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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. And 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 so much 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 on 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 such 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 the consumer wanted nothing to do with fashion footwear as they were working from home and limiting their social occasions. We had 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 some 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 this action. We're working closely with them to aid in their transition, and I personally would like 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 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?

Doug Howe: Thank you, Roger, and good morning, everyone. I've gotten to speak with some of you since the news of my appointment, but I want to share that I am incredibly excited to be taking on this role. I want to thank Roger for his phenomenal leadership that has elevated designer brands to its current status, and I look forward to continuing to work with him over the next year. Thank you as well to our teams for the support you've shown me thus far. I look forward to traveling even more in the coming quarters to get to know more of you individually. We delivered well this quarter and this year amidst a pressured macro environment. The dynamics we called out last quarter continued to persist. In the fourth quarter, the footwear industry was highly promotional, specifically in athletic to combat over inventory positions and a constrained consumer.

In considering the variables we could control, we elected to be less promotional in athletic. We had positioned ourselves well with proactive actions earlier in the year to manage our inventory levels, and we were supported by the continued resurgence of our clearance business. We made this decision with an eye towards protecting our dress and seasonal market share during a critically important season. As such, we chose to implement select thoughtful promotions in our seasonal business, specifically on ready-to-wear product like boots in the quarter. Our customer has clearly shown us that they are looking for value at this point in time, and we saw outperformance of our clearance business. In the quarter at DSW, clearance sales were up 2%, while regular price selling was down 10%.

As other companies across our space have been sharing, we are continuing to see a consumer under pressure as we enter the new year. Between current inflation levels and a looming recession, customers are spending less and purchasing discounted product more. Ultimately, we are continuing to be thoughtful about how we are playing in the promotional space while carefully balancing inventory investments, putting us in a position to chase into any opportunities we see in real time. Importantly, our owned and national brand strategy continues to be our priority. I want to take a moment to emphasize that our goal is to maintain strong partnerships with national brands while doubling owned brands are completely complementary. We will continue to aggressively grow our own brands, while finding unique ways to unlock additional opportunities with our national brand partners.

With our recent additions to our portfolio, we have put ourselves in a position to continue building an incredibly strong foundation in 2023 that will position us for even greater growth in 2024. Let me start with our own brands. In recent months, we have made 3 exciting acquisitions, Latigre, TopoAthletic and kids that support our strategy to be a leading brand builder and get us even closer to our own brands target, which we are set to achieve in 2026. This is notable for 2 reasons. First, it demonstrates our ability to make material progress on our strategy. Two months ago, we had no athletic or athleisure product represented in our own portfolio. And now we own brands across all major price points for our customers to shop. And secondly, it highlights the importance of our national brand partners to our own brand strategy.

Our strong long-term relationship with Wolverine has allowed us to partner in many ways from being the largest wholesale customer to Keds to unlocking new value with the Hush Puppies brand to ultimately acquiring Keds and soon exclusively licensing Husch Puppies. As a reminder, we invested in Latigra and simultaneously entered into an exclusive licensing agreement for footwear in July to distribute premium athletic product through our channels and selectively expand that distribution in the future. Then in December, we acquired Topo athletic, which provides a premium athletic product that focuses on running, walking, hiking and comfort. And most recently, our acquisition of Keds gives us an iconic brand with wide reach and brand love, which gives us more opportunities to continue building brands outside our retail operations.

Also announced just a few weeks ago was our anticipated future expansion with Husch Puppies -- where Designer Brands is expected to become the exclusive license in the U.S. and Canada effective later this year. The new agreement opens up the opportunity for us to wholesale the brand in the U.S. and Canada, operate tuchpuppies.com and design and source product in the highly critical comfort space, another large white space for our own brands. As Roger mentioned, we have been extremely successful growing our own brand penetration within our own retail distribution, delivering incredible margin accretion along the way. All the while, we have made significant progress growing our own brands outside our DSW store base. Prior to 2019, we only had 1 e-commerce site and have made notable progress in the time sense.

Today, we now operate 5 independent e-commerce sites, DSW, Schuco, Topo Athletic, vincecamuto.com and keds.com with a sixth tchpufpies.com, anticipated to come into the fold later this year. For those of our own brands that have a personalized online presence, roughly 30% of their sales come through that channel. We are exploring ways we can continue to capitalize on this with some of our other own brands where we have eCom-Bitespace. As we think about setting ourselves up for greater growth in the future, we are also thinking about how to connect with our customers in different ways. Our own brands are playing a significant role in this. In addition to our DBI VIP loyalty programs, gaining over 4 million new customers over the last year, our recent acquisitions allow us to broaden our customer reach beyond just DSW.

TopoAthletic brings Designer Brands a new customer that is at a premium price point. Touch Puppies allows us to target millennials who want both style and comfort in their busy lifestyles. Ted has a large penetration on Amazon, which we can now glean insights from as well as a kids wholesale business in Canada. They will also bring into the DBI fold a significant international presence that will continue to be a growth engine for the brand, and we will look for potential opportunities to leverage this among our other brands as well. These are all clear examples of how we will easily broaden our reach to include a new set of touch points with potential customers while expanding our offering for our existing customer base. All these accomplishments are resulting in more diversity across our own brands portfolio.

We have long been clear leaders in dress and seasonal and now we are successfully making a name for ourselves in athleisure and casual. Ultimately, this will allow us to balance our performance through economic and demand cycles as well as changes in trends and consumer purchasing preferences. On the national brand side, our top 5 brand partners achieved a nearly 20% increase in sales across our U.S. and Canadian retail operations for the year, showcasing the continued success of our Amplify and edit strategy. You've heard us speak in recent quarters and years about our intense focus on the top 50 brands in footwear. We are not stepping away from that strategy, but are beginning to flex some of our other capabilities to take advantage of things like closeout lives in environments like today where this will benefit our business.

Turning to results. We were pleased with our performance during the quarter and the year. We delivered healthy comps of 4.4% in fiscal year 2022, while effectively managing our expenses, which improved year-over-year. Although our sales and profitability were pressured in this highly promotional environment, our gross margin rates were well above 2019 levels for the year. Our own brand strategy continues to gain traction with robust sales growth, putting us well on our way to achieving our goal of nearly 1/3 of total sales by 2026. For the year, total owned brand penetration grew to 24% from 19% in the prior year, and DTC owned brands grew to 18% penetration versus 14% in the prior year. Although the industry struggled in Q4 with being over-inventoried, we personally saw bright spots in our own brand portfolio with Lucky up 42%, given its more casual nature versus Vince Camuto and Jessica Simpson that felt pressure as more dressy brands.

Our brands with the strongest DTC performance in the fourth quarter, were lucky, which was up 65%; Kelly and Katy, which was up 28%; and Crown vintage, up 17% on the heels of a fantastic celebrity partnership with Emma Roberts in Q3 and continued momentum into Q4. I want to take a moment to discuss our guidance, which Jared will dissect in more detail in just a moment. You'll clearly notice, we are planning our sales and earnings down for the year, and that is because we believe it is prudent to assume the pressure facing our customers will continue through the first part of 2023. We -- that being said, we do believe these trends are temporary. With that in mind, we are laser-focused on what we can control to deliver profitability that continues to be above historical levels.

We'll also continue to manage our inventory carefully. We have managed our inventory position to be better than most of our peers and competitors, and we feel we are well positioned to pounce on any sign of opportunity in chase business that may materialize stronger than anticipated. Assuming there is a soft landing as economists are predicting, we are anticipated seeing a recovery in our results in the second half of the year as we begin to lap the easier comparisons as well. Before I pass it over to Jarrod, I want to thank all of our associates for their hard work. We are executing well in challenging times, and I am confident in our ability to continue to do so. With that, I'll pass it over to Jared. Jared?

Jared Poff: 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 versus 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 benscamuto.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 has struggled with being over inventory, 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. Tenkmuto.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 on 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 3 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 CED, 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 CDs, with spring expected to be down 25% to 35% to 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 Kids to be down by 15% to 20%. We also anticipate our vincecamuto.com DTC site to be relatively flat 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, that geography is experiencing. This guidance excludes the impact of our Kids 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 Kids to be down mid-single digits to fiscal 2022. As it pertains to CEDS, 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 we will recognize these incremental sales, we are anticipating no material impact to the profitability from these sales in the current year due to cost 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 as a result of 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 CADs 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 are expected to add approximately $50 million of SG&A. On the operating income line, we anticipate the 53rd week will contribute approximately $4 million. Topo is also expected to contribute $2 million to $3 million this year. As mentioned earlier, 2023 is a heavy integration year for kids with work and investment occurring at DBI, while simultaneously paying Wolverine to support this business under a robust transition services agreement. Thus, we are anticipating that kids 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 up slightly 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 compares 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 kids.

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. Operator?

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