Ulta Beauty Inc

Previous wording

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our financial statements and related notes included elsewhere in this quarterly report. This discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance. You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, targets, strategies, or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:

Current wording

statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words. Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us or any other person that the future plans, estimates, targets, strategies, or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:

Previous wording

We were founded in 1990 as a beauty retailer at a time when prestige, mass, and salon products were sold through distinct channels – department stores for prestige products; drug stores and mass merchandisers for mass products; and salons and authorized retail outlets for professional hair care products. We developed a unique specialty retail concept that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment. We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category, uses beauty for self-expression, experimentation and self-investment, and has high expectations for the shopping experience. We believe our strategy provides us with the competitive advantages that have contributed to our financial performance.

Current wording

that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment. We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category, uses beauty for self-expression, experimentation, and self-investment, and has high expectations for the shopping experience. We believe our strategy provides us with the competitive advantages that have contributed to our financial performance.

Previous wording

Today, we are the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products, and salon services. Key aspects of our business include: a differentiated assortment of approximately 25,000 beauty and wellness products across a variety of categories and price points as well as a variety of beauty services, including salon services, in more than 1,400 stores predominantly located in convenient, high-traffic locations; engaging digital experiences delivered through our website, Ulta.com, and our mobile applications; our best-in-class loyalty program that enables members to earn points for every dollar spent on products and beauty services and provides us with deep, proprietary customer insights; and our ability to cultivate human connection with warm and welcoming guest experiences across all of our channels.

Current wording

Today, we are the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products, wellness products, and salon services. Key aspects of our business include: a differentiated assortment of approximately 29,000 beauty products across a variety of categories and price points as well as a variety of beauty services, including salon services, in more than 1,400 stores predominantly located in convenient, high-traffic locations; engaging digital experiences delivered through our website, Ulta.com, and our mobile applications; our best-in-class loyalty program that enables members to earn points for every dollar spent on products and beauty services and provides us with deep, proprietary customer insights; and our ability to cultivate human connection with warm and welcoming guest experiences across all of our channels.

Previous wording

The continued growth of our business and any future increases in net sales, net income, and cash flows is dependent on our ability to execute our strategic priorities across four foundational focus areas: 1) Assortment: curating the best of all things beauty and wellness for all beauty enthusiasts; 2) Experience: fostering authentic, empowering human connections that inspire, delight and engage guests at every touchpoint; 3) Access: engaging our guests wherever they want to shop by expanding our reach through seamless and immersive omnichannel experiences; and 4) Loyalty: building lifelong loyalty and brand love through member growth and personalization. We operate in an attractive and growing U.S. beauty products and salon services industry, and believe our strong operating model, competitive advantages, and financial foundation, paired with our investments to drive our growth, position us to capture additional market share in the industry.

Current wording

The continued growth of our business and any future increases in net sales, net income, and cash flows is dependent on our ability to execute our strategic priorities across four foundational focus areas: 1) Assortment: curating the best of all things beauty and wellness for all beauty enthusiasts; 2) Experience: fostering authentic, empowering human connections that inspire, delight and engage guests at every touchpoint; 3) Loyalty: building lifelong loyalty and brand love through member growth and personalization; and 4) Access: engaging our guests wherever they want to shop by expanding our reach through seamless and immersive omnichannel experiences. We operate in an attractive and growing U.S. beauty products and salon services industry, and believe our strong operating model, competitive advantages, and financial foundation, paired with our investments to drive our growth, position us to capture additional market share in the industry.

Previous wording

Over the long term, our growth strategy is to drive profitable growth and market share leadership in beauty and wellness through growing our comparable sales, expanding omnichannel capabilities, and opening new stores. Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, improve merchandise margin, increase operating efficiencies, and grow other revenue, partially offset by incremental investments in new stores and technology to enhance the guest experience, people, assortment, advertising, and depreciation.

Current wording

Over the long term, our growth strategy is to drive profitable growth and market share leadership in beauty and wellness through growing our comparable sales, expanding omnichannel capabilities, and opening new stores. Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, improve merchandise margin, increase operating efficiencies, and grow other revenue, partially offset by incremental investments in new stores and technology to enhance the guest experience, people, assortment, and advertising.

Previous wording

Our research indicates that Ulta Beauty has captured meaningful market share across all categories over the last several years. The overall beauty market expanded in 2023 and into the first 39 weeks of fiscal 2024, supported by on-going consumer engagement with the beauty category. We remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains over the long term.

Current wording

The overall beauty market expanded in 2024 and into the first quarter of 2025, supported by on-going consumer engagement with the beauty category. We remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains over the long term.

Previous wording

Persistent inflationary and macroeconomic pressures have impacted consumer spending habits broadly, which we believe may have contributed to lower sales trends through the first 39 weeks of fiscal 2024. The continuation of inflationary and macroeconomic pressures could lead to a recession and further impact our ability to grow sales and maintain historical profitability levels. In addition, inflation could cause the interest rates on any future debt to remain at an elevated level or increase.

Current wording

Persistent inflationary and macroeconomic pressures, including existing and potential tariffs, have impacted consumer spending habits broadly, which we believe could contribute to lower sales trends throughout fiscal 2025. The continuation of inflationary and macroeconomic pressures, including existing and potential tariffs, could further impact our ability to grow sales and maintain historical profitability levels. In addition, inflation could cause the interest rates on any future debt to remain at an elevated level or increase.

Previous wording

We recognize merchandise revenue at the point of sale in our retail stores. E-commerce sales are recognized upon shipment or guest pickup of the merchandise based on meeting the transfer of control criteria. Retail store and e-commerce sales are recorded net of estimated returns. Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the customer, which is at the time of shipment or guest pickup. We provide refunds for merchandise returns within 60 days from the original purchase date. State sales taxes are presented on a net basis as we consider our self a pass-through conduit for collecting and remitting state sales tax. Salon service revenue is recognized at the time the service is provided to the guest. Gift card sales revenue is deferred until the guest redeems the gift card. Company coupons and other incentives are recorded as a reduction of net sales. Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.

Current wording

We recognize merchandise revenue at the point of sale in our retail stores. E-commerce sales are recognized upon shipment or guest pickup of the merchandise based on meeting the transfer of control criteria. Retail store and e-commerce sales are recorded net of estimated returns. Shipping and handling are treated as costs to fulfill the contract and not a separate performance obligation. Accordingly, we recognize revenue for our single performance obligation related to online sales at the time control of the merchandise passes to the customer, which is at the time of shipment or guest pickup. We provide refunds for merchandise returns within 30 days from the original purchase date. State sales taxes are presented on a net basis as we consider our self a pass-through conduit for collecting and remitting state sales tax. Salon service revenue is recognized at the time the service is provided to the guest. Gift card sales revenue is deferred until the guest redeems the gift card. Company coupons and other incentives are recorded as a reduction of net sales. Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.

Previous wording

Comparable sales reflect sales for stores beginning on the first day of the 14 th month of operation. Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial one-month grand opening period. Non-comparable store sales include sales from new stores that have not yet completed their 13 th month of operation and stores that were closed for part or all of the period in either year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or prior period. Comparable sales include retail sales, salon services, and e-commerce. In fiscal years with 53 weeks, the 53 rd week of comparable sales is included in the calculation. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks. There may be variations in the way in which some of our competitors and other retailers calculate comparable or same store sales.

Current wording

Comparable sales reflect sales for stores beginning on the first day of the 14th month of operation. Therefore, a store is included in our comparable store base on the first day of the period after one year of operations plus the initial one-month grand opening period. Non-comparable store sales include sales from new stores that have not yet completed their 13th month of operation and stores that were closed for part or all of the period in either year. Remodeled stores are included in comparable sales unless the store was closed for a portion of the current or prior period. Comparable sales include retail sales, salon services, and e-commerce. In fiscal years with 53 weeks, the 53rd week of comparable sales is included in the calculation. In the year following a 53-week year, the prior year period is shifted by one week to compare similar calendar weeks. There may be variations in the way in which some of our competitors and other retailers calculate comparable or same store sales.

Previous wording

Interest income, net represents interest from cash equivalents, which include highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase. Interest expense includes interest costs and facility fees associated with our credit facility, which is structured as an asset-based lending instrument. Our credit facility interest is based on a variable interest rate structure which can result in increased cost in periods of rising or elevated interest rates.

Current wording

Interest income represents interest from cash equivalents, which include highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase. Interest expense includes interest costs and facility fees associated with our credit facility, which is structured as an asset-based lending instrument. Our credit facility interest is based on a variable interest rate structure which can result in increased cost in periods of rising or elevated interest rates.

Previous wording

Our quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The Company’s third quarter in fiscal 2024 and 2023 ended on November 2, 2024 and October 28, 2023, respectively. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.

Current wording

Our quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31. The Company’s first quarter in fiscal 2025 and 2024 ended on May 3, 2025 and May 4, 2024, respectively. Our quarterly results of operations have varied in the past and are likely to do so again in the future. As such, we believe that period-to-period comparisons of our results of operations should not be relied upon as an indication of our future performance.

Previous wording

Net sales increased $41.2 million, or 1.7%, to $2.53 billion for the 13 weeks ended November 2, 2024 compared to $2.49 billion for the 13 weeks ended October 28, 2023. The net sales increase was primarily due to new store contribution, partially offset by a $4.9 million decline in other revenue. The comparable sales increase of 0.6% for the 13 weeks ended November 2, 2024 was driven by a 0.5% increase in transactions and a 0.1% increase in average ticket.

Current wording

Net sales increased $122.5 million or 4.5%, to $2.8 billion for the 13 weeks ended May 3, 2025, compared to $2.7 billion for the 13 weeks ended May 4, 2024. The net sales increase was primarily due to increased comparable sales and new store contribution, partially offset by a $3.5 million decrease in other revenue. The total comparable sales increase of 2.9% was driven by a 2.3% increase in average ticket and a 0.6% increase in transactions.

Previous wording

Gross profit increased $13.6 million, or 1.4%, to $1.0 billion for the 13 weeks ended November 2, 2024, compared to $992.1 million for the 13 weeks ended October 28, 2023. Gross profit as a percentage of net sales decreased to 39.7% for the 13 weeks ended November 2, 2024, compared to 39.9% for the 13 weeks ended October 28, 2023. The decrease in gross profit margin was primarily due to deleverage of store and supply chain fixed costs and lower other revenue, partially offset by favorable channel mix and lower inventory shrink.

Current wording

Gross profit increased $44.4 million or 4.2%, to $1.11 billion for the 13 weeks ended May 3, 2025, compared to $1.07 billion for the 13 weeks ended May 4, 2024. Gross profit as a percentage of net sales decreased to 39.1% for the 13 weeks ended May 3, 2025, compared to 39.2% for the 13 weeks ended May 4, 2024. The decrease in gross profit margin was primarily due to deleverage of store and supply chain fixed costs and lower other revenue, partially offset by lower inventory shrink.

Previous wording

Selling, general and administrative (SG&A) expenses increased $20.9 million, or 3.2%, to $682.3 million for the 13 weeks ended November 2, 2024, compared to $661.4 million for the 13 weeks ended October 28, 2023. SG&A expenses as a percentage of net sales increased to 27.0% for the 13 weeks ended November 2, 2024, compared to 26.6% for the 13 weeks ended October 28, 2023, primarily due to deleverage of store payroll and benefits and corporate overhead, primarily due to strategic investments, partially offset by lower incentive compensation.

Current wording

Selling, general and administrative (SG&A) expenses increased $44.7 million or 6.7%, to $710.6 million for the 13 weeks ended May 3, 2025, compared to $665.9 million for the 13 weeks ended May 4, 2024. SG&A expenses as a percentage of net sales increased to 24.9% for the 13 weeks ended May 3, 2025, compared to 24.4% for the 13 weeks ended May 4, 2024, primarily due to deleverage of store payroll and benefits and store expenses, partially offset by leverage of corporate overhead.

Previous wording

Income tax expense of $78.0 million for the 13 weeks ended November 2, 2024 represents an effective tax rate of 24.4%, compared to $80.2 million of income tax expense representing an effective tax rate of 24.3% for the 13 weeks ended October 28, 2023.

Current wording

Income tax expense of $99.6 million for the 13 weeks ended May 3, 2025 represents an effective tax rate of 24.6%, compared to $94.7 million of income tax expense representing an effective tax rate of 23.2% for the 13 weeks ended May 4, 2024. The higher income tax rate is primarily due to a reduced benefit from income tax accounting for stock-based compensation.

Previous wording

Net income was $242.2 million for the 13 weeks ended November 2, 2024, compared to $249.5 million for the 13 weeks ended October 28, 2023. The decrease in net income is primarily due to the $20.9 million increase in SG&A expenses and the $1.4 million increase in pre-opening expenses, partially offset by the $13.6 million increase in gross profit and the $2.2 million decrease in income taxes.

Current wording

Net income was $305.1 million for the 13 weeks ended May 3, 2025, compared to $313.1 million for the 13 weeks ended May 4, 2024. The decrease in net income is primarily related to the $44.7 million increase in SG&A expenses, the $4.9 million increase in income tax expense, and the $3.4 million decrease in interest income, net, partially offset by the $44.4 million increase in gross profit.

Previous wording

Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowings under our credit facility. The most significant components of our working capital are merchandise inventories, cash and cash equivalents, and receivables, reduced by accounts payable, deferred revenue, and accrued liabilities. As of November 2, 2024, February 3, 2024, and October 28, 2023, we had cash and cash equivalents of $177.8 million, $766.6 million, and $121.8 million, respectively.

Current wording

Our primary sources of liquidity are cash and cash equivalents, cash flows from operations, and borrowings under our credit facility. The most significant components of our working capital are merchandise inventories, cash and cash equivalents, and receivables, reduced by accounts payable, deferred revenue, and accrued liabilities. As of May 3, 2025, February 1, 2025, and May 4, 2024, we had cash and cash equivalents of $454.6 million, $703.2 million, and $524.6 million, respectively.

Previous wording

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for lease expenses, inventory, labor, distribution, advertising and marketing, and tax liabilities) as well as periodic spend for capital expenditures, investments, and share repurchases. Our working capital needs are greatest from August through November each year as a result of our inventory build-up during this period for the approaching holiday season.

Current wording

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for lease expenses, inventory, labor, distribution, advertising and marketing, and tax liabilities) as well as periodic spend for capital expenditures, investments, and share repurchases. Our working capital needs are greatest from

Previous wording

The decrease in net cash provided by operating activities in the first 39 weeks of fiscal 2024 compared to the first 39 weeks of fiscal 2023 was mainly due to the decrease in net income, the timing of accrued income taxes, prepaid expenses and other current assets, accrued liabilities, accounts payable, and deferred revenue, partially offset by a lower increase in merchandise inventories in the first 39 weeks of fiscal 2024, a decrease in net other assets and liabilities, and an increase in depreciation and amortization.

Current wording

The increase in net cash provided by operating activities in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was mainly due to the timing of accounts payable and accrued liabilities and a smaller increase in merchandise inventories in the first quarter of fiscal 2025, partially offset by the net increase in other assets and liabilities and the decrease in net income.

Previous wording

Merchandise inventories, net were $2.4 billion at November 2, 2024 compared to $2.3 billion at October 28, 2023, representing an increase of $43.9 million or 1.9%. The increase in total inventory is primarily due to the addition of 63 net new stores opened since October 28, 2023.

Current wording

Merchandise inventories, net were $2.1 billion at May 3, 2025, compared to $1.9 billion at May 4, 2024, representing an increase of $215.5 million or 11.3%. The increase in total inventory is primarily due to the following:

Previous wording

We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investing activities for capital expenditures were $300.5 million during the 39 weeks ended November 2, 2024, compared to $311.0 million during the 39 weeks ended October 28, 2023.

Current wording

We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems. Investing activities for capital expenditures were $79.0 million during the 13 weeks ended May 3, 2025 compared to $91.0 million during the 13 weeks ended May 4, 2024.

Previous wording

During the 39 weeks ended November 2, 2024, we opened 57 new stores, closed five stores, relocated two stores, and remodeled 36 stores, compared to the 39 weeks ended October 28, 2023, when we opened 20 new stores, closed one store, relocated five stores, and remodeled 16 stores.

Current wording

During the 13 weeks ended May 3, 2025, we opened six new stores, remodeled four stores, and relocated two stores, compared to the 13 weeks ended May 4, 2024, when we opened 12 new stores, closed two stores, and relocated one store.

Previous wording

The decrease in net cash used in investing activities in the first 39 weeks of fiscal 2024 compared to the first 39 weeks of fiscal 2023 was primarily due to lower capital expenditures for information technology systems, supply chain

Current wording

The decrease in net cash used in investing activities in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was primarily due to lower capital expenditures for merchandising fixtures and information technology systems, partially offset by higher capital expenditures for supply chain investments, compared to the first quarter of fiscal 2024.

Previous wording

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems, and supply chain investments we undertake and the timing of these expenditures. Based on past performance and current expectations, we believe our sources of liquidity will be sufficient to fund future capital expenditures.

Current wording

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems investments, and supply chain investments that we undertake and the timing of these expenditures. Based on past performance and current expectations, we believe our sources of liquidity will be sufficient to fund future capital expenditures.

Previous wording

The decrease in net cash used in financing activities in the first 39 weeks of fiscal 2024 compared to the first 39 weeks of fiscal 2023 was primarily due to a decrease in the dollar amount of share repurchases.

Current wording

The increase in net cash used in financing activities in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was primarily due to an increase in share repurchases.

Previous wording

In October 2024, the Board of Directors authorized a new share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock. The October 2024 Share Repurchase Program authorization revokes the previously authorized but unused amounts from the March 2024 Share Repurchase Program. The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

Current wording

In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock. The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the March 2024 Share Repurchase Program. The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

Previous wording

On March 13, 2024, we entered into Amendment No. 3 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; PNC Bank, National Association,

Current wording

On March 13, 2024, we entered into Amendment No. 3 to the Second Amended and Restated Loan Agreement (as so amended, the Loan Agreement) with Wells Fargo Bank, National Association, as Administrative Agent, Collateral Agent and a Lender thereunder; Wells Fargo Bank, National Association and JPMorgan Chase Bank, N.A., as Lead Arrangers and Bookrunners; JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender; PNC Bank, National Association, as Documentation Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13,

Previous wording

as Documentation Agent and a Lender; and the other lenders party thereto. The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $800.0 million or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $50.0 million subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $200.0 million, subject to the consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.

Current wording

2029, provides maximum revolving loans equal to the lesser of $800.0 million or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $50.0 million subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $200.0 million, subject to the consent by each lender and other conditions. The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold. Substantially all of the Company’s assets are pledged as collateral for outstanding borrowings under the Loan Agreement. Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.

Previous wording

As of November 2, 2024 and October 28, 2023, we had $199.7 million and $195.4 million, respectively, outstanding under the credit facility. The weighted average interest rate was 7.15% and 8.21% for the 39 weeks ended November 2, 2024 and October 28, 2023, respectively. As of February 3, 2024, we had no borrowings outstanding under the credit facility.

Current wording

As of May 3, 2025, February 1, 2025, and May 4, 2024 we had no borrowings outstanding under the credit facility.