Footwear retailer Designer Brands (DBI -2.20%) announced today it was shoring up its financial position by replacing an existing cash flow revolving loan with a new asset-backed loan of the same amount. It is also taking out a new term loan to give itself more financial flexibility.

With almost all of its retail stores now reopened, Designer Brands also said it is accelerating its discounting program to clear out its seasonal and dress footwear inventory so that it can replace it with casual and athletic shoes, which are currently the big industry trend.

Woman looking at sneakers in store

Image source: Getty Images.

Kicked to the curb

Designer Brands had virtually tapped out its available borrowings under its existing credit lines at the end of the first quarter, having only $2 million left on the $400 million limit.

Under the terms of the new loan, the same borrowing limits are imposed, but Designer Brands is now allowed to take on new borrowings, which it did in the form of a $250 million term loan. Both loans now have an August 2025 maturity date compared to the August 2022 date of the original revolver.

In a statement, CFO Jared Poff said Designer Brands is "confident we have sufficient liquidity today, and in the future, to provide us with the flexibility to navigate the current complex environment and pursue our long-term business strategy."

Last month the footwear company said it was eliminating over 1,000 jobs, 350 of which would be permanent. Most affected employees would be offered new roles with the company. It expects annual cost savings of $40 million.

Designer Brands is also reevaluating its 1,000-store footprint, noting customer traffic continues to be weak. As a result, CEO Roger Rawlins said the retailer was looking to "optimize our real estate portfolio" and negotiating lease terms with its landlords.