Good day and welcome to the Designer Brands Inc. Fourth Quarter 2022 Earnings Call. This event is being recorded. I would now like to turn the conference over to Jesse Miller, Head of Investor Relations. Please go ahead.

Good morning. Earlier today, the company issued a press release comparing results of operations for the 13-week and 52-week periods ended January 28, 2023, to the 13-week and 52-week periods ended January 29, 2022. Please note that the financial results we will reference during the remainder of today's call exclude certain adjustments recorded under GAAP unless specified otherwise. For a complete reconciliation of GAAP to adjusted earnings, please reference our press release. Additionally, please note that remarks made about the future expectations, plans and prospects of the company constitute forward-looking statements. Results may differ materially due to various factors listed in today's press release and the company's public filings with the SEC. The company assumes no obligation to update any forward-looking statements. Joining us today are Roger Rawlins, Chief Executive Officer; Jared Poff, Chief Financial Officer; and Doug Howe, incoming CEO of DBI and President of DSW. Now, let me turn over the call to Roger.

Thanks, Jesse. Thank you, everyone, for joining us this morning, especially our associates who I know are listening in today. I'm proud of the results we posted this year, delivering an adjusted EPS at the top of our original annual guidance, an achievement during a very challenging environment. Before turning it over to Doug and Jared, I wanted to share a few thoughts on the progress we have made over the past 7 years as we evolved from DSW, a domestic retailer selling other people's brands, to the multinational brand-building enterprise that is now Designer Brands. In 2016, we shared our belief that the days of being a retailer of others' brands were in jeopardy. We described it as a piece of ice sitting out in 35-degree weather. Some retailers were glaciers that would take years to melt away, but others were going to disappear quickly as we predicted that brands would aggressively take their products direct to consumer through their websites and the stores they were opening, competing directly with the retailers that spent years and billions of dollars supporting them and growing their brands. As a result of this challenge, we felt it was necessary to diversify our business model. We first moved to expand our retail reach beyond the U.S., leading to the acquisition of the Shoe Company brand in Canada in 2018, where we bucked the trend of other U.S.-based businesses who have failed to grow in the market. This acquisition has been successful because we attracted an amazing team of experienced Canadian retailers who leverage the core retail competencies of our DSW business, including our direct-to-consumer capabilities, assortment disciplines, and technology infrastructure, allowing them to deliver nearly $100 million in gross profit and meaningfully contributing to DBI's bottom line while materially growing our share of the Canadian market, becoming one of the most commanding retailers in our channel. Additionally, we wanted to deliver a differentiated product and assortment through DSW and acquired the ability to design and source our own goods and to own or control brands through our own direct-to-consumer channels. This vision led to the acquisition of the Camuto organization, which has allowed us to now own and/or operate 6 of the top 50 women's fashion footwear brands. It also allowed us to increase our penetration of owned brands sold through our direct-to-consumer channels to 18%, delivering approximately $100 million of incremental gross profit on the goods we design and source and expanding our gross margin on these goods by over 1,000 basis points on average. Finally, this vision expanded distribution of our own brands to a much broader customer base through our wholesale partners, which today includes some of the best retail platforms in the world. We also shared back in 2016 the desire to evolve our assortment to DSW. We were, and are still, a dominant player in the women's dress and seasonal categories, but we needed to casualize our mix to attack the athleisure category, which represented roughly half of all footwear sales. At that point, our penetration was roughly 30%, and we saw great upside in supporting our fashion customer with this type of casual athleisure footwear. I'm very proud of the shifts our team has made, and this category now represents over 47% of our assortment. We've gained market share in the category through the expanded assortment of top national brands at DSW, the amazing Canadian results, our launch of Kids footwear, and the recent acquisitions of Keds, Latigo, and Sopo, which now sit in our own brands portfolio. With these new additions, DBI now has the ability to design and source not just fashion and seasonal footwear, but casual footwear as well, meeting even more of the needs of the consumer we service through so many of our direct-to-consumer channels. This is a critical piece of the puzzle as we build for long-term growth in both our top and bottom line. That's a lot of change in 7 years, especially when you consider we did all of that while going through a pandemic when consumers wanted nothing to do with fashion footwear as they were working from home and limiting their social occasions. We faced our share of bumps along the way. However, I firmly believe our effective execution on our vision has set DBI up for success as we integrate our recent acquisitions, continue to accelerate our direct-to-consumer capabilities, and build our own brands across the retail landscape. This vision and our culture is what attracted Doug to our business a year ago, and I believe he's uniquely qualified as a merchant leader to take this strategy to the next level to ensure our glacier doesn't melt but instead grows to new heights. To that end, and in conjunction with the significant evolution of our business, we have recently undertaken actions to streamline our operations, promote collaboration, and make our organization more efficient. We are sensitive to the fact that a number of our employees have been affected by these actions. We're working closely with them to aid in their transition, and I personally want to thank them for all their contributions to DBI. I want to thank Jay and our Board, my team, and my teammates for all the support they have given me, and I can't wait to watch them utilize the platforms we have built to deliver on our mission of inspiring self-expression. With that, I will turn it over to Doug and Jared for an overview of the past quarter. Doug?

Thank you, Roger, and good morning, everyone. I want to express my excitement about taking on this role. I appreciate Roger's outstanding leadership that has helped elevate Designer Brands, and I look forward to working with him over the next year. I also want to thank our teams for their support so far. We performed well this quarter and this year despite a challenging macro environment. The trends we noted last quarter continued. In the fourth quarter, the footwear industry faced significant promotions, particularly in athletics due to overstock and a constrained consumer base. To manage what we could control, we chose to be less promotional in athletic footwear, having positioned ourselves proactively earlier to handle our inventory levels, supported by the growth of our clearance business. This strategy aimed to protect our market share in dress and seasonal products during a crucial time. We implemented selective promotions for seasonal items, specifically on ready-to-wear products like boots. Our customers have indicated they are seeking value, leading to an increase in clearance sales. At DSW, clearance sales were up 2%, while regular price selling saw a decline of 10%. Like other companies in our sector, we recognize that consumers are under pressure as we enter the new year. With inflation and a potential recession, spending is down, and customers are favoring discounted items. We are continuing to be cautious about promotions while balancing inventory investments, allowing us to pursue real-time opportunities. Our strategy of focusing on both owned and national brands remains a priority. I want to stress our goal of maintaining strong partnerships with national brands while aggressively growing our own brands, which complement each other. Our recent acquisitions have strengthened our foundation this year, positioning us for greater growth in 2024. Recently, we've made three notable acquisitions: Latigre, Topo Athletic, and Kids, which support our aim to be a leading brand builder and meet our target for our owned brands by 2026. This is significant for two reasons. First, it shows our capability to make headway on our strategy. Just two months ago, we had no athletic or athleisure products in our portfolio, and now we own brands across all key price points. Second, it underscores the importance of our national brand partners in our strategy. Our long-term partnership with Wolverine has enabled us to collaborate in various ways, from being the largest wholesale customer of Keds to adding value with Hush Puppies, leading to the acquisition of Keds and an exclusive licensing agreement for Hush Puppies. In July, we invested in Latigre and entered into a licensing agreement for footwear to distribute premium athletic products through our channels and expand that distribution later. In December, we acquired Topo Athletic, focusing on premium products for running, walking, hiking, and comfort. Our acquisition of Keds gives us a well-known brand that allows us to expand beyond our retail operations. We recently announced our upcoming expansion with Hush Puppies, where we will成为 the exclusive licensee in the U.S. and Canada effective later this year. This new agreement will enable us to wholesale the brand and design and source products in the crucial comfort sector, which is another significant area for our own brands. As Roger highlighted, we have successfully increased our owned brand presence in our retail operations, contributing positively to our margins. We've also made considerable progress in growing our owned brands outside our DSW stores. Before 2019, we had just one e-commerce site, but now we operate five independent e-commerce sites: DSW, Schuco, Topo Athletic, vincecamuto.com, and keds.com, with hushpuppies.com expected to launch later this year. For our brands with a personalized online presence, around 30% of their sales come from that channel. We are looking for ways to extend this for other owned brands where we see e-commerce potential. As we prepare for future growth, we are considering how to engage with our customers in various ways, with our own brands playing a crucial role. Along with our DBI VIP loyalty programs that gained over 4 million new customers last year, our recent acquisitions help us reach customers beyond DSW. Topo Athletic attracts a premium customer, while Hush Puppies targets millennials seeking both style and comfort. Keds has a strong presence on Amazon, providing valuable insights and a kids' wholesale business in Canada. They also bring significant international exposure that can drive growth, and we will explore potential synergies with our other brands. These achievements enhance the diversity within our owned brands portfolio. We have long been leaders in dress and seasonal sectors and are now successfully establishing a presence in athleisure and casual markets. This diversification equips us to navigate various economic cycles and changes in consumer purchasing habits. Regarding our national brands, the top five partners experienced nearly a 20% sales increase across our U.S. and Canadian operations for the year, demonstrating the success of our Amplify and edit strategy. We are committed to our focus on the top 50 brands in footwear, while also leveraging our capabilities to benefit from closeout opportunities in the current environment. Now, turning to our results, we are pleased with our performance for the quarter and the year. We achieved healthy comparable sales growth of 4.4% in fiscal year 2022 while effectively managing expenses, which showed improvement compared to the previous year. Despite the pressure on our sales and profitability due to the highly promotional climate, our gross margin rates exceeded 2019 levels for the year. Our strategy for owned brands is gaining traction, with robust sales growth putting us on track to achieve our goal of nearly one-third of total sales by 2026. For the year, total owned brand penetration grew from 19% to 24%, while DTC owned brands increased from 14% to 18%. Although the industry faced challenges in Q4 with excess inventory, our owned brand portfolio showed strong performance with Lucky up 42%, particularly due to its casual appeal compared to Vince Camuto and Jessica Simpson, which experienced pressure from being more dress-focused. In the fourth quarter, the strongest DTC performers were Lucky, which rose 65%; Kelly and Katy, which was up 28%; and Crown Vintage, which increased 17%, bolstered by a strong celebrity partnership in Q3 and continued momentum into Q4. Now, I want to touch on our guidance, which Jared will elaborate on shortly. We are planning for a decrease in sales and earnings this year due to the expected continued pressure on our customers into early 2023. However, we believe these trends are temporary. We are focused on managing what we can to ensure profitability remains above historical levels and will continue to be careful with inventory management. We believe our inventory position gives us an edge over most competitors, setting us up to capitalize on any unexpectedly strong opportunities. If the economy experiences a soft landing as predicted, we anticipate a recovery in our results in the latter half of the year, as we will be comparing against easier metrics. Before I hand the floor to Jared, I want to express my gratitude to all our associates for their hard work. We are performing well despite challenges, and I am confident in our ability to keep it up. Now, I will turn it over to Jared.

Thanks, Doug, and good morning, everyone. I briefly want to echo Roger and Doug's comments on how proud I am of the progress we made on our strategy during the quarter and the year. We once again posted results that showcased our evolved business model and the power of our brand-building capabilities. Adjusted EPS for the full year was $1.85, landing at the very top of the guidance we provided at the start of the year and on top of a strong 2021. While the fourth quarter saw some pressure from a top line perspective, I am pleased with our earnings compared to our expectations. The team effectively managed inventory and expenses and continued to successfully deliver on our own brand strategy. Turning to our results. For the full year, sales increased 3.7% to $3.3 billion compared to 2021. In the quarter, sales decreased 7.5% to $760.5 million compared to 2021, primarily as a result of a pressured consumer and a highly competitive and promotional environment. On top of record-level performance last year, total comps were up 4.4%, and U.S. retail comps were up 2% for the full year. Canada also had an excellent year, posting comps of 28.8%. We are incredibly proud of our performance on vincecamuto.com with comps up 34.5%. Specifically, our own brands had a great showing, growing 32% for the year, and DTC was up 35%. In the fourth quarter, total comps were down 5.5%, following a 36.9% comp in the fourth quarter of 2021. U.S. retail comps for the fourth quarter were down 8.1%, driven by the pressure of a constrained consumer. As Doug mentioned, our industry struggled with being over-inventoried, and as a result, our external wholesale business was down 9% during the quarter on a net sales basis where, as for the year, it was up 24%. Canada's growth story continued as they posted comps of 15.9% for the quarter. Vincecamuto.com comps were up an impressive 44.4% for the quarter compared to a gain of 50.9% in the prior year. We're pleased with this continued online growth for vincecamuto.com, our largest owned brand. As we look forward, with keds.com now part of our DBI family, we'll look to leverage best practices from all of our online presences to grow our own brands further. For the full year, gross margin was 32.6% compared to 33.4% in the prior year, a decrease of 80 basis points as a result of our intentional strategy to increase our clearance activity that we laid out at the start of the year. Importantly, gross margin continues to be structurally more robust than pre-pandemic, with full year consolidated gross margin 400 basis points above fiscal 2019. In the quarter, the consolidated gross margin was 29.2% compared to 30.9% last year, a decrease of 170 basis points due to our increased clearance activity and a slightly higher promotional level. This year-over-year change was, however, a sequential improvement over the prior quarter. Again, this continues to be significantly better than pre-pandemic, with the fourth quarter up 440 basis points compared to the fourth quarter of 2019. The team continued to manage expenses closely and our adjusted SG&A ratio for the fiscal year was 26.6% of sales compared to 27% in fiscal 2021. For the fourth quarter, our adjusted SG&A ratio was 27.5% compared to 28.3% last year as we look to find opportunities to cut back expenses across the entire business. For the full year, adjusted operating profit was 6.3% of sales compared to 6.7% in the prior year. For the fourth quarter, adjusted operating profit was 2% of sales compared to 2.9% last year. We had $14.9 million of net interest expense during fiscal 2022 and $4.3 million of net interest expense during the fourth quarter. Our effective tax rate on our adjusted results was 30.6% for the full year and 56.7% in the fourth quarter. Full year adjusted net income was $133.6 million or $1.85 diluted EPS versus $1.70 last year. Fourth quarter adjusted net income was $4.7 million or $0.07 of diluted EPS versus $0.15 last year. Turning to our inventory. We ended the fourth quarter with inventories of $605.7 million compared to $586.4 million last year. On a retail square foot basis, we ended up 5% versus the end of fiscal '22, a notable improvement over the prior three quarters, which was the plan we had been signaling all along. Remember, our inventory levels were up 21% at the start of the year, so we made great progress on bringing down our inventory levels throughout the year. As we head into 2023, we feel great about our inventory position, especially compared to others in our space. We ended the quarter with $58.8 million of cash and our total liquidity, which includes cash and availability under our revolver, was $302.7 million. We had $243.9 million available to draw on our revolving credit facility. As a reminder, we continue to await the receipt of the final approximate $40 million of our CARES Act tax refund due to us from the IRS, which we expect as soon as the standard audits of the applicable prior tax years conclude. As we look towards 2023, I would like to provide guidance on our overall base business, excluding our recent acquisition of Keds, which will be additive to our top line but neutral to our earnings in 2023, given this is an integration year. With the continued uncertainty in the macroeconomic environment and evolving patterns of consumer discretionary spending, we expect the pullback of consumer spending that we saw starting in October of 2022 to continue through the first half of this year, with signs of a soft landing in Q3. By Q4, we plan a modest return to growth as we start lapping that October pullback. Specifically, within our U.S. Retail segment, we are expecting to see sales for the year down in the mid-single digits. We are expecting sales to be down mid-single digits for the first half of the year, recovering throughout the third and fourth quarters with relatively flat quarterly comps by the time we exit the year. We anticipate a similar trend in our external wholesale business, excluding Keds, with spring expected to be down 25% to 35% from 2022 and fall being down between 5% to 15% to last year. For the full year, within our Brand Portfolio segment, we expect external wholesale excluding Keds to be down by 15% to 20%. We also anticipate our vincecamuto.com DTC site to be relatively flat compared to last year. Within our Canadian retail business, we expect to remain relatively flat to last year in sales given the continued post-COVID recovery that geography is experiencing. This guidance excludes the impact of our Keds acquisitions but incorporates Topo being added to our Brand Portfolio segment and the inclusion of a 53rd selling week at our retail segment, which will add approximately $30 million of sales over 2022 in the fourth quarter. In summary, we anticipate total Designer Brands net sales excluding Keds to be down mid-single digits compared to fiscal 2022. As it pertains to Keds, as a reminder, we did close on the Keds acquisition at the beginning of this fiscal year. As such, we are anticipating that this acquisition will add approximately $75 million to $85 million of net sales across multiple channels of wholesale, DTC, international and Canada. As I said previously, it should be noted that while we are excited about this acquisition and will recognize these incremental sales, we are anticipating no material impact to profitability from these sales in the current year due to costs and investments related to the integration. Turning to factors impacting our profitability. While we are not providing detailed P&L line item guidance, directionally, I want to highlight a few key points. As we look at our total business, we expect gross profit dollars to be down mid-single digits in 2023, but gross margin rate to be up due to continued penetration of owned brands and the normalization of supply chain costs versus 2022. Given the current pressures, we are working hard to pare back every line of spending possible, including labor, management incentive compensation, and zero-based budgeting of all discretionary line items. Therefore, our business for the 52-week period, excluding the new acquisition of Keds and Topo, is expected to reduce SG&A by approximately $25 million. This is all while also covering meaningful inflation across multiple lines in the P&L. Topo in the 53rd week is expected to add approximately $50 million of SG&A. As mentioned earlier, 2023 is a heavy integration year for Keds with work and investment occurring at DBI, while simultaneously paying Wolverine to support this business under a robust transition services agreement. Thus, we anticipate that Keds will operate at a breakeven operating income contribution during the year. Our expectation is that the Keds business will become profitable in 2024 once they are fully off of the TSA. With an assumed tax rate of 29.5% and approximately 69 million weighted average shares for the year, our adjusted EPS in 2023 is expected to be in the range of $1.65 to $1.75, including acquisitions in the 53rd week. From a calendarization perspective, we are planning almost all of the decline from last year to materialize in the first quarter, with the balance of the quarters remaining relatively flat to slightly up compared to last year. This is due primarily to the macro pressures on the consumer strongly continuing from Q4 into 2023 and the assumption around a soft landing in the back half of the year. Additionally, we find the toughest comparisons to last year residing in Q1, generating the most fixed cost deleverage. Furthermore, we expect more of the targeted expense reductions we've implemented for 2023 not to become effective until midway through the quarter. We see upside to these estimates from opportunities like exciting closeout buys, a potential faster recovery in the macro environment, and an accelerated integration of Keds. In conclusion, our brands are delivering structurally improved results across the board, and I'm excited about the milestones we've reached this year and continue to support the diversification of our own brand portfolio and revenue streams. With that, we'll open the call for questions.

We will now begin the question-and-answer session. This concludes our question-and-answer session. I would like to turn the conference back over to Roger Rawlins for any closing remarks.

Thanks, again, everybody, for joining the call. I appreciate everybody's support and look forward to all the success that Doug and his team are going to have.

Thanks, everybody. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.