EXECUTIVE OVERVIEW AND TRENDS IN OUR BUSINESS As described in Note 1 to the condensed consolidated financial statements of this Form 10-Q, we have made immaterial corrections to comparative prior period amounts. Refer to Note 12 of the condensed consolidated financial statements of this Form 10-Q for quantification of the prior period restatement impacts. For the first quarter of 2026, net sales increased 1.4% with a decrease in total comparable sales of 1.1% when compared to the same period last year. Gross profit as a percentage of net sales for the first quarter of 2026 was 45.3%, an increase of 240 basis points when compared to the same period last year. EFFECTS OF MACROECONOMIC CONDITIONS AND TARIFFS Macroeconomic conditions influenced by uncertain tariff policies, inflation, elevated fuel prices, stock market indices, interest rates and employment levels, along with geopolitical unrest, continue to persist and create a challenging retail environment. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. We believe these ongoing uncertainties have had a negative impact on our operating results and liquidity during 2026 and we may continue to experience the impact of decreased consumer demand for our products and lower direct-to-consumer traffic. We have enacted certain mitigating actions, including alignment of inventory with current demand levels and expense reductions. Although we have made progress in mitigating the impacts of certain macroeconomic conditions, our actions are not necessarily complete, and they should be viewed as part of the process in which we will continue our efforts to better align our cost structure with our operating results. We are unable to predict the severity of macroeconomic uncertainty, whether or when such circumstances may improve or worsen, including from one of our quarterly reporting periods to the next, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact further mitigating operating efficiency measures that could have a material adverse effect on our business, results of operations, and liquidity. Following its January 2025 inauguration, the U.S. administration has taken action to increase tariffs assessed on most products imported into the U.S. Various modifications to the U.S. tariffs have been announced, and further changes are expected to be made in the future, including in response to litigation, which has introduced heightened uncertainty regarding the future of global trade and the impact to our cost structure. On February 20, 2026, the U.S. Supreme Court rendered a decision invalidating tariffs imposed under the IEEPA. During April 2026, the CBP launched the CAPE process, which allows entities to submit refund claims for paid IEEPA tariffs. We have submitted claims seeking refunds of previously paid IEEPA tariffs through CAPE. The timing of any refunds and the total amount ultimately received or recorded remains uncertain, and we cannot provide any assurance that we will receive the full amount expected. Further, following the U.S. Supreme Court decision, the U.S. administration imposed a new tariff surcharge of not less than 10% under Section 122 of the Trade Act of 1974 on all imports, subject to certain exceptions. The tariffs under this statute took effect on February 24, 2026, and will remain in effect for 150 days (the maximum under the statute). Tariffs have not been previously imposed under this statutory provision, and, in May 2026, the U.S. Court of International Trade invalidated these temporary tariffs, but they remain in place, subject to appeal. The U.S. administration has indicated future actions may be taken that could restore or exceed the level of the IEEPA tariffs under other statutory provisions. Any future tariffs or other trade policy actions could affect our cost structure and supply chain. All of the products manufactured through the Brand Portfolio segment come from third-party facilities outside of the U.S., with the majority of our units sourced from Asia. In addition to the merchandise sourced through our Brand Portfolio segment, our Retail segment also sources merchandise from third-party suppliers, with many of these suppliers importing a large portion of their merchandise from Asia. We are closely monitoring this situation and evaluating the actions we have taken and additional actions we may take in the future, including cost mitigation measures and price adjustments. For our Brand Portfolio segment, we have adjusted our sourcing diversification by optimizing where we source our products from in an effort to mitigate the risk, maximize flexibility, and decrease costs. However, sourcing diversification could result in product quality issues, higher product costs, and/or not being able to source the quantity desired on a timely basis and there can be no assurance that we will be able to fully mitigate the impact of such tariffs or new tariffs in Asia or elsewhere. The ultimate impact of tariffs and other trade policies on our business will depend on several factors, including future measures implemented by the U.S. government and the governments of other countries, the overall magnitude and duration of these measures, and our ability to mitigate effects, which could include higher import costs and our ability to obtain any refund. Accordingly, our financial position or results of operations may be adversely influenced by political, economic, legal, compliance, social, and business conditions in the U.S. and in other countries. 18 Table of contents Future impacts from macroeconomic conditions and tariffs are unknown at this time and could have a material adverse effect on our business, results of operations, and liquidity. Unfavorable developments may result in future write-downs or adjustments to inventories, receivables, the valuation allowance on deferred tax assets, and may also negatively impact the fair value of our reporting units, indefinite-lived tradenames, and long-lived assets, which could result in us recording impairment charges for amounts below their carrying value. FINANCIAL SUMMARY AND OTHER KEY METRICS For the three months ended May 2, 2026: •Net sales increased to $696.4 million from $686.9 million for the same period last year. •Gross profit as a percentage of net sales was 45.3% compared to 42.9% for the same period last year. •Net income attributable to Designer Brands Inc. was $1.2 million, or $0.02 per diluted share, compared to a net loss attributable to Designer Brands Inc. of $17.8 million, or $0.37 loss per diluted share, for the same period last year. Comparable Sales Performance Metric- The following table presents the percent change in comparable sales for each segment and in total: Three months ended May 2, 2026 May 3, 2025 Change in comparable sales: Retail segment (1.2) % (7.5) % Brand Portfolio segment - direct-to-consumer channel 3.0 % (27.0) % Total (1.1) % (7.8) % We consider the percent change in comparable sales from the same previous year period, a primary metric commonly used throughout the retail industry, to be an important measurement for management and investors of the performance of our direct-to-consumer businesses. We include in our comparable sales metric sales from stores in operation for at least 14 months at the beginning of the applicable year. Stores are added to the comparable base at the beginning of the year and are dropped for comparative purposes in the quarter in which they are closed. Comparable sales include the e-commerce sales of the Retail segment. Comparable sales in Canada exclude the impact of foreign currency translation and are calculated by translating current period results at the foreign currency exchange rate used in the comparable period of the prior year. Comparable sales include the e-commerce net sales of the Brand Portfolio segment from the direct-to-consumer e-commerce sites. The calculation of comparable sales varies across the retail industry and, as a result, the calculations of other retail companies may not be consistent with our calculation. Number of Stores- As of May 2, 2026 and May 3, 2025, we had the following number of stores: May 2, 2026 May 3, 2025 DSW 518 520 The Shoe Co. 118 121 Rubino 27 28 Total number of stores 663 669 19 Table of contents RESULTS OF OPERATIONS FIRST QUARTER OF 2026 COMPARED WITH FIRST QUARTER OF 2025 (amounts in thousands, except per share amounts) Three months ended May 2, 2026 May 3, 2025 Change Amount % of Net Sales Amount % of Net Sales Amount % Net sales $ 696,350 100.0 % $ 686,909 100.0 % $ 9,441 1.4 % Cost of sales (381,032) (54.7) (392,428) (57.1) 11,396 (2.9) % Gross profit 315,318 45.3 294,481 42.9 20,837 7.1 % Operating expenses (299,209) (43.0) (301,862) (43.9) 2,653 (0.9) % Income from equity investments 2,761 0.4 2,427 0.4 334 13.8 % Impairment charges — — (2,953) (0.6) 2,953 NM Operating profit (loss) 18,870 2.7 (7,907) (1.2) 26,777 NM Interest expense, net (10,125) (1.4) (11,971) (1.7) 1,846 (15.4) % Non-operating income (expenses), net (5) — 8 — (13) NM Income (loss) before income taxes and loss from equity investment 8,740 1.3 (19,870) (2.9) 28,610 NM Income tax benefit (provision) (4,805) (0.8) 2,189 0.3 (6,994) NM Loss from equity investment (481) — — — (481) NM Net income (loss) 3,454 0.5 (17,681) (2.6) 21,135 NM Net income attributable to redeemable noncontrolling interest (2,295) (0.3) (135) — (2,160) 1,600.0 % Net income (loss) attributable to Designer Brands Inc. $ 1,159 0.2 % $ (17,816) (2.6) % $ 18,975 NM Earnings (loss) per share attributable to Designer Brands Inc.: Basic earnings (loss) per share $ 0.02 $ (0.37) $ 0.39 NM Diluted earnings (loss) per share $ 0.02 $ (0.37) $ 0.39 NM Weighted average shares used in per share calculations: Basic shares 50,241 48,243 1,998 4.1 % Diluted shares 55,920 48,243 7,677 15.9 % NM - Not meaningful 20 Table of contents NET SALES The following table summarizes net sales by segment: Three months ended (dollars in thousands) May 2, 2026 May 3, 2025 Change Amount % of Segment Net Sales Amount % of Segment Net Sales Amount % Comparable Sales Segment net sales: Retail $ 626,684 84.5 % $ 627,145 86.7 % $ (461) (0.1) % (1.2) % Brand Portfolio 114,518 15.5 95,898 13.3 18,620 19.4 % 3.0 % Total segment net sales 741,202 100.0 % 723,043 100.0 % 18,159 2.5 % (1.1) % Elimination of intersegment net sales (44,852) (36,134) (8,718) 24.1 % Consolidated net sales $ 696,350 $ 686,909 $ 9,441 1.4 % For the three months ended May 2, 2026, net sales were relatively flat in the Retail segment over the same period last year primarily driven by a decline in comparable sales of approximately $7.0 million, which was partially offset by an increase in non-product sales activity, including service revenue and shipping revenue, and the favorable impact from foreign currency translation. The decrease in comparable sales for the Retail segment was largely driven by lower comparable transactions of approximately 7% primarily due to reduced conversion and slightly lower traffic, partially offset by an increase in comparable average sales amounts per transaction. The increase in net sales for the Brand Portfolio segment was primarily due to higher revenue from wholesale activity due to increased demand from retail customers and the Retail segment, as we are experiencing positive trends in the dress category, and the expansion of retail partner locations for Topo along with new Topo product introductions. GROSS PROFIT The following table summarizes gross profit by segment: Three months ended (dollars in thousands) May 2, 2026 May 3, 2025 Change Amount % of Segment Net Sales Amount % of Segment Net Sales Amount % Basis Points Segment gross profit: Retail $ 284,296 45.4 % $ 268,200 42.8 % $ 16,096 6.0 % 260 Brand Portfolio 38,877 33.9 % 26,026 27.1 % 12,851 49.4 % 680 Total segment gross profit 323,173 43.6 % 294,226 40.7 % 28,947 9.8 % 290 Net recognition (elimination) of intersegment gross profit (7,855) 255 (8,110) Consolidated gross profit $ 315,318 45.3 % $ 294,481 42.9 % $ 20,837 7.1 % 240 The increase in gross profit for the Retail segment over the same period last year was primarily driven by the higher margin rates, which was driven by lower promotional activity and higher penetration of non-product sales activities. The increase in gross profit for the Brand Portfolio segment was primarily due to higher net sales as demand from retail customers increased with higher margin rates. Gross profit as a percentage of net sales increased for the Brand Portfolio segment primarily due to product mix, lower clearance activity, and the leverage of fixed royalty expenses on higher net sales. 21 Table of contents The net recognition (elimination) of intersegment gross profit consisted of the following: Three months ended (in thousands) May 2, 2026 May 3, 2025 Intersegment recognition and elimination activity: Elimination of net sales recognized by Brand Portfolio segment $ (44,852) $ (36,134) Cost of sales: Elimination of cost of sales recognized by Brand Portfolio segment 28,003 25,814 Recognition of intersegment gross profit for inventory previously purchased that was subsequently sold to external customers during the current period 8,994 10,575 $ (7,855) $ 255 OPERATING EXPENSES The following table summarizes operating expenses by segment: Three months ended (dollars in thousands) May 2, 2026 May 3, 2025 Change Amount % of Segment Net Sales Amount % of Segment Net Sales Amount % Basis Points Segment operating expenses: Retail $ 233,018 37.2 % $ 228,227 36.4 % $ 4,791 2.1 % 80 Brand Portfolio 26,215 22.9 % 26,507 27.6 % (292) (1.1) % (470) Total segment operating expenses 259,233 35.0 % 254,734 35.2 % 4,499 1.8 % (20) Corporate 39,976 47,128 (7,152) (15.2) % Consolidated operating expenses $ 299,209 43.0 % $ 301,862 43.9 % $ (2,653) (0.9) % (90) For the three months ended May 2, 2026, operating expenses increased in the Retail segment over the same period last year primarily due to higher occupancy costs, as a result of higher utility costs and the impact of lease renewals, and an increase in marketing expenses. Operating expenses as a percentage of net sales increased in the Retail segment due to higher expenses on flat net sales. Operating expenses as a percentage of net sales decreased in the Brand Portfolio segment as the relatively flat change in operating expenses leveraged on higher net sales. Operating expenses decreased for corporate shared services primarily due to restructuring actions taken in 2025. OPERATING PROFIT The following table summarizes operating profit (loss) by segment: Three months ended (dollars in thousands) May 2, 2026 May 3, 2025 Change Amount % of Segment Net Sales Amount % of Segment Net Sales Amount % Basis Points Segment operating profit: Retail $ 51,278 8.2 % $ 39,973 6.4 % $ 11,305 28.3 % 180 Brand Portfolio 15,423 13.5 % 1,946 2.0 % 13,477 692.5 % 1,150 Total segment operating profit 66,701 9.0 % 41,919 5.8 % 24,782 59.1 % 320 Corporate/eliminations (47,831) (49,826) 1,995 (4.0) % Consolidated operating profit (loss) $ 18,870 2.7 % $ (7,907) (1.2) % $ 26,777 NM NM 22 Table of contents For the three months ended May 2, 2026, operating profit for the Retail segment increased over the same period last year due to higher gross profit partially offset by higher operating expenses. Operating profit for the Brand Portfolio segment increased due to higher gross profit. Corporate/eliminations were favorable to consolidated operating profit due to lower corporate operating expenses and impairment charges incurred last year. These factors led to consolidated operating profit for the three months ended May 2, 2026 as compared to consolidated operating loss for the same period last year. INCOME TAXES For the three months ended May 2, 2026 and May 3, 2025, our effective tax rate was 55.0% and 11.0%, respectively. The effective tax rate for the three months ended May 2, 2026 differed from the U.S. federal statutory rate primarily due to the tax impact of non-deductible compensation and state income taxes, which has a higher rate impact on a relatively low pre-tax income base. The effective tax rate for the three months ended May 3, 2025 differed from the statutory rate primarily due to state minimum tax expense on quarterly pre-tax loss and non-deductible compensation. LIQUIDITY AND CAPITAL RESOURCES OVERVIEW Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy, and withstand unanticipated business volatility, including the impacts of the current macroeconomic conditions on our results of operations. We believe that cash generated from our operations, together with our current levels of cash, as well as the availability under our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures, and meet our debt service obligations over the next 12 months and beyond. As discussed above in the "Executive Overview and Trends in Our Business" section under the heading "Effects of Macroeconomic Conditions and Tariffs," current macroeconomic conditions have had a negative impact on our operating results and liquidity and we may continue to experience the impact of decreased consumer demand for our products. Future impacts are unknown at this time and could have a material adverse effect on our business, operations, results of operations, and liquidity. We submitted claims seeking refunds of previously paid IEEPA tariffs through CAPE. Prior to the U.S. Supreme Court ruling invalidating IEEPA tariffs, we entered into an agreement to sell the rights to potential claims to an Investor. As the refunds for the sold claims are received, we will remit such refunds to the Investor and record the remittance as a financing transaction. As of May 2, 2026, we had not received any refund payments. We expect to recognize approximately $20.0 million to income for tariff recoveries, which represents the value of the claims submitted through CAPE, less the portion due to the Investor, net of the proceeds received from the Investor; however, the timing of any refunds and the total amount ultimately received remains uncertain, and we cannot provide any assurance that we will receive the full amount anticipated. The following table presents the key categories of our condensed consolidated statements of cash flows: Three months ended (in thousands) May 2, 2026 May 3, 2025 Change Net cash used in operating activities $ (22,033) $ (20,366) $ (1,667) Net cash used in investing activities (9,869) (7,229) (2,640) Net cash provided by financing activities 31,302 27,672 3,630 Effect of exchange rate changes on cash balances (167) 1,196 (1,363) Net increase (decrease) in cash and cash equivalents $ (767) $ 1,273 $ (2,040) OPERATING CASH FLOWS The increase in net cash used in operating activities was primarily due to a higher use of working capital as we had timing shifts in lease and other payments, an increase in receivables with higher net sales from the Brand Portfolio segment, and paid incentive compensation earned in 2025, partially offset by the net income recognized during the three months ended May 2, 2026 as compared to the net loss recognized during the same period last year. 23 Table of contents INVESTING CASH FLOWS The increase in net cash used in investing activities for the three months ended May 2, 2026 as compared to the same period last year was primarily due to the increase in capital expenditures of $2.6 million in line with planned new and remodeled stores. FINANCING CASH FLOWS For the three months ended May 2, 2026, net cash provided by financing activities increased over the same period last year due to higher net receipts from our ABL Revolver used for funding working capital, partially offset by debt issuance costs associated with amending our ABL Revolver. DEBT ABL Revolver- The ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes a first-in last-out term loan ("FILO Term Loan") with $29.5 million borrowed. The FILO Term Loan may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. The ABL Revolver may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. The ABL Revolver matures on the earlier of the maturity date of the Term Loan (currently June 2028) or February 2031. As of May 2, 2026, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $492.3 million, with $331.2 million in outstanding borrowings and $22.6 million in letters of credit issued, resulting in $138.5 million available for borrowings. Term Loan- On June 23, 2023, we entered into the Term Loan and have since borrowed the maximum aggregate amount of $135.0 million. The Term Loan matures at the earlier of the maturity date of the ABL Revolver or June 2028. Debt Covenants- The ABL Revolver requires us to maintain a fixed charge coverage ratio covenant of not less than 1:1 when availability is less than the greater of $47.3 million or 10.0% of the maximum borrowing amount. At any time that liquidity is less than $100.0 million, the Term Loan requires a maximum consolidated net leverage ratio as of the last day of each fiscal month of 2.50 to 1.00, calculated on a trailing twelve-month basis. Testing of the consolidated net leverage ratio ends after liquidity has been greater than or equal to $100.0 million for a period of 45 consecutive days. The ABL Revolver and the Term Loan also contain customary covenants restricting certain activities, including limitations on our ability to sell assets, engage in acquisitions, enter into transactions involving related parties, incur additional debt, grant liens on assets, pay dividends or repurchase stock, and make certain other changes. There are specific exceptions to these covenants including, in some cases, upon satisfying specified payment conditions based on availability. As of May 2, 2026, we were in compliance with all financial covenants contained in the ABL Revolver and the Term Loan. Refer to Note 9, Debt, of the condensed consolidated financial statements of this Form 10-Q for further information about our debt arrangements. PLANS FOR CAPITALIZED COSTS During 2026, we expect to spend approximately $45.0 million to $55.0 million that will be capitalized for property and equipment and implementation costs for cloud computing arrangements accounted for as service contracts, $11.7 million of which was spent during the three months ended May 2, 2026. Our future investments will depend primarily on the number of stores we open and remodel, infrastructure and IT projects that we undertake, and the timing of these expenditures. RECENT ACCOUNTING PRONOUNCEMENTS The information related to recent accounting pronouncements as set forth in Note 1, Description of Business and Significant Accounting Policies - Recently Issued Accounting Pronouncements, of the condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference. 24 Table of contents CRITICAL ACCOUNTING POLICIES AND ESTIMATES The preparation of our condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosure of commitments and contingencies at the date of the condensed consolidated financial statements and reported amounts of revenue and expenses during the reporting period. We base these estimates and judgments on factors we believe to be relevant, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. The process of determining significant estimates is fact-specific and takes into account factors such as historical experience, current and expected economic conditions, product mix, and in some cases, actuarial and valuation techniques. We constantly re-evaluate these significant factors and make adjustments where facts and circumstances dictate. While we believe that the factors considered provide a meaningful basis for the accounting policies applied in the preparation of the condensed consolidated financial statements, we cannot guarantee that our estimates and assumptions will be accurate. As the determination of these estimates requires the exercise of judgment, actual results may differ from those estimates, and such differences may be material to our condensed consolidated financial statements. There have been no material changes to the application of critical accounting policies and estimates disclosed in our 2025 Form 10-K.