What changed in this filing

/stocks — the workspaceLOADING

Item 8. Financial Statements and Supplementary Data

2025-03-31 compared with 2024-04-01 · 347 added, 278 removed, 1023 unchanged (38% of the section changed)

6 unchanged sentences

Cost of sales, exclusive of depreciation and amortization 1,773,926 1,587,265 1,593,213

Gross profit 2,693,412 2,104,538 2,311,995

Stores and distribution expense 1,571,737 1,496,962 1,440,423

Marketing, general and administrative expense 642,877 517,602 536,815

Selling expense

1,689,988 1,533,438 1,462,011

General and administrative expense

750,485 681,176 552,553

Other operating income, net ( 6,632 ) ( 5,873 ) ( 2,674 )

4 unchanged sentences

( 39,934 ) ( 29,980 ) ( 4,604 )

Interest (income) expense, net ( 27,857 ) 372 25,632

Income before income taxes 768,677 484,299 67,016

9 unchanged sentences

Diluted 52,971 52,726 52,327

Other comprehensive income (loss)

Other comprehensive (loss) income

Foreign currency translation, net of tax $ ( 7,351 ) $ ( 3,879 ) $ ( 11,964 )

1 unchanged sentence

4,168 5,438 ( 10,857 )

Other comprehensive income (loss) 1,559 ( 22,821 ) ( 12,399 )

Other comprehensive (loss) income ( 3,183 ) 1,559 ( 22,821 )

Comprehensive income (loss) 570,833 336,972 ( 12,436 )

7 unchanged sentences

(Thousands, except par value amounts)

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Current assets:

Cash and equivalents $ 772,727 $ 900,884

Marketable securities

Receivables 105,324 78,346

25 unchanged sentences

Treasury stock, at average cost:

52,800 and 54,298 shares at February 3, 2024 and January 28, 2023, respectively

53,565 and 52,800 shares at February 1, 2025 and February 3, 2024, respectively

( 2,145,890 ) ( 1,895,143 )

Total A&F stockholders’ equity 1,035,160 694,841

Total Abercrombie & Fitch Co.

stockholders’ equity

1,335,628 1,035,160

Noncontrolling interests 15,695 14,827

20 unchanged sentences

Foreign currency translation adjustments, net of tax — — — — — ( 11,964 ) — — ( 11,964 )

Distributions to noncontrolling interests, net — — — ( 8,506 ) — — — — ( 8,506 )

Distribution to noncontrolling interests, net

— — — ( 7,075 ) — — — — ( 7,075 )

Balance, January 28, 2023 49,002 $ 1,033 $ 416,255 $ 11,728 $ 2,368,815 $ ( 137,527 ) 54,298 $ ( 1,953,735 ) $ 706,569

Net income — — — 7,290 328,123 — — — 335,413

Purchase of common stock ( 4,770 ) — — — — — 4,770 ( 125,775 ) ( 125,775 )

Share-based compensation issuances and exercises 1,498 — ( 34,768 ) — ( 53,309 ) — ( 1,498 ) 58,592 ( 29,485 )

2 unchanged sentences

Foreign currency translation adjustments, net of tax — — — — — ( 3,879 ) — — ( 3,879 )

Distributions to noncontrolling interests, net — — — ( 7,075 ) — — — — ( 7,075 )

Balance, January 28, 2023 49,002 $ 1,033 $ 416,255 $ 11,728 $ 2,368,815 $ ( 137,527 ) 54,298 $ ( 1,953,735 ) $ 706,569

Distribution to noncontrolling interests, net

— — — ( 4,191 ) — — — — ( 4,191 )

Balance, February 3, 2024 50,500 $ 1,033 $ 421,609 $ 14,827 $ 2,643,629 $ ( 135,968 ) 52,800 $ ( 1,895,143 ) $ 1,049,987

Net income — — — 7,793 566,223 — — — 574,016

Purchase of common stock (1)

( 1,615 ) — — — — — 1,615 ( 231,031 ) ( 231,031 )

Share-based compensation issuances and exercises 850 — ( 37,364 ) — ( 13,128 ) — ( 850 ) ( 19,716 ) ( 70,208 )

2 unchanged sentences

Foreign currency translation adjustments, net of tax — — — — — ( 7,351 ) — — ( 7,351 )

Distributions to noncontrolling interests, net — — — ( 4,191 ) — — — — ( 4,191 )

Distribution to noncontrolling interests, net

— — — ( 6,925 ) — — — — ( 6,925 )

Balance, February 1, 2025 49,735 $ 1,033 $ 422,912 $ 15,695 $ 3,196,724 $ ( 139,151 ) 53,565 $ ( 2,145,890 ) $ 1,351,323

(1) Includes excise tax on share repurchases

The accompanying Notes are an integral part of these Consolidated Financial Statements.

8 unchanged sentences

Depreciation and amortization 153,773 141,104 132,243

Amortization of capitalized cloud computing arrangement implementation costs 15,572 10,796 1,347

Asset impairment 11,596 8,289 14,031

12 unchanged sentences

Investing activities

Purchases of marketable securities

( 139,600 ) — —

Proceeds from maturities of marketable securities

Purchases of property and equipment ( 182,903 ) ( 157,797 ) ( 164,566 )

3 unchanged sentences

Financing activities

Purchase of senior secured notes ( 77,972 ) ( 7,862 ) ( 46,969 )

Payment of debt issuance costs and fees ( 180 ) ( 181 ) ( 2,016 )

Repayment/redemption of senior secured notes

( 223,331 ) ( 77,972 ) ( 7,862 )

Payment of debt modification costs and fees

( 3,291 ) ( 180 ) ( 181 )

Purchases of common stock ( 229,807 ) — ( 125,775 )

Acquisition of Common stock for tax withholding obligations

( 70,208 ) ( 29,485 ) ( 14,464 )

Other financing activities ( 8,240 ) ( 3,564 ) ( 7,047 )

1 unchanged sentence

Effect of foreign currency exchange rates on cash ( 7,086 ) ( 2,923 ) ( 8,452 )

Net increase (decrease) in cash and equivalents, and restricted cash and equivalents 382,116 ( 306,799 ) ( 289,789 )

Net (decrease) increase in cash and equivalents, and restricted cash and equivalents ( 129,290 ) 382,116 ( 306,799 )

Cash and equivalents, and restricted cash and equivalents, beginning of period 909,685 527,569 834,368

1 unchanged sentence

Supplemental information related to non-cash activities

Purchases of property and equipment not yet paid at end of period $ 35,568 $ 57,313 $ 29,932

Purchases of property and equipment accrued in accounts payable

$ 48,856 $ 35,568 $ 57,313

Excise tax liability accrued on share repurchases

Operating lease right-of-use assets additions, net of terminations, impairments and other reductions 365,813 155,184 269,430

3 unchanged sentences

Cash received from income tax refunds 502 1,843 3,701

Cash paid for amounts included in measurement of operating lease liabilities

Cash paid for amounts included in measurement of operating lease liabilities, net of abatements

278,229 296,834 263,269

9 unchanged sentences

ASSET IMPAIRMENT

RABBI TRUST ASSETS

ACCRUED EXPENSES

13 unchanged sentences

The Company offers a broad assortment of apparel, personal care products and accessories for men, women and kids, which are sold primarily through its Company-owned stores and digital channels, as well as through various third-party arrangements.

During the second quarter of Fiscal 2023, to leverage the knowledge and experience of our regional teams to better drive brand growth, the Company reorganized its structure and now manages its business on a geographic basis, consisting of three reportable segments:

The Company manages its business on a geographic basis, consisting of three reportable segments:

Europe, the Middle East and Africa (“EMEA”);

1 unchanged sentence

Corporate functions and other income and expenses are evaluated on a consolidated basis and are not allocated to the Company’s segments, and therefore are included as a reconciling item between segment and total operating income (loss).

There was no impact on consolidated net sales, operating income (loss) or net income (loss) as a result of these changes.

All prior periods presented are recast to conform to the new segment presentation.

The Company’s brands include Abercrombie brands, which includes Abercrombie & Fitch and abercrombie kids, and Hollister brands, which includes Hollister and Gilly Hicks.

The Company’s brand families include Abercrombie brands and Hollister brands.

These brands share a commitment to offering unique products of enduring quality and exceptional comfort that allow customers around the world to express their own individuality and style.

2 unchanged sentences

The accompanying Consolidated Financial Statements include historical financial statements of, and transactions applicable to, the Company and reflect its financial position, results of operations and cash flows.

The Company has interests in an Emirati business venture and in a Kuwaiti business venture with Majid al Futtaim Fashion L.L.C.

(“MAF”) and a “U.S.” business venture with Dixar L.L.C.

(“Dixar”), each of which meets the definition of a variable interest entity (“VIE”).

The purpose of the business ventures with MAF is to operate stores in the United Arab Emirates and Kuwait and the purpose of the business venture with Dixar is to hold certain intellectual property assets related to the Social Tourist product.

The Company has interests in an Emirati business venture and in a Kuwaiti business venture with Majid al Futtaim Lifestyle L.L.C.

(“MAF”), each of which meets the definition of a variable interest entity (“VIE”).

The purpose of the business ventures with MAF is to operate stores in the United Arab Emirates and Kuwait.

The Company is deemed to be the primary beneficiary of these VIEs;

1 unchanged sentence

The Company’s fiscal year ends on the Saturday closest to January 31.

This typically results in a fifty-two week year, but occasionally gives rise to an additional week, resulting in a fifty-three week year, as is the case in Fiscal 2023.

This typically results in a fifty-two week year, but occasionally gives rise to an additional week, resulting in a fifty-three week year, as was the case in Fiscal 2023.

Fiscal years are designated in the Consolidated Financial Statements and notes by the calendar year in which the fiscal year commences.

3 unchanged sentences

Fiscal 2022 January 28, 2023 52

Fiscal 2023 February 3, 2024 53

Fiscal 2024 February 1, 2025 52

Fiscal 2025 January 31, 2026 52

Use of Estimates

2 unchanged sentences

Due to the inherent uncertainty involved with estimates, actual results may differ.

Additionally, these estimates and assumptions may change as a result of the impact of global economic conditions such as the uncertainty regarding a slowing economy, rising interest rates, continued inflation, fluctuation in foreign exchange rates, the ongoing conflicts between Russia and Ukraine and Israel and Hamas which could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Additionally, these estimates and assumptions may change as a result of the impact of global economic conditions such as the uncertainty regarding a slowing economy, volatile interest rates, continued inflation, fluctuation in foreign exchange rates, and geopolitical concerns, all of which could result in material impacts to the Company’s consolidated financial statements in future reporting periods.

Abercrombie & Fitch Co.

2 unchanged sentences

Reclassifications

The Company reclassified asset impairment charges into stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

In addition, the Company expanded the presentation of interest expense, net to present interest expense and interest income on the Consolidated Statements of Operations and Comprehensive Income (Loss).

In prior periods, the Company included stores and distribution expense and marketing, general and administrative expense as individual expense categories on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Stores & distribution expense was recaptioned as selling expense, while marketing, general and administrative expense was recaptioned as general and administrative expense.

In conjunction with these changes, all marketing expenses, including amounts previously presented in marketing, general and administrative expense, were moved into selling expense, while certain management and IT costs were moved out of stores and distribution expense and into general and administrative expense.

The net changes associated with these reclassifications results in selling expense that is $ 38.3 million and $ 35.0 million lower than the stores and distribution expense that was previously presented for Fiscal 2023 and Fiscal 2022, respectively, and in general and administrative expense that is $ 38.3 million and $ 35.0 million higher than the marketing, general, and administrative expense that was previously presented for Fiscal 2023 and Fiscal 2022, respectively.

Refer to selling expense and general and administrative expense below for details regarding the composition of these expenses categories.

There were no changes to operating income (loss) or net income (loss).

Prior period amounts have been reclassified to conform to current year’s presentation.

Prior period amounts have been reclassified to conform to the current fiscal year’s presentation.

Cash and Equivalents

A summary of cash and equivalents on the Consolidated Balance Sheets follows:

(in thousands) February 3, 2024 January 28, 2023

(in thousands) February 1, 2025 February 3, 2024

$ 467,642 $ 524,735

7 unchanged sentences

The following table provides a reconciliation of cash and equivalents and restricted cash and equivalents to the amounts shown on the Consolidated Statements of Cash Flows:

(in thousands) Location February 3, 2024 January 28, 2023 January 29, 2022

(in thousands) Location February 1, 2025 February 3, 2024 January 28, 2023

Cash and equivalents Cash and equivalents $ 772,727 $ 900,884 $ 517,602

Long-term restricted cash and equivalents (1)

Restricted cash and equivalents (1)

Other assets 7,668 8,801 9,967

Cash and equivalents and restricted cash and equivalents $ 780,395 $ 909,685 $ 527,569

(1) Restricted cash and equivalents primarily consists of amounts on deposit with banks that are used as collateral for customary non-debt banking commitments and deposits into trust accounts to conform to standard insurance security requirements.

(1) Restricted cash and equivalents primarily consist of amounts on deposit with banks that are used as collateral for customary non-debt banking commitments and deposits into trust accounts to conform to standard insurance security requirements.

Marketable securities

Marketable securities that the Company has the positive intent and ability to hold to maturity are classified as held-to-maturity securities and recorded at amortized cost.

Marketable securities consist of short-term investments of time deposits with original maturities greater than three months and with maturities within one year as of balance sheet date.

Interest income is recognized when earned.

Cash inflows and outflows related to the sale and purchase of marketable securities are classified as investing activities on the Consolidated Statements of Cash Flows.

Refer to Note 5, “ INVESTMENTS .”

Receivables on the Consolidated Balance Sheets primarily include credit card receivables, lessor construction allowance and lease incentive receivables, value added tax (“VAT”) receivables and trade receivables or refunds.

5 unchanged sentences

Income tax receivables represent refunds of certain tax payments along with net operating loss and credit carryback claims for which the Company expects to receive refunds within the next 12 months.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

Inventories on the Consolidated Balance Sheets are valued at the lower of cost and net realizable value on a weighted-average cost basis.

5 unchanged sentences

The Company’s global sourcing of merchandise is generally negotiated, contracted, and settled in U.S.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Other Current Assets

22 unchanged sentences

As the rates implicit in the Company’s leases are not readily determinable, the Company uses its incremental borrowing rate, based on the local economic environment and the duration of the lease term, for the initial measurement of the operating lease right-of-use asset and liability.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

The measurement of operating lease right-of-use assets and liabilities includes amounts related to:

9 unchanged sentences

• Leases not related to Company-operated retail stores with an initial term of 12 months or less, the expense of which is recognized in the period incurred in the Consolidated Statements of Operations and Comprehensive Income (Loss).

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Certain of the Company’s operating leases include options to extend the lease or to terminate the lease.

5 unchanged sentences

Amortization and interest expense related to previously impaired operating lease right-of-use assets are calculated on a front-loaded pattern.

Depending on the nature of the operating lease, amortization and interest expense are primarily recorded within stores and distribution expense, marketing, or general and administrative expense, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Depending on the nature of the operating lease, amortization and interest expense are primarily recorded within selling expense, or general and administrative expense, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company’s operating lease agreements do not contain any material residual value guarantees or material restrictive covenants.

7 unchanged sentences

The key assumption used in developing these projected cash flows used in the recoverability test is estimated sales growth rate.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

If the sum of the estimated future undiscounted cash flows attributable to an asset group is less than its carrying amount, and it is determined that the carrying amount of the asset group is not recoverable, management determines if there is an impairment loss by comparing the carrying amount of the asset group to its fair value.

Fair value of an asset group is based on the highest and best use of the asset group, often using a discounted cash flow model that utilizes Level 3 fair value inputs.

Fair value of an asset group measured on a non-recurring basis is based on the highest and best use of the asset group, often using a discounted cash flow model that utilizes Level 3 fair value inputs.

The key assumptions used in the Company’s fair value analyses are estimated sales growth rate and comparable market rents.

2 unchanged sentences

Other assets on the Consolidated Balance Sheets consist primarily of the Company’s trust-owned life insurance policies held in the irrevocable rabbi trust (the “Rabbi Trust”), deferred tax assets, long-term deposits, intellectual property, long-term restricted cash and equivalents, long-term supplies, certain costs incurred to develop internal-use computer software during the application development stage and various other assets.

Rabbi Trust Assets

The Company defers costs incurred with the implementation of a cloud computing arrangement (“CCA”) that is a service contract.

The deferred implementation costs of cloud computing arrangements are amortized on a straight-line basis over the term of the cloud computing arrangement, generally ranging from 1 to 5 years, in general and administrative expenses on Consolidated Statements of Operations and Comprehensive Income (Loss).

The eligible implementation costs incurred of a cloud computing arrangement are included in other assets on the Consolidated Balance Sheets, and in operating cash flows of the Consolidated statements of cash flows.

The deferred CCA implementation costs were $ 73.3 million and $ 49.9 million, net of accumulated amortization of $ 25.5 million and $ 12.2 million for the years ended February 1, 2025 and February 3, 2024, respectively.

The Rabbi Trust includes amounts, restricted in their use, to meet funding obligations to participants in the Abercrombie & Fitch Co.

3 unchanged sentences

The change in cash surrender value of the life insurance policies in the Rabbi Trust is recorded in interest expense, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Refer to Note 9, “ RABBI TRUST ASSETS .”

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Refer to Note 5, “ INVESTMENTS .”

Intellectual Property

8 unchanged sentences

The agreement with the financial institution does not require the Company to provide assets pledged as security or other forms of guarantees for the SCF program.

As of February 3, 2024 and January 28, 2023, $ 72.4 million and $ 68.4 million of SCF program liabilities were recorded in accounts payable in the Consolidated Balance Sheets, respectively, and reflected as a cash flow from operating activities in the Consolidated Statements of Cash Flows when settled

As of February 1, 2025 and February 3, 2024, $ 88.4 million and $ 72.4 million of SCF program liabilities were recorded in accounts payable in the Consolidated Balance Sheets, respectively, and reflected as a cash flow from operating activities in the Consolidated Statements of Cash Flows when settled.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

The following table provides activity in the SCF program for Fiscal 2024:

(in thousands) Fiscal 2024

Confirmed obligations outstanding at the beginning of the period $ 72,376

Invoices confirmed during the period 440,125

Confirmed invoices paid during the period ( 424,112 )

Confirmed obligations outstanding at the end of the period $ 88,389

Income taxes are calculated using the asset and liability method.

17 unchanged sentences

Refer to Note 11, “ INCOME TAXES .”

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Foreign Currency Translation and Transactions

6 unchanged sentences

Subsequently, assets and liabilities associated with foreign currency transactions are remeasured into the entity’s functional currency using historical exchange rates when remeasuring nonmonetary assets and liabilities and current exchange rates when remeasuring monetary assets and liabilities.

Gains and losses resulting from the remeasurement of monetary assets and liabilities are included in other operating income, net;

whereas, translation adjustments and gains and losses associated with measuring inter-company loans of a long-term investment nature are reported as an element of other comprehensive income (loss).

Gains and losses resulting from the remeasurement of monetary assets and liabilities are included in other operating income, net, whereas translation adjustments and gains and losses associated with measuring inter-company loans of a long-term investment nature are reported as an element of other comprehensive income (loss).

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

Derivative Instruments

21 unchanged sentences

However, the Company’s derivative instruments allow net settlements under certain conditions.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Refer to Note 14, “ DERIVATIVE INSTRUMENTS .

1 unchanged sentence

A summary of the Company’s Class A Common Stock, $ 0.01 par value, and Class B Common Stock, $ 0.01 par value, follows:

(in thousands) February 3, 2024 January 28, 2023

(in thousands) February 1, 2025 February 3, 2024

Class A Common Stock

4 unchanged sentences

Shares authorized 106,400 106,400

(1) No shares were issued or outstanding as of each of February 3, 2024 and January 28, 2023 .

(1) No shares were issued or outstanding as of each of February 1, 2025 and February 3, 2024 .

Holders of Class A Common Stock generally have identical rights to holders of Class B Common Stock, except holders of Class A Common Stock are entitled to one vote per share while holders of Class B Common Stock are entitled to three votes per share on all matters submitted to a vote of stockholders.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

Revenue Recognition

The Company recognizes revenue from product sales when control of the good is transferred to the customer, generally upon pick up at, or shipment from, a Company location.

The Company provides shipping and handling services to customers in certain transactions under its digital operations.

Revenue associated with the related shipping and handling obligations is deferred until the obligation is fulfilled, typically upon the customer’s receipt of the merchandise.

The related shipping and handling costs are classified in stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Revenue is recorded net of estimated returns, associate discounts, promotions and other similar customer incentives.

13 unchanged sentences

For a discussion of the disaggregation of revenue, refer to Note 17, “ SEGMENT REPORTING .

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Cost of Sales, Exclusive of Depreciation and Amortization

3 unchanged sentences

Some retailers include all costs related to buying, design and distribution operations in cost of sales, while others may include either all or a portion of these costs in selling, general and administrative expenses.

Stores and Distribution Expense

Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists of:

store payroll;

store management;

operating lease costs;

Selling Expense

Selling expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) is comprised of stores, fulfillment and marketing expenses.

Stores expenses include non-management employee compensation;

costs associated with operating stores including occupancy costs;

including lease costs;

utilities and other landlord expenses;

depreciation and amortization, except for those amounts included in marketing, general and administrative expense;

repairs and maintenance and other store support functions;

marketing and other costs related to the Company’s digital operations;

depreciation and amortization;

repairs and maintenance.

Fulfillment costs primarily consists of costs related to the Company’s digital operations;

shipping and handling costs;

and distribution center (“DC”) expense.

non-management employee compensation;

and distribution center (“DC”) expenses.

Marketing expenses include costs associated with the Company’s marketing and advertising activities.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

A summary of shipping and handling costs, which includes costs incurred to store, move and prepare product for shipment and costs incurred to physically move product to our customers across channels, follows:

1 unchanged sentence

Shipping and handling costs $ 410,004 $ 362,545 $ 356,280

Marketing, General and Administrative Expense

Marketing, general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists of:

home office compensation and marketing, except for those departments included in stores and distribution expense;

Marketing costs consist primarily of paid media advertising, direct digital advertising, including e-mail distribution, digital content and in-store photography and signage.

Marketing costs related specifically to digital operations are expensed as incurred and the production of in-store photography and signage is expensed when the marketing campaign commences.

All other marketing costs are expensed as incurred.

A summary of marketing costs follows:

(in thousands) Fiscal 2024 Fiscal 2023 Fiscal 2022

Marketing costs

$ 270,598 $ 217,276 $ 189,347

General and Administrative Expense

General and administrative expense on the Consolidated Statements of Operations and Comprehensive Income (Loss) primarily consists of:

home office and support functions including;

store management and DC management compensation;

information technology;

12 unchanged sentences

Interest income primarily consists of interest income earned on the Company’s investments and cash holdings and realized gains from the Rabbi Trust assets.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Advertising Costs

Advertising costs consist primarily of paid media advertising, direct digital advertising, including e-mail distribution, digital content and in-store photography and signage.

Advertising costs related specifically to digital operations are expensed as incurred and the production of in-store photography and signage is expensed when the marketing campaign commences as components of stores and distribution expense.

All other advertising costs are expensed as incurred as components of marketing, general and administrative expense.

A summary of advertising costs follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Advertising costs $ 217,276 $ 189,347 $ 204,575

Share-based Compensation

7 unchanged sentences

As long as the awards are required to be classified as a liability, the change in fair value would be recognized in current period expense based on the requisite service period rendered.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

Fair value of both service-based and performance-based restricted stock units is calculated using the market price of the underlying Common Stock on the date of grant reduced for anticipated dividend payments on unvested shares.

17 unchanged sentences

Refer to Note 13, “ SHARE-BASED COMPENSATION .”

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

Net Income per Share Attributable to A&F

12 unchanged sentences

Unvested contingently issuable shares related to restricted stock units with performance-based and market-based vesting conditions can achieve up to 200% of their target vesting amount and are reflected at the maximum vesting amount less any dilutive portion.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

Recent Accounting Pronouncements

9 unchanged sentences

This update is effective for annual periods beginning after December 15, 2022, and interim periods within those fiscal years, except for the requirement to disclose roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

January 29, 2023 The Company adopted the changes to the standard under the retrospective method in the first quarter of Fiscal 2023, except for roll-forward information, which is effective for fiscal years beginning after December 15, 2023.

Other than the new disclosure requirements, the adoption of this guidance did not have a significant impact on the Company's consolidated financial statements.

Standards not yet adopted

January 29, 2023 The Company adopted this guidance by enhancing supply chain financing disclosures to include roll-forward activity.

Refer to Note 2, “ S UMMARY OF SIGNIFICANT ACCOUNTING PO LICIES .

ASU 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures

The update modifies the disclosure/presentation requirements of reportable segments.

Improvements to Reportable Segment Disclosures The update modifies the disclosure/presentation requirements of reportable segments.

The amendments in the update require the disclosure of significant segment expenses that are regularly provided to the chief operating decision maker (CODM) and included within each reported measure of segment profit and loss.

The amendments also require disclosure of all other segment items by reportable segment and a description of its composition.

Additionally, the amendments require disclosure of the title and position of the CODM and an explanation of how the CODM uses the reported measure(s) of segment profit or loss in assessing segment performance and deciding how to allocate resources.This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

This update is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Early adoption is permitted.

Other than the new disclosure requirements, the adoption of this guidance will not have a significant impact on the Company's consolidated financial statements.

February 1, 2025

The Company adopted this guidance by enhancing segment reporting footnote disclosures to include significant segment expenses.

Refer to Note 17, “ SEGMENT REPORTING .

Standards not yet adopted

ASU 2023-09, Income Taxes (Topic 740):

5 unchanged sentences

Other than the new disclosure requirements, the adoption of this guidance will not have a significant impact on the Company's consolidated financial statements.

ASU 2024-03 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Disaggregation of Income Statement Expenses

ASU 2025-01 - Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40):

Clarifying the Effective Date

The update requires a disaggregated disclosure of income statement expenses.

The amendments in this update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses.

The update is effective for fiscal years beginning after December 15, 2026 and interim period periods within annual reporting periods beginning after December 15, 2027.

Early adoption is permitted.

Other than the new disclosure requirements, the adoption of this guidance will not have a significant impact on the Company’s consolidated financial statements.

Abercrombie & Fitch Co.

6 unchanged sentences

Contract liabilities

The following table details certain contract liabilities representing unearned revenue as of February 3, 2024, January 28, 2023 and January 29, 2022:

(in thousands) February 3, 2024 January 28, 2023 January 29, 2022

The following table details certain contract liabilities representing unearned revenue as of February 1, 2025, February 3, 2024 and January 28, 2023:

(in thousands) February 1, 2025 February 3, 2024 January 28, 2023

Gift card liability (1)

1 unchanged sentence

Loyalty programs liability 32,199 27,937 25,640

(1) Includes $ 20.0 million and $ 16.4 million of revenue recognized during Fiscal 2023 and Fiscal 2022, respectively, that was included in the gift card liability at the beginning of January 28, 2023 and January 29, 2022, respectively.

(1) Includes $ 19.8 million and $ 20.0 million of revenue recognized during Fiscal 2024 and Fiscal 2023, respectively, that was included in the gift card liability at the beginning of February 3, 2024 and January 28, 2023, respectively.

The following table details recognized revenue associated with the Company’s gift card program and loyalty programs for Fiscal 2024, Fiscal 2023, and Fiscal 2022:

5 unchanged sentences

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue recognition ,” for discussion regarding significant accounting policies related to the Company’s revenue recognition.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

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The lowest level of significant input determines the placement of the entire fair value measurement in the hierarchy.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

T he three levels of the hierarchy and the distribution of the Company’s assets and liabilities that are measured at fair value on a recurring basis, were as follows:

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Total assets $ 308,306 $ 60,745 $ — $ 369,051

Derivative instruments (2)

$ — $ 539 $ — $ 539

Total liabilities $ — $ 539 $ — $ 539

Assets and Liabilities at Fair Value as of January 28, 2023

Assets and Liabilities at Fair Value as of February 3, 2024

(in thousands) Level 1 Level 2 Level 3 Total

2 unchanged sentences

Derivative instruments (2)

— 1,092 — 1,092

Rabbi Trust assets (3)

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treasury bills.

Level 2 assets consisted of time deposits.

Level 2 assets consisted of time deposits with original maturities of less than three months.

(2) Level 2 assets and liabilities consisted primarily of foreign currency exchange forward contracts.

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• Trust-owned life insurance policies, which were valued using the cash surrender value of the life insurance policies;

• Time deposits, which were valued at cost, approximating fair value, due to the short-term nature of these investments;

• Time deposits with original maturities of three months or less, which were valued at cost, approximating fair value, due to the short-term nature of these investments and;

• Derivative instruments, primarily foreign currency exchange forward contracts, which were valued using quoted market prices of the same or similar instruments, adjusted for counterparty risk.

The Company also holds certain investments that are not measured at fair value on a recurring basis on the Consolidated Balance Sheets, including held-to-maturity securities.

Held-to-maturity securities consist primarily of time deposits with maturities less than one year, which are valued at amortized cost, approximating fair value.

Fair Value of Long-term Borrowings

The Company’s borrowings under the Senior Secured Notes are carried at historical cost in the Consolidated Balance Sheets.

The carrying amount and fair value of the Company’s long-term gross borrowings were as follows:

(in thousands) February 3, 2024 January 28, 2023

Gross borrowings outstanding, carrying amount $ 223,214 $ 299,730

Gross borrowings outstanding, fair value 226,004 304,975

The Company’s borrowings were carried at historical cost in the accompanying Condensed Consolidated Balance Sheet as of February 3, 2024.

On July 15, 2024 (the “Redemption Date”), Abercrombie & Fitch Management Co.

(“A&F Management”) redeemed all of its outstanding senior secured notes at par value, which had a fixed 8.75 % interest rate and were scheduled to mature on July 15, 2025 (the “Senior Secured Notes”).

As of the Redemption Date, the Senior Secured Notes were no longer deemed outstanding.

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

Investments consisted of:

February 1, 2025 February 3, 2024

(in thousands)

Marketable securities

Time deposits

$ 116,221 $ —

Total Marketable securities

$ 116,221 $ —

Rabbi Trust assets (1)

Trust-owned life insurance policies (at cash surrender value) $ 53,921 $ 52,521

Money market funds 1,164 1,164

Total Rabbi Trust assets

$ 55,085 $ 53,685

(1) Rabbi Trust assets are included in Other assets on the Consolidated Balance Sheets and are restricted as to their use.

Realized gains resulting from the change in cash surrender value and benefits paid pursuant to the trust-owned life insurance policies of the Rabbi Trust assets for Fiscal 2024, Fiscal 2023 and Fiscal 2022 were as follows:

(in thousands) Fiscal 2024 Fiscal 2023 Fiscal 2022

Realized gains related to Rabbi Trust assets $ 1,400 $ 1,978 $ 1,409

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES ,” for further discussion related to the Company’s Marketable securities and Rabbi Trust assets.

Inventories consisted of:

(in thousands) February 3, 2024 January 28, 2023

(in thousands) February 1, 2025 February 3, 2024

Inventories at original cost $ 603,602 $ 500,020

2 unchanged sentences

$ 575,005 $ 469,466

(1) Included $ 103.5 million and $ 93.7 million of inventory in transit, merchandise owned by the Company that has not yet been received at a Company DC, as of February 3, 2024 and January 28, 2023, respectively.

(1) Included $ 115.0 million and $ 103.5 million of inventory in transit, merchandise owned by the Company that has not yet been received at a Company DC, as of February 1, 2025 and February 3, 2024, respectively.

A summary of the Company’s vendors based on location and the percentage of cost of merchandise receipts during Fiscal 2024, Fiscal 2023 and Fiscal 2022 follows:

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Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Inventories ,” for discussion regarding significant accounting policies related to the Company’s inventories.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

PROPERTY AND EQUIPMENT, NET

Property and equipment, net consisted of:

(in thousands) February 3, 2024 January 28, 2023

(in thousands) February 1, 2025 February 3, 2024

Land $ 28,599 $ 28,599

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Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Property and equipment, net ,” for discussion regarding significant accounting policies related to the Company’s property and equipment, net.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

The Company is a party to leases related to its Company-operated retail stores, as well as for certain of its DCs, office space, information technology and equipment.

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(3) Refer to Note 8, “ ASSET IMPAIRMENT ,” for details related to operating lease right-of-use asset impairment charges.

The following table provides the weighted-average remaining lease term of the Company’s operating leases and the weighted-average discount rate used to calculate the Company’s operating lease liabilities as of February 3, 2024 and January 28, 2023:

February 3, 2024 January 28, 2023

February 1, 2025 February 3, 2024

Weighted-average remaining lease term (years) 4.9 4.7

Weighted-average discount rate 6.8 % 6.7 %

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

The following table provides a maturity analysis of the Company’s operating lease liabilities, based on undiscounted cash flows, as of February 1, 2025:

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The Company had minimum commitments related to operating lease contracts that have not yet commenced, primarily for its Company-operated retail stores, of approximately $ 135.0 million as of February 1, 2025.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

ASSET IMPAIRMENT

6 unchanged sentences

$ 11,596 $ 8,289 $ 14,031

(1) Amounts for Fiscal 2022 include store asset impairment of $ 4.8 million and other asset impairment of $ 3.0 million.

(1) Amounts for Fiscal 2024 and Fiscal 2023 only include store asset impairment.

(2) Included in Stores and distribution expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Asset impairment charges for Fiscal 2023 were related to certain of the Company’s assets including stores across brands, primarily in the Americas and EMEA segments.

Amounts for Fiscal 2022 include store asset impairment of $4.8 million and other asset impairment of $3.0 million.

(2) Included in Selling expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Asset impairment charges for Fiscal 2024 were related to certain of the Company’s store assets, primarily in the APAC segment.

The impairment charges for Fiscal 2024 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 8.2 million, including $ 7.3 million related to operating lease right-of-use assets.

Asset impairment charges for Fiscal 2022 were related to certain of the Company’s stores across brands, segments and store formats and other assets.

Asset impairment charges for Fiscal 2023 were related to certain of the Company’s store assets, primarily in the Americas and EMEA segments.

The impairment charges for Fiscal 2023 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 28.1 million, including $ 23.7 million related to operating lease right-of-use assets.

Asset impairment charges for Fiscal 2021 were principally the result of the impact of COVID-19 and were related to certain of the Company’s stores across brands, segments and store formats.

Asset impairment charges for Fiscal 2022 were related to certain of the Company’s assets including stores across segments, brands and store formats and other assets.

The impairment charges for Fiscal 2022 reduced the then carrying amount of the impaired stores’ assets to their fair value of approximately $ 39.7 million, including $ 37.0 million related to operating lease right-of-use assets.

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Long-lived Asset Impairment ,” for discussion regarding significant accounting policies related to impairment of the Company’s long-lived assets.

RABBI TRUST ASSETS

Investments of Rabbi Trust assets consisted of the following as of February 3, 2024 and January 28, 2023:

(in thousands) February 3, 2024 January 28, 2023

Trust-owned life insurance policies (at cash surrender value) $ 52,521 $ 51,681

Money market funds 1,164 1

Rabbi Trust assets $ 53,685 $ 51,682

Realized gains resulting from the change in cash surrender value and benefits paid pursuant to the trust-owned life insurance policies of the Rabbi Trust assets for Fiscal 2023, Fiscal 2022 and Fiscal 2021 were as follows:

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

Realized gains related to Rabbi Trust assets $ 1,978 $ 1,409 $ 1,483

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Rabbi Trust Assets ,” for further discussion related to the Company’s Rabbi Trust assets.

Abercrombie & Fitch Co.

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Accrued expenses consisted of:

(in thousands) February 3, 2024 January 28, 2023

(in thousands) February 1, 2025 February 3, 2024

Accrued payroll and related costs (1)

$ 92,504 $ 100,825

Accrued costs related to the Company’s DCs and digital operations 33,220 38,729

Accrued marketing

77,509 52,792

334,909 283,038

Accrued expenses $ 504,922 $ 436,655

(1) Accrued payroll and related costs include salaries, incentive compensation, benefits, withholdings and other payroll-related costs.

(2) Other primarily includes the Company’s gift card and loyalty programs liabilities, accrued taxes, accrued rent and expenses incurred but not yet paid primarily related to outside services associated with store and home office operations and construction in progress.

Refer to Note 3, “ REVENUE RECOGNITION .”

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As of February 1, 2025, the Company had foreign net deferred tax assets of approximately $ 35.7 million, including $ 8.2 million, $ 5.4 million, and $ 13.4 million in China, Japan, and the United Kingdom, respectively.

While the Company believes that these net deferred tax assets are more-likely-than-not to be realized, it is not a certainty, as the Company continues to evaluate and respond to emerging situations.

While the Company believes that these net deferred tax assets are more-likely-than-not to be realized, it is not a certainty, as the Company continues to evaluate and respond to situations as they emerge.

Should circumstances change, the net deferred tax assets may become subject to additional valuation allowances in the future.

2 unchanged sentences

During Fiscal 2023, the Company did not recognize income tax benefits on $ 103.0 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 15.6 million.

As of January 28, 2023, the Company had foreign net deferred tax assets of approximately $ 43.8 million, including $ 8.0 million, $ 9.1 million, and $ 15.6 million in China, Japan, and the United Kingdom, respectively.

As of February 3, 2024, the Company had foreign net deferred tax assets of approximately $ 36.7 million, including $ 7.6 million, $ 7.5 million, and $ 12.6 million in China, Japan, and the United Kingdom, respectively.

Impact of valuation allowances and other tax charges during Fiscal 2022

During Fiscal 2021, as a result of the improvement seen in business conditions, the Company recognized $ 42.5 million of tax benefits due to the release of valuation allowances, primarily in the U.S.

and Germany, and a discrete tax benefit of $ 3.9 million due to a rate change in the United Kingdom.

The Company did not recognize income tax benefits on $ 25.3 million of pre-tax losses generated in Fiscal 2022, primarily in Switzerland, resulting in adverse tax impacts of $ 4.6 million.

During Fiscal 2022, the Company did not recognize income tax benefits on $ 136.5 million of pre-tax losses, primarily in Switzerland, resulting in adverse tax impacts of $ 20.0 million.

29 unchanged sentences

federal income tax effect 4.5 4.9 12.4

Net change in valuation allowances 3.4 30.7 ( 19.7 )

Foreign taxation of non-U.S.

1 unchanged sentence

Internal Revenue Code Section 162(m) 0.7 1.4 4.6

Net change in valuation allowances 0.6 3.4 30.7

Additional U.S.

taxation of non-U.S.operations 0.1 1.3 0.6

taxation of non-U.S.

operations 0.1 0.1 1.3

Credit for increasing research activities ( 0.1 ) ( 0.5 ) ( 2.5 )

Audit and other adjustments to prior years' accruals, net ( 0.2 ) ( 0.2 ) 5.9

Net income attributable to noncontrolling interests ( 0.2 ) ( 0.3 ) ( 2.4 )

Credit for increasing research activities ( 0.5 ) ( 2.5 ) ( 0.6 )

Tax benefit recognized on share-based compensation expense (2)

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Other items, net — — ( 0.1 )

Other statutory tax rate and law changes — — ( 1.2 )

Total 25.3 % 30.7 % 84.5 %

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For certain years, the impact of various tax items on the Company's effective tax rate were amplified on a percentage basis at lower levels of consolidated pre-tax income (loss) in absolute dollars.

The effective tax rate remains dependent on jurisdictional mix.

The effective tax rate remains sensitive to jurisdictional mix.

The taxation of non-U.S.

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operations on the Company's effective income tax rate was related to the Company's jurisdictional mix driven primarily by the Company’s operations within Switzerland.

Components of Deferred Income Tax Assets and Deferred Income Tax Liabilities

The effect of temporary differences which gives rise to deferred income tax assets (liabilities) were as follows:

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

(in thousands) February 3, 2024 January 28, 2023

Components of Deferred Income Tax Assets and Deferred Income Tax Liabilities

The effect of temporary differences that gives rise to deferred income tax assets (liabilities) were as follows:

(in thousands) February 1, 2025 February 3, 2024

Deferred income tax assets:

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Inventory 9,996 5,518

Property and equipment and intangibles 1,129 —

Rent 509 1,874

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Operating lease right-of-use assets $ ( 223,384 ) $ ( 192,020 )

Property and equipment and intangibles ( 7,472 ) ( 14,273 )

Prepaid expenses ( 2,809 ) ( 1,832 )

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( 125 ) ( 187 )

Property and equipment and intangibles — ( 7,472 )

Other ( 2,215 ) ( 781 )

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(1) This table does not reflect deferred taxes classified within AOCL.

As of February 3, 2024 and January 28, 2023, AOCL included deferred tax liabilities of $0.1 million and deferred tax assets of $0.9 million, respectively.

As of February 1, 2025 and February 3, 2024, AOCL included deferred tax liabilities of $1.0 million and deferred tax liabilities of $0.1 million, respectively.

As of February 1, 2025, the Company had deferred tax assets related to foreign and state NOL and credit carryforwards of $ 91.9 million and $ 0.1 million, respectively, that could be utilized to reduce future years’ tax liabilities.

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Refer to Note 13, “ SHARE-BASED COMPENSATION ,” for details on income tax benefits and charges related to share-based compensation awards during Fiscal 2024, Fiscal 2023 and Fiscal 2022.

The amount of uncertain tax positions as of February 3, 2024, January 28, 2023 and January 29, 2022, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions, excluding accrued interest and penalties, are as follows:

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

The amount of uncertain tax positions as of February 1, 2025, February 3, 2024 and January 28, 2023, which would impact the Company’s effective tax rate if recognized and a reconciliation of the beginning and ending amounts of uncertain tax positions, excluding accrued interest and penalties, are as follows:

(in thousands) Fiscal 2024 Fiscal 2023 Fiscal 2022

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Gross addition for tax positions of the current year 611 572 339

Gross addition (reduction) for tax positions of prior years 75 907 ( 136 )

Gross addition for tax positions of prior years 1,725 75 907

Reductions of tax positions of prior years for:

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Uncertain tax positions, end of year $ 4,582 $ 2,751 $ 2,293

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

The IRS is currently conducting an examination of the Company’s U.S.

7 unchanged sentences

Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Income Taxes ,” for discussion regarding significant accounting policies related to the Company’s income taxes.

Details on the Company’s long-term borrowings, net, as of February 3, 2024 and January 28, 2023 are as follows:

(in thousands) February 3, 2024 January 28, 2023

Long-term portion of borrowings, gross at carrying amount $ 223,214 $ 299,730

Unamortized fees ( 1,095 ) ( 2,878 )

Long-term portion of borrowings, net $ 222,119 $ 296,852

Senior Secured Notes

On July 2, 2020, Abercrombie & Fitch Management Co.

(“A&F Management”), a wholly-owned indirect subsidiary of A&F, completed the private offering of $ 350 million aggregate principal amount of senior secured notes (the “Senior Secured Notes”), at an offering price of 100% of the principal amount thereof.

The Senior Secured Notes will mature on July 15, 2025, and bear interest at a rate of 8.75 % per annum, with semi-annual interest payments, which began in January 2021.

The Senior Secured Notes were issued pursuant to an indenture, dated as of July 2, 2020, by and among A&F Management, A&F and certain of A&F’s wholly-owned subsidiaries, as guarantors, and U.S.

Bank National Association (now known as U.S.

Bank Trust National Association), as trustee, and as collateral agent.

During Fiscal 2023, 2022, and 2021, A&F Management purchased $ 76.5 million, $ 8.0 million and $ 42.3 million, respectively, of outstanding Senior Secured Notes and incurred a $ 2.0 million loss, $ 0.1 million gain and $ 5.3 million loss, respectively, on extinguishment of debt, recognized in interest expense, net on the Consolidated Statements of Operations and Comprehensive Income (Loss).

The Company used the net proceeds from the offering of the Senior Secured Notes to repay outstanding borrowings and accrued interest of $ 223.6 million and $ 110.8 million under its prior term loan facility and the ABL Facility (defined below), respectively, with the remaining net proceeds used towards fees and expenses in connection with such repayments and the offering of the Senior Secured Notes.

The Company recorded deferred financing fees associated with the issuance of the Senior Secured Notes, which are being amortized to interest expense over the contractual term of the Senior Secured Notes.

On April 29, 2021, A&F Management, in A&F Management’s capacity as the lead borrower, and the other borrowers and guarantors party thereto, amended and restated in its entirety the Credit Agreement, dated as of August 7, 2014, as amended on September 10, 2015, and on October 19, 2017 (as amended and restated, the “Amended and Restated Credit Agreement”), among A&F Management, the other borrowers and guarantors party thereto, the lenders party thereto, Wells Fargo Bank, National Association, as administrative agent for the lenders, and the other parties thereto.

The Amended and Restated Credit Agreement continues to provide for a senior secured revolving credit facility of up to $ 400.0 million (the “ABL Facility”), and (i) extended the maturity date of the ABL Facility to April 29, 2026 ;

and (ii) modified the required fee on undrawn commitments under the ABL Facility from 0.25 % per annum to either 0.25 % or 0.375 % per annum (with the ultimate amount dependent on the conditions detailed in the Amended and Restated Credit Agreement).

On March 15, 2023, the Company entered into the First Amendment to the Amended and Restated Credit Agreement to

On July 15, 2024 (the “Redemption Date”), A&F redeemed all of its outstanding 8.75 % Senior Secured Notes due July 15, 2025 , which had an aggregate principal amount of $ 214 million, at a redemption price equal to 100% of the principal amount, plus accrued and unpaid interest to, but excluding, the Redemption Date, and incurred a $ 0.9 million loss on extinguishment of debt, recognized in interest expense on the Condensed Consolidated Statements of Operations and Comprehensive Income.

For the year-to-date period through the Redemption Date, A&F Management repurchased $ 9.3 million in the open market and redeemed $ 214 million of its Senior Secured Notes and incurred a loss on extinguishment of debt of $ 1.1 million.

As of the Redemption Date, the Senior Secured Notes were no longer deemed outstanding and interest on the Senior Secured Notes ceased to accrue.

On August 2, 2024, A&F, as parent and a guarantor, A&F Management, as lead borrower, and certain of A&F’s direct and indirect wholly-owned subsidiaries, as additional borrowers and guarantors, entered into the Second Amendment to the Amended and Restated Credit Agreement (the “Second Amendment”), together with the lenders party thereto and Wells Fargo Bank, National Association, as administrative agent for the lenders.

The Second Amendment amended the Amended and Restated Credit Agreement, dated as of April 29, 2021 (the “ABL Credit Agreement”), to, among other things (as described in greater detail below), provide for a $ 500 million senior secured asset-based revolving credit facility (the “ABL Facility”).

The Company incurred customary fees and expenses in connection with the entry into the Second Amendment.

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

eliminate LIBO rate based loans and to use the current market definitions with respect to the Secured Overnight Financing Rate (“SOFR”), as well as to reflect other conforming changes.

The Company did not have any borrowings outstanding under the ABL Facility as of February 3, 2024 or as of January 28, 2023.

The ABL Facility is subject to a borrowing base, consisting primarily of U.S.

inventory, with a letter of credit sub-limit of $50 million and an accordion feature allowing A&F to increase the revolving commitment by up to $100 million subject to specified conditions.

The Second Amendment amended the ABL Credit Agreement to, among other things:

• increase the aggregate commitments thereunder from $ 400 million to $ 500 million;

• establish a $100 million sub-facility for the benefit of Abfico Netherlands Distribution B.V.

(“Abfico”) and AFH Stores UK Limited (“AFH UK”) that is (i) secured by a first priority security interest in all assets (subject to specified exclusions) of each of Abfico and AFH UK, (ii) guaranteed by A&F and certain of its domestic direct and indirect wholly-owned subsidiaries, and (iii) subject to a borrowing base as described therein;

• extend the maturity date from April 29, 2026 to August 2, 2029;

• increase the letter of credit sub-limit from $ 50 million to $ 62.5 million;

• decrease the swing line availability from $ 50 million to $ 30 million;

• decrease the unused line fee from a variable rate of 25 basis points to 37.5 basis points to a flat rate of 25 basis points;

• increase pricing of the interest rate margin applicable to borrowings as follows:

◦ from 1.25 % to 1.50 % when average availability is greater than or equal to 50% of the Loan Cap (as defined in the Second Amendment);

◦ from 1.50 % to 1.75 % when average availability is less than 50% of the Loan Cap.

The ABL Facility is subject to a borrowing base, consisting primarily of inventory located in the U.S., the United Kingdom and the Netherlands, with a letter of credit sub-limit of $ 62.5 million, a swing line loan sub-limit of $ 30 million, and an accordion feature allowing A&F to increase the revolving commitment by up to $ 150 million subject to specified conditions.

The ABL Facility is available for working capital, capital expenditures, and other general corporate purposes.

As of February 3, 2024, the Company had availability under the ABL Facility of $ 332.5 million, net of $ 0.4 million in outstanding stand-by letters of credit.

As of February 1, 2025, availability under the ABL Facility was $ 500 million, net of $ 0.4 million in outstanding stand-by letters of credit.

As the Company must maintain excess availability equal to the greater of 10% of the Loan Cap or $36 million under the ABL Facility, borrowing capacity available to the Company under the ABL Facility was $ 450 million as of February 1, 2025.

Obligations under the ABL Facility are unconditionally guaranteed by A&F and certain of A&F’s subsidiaries.

The ABL Facility is secured by a first-priority security interest in certain working capital of the borrowers and guarantors consisting of inventory, accounts receivable and certain other assets.

The ABL Facility is also secured by a second-priority security interest in certain property and assets of the borrowers and guarantors, including certain fixed assets, intellectual property, stock of subsidiaries and certain after-acquired material real property.

At the Company’s option, borrowings under the ABL Facility will bear interest at either (a) an adjusted LIBO rate plus a margin of 1.25 % to 1.50 % per annum, or (b) an alternate base rate plus a margin of 0.25 % to 0.50 % per annum.

As of February 3, 2024, the applicable margins with respect to LIBO rate loans and base rate loans, including swing line loans, under the ABL Facility were 1.25 % and 0.25 % per annum, respectively, and are subject to adjustment each fiscal quarter based on average historical availability during the preceding quarter.

Following the March 15, 2023 amendment, borrowings under the ABL will bear interest using the current market SOFR rate.

Customary agency fees and letter of credit fees are also payable in respect of the ABL Facility.

Representations, Warranties and Covenants

The agreements related to the Senior Secured Notes and the ABL Facility contain various representations, warranties and restrictive covenants that, among other things and subject to specified exceptions, restrict the ability of the Company and its subsidiaries to:

The agreements related to the ABL Facility contain various representations, warranties and restrictive covenants that, among other things and subject to specified exceptions, restrict the ability of the Company and its subsidiaries to:

grant or incur liens;

5 unchanged sentences

and consolidate or merge with or into, or sell substantially all of the assets of the Company or A&F Management to another entity.

The Senior Secured Notes are guaranteed on a senior secured basis, jointly and severally, by A&F and each of the existing and future wholly-owned domestic restricted subsidiaries of A&F that guarantee or will guarantee A&F Management’s ABL Facility or certain future capital markets indebtedness.

The Company was in compliance with all debt covenants under the agreements related to the Senior Secured Notes and the ABL Facility as of February 3, 2024.

Certain of the agreements related to the ABL Facility also contain certain affirmative covenants, including reporting requirements, such as delivery of financial statements, certificates and notices of certain events, maintaining insurance and providing additional guarantees and collateral in certain circumstances.

The Company was in compliance with all covenants under these agreements as of February 1, 2025.

SHARE-BASED COMPENSATION

53 unchanged sentences

Date Fair Value

Unvested at January 28, 2023

Unvested at February 3, 2024

1,886,085 $ 27.12 521,212 $ 30.03 260,619 $ 43.90

22 unchanged sentences

Total grant date fair value of awards vested 9,659 — 4,482

Total intrinsic value of awards vested

39,670 — 6,468

Market-based restricted stock units:

2 unchanged sentences

Total intrinsic value of awards vested 19,836 24,890 3,768

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during Fiscal 2023, Fiscal 2022 and Fiscal 2021 were as follows:

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

The weighted-average assumptions used for market-based restricted stock units in the Monte Carlo simulation during Fiscal 2024, Fiscal 2023 and Fiscal 2022 were as follows:

Fiscal 2024 Fiscal 2023 Fiscal 2022

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Contractual Life (years)

Outstanding at January 28, 2023 190,589 $ 29.43

Outstanding at February 3, 2024 25,600 $ 29.29

Exercised ( 25,600 ) 29.29

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Refer to Note 2, “ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Share-Based Compensation ,” for discussion regarding significant accounting policies related to share-based compensation.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

DERIVATIVE INSTRUMENTS

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Dollar notional amounts outstanding as of February 1, 2025.

As of February 3, 2024, foreign currency exchange forward contracts that were entered into to hedge foreign-currency-denominated net monetary assets and liabilities were as follows:

(in thousands) Notional Amount (1)

United Arab Emirates dirham $ 5,719

(1) Amounts reported are the U.S.

Dollar notional amounts outstanding as of February 3, 2024.

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

The fair value of derivative instruments is determined using quoted market prices of the same or similar instruments, adjusted for counterparty risk.

The location and amounts of derivative fair values of foreign currency exchange forward contracts on the Consolidated Balance Sheets as of February 3, 2024, and January 28, 2023 were as follows:

(in thousands) Location February 3, 2024 January 28, 2023 Location February 3, 2024 January 28, 2023

The location and amounts of derivative fair values of foreign currency exchange forward contracts on the Consolidated Balance Sheets as of February 1, 2025, and February 3, 2024 were as follows:

(in thousands) Location February 1, 2025 February 3, 2024 Location February 1, 2025 February 3, 2024

Derivatives designated as cash flow hedging instruments

8 unchanged sentences

$ 6,473 $ 3,618 $ 2,844

(Loss) gain reclassified from AOCL into cost of sales, exclusive of depreciation and amortization (2)

Gain(loss) reclassified from AOCL into cost of sales, exclusive of depreciation and amortization (2)

2,113 ( 1,846 ) 13,781

4 unchanged sentences

(in thousands) Fiscal 2024 Fiscal 2023 Fiscal 2022

(Loss) gain recognized in other operating income, net

Gain(loss) recognized in other operating income, net

$ 370 $ ( 1,206 ) $ 1,226

6 unchanged sentences

(in thousands) Foreign Currency Translation Adjustment Unrealized Gain (Loss) on Derivative Financial Instruments Total

Beginning balance at January 28, 2023

Beginning balance at February 3, 2024

$ ( 136,532 ) $ 564 $ ( 135,968 )

Other comprehensive (loss) income before reclassifications ( 7,351 ) 6,473 ( 878 )

Reclassified loss from AOCL (1)

Reclassified gain from AOCL (1)

— ( 2,113 ) ( 2,113 )

3 unchanged sentences

$ ( 143,883 ) $ 4,732 $ ( 139,151 )

(1) Amount represents loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

(1) Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

For Fiscal 2023, the activity in AOCL was as follows:

3 unchanged sentences

Other comprehensive (loss) income before reclassifications ( 3,879 ) 3,618 ( 261 )

Reclassified gain from AOCL (1)

Reclassified loss from AOCL (1)

— 1,846 1,846

Tax effect — ( 26 ) ( 26 )

Other comprehensive loss after reclassifications ( 11,964 ) ( 10,857 ) ( 22,821 )

Ending balance at January 28, 2023

Other comprehensive (loss) income after reclassifications ( 3,879 ) 5,438 1,559

Ending balance at February 3, 2024

$ ( 136,532 ) $ 564 $ ( 135,968 )

(1) Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

(1) Amount represents loss reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

For Fiscal 2022, the activity in AOCL was as follows:

5 unchanged sentences

— ( 13,781 ) ( 13,781 )

— ( 206 ) ( 206 )

Other comprehensive (loss) income after reclassifications ( 22,917 ) 10,518 ( 12,399 )

Other comprehensive loss after reclassifications ( 11,964 ) ( 10,857 ) ( 22,821 )

Ending balance at January 28, 2023

1 unchanged sentence

(1) Amount represents gain reclassified from AOCL to cost of sales, exclusive of depreciation and amortization, on the Consolidated Statements of Operations and Comprehensive Income (Loss).

Abercrombie & Fitch Co.

2023 Form 10-K

Abercrombie & Fitch Co.

SAVINGS AND RETIREMENT PLANS

7 unchanged sentences

The cost of the Company’s contributions to these plans was $ 18.0 million, $ 16.9 million and $ 14.7 million for Fiscal 2024, Fiscal 2023 and Fiscal 2022, respectively.

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

In addition, the Company maintains the Supplemental Executive Retirement Plan, which provides retirement income to its former Chief Executive Officer for life, based on averaged compensation before retirement, including base salary and cash incentive compensation.

As of February 3, 2024 and January 28, 2023, the Company has recorded $ 6.7 million and $ 7.2 million, respectively, in other liabilities on the Consolidated Balance Sheets related to future Supplemental Executive Retirement Plan distributions.

As of February 1, 2025 and February 3, 2024, the Company had recorded $ 6.1 million and $ 6.7 million, respectively, in other liabilities on the Consolidated Balance Sheets related to Supplemental Executive Retirement Plan distributions.

SEGMENT REPORTING

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All prior periods presented are recast to conform to the new segment presentation.

The group comprised of the Company’s (i) Chief Executive Officer and (ii) Chief Financial Officer and Chief Operating Officer functions as the Company’s CODM.

The group comprised of the Company’s (i) Chief Executive Officer, (ii) Chief Operating Officer, and (iii) Chief Financial Officer functions as the Company’s CODM.

The Company’s CODM manages business operations and evaluates the performance of each segment based on the net sales and operating income (loss) of the segment.

The CODM considers actual performance relative to expectations, and growth potential to determine the appropriate allocation of resources to each segment.

Net sales by segment are presented by attributing revenues on the basis of the segment that fulfills the order.

3 unchanged sentences

The Company does not report its other assets by segment as that information is not used by the CODM in assessing segment performance or allocating resources.

The following tables provide the Company’s segment information as of February 3, 2024 and January 28, 2023, and for Fiscal 2023, Fiscal 2022 and Fiscal 2021.

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

$ 3,455,674 $ 2,920,157 $ 2,803,791

EMEA 687,095 658,794 747,356

APAC 137,908 118,800 161,621

Total $ 4,280,677 $ 3,697,751 $ 3,712,768

(1) Includes the U.S., Canada, and Latin America.

Net sales in the U.S.

were $ 3.3 billion, $ 2.8 billion, and $ 2.7 billion in Fiscal 2023, Fiscal 2022, and Fiscal 2021, respectively.

Abercrombie & Fitch Co.

1 unchanged sentence

Abercrombie & Fitch Co.

(in thousands) Fiscal 2023 Fiscal 2022 Fiscal 2021

The following tables provide the Company’s segment information as of February 1, 2025 and February 3, 2024, and for Fiscal 2024, Fiscal 2023 and Fiscal 2022.

EMEA APAC Total

Net Sales $ 4,027,514 $ 770,519 $ 150,554 $ 4,948,587

Cost of sales, exclusive of depreciation and amortization

1,436,161 285,734 52,031 1,773,926

Store occupancy (2)

327,458 114,664 33,545 475,667

Fulfillment (2)

403,114 83,832 19,306 506,252

Other expense (3)

650,288 176,468 57,683 884,439

Segment income (loss) $ 1,210,493 $ 109,821 $ ( 12,011 ) $ 1,308,303

Operating loss not attributed to segments:

Corporate and other unallocated expenses (4)

Operating income

Interest expense (income), Net ( 27,857 )

Income before taxes $ 768,677

Depreciation and amortization $ 85,207 $ 25,070 $ 7,975 $ 118,252

Americas $ 73,779 $ 75,231 $ 79,189

EMEA 26,782 21,497 23,276

APAC 5,921 8,123 10,892

Segment total $ 106,482 $ 104,851 $ 113,357

Depreciation and amortization not attributed to segments 35,521

34,622 27,392 30,678

Total depreciation and amortization

$ 141,104 $ 132,243 $ 144,035

Capital expenditures $ 99,571 $ 17,764 $ 15,240 $ 132,575

Americas $ 78,062 $ 102,030 $ 40,774

EMEA 26,019 32,206 20,727

APAC 4,331 1,249 6,210

Segment total $ 108,412 $ 135,485 $ 67,711

Capital expenditures not attributed to segments 50,328

Total capital expenditures $ 182,903

EMEA APAC Total

Net Sales $ 3,455,674 $ 687,095 $ 137,908 $ 4,280,677

Cost of sales, exclusive of depreciation and amortization 1,279,050 259,347 48,868 1,587,265

Store occupancy (2)

312,340 120,118 30,982 463,440

Fulfillment (2)

353,538 72,610 17,505 443,653

Other expense (3)

570,454 153,804 51,111 775,369

Segment income (loss) $ 940,292 $ 81,216 $ ( 10,558 ) $ 1,010,950

Operating loss not attributed to segments:

Corporate and other unallocated expenses (4)

Operating income

Interest expense (income), Net 372

Income before taxes $ 484,299

Depreciation and amortization $ 73,779 $ 26,782 $ 5,921 $ 106,482

Depreciation and amortization not attributed to segments 34,622

Total depreciation and amortization

Capital expenditures $ 78,062 $ 26,019 $ 4,331 $ 108,412

Capital expenditures not attributed to segments 49,385

Total capital expenditures $ 157,797

Abercrombie & Fitch Co.

2024 Form 10-K

Abercrombie & Fitch Co.

EMEA APAC Total

Net Sales $ 2,920,157 $ 658,794 $ 118,800 $ 3,697,751

Cost of sales, exclusive of depreciation and amortization 1,262,429 287,618 43,166 1,593,213

Store occupancy (2)

299,678 105,868 39,831 445,377

Fulfillment (2)

356,506 69,466 18,563 444,535

Other expense (3)

518,099 150,657 46,347 715,103

Segment income (loss) $ 483,445 $ 45,185 $ ( 29,107 ) $ 499,523

Operating loss not attributed to segments:

Corporate and other unallocated expenses (4)

Operating income

Americas $ 940,292 $ 483,445 $ 637,308

EMEA 81,216 45,185 118,235

APAC ( 10,558 ) ( 29,107 ) ( 20,240 )

Segment total $ 1,010,950 $ 499,523 $ 735,303

Operating (loss) income not attributed to Segments:

Stores and distribution expense ( 12,066 ) ( 9,051 ) ( 5,880 )

Marketing, general and administrative expense ( 520,082 ) ( 400,508 ) ( 403,622 )

Other operating (loss) income, net 5,869 2,684 17,283

Total operating income $ 484,671 $ 92,648 $ 343,084

(in thousands) February 03, 2024 January 28, 2023

Interest expense (income), Net 25,632

Income before taxes $ 67,016

Depreciation and amortization 75,231 21,497 8,123 $ 104,851

Depreciation and amortization not attributed to segments 27,392

Total depreciation and amortization $ 132,243

Capital expenditures 102,030 32,206 1,249 $ 135,485

Capital expenditures not attributed to segments 29,081

Total capital expenditures $ 164,566

(1) Includes the U.S., Canada, and Latin America.

Net sales in the U.S.

were $ 3.8 billion, $ 3.3 billion, and $ 2.8 billion in Fiscal 2024, Fiscal 2023, and Fiscal 2022, respectively.

(2) Included in selling expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

(3) Other expense includes store payroll, other direct store controllable and marketing expenses included in selling expense, as well as allocated and support related expenses included in general and administrative expense on the Consolidated Statements of Operations and Comprehensive Income (Loss).

(4) Corporate and other unallocated expenses represent corporate overhead expenses that have not been allocated to any segment.

(in thousands) February 1, 2025 February 3, 2024 January 28, 2023

Americas $ 463,148 $ 372,371 $ 404,040

4 unchanged sentences

Total assets $ 3,299,887 $ 2,974,233 $ 2,713,100

The Company’s long-lived assets and intellectual property, which primarily relates to trademark assets associated with the Company’s global operations, by geographic area as of February 3, 2024 and January 28, 2023 were as follows:

(in thousands) February 3, 2024 January 28, 2023

(in thousands) February 1, 2025 February 3, 2024 January 28, 2023

Americas (1) (2)

5 unchanged sentences

Long-lived assets and intellectual property located in the U.S.

were $ 880 million and $ 911 million as of February 3, 2024 and January 28, 2023, respectively.

(2) Includes intellectual property of $ 2.9 million and $ 3.4 million at February 3, 2024 and January 28, 2023, respectively.

(3) Includes intellectual property of $ 17.4 million and $ 18.3 million at February 3, 2024 and January 28, 2023, respectively.

were $ 965 million, $ 880 million, and $ 911 million as of February 1, 2025, February 3, 2024, and January 28, 2023 respectively.

(2) Includes intellectual property of $ 2.9 million, $ 2.9 million, and $ 3.4 million at February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

(3) Includes intellectual property of $ 16.6 million, $ 17.4 million, and $ 18.3 million at February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

Abercrombie & Fitch Co.

4 unchanged sentences

(in thousands) Fiscal 2024 Fiscal 2023 Fiscal 2022

Abercrombie (1)

$ 2,556,434 $ 2,201,686 $ 1,734,866

Hollister (2)

2,392,153 2,078,991 1,962,885

Total $ 4,948,587 $ 4,280,677 $ 3,697,751

(1) Abercrombie brands includes Abercrombie & Fitch and abercrombie kids.

(2) Hollister brands includes Hollister and Gilly Hicks

CONTINGENCIES

12 unchanged sentences

We have audited the accompanying consolidated balance sheets of Abercrombie & Fitch Co.

and its subsidiaries (the “Company”) as of February 3, 2024 and January 28, 2023, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended February 3, 2024, including the related notes (collectively referred to as the “consolidated financial statements”).

and its subsidiaries (the “Company”) as of February 1, 2025 and February 3, 2024, and the related consolidated statements of operations and comprehensive income (loss), of stockholders’ equity and of cash flows for each of the three years in the period ended February 1, 2025, including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company's internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 3, 2024 and January 28, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 3, 2024 in conformity with accounting principles generally accepted in the United States of America.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025 in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025 , based on criteria established in Internal Control - Integrated Framework (2013) issued by the COSO.

36 unchanged sentences

An impairment loss is recognized based on the excess of the carrying amount of the asset group over its fair value.

The principal considerations for our determination that performing procedures relating to the impairment of long-lived assets - stores is a critical audit matter are (i) the significant judgment by management when developing the future undiscounted cash flows attributable to an asset group when testing for recoverability and when determining the fair value of the asset groups to measure for impairment;

(ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimated sales growth rate when developing the future undiscounted cash flows, and comparable market rents when estimating the fair value;

and (iii) the audit effort involved the use of professionals with specialized skill and knowledge.

The principal considerations for our determination that performing procedures relating to the impairment of long-lived assets - stores is a critical audit matter are (i) the significant judgment by management when developing the future undiscounted cash flows attributable to an asset group when testing for recoverability and when estimating the fair value of the asset groups to measure for impairment;

and (ii) a high degree of auditor judgment, subjectivity, and effort in performing procedures and evaluating management’s significant assumptions related to estimated sales growth rate when developing the future undiscounted cash flows, and comparable market rents when estimating the fair value.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included testing the effectiveness of controls relating to management’s long-lived assets - stores recoverability test and determination of the fair value of the asset groups.

These procedures also included, among others (i) testing management’s process for developing the future undiscounted cash flows attributable to an asset group when testing for recoverability and when determining the fair value of the asset groups to measure for impairment;

(ii) evaluating the appropriateness of the models used by management in determining the fair value of the asset groups;

These procedures included testing the effectiveness of controls relating to management’s store impairment assessments, including controls over the recoverability test and fair value estimate of the asset groups.

These procedures also included, among others (i) testing management’s process for developing the future undiscounted cash flows attributable to an asset group when testing for recoverability and when estimating the fair value of the asset groups to measure for impairment;

(ii) evaluating the appropriateness of the models used by management in estimating the fair value of the asset groups;

(iii) testing the completeness and accuracy of underlying data used in the models;

and (iv) evaluating the reasonableness of the significant assumptions related to estimated sales growth rate when developing the future undiscounted cash flows and comparable market rents when estimating the fair value.

Evaluating management’s assumptions related to estimated sales growth rate and comparable market rents involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the asset groups, the consistency with evidence obtained in other areas of the audit as it relates to estimated sales growth rate, and consistency with external market data as it relates to estimated sales growth rate and comparable market rents.

Professionals with specialized skill and knowledge were used to assist in evaluating of the reasonableness of the comparable market rents significant assumption.

and (iv) evaluating the reasonableness of the significant assumptions used by management related to estimated sales growth rate when developing the future undiscounted cash flows and comparable market rents when estimating the fair value.

Evaluating management’s assumptions involved evaluating whether the assumptions used by management were reasonable considering the current and past performance of the asset groups as it relates to estimated sales growth rate, the consistency with evidence obtained in other areas of the audit as it relates to estimated sales growth rate, and the consistency with external market data as it relates to estimated sales growth rate and comparable market rents.

/s/ PricewaterhouseCoopers LLP

Columbus, Ohio

April 1, 2024

March 31, 2025

We have served as the Company’s auditor since 1996.

3 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 8. Financial Statements and Supplementary Data