Friday, July 1 2022

GENERAL OVERVIEW AND TRENDS IN OUR BUSINESS

For the first quarter of 2022, consolidated net sales increased 18.1% and
comparable sales increased 15.3% over the same period last year with each of our
three segments contributing to these increases. Net sales during the first
quarter of 2022 from our Owned Brands increased 68.3% over the same period last
year and Owned Brands representing 25.4% of consolidated net sales as compared
to 17.8% for the same period last year. This growth came despite volatile market
conditions, including increased freight costs and supply chain disruptions. We
continue to make progress on our initiatives centered on our three pillars -
Customer, Brand, and Speed - as we work towards our long-term strategic plans.

IMPACT OF THE COVID-19 PANDEMIC ON OUR OPERATING RESULTS

The COVID-19 pandemic continues to impact the global economy and has created
supply chain disruptions, inflationary pressures, higher freight and labor
costs, and labor shortages. While we experienced continued improvement in our
performance during the first quarter of 2022, we cannot reasonably estimate the
extent to which our business will continue to be affected by the COVID-19
pandemic and to what extent the recent improved trends in our business will
continue.

FINANCIAL SUMMARY AND OTHER KEY INDICATORS

For the three months ended April 30, 2022:

• Net sales increased to $830.5 million of $703.2 million for the three months ended May 1, 2021.

•Gross margin as a percentage of net sales was 33.2% compared to 30.7% for the same period last year.

•Net income was $26.2 million, or $0.34 per diluted share, which included net
after-tax charge of $10.5 million, or $0.14 per diluted share, primarily related
to the loss on extinguishment of debt and write-off of debt issuance costs. Net
income for the three months ended May 1, 2021 was $17.0 million, or $0.22 per
diluted share, which included net after-tax benefits of $7.6 million, or $0.10
per diluted share, primarily related to the change in the valuation allowance on
deferred tax assets.

Comparable sales performance indicator – The following table presents the evolution of comparable sales for each segment and in total:

Three months completed

                                                                    April 30, 2022               May 1, 2021
Change in comparable sales:
U.S. Retail segment                                                          13.6  %                       56.3  %
Canada Retail segment                                                        41.4  %                       10.0  %
Brand Portfolio segment - direct-to-consumer channel                         19.7  %                        6.8  %
Total                                                                        15.3  %                       52.2  %



We consider the change in comparable sales from the same previous year period, a
primary metric commonly used throughout the retail industry, to be an important
indicator of the performance of our retail and direct-to-consumer businesses. We
include in our comparable sales metric stores in operation for at least 14
months at the beginning of the fiscal 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 stores
temporarily closed as a result of the COVID-19 pandemic as management continues
to believe that this metric is meaningful to monitor our performance. Comparable
sales also include e-commerce sales. Comparable sales for the Canada Retail
segment 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 for the Brand
Portfolio segment include the direct-to-consumer e-commerce site
www.vincecamuto.com. 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.

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Number of Stores – As of April 30, 2022 and May 1, 2021we had the following number of stores:

                                     April 30, 2022       May 1, 2021

U.S. Retail segment - DSW stores           510                              516
Canada Retail segment:
The Shoe Company stores                    115                              118
DSW stores                                  25                               27
                                           140                              145
Total number of stores                     650                              661



RESULTS OF OPERATIONS

FIRST QUARTER 2022 COMPARED TO FIRST QUARTER 2021

                                                                  Three months ended
(dollars in thousands, except per
share amounts)                                 April 30, 2022                                May 1, 2021                              Change
                                        Amount             % of Net Sales           Amount           % of Net Sales           Amount              %
Net sales                          $      830,543                 100.0  %       $  703,155                 100.0  %       $ 127,388             18.1  %
Cost of sales                            (554,798)                (66.8)           (487,044)                (69.3)           (67,754)            13.9  %
Gross profit                              275,745                  33.2             216,111                  30.7             59,634             27.6  %
Operating expenses                       (223,426)                (26.9)           (200,814)                (28.5)           (22,612)            11.3  %
Income from equity investment               1,945                   0.2               1,708                   0.2                237             13.9  %
Impairment charges                         (1,072)                 (0.1)                  -                     -             (1,072)             NM
Operating profit                           53,192                   6.4              17,005                   2.4             36,187            212.8%
Interest expense, net                      (2,952)                 (0.4)             (8,814)                 (1.2)             5,862            (66.5) %
Loss on extinguishment of debt and
write-off of debt issuance costs          (12,862)                 (1.5)                  -                     -            (12,862)             NM
Non-operating income, net                       6                   0.0                 806                   0.1               (800)           (99.3) %
Income before income taxes                 37,384                   4.5               8,997                   1.3             28,387            315.5%
Income tax benefit (provision)            (11,202)                 (1.3)              8,029                   1.1            (19,231)             NM
Net income                         $       26,182                   3.2  %       $   17,026                   2.4  %       $   9,156            53.8%
Basic and diluted earnings per
share:
Basic earnings per share           $         0.36                                $     0.23                                $    0.13            56.5%
Diluted earnings per share         $         0.34                                $     0.22                                $    0.12            54.5%
Weighted average shares used in
per share calculations:
Basic shares                               72,923                                    72,613                                      310              0.4  %
Diluted shares                             76,924                                    76,976                                      (52)            (0.1) %


NM - Not meaningful

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Net sales– Here is a summary of net sales by segment:

                                                                Three months ended
(dollars in thousands)                       April 30, 2022                                May 1, 2021                               Change
                                                          % of Segment                              % of Segment
                                      Amount                Net Sale              Amount              Net Sale              Amount               %
Segment net sales:
U.S. Retail                      $      702,745                  82.0  %       $  620,658                  86.4  %       $  82,087              13.2  %
Canada Retail                            56,315                   6.6  %           40,604                   5.6  %          15,711              38.7  %
Brand Portfolio                          97,456                  11.4  %           57,427                   8.0  %          40,029              69.7  %

Total segment net sales                 856,516                 100.0  %          718,689                 100.0  %         137,827              19.2  %
Elimination of intersegment net
sales                                   (25,973)                                  (15,534)                                 (10,439)             67.2  %
Consolidated net sales           $      830,543                                $  703,155                                $ 127,388              18.1  %



The improvement in sales during the three months ended April 30, 2022 over the
same period last year was primarily due to the increase in comparable sales
across all segments, primarily driven by the fact that during the three months
ended May 1, 2021, the prolonged COVID-19 pandemic resulted in significantly
reduced customer traffic in the U.S. Retail and Canada Retail segments, with the
Canada Retail segment also impacted by continued mandated closures and
restrictions in certain key markets. In addition, wholesale sales in the Brand
Portfolio segment were higher in the first quarter of 2022 as compared to the
same period last year due to increased orders as our retailer customers continue
to recover.

Gross profit – The following summarizes gross profit by segment:

                                                         Three months ended
(dollars in thousands)                April 30, 2022                                May 1, 2021                                          Change
                                                   % of Segment                              % of Segment
                               Amount                Net Sales             Amount              Net Sales            Amount               %               Basis Points
Segment gross profit:
U.S. Retail               $      233,067                  33.2  %       $  193,113                  31.1  %       $ 39,954               20.7  %              210
Canada Retail                     18,873                  33.5  %           10,835                  26.7  %          8,038               74.2  %              680
Brand Portfolio                   23,842                  24.5  %           11,926                  20.8  %         11,916               99.9  %              370

Total segment gross
profit                           275,782                  32.2  %          215,874                  30.0  %         59,908               27.8  %              220
Net recognition
(elimination) of
intersegment gross profit            (37)                                      237                                    (274)
Gross profit              $      275,745                  33.2  %       $  216,111                  30.7  %       $ 59,634               27.6  %              250



The improvement in gross profit was primarily driven by increased sales during
the first quarter of 2022 over the same period last year and being less
promotional, partially offset by higher freight costs. Gross profit as a
percentage of net sales for the U.S. Retail and Canada Retail segments increased
due to being less promotional and improved leverage on occupancy costs,
partially offset by higher freight costs. The improvement in gross profit as a
percentage of net sales for the Brand Portfolio segment was primarily driven by
the leverage of royalty expenses on higher sales volume.

The net recognition (elimination) of intersegment gross profit consisted of the
following:
                                                                         Three months ended
(in thousands)                                                  April 30, 2022           May 1, 2021

Recognition (elimination) of inter-segment activity: net sales recognized by segment of the brand portfolio

               $       (25,973)         $     (15,534)
Cost of sales:
Cost of sales recognized by Brand Portfolio segment                    18,169                 10,935

Recognition of intersegment gross margin for previously purchased inventory that was subsequently sold to external customers in the current period

7,767                  4,836
                                                              $           (37)         $         237


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Operating Expenses- For the three months ended April 30, 2022, operating
expenses increased by $22.6 million over the same period last year, primarily
driven by an increase in store payroll and marketing expenses in line with the
increase in net sales. Operating expenses as a percentage of sales improved to
26.9% compared to 28.5% in the same period last year due to the improvement in
net sales year over year as we leveraged our fixed costs.

Loss on extinguishment of debt and write-off of deferred debt issuance costs- In
connection with the settlement of our Term Loan on February 8, 2022, during the
three months ended April 30, 2022 we incurred a $12.7 million loss on
extinguishment of debt, composed of a $6.9 million prepayment premium and a $5.7
million write-off of unamortized debt issuance costs. As a result of the
replacement of the 2020 ABL Revolver during the three months ended April 30,
2022, we also wrote-off $0.2 million of debt issuance costs.

Income Taxes- For the three months ended April 30, 2022 and May 1, 2021, our
effective tax rate was 30.0% and negative 89.2%, respectively. The rate for
three months ended April 30, 2022 was impacted by permanent tax adjustments,
primarily non-deductible compensation. The negative rate for the three months
ended May 1, 2021 was the result of maintaining a full valuation allowance on
deferred tax assets along with net discrete tax benefits, primarily as a result
of adjustments to our estimated 2020 return reflecting implemented tax
strategies.

SEASONALITY

Our business consists of two principal selling seasons; the spring season, which
includes the first and second fiscal quarters, and the fall season, which
includes the third and fourth fiscal quarters. Generally, net sales in the fall
season have been slightly higher than the spring season. Our seasonal results of
operations may fluctuate based on the change in weather conditions and our
customers' interest in new seasonal styles. Due to the COVID-19 pandemic, we did
not experience the typical seasonal trends during 2021 given the changes in
customer behavior.

CASH AND CAPITAL RESOURCES

OVERVIEW

Our main current operating cash needs relate to inventory purchases, payments on lease obligations and license royalty commitments, other working capital requirements and capital expenditures. Our working capital and inventory levels fluctuate seasonally.

During the three months ended April 30, 2022, we repurchased 1.7 million Class A
common shares at an aggregate cost of $22.7 million, with $312.2 million of
Class A common shares that remain authorized under the program as of April 30,
2022. During the three months ended May 1, 2021, we did not repurchase any Class
A common shares.

We are committed to a cash management strategy that maintains liquidity to
adequately support the operation of the business and withstand unanticipated
business volatility, including any ongoing impacts of the COVID-19 pandemic. We
believe that cash generated from our operations, together with our current
levels of cash, as well as the use of our 2022 ABL Revolver, are sufficient to
maintain our ongoing operations, support seasonal working capital requirements,
fund capital expenditures, and repurchase common shares under our share
repurchase program over the next 12 months and beyond.

The following table presents the key categories of our condensed consolidated
statements of cash flows:

                                                             Three months ended
(in thousands)                                      April 30, 2022           May 1, 2021            Change
Net cash used in operating activities             $       (40,672)         $     (1,356)         $ (39,316)
Net cash used in investing activities                     (17,101)               (5,641)           (11,460)
Net cash provided by (used in) financing
activities                                                 39,768                (3,589)            43,357
Effect of exchange rate changes on cash balances              115                   306               (191)
Net decrease in cash, cash equivalents, and
restricted cash                                   $       (17,890)         $    (10,280)         $  (7,610)



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CASH FLOW FROM OPERATIONS

The increase in net cash used in operations was driven by higher spend on
working capital as our business continues to recover from the impacts of the
COVID-19 pandemic with increases in consolidated inventories, increases in
receivables on wholesale sales, and timing of payments to vendors. This was
partially offset by the increase in net income recognized in the three months
ended April 30, 2022 over the same period last year, after adjusting for
non-cash activity including the loss from extinguishment of debt and write-off
of debt issuance costs and the changes in deferred income taxes.

INVESTING CASH FLOW

For the three months ended April 30, 2022, net cash used in investing activities
was primarily due to capital expenditures relating to infrastructure and
information technology ("IT") projects and store improvements. During the three
months ended May 1, 2021, the net cash used in investing activities was due to
capital expenditures relating to IT projects and store improvements.

CASH FLOW FINANCING

For the three months ended April 30, 2022, net cash provided by financing
activities was due to net receipts of $306.9 million from our revolving lines of
credit offset by the payments of $238.2 million due to the settlement of the
Term Loan and the repurchase of 1.7 million Class A common shares at an
aggregate cost of $22.7 million. During the three months ended May 1, 2021, we
had net borrowings of $4.8 million from our revolving lines of credit with
payments on the Term Loan of $3.1 million.

DEBT

2022 ABL Revolver- On March 30, 2022, we replaced our 2020 ABL Revolver with our
current 2022 ABL Revolver, which provides a revolving line of credit of up to
$550.0 million, including a Canadian sub-limit of up to $55.0 million, a $75.0
million sub-limit for the issuance of letters of credit, a $55.0 million
sub-limit for swing loan advances for U.S. borrowings, and a $5.5 million
sub-limit for swing loan advances for Canadian borrowings. Our 2022 ABL Revolver
matures in March 2027 and is secured by a first priority lien on substantially
all of our personal property assets, including credit card receivables and
inventory. The 2022 ABL Revolver may be used to provide funds for working
capital, capital expenditures, share repurchases, other expenditures, and
permitted acquisitions as defined by the credit facility agreement. The amount
of credit available is limited to a borrowing base formulated on, among other
things, a percentage of the book value of eligible inventory and credit card
receivables, as reduced by certain reserves. As of April 30, 2022, the 2022 ABL
Revolver had a borrowing base of $550.0 million, with $306.9 million outstanding
borrowings and $4.9 million in letters of credit issued, resulting in $238.2
million available for borrowings.

Debt Covenants- The 2022 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 $41.3 million and 10.0% of the maximum borrowing amount. The 2022 ABL
Revolver also contains customary covenants restricting our activities, including
limitations on the 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 April 30,
2022, we were in compliance with all financial covenants.

Termination of Term Loan - On February 8, 2022, we settled in full the $231.3
million principal amount outstanding on that date under our Term Loan. In
connection with this settlement, we incurred a $12.7 million loss on
extinguishment of debt, composed of a $6.9 million prepayment premium and a $5.7
million write-off of unamortized debt issuance costs.

Refer to Note 9, Debt, to the condensed consolidated financial statements of this Form 10-Q for more information on our debt arrangements.

CAPITAL EXPENDITURE PLANS

We expect to spend approximately $70.0 million to $80.0 million for capital
expenditures in 2022, of which we invested $12.2 million during the three months
ended April 30, 2022. 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.

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RECENT ACCOUNTING PRONOUNCEMENTS

No recent accounting pronouncement is expected to have a material impact on our consolidated financial statements when adopted.

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 2021 Form 10-K.

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