Designer Brands Inc.

Previous wording

For the second quarter of 2025, net sales decreased 4.2% with a decrease in total comparable sales of 5.0% when compared to the same period last year. Gross profit as a percentage of net sales for the second quarter of 2025 was 43.7%, a decrease of 30 basis points when compared to the same period last year as margin rates were down for all segments.

Current wording

For the third quarter of 2025, net sales decreased 3.2% with a decrease in total comparable sales of 2.4% when compared to the same period last year. Gross profit as a percentage of net sales for the third quarter of 2025 was 45.1%, an increase of 210 basis points when compared to the same period last year.

Previous wording

Macroeconomic conditions influenced by uncertain tariff policies, volatility in stock market indices, elevated interest rates, persistent inflationary pressures, changes in employment levels, and geopolitical unrest continue to create a complex and challenging retail environment. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. These macroeconomic conditions have had a negative impact on our operating results and liquidity during the first half of 2025 and we may continue to experience the impact of decreased consumer demand for our products and lower direct-to-consumer traffic. We have enacted certain mitigating actions, including alignment of inventory with current demand levels, expense and capital expenditure reductions, and accelerating sourcing diversification efforts. Although we have made progress in addressing certain macroeconomic conditions, our mitigating actions are not necessarily complete and they should be viewed as part of the process in which we will continue to better align our cost structure with our operating results. We are unable to predict the severity of macroeconomic uncertainty, whether or when such circumstances may improve or worsen, including from one of our quarterly reporting periods to the next, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact further mitigating operating efficiency measures that could have a material adverse effect on our business, results of operations, and liquidity.

Current wording

Macroeconomic conditions influenced by uncertain tariff policies, stock market indices, interest rates, inflation and employment levels, along with geopolitical unrest, continue to persist and create a challenging retail environment. Consumer spending on discretionary items, including our products, generally declines during periods of economic uncertainty, when disposable income is reduced, or when there is a reduction in consumer confidence. These macroeconomic conditions have had a negative impact on our operating results and liquidity during 2025 and we may continue to experience the impact of decreased consumer demand for our products and lower direct-to-consumer traffic. We have enacted certain mitigating actions, including alignment of inventory with current demand levels, expense and capital expenditure reductions, and accelerating sourcing diversification efforts. Although we have made progress in mitigating the impacts of certain macroeconomic conditions, our actions are not necessarily complete and they should be viewed as part of the process in which we will continue our efforts to better align our cost structure with our operating results. We are unable to predict the severity of macroeconomic uncertainty, whether or when such circumstances may improve or worsen, including from one of our quarterly reporting periods to the next, or the full impact such circumstances could have on our business. These factors ultimately could require us to enact further mitigating operating efficiency measures that could have a material adverse effect on our business, results of operations, and liquidity.

Previous wording

Following its January 2025 inauguration, the U.S. administration has taken action to increase tariffs assessed on most products imported into the U.S. The numerous announcements of changes to and delays of tariff policies has introduced heightened uncertainty regarding the future of global trade and the impact to our cost structure. All of the products manufactured through the Brand Portfolio segment come from third-party facilities outside of the U.S., with the majority of our units sourced from Asia. In addition to the merchandise sourced through our Brand Portfolio segment, our U.S. Retail and Canada Retail segments also source merchandise from domestic third-party suppliers, with many of these suppliers importing a large portion of their merchandise from Asia. We are closely monitoring this situation and evaluating the actions we have taken and additional actions we may take in the future, including cost mitigation measures and price adjustments. For our Brand Portfolio segment, we have accelerated our sourcing diversification efforts by rebalancing and optimizing where we source from to mitigate the risk, maximize flexibility, and decrease costs. However, sourcing diversification could result in product quality issues, higher product costs, and/or not being able to source the quantity desired on a timely basis and there can be no assurance that we will be able to fully mitigate the impact of such tariffs or new tariffs in Asia or elsewhere.

Current wording

Following its January 2025 inauguration, the U.S. administration has taken action to increase tariffs assessed on most products imported into the U.S. The numerous announcements of changes to and delays of tariff policies has introduced heightened uncertainty regarding the future of global trade and the impact to our cost structure. All of the products manufactured through the Brand Portfolio segment come from third-party facilities outside of the U.S., with the majority of our units sourced from Asia. In addition to the merchandise sourced through our Brand Portfolio segment, our U.S. Retail and Canada Retail segments also source merchandise from domestic third-party suppliers, with many of these suppliers importing a large portion of their merchandise from Asia. We are closely monitoring this situation and evaluating the actions we have taken and additional actions we may take in the future, including cost mitigation measures and price adjustments. For our Brand Portfolio segment, we have adjusted our sourcing diversification by optimizing where we source from to mitigate the risk, maximize flexibility, and decrease costs. However, sourcing diversification could result in product quality issues, higher product costs, and/or not being able to source the quantity desired on a timely basis and there can be no assurance that we will be able to fully mitigate the impact of such tariffs or new tariffs in Asia or elsewhere.

Previous wording

•Net sales decreased to $739.8 million from $771.9 million for the same period last year.

Current wording

•Net sales decreased to $752.4 million from $777.2 million for the same period last year.

Previous wording

•Net income attributable to Designer Brands Inc. was $10.8 million, or $0.22 per diluted share, which included net after-tax charges of $5.9 million, or $0.12 per diluted share, primarily related to restructuring costs and impairment charges. For the three months ended August 3, 2024, net income attributable to Designer Brands Inc. was $13.8 million, or $0.24 per diluted share, which included net after-tax charges of $3.2 million, or $0.05 per diluted share, primarily related to restructuring, integration, and acquisition costs.

Current wording

•Net income attributable to Designer Brands Inc. was $18.2 million, or $0.35 per diluted share, which included net after-tax charges of $1.4 million, or $0.03 per diluted share, primarily related to restructuring costs. For the three months ended November 2, 2024, net income attributable to Designer Brands Inc. was $13.0 million, or $0.24 per diluted share, which included net after-tax charges of $1.5 million, or $0.03 per diluted share, primarily related to impairment charges.

Previous wording

SECOND QUARTER OF 2025 COMPARED WITH SECOND QUARTER OF 2024

Current wording

THIRD QUARTER OF 2025 COMPARED WITH THIRD QUARTER OF 2024

Previous wording

For the three months ended August 2, 2025, net sales decreased in the U.S. Retail segment primarily driven by a decline in comparable sales, largely driven by lower comparable transactions of approximately 7% due to reduced traffic, partially offset by an increase in comparable average sales amounts per transaction. Net sales also decreased by approximately $6.0 million in the U.S. Retail segment due to net store closures since the end of the second quarter of 2024, offset by a similar amount due to an increase in shipping revenue and other non-product sales activity. Net sales increased slightly in the Canada Retail segment driven by the addition of Rubino, partially offset by the small decline in comparable sales. The decrease in net sales for the Brand Portfolio segment was primarily due to lower revenue from wholesale activity of $22.6 million (excluding Topo wholesale) as retail customers and the U.S. Retail segment pulled back on orders, partially offset by a $4.2 million increase in net sales from strong Topo wholesale activity, with the remainder of the decrease from direct-to-consumer sales, primarily from our Vince Camuto e-commerce site.

Current wording

For the three months ended November 1, 2025, net sales decreased in the U.S. Retail segment over the same period last year primarily driven by a decline in comparable sales of $9.0 million, largely driven by lower comparable transactions of approximately 8% due to reduced traffic, partially offset by an increase in comparable average sales amounts per transaction. The decline in comparable sales was partially offset by an increase in non-product sales activity. Net sales decreased in the Canada Retail segment primarily driven by a decline in comparable sales, also due to lower traffic. The decrease in net sales for the Brand Portfolio segment was primarily due to a shift in timing of wholesale revenue from the third quarter to the fourth quarter in the current year.

Previous wording

The net recognition (elimination) of intersegment gross profit consisted of the following:

Current wording

The net recognition of intersegment gross profit consisted of the following:

Previous wording

For the three months ended August 2, 2025, operating expenses decreased in the U.S. Retail segment primarily due to lower store selling expenses and personnel overhead costs of $4.1 million in line with lower net sales, partially offset by an increase in distribution and fulfillment costs with the addition of our new distribution center. Operating expenses as a percentage of net sales increased in the U.S. Retail segment due to the deleverage impact of lower net sales. Operating expenses increased slightly in the Canada Retail segment primarily due to the addition of Rubino. Operating expenses decreased in the Brand Portfolio segment primarily due to a $3.1 million decrease in marketing expenses with the remaining decrease primarily due to lower personnel overhead and other costs, in line with lower sales. Operating expenses as a percentage of net sales in the Brand Portfolio segment increased due to the deleverage impact of lower net sales. Operating expenses decreased for corporate shared services primarily due to lower professional fees.

Current wording

For the three months ended November 1, 2025, operating expenses increased in the U.S. Retail segment over the same period last year primarily due to higher distribution and fulfillment costs with the addition of our new distribution center. Operating expenses as a percentage of net sales increased in the U.S. Retail segment due to the deleverage impact of lower net sales. Operating expenses as a percentage of net sales increased in the Canada Retail segment due to the deleverage impact of lower net sales. Operating expenses decreased in the Brand Portfolio segment primarily due to managing costs in response to lower net sales, which resulted in lower operating expenses as a percentage of net sales. Operating expenses were relatively flat for corporate shared services primarily due to lower personnel and other costs offsetting higher severance charges and the impact of an incentive compensation accrual reversal recorded in the same period last year.

Previous wording

The following table summarizes operating profit (loss) by segment:

Current wording

The following table summarizes operating profit by segment:

Previous wording

For the three months ended August 2, 2025, operating profit for the U.S. Retail segment decreased due to lower gross profit, slightly offset by lower operating expenses. For the Brand Portfolio segment, the increase in operating loss was due to the decrease in gross profit, partially offset by lower operating expenses. Corporate/eliminations were favorable to consolidated operating profit due to lower corporate operating expenses and favorable intersegment activity, partially offset by higher impairment charges when compared to the same period last year. These factors led to a decrease in consolidated operating profit for the three months ended August 2, 2025 as compared the same period last year.

Current wording

For the three months ended November 1, 2025, operating profit for the U.S. Retail segment increased over the same period last year due to higher gross profit, slightly offset by higher operating expenses. Operating profit for the Canada Retail segment decreased due to lower gross profit. Operating profit for the Brand Portfolio segment increased due to lower operating expenses partially offset by lower gross profit. Corporate/eliminations were favorable to consolidated operating profit due to impairment charges incurred last year. These factors led to an increase in consolidated operating profit for the three months ended November 1, 2025 as compared the same period last year.

Previous wording

SIX MONTHSOF 2025 COMPARED WITH SIX MONTHS OF 2024

Current wording

NINE MONTHSOF 2025 COMPARED WITH NINE MONTHS OF 2024

Previous wording

For the six months ended August 2, 2025, net sales decreased in the U.S. Retail segment primarily driven by the decline in comparable sales, largely driven by lower comparable transactions of approximately 9% due to reduced traffic, partially offset by an increase in comparable average sales amounts per transaction. Net sales also decreased by approximately $10.0 million in the U.S. Retail segment due to net store closures since the end of the second quarter of 2024, offset by a similar amount due to an increase in shipping revenue and other non-product sales activity. Net sales decreased in the Canada Retail segment driven by a decline in comparable sales of $5.5 million, also due to lower traffic, and the unfavorable impact from foreign currency translation of $2.4 million, partially offset by an increase in net sales with the addition of Rubino. The decrease in net sales for the Brand Portfolio segment was primarily due to lower revenue from wholesale activity of $32.5 million (excluding Topo wholesale) as retail customers and the U.S. Retail segment pulled back on orders, partially offset by a $10.0 million increase in net sales from strong Topo wholesale activity, with the remaining decrease from direct-to-consumer sales, primarily from our Vince Camuto e-commerce site.

Current wording

For the nine months ended November 1, 2025, net sales decreased in the U.S. Retail segment over the same period last year primarily driven by the decline in comparable sales, largely driven by lower comparable transactions of approximately 9% due to reduced traffic, partially offset by an increase in comparable average sales amounts per transaction. Net sales also decreased by approximately $13.0 million in the U.S. Retail segment due to net store closures since the end of the third quarter of 2024, which was partially offset by an increase in shipping revenue and other non-product sales activity. Net sales decreased in the Canada Retail segment driven by a decline in comparable sales of $10.7 million, also due to lower traffic, and the unfavorable impact from foreign currency translation of $3.7 million, partially offset by an increase in net sales with the addition of Rubino. The decrease in net sales for the Brand Portfolio segment was primarily due to lower revenue from wholesale activity of $41.5 million (excluding Topo wholesale) as retail customers and the U.S. Retail segment pulled back on orders in the first half of the year and a shift in timing of wholesale revenue from the third quarter to the fourth quarter in the current year, partially offset by a $12.6 million increase in net sales from strong Topo wholesale activity, with the remaining decrease from direct-to-consumer sales, primarily from our Vince Camuto e-commerce site.

Previous wording

The decrease in gross profit for the U.S. Retail segment was primarily driven by the decrease in net sales during the three months ended August 2, 2025 over the same period last year and at lower margin rates. Gross profit as a percentage of net sales decreased for the U.S. Retail segment when compared to the same period last year primarily due to promotional activity, partially offset by lower shipping expense. The slight decrease in gross profit as a percentage of net sales for the Canada Retail segment was primarily due to the Rubino banner, which has lower margin rates. The decrease in gross profit for the Brand Portfolio segment was primarily due to lower net sales as retail customers pulled back on orders. Gross profit as a percentage of net sales decreased for the Brand Portfolio segment primarily due to the deleverage on lower net sales on mostly fixed royalty expenses.

Current wording

For the nine months ended November 1, 2025, the decrease in gross profit for the U.S. Retail and Canada Retail segments over the same period last year was primarily driven by the decrease in net sales at slightly lower margin rates. The decrease in gross profit for the Brand Portfolio segment was primarily due to the lower net sales at lower margin rates. Gross profit as a percentage of net sales decreased for the Brand Portfolio segment primarily due to unfavorable customer mix and the deleverage of fixed royalty expenses on lower net sales.

Previous wording

For the six months ended August 2, 2025, operating expenses decreased in the U.S. Retail segment primarily due to lower store selling expenses and personnel overhead costs of $9.3 million in line with lower net sales, partially offset by an increase in distribution and fulfillment costs with the addition of our new distribution center. Operating expenses as a percentage of net sales increased in the U.S. Retail segment due to the deleverage impact of lower net sales. Operating expenses increased in the Canada Retail segment primarily due to the addition of Rubino. Operating expenses as a percentage of net sales in the Canada Retail segment increased due to lower net sales on higher operating expenses. Operating expenses decreased in the Brand Portfolio segment primarily due to a $7.7 million decrease in marketing expenses with the remaining decrease primarily due to lower personnel overhead and other costs, in line with lower sales. Operating expenses as a percentage of net sales decreased in the Brand Portfolio segment as the decline in operating expenses leveraged even with lower net sales. Operating expenses decreased for corporate shared services primarily due to lower professional fees as well as a decrease in incentive compensation.

Current wording

For the nine months ended November 1, 2025, operating expenses decreased in the U.S. Retail segment over the same period last year primarily due to lower store selling expenses and personnel overhead costs of $9.2 million in line with lower net sales, partially offset by an increase in distribution and fulfillment costs with the addition of our new distribution center. Operating expenses as a percentage of net sales increased in the U.S. Retail segment due to the deleverage impact of lower net sales. Operating expenses increased in the Canada Retail segment primarily due to the addition of Rubino. Operating expenses as a percentage of net sales in the Canada Retail segment increased due to lower net sales on higher operating expenses. Operating expenses decreased in the Brand Portfolio segment primarily due to an $8.5 million decrease in marketing expenses with the remaining decrease primarily due to lower personnel overhead and other costs, in line with lower net sales. Operating expenses as a percentage of net sales decreased in the Brand Portfolio segment as the decline in operating expenses leveraged even with lower net sales. Operating expenses decreased for corporate shared services primarily due to lower professional fees.

Previous wording

During the six months ended August 2, 2025, we recorded impairment charges to long-lived assets of $1.5 million due to an underperforming store in the U.S. and $1.0 million due to underperforming stores in Canada. Also during the six months ended August 2, 2025, we recorded a $2.0 million impairment charge for an interest in an equity security without a readily determinable fair value held at cost, which resulted in no remaining value due to the lack of liquidity and the deterioration in the business prospects of the investee. There were no impairment charges for the same period last year.

Current wording

During the nine months ended November 1, 2025, we recorded impairment charges to long-lived assets of $1.5 million due to an underperforming U.S. Retail segment store and $1.0 million due to underperforming Canada Retail segment stores, and to a cost-basis investment of $2.0 million of an interest in an equity security without a readily determinable fair value held at cost, which resulted in no remaining value due to the lack of liquidity and the deterioration in the business prospects of the investee. During the nine months ended November 2, 2024, we recorded impairment charges of $17.8 million including charges to long-lived assets with $9.2 million due to a vacated leased corporate office, $1.0 million due to an underperforming Canada Retail segment store and $0.6 million due to an underperforming U.S. Retail segment store, and to our equity investment ownership interest in Le Tigre of $7.0 million, resulting in no remaining value, due to the inability of Le Tigre to generate earnings with expected future losses.

Previous wording

For the six months ended August 2, 2025, operating profit for the U.S. Retail segment decreased due to lower gross profit partially offset by lower operating expenses, whereas operating profit for the Canada Retail segment decreased due to lower gross profit and higher operating expenses. Corporate/eliminations were favorable to consolidated operating profit due to lower corporate operating expenses and favorable intersegment activity, partially offset by higher impairment charges when compared to the same period last year. These factors led to a decrease in consolidated operating profit for the six months ended August 2, 2025 as compared to the same period last year.

Current wording

For the nine months ended November 1, 2025, operating profit for the U.S. Retail segment decreased over the same period last year primarily due to lower gross profit. Operating profit for the Canada Retail segment decreased due to lower gross profit and higher operating expenses. Operating profit for the Brand Portfolio segment was relatively flat due to lower gross profit offset by lower operating expenses. Corporate/eliminations were favorable to consolidated operating profit due to lower corporate operating expenses and favorable intersegment activity. These factors led to an increase in consolidated operating profit for the nine months ended November 1, 2025 as compared to the same period last year.

Previous wording

For the six months ended August 2, 2025 and August 3, 2024, our effective tax rate was negative 36.7% and positive 1.0%, respectively. The effective tax rate for the six months ended August 2, 2025 differed from the statutory rate primarily due to the impact of permanent non-deductible compensation, which resulted in a negative effective tax rate. The effective tax rate for the six months ended August 3, 2024 differed from the statutory rate primarily due to discrete tax benefits recognized, primarily the release of tax reserves no longer deemed necessary and state tax planning initiatives, partially offset by the impact of permanent non-deductible compensation.

Current wording

For the nine months ended November 1, 2025 and November 2, 2024, our effective tax rate was positive 50.0% and negative 7.9%, respectively. The positive effective tax rate for the nine months ended November 1, 2025 differed from the statutory rate primarily due to the impact of permanent non-deductible compensation. The negative effective tax rate for the nine months ended November 2, 2024 was due to discrete tax benefits recognized, primarily related to the release of tax reserves no longer deemed necessary and state tax planning initiatives, which partially offset the tax calculated on income before income taxes at statutory rates.

Previous wording

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy, and withstand unanticipated business volatility, including the impacts of the current macroeconomic conditions on our results of operations. We believe that cash generated from our operations, together with our current levels of cash, as well as the availability under our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures, and meet our debt service obligations over the next 12 months and beyond. As discussed above in the "Executive Overview and Trends in Our Business" section under the heading "Effects of Macroeconomic Conditions and Tariffs," current macroeconomic conditions have had a negative impact on our operating results and liquidity during the first half of 2025 and we may continue to experience the impact of decreased consumer demand for our products. Future impacts are unknown at this time and could have a material adverse effect on our business, operations, results of operations, and liquidity.

Current wording

Our primary ongoing operating cash flow requirements are for inventory purchases, payments on lease obligations and licensing royalty commitments, other working capital needs, capital expenditures, and debt service. Our working capital and inventory levels fluctuate seasonally. We are committed to a cash management strategy that maintains liquidity to adequately support the operation of the business, pursue our growth strategy, and withstand unanticipated business volatility, including the impacts of the current macroeconomic conditions on our results of operations. We believe that cash generated from our operations, together with our current levels of cash, as well as the availability under our ABL Revolver, are sufficient to maintain our ongoing operations, support seasonal working capital requirements, fund capital expenditures, and meet our debt service obligations over the next 12 months and beyond. As discussed above in the "Executive Overview and Trends in Our Business" section under the heading "Effects of Macroeconomic Conditions and Tariffs," current macroeconomic conditions have had a negative impact on our operating results and liquidity during 2025 and we may continue to experience the impact of decreased consumer demand for our products. Future impacts are unknown at this time and could have a material adverse effect on our business, operations, results of operations, and liquidity.

Previous wording

The decrease in net cash provided by operating activities was due to the net loss recognized during the six months ended August 2, 2025 as compared to the net income recognized during the same period last year and the receipt of income tax refunds of over $40.0 million during the six months ended August 3, 2024, partially offset by improved working capital management as we adjusted inventories in line with the decline in operating results.

Current wording

The increase in net cash provided by operating activities during the nine months ended November 1, 2025 as compared to the same period last year was primarily due to improved working capital management as we adjusted inventories in line with lower net sales and the timing of vendor payments, partially offset by a decrease in net income recognized after adjusting for non-cash activity, including impairment charges and depreciation and amortization, and the receipt of income tax refunds of over $40.0 million during the nine months ended November 2, 2024.

Previous wording

The decrease in net cash used in investing activities for the six months ended August 2, 2025 as compared to the same period last year was primarily due to the reduction in capital expenditures of $12.7 million in line with the decline in operating results along with the impact of the acquisition of Rubino of over $16.0 million during the six months ended August 3, 2024.

Current wording

The decrease in net cash used in investing activities for the nine months ended November 1, 2025 as compared to the same period last year was primarily due to the reduction in capital expenditures of $13.1 million in line with the decline in operating results along with the impact of the acquisition of Rubino of over $16.0 million during the nine months ended November 2, 2024.

Previous wording

ABL Revolver-The ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes borrowings of $30.0 million under a FILO Term Loan, which may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. The ABL Revolver, which matures in 2027, may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of August 2, 2025, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $476.2 million, with $367.9 million in outstanding borrowings and $4.0 million in letters of credit issued, resulting in $104.3 million available for borrowings.

Current wording

ABL Revolver-The ABL Revolver provides a revolving line of credit of up to $600.0 million, including a Canadian sub-limit of up to $60.0 million, a $75.0 million sub-limit for the issuance of letters of credit, a $60.0 million sub-limit for swing-loan advances for U.S. borrowings, and a $6.0 million sub-limit for swing-loan advances for Canadian borrowings. In addition, the ABL Revolver includes borrowings of $30.0 million under a FILO Term Loan, which may be repaid in full, but not in part, so long as certain payment conditions are satisfied. Once repaid, no portion of the FILO Term Loan may be reborrowed. The ABL Revolver, which matures in 2027, may be used to provide funds for working capital, capital expenditures, share repurchases, other expenditures, and permitted acquisitions as defined by the credit facility agreement. The amount of credit available is limited to a borrowing base formulated on, among other things, a percentage of the book value of eligible inventory and credit card receivables, as reduced by certain reserves. As of November 1, 2025, the revolving line of credit (excluding the FILO Term Loan) had a borrowing base of $493.6 million, with $322.7 million in outstanding borrowings and $4.0 million in letters of credit issued, resulting in $166.9 million available for borrowings.

Previous wording

Term Loan-On June 23, 2023, we entered into a Term Loan, which matures at the earliest of the date the ABL Revolver matures (currently March 2027) or five years from closing of the Term Loan (June 2028). As of August 2, 2025, the Term Loan had an outstanding balance of $123.0 million.

Current wording

Term Loan-On June 23, 2023, we entered into a Term Loan, which matures at the earliest of the date the ABL Revolver matures (currently March 2027) or five years from closing of the Term Loan (June 2028). As of November 1, 2025, the Term Loan had an outstanding balance of $121.3 million.

Previous wording

During 2025, we expect to spend approximately $35.0 million to $45.0 million that will be capitalized for property and equipment and implementation costs for cloud computing arrangements accounted for as service contracts, $21.5 million of which was spent during the six months ended August 2, 2025. Our future investments will depend primarily on the number of stores we open and remodel, infrastructure and IT projects that we undertake, and the timing of these expenditures.

Current wording

During 2025, we expect to spend approximately $35.0 million to $45.0 million that will be capitalized for property and equipment and implementation costs for cloud computing arrangements accounted for as service contracts, $32.6 million of which was spent during the nine months ended November 1, 2025. Our future investments will depend primarily on the number of stores we open and remodel, infrastructure and IT projects that we undertake, and the timing of these expenditures.

Previous wording

The information related to a recent accounting pronouncement as set forth in Note 1, Description of Business and Significant Accounting Policies - Recently Issued Accounting Pronouncement, of the condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference.

Current wording

The information related to recent accounting pronouncements as set forth in Note 1, Description of Business and Significant Accounting Policies - Recently Issued Accounting Pronouncements, of the condensed consolidated financial statements included in this Form 10-Q is incorporated herein by reference.