MANAGEMENT'S DISCUSSION AND ANALYSIS OFFINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations should be read in conjunction with our Consolidated Financial Statements and related Notes and other financial information appearing elsewhere in this Annual Report on Form 10-K, and with Part II, Item 7 ("Management's Discussion and Analysis of Financial Condition and Results of Operations") of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, filed with the SEC on March 26, 2025, which provides a discussion of our financial condition and results of operations for Fiscal 2025 compared to our Fiscal 2024.

Summary of Results of Operations

Key Performance Indicators

In assessing the performance of our business, we consider a variety of performance and financial measures. The key performance indicators we use to evaluate the financial condition and operating performance of our business are comparable sales, net sales, gross margin, operating income and operating margin. These key performance indicators should not be considered superior to, as a substitute for or as an alternative to, and should be considered in conjunction with, the U.S. GAAP financial measures presented herein. These measures may not be comparable to similarly-titled performance indicators used by other companies.

Comparable Sales

We consider comparable sales to be an important indicator of our current performance, and investors may find it useful as such. Comparable sales results are important to achieve leveraging of our costs, including occupancy, selling salaries, depreciation, etc. Comparable sales also have a direct impact on our total net revenue, working capital and cash. We define "comparable sales" as sales from stores open longer than one year, beginning with the first day a store has comparable sales (which we refer to in

this report as "same store sales"), and sales from websites operated longer than one year and direct mail catalog sales (which we refer to in this report as "comparable e-commerce sales"). Temporarily closed stores are excluded from the comparable sales calculation if closed for more than seven days. Expanded stores are excluded from the comparable sales calculation until the first day an expanded store has comparable prior year sales. Current year foreign exchange rates are applied to both current year and prior year comparable sales to achieve a consistent basis for comparison.

Results of Operations-Fiscal 2026 Compared to Fiscal 2025

Our net sales for Fiscal 2026 increased 4.8% to $2.4 billion compared to $2.3 billion in Fiscal 2025. The net sales increase for Fiscal 2026 reflected a 6% increase in comparable sales, including a 6% increase in same store sales and a 4% increase in e-commerce comparable sales, and a favorable foreign exchange impact, partially offset by 42 net store closings and decreased wholesale sales. The consumer environment remains selective and intentional. Consumers tend to engage during key shopping moments and reduce discretionary spending outside of key shopping moments. Journeys Group had a strong year with comparable sales up 9%, fueled by strength in product assortment and other initiatives. Schuh Group comparable sales were flat for the year, reflecting the challenging retail environment in the U.K. Johnston & Murphy Group comparable sales were flat for the year reflecting lower store sales. Journeys Group sales increased 7% and Schuh Group sales increased 4%, partially offset by a sales decrease of 4% at Genesco Brands Group, reflecting the wind-down of Levis and other licenses, while Johnston & Murphy Group sales were flat for Fiscal 2026 compared to Fiscal 2025. Schuh Group's sales were flat on a local currency basis for Fiscal 2026.

Gross margin increased 2.7% to $1.127 billion in Fiscal 2026 from $1.097 billion in Fiscal 2025. Gross margin decreased 90 basis points as a percentage of net sales from 47.2% in Fiscal 2025 to 46.3% in Fiscal 2026, reflecting decreased gross margin as a percentage of net sales in Schuh Group and Genesco Brands Group, while gross margin as a percentage of net sales was flat in both Journeys Group and Johnston & Murphy Group. The overall decrease in gross margin as a percentage of net sales reflects increased promotional activity at Schuh Group and lower margins at Genesco Brands Group related to the exit of licenses and ongoing tariff pressure.

Selling and administrative expenses in Fiscal 2026 increased 2.0% to $1.101 billion compared to $1.080 billion in Fiscal 2025. Selling and administrative expenses decreased 120 basis points as a percentage of net sales from 46.4% in Fiscal 2025 to 45.2% in Fiscal 2026, reflecting decreased expenses as a percentage of net sales at Journeys Group and Genesco Brands Group, partially offset by increased expenses as a percentage of net sales at Schuh Group and Johnston & Murphy Group. The overall decrease in expenses as a percentage of net sales in Fiscal 2026 reflects a decrease in occupancy costs and selling salaries along with other expenses as part of our cost savings initiatives. Explanations of the changes in results of operations are provided by business segment in discussions following these introductory paragraphs.

Operating margin was 0.7% in Fiscal 2026 compared to 0.6% in Fiscal 2025 reflecting improved operating margin at Journeys Group, partially offset by decreased operating margin at Schuh Group, Johnston & Murphy Group and Genesco Brands Group. The overall improvement in operating margin in Fiscal 2026 primarily reflects decreased selling and administrative expenses as a percentage of net sales, partially offset by decreased gross margin as a percentage of net sales and higher asset impairment and other charges in Fiscal 2026 compared to Fiscal 2025.

Earnings from continuing operations before income taxes ("pretax earnings") for Fiscal 2026 were $12.6 million, compared to $9.3 million for Fiscal 2025. Pretax earnings for Fiscal 2026 included asset impairment and other charges of $8.1 million which included $3.9 million for store restructuring, $2.9 million for costs associated with information technology transformation, $0.7 million for asset impairments and $0.6 million for severance. Pretax earnings for Fiscal 2025 included asset impairment and other charges of $3.2 million which included $1.8 million for severance and $1.4 million for asset impairments.

The effective income tax rate was (5.4)% for Fiscal 2026 compared to 309.6% for Fiscal 2025. The lower effective tax rate for Fiscal 2026 compared to Fiscal 2025 reflects the impact of the enactment of income tax law changes under the OBBBA in Fiscal 2026 and their interaction with our valuation allowance in the U.S. jurisdiction coupled with a tax benefit associated with our

losses generated in our U.K. tax jurisdiction. Conversely, the higher effective tax rate for Fiscal 2025 reflects a $26.2 million U.S. valuation allowance recorded in Fiscal 2025, reflecting the uncertainty regarding our ability to realize the benefit of our general tax attributes in the U.S. See Item 8, Note 11, "Income Taxes", to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information.

Net earnings for Fiscal 2026 were $13.3 million, or $1.25 diluted earnings per share compared to a net loss of $18.9 million, or $1.74 diluted loss per share for Fiscal 2025. The net loss for Fiscal 2025 includes a $1.2 million ($0.9 million, net of tax) gain from insurance proceeds related to legacy environmental matters.

Journeys Group

Net sales from Journeys Group increased 6.8% to $1.49 billion for Fiscal 2026 compared to $1.40 billion for Fiscal 2025. The increase in net sales was primarily due to a total comparable sales increase of 9% primarily reflecting increased store sales, partially offset by a 5% decrease in the average number of Journeys stores for Fiscal 2026 due to 41 net store closures. The increase in comparable sales in Fiscal 2026 was fueled by strength in Journeys Group's product assortment with brands across both casual and athletic posting gains. Journeys Group drove strong gains in conversion and transaction size. We continue to elevate the product assortment and invest in the Journeys brand to improve the customer experience.

The store count for Journeys Group was 965 stores at the end of Fiscal 2026, including 194 Journeys Kidz stores, 33 Journeys stores in Canada and 30 Little Burgundy stores in Canada, compared to 1,006 stores at the end of Fiscal 2025, including 211 Journeys Kidz stores, 35 Journeys stores in Canada and 30 Little Burgundy stores in Canada.

The 210 basis point improvement in operating margin for Journeys Group in Fiscal 2026 compared to Fiscal 2025 was primarily due to decreased selling and administrative expenses as a percentage of net sales reflecting leverage of expense as a result of increased revenue in Fiscal 2026, especially occupancy expense and selling salaries, and also reflecting our cost savings initiatives. The decrease in selling and administrative expense as a percentage of net sales demonstrates the impact of our cost savings initiatives and closing underperforming stores. Gross margin as a percentage of net sales was flat in Fiscal 2026 as changes in product mix were offset by lower markdowns and decreased shipping and warehouse expense.

Schuh Group

Net sales from Schuh Group increased 4.2% to $500.0 million for Fiscal 2026 compared to $479.9 million for Fiscal 2025. Net sales in Fiscal 2026 included a favorable impact of $21.2 million in sales due to changes in foreign exchange rates and an increase in e-commerce comparable sales, partially offset by decreased stores sales. Total comparable sales were flat for Schuh Group in Fiscal 2026. Schuh Group's sales were flat on a local currency basis for Fiscal 2026. Schuh Group performance was impacted by the ongoing challenging U.K. retail environment in Fiscal 2026. The e-commerce business remains a key channel for consumer engagement, accounting for over 45% of its sales in Fiscal 2026. Schuh Group operated 118 stores at the end of Fiscal 2026 compared to 124 stores at the end of Fiscal 2025.

The 300 basis point decrease in operating margin for Fiscal 2026 compared to Fiscal 2025 reflects decreased gross margin as a percentage of net sales reflecting increased promotional activity, including increased loyalty redemptions and promotions to match the competitive environment, partially offset by decreased shipping and warehouse expenses. In addition, selling and administrative expenses increased as a percentage of net sales, reflecting deleverage of expenses, especially marketing expense and selling salaries, partially offset by decreased compensation expense.

Johnston & Murphy Group

Johnston & Murphy Group net sales were flat at $320.2 million for Fiscal 2026 and Fiscal 2025. Total comparable sales were flat in Fiscal 2026 and the average number of Johnston & Murphy stores decreased 1% for Fiscal 2026 which was offset by a small increase in wholesale sales. Retail operations accounted for 77.9% of Johnston & Murphy Group's sales in Fiscal 2026, down from 78.3% in Fiscal 2025. The store count for Johnston & Murphy retail operations at the end of Fiscal 2026 was 153 Johnston & Murphy shops and factory stores, compared to 148 Johnston & Murphy shops and factory stores at the end of Fiscal 2025.

The 120 basis point decrease in operating margin for Johnston & Murphy Group for Fiscal 2026 compared to Fiscal 2025 reflects increased selling and administrative expenses as a percentage of net sales for Fiscal 2026, reflecting increased depreciation,

occupancy and compensation expenses, partially offset by decreased marketing expense. Gross margin as a percentage of net sales was flat in Fiscal 2026 compared to Fiscal 2025 as better initial margins at retail were offset by lower wholesale margins due primarily to tariff impacts.

Genesco Brands Group

Net sales for Genesco Brands Group decreased 3.8% to $121.2 million for Fiscal 2026 from $126.0 million for Fiscal 2025, primarily due to decreased sales of Levi's as we exit that business, partially offset by increased sales of private label footwear.

The 550 basis point decrease in operating margin for Genesco Brands Group in Fiscal 2026 was primarily due to decreased gross margin as a percentage of net sales due to the impact of tariffs and higher closeout sales related to the exit of Levi's and other licenses as well as an unfavorable change in sales mix. Gross margin included an inventory write-down related to the exit of licenses in Fiscal 2026 and a charge for a distribution model transition in Fiscal 2025. The decrease in gross margin was partially offset by decreased selling and administrative expenses as a percentage of net sales in Fiscal 2026 primarily reflecting decreased performance-based compensation, freight and other expenses, partially offset by increased royalty expense, due to a reversal of royalty expense last year resulting from an amendment to the Levi's license agreement.

Corporate, Interest Expenses and Other Charges

Corporate and other expense for Fiscal 2026 increased 14% to $43.2 million compared to $37.8 million for Fiscal 2025. Corporate and other expense in Fiscal 2026 included an $8.1 million charge in asset impairments and other which included $3.9 million for store restructuring, $2.9 million for costs associated with information technology transformation, $0.7 million for asset impairments and $0.6 million for severance. Corporate and other expense in Fiscal 2025 included a $3.2 million charge in asset impairment and other charges which included $1.8 million for severance and $1.4 million for asset impairments. The corporate expense increase, excluding asset impairment and other charges in Fiscal 2026 and Fiscal 2025, primarily reflects an increase in compensation expense, partially offset by a decrease in professional fees in Fiscal 2026 compared to Fiscal 2025.

Net interest expense decreased 3.6% or $0.2 million to $4.1 million in Fiscal 2026 from $4.3 million in Fiscal 2025 primarily reflecting decreased revolver borrowings in the U.S. in Fiscal 2026 compared to Fiscal 2025, partially offset by increased revolver borrowings in the U.K. in Fiscal 2026.

Liquidity and Capital Resources

Working Capital

Our business is seasonal, with our investment in inventory and accounts receivable normally reaching peaks in the spring and fall of each year. Historically, cash flow from operations has been generated principally in the fourth quarter of each fiscal year.

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

Cash provided by operating activities was $57.9 million higher in Fiscal 2026 compared to Fiscal 2025, reflecting primarily the following factors:

Cash used in investing activities was $20.9 million higher in Fiscal 2026 compared to Fiscal 2025 reflecting increased capital expenditures primarily related to investments in retail stores, primarily renovations.

Cash used in financing activities was $33.7 million lower in Fiscal 2026 as compared to Fiscal 2025 primarily reflecting higher net payments in Fiscal 2025 compared to Fiscal 2026.

Sources of Liquidity and Future Capital Needs

We have three principal sources of liquidity: cash flow from operations, cash on hand and our credit facilities discussed in Item 8, Note 8, "Long-Term Debt", to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

On January 16, 2026, we entered into the Fourth Amendment (the "Fourth Amendment")to the Fourth Amended and Restated Credit Agreement dated as of January 31, 2018 (as amended, the "Credit Facility" or the "Credit Agreement") by and among us, certain of our subsidiaries, the lenders party thereto and Bank of America, N.A. as agent, to,among other things, extend the maturity date to January 16, 2031. In addition, the Fourth Amendment (i) makes conforming changes to replace the Canadian Dollar Offered Rate with the Canadian Overnight Repo Rate Average ("CORRA") with respect to Canadian borrowings and (ii) removes the credit spread adjustment and thereby reduces the Term SOFR (as defined in the Credit Agreement) interest rate with respect to domestic borrowings. The Total Commitments (as defined in the Credit Agreement) for the revolving loans remains at $332.5 million. As of January 31, 2026, we had outstanding revolver borrowings under the Credit Facility of $3.4 million (CAD

$4.6 million) related to GCO Canada ULC. We had outstanding letters of credit of $6.2 million under the Credit Facility at January 31, 2026. These letters of credit support insurance and lease indemnifications.

On November 2, 2022, Schuh entered into a facility agreement (the "Facility Agreement") with Lloyds Bank PLC ("Lloyds") for a £19.0 million revolving credit facility. The Facility Agreement was extended through February 28, 2026 and bears interest at 2.35% over the SONIA Rate. The Facility Agreement was amended during the first quarter of Fiscal 2027 on February 20, 2026 to, among other things, increase the commitment of the credit facility to £20.0 million, extend the maturity date to August 20, 2027, and it will bear interest at 1.75% over the SONIA Rate. This Facility Agreement replaced Schuh's Facility Letter. The Facility Agreement includes certain financial covenants specific to Schuh. Following certain customary events of default outlined in the Facility Agreement, payment of outstanding amounts due may be accelerated or the commitments may be terminated. The Facility Agreement is secured by charges over all of the assets of Schuh, and Schuh's subsidiary, Schuh (ROI) Limited. Pursuant to a Guarantee in favor of Lloyds in its capacity as security trustee, Genesco Inc. has guaranteed the obligations of Schuh under the Facility Agreement and certain existing ancillary facilities on an unsecured basis. As of January 31, 2026, we did not have any borrowings under the Schuh Facility Agreement.

We were in compliance with all the relevant terms and conditions of the Credit Facility and Facility Agreement as of January 31, 2026.

We believe that cash on hand, cash provided by operations and borrowings under our amended Credit Facility and the Schuh Facility Agreement will be sufficient to support our liquidity needs in Fiscal 2027 and the foreseeable future.

In the fourth quarter of Fiscal 2021, we implemented tax strategies allowed under the 5-year carryback provisions in the CARES Act which we believed would generate approximately $55 million of net tax refunds. We received approximately $26 million of such net tax refunds in Fiscal 2022 and anticipated receipt of the remaining outstanding net tax refund in Fiscal 2023. However, in the third quarter of Fiscal 2023, we were notified that the IRS would conduct an audit of the periods related to the outstanding net tax refund. As a result, the timing of the net tax refund was extended due to the audit process. On January 17, 2025, we executed Form 870 with the IRS exam team and began the process of completing the separate Joint Committee on Taxation ("JCT") review of our outstanding U.S. Federal tax refund claim for the Fiscal 2014 to Fiscal 2021 tax periods. During the first quarter of Fiscal 2026, the JCT finalized their review with no changes to the claim and the IRS began the process of issuing the refund. The balance outstanding increased as a result of additional accrued interest. We received a total refund of $60.1 million, including interest, in Fiscal 2026.

Contractual Obligations

The following table sets forth aggregate contractual obligations as of January 31, 2026.

(1)Operating lease obligations excludes $55.8 million for leases signed but not yet commenced.

We issue inventory purchase orders in the ordinary course of business, which represent authorizations to purchase that are cancelable by their terms. We do not consider purchase orders to be firm inventory commitments. If we choose to cancel a purchase order, we may be obligated to reimburse the vendor for unrecoverable outlays incurred prior to cancellation.

Capital Expenditures

Capital expenditures were $62.1 million and $41.1 million for Fiscal 2026 and 2025, respectively. The $21.0 million increase in Fiscal 2026 capital expenditures as compared to Fiscal 2025 is primarily due to increased store renovations and new stores.

We expect total capital expenditures for Fiscal 2027 to be approximately $65-$70 million of which approximately 90% is for new stores and renovations and 10% is for other initiatives. We do not currently have any longer-term capital expenditures or other cash requirements other than as set forth in the contractual obligations table. We also do not currently have any off-balance sheet arrangements.

Common Stock Repurchases

We repurchased 604,531 shares during Fiscal 2026 at a cost of $12.6 million or an average of $20.79 per share. We were operating under a $100.0 million repurchase authorization from February 2022. In June 2023, we announced an additional $50.0 million share repurchase authorization. As of January 31, 2026, we have $29.8 million remaining under the expanded share repurchase authorization. We repurchased 399,633 shares during Fiscal 2025 at a cost of $9.8 million or an average of $24.49 per share. We repurchased 1,261,295 shares during Fiscal 2024 at a cost of $32.0 million or an average of $25.39 per share. During the first quarter of Fiscal 2027, through March 25, 2026, we did not repurchase any shares.

Environmental and Other Contingencies

We are subject to certain loss contingencies related to environmental proceedings and other legal matters, including those disclosed in Item 8, Note 15, "Legal Proceedings", to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

Financial Market Risk

The following discusses our exposure to financial market risk.

Outstanding Debt - We have outstanding revolver borrowings of $3.4 million (CAD $4.6 million) related to GCO Canada ULC, at an average interest rate of 4.7% as of January 31, 2026. A 100 point basis point increase in interest rates would increase annual interest less than $0.1 million on the $3.4 million revolver borrowings.

Cash and Cash Equivalents - Our cash and cash equivalent balances are held in our bank accounts and are invested primarily in institutional money market funds. We did not have significant exposure to changing interest rates on invested cash at January 31, 2026. As a result, we consider the interest rate risk implicit in these investments at January 31, 2026 to be low. We had cash equivalents of $71.8 million at January 31, 2026.

Summary - Based on our overall market interest rate exposure at January 31, 2026, we believe that the effect, if any, of reasonably possible near-term changes in interest rates on our consolidated financial position, results of operations or cash flows for Fiscal 2027 would not be material.

Accounts Receivable - Our accounts receivable balance at January 31, 2026 is concentrated in our wholesale businesses, which sell primarily to department stores and independent retailers across the United States. In the wholesale businesses, one customer accounted for 22%, one customer accounted for 13% and two customers each accounted for 10% of our total trade receivables balance, while no other customer accounted for more than 8% of our total trade receivables balance as of January 31, 2026. We monitor the credit quality of our customers and establish an allowance for doubtful accounts based upon factors surrounding credit risk of specific customers, historical trends and other information, as well as customer specific factors; however, credit risk is affected by conditions or occurrences within the economy and the retail industry, as well as company-specific information.

Foreign Currency Exchange Risk - We are exposed to translation risk because certain of our foreign operations utilize the local currency as their functional currency and those financial results must be translated into United States dollars. As currency exchange rates fluctuate, translation of our financial statements of foreign businesses into United States dollars affects the comparability of financial results between years. Schuh Group's net sales for Fiscal 2026 were positively impacted by $21.2 million and the operating loss for Fiscal 2026 was negatively impacted by $0.2 million due to the change in foreign exchange rates.

New Accounting Principles

Descriptions of recently issued accounting pronouncements, if any, and the accounting pronouncements adopted by us during Fiscal 2026 are included in Note 2, "New Accounting Pronouncements", to the Consolidated Financial Statements included in Item 8, "Financial Statements and Supplementary Data".

Critical Accounting Estimates

Inventory Valuation

In our footwear wholesale operations and our Schuh Group segment, cost for inventory that we own is determined using the first-in, first-out ("FIFO") method. Net realizable value is determined using a system of analysis which evaluates inventory at the stock number level based on factors such as inventory turn, average selling price, inventory level, and selling prices reflected in future orders for footwear wholesale. We provide a valuation allowance when the inventory has not been marked down to net realizable value based on current selling prices or when the inventory is not turning and is not expected to turn at satisfactory levels.

In our retail operations, other than the Schuh Group segment, we employ the retail inventory method, applying average cost-to-retail ratios to the retail value of inventories. Under the retail inventory method, valuing inventory at the lower of cost or market is achieved as markdowns are taken or accrued as a reduction of the retail value of inventories.

Inherent in the retail inventory method are subjective judgments and estimates about the recoverability of the inventory and its market value, including merchandise mark-on, markups, markdowns and shrinkage. These judgments and estimates, coupled with the fact that the retail inventory method is an averaging process, could produce a range of cost figures. To reduce the risk of inaccuracy and to ensure consistent presentation, we employ the retail inventory method in multiple subclasses of inventory with similar gross margins. We analyze markdown requirements at the stock number level based on factors such as inventory turn, average selling price and inventory age and we accrue markdowns as necessary. These additional markdown accruals reflect all of the above factors as well as current agreements to return products to vendors and vendor agreements to provide markdown support. In addition to markdown allowances, we maintain reserves for shrinkage and damaged goods based on historical rates.

Inherent in the analysis of both wholesale and retail inventory valuation are subjective judgments about current market conditions, fashion trends and overall economic conditions as well as expectations surrounding future sales. Failure to make appropriate conclusions regarding these factors may result in an overstatement or understatement of inventory value. A change of 10% from the recorded amounts for markdowns, shrinkage and damaged goods would have changed inventory by $0.9 million at January 31, 2026.

Impairment of Long-Lived Assets

We periodically assess the recoverability of our long-lived assets, other than goodwill, and evaluate such assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Asset impairment is determined to exist if an asset's fair value is less than the carrying amount. Fair value of our long-lived assets is determined by estimated future cash flows, undiscounted and without interest charges, and comparable market rents. Inherent in the analysis of impairment are subjective judgments about future cash flows. Failure to make appropriate conclusions regarding these judgments may result in an overstatement or understatement of the value of long-lived assets.

We annually assess our goodwill and indefinite lived trademarks for impairment and on an interim basis if indicators of impairment are present. Our annual assessment date of goodwill and indefinite lived trade names is the first day of the fourth quarter.

In accordance with ASC ("Accounting Standards Codification") 350, "Intangibles - Goodwill and Other" ("ASC 350") we have the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill is impaired. If, after such assessment, we conclude that the asset is not impaired, no further action is required. However, if we conclude otherwise, we are required to determine the fair value of the asset using a quantitative impairment test. The quantitative impairment test for goodwill compares the fair value of each reporting unit with the carrying value of the reporting unit with which the goodwill is associated. If the fair value of the reporting unit is less than the carrying value of the reporting unit, an impairment charge would be recorded for the amount, if any, in which the carrying value exceeds the reporting unit's fair value. We estimate fair value using the best information available, and compute the fair value derived by a combination of the market and income approach. The market approach is based on observed market data of comparable companies to determine fair value. The income approach utilizes a projection of a reporting unit's estimated operating results and cash flows that are discounted using a weighted-average cost of capital that reflects current market conditions. A key assumption in our fair value estimate is the weighted average cost of capital utilized for discounting our cash flow projections in our income approach. The projection uses our best estimates of economic and market conditions over the projected period including growth rates in sales, costs, estimates of future expected changes in operating margins and cash expenditures. Other significant estimates and assumptions include terminal value growth rates, future estimates of capital expenditures and changes in future working capital requirements. For additional information regarding impairment of long-lived assets, see Item 8, Note 3, "Goodwill and Other

Intangible Assets" and Note 4,"Asset Impairments and Other Charges" to our Consolidated Financial Statements included in this Annual Report on Form 10-K.

The quantitative impairment test for indefinite lived trademarks compares the fair value of the trademark with the carrying value of the related trademark. If the fair value of the trademark is less than the carrying value of the trademark, an impairment charge would be recorded for the amount, if any, in which the carrying value exceeds the trademark's fair value. We estimate fair value using the best information available, and compute the fair value using an income approach that estimates the savings that the trademark owner would realize from owning that asset instead of having to pay rent or a royalty for the use of it. Key assumptions in our fair value estimate are the selected royalty rate and discount rate. Other significant estimates and assumptions include terminal value growth rates and future profitability expectations.

Revenue Recognition

In accordance with Accounting Standards Update ("ASU") 2014-09, "Revenue from Contracts with Customers (Topic 606)" ("ASC 606"), revenue shall be recognized upon satisfaction of all contractual performance obligations and transfer of control to the customer. Revenue is measured as the amount of consideration we expect to be entitled to in exchange for corresponding goods. The majority of our sales are single performance obligation arrangements for retail sale transactions for which the transaction price is equivalent to the stated price of the product, net of any stated discounts applicable at a point in time. Each sales transaction results in an implicit contract with the customer to deliver a product at the point of sale. Revenue from retail sales is recognized at the point of sale, is net of estimated returns, and excludes sales and value added taxes. Revenue from catalog and internet sales is recognized at estimated time of delivery to the customer, is net of estimated returns, and excludes sales and value added taxes. Wholesale revenue is recorded net of estimated returns and allowances for markdowns, damages and miscellaneous claims when the related goods have been shipped and legal title has passed to the customer. Actual amounts of markdowns have not differed materially from estimates. Shipping and handling costs charged to customers are included in net sales. We elected the practical expedient within ASC 606 related to taxes that are assessed by a governmental authority, which allows for the exclusion of sales and value added tax from transaction price.

Revenue from gift cards is deferred and recognized upon the redemption of the cards. These cards have no expiration date. Income from unredeemed cards is recognized in our Consolidated Statements of Operations within net sales in proportion to the pattern of rights exercised by the customer in future periods. We perform an evaluation of historical redemption patterns from the date of original issuance to estimate future period redemption activity.

Income Taxes

As part of the process of preparing our Consolidated Financial Statements, we are required to estimate our income taxes in each of the tax jurisdictions in which we operate. This process involves estimating actual current tax obligations together with assessing temporary differences resulting from differing treatment of certain items for tax and accounting purposes, such as depreciation of property and equipment and valuation of inventories. These temporary differences result in deferred tax assets and liabilities, which are included within our Consolidated Balance Sheets. We then assess the likelihood that our deferred tax assets will be recovered from future taxable income. Actual results could differ from this assessment if adequate taxable income is not generated in future periods. To the extent it is more likely than not that some portion or all of a deferred asset will not be realized, valuation allowances are established. To the extent valuation allowances are established or increased in a period, we include an expense within the tax provision in our Consolidated Statements of Operations. These deferred tax valuation allowances may be released in future years when we consider that it is more likely than not that some portion or all of the deferred tax assets will be realized. In making such a determination, we will need to periodically evaluate whether or not all available evidence, such as future taxable income and reversal of temporary differences, tax planning strategies, and recent results of operations, provides sufficient positive evidence to offset any other negative evidence that may exist at such time. In the event the deferred tax valuation allowance is released, we would record an income tax benefit for a portion or all of the deferred tax valuation allowance released. At January 31, 2026, we had a deferred tax valuation allowance of $71.2 million.

Income tax reserves for uncertain tax positions are determined using the methodology required by the ASC Income Tax Topic, ("ASC 740"). This methodology requires companies to assess each income tax position taken using a two-step process. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position. Uncertain tax positions require determinations and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying interpretation. If our determinations and estimates prove to be inaccurate, the resulting adjustments could be material to our future financial results. See Item 8, Note 11, "Income Taxes", to our Consolidated Financial Statements included in this Annual Report on Form 10-K for additional information related to income taxes.