($ in thousands) Interest Rate Risk We do not engage in the trading of market risk sensitive instruments in the normal course of business. As of June 30, 2026, we had outstanding borrowings of $130,000 under our senior secured term loan facility pursuant to the Credit Agreement (See Note 14 – Credit Agreement), which bears interest at a variable rate based on a benchmark rate (e.g., Term SOFR) plus an applicable margin. We had no outstanding borrowing under our $250,000 revolving credit facility, which bears interest at a variable rate. Our interest expense is therefore subject to fluctuations in market interest rates. A hypothetical 100 basis point increase in interest rates would increase annual interest expense by approximately $1,300 on our term loan balance, excluding the potential impact of any future borrowings under our revolving credit facility. Our collection agency agreements with Rosenthal & Rosenthal, Inc. and CIT Group/Commercial Services, can be found in Note 15 – Factoring Agreements, respectively, to the Condensed Consolidated Financial Statements included in this Quarterly Report. Foreign Currency Exchange Rate Risk We face market risk to the extent that our U.S. or foreign operations involve the transaction of business in foreign currencies. In addition, our inventory purchases are primarily done in foreign jurisdictions and inventory purchases may be impacted by fluctuations in the exchange rates between the U.S. dollar and the local currencies of our contract manufacturers, which could have the effect of increasing the cost of goods sold in the future. We manage these risks primarily by denominating these purchases in U.S. dollars. To mitigate the risk of purchases that are denominated in foreign currencies, we may enter into forward foreign exchange contracts for terms of no more than two years. A description of our accounting policies for derivative financial instruments is included in Note 11 – Derivative Instruments to the Condensed Consolidated Financial Statements. The acquisition of Kurt Geiger significantly increases our exposure to foreign currency exchange rate risk. Kurt Geiger generates a substantial portion of its revenue and incurs significant expenses in British pounds sterling (GBP), while our Condensed Consolidated Financial Statements are reported in U.S. dollars (USD). As a result, our reporting results are subject to translation adjustments based on fluctuations in GBP/USD exchange rates. Additionally, future cash flows from Kurt Geiger’s operations may be affected by changes in foreign currency exchange rates. We actively monitor our foreign currency exposures and, from time to time, enter into hedging arrangements to mitigate the impact of exchange rate fluctuations on our 45 financial results. However, these hedging activities may not fully offset our exposure to currency movements and could involve additional costs or risks. As of June 30, 2026, we had entered into forward foreign exchange contracts with notional amounts totaling $129,783. We performed a sensitivity analysis based on a model that measures the impact of a hypothetical change in foreign currency exchange rates to determine the effects that market risk exposures may have on the fair values of our forward foreign exchange contracts that were outstanding as of June 30, 2026. As of June 30, 2026, a 10% increase or decrease of the U.S. dollar against the exchange rates for foreign currencies under forward foreign exchange contracts, with all other variables held constant, would result in a net increase or decrease in the fair value of our derivatives portfolio of approximately $178, which is immaterial to the Condensed Consolidated Financial Statements. In addition, we are exposed to translation risk in connection with our foreign operations because our subsidiaries and joint ventures in these international markets utilize the local currency as their functional currency, and those financial results are translated into U.S. dollars. Therefore, currency exchange rates may affect the comparability of financial results between reporting periods and fiscal years. As of the end of the second quarter of 2026, the U.S. dollar appreciated by approximately 3% on a year-to-date basis, based on movements in the U.S. dollar index. While fluctuations in exchange rates can affect both our operating results and financial position, including the translation of results from our foreign subsidiaries, we have evaluated the impact of this appreciation and determined that these currency movements did not result in a material change in our overall foreign currency risk exposure as of the end of the year. We continue to monitor exchange rate developments and assess their potential effect on our financial results and hedging activities. Inflation Risk Inflationary factors generally affect us by reducing consumer spending, increasing our labor and overhead costs, and negatively impacting our direct sales to end consumers and our sales to our wholesale customers, all of which may adversely affect our results of operations, and financial position. We have historically been able to minimize the impacts of inflation by raising prices, renegotiating costs, changing suppliers, and improving operating efficiencies. However, no assurance can be given that we will be able to offset such inflationary impacts in the future. 46