Childrens Place, Inc.

Previous wording

•First Quarter 2025 — The thirteen weeks ended May 3, 2025

Current wording

•Second Quarter 2025 — The thirteen weeks ended August 2, 2025

Previous wording

•First Quarter 2024 — The thirteen weeks ended May 4, 2024

Current wording

•Second Quarter 2024 — The thirteen weeks ended August 3, 2024

Previous wording

We are the largest pure-play children’s specialty retailer in North America with an omni-channel portfolio of brands and an industry-leading digital-first model. We design, contract to manufacture, and sell fashionable, high quality apparel, accessories and footwear predominantly at value prices, primarily under our proprietary brands: “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”. Our global retail and wholesale network includes two digital storefronts, 495 stores in North America, wholesale marketplaces, 228 international points of distribution in 12 countries through our seven franchise partners, and social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest. Our digital storefronts are atwww.childrensplace.comand www.gymboree.com, where our customers are able to shop online for the same merchandise available in our physical stores, but also certain exclusive merchandise only available at our e-commerce sites.

Current wording

We are the largest pure-play children’s specialty retailer in North America with an omni-channel portfolio of brands and an industry-leading digital-first model. We design, contract to manufacture, and sell fashionable, high quality apparel, accessories and footwear predominantly at value prices, primarily under our proprietary brands: “The Children’s Place”, “Gymboree”, “Sugar & Jade”, and “PJ Place”. Our global retail and wholesale network includes two digital storefronts, 494 stores in North America, wholesale marketplaces, 229 international points of distribution in 12 countries through our seven international franchise and wholesale partners, and social media channels on Instagram, Facebook, X, formerly known as Twitter, YouTube and Pinterest. Our digital storefronts are atwww.childrensplace.comand www.gymboree.com, where our customers are able to shop online for the same merchandise available in our physical stores, but also certain exclusive merchandise only available at our e-commerce sites.

Previous wording

In accordance with FASB ASC 280—Segment Reporting, we report segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located atwww.childrensplace.comand www.gymboree.com. Included in The Children’s Place U.S. segment are our U.S. and Puerto Rico-based stores and net sales from our U.S.-based wholesale business. Included in The Children’s Place International segment are our Canadian-based stores and net sales from international franchisees. We measure our segment profitability based on operating income (loss), defined as income (loss) before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. We periodically review these allocations and adjust them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and we have one U.S. wholesale customer that individually accounted for more than 10% of our net sales for the First Quarter 2025.

Current wording

In accordance with FASB ASC 280—Segment Reporting, we report segment data based on geography: The Children’s Place U.S. and The Children’s Place International. Each segment includes an e-commerce business located atwww.childrensplace.comand www.gymboree.com. Included in The Children’s Place U.S. segment are our U.S. and Puerto Rico-based stores and net sales from our U.S.-based wholesale business. Included in The Children’s Place International segment are our Canadian-based stores and net sales from international franchisees. We measure our segment profitability based on operating income (loss), defined as income (loss) before interest and taxes. Net sales and direct costs are recorded by each segment. Certain inventory procurement functions such as production and design, as well as corporate overhead, including executive management, finance, real estate, human resources, legal, and information technology services, are managed by The Children’s Place U.S. segment. Expenses related to these functions, including depreciation and amortization, are allocated to The Children’s Place International segment based primarily on net sales. The assets related to these functions are not allocated. We periodically review these allocations and adjust them based upon changes in business circumstances. Net sales to external customers are derived from merchandise sales, and we have one U.S. wholesale customer that individually accounted for more than 10% of our net sales for the Second Quarter 2025 and Year-To-Date 2025.

Previous wording

Macroeconomic conditions, including inflationary pressures, higher interest rates, and other domestic and geopolitical factors, continued to adversely affect our core customer. While some of these inflationary pressures, including freight input costs and product input costs, improved in Fiscal 2024, we may continue to experience inflationary pressures on our product input costs and distribution costs in Fiscal 2025. During the First Quarter 2025, these pressures contributed to a decrease in consumer discretionary apparel purchases. We expect these macroeconomic conditions, including but not limited to increased product input costs, transportation costs, distribution costs, and geopolitical conditions like changes in foreign policies of the United States, and other inflationary pressures, to continue to have an adverse impact during the remainder of Fiscal 2025.

Current wording

Macroeconomic conditions, including inflationary pressures, higher interest rates, tariffs, and other domestic and geopolitical factors, continued to adversely affect our core customer. During the Second Quarter 2025, these pressures contributed to a decrease in consumer discretionary apparel purchases. We expect these macroeconomic conditions, including but not limited to increased product input costs, transportation costs, distribution costs, and geopolitical conditions like changes in foreign policies of the United States, and other inflationary pressures, to continue to have an adverse impact during the remainder of Fiscal 2025.

Previous wording

During the First Quarter 2025, the U.S. government announced the intention to impose tariffs on certain goods imported from Canada, Mexico and China. It was further announced that tariffs would be applied to all countries importing goods to the United States. Since then, subsequent developments have put the certainty and the extent of these tariffs into question. We will continue to monitor the impact of any of these tariffs that become effective, as well as potential retaliatory tariffs imposed by other countries. These tariffs could have a material adverse impact on the global retail industry, supply chains worldwide, and other political and macroeconomic conditions, which could also affect customer sentiment in deciding whether to purchase U.S. goods as opposed to other alternatives. In the meantime, we are benefiting from our diversified sourcing strategies, with no single country representing more than 20% of our total sourcing capacity, including limited exposure to China in the mid-single digit range.

Current wording

During Fiscal 2025, the U.S. government announced the intention to impose tariffs on certain goods imported from all countries importing goods to the United States. We have assessed the potential impact of tariffs that have become effective and are implementing plans to reduce their financial impact on us. We will continue to monitor the impact of any further tariffs that may become effective in the future, as well as potential retaliatory tariffs imposed by other countries. These tariffs could have a material adverse impact on the global retail industry, supply chains worldwide, and other political and macroeconomic conditions, which could also affect customer sentiment in deciding whether to purchase U.S. goods as opposed to other alternatives. In the meantime, we are benefiting from our diversified sourcing strategies, which includes our efforts to ensure no single country represents more than 20% of our total sourcing capacity, with limited exposure to China in the mid-single digit range.

Previous wording

The Organization for Economic Cooperation and Development (“OECD”) has introduced a global minimum corporate tax rate of 15% under its Pillar Two initiative (“Pillar Two”), effective for tax years beginning in January 2024. Although the U.S. has not yet implemented the Pillar Two rules, other regions where we conduct business, primarily Hong Kong and Canada, have enacted such legislation. The implementation of the Pillar Two rules in each jurisdiction in which it operates is not expected to have a material impact on our effective tax rate. We are closely monitoring legislative developments globally to evaluate potential impacts on our financial statements, as more regions implement Pillar Two rules.

Current wording

The Organization for Economic Cooperation and Development (“OECD”) introduced a global minimum corporate tax rate of 15% under its Pillar Two initiative (“Pillar Two”), which became effective for tax years beginning in January 2024. Although the U.S. has not yet implemented the Pillar Two rules, other regions where we conduct business, primarily Hong Kong and Canada, have enacted such legislation. The implementation of the Pillar Two rules in each jurisdiction in which it operates is not expected to have a material impact on our effective tax rate. We are closely monitoring legislative developments globally to evaluate potential impacts on our financial statements, as more regions implement Pillar Two rules.

Previous wording

We believe that our e-commerce and brick-and-mortar retail store operations are highly interdependent, with both sharing common customers purchasing from a common pool of product inventory. Accordingly, we believe that consolidated omni-channel reporting presents the most meaningful and appropriate measure of our performance, including Net sales.

Current wording

We believe that our e-commerce and brick-and-mortar retail store operations are highly interdependent, with both sharing common customers purchasing from a common pool of product inventory. Accordingly, we believe that consolidated omni-channel reporting presents the most meaningful and appropriate measure of our performance. We primarily evaluate the results of our operations as a percentage of Net sales rather than in terms of absolute dollar increases or decreases by analyzing the year over year change in our business expressed as a percentage of Net sales (i.e., “basis points”).

Previous wording

We have presented certain measures on a non-GAAP basis. Adjusted net loss, adjusted net loss per diluted share, adjusted selling, general, and administrative expenses, and adjusted operating loss are non-GAAP measures. These measures are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The most comparable GAAP measures are net loss, net loss per diluted share, selling, general, and administrative expenses, and operating loss, respectively. We believe the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of our core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of our core business.

Current wording

We have presented certain measures on a non-GAAP basis. Adjusted net income (loss), adjusted net income (loss) per diluted share, adjusted selling, general, and administrative expenses, and adjusted operating income (loss) are non-GAAP measures. These measures are not intended to replace GAAP financial information, and may be different from non-GAAP measures reported by other companies. The most comparable GAAP measures are net income (loss), net income (loss) per diluted share, selling, general, and administrative expenses, and operating income (loss), respectively. We believe the income and expense items excluded as non-GAAP adjustments are not reflective of the performance of our core business, and that providing this supplemental disclosure to investors will facilitate comparisons of the past and present performance of our core business.

Previous wording

Net sales decreased $25.8 million, or 9.6%, to $242.1 million during the First Quarter 2025 from $267.9 million during the First Quarter 2024, driven by a decrease in e-commerce sales due to an increase in shipping minimum thresholds to $40 from $20 in the prior year period as we continue to focus on profitable top-line sales, combined with lower traffic and conversion. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume due to lower traffic. Our stores and e-commerce sales were both negatively impacted by the current macroeconomic environment, including uncertainty around potential tariffs, which has decreased consumer sentiment. The decrease in net sales was partially offset by an increase in wholesale revenue. Comparable retail sales decreased 13.6% for the First Quarter 2025, largely driven by the decrease in e-commerce revenue.

Current wording

Net sales decreased $21.7 million, or 6.8%, to $298.0 million during the Second Quarter 2025 from $319.7 million during the Second Quarter 2024, driven by a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume due to lower traffic. We also experienced a decrease in e-commerce sales due to lower traffic and conversion compared to the Second Quarter 2024, however, these trends have improved since the first quarter of Fiscal 2025, due to shifts in our marketing strategies combined with the impact of our new product strategies. Our stores and e-commerce sales were both negatively impacted by the current macroeconomic environment, including uncertainty around potential tariffs, which has negatively affected consumer sentiment. Comparable retail sales decreased 4.7% for the Second Quarter 2025.

Previous wording

Gross profit decreased $21.9 million to $70.8 million during the First Quarter 2025, compared to $92.7 million during the First Quarter 2024. Gross margin decreased 540 basis points to 29.2% of Net sales in the First Quarter 2025, compared to 34.6% of Net sales in the First Quarter 2024. The decrease in gross margin was caused by a combination of factors, including channel mix from the higher penetration of wholesale sales and a higher mix of markdown versus full price product sales, partially offset by favorability from higher shipping minimum thresholds compared to the First Quarter 2024.

Current wording

Gross profit decreased $10.5 million to $101.3 million during the Second Quarter 2025, compared to $111.8 million during the Second Quarter 2024. Gross margin decreased 100 basis points to 34.0% of Net sales in the Second Quarter 2025, compared to 35.0% of Net sales in the Second Quarter 2024. The decrease in gross margin was caused by adjustments associated with our decrease in inventory balance compared to the Second Quarter 2024 and shifts in channel mix, partially offset by favorable product margins and improvements in product mix, pricing and promotions.

Previous wording

Depreciation and amortizationwas $8.2 million during the First Quarter 2025, compared to $11.6 million during the First Quarter 2024. The decrease was primarily driven by reduced depreciation of capitalized software and the permanent closure of 24 stores during the past twelve months.

Current wording

Depreciation and amortizationwas $7.6 million during the Second Quarter 2025, compared to $9.5 million during the Second Quarter 2024. The decrease was primarily driven by reduced depreciation of capitalized software and the permanent closure of 23 stores during the past twelve months, partially offset by two store openings.

Previous wording

Operating losswas $(24.1) million during the First Quarter 2025, compared to $(28.0) million during the First Quarter 2024. The First Quarter 2025 results were impacted by incremental operating expenses of $0.1 million, as described within SG&A expenses above. The First Quarter 2024 results were impacted by incremental operating expenses of $22.9 million, including SG&A expenses of $20.4 million, as described above, accelerated depreciation of $1.6 million, and additional change in control charges impacting gross margin of $0.9 million. Excluding the impact of these incremental charges, Adjusted operating loss was $(24.0) million in the First Quarter 2025, compared to $(5.1) million in the First Quarter 2024, and deleveraged 800 basis points to (9.9)% of Net sales.

Current wording

Operating income (loss)was an income of $4.1 million during the Second Quarter 2025, compared to a loss of $(21.8) million during the Second Quarter 2024. The Second Quarter 2025 results were impacted by incremental operating expenses of $2.0 million, as described within SG&A expenses above. The Second Quarter 2024 results were impacted by incremental operating expenses, including SG&A expenses of $7.7 million, as described above, an impairment charge of $28.0 million on the Gymboree tradename, and accelerated depreciation of $0.3 million. Excluding the impact of these incremental charges, Adjusted operating income was $6.1 million in the Second Quarter 2025, compared to $14.2 million in the Second Quarter 2024, and deleveraged 250 basis points to 2.0% of Net sales.

Previous wording

Other interest expense, netwas $6.7 million during the First Quarter 2025, compared to $7.3 million during the First Quarter 2024. The decrease in interest expense was primarily driven by lower average interest rates associated with our asset-based revolving credit facility (the “ABL Credit Facility”) and the paydown of a prior $50.0 million term loan under our credit agreement with Wells Fargo Bank, National Association (“Wells Fargo”) and other lenders, partially offset by higher borrowings on our ABL Credit Facility, and the write-off of deferred financing costs associated with the partial paydown of our first term loan entered into with Mithaq as a result of the completion of our rights offering in the First Quarter 2025 (the “Rights Offering”). For more information about our ABL Credit Facility and our term loans with Mithaq, see “Liquidity and Capital Resources — ABL Credit Facility” and “— Mithaq Term Loans” below.

Current wording

Other interest expense, netwas $6.2 million during the Second Quarter 2025, compared to $7.1 million during the Second Quarter 2024. The decrease in interest expense was primarily driven by lower average borrowings on our asset-based revolving credit facility (the “ABL Credit Facility”) and lower average interest rates.

Previous wording

Provision for income taxeswas $1.3 million during the First Quarter 2025, compared to $2.1 million during the First Quarter 2024. Our effective tax rate was a provision of (4.1)% and (5.8)% in the First Quarter 2025 and First Quarter 2024, respectively. We continue to adjust our valuation allowance based on ongoing operating results.

Current wording

Provision for income taxeswas $1.5 million during the Second Quarter 2025, compared to $1.1 million during the Second Quarter 2024. Our effective tax rate was a provision of (37.1)% and (3.6)% in the Second Quarter 2025 and Second Quarter 2024, respectively. We continue to adjust our valuation allowance based on ongoing operating results.

Previous wording

Net losswas $(34.0) million, or $(1.57) per diluted share, during the First Quarter 2025, compared to $(37.8) million, or $(2.98) per diluted share, during the First Quarter 2024, due to the factors discussed above. Adjusted net loss was $(32.8) million, or $(1.52) per diluted share during the First Quarter 2025, compared to $(14.9) million, or $(1.18) per diluted share, during the First Quarter 2024, due to the factors described above, in addition to the loss on extinguishment of debt of $1.0 million during the First Quarter 2025, due to the partial prepayment of our first term loan entered into with Mithaq.

Current wording

Net losswas $(5.4) million, or $(0.24) per diluted share, during the Second Quarter 2025, compared to $(32.1) million, or $(2.51) per diluted share, during the Second Quarter 2024, due to the factors discussed above. Adjusted net loss was $(3.4) million, or $(0.15) per diluted share during the Second Quarter 2025, compared to adjusted net income of $3.9 million, or $0.30 per diluted share, during the Second Quarter 2024, due to the factors described above.

Previous wording

The Children’s Place International Net sales decreased $1.3 million, or 6.1%, to $20.4 million during the First Quarter 2025, compared to $21.7 million during the First Quarter 2024, driven by a decrease in e-commerce sales due to a higher shipping threshold, combined with lower conversion. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume due to lower traffic.

Current wording

The Children’s Place International Net sales decreased $2.5 million, or 9.0%, to $24.8 million during the Second Quarter 2025, compared to $27.3 million during the Second Quarter 2024, driven by a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume due to lower traffic. We also experienced a decrease in e-commerce sales due to lower traffic and conversion compared to the Second Quarter 2024.

Previous wording

The Children’s Place U.S. Operating loss was $(19.7) million during the First Quarter 2025, compared to $(24.0) million during the First Quarter 2024. The Children’s Place U.S. operating margin improved during the First Quarter 2025, primarily due to a reduction in one-time costs incurred in the prior year associated with the Company’s change of control and broken financing deal costs.

Current wording

The Children’s Place U.S. Operating income was $6.3 million during the Second Quarter 2025, compared to a loss of $(19.7) million during the Second Quarter 2024. The Children’s Place U.S. operating margin improved during the Second Quarter 2025, primarily due to the impairment charge on the Gymboree tradename during the Second Quarter 2024.

Previous wording

The Children’s Place U.S. Net sales decreased $24.4 million, or 9.9%, to $221.8 million during the First Quarter 2025, compared to $246.2 million during the First Quarter 2024, driven by a decrease in e-commerce sales due to a higher shipping threshold, combined with lower traffic and conversion. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume due to lower traffic. Our stores and e-commerce sales were both negatively impacted by the current macroeconomic environment, including uncertainty around potential tariffs, which has decreased consumer sentiment. The decrease in net sales was partially offset by an increase in wholesale revenue.

Current wording

Net sales decreased $47.4 million, or 8.1%, to $540.1 million during Year-To-Date 2025 from $587.5 million during Year-To-Date 2024, driven by a decrease in e-commerce sales due to lower traffic and conversion. We also experienced a decrease in brick-and-mortar revenue due to a lower store count and lower sales volume due to lower traffic. Our stores and e-commerce sales were both negatively impacted by the current macroeconomic environment, including uncertainty around potential tariffs, which has negatively affected consumer sentiment. This was partially offset by an increase in wholesale revenue. Comparable retail sales decreased 8.9% during Year-To-Date 2025.

Previous wording

Selling, general, and administrative expenses were $86.7 million during the First Quarter 2025, compared to $109.1 million during the First Quarter 2024. The decrease was due to a reduction in one-time costs incurred during the First Quarter 2024, primarily associated with the change of control and broken financing deal costs. The First Quarter 2025 results included incremental operating expenses of $0.1 million, including restructuring costs of $0.9 million, partially offset by the reversal of a legal settlement accrual of $0.8 million. The First Quarter 2024 results included incremental operating expenses of $20.4 million, including non-cash equity compensation charges of $9.9 million and other fees of $3.8 million associated with the change of control, broken financing and restructuring fees of $6.7 million, costs to close our Canada distribution center of $0.8 million, fees associated with our credit agreement of $0.8 million, fleet optimization costs of $0.6 million, and restructuring costs of $0.3 million, partially offset by the reversal of a legal settlement accrual of $2.3 million. Excluding the impact of these incremental charges, Adjusted SG&A expenses were $86.5 million during the First Quarter 2025, compared to $88.6 million during the First Quarter 2024, and deleveraged 260 basis points to 35.7% of Net sales, due to lower sales combined with incremental marketing spend as a percentage of net sales. As we reinvest in marketing and focus on content, we are beginning to see initial promising indicators, as Google search interest has grown, along with an acceleration of TikTok followers. We have continued to control our costs well, as this represents the lowest level of Adjusted selling, general, and administrative expenses in more than 15 years for the first quarter of a fiscal year and we continue to evaluate opportunities to further optimize our operating model.

Current wording

Selling, general, and administrative expenses were$176.3 million during Year-To-Date 2025, compared to$205.2 million during Year-To-Date 2024. The decrease was due to a reduction in one-time costs incurred during Year-To-Date 2025, as described below. The Year-To-Date 2025 results included incremental operating expenses of $2.1 million for restructuring costs. The Year-To-Date 2024 results included incremental operating expenses, including costs associated with our change of control of $13.7 million, financing related charges of $6.7 million, restructuring costs of $6.4 million, credit agreement lender-required consulting costs of $1.9 million, costs associated with the closure of our Canada distribution center of $0.8 million, fleet optimization costs of $0.7 million, and professional and consulting fees of $0.4 million, partially offset by the reversal of a legal settlement accrual of $2.3 million. Excluding the impact of these incremental charges, Adjusted SG&A expenses were $174.2 million during Year-To-Date 2025, compared to $177.0 million during Year-To-Date 2024, and deleveraged 210 basis points to 32.2% of Net sales.

Previous wording

As of May 3, 2025, we had $258.6 million of outstanding borrowings under our $433.0 million ABL Credit Facility and no borrowings under our $40.0 million senior unsecured credit facility with Mithaq (the “Mithaq Credit Facility”).

Current wording

As of August 2, 2025, we had $294.4 million of outstanding borrowings under our $433.0 million ABL Credit Facility and no borrowings under our $40.0 million senior unsecured credit facility with Mithaq (the “Mithaq Credit Facility”).

Previous wording

Our working capital deficit decreased $20.6 million to $43.0 million as of May 3, 2025, compared to $63.6 million as of May 4, 2024, primarily reflecting a decrease in our accounts payable balances as we paid down past due vendors, partially offset by an increase in outstanding borrowings under our ABL Credit Facility.

Current wording

Our working capital deficit decreased $31.1 million to $40.0 million as of August 2, 2025, compared to $71.2 million as of August 3, 2024, primarily reflecting a decrease in our accounts payable balances as we paid down past due vendors and reduced inventory purchases, and a decrease in outstanding borrowings under our ABL Credit Facility, partially offset by a decrease in inventory due to improved inventory management as we continue to align our inventory levels with our growth and product strategy, and better balance the mix of fashion and basic product.

Previous wording

As of May 3, 2025, we had total liquidity of $84.4 million, including $38.7 million of availability under our ABL Credit Facility, $40.0 million of availability under our Mithaq Credit Facility, and $5.7 million of cash on hand. As of May 3, 2025, we had $18.2 million of outstanding letters of credit, with an additional $6.8 million available for issuing letters of credit under our ABL Credit Facility.

Current wording

As of August 2, 2025, we had total liquidity of $91.6 million, including $43.8 million of availability under our ABL Credit Facility, $40.0 million of availability under our Mithaq Credit Facility, and $7.8 million of cash on hand. As of August 2, 2025, we had $18.2 million of outstanding letters of credit, with an additional $6.8 million available for issuing letters of credit under our ABL Credit Facility.

Previous wording

We expect to be able to meet our working capital and capital expenditure requirements for at least the next twelve months from the date that our consolidated financial statements for the First Quarter 2025 were issued, by using our cash on hand, cash flows from operations, and availability under our ABL Credit Facility and Mithaq Credit Facility.

Current wording

We expect to be able to meet our working capital and capital expenditure requirements for at least the next twelve months from the date that our consolidated financial statements for the Second Quarter 2025 were issued, by using our cash on hand, cash flows from operations, and availability under our ABL Credit Facility and Mithaq Credit Facility.

Previous wording

In November 2021, our Board of Directors (the “Board”) authorized a $250.0 million share repurchase program (the “Share Repurchase Program”). Currently, given the terms of our credit agreement with Wells Fargo and other lenders, as amended by its seventh amendment, the repurchase of any shares would require fulfilling the heightened payment conditions under that credit agreement, except that repurchases of shares as described in “Note 8. Stockholders’ Equity (Deficit)” of the consolidated financial statements, pursuant to our practice as a result of our insider trading policy, are expressly permitted. As of May 3, 2025, there was $156.5 million remaining availability under the Share Repurchase Program.

Current wording

In November 2021, our Board of Directors (the “Board”) authorized a $250.0 million share repurchase program (the “Share Repurchase Program”). Currently, given the terms of our credit agreement with Wells Fargo and other lenders, as amended by its seventh amendment, the repurchase of any shares would require fulfilling the heightened payment conditions under that credit agreement, except that repurchases of shares as described in “Note 8. Stockholders’ Deficit” of the consolidated financial statements, pursuant to our practice as a result of our insider trading policy, are expressly permitted. As of August 2, 2025, there was $156.1 million remaining availability under the Share Repurchase Program.

Previous wording

Cash used in operating activities was $43.0 million during the First Quarter 2025, compared to $110.8 million during the First Quarter 2024. The decrease in cash used in operating activities during the First Quarter 2025 was primarily the result of a smaller increase in our inventory balance compared to the First Quarter 2024, as we continue to scale our inventory levels, in addition to the paydown of past due accounts payable balances in the prior year that existed at the end of fiscal year 2023.

Current wording

Cash used in operating activities was $73.4 million during Year-To-Date 2025, compared to $194.7 million during Year-To-Date 2024. The decrease in cash used in operating activities during Year-To-Date 2025 was primarily the result of a smaller increase in our inventory balance compared to Year-To-Date 2024, as we continue to scale our inventory levels.

Previous wording

Cash used in investing activities was $3.4 million during the First Quarter 2025, compared to $4.7 million during the First Quarter 2024, driven by lower capital expenditures.

Current wording

Cash used in investing activities was $4.8 million during Year-To-Date 2025, compared to $12.5 million during Year-To-Date 2024, driven by lower capital expenditures.

Previous wording

Cash provided by financing activities was $42.3 million during the First Quarter 2025, compared to $114.9 million during the First Quarter 2024. The decrease primarily resulted from proceeds received from the Mithaq Term Loans during the First Quarter 2024, partially offset by the net cash proceeds received from the Rights Offering completed during the First Quarter 2025.

Current wording

Cash provided by financing activities was $77.8 million during Year-To-Date 2025, compared to $203.7 million during Year-To-Date 2024. The decrease primarily resulted from proceeds received from the Mithaq Term Loans during Fiscal 2024 and lower net borrowings on our ABL Credit Facility, partially offset by the net cash proceeds received from the Rights Offering completed during Fiscal 2025.

Previous wording

Accounts receivable were $41.3 million as of May 3, 2025, compared to $28.3 million as of May 4, 2024 and $42.7 million as of February 1, 2025. The increase of $13.1 million, or 46.1%, compared to May 4, 2024 was primarily driven by an increase in wholesale revenue during the First Quarter 2025. There was no significant change in balance compared to February 1, 2025.

Current wording

Accounts receivable were $54.4 million as of August 2, 2025, compared to $61.9 million as of August 3, 2024 and $42.7 million as of February 1, 2025. The decrease of $7.6 million, or 12.2%, compared to August 3, 2024 was primarily driven by a decrease in wholesale receivables. The increase of $11.7 million, or 27.3%, compared to February 1, 2025 was primarily driven by an increase in credit card receivables, in line with the seasonality of our business.

Previous wording

Accounts payable were $131.4 million as of May 3, 2025, compared to $193.1 million as of May 4, 2024 and $126.7 million as of February 1, 2025. The decrease of $61.7 million, or 32.0%, compared to May 4, 2024 was primarily the result of paying down past due vendors that existed at the end of the First Quarter 2024. There was no significant change in balance compared to February 1, 2025.

Current wording

Accounts payable were $132.4 million as of August 2, 2025, compared to $215.8 million as of August 3, 2024 and $126.7 million as of February 1, 2025. The decrease of $83.4 million, or 38.6%, compared to August 3, 2024 was primarily the result of lower inventory purchases and paying down past due vendors that existed at the end of the Second Quarter 2024. There was no significant change in balance compared to February 1, 2025.

Previous wording

(ii)the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100%, plus a margin of 3.000%.

Current wording

(ii)the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100%, plus a margin of 2.750% or 3.000%.

Previous wording

Prior to February 4, 2025, letter of credit fees were at 1.125% for commercial letters of credit and 1.750% for standby letters of credit. As of February 4, 2025, letter of credit fees range from 1.000% to 1.125% for commercial letters of credit and range from 1.500% to 1.750% for standby letters of credit. These fees are determined based on the amount of our average daily excess availability under the facility. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves and an availability block.

Current wording

As of February 4, 2025, letter of credit fees range from 1.000% to 1.125% for commercial letters of credit and range from 1.500% to 1.750% for standby letters of credit. These fees are determined based on the amount of our average daily excess availability under the facility. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves and an availability block.

Previous wording

As of May 3, 2025, February 1, 2025, and May 4, 2024, unamortized deferred financing costs amounted to $3.3 million, $3.8 million, and $2.9 million, related to our ABL Credit Facility.

Current wording

As of August 2, 2025, February 1, 2025, and August 3, 2024, unamortized deferred financing costs amounted to $2.7 million, $3.8 million, and $2.4 million, related to the Company’s ABL Credit Facility.

Previous wording

Mithaq is a controlling stockholder of the Company. The Company and certain subsidiaries maintain the interest-free, unsecured and subordinated promissory note for a $78.6 million Initial Mithaq Term Loan, dated February 29, 2024, by and among us, certain of our subsidiaries, and Mithaq. During the First Quarter 2025, $60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of our rights offering on February 6, 2025 (“Rights Offering”), leaving $18.4 million outstanding under the Initial Mithaq Term Loan as of May 3, 2025. We recorded a loss on extinguishment of debt of $1.0 million during the First Quarter 2025, due to this partial prepayment of the Initial Mithaq Term Loan, which is recorded within Other interest expense.

Current wording

Mithaq is a controlling stockholder of the Company. The Company and certain subsidiaries maintain the interest-free, unsecured and subordinated promissory note for a $78.6 million Initial Mithaq Term Loan, dated February 29, 2024, by and among us, certain of our subsidiaries, and Mithaq. During the first quarter of Fiscal 2025, $60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of our rights offering on February 6, 2025 (“Rights Offering”), leaving $18.4 million outstanding under the Initial Mithaq Term Loan as of August 2, 2025.

Previous wording

The New Mithaq Term Loan matures on April 16, 2027, and requires monthly payments equivalent to interest charged at the SOFR plus 4.000% per annum, with the first year’s monthly payments to Mithaq deferred until April 30, 2025. On April 28, 2025, the Company and Mithaq entered into Amendment No. 1 to the New Mithaq Term Loan promissory note, which subjected these deferred monthly payments due as of April 30, 2025 to a payment plan, payable in installments prior to the end of Fiscal 2025. The New Mithaq Term Loan is guaranteed by each of our subsidiaries that guarantee our ABL Credit Facility. For the First Quarter 2025 and First Quarter 2024, we recognized $1.9 million and $0.4 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan. As of May 3, 2025 and May 4, 2024, interest-equivalent expense payable to Mithaq was $8.4 million and $0.4 million, respectively, which is recorded within Accrued expenses and other current liabilities.

Current wording

The New Mithaq Term Loan matures on April 16, 2027, and requires monthly payments equivalent to interest charged at the SOFR plus 4.000% per annum, with the first year’s monthly payments to Mithaq deferred until April 30, 2025. On April 28, 2025, the Company and Mithaq entered into Amendment No. 1 to the New Mithaq Term Loan promissory note, which subjected these deferred monthly payments due as of April 30, 2025 to a payment plan, payable in installments prior to the end of Fiscal 2025. The amendment was evaluated under FASB ASC 470 — Debt, and accounted for as a debt modification. The New Mithaq Term Loan is guaranteed by each of our subsidiaries that guarantee our ABL Credit Facility. For the Second Quarter 2025 and Year-To-Date 2025, the Company recognized $1.9 million and $3.7 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan. For the Second Quarter 2024 and Year-To-Date 2024, the Company recognized $2.1 million and $2.5 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan.

Previous wording

As of May 3, 2025, February 1, 2025, and May 4, 2024, unamortized deferred financing costs amounted to $1.4 million, $2.6 million, and $2.0 million, respectively, related to the Mithaq Term Loans.

Current wording

As of August 2, 2025, February 1, 2025, and August 3, 2024, unamortized deferred financing costs amounted to $1.2 million, $2.6 million, and $3.2 million, respectively, related to the Mithaq Term Loans.

Previous wording

On May 2, 2024, we entered into a commitment letter (the “Commitment Letter”) with Mithaq for a $40.0 million Mithaq Credit Facility. Under the Mithaq Credit Facility, we had the ability to request for advances at any time prior to July 1, 2025. On September 10, 2024, we entered into an Amendment No. 1 to the Commitment Letter with Mithaq, that extended the deadline for requesting advances until July 1, 2026.

Current wording

On May 2, 2024, we entered into a commitment letter (the “Commitment Letter”) with Mithaq for a $40.0 million Mithaq Credit Facility. Under the Mithaq Credit Facility, we had the ability to request for advances at any time prior to July 1, 2025. On September 10, 2024, we entered into an Amendment No. 1 to the Commitment Letter with Mithaq, that extended the deadline for requesting advances until July 1, 2026. On September 4, 2025, the Company and Mithaq entered into an Amendment No. 2 to the Commitment Letter, that further extended the deadline for requesting advances until July 1, 2027.