~~$348.5 million at July 30, 2022 increased $49.5 million, from $299.0 million at July 31, 2021, ~~decreased $249.5~~and increased $58.5 million, from ~~$548.6 million at August 1, 2020, and decreased $149.8 million, from $448.9~~$290.0 million at January ~~30, 2021.~~29, 2022. The ~~decreases~~increase in total debt from ~~both August 1, 2020~~July 31, 2021 and January ~~30,~~29, 2022 is due primarily to higher inventory purchases during the quarter to prepare for our back-to-school selling season, as well as $41.7 million of repurchases of our common stock. In August 2021, ~~reflect continued progress toward reducing~~we redeemed $100.0 million aggregate principal amount of our senior notes and on January 3, 2022, we redeemed the remaining $100.0 million of senior notes. We shifted this higher interest rate debt to borrowings under ~~our~~the revolving credit ~~agreement. We reduced~~facility, which has resulted in significant interest expense savings for the ~~borrowings under~~Company. While this reduction in interest expense is expected to continue, the interest on our revolving credit facility by $100.0 million during the second quarter of 2021, ending the quarter with an outstanding balance of $100.0 million. We have continued to utilize our strong cash generation to reduce the incremental borrowings that were used to preserve financial flexibility at the onset of the pandemic, reducing the borrowings under our revolving credit agreement from $440.0 millionis based on a variable interest rate, which may result in ~~March 2020 to $100.0 million at July 31, 2021.~~higher interest expense in a rising interest rate environment. Net interest expense for the second quarter of ~~2021~~2022 decreased ~~$1.5~~$9.5 million to ~~$12.0~~$2.5 million, compared to ~~$13.5~~$12.0 million for the second quarter of ~~2020.~~2021. The decrease is primarily attributable to ~~lower average borrowings under our revolving credit agreement, partially offset by a $0.5~~the non-recurrence of the $7.1 million ~~increase in the~~ fair value adjustment ~~for~~to the Blowfish Malibu mandatory purchase obligation ~~associated with~~recorded in the second quarter of 2021. The Blowfish Malibu ~~acquisition,~~mandatory purchase obligation of $54.6 million was paid on November 4, 2021, as further discussed in Note 5 and Note 14 to the condensed consolidated financial statements. In addition, as discussed above, the redemption of all outstanding senior notes in 2021 also contributed to the decrease in interest expense in the second quarter of 2022. These decreases were partially offset by higher average borrowings under our revolving credit agreement.

Credit Agreement

As further discussed in Note 10 to the condensed consolidated financial statements, the Company maintains a revolving credit facility for working capital needs. On ~~April 14, 2020,~~October 5, 2021, we entered into a ~~Fourth~~Fifth Amendment to Fourth Amended and Restated Credit Agreement (as so amended, the ~~"Credit Agreement"~~“Credit Agreement”) which, among other modifications, ~~increased~~extended the maturity date of the credit facility from January 18, 2024, to October 5, 2026 and decreased the amount available under the revolving credit facility by $100.0 million to an aggregate amount of up to ~~$600.0~~$500.0 million, subject to borrowing base restrictions, and may be ~~further~~ increased by up to ~~$150.0~~$250.0 million. Interest on the borrowings is at variable rates based on the London Interbank Offered Rate ("LIBOR") (with a floor of ~~1.0% imposed by the Credit Agreement)~~0.0%), or the prime rate (as defined in the Credit

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Agreement), plus a spread. The Credit Agreement ~~increased~~decreased the spread applied to the LIBOR or prime rate by a total of 75 basis ~~points and increased the unused line fee by 5 basis~~ points. At July ~~31, 2021,~~30, 2022, we had ~~$100.0~~$348.5 million in borrowings and ~~$12.5~~$10.8 million in letters of credit outstanding under the Credit Agreement. Total borrowing availability was ~~$364.5~~$140.7 million at July ~~31, 2021.~~30, 2022. We were in compliance with all covenants and restrictions under the Credit Agreement as of July ~~31, 2021.~~30, 2022.

During the second half of 2021, we plan to continue to prioritize debt reduction. We are currently in the process of renegotiating and renewing the terms of our revolving credit facility to better reflect our improved capital structure.

~~$200 Million~~ Senior Notes

On July 27, 2015, we issued $200.0 million aggregate principal amount of ~~Senior Notes~~senior notes due ~~on August 15,~~in 2023 (the "Senior Notes"). The Senior Notes ~~bear~~were guaranteed on a senior unsecured basis by each of the subsidiaries of Caleres, Inc. that is an obligor under the Credit Agreement, and bore interest atof 6.25%, which iswas payable on February 15 and August 15 of each year. The Senior Notes contain covenants and restrictions that limit certain activities including, among other things, levels of indebtedness, payments of dividends, the guarantee or pledge of assets, certain investments, common stock repurchases, mergers and acquisitions and sales of assets. As of July 31, 2021, we were in compliance with all covenants and restrictions relating to the Senior Notes.

We may redeem some or all of the Senior Notes at a redemption price (expressed as a percentage of principal amount) of 101.563% if redeemed prior to August 15, 2021 and 100.000% if redeemed after August 15, 2021, plus any accrued and unpaid interest and Additional Interest (as defined in the Senior Notes indenture). During the second quarter of 2021, we determined that we would redeem a portion of our Senior Notes on August 16, 2021. Accordingly, we classified $100.0 million aggregate principal amount of Senior Notes as a current liability. On August 16, 2021, we redeemed $100.0 million of the Senior Notes at ~~100.000%, shifting~~100.0%. In addition, on January 3, 2022, we redeemed the ~~higher interest debt to borrowings under the revolving credit agreement.~~

~~Supplemental Guarantor Financial Information~~

~~The~~remaining $100.0 million of Senior Notes ~~are fully and unconditionally and jointly and severally guaranteed on a senior unsecured basis by all of its existing and future subsidiaries that are guarantors under~~at 100.0%. Refer to further discussion regarding the ~~Company’s Credit Agreement. The guarantors are 100% owned by Caleres, Inc. ("Parent").~~

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~~On October 31, 2018, Vionic was joined~~Senior Notes in Note 10 to the Credit Agreement as a guarantor. After giving effect to the joinder, the Company is the lead borrower, and Sidney Rich Associates, Inc., BG Retail, LLC, Allen Edmonds, LLC, Vionic Group, LLC and Vionic International, LLC are each co-borrowers and guarantors under the Credit Agreement. The following tables present summarizedcondensed consolidated financial information for the Parent and guarantors on a combined basis after elimination of intercompany transactions between entities and amounts related to investments in any subsidiary that is a non-guarantor:statements.

($ millions)

July 31, 2021

January 30, 2021
Current assets

$
724.0

$
686.3
Non-current assets

974.3

1,029.5
Current liabilities

904.1

818.4
Non-current liabilities

594.1

740.0

Twenty-Six Weeks

Ended
($ millions)

July 31, 2021
Net sales ⁽¹⁾

$
1,253.6
Gross profit

555.8
Operating earnings

60.7
Net earnings

42.7
Net earnings attributable to Caleres, Inc.

42.7

~~(1)~~

~~Intercompany activity with the non-guarantor entities for the twenty-six weeks ended July 31, 2021 was not material.~~

Working Capital and Cash Flow

Twenty-Six Weeks Ended

($ millions)

July 31, 2021

August 1, 2020

Change
Net cash provided by operating activities

$
135.5

$
67.5

$
68.0
Net cash used for investing activities

(9.4)

(8.6)

(0.8)
Net cash (used for) provided by financing activities

(159.7)

44.5

(204.2)
Effect of exchange rate changes on cash and cash equivalents

—

��
(0.1)

0.1
(Decrease) increase in cash and cash equivalents

$
(33.6)

$
103.3

$
(136.9)


	Twenty-Six Weeks Ended
($ millions)	July 30, 2022		July 31, 2021		Change
Net cash provided by operating activities	$	27.2	$	135.5	$	(108.3)
Net cash used for investing activities		(20.7)		(9.4)		(11.3)
Net cash provided by (used for) provided by financing activities		9.3		(159.7)		169.0
Effect of exchange rate changes on cash and cash equivalents		—		—		—
Increase (decrease) in cash and cash equivalents	$	15.8	$	(33.6)	$	49.4

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

Cash provided by operating activities was ~~$68.0~~$108.3 million ~~higher~~lower in the six months ended July ~~31, 2021~~30, 2022 as compared to the six months ended ~~August 1, 2020,~~July 31, 2021, primarily reflecting the following factors:

●

An increase in net earnings, after consideration of non-cash items, in the six months ended July 31, 2021, compared to the comparable period in 2020, primarily driven by the strong financial results of our Famous Footwear segment; and

●

A larger ~~increase in accounts payable in the six months ended July 31, 2021, compared to the six months ended August 1, 2020; partially offset by~~

●

An increase in inventory during the six months ended July ~~31, 2021,~~30, 2022, compared to ~~a decrease during~~ the six months ended ~~August 1, 2020; and~~July 31, 2021, primarily reflecting higher inventory in preparation for the back-to-school season as well as earlier arrival of inventory for the Brand Portfolio segment due to improved transportation lead times;

●

A ~~smaller increase~~decrease in accrued expenses and other liabilities during the six months ended July 30, 2022, compared to an increase during the six months ended July 31, 2021 due in part to higher accruals for incentive compensation payments in 2021, reflecting operating results that exceeded the targets established for the annual incentive plan; and

●

An increase in accounts receivable during the six months ended July 30, 2022, compared to a decrease in the six months ended July 31, 2021, attributable to higher wholesale sales during the period; partially offset by

●

Higher net earnings in the six months ended July 30, 2022, compared to the ~~three~~six months ended ~~August 1, 2020.~~July 31, 2021.

Supply chain financing: Certain of our suppliers are given the opportunity to sell receivables from us related to products that ~~we’ve~~we have purchased to participating financial institutions at a rate that leverages our credit rating, which may be more beneficial to the suppliers than the rate they can obtain based upon their own credit rating. We negotiate payment and other terms with our suppliers, regardless of whether the supplier participates in the program, and our responsibility is limited to making payment based on the terms originally negotiated with the supplier. These liabilities continue to be presented as accounts payable in our condensed consolidated balance sheets, with changes reflected within cash flows from operating activities when settled. As of July 30, 2022 and July 31, 2021, we had $39.9 million and $48.0 million, ~~of accounts payable subject to supply~~

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~~chain financing arrangements. There was an immaterial amount~~respectively, of accounts payable subject to supply chain financing ~~arrangements at August 1, 2020.~~arrangements.

Cash used for investing activities was ~~$0.8~~$11.3 million higher for the six months ended July ~~31, 2021~~30, 2022 as compared to the six months ended ~~August 1, 2020,~~July 31, 2021, reflecting ~~slightly~~ higher capital ~~expenditures in the six months ended July 31, 2021.~~expenditures. In ~~2021,~~2022, we expect our purchases of property and equipment and capitalized software to be between ~~$20~~$45 million and ~~$30~~$55 million, as compared to ~~$22.1~~$24.1 million in ~~2020.~~2021. In the first quarter of 2022, we tested a new prototype Famous Footwear store that offers an enhanced shopping experience, highlights our leading assortment of trending brands and elevates those brands in an energetic and exciting manner. We have also continued to invest in refreshing our Famous Footwear stores in the first half of 2022. We plan to invest in additional prototype stores and store renovations throughout 2022, which we believe will reinforce our national presence and further differentiate our store experience from that of our competitors.

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Cash ~~used for~~provided by financing activities was ~~$204.2~~$169.0 million higher for the six months ended July ~~31, 2021~~30, 2022 as compared to the six months ended ~~August 1, 2020,~~July 31, 2021, primarily due to ~~$150.0 million of~~ net ~~repayments~~borrowings on our revolving credit agreement of $58.5 in the six months ended July ~~31, 2021,~~30, 2022, compared to net ~~borrowings~~repayments of ~~$75.0~~$150.0 million in the comparable period in ~~2020.~~2021. In addition, we ~~did not repurchase any shares~~repurchased $41.7 million of our common stock under our share repurchase programs during the ~~three~~six months ended July 30, 2022, with no corresponding share repurchases during the six months ended July 31, ~~2021, compared to $23.3 million in the three months ended August 1, 2020.~~2021.

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

July 31, 2021

August 1, 2020


January 30, 2021

Operating working capital ($ millions) ⁽¹⁾

$
100.4

$
284.9

$
191.8

Current ratio ⁽²⁾

0.82:1

0.91:1

0.86:1

Debt-to-capital ratio⁽³⁾

54.9
%

69.1
%

68.8
%


	July 30, 2022			July 31, 2021			January 29, 2022
Operating working capital ($ millions) ⁽¹⁾	$	296.4		$	100.4		$	193.8
Current ratio ⁽²⁾		0.89:1			0.82:1			0.82:1
Debt-to-capital ratio⁽³⁾		47.5	%		54.9	%		47.3	%

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

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

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

Operating working capital at July ~~31, 2021~~30, 2022 was ~~$100.4~~$296.4 million, which was ~~$184.5~~$196.0 million ~~lower~~and $102.6 million higher than at August 1, 2020 and $91.4 million lower than at January 30, 2021. Our current ratio was 0.82 to 1 as of July 31, 2021, compared to 0.91 to 1 at August 1, 2020 and 0.86:1 at January 30, 2021. The decrease in both operating working capital and the current ratio from August 1, 2020 primarily reflects higher accounts payable at July 31, 2021 ~~as well as~~and January 29, 2022, respectively. The increase in operating working capital from July 31, 2021 and January 29, 2022 primarily reflects higher inventories and the ~~reclassification~~settlement of the Blowfish Malibu mandatory purchase obligation ~~to current liabilities, reflecting the anticipated settlement~~ in the ~~third~~fourth quarter of ~~2021.~~2021, partially offset by higher trade accounts payable. The ~~decrease~~increase in operating working capital from January ~~30, 2021~~29, 2022 primarily reflects higher ~~trade accounts payable and accrued expenses combined with an increase in the mandatory purchase obligation,~~inventories, partially offset by higher ~~inventory.~~trade payables. Our current ratio was 0.89 to 1 as of July 30, 2022, compared to 0.82:1 at July 31, 2021 and January 29, 2022. Our debt-to-capital ratio was 47.5% as of July 30, 2022, compared to 54.9% as of July 31, 2021 ~~compared to 69.1% as of August 1, 2020~~ and ~~68.8%~~47.3% at January ~~30, 2021.~~29, 2022. The decrease in our debt-to-capital ratio from ~~August 1, 2020 and January 30,~~July 31, 2021 primarily reflects ~~lower borrowings on~~the extinguishment of our ~~revolving credit facility at July 31, 2021. We believe~~senior notes and higher equity attributable to our cash flows from operations, as well as $364.5 million in borrowing availability under the Credit Agreement, provide ample liquidity to meet the Company’s working capital needs for the foreseeable future.strong financial results.

We declared and paid dividends of $0.07 per share in the second quarter of both ~~2021~~2022 and ~~2020.~~2021. The declaration and payment of any future dividend is at the discretion of the Board of Directors and will depend on our results of operations, financial condition, business conditions and other factors deemed relevant by our Board of Directors. However, we presently expect that dividends will continue to be paid.

~~CONTRACTUAL OBLIGATIONS~~

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

~~Except for these items and changes within the normal course of business (primarily changes in~~benefits. We also have purchase obligations ~~which fluctuate throughout~~to purchase inventory, assets and other goods and services. We believe our operating cash flows are sufficient to meet our material cash requirements for at least the year as a result of the seasonal nature of our operations, changes in borrowings under our revolving credit agreement, changes in the mandatory purchase obligation associated with the acquisition of Blowfish Malibu and changes in operating lease commitments as a result of new stores, store closures and lease renewals), there have been no other significant changes to the contractual obligations identified in our Annual Report on Form 10-K for the year ended January 30, 2021.next 12 months.

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CRITICAL ACCOUNTING POLICIES AND ESTIMATES

No material changes have occurred related to critical accounting policies and estimates since the end of the most recent fiscal year. For further information on the Company’s critical accounting policies and estimates, see Part II, Item 7 of our Annual Report on Form 10-K for the year ended January ~~30, 2021.~~29, 2022.

RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

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

~~INFLATION~~

We have recently experienced inflationary pressures on our product costs. We believe that the rates of inflation we have experienced have not had a significant effect on our net sales or operating earnings for the three and six months ended July 31, 2021. While we have historically been able to offset our product cost increases by increasing prices, negotiating costs, or changing suppliers, we may not be able to offset price increases in the future, which may have an adverse effect on our results of operations and financial condition.

FORWARD-LOOKING STATEMENTS

This Form 10-Q contains certain forward-looking statements and expectations regarding the Company’s future performance and the performance of its brands. Such statements are subject to various risks and uncertainties that could cause actual results to differ materially. These risks include (i) supply chain disruptions and inflationary pressures; (ii) the coronavirus pandemic and its adverse impact on our

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business operations ~~store traffic~~ and financial ~~condition (ii)~~condition; (iii) changing consumer demands, which may ~~be influenced by consumers' disposable income, which in turn can~~ be influenced by general economic conditions and other factors; ~~(iii)~~(iv) rapidly changing consumer preferences and purchasing patterns and fashion trends; ~~(iv) intense competition within the footwear industry;~~ (v) customer concentration and increased consolidation in the retail industry; (vi) intense competition within the footwear industry; (vii) foreign currency fluctuations; ~~(vii) impairment charges resulting from a long-term decline in our stock price;~~ (viii) political and economic conditions or other threats to the continued and uninterrupted flow of inventory from China and other countries, where the ~~company~~Company relies heavily on third-party manufacturing facilities for a significant amount of its inventory; (ix) cybersecurity threats or other major disruption to the ~~company’s~~Company’s information technology systems; (x) the ability to accurately forecast sales and manage inventory levels; (xi) a disruption in the ~~company’s~~Company’s distribution centers; (xii) the ability to recruit and retain senior management and other key associates; (xiii) the ability to ~~maintain relationships with current suppliers; (xiv) the ability to~~ secure/exit leases on favorable terms; (xiv) the ability to maintain relationships with current suppliers; (xv) transitional challenges with acquisitions and divestitures; (xvi) changes to tax laws, policies and treaties; (xvii) compliance with applicable laws and standards with respect to labor, trade and product safety issues; and (xviii) the ability to attract, retain, and maintain good relationships with licensors and protect our intellectual property rights. The Company’s reports to the Securities and Exchange Commission contain detailed information relating to such factors, including, without limitation, the information under the caption “Risk Factors” in Part I, Item 1A of the Company’s Annual Report on Form 10-K for the year ended January ~~30, 2021,~~29, 2022, which information is incorporated by reference herein and updated by the Company’s Quarterly Reports on Form 10-Q. The Company does not undertake any obligation or plan to update these forward-looking statements, even though its situation may change.

ITEM 3 QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

No material changes have taken place in the quantitative and qualitative information about market risk since the end of the most recent fiscal year. For further information, see Part II, Item 7A of the Company’s Annual Report on Form 10-K for the year ended January ~~30, 2021.~~29, 2022.

ITEM 4 CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

It is the Chief Executive Officer’s and Chief Financial Officer’s ultimate responsibility to ensure we maintain disclosure controls and procedures designed to provide reasonable assurance that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms and is accumulated and communicated to our management, including our principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our disclosure controls and

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procedures include mandatory communication of material events, automated accounting processing and reporting, management review of monthly, quarterly and annual results, an established system of internal controls and ongoing monitoring by our internal auditors.

A control system, no matter how well conceived or operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Furthermore, the design of a control system must reflect the fact there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by management override of the controls. The design of any system of controls is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance any design will succeed in achieving its stated goals under all potential future conditions; over time, controls may become inadequate because of changes in conditions, or the degree of compliance with the policies or procedures may deteriorate. Because of the inherent limitations in a cost-effective control system, misstatements due to errors or fraud may occur and not be detected. Our disclosure controls and procedures are designed to provide a reasonable level of assurance that their objectives are achieved. As of July ~~31, 2021,~~30, 2022, management of the Company, including the Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934). Based upon and as of the date of that evaluation, the Chief Executive Officer and Chief Financial Officer have concluded our disclosure controls and procedures were effective at the reasonable assurance level.

Based on the evaluation of internal control over financial reporting, the Chief Executive Officer and Chief Financial Officer have concluded that there have been no changes in the Company’s internal controls over financial reporting during the quarter ended July ~~31, 2021~~30, 2022 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

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PART II OTHER INFORMATION

ITEM 1 LEGAL PROCEEDINGS

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

Information regarding Legal Proceedings is set forth within Note 16 to the condensed consolidated financial statements and incorporated by reference herein.

ITEM 1A RISK FACTORS

There have been no material changes that have occurred related to our risk factors since the end of the most recent fiscal year. For further information, see Part I, Item 1A of our Annual Report on Form 10-K for the year ended January ~~30, 2021.~~29, 2022.

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ITEM 2 UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

The following table provides information relating to our repurchases of common stock during the second quarter of ~~2021:~~2022:


				Total Number	Maximum Number				Total Number	Maximum Number
				Purchased as Part	of Shares that May				Purchased as Part	of Shares that May
	Total Number of			of Publicly	Yet be Purchased	Total Number of			of Publicly	Yet be Purchased
	Shares	Average Price Paid		Announced	Under the	Shares	Average Price Paid		Announced	Under the
Fiscal Period	Purchased⁽¹⁾		per Share ⁽¹⁾	Program ⁽²⁾	Program ⁽²⁾	Purchased⁽¹⁾		per Share ⁽¹⁾	Program ⁽²⁾	Program ⁽²⁾
May 2, 2021 - May 29, 2021	—	$	—	—	2,651,489
May 1, 2022 - May 28, 2022						800,008	$	23.75	800,008	7,488,892

May 30, 2021 - July 3, 2021	9,443		26.61	—	2,651,489
May 29, 2022 - July 2, 2022						291,003		28.22	283,488	7,205,404

July 4, 2021 - July 31, 2021	—		—	—	2,651,489
July 3, 2022 - July 30, 2022						—		—	—	7,205,404

Total	9,443	$	26.61	—	2,651,489	1,091,011	$	24.94	1,083,496	7,205,404

(1)

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

(2)

On ~~December 14, 2018, the Board of Directors approved a stock repurchase program ("2018 Program") authorizing the repurchase of 2,500,000 shares of our outstanding common stock. In addition, on~~ September 2, 2019, the Board of Directors approved a stock repurchase program ("2019 Program") authorizing the repurchase of 5,000,000 shares of our outstanding common stock. In addition, on March 10, 2022, the Board of Directors approved a stock repurchase program ("2022 Program") authorizing the repurchase of an additional ~~5,000,000~~7,000,000 shares of our outstanding common stock. We can use the repurchase programs to repurchase shares on the open market or in private transactions from time to time, depending on market conditions. The repurchase programs do not have an expiration date. During the thirteen and twenty-six weeks ended July 30, 2022, the Company repurchased 1,083,496 and 1,784,820 shares, respectively, under these programs. The Company did not repurchase any shares under these ~~plans~~programs during the twenty-six weeks ended July 31, 2021. ~~During the thirteen and twenty-six weeks ended August 1, 2020, the Company repurchased 1,391,234 and 2,902,122 shares, respectively.~~ As of July ~~31, 2021,~~30, 2022, there were ~~2,651,489~~7,205,404 shares authorized to be repurchased under the repurchase programs. Our repurchases of common stock are limited under our debt agreements.

ITEM 3 DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4 MINE SAFETY DISCLOSURES

Not applicable.

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ITEM 5 OTHER INFORMATION

None.

4339

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ITEM 6 EXHIBITS


Exhibit No.
3.1		Restated Certificate of Incorporation of Caleres, Inc. (the “Company”) incorporated herein by reference to Exhibit 3.1 to the Company’s Form 8-K filed May 29, 2020.
3.2		Bylaws of the Company as amended through May ~~28, 2020,~~26, 2022, incorporated herein by reference to Exhibit ~~3.2~~3.1 to the Company’s Form 8-K filed May ~~29, 2020.~~27, 2022.
2210.1		~~List~~Caleres, Inc. Incentive and Stock Compensation Plan of ~~Guarantor Subsidiaries,~~2022, incorporated herein by reference to Exhibit 22A to the Company’s Proxy Statement filed on April 14, 2022.
10.4a*		Form of Performance Award Agreement under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.4a the Company’s Form 10-Q for the quarter ended ~~October 31, 2020,~~April 30, 2022, and filed ~~December 9, 2020.~~June 7, 2022.
10.4b*		Form of Restricted Stock Award Agreement under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.4b the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
10.5a*		Form of Non-Employee Director Restricted Stock Unit Agreement between the Company and its Non-Employee Directors under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.5a the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
10.5b*		Form of Non-Employee Director Restricted Stock Award Agreement between the Company and its Non-Employee Directors under the Company’s Incentive and Stock Compensation Plan of 2022, incorporated herein by reference to Exhibit 10.5b the Company’s Form 10-Q for the quarter ended April 30, 2022, and filed June 7, 2022.
31.1	†	Certification of the Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	†	Certification of the Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	†	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	†	iXBRL Instance Document
101.SCH	†	iXBRL Taxonomy Extension Schema Document
101.CAL	†	iXBRL Taxonomy Extension Calculation Linkbase Document
101.LAB	†	iXBRL Taxonomy Extension Label Linkbase Document
101.PRE	†	iXBRL Taxonomy Presentation Linkbase Document
101.DEF	†	iXBRL Taxonomy Definition Linkbase Document
104	†	Cover Page Interactive Data File, formatted in iXBRL and contained in Exhibit 101.

†	* Denotes management contract or compensatory plan arrangements. † Denotes exhibit is filed with this Form 10-Q.

4440

Table of Contents

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		CALERES, INC.

Date: September ~~7, 2021~~6, 2022		/s/ Kenneth H. Hannah
		Kenneth H. Hannah Senior Vice President and Chief Financial Officer on behalf of the Registrant and as the Principal Financial Officer

4541

INDEX

PART I		Page
Item 1	Financial Statements	3
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations	2827
Item 3	Quantitative and Qualitative Disclosures About Market Risk	4137
Item 4	Controls and Procedures	4137

PART II		4238
Item 1	Legal Proceedings	4238
Item 1A	Risk Factors	4238
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	4338
Item 3	Defaults Upon Senior Securities	4338
Item 4	Mine Safety Disclosures	4338
Item 5	Other Information	4339
Item 6	Exhibits	4440
	Signature	4541


	Twenty-Six Weeks Ended
($ thousands)	July 31, 2021		August 1, 2020
Balance, beginning of period	$	14,928	$	1,813
Adjustment upon adoption of ASU 2016-13		—		2,521
Provision/adjustment for expected credit losses ⁽¹⁾		(2,543)		8,525
Uncollectible accounts written off, net of recoveries		(2,500)		215
Balance, end of period	$	9,885	$	13,074


	Twenty-Six Weeks
	Ended
($ millions)	July 31, 2021
Net sales ⁽¹⁾	$	1,253.6
Gross profit		555.8
Operating earnings		60.7
Net earnings		42.7
Net earnings attributable to Caleres, Inc.		42.7

Twenty-Six Weeks Ended

($ thousands)

July 30, 2022

July 31, 2021

Cash paid for lease liabilities⁽¹⁾

84,310

Cash received from sublease income