Academy Sports & Outdoors, Inc.

Previous wording

We are a leading full-line sporting goods and outdoor recreation retailer in the United States. Our mission is to provide “Fun for All” and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoors, apparel, sports & recreation and footwear (representing 30%, 27%, 23% and 20% of our 2024 net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.

Current wording

We are a leading full-line sporting goods and outdoor recreation retailer in the United States. Our mission is to provide “Fun for All” and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers. Our product assortment focuses on key categories of outdoors, sports & recreation, apparel, and footwear (representing 31%, 22%, 27% and 20% of our 2025 net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.

Previous wording

Our business is subject to seasonal fluctuations. A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter. Our net sales and profits are also impacted by the August/September back-to-school selling season during the third quarter, the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.

Current wording

Our business is subject to seasonal fluctuations. A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter. Our net sales and profits are also impacted by the July/August back-to-school selling season during the second and third quarters, the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.

Previous wording

As of February 1, 2025, we operated 298 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approxima tely 70,000 gross square feet, throughout 19 cont iguous states located primarily in the southern United States. Our stores are supported by approxi mately 22,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app. Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities, such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities.

Current wording

As of January 31, 2026, we operated 322 stores that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approximately 70,000 gross square feet, throughout 21 contiguous states located primarily in the southern United States. Our stores are supported by approxi mately 23,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app. Additionally, we are deepening our customer relationships, further integrating our e-commerce platform with our stores and driving operating efficiencies by developing our omnichannel capabilities such as our mobile app, optimizing the website experience and upgrading our fulfillment capabilities.

Previous wording

How We Assess the Performance of Our Business and Recent Trends

Current wording

How We Assess the Performance of Our Business

Previous wording

Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. Various other factors affect comparable sales, including consumer preferences, buying trends and overall economic trends; our ability to identify and respond effectively to customer preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than thirteen months.

Current wording

Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results. Various other factors affect comparable sales, including consumer preferences; buying trends and overall economic trends; our ability to identify and respond effectively to customer preferences and local and regional trends; our ability to provide an assortment of high quality/value oriented product offerings that generate new and repeat visits to our stores and our website; the customer experience and unique services we provide in our stores; our ability to execute our omnichannel strategy, including the growth of our e-commerce business; changes in product mix and pricing, including promotional activities; the number of items purchased per visit and average order value; unseasonal or extreme weather; a shift in the timing of a holiday between comparable periods; and the number of stores that have been in operation for more than thirteen months.

Previous wording

Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases including e-commerce sales, our ability to adjust inventory based on sales fluctuations, our management of vendor relations and meeting customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and market and sales promotions.

Current wording

Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases including e-commerce sales, our ability to adjust inventory based on sales fluctuations, our management of vendor relations and meeting customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and changes in product mix and pricing, including promotional activities.

Previous wording

We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business. A shortage of popular merchandise could reduce our net sales. Conversely, we also must seek to avoid accumulating excess inventory to avoid markdowns and clearance, which negatively impact sales and gross margin. We have deployed several new tools over recent years to improve inventory handling and vendor management, including third-party programs to analyze our inventory stock and execute a disciplined markdown strategy throughout the year at every location. This implementation, along with other factors, has allowed us to improve our inventory management in stores over the past few years. We have coupled these tools with the data we have been able to collect from our Academy Credit Card program, our customer database and targeted customer surveys, so that we can better estimate future inventory requirements. It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis.

Current wording

We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business. A shortage of popular merchandise could reduce our net sales. Conversely, we also must seek to avoid accumulating excess inventory to avoid markdowns and clearance, which negatively impact sales and gross margin. We deploy several tools to improve inventory handling and vendor management, including third-party programs to analyze our inventory stock, execute a disciplined markdown strategy and improve our inventory management throughout the year at every location. We have coupled these tools with the data we collect from our myAcademy Rewards program, our customer database and targeted customer surveys, so that we can better estimate future inventory requirements. It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis.

Previous wording

Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy. We have also continued to add private label brand products to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. A shift in our sales mix in which we sell more units of our private label brand products and fewer units of the national brand products would generally have a positive impact on our gross margin but an adverse impact on our total net sales. Furthermore, our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions, which consist of outdoors and sports and recreation. A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin.

Current wording

Our broad assortment gives us an advantage over mass general merchants who typically do not carry the full assortment of leading national brands sold at Academy. We have also continued to add private label brands to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer. A shift in our sales mix in which we sell more units of our private label brand products and fewer units of the national brand products would generally have a positive impact on our gross margin rate but an adverse impact on our total net sales. Furthermore, our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions, which consist of outdoors and sports and recreation. A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin rate.

Previous wording

We expect that new stores will be a key driver of growth in our net sales and gross margin in the future as we execute our new store opening growth plans. Our growth strategy encompasses both deepening our presence in existing markets as well as entering new markets, leveraging enhanced brand awareness and operational efficiencies. Our new store model favors off-mall locations within power centers or stand-alone buildings. We utilize comprehensive demographic and trade data to guide our real estate site selection. During the fiscal year 2024, we opened 16 new stores. We plan to open 20 to 25 stores in fiscal year 2025 and we are continuously evaluating available locations that meet our size requirements and market criteria. Our strategic real estate approach, including the 39 stores opened since fiscal year 2021, has positioned us effectively for continued expansion.

Current wording

We expect that new stores will be a key driver of growth in our net sales and gross margin in the future as we execute our new store opening growth plans. Our growth strategy encompasses both deepening our presence in legacy and existing markets as well as entering new markets, leveraging enhanced brand awareness and operational efficiencies. Our new store model favors off-mall locations within power centers or stand-alone buildings. We utilize comprehensive demographic and trade data to guide our real estate site selection. During the fiscal year 2025, we opened 24 new stores. We plan to open 20 to 25 stores in fiscal year 2026 and we are continuously evaluating available locations that meet our size requirements and market criteria. Our strategic real estate approach, including the 63 stores opened since fiscal year 2021, has positioned us effectively for continued expansion.

Previous wording

Gross Margin. Gross margin is our net sales less cost of goods sold. Our cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution, which consist primarily of payroll and benefits, distribution center occupancy costs and freight and are generally variable in nature relative to our sales volume.

Current wording

Gross Margin. Gross margin is our net sales less cost of goods sold. Cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution. These costs consist primarily of tariffs, payroll and benefits, distribution center occupancy costs, depreciation and freight, and are generally variable in nature relative to our inventory receipts and sales volume.

Previous wording

Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including private label brand merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including duties, tariffs, commodity costs, freight costs, shrinkage (discussed below), inventory processing costs, and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.

Current wording

Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including private label brand merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management. Our gross margin is also impacted by variables including tariffs, commodity costs, freight costs, shrinkage (discussed below), inventory processing costs, and e-commerce shipping costs. We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.

Previous wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. SG&A expenses as a percentage of sales increased from 23.3% in 2023 to 24.8% in 2024. The majority of the increase in SG&A from the prior year was driven by investments in our growth initiatives, including costs related to new stores (such as additional property and facility fees, employee compensation costs and advertising costs). We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance a control of operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers.

Current wording

Selling, General and Administrative Expenses. Selling, general and administrative (“SG&A”) expenses include store and corporate administrative payroll and payroll benefits, store and corporate headquarters occupancy costs, advertising, credit card processing, information technology, pre-opening costs and other store and administrative expenses. These expenses are both variable and fixed in nature. SG&A expenses as a percentage of sales increased from 24.8% in 2024 to 26.3% in 2025. The majority of the increase in SG&A from the prior year was driven by investments in our growth initiatives, including costs related to new stores (such as additional property and facility fees, employee compensation costs and advertising costs). We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets. Management of SG&A expenses depends on our ability to balance operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers. Selling, general, and administrative expenses on the Consolidated Statements of Income includes gains of approximately $15.4 million in 2025 and $7.1 million in 2024 related to multiple sale-leaseback transactions which qualified for sale accounting under ASC 606 (see Note 11).

Previous wording

Interest Expense. Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4 to the accompanying financial statements) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt. In 2022 and 2023, we utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings on our Term Loan. However, this prepayment in principal on our Term Loan was largely offset by increases made by the Federal Reserve to the federal funds benchmark rate during 2022 and 2023, resulting in a decrease in interest expense in 2024 compared to 2023.

Current wording

Interest Expense. Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt.

Previous wording

2024 (52 weeks) Compared to 2023 (53 weeks)

Current wording

2025 (52 weeks) Compared to 2024 (52 weeks)

Previous wording

Net Sales. Net sales decreased $225.8 million, or 3.7%, in fiscal year 2024 (a 52 week year) over fiscal year 2023 (a 53 week year). This is primarily a result of decreased comparable sales, which was partially offset by $88.5 million of net sales, including e-commerce, generated by 16 new stores opened since the end of the 2023 fiscal year. Since re-launching our new store program in 2022, we have opened 39 new stores, 23 of which have been open for at least twelve months. Over the last twelve months, those 23 stores have averaged approximately $13 million in net sales per store, including e-commerce. We believe that performance of new stores in year one is partially affected by the season in which the new store opens and the brand awareness in the region the new store opens.

Current wording

We opened 24 new stores since the end of the 2024 fiscal year, 5 of which opened throughout the 2025 fourth quarter. During the 2025 fiscal year, these 24 stores generated $142.8 million of net sales, including e-commerce. Since re-launching our new store program in 2022, we have opened 63 new stores, 39 of which have been open for at least twelve months. Over the last twelve months, those 39 stores have averaged approximately $13 million in net sales per store, including e-commerce. We believe that performance of new stores in year one is partially affected by the season in which the new store opens and the brand awareness in the region the new store opens.

Previous wording

Comparable sales decreased 5.1% driven by lower sales across all merchandise divisions as a result of a 6.3% decrease in comparable transactions, partially offset by an increase in average ticket of 1.2%. The decrease of 3.7% in net sales was driven by decreased sales of 6.5% in the sports and recreation merchandise division, 5.8% in the apparel division and 3.9% in the footwear division, partially offset by an increase of 0.7% in the outdoor merchandise division. Fiscal year 2024 was a 52 week year compared to fiscal year 2023, which was a 53 week year. Merchandise net sales for the 53rd week in 2023 were $73.3 million.

Current wording

Comparable sales decreased 1.5% driven by lower comparable sales across all merchandise divisions, except the sports and recreation merchandise division, as a result of a 4.2% decrease in comparable transactions, partially offset by an increase in average ticket of 2.9%.

Previous wording

Gross Margin. Gross margin decreased $98.8 million, or 4.7%. As a percentage of net sales, gross margin decreased 40 basis points from 34.3% in 2023 to 33.9% in 2024. The decrease of 40 basis points in gross margin was primarily attributable to:

Current wording

Gross Margin. Gross margin increased $94.2 million, or 4.7%, to $2,105.6 million for fiscal year 2025 from $2,011.5 million for fiscal year 2024. As a percentage of net sales, gross margin increased 90 basis points from 33.9% in 2024 to 34.8% in 2025. The increase of 90 basis points in gross margin was primarily attributable to favorability in merchandise margin due to promotions and managing prices in response to increased tariff costs, while maintaining alignment with our value pricing strategy.

Previous wording

Selling, General and Administrative Expenses. SG&A expenses increased $40.5 million, or 2.8%, to $1,472.8 million in 2024 from $1,432.4 million in 2023, primarily as a result of our increased strategic investments of $66.4 million in new stores and technology and deleverage from decreased sales. This was partially offset by an additional week of SG&A expense in the prior year of approximately $17.1 million as fiscal year 2023 was a 53-week year.

Current wording

Selling, General and Administrative Expenses. SG&A expenses increased $120.6 million, or 8.2%, to $1,593.4 million in 2025 from $1,472.8 million in 2024, primarily as a result of our increased strategic investments of $109.0 million, including $84.8 million in new stores and $13.1 million in technology.

Previous wording

Write off of Deferred Loan Costs. Write off of Deferred Loan Costs increased by $0.4 million for the year-to-date 2024 when compared with the year-to-date 2023, in connection with the amendment in the 2024 first quarter that led to the write off of deferred loan costs on the ABL Facility.

Current wording

Write-off of Deferred Loan Costs. Write-off of deferred loan costs decreased by $0.4 million for fiscal year 2025 when compared with fiscal year 2024, in connection with the amendment in the 2024 first quarter that led to the write-off of deferred loan costs on the ABL Facility.

Previous wording

Interest Expense. Interest expense decreased $9.2 million, or 19.9%, to $36.9 million in 2024 from $46.1 million in 2023 resulting primarily from a lower outstanding balance on our long-term debt, driven by a voluntary prepayment of $100.0 million under the Term Loan made on February 1, 2024.

Current wording

Interest Expense. Interest expense decreased $0.7 million, or 1.8%, to $36.2 million in 2025 from $36.9 million in 2024, primarily driven by lower interest rates and a lower outstanding balance on our Term Loan.

Previous wording

Other (Income), net. Other (Income), net, increased $4.0 million in 2024 when compared to 2023, primarily driven by increased money market investments in the current year.

Current wording

Other Income, net. Other income, net, decreased $26.8 million in 2025 when compared to 2024, primarily driven by the settlement of a legal matter with a non-trade vendor that resulted in a net gain of approximately $15.0 million in 2024 (see Note 2) as well as lower interest rates in the current year.

Previous wording

Income Tax Expense. Income tax expense decreased $24.2 million to $119.8 million in 2024 as compared to $144.0 million in 2023, resulting primarily from a decrease in pre-tax income. ASO, Inc.'s effective tax rate for 2024 was 22.3% compared to 21.7% in 2023. The increase in effective tax rate was largely driven by the decrease in pre-tax income in the current year, as well as decreased permanent adjustments related to stock compensation awards during 2024.

Current wording

Income Tax Expense. Income tax expense decreased $10.5 million to $109.3 million in 2025 as compared to $119.8 million in 2024, resulting primarily froma decrease in pre-tax income. ASO, Inc.'s effective tax rate for 2025 was 22.5% compared to 22.3%in 2024. The increase in effective tax rate was primarily driven by the decrease in pre-tax income in the current year.

Previous wording

Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense. We also use cash to pay dividends and use cash to repurchase our common stock. We may fund our liquidity requirements through cash and cash equivalents, cash generated from operating activities, and borrowings under our ABL Facility (as defined below). On February 1, 2025, our cash and cash equivalents totaled $288.9 million. We believe our existing cash and cash equivalents, cash flows from operations, as well as availability under the ABL Facility, will be sufficient to fund our cash requirements for the foreseeable future.

Current wording

Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense. We also use cash to pay dividends and to repurchase our common stock. We may fund our liquidity requirements through cash and cash equivalents, cash generated from operating activities, and borrowings under our ABL Facility (as defined below). On January 31, 2026, our cash and cash equivalents totaled $330.3 million. We believe our existing cash and cash equivalents, cash flows from operations, as well as availability under the ABL Facility, will be sufficient to fund our cash requirements for the foreseeable future.

Previous wording

•Term Loan - 8.38% variable rate term-loan with $88.8 million in principal outstanding maturing November 6, 2027 and requiring quarterly principal payments of $750 thousand through September 30, 2027; and

Current wording

•Term Loan - 7.72% variable rate term-loan with $85.8 million in principal outstanding maturing November 6, 2027 and requiring quarterly principal payments of $750 thousand through September 30, 2027; and

Previous wording

We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2024 and 2044. Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at February 1, 2025. In the fiscal year ended February 1, 2025, we opened 16 new locations. The following table summarizes our operating lease obligations by fiscal year:

Current wording

We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2026 and 2045. Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at January 31, 2026. In the fiscal year ended January 31, 2026, we opened 24 new locations. The following table summarizes our operating lease obligations by fiscal year:

Previous wording

(1) Minimum lease payments have not been reduced by sublease rentals of $2.0 million due in the future under non-cancelable subleases.

Current wording

(1) Minimum lease payments have not been reduced by sublease rentals of $1.4 million due in the future under non-cancelable subleases.

Previous wording

On December 4, 2024, the Company's Board of Directors authorized a new share repurchase program under which the Company is authorized to purchase up to$700 millionof its outstanding shares during the three-year period ending December 4, 2027 (the “2024 Share Repurchase Program”), and which replaces the 2023 Share Repurchase Program. Under the 2024 Share Repurchase Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs, privately negotiated transactions and/or Rule 10b5-1 or other non-discretionary trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the 2024 Share Repurchase Program will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The 2024 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time.

Current wording

On December 4, 2024, the Company's Board of Directors approved a new share repurchase program under which the Company is authorized to purchase up to $700 millionof its outstanding shares during the three-year period ending December 4, 2027 (the “2024 Share Repurchase Program”), and which replaces the previously approved share repurchase program. Under the 2024 Share Repurchase Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs, privately negotiated transactions and/or Rule 10b5-1 or other non-discretionary trading plans, all in compliance with the rules of the SEC and other applicable legal requirements. The timing, manner, price and amount of any common share repurchases under the 2024 Share Repurchase Program will be determined by the Company in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The 2024 Share Repurchase Program does not obligate the Company to acquire any particular number of common shares, and the program may be suspended, extended, modified or discontinued at any time. As of January 31, 2026, the Company had $436.6 million remaining for share repurchases under the 2024 Share Repurchase Program. See Note 2 to the consolidated financial statements.

Previous wording

On March 6, 2025, the Company announced that the Board of Directors declared a quarterly cash dividend with respect to the quarter ended February 1, 2025 of $0.13 per share of common stock, payable on April 17, 2025, to stockholders of record as of the close of business on March 25, 2025.

Current wording

On March 5, 2026, the Company announced that the Board of Directors declared a quarterly cash dividend with respect to the quarter ended January 31, 2026 of $0.15 per share of common stock, payable on April 10, 2026, to stockholders of record as of the close of business on March 20, 2026.

Previous wording

We expect capital expenditures for fiscal year 2025 to be between $220 million and $250 million. The following table summarizes our forecasted allocation of capital expenditures for fiscal year 2025:

Current wording

We expect capital expenditures for fiscal year 2026 to be between $200 million and $240 million. The following table summarizes our forecasted allocation of capital expenditures for fiscal year 2026:

Previous wording

Cash provided by operating activities in 2024 decreased $7.7 million compared to 2023. This decrease is attributable to:

Current wording

Cash provided by operating activities in 2025 decreased $93.3 million compared to 2024. This decrease is attributable to:

Previous wording

•$100.7 million decrease in net income; partially offset by

Current wording

•$41.7 million decrease in net income; and

Previous wording

•$71.7 million net increase in cash flows provided by operating assets and liabilities.

Current wording

•$99.9 million net decrease in cash flows provided by operating assets and liabilities; partially offset by

Previous wording

The increase in cash flows from operating assets and liabilities was primarily attributable to:

Current wording

The decrease in cash flows from operating assets and liabilities was primarily attributable to:

Previous wording

Investing Activities. Cash used in investing activities decreased $20.0 million in 2024 compared to 2023. The decrease in cash used in investing activities is primarily related to:

Current wording

Investing Activities. Cash used in investing activities decreased $14.1 million in 2025 compared to 2024. The decrease in cash used in investing activities is primarily related to:

Previous wording

Financing Activities. Cash used in financing activities increased $82.1 million in 2024, compared to 2023. The primary drivers of the increase were:

Current wording

Financing Activities. Cash used in financing activities decreased $179.6 million in 2025 compared to 2024. The primary drivers of the decrease were:

Previous wording

We expect our existing cash balances, internally generated cash flows and available borrowings under our ABL Facility will be fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities for the foreseeable future. As of February 1, 2025, we had $955.5 million of available capacity under our ABL Facility and $288.9 million of cash and cash equivalents.

Current wording

We expect our existing cash balances, internally generated cash flows and available borrowings under our ABL Facility to fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities for the foreseeable future. As of January 31, 2026, we had $992.4 million of available capacity under our ABL Facility and $330.3 million of cash and cash equivalents. As discussed in Note 12, the Company previously sold a portion of its rights to potential tariff relief litigation claims and does not expect to receive refunds associated with the portion of the rights sold. Accordingly, the Company does not expect potential tariff refunds to represent a significant incremental future source of liquidity.

Previous wording

Description: Merchandise inventories are stated at the lower of weighted average cost and net realizable value. Merchandise inventories include the direct cost of merchandise and capitalized costs related to procurement, warehousing and distribution and are reflected net of shrinkage, vendor allowances and other valuation reserves.

Current wording

Description: Merchandise inventories are stated at the lower of weighted average cost and net realizable value. Merchandise inventories include the direct cost of merchandise (including tariffs), capitalized costs related to procurement, and warehousing and distribution. Merchandise inventories are reflected net of shrinkage, vendor allowances and other valuation reserves.

Previous wording

Impact of Assumptions: For inventory shrinkage, our reserves may be inaccurate if our historical physical inventory shrinkage rates, used in our assumptions, differ significantly from actual rates due to consistent misses to our accrual. However, due to the frequency with which we perform full physical inventory counts, our assumptions are regularly updated, and we constantly analyze the physical inventory results to our accruals and, where necessary, adjust our store accruals to compensate for consistent patterns identified. We have not had a history of significant differences to our reserves for vendor allowances, and the assumptions generally do not have a significant impact on reserves since they are typically short-term and contractual in nature. We book a reserve for inventory permanently marked down below the inventory’s historical cost. Additionally, for slow moving or obsolete inventory, we book reserves based on historical margins received for marked down inventory with similarly slow historical sell-through rates. A 20% decrease in assumed margins would not have a material impact to our financial statements. We believe our long history of operations has given us sufficient data to enable us to accurately predict these reserves.

Current wording

Impact of Assumptions: For inventory shrinkage, our reserves may be inaccurate if our historical physical inventory shrinkage rates, used in our assumptions, differ significantly from actual rates due to consistent misses to our accrual. However, due to the frequency with which we perform full physical inventory counts, our assumptions are regularly updated, and we regularly analyze the physical inventory results to our accruals and, where necessary, adjust our store accruals to compensate for consistent patterns identified. We have not had a history of significant differences to our reserves for vendor allowances, and the assumptions generally do not have a significant impact on reserves since they are typically short-term and contractual in nature. We book a reserve for inventory permanently marked down below the inventory’s historical cost. Additionally, for slow moving or obsolete inventory, we book reserves based on historical margins received for marked down inventory with similarly slow historical sell-through rates. A 20% decrease in assumed margins used in these reserves would not have a material impact to our financial statements. We believe our long history of operations has given us sufficient data to enable us to accurately predict these reserves.

Previous wording

Description: We review the carrying value of long-lived assets, including property and equipment at our stores, for indicators of impairment regularly and whenever events and circumstances indicate that the carrying value of an asset may not be recoverable.

Current wording

Description: We review the carrying value of long-lived assets, including property and equipment at our stores and right-of-use assets, for indicators of impairment regularly and whenever events and circumstances indicate that the carrying value of an asset may not be recoverable.

Previous wording

Impact of Assumptions: The assumptions used to project store impairment loss is based on projected future store income and considers variables such as historical and current trends, macroeconomic conditions, store location and local economy and supply chain factors. Additionally, the long-term store income projections also contain a projection of future store specific costs such as store wages and advertising. Actual long-term income results could vary significantly from our projections due to a variety of reasons such as changes in the local retail environment or macroeconomic factors not used in our assumptions. In addition to variables considered in developing projected long-term store income, assumptions are made to develop the assumed discount rate based on company specific factors. There is significant judgment used in determining these assumptions used in the assessment of store impairment and variability in the assumptions could cause us to reach a materially different conclusion on impairment, however, we do not believe the net book value of any individual store assets are material to the Company’s operations.

Current wording

Impact of Assumptions: The assumptions used to project store impairment loss is based on projected future store income and considers variables such as historical and current trends, macroeconomic conditions, store location, and local economy and supply chain factors. Additionally, the long-term store income projections also contain a projection of future store specific costs such as store wages and advertising. Actual long-term income results could vary significantly from our projections due to a variety of reasons such as changes in the local retail environment or macroeconomic factors not used in our assumptions. In addition to variables considered in developing projected long-term store income, assumptions are made to develop the assumed discount rate based on company specific factors. There is significant judgment used in determining these assumptions used in the assessment of store impairment and variability in the assumptions could cause us to reach a materially different conclusion on impairment; however, we do not believe the net book value of any individual store assets are material to the Company’s operations. The Company has not recognized any long-lived asset impairment charges during 2025, 2024, or 2023.