What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-09-02 compared with 2025-06-10 · 129 added, 89 removed, 334 unchanged (39% of the section changed)

3 unchanged sentences

Forward-looking statements include all statements that are not historical facts, including statements reflecting our current views with respect to, among other things, our operations and financial performance.

These forward-looking statements are included throughout this Quarterly Report, including in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section and in the section entitled “Risk Factors,” and relate to matters such as macroeconomic conditions, our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information.

These forward-looking statements are included throughout this Quarterly Report, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and in the section entitled “Risk Factors,” and relate to matters such as macroeconomic conditions, our industry, business strategy, goals and expectations concerning our market position, future operations, margins, profitability, capital expenditures, liquidity and capital resources and other financial and operating information.

We have used the words “anticipate,” “assume,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “future,” “will,” “seek,” “foreseeable,” the negative version of these words or similar terms and phrases to identify forward-looking statements in this Quarterly Report.

4 unchanged sentences

Actual results may differ materially from these expectations due to changes in global, regional or local economic, business, competitive, market, regulatory and other factors that could affect overall consumer spending or our industry, including the possible effect of ongoing macroeconomic challenges, inflation and higher interest rates, trade policy changes or additional tariffs or changes in tariffs, geopolitical tensions, or changes to the financial health of our customers, many of which are beyond our control.

We believe that these factors include but are not limited to those described under the “Risk Factors” section in the Company's Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC which are accessible on the SEC's website at www.sec.gov.

We believe that these factors include but are not limited to those described under “Risk Factors” in the Company's Annual Report, as such risk factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov.

Any forward-looking statement made by us in this Quarterly Report speaks only as of the date of this Quarterly Report and are expressly qualified in their entirety by the cautionary statements included in this Quarterly Report.

43 unchanged sentences

• restrictions on our current and future operations imposed by the terms of our indebtedness;

• our ability to borrow under the ABL Facility (as defined below);

• our ability to borrow under the ABL Facility (as defined above);

• our level of indebtedness may hinder our ability to negotiate favorable terms with our vendors.

7 unchanged sentences

Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, our actual results may vary in material respects from those projected in these forward-looking statements.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen weeks ended May 3, 2025 and our audited financial statements for the fiscal year ended February 1, 2025 and the section entitled "Management's Discussion and Analysis of Financial Condition and Results of Operations" included in the Annual Report.

The following discussion and analysis of our financial condition and results of operations should be read together with our unaudited financial statements and related notes included elsewhere in this Quarterly Report for the thirteen and twenty-six weeks ended August 2, 2025 and our audited financial statements for the fiscal year ended February 1, 2025 and the section entitled “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in the Annual Report.

All references to “Academy,” “Academy Sports + Outdoors,” “ASO, Inc.,” “we,” “us,” “our” or the “Company” in this Quarterly Report refer to Academy Sports and Outdoors, Inc., a Delaware corporation and the current parent holding company of our operations, and its consolidated subsidiaries.

We conduct our operations primarily through our indirect subsidiary, Academy, Ltd., a Texas limited partnership doing business as “Academy Sports + Outdoors”, or Academy, Ltd .

We conduct our operations through our indirect subsidiary, Academy, Ltd., a Texas limited partnership doing business as “Academy Sports + Outdoors”, or Academy, Ltd.

All of the Company's sales and business operations occur at Academy, Ltd., and Academy, Ltd., is also the borrower and/or issuer of the Company's long-term debt and lessee of facilities.

1 unchanged sentence

References to any year, quarter, or month mean our fiscal year, fiscal quarter, and fiscal month, respectively, unless the context requires otherwise.

References to the “current quarter,” “2025 first quarter,” or similar reference refers to the thirteen week period ended May 3, 2025, and any reference to the “prior year quarter,” “2024 first quarter” or similar reference refers to the thirteen week period ended May 4, 2024.

References to the “current quarter,” “2025 second quarter,” or similar reference refers to the thirteen week period ended August 2, 2025, and any reference to the “prior year quarter,” “2024 second quarter” or similar reference refers to the thirteen week period ended August 3, 2024.

Unless otherwise specified, all comparisons regarding the current period of 2025 are made to the corresponding period of 2024.

1 unchanged sentence

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 outdoor, sports and recreation, apparel, and footwear (representing 28%, 26%, 24%, and 22% of our 2025 first quarter 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.

Our product assortment focuses on key categories of outdoor, sports and recreation, apparel, and footwear (representing 28%, 23%, 28%, and 21% of our 2025 second quarter 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.

We sell a range of sporting and outdoor recreation products, including sporting equipment, apparel, footwear, camping gear, patio furniture, outdoor cooking equipment, and hunting and fishing gear, among many others.

2 unchanged sentences

We provide locally relevant offerings, such as crawfish boilers in Louisiana, licensed apparel for area sports fans, baits and lures for area fishing spots, and beach towels in coastal markets.

As of May 3, 2025, we operated 303 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.

As of August 2, 2025, we operated 306 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 approximately 23,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app.

1 unchanged sentence

The following table summarizes store activity for the periods indicated:

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

Beginning stores 298 282

Q1 new stores 5 2

Q2 new stores 3 1

Ending stores 306 285

2 unchanged sentences

We continue to monitor global macroeconomic trends and uncertainties such as inflation, existing and potential tariffs, and other shifting trade policies, which have impacted consumer spending and could adversely affect our ability to grow sales and merchandise margin.

We have worked diligently to reduce our exposure related to products imported from China.

The Company reduced its cost exposure to approximately 9% of total cost of goods sold directly related to China for its private label business, and we plan to further accelerate our efforts to diversify our global supply chain.

The impact of the evolving macroeconomic environment on our financial results is uncertain.

We are closely monitoring the evolving environment with respect to tariffs and other trade policy developments and will continue to adjust plans as needed, including, but not limited to, inventory purchase quantities and timing, strategic pricing and promotional adjustments to maintain value for our customers, alternating sourcing to reduce receipts from China, and vendor negotiations.

We have worked diligently to mitigate the impact of tariffs on our business.

We are closely monitoring the evolving environment with respect to tariffs and other trade policy developments and will continue to adjust plans as needed, including, but not limited to, inventory purchase quantities and timing, strategic pricing and promotional adjustments to maintain value for our customers, diversifying sourcing to shift country of origin, and vendor negotiations.

How We Assess the Performance of Our Business

19 unchanged sentences

and the number of stores that have been in operation for more than thirteen months.

The comparable sales metric for the 2025 first quarter compares the thirteen weeks ended May 3, 2025 versus the thirteen weeks ended May 4, 2024.

The prior year rate of decline in comparable store sales slowed in the 2025 first quarter with a 2025 first quarter comparable sales decrease of 3.7% compared to 5.7% in the 2024 first quarter.

See the discussion on Net Sales below for factors contributing to these changes.

Transactions and average ticket.

9 unchanged sentences

Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.

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.

demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and market and sales promotions.

We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business.

5 unchanged sentences

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.

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.

We have 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.

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.

3 unchanged sentences

These initiatives include investments in our new customer data platform and the development of strategies that focus on customer segmentation with the intention of improving customer identification and increasing customer engagement.

Additionally , we continue to implemen t several innovative website features to enhance the customer online shopping experience, including a redesigned home page, additional BOPIS features, and enhanced shipping notifications.

Additionally, we continue to implement several website features to enhance the customer online shopping experience, including a redesigned home page, additional BOPIS features, and enhanced shipping notifications.

Our improved e-commerce platform supports our stores with digital marketing and our BOPIS and ship-to-store programs.

These platforms allow us to connect further with our customers for marketing and product education and assists us in introducing customers to the Academy brand by reaching customers outside of our current store footprint.

During the 2025 first quarter, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales.

During the 2025 year-to-date second quarter, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS and in-store retail sales.

We expect to continue to invest in expanding and enhancing our omnichannel capabilities, including our mobile app, optimizing the web site experience and upgrading our fulfillment capabilities, which will continue to require further investments by us.

3 unchanged sentences

We utilize comprehensive demographic and trade data to guide our real estate site selection.

During the 2025 first quarter, we opened 5 new stores.

During the 2025 second quarter, we opened 3 new stores.

Our strategic real estate approach, including the 47 stores opened since fiscal year 2021, has positioned us effectively for continued expansion.

10 unchanged sentences

These expenses are both variable and fixed in nature.

SG&A expenses as a percentage of sales increased from 25.9% in the 2024 first quarter to 28.8% in the 2025 first quarter, primarily attributable to the addition of new stores.

We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets.

SG&A expenses as a percentage of sales increased from 24.8% in the 2024 year-to-date second quarter to 26.9% in the 2025 year-to-date second quarter, primarily attributable to increased strategic investments, including the addition of 21 new stores since the end of the 2024 second quarter.

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.

2 unchanged sentences

The following table summarizes our pre-opening expense activity for the periods presented:

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Number of new stores opened 3 1 8 3

8 unchanged sentences

Results of Operations

Thirteen Weeks Ended May 3, 2025 Compared to Thirteen Weeks Ended May 4, 2024

Thirteen Weeks Ended August 2, 2025 Compared to Thirteen Weeks Ended August 3, 2024

The following table sets forth amounts and information derived from our unaudited statements of income for the periods indicated as follows (dollar amounts in thousands):

Thirteen Weeks Ended Change

May 3, 2025 May 4, 2024 Dollars Percent

August 2, 2025 August 3, 2024 Dollars Percent

Net sales $ 1,599,838 100.0 % $ 1,548,980 100.0 % $ 50,858 3.3 %

4 unchanged sentences

Interest expense, net 9,028 0.6 % 9,071 0.6 % (43) (0.5) %

Other income, net 1,480 0.1 % 5,531 0.4 % (4,051) (73.2) %

Income before income taxes 164,833 10.3 % 186,546 12.0 % (21,713) (11.6) %

Income tax expense 39,399 2.5 % 43,958 2.8 % (4,559) (10.4) %

Net income $ 125,434 7.8 % $ 142,588 9.2 % $ (17,154) (12.0) %

*Percentages in table may not sum properly due to rounding.

Net sales increased $50.9 million, or 3.3%, i n the 2025 second quarter over the prior year second quarter.

The increase of 3.3% in net sales was driven by increased sales of 3.7% in the apparel merchandise division, 3.6% in the footwear merchandise division, 3.5% in the sports and recreation merchandise division and 2.5% in the outdoor merchandise division.

We opened 21 new stores since the end of the 2024 second quarter, 3 of which opened throughout the 2025 second quarter.

During the 2025 second quarter, these 21 stores generated $60.8 million of net sales, including e-commerce.

Since re-launching our new store program in 2022, we have opened 47 new stores, 26 of which have been open for at least twelve months.

Over the last twelve months, those 26 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.

Comparable sales increased 0.2% driven b y higher sales across all merchandise divisions, except outdoor, as a result of a 1.5% increase in average ticket, partially offset by a decrease in comparable transactions of 1.4% .

E-commerce net sales represente d 10.9% of merchandise sales for the 2025 second quarter compared to 9.7% for the prior year second quarter.

Gross Margin.

Gross margi n increased $18.0 million, or 3.2%, to $576.7 million in the 2025 second quarter from $558.7 million in the 2024 second quarter.

As a percentage of net sales, gross margin remained relatively constant, with a decrease of 10 basis points primarily due to the effects of rounding as shown in the table above.

Selling, General and Administrative Expenses.

SG&A expense s increased $35.7 million, or 9.7%, to $404.4 million in the 2025 second quarter as compared to $368.6 million in the 2024 second quarter, primarily as a result of our increased strategic investments o f $26.8 million in new stores and technology.

Interest Expense.

Interest expens e remained relatively constant in the 2025 second quarter when compared with the 2024 second quarter .

Other Income, net.

Other income, ne t, decreased $4.1 million in the 2025 second quarter when compared with the 2024 second quarter, primarily driven by decreased money market investments at lower interest rates in the 2025 second quarter when compared with the 2024 second quarter.

Income Tax Expense.

Income tax expense decreased $4.6 million to $39.4 million for the 2025 second quarter as compared to $44.0 million in the 2024 second quarter, resulting primarily from a decrease in pre-tax income .

ASO, Inc.'s effective income tax rate was 23.9% in the second quarter of 2025 compared to 23.6% in the second quarter of 2024.

The increase in effective tax rate compared to the prior year quarter is due to a reduction in excess tax benefits for share based compensation.

Twenty-Six Weeks Ended August 2, 2025 Compared to Twenty-Six Weeks Ended August 3, 2024

The following table sets forth amounts and information derived from our unaudited statements of income for the periods indicated as follows (dollar amounts in thousands):

Twenty-Six Weeks Ended Change

August 2, 2025 August 3, 2024 Dollars Percent

Net sales $ 2,951,247 100.0 % $ 2,913,200 100.0 % $ 38,047 1.3 %

Cost of goods sold 1,915,645 64.9 % 1,898,681 65.2 % 16,964 0.9 %

Gross margin 1,035,602 35.1 % 1,014,519 34.8 % 21,083 2.1 %

Selling, general and administrative expenses 793,956 26.9 % 722,050 24.8 % 71,906 10.0 %

Operating income 241,646 8.2 % 292,469 10.0 % (50,823) (17.4) %

Interest expense, net 18,072 0.6 % 18,557 0.6 % (485) (2.6) %

Write off of deferred loan costs — — % 449 — % (449) (100.0) %

4 unchanged sentences

*Percentages in table may not sum properly due to rounding.

Net sales decreased $12.8 million, or 0.9%, in the 2025 first quarter over the prior year first quarter, which was primarily a result of decreased comparable sales.

We opened 19 new stores since the end of the 2024 first quarter, 5 of which opened throughout the 2025 first quarter.

During the 2025 first quarter, these 19 stores generated $45.3 million of net sales, including e-commerce.

Net sale s increased $38.0 million, or 1.3% , year-to-date 2025 compared to year-to-date 2024, which was driven by increased sales of 1.9% in the footwear merchandise division, 1.9% in the apparel merchandise division, 1.3% in the sports and recreation merchandise division and 0.6% in the outdoor division.

We opened 21 new stores since the end of the 2024 second quarter, 3 of which opened throughout the 2025 second quarter.

During the year-to-date 2025, these 21 stores generated $103.8 million of net sales, including e-commerce.

Since re-launching our new store program in 2022, we have opened 47 new stores, 26 of which have been open for at least twelve months.

1 unchanged sentence

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.

Comparable sales decreased 3.7% driven by lower sales across all merchandise divisions as a result of a 5.2% decrease in comparable transactions, partially offset by an increase in average ticket of 1.5%.

The decrease of 0.9% in net sales was driven by decreased sales of 1.8% in the outdoor merchandise division, 0.6% in the sports and recreation merchandise division and 0.5% in the apparel division, partially offset by an increase of 0.1% in the footwear division.

E-commerce net sales represented 10.0% of merchandise sales for the 2025 first quarter compared to 9.0% for the prior year first quarter.

Comparable sales decreased 1.7% driven b y lower sales across all merchandise divisions as a result of a 3.1% decrease in comparable transactions, partially offset by a n increase in average ticket of 1.5%.

E-commerce net sales represen ted 10.5% of merchandise sales for the year-to-date 2025 compared to 9.4% for the year-to-date 2024.

Gross Margin.

Gross margin increased $3.1 million, or 0.7%, to $458.9 million in the 2025 first quarter from $455.8 million in the 2024 first quarter.

As a percentage of net sales, gross margin increased 60 basis points from 33.4% in the 2024 first quarter to 34.0% in the 2025 first quarter.

The increase of 60 basis points in gross margin was primarily attributable to 40 basis points of favorability in merchandise margin as a result of managing prices to provide differentiated value and newness to our customers and 10 basis points of favorability as a result of decreased inventory shrink.

Gross margin increased $21.1 million, or 2.1%, to $1,035.6 million for the year-to-date 2025 from $1,014.5 million for the year-to-date 2024.

As a percentage of net sales, gross margi n increased 30 basis points from 34.8% for the year-to-date 2024 to 35.1% for the year-to-date 2025.

The increase of 30 basis points in gross margin was primarily attributable to 50 basis points of favorability in merchandise margin, which was partially offset by 20 basis points of unfavorability due to increased shrink and e-commerce shipping.

Selling, General and Administrative Expenses.

SG&A expenses increased $36.2 million, or 10.2%, to $389.6 million in the 2025 first quarter as compared to $353.4 million in the 2024 first quarter, primarily as a result of our increased strategic investments of $33.4 million in new stores, technology, and the Jordan Brand launch.

SG&A expense s increased $71.9 million, or 10.0%, to $794.0 million for the year-to-date 2025 as compared to $722.1 million for the year-to-date 20 24, primarily as a result of our increased strategic investments of $60.2 million in new stores, technology, and the Jordan Brand launch.

Write off of Deferred Loan Costs.

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

Write off of deferred loan costs decreased b y $0.4 million for the year-to-date 2025 when compared with the year-to-date 202 4, in connection with the amendment in the 2024 first quarter that led to the write off of deferred loan costs on the ABL Facility for the year-to-date 2024.

Interest Expense.

Interest expense decreased $0.4 million, or 4.7%, in the 2025 first quarter when compared with the 2024 first quarter primarily resulting from lower interest rates and a lower outstanding balance on our Term Loan.

Interest expens e decreased $0.5 million, or 2.6%, for the year-to-date 2025 when compared with the year-to-date 20 24 primarily resulting from lower interest rates and a lower outstanding balance on our Term Loan.

Other Income, net.

Other (income), net, decreased $2.4 million in the 2025 first quarter when compared with the 2024 first quarter, primarily driven by decreased money market investments at lower interest rates in the 2025 first quarter when compared with the 2024 first quarter.

Other income, n et, decreased $6.4 million for the year-to-date 2025 when compared with the year-to-date 2024, primarily driven by decreased money market investments at lower interest rates in the year-to-date 2025 when compared with the year-to-date 2024.

Income Tax Expense.

Income tax expense decreased $4.2 million to $16.9 million for the 2025 first quarter as compared to $21.2 million in the 2024 first quarter, resulting primarily from a decrease in pre-tax income.

ASO, Inc.'s effective tax rate was 26.9% in the first quarter of 2025 compared to 21.7% in the first quarter of 2024.

The increase in the effective tax rate compared to the prior year quarter is due to a higher number of employee equity awards vesting and exercised in the 2024 first quarter at a higher share price compared with the 2025 first quarter.

Income tax expen se decreased $8.8 million to $56.3 million for the year-to-date 2025 as compared to $65.1 million for the year-to-date 2024, resulting primarily from a decrease in pre-tax income.

ASO, Inc.'s effective tax rate was 24.7% for the year- to-date 2025 compared to 22.9% for the year-to-date 2024.

The increase in the effective tax rate compared to the prior year is due to a higher number of employee equity awards vesting and exercised in 2024 at a higher share price compared with 2025.

Non-GAAP Measures

32 unchanged sentences

The following table provides reconciliations of net income to Adjusted EBITDA and to Adjusted EBIT for the periods presented (amounts in thousands):

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Net income $ 125,434 $ 142,588 $ 171,518 $ 219,053

10 unchanged sentences

The following table provides a reconciliation of net income to Adjusted Net Income and Adjusted Earnings per Share for the periods presented (amounts in thousands, except per share data):

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Net income $ 125,434 $ 142,588 $ 171,518 $ 219,053

13 unchanged sentences

Represents non-cash charges related to equity-based compensation, which vary from period to period depending on certain factors such as timing and valuation of awards, achievement of performance targets and equity award forfeitures.

For the thirteen weeks ended May 3, 2025 and May 4, 2024, this represents the estimated tax effect (by using the projected full year tax rates for the respective years) of the total adjustments made to arrive at Adjusted Net Income.

For the thirteen and twenty-six weeks ended August 2, 2025 and August 3, 2024, this represents the estimated tax effect (by using the projected full year tax rates for the respective years) of the total adjustments made to arrive at Adjusted Net Income.

Adjusted Free Cash Flow

The following table provides a reconciliation of net cash provided by operating activities to Adjusted Free Cash Flow for the periods presented (amounts in thousands):

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Thirteen Weeks Ended Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Net cash provided by operating activities $ 78,575 $ 91,346 $ 236,047 $ 291,023

4 unchanged sentences

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 common stock.

We also use cash to pay dividends and repurchase common stock.

We fund these liquidity requirements through cash and cash equivalents, cash generated from operating activities, issuances of debt (such as the Notes) and borrowings under our ABL Facility.

On May 3, 2025, our cash and cash equivalents totaled $285.1 million.

On August 2, 2025, our cash and cash equivalents totaled $300.9 million.

We believe our cash and cash equivalents, as well as our availability under the ABL Facility, will be sufficient to fund our cash requirements for the next 12 months and the longer term foreseeable future.

Long-Term Debt

As of May 3, 2025, the Company's long-term debt and interest rates consist of:

As of August 2, 2025, the Company's long-term debt and interest rates consist of :

• Notes - 6.00% fixed rate senior secured notes with $400 million in principal outstanding and full principal maturing November 15, 2027;

• Term Loan - 8.18% variable rate term-loan with $88.0 million in principal outstanding maturing November 6, 2027 and requiring quarterly principal payments of $750 thousand through September 30, 2027;

• Term Loan - 8.19% variable rate term-loan with $87.3 million in principal outstanding maturing November 6, 2027 and requiring quarterly principal payments of $750 thousand;

• ABL Facility - $1.0 billion commitment on a variable rate secured asset-based revolving credit facility with no principal outstanding maturing March 8, 2029.

12 unchanged sentences

Liquidity information related to the ABL Facility is as follows for the periods shown (dollar amounts in thousands):

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

Average funds drawn $ — $ 64

3 unchanged sentences

Liquidity information related to the ABL Facility (amounts in thousands) as of:

May 3, 2025 February 1, 2025 May 4, 2024

August 2, 2025 February 1, 2025 August 3, 2024

Outstanding borrowings $ — $ — $ —

2 unchanged sentences

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 May 3, 2025.

The following table summarizes our remaining operating lease obligations by fiscal year:

Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at August 2, 2025.

The following table summarizes our remaining operating lease obligations by fiscal year (amounts in thousands):

2025 2026 2027 2028 2029 After 2029 Total

2 unchanged sentences

(1) Minimum lease payments have not been reduced by sublease rentals of $1.6 million due in the future under non-cancelable sub-leases.

(2) These balances include stores where we have an executed contract but have not taken possession of the location as of May 3, 2025.

(2) These balances include stores where we have an executed contract but have not taken possession of the location as of August 2, 2025.

Share Repurchases

On November 29, 2023, the Board of Directors approved a share repurchase program (the “2023 Share Repurchase Program”) under which the Company was authorized to purchase up to $600 million of its outstanding shares during the three-year period ending November 29, 2026.

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 million of 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.

1 unchanged sentence

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 May 3, 2025, the Company had $536.5 million remaining for share repurchases under the Share Repurchase Programs.

As of August 2, 2025, the Company had $536.5 million remaining for share repurchases under the Share Repurchase Programs.

See Note 2 to the consolidated financial statements.

The following table summarizes our share repurchases for the 2025 first quarter (dollar amounts in thousands, except per share amounts):

The following table summarizes our share repurchases for the 2025 first and second quarters (dollar amounts in thousands, except per share amounts):

Total Number of Shares Purchased Average Price Paid per Share (1)

1 unchanged sentence

First Quarter (February 2, 2025 to May 3, 2025) 2,080,772 $ 47.59 $ 99,031

2,080,772 47.59 99,031

Total Shares Repurchased 2,080,772 $ 47.59 $ 99,031

Second Quarter (May 4, 2025 to August 2, 2025) — — —

Total Share Repurchase Activity 2,080,772 $ 47.59 $ 99,031

(1) Excludes the impact of unpaid excise taxes.

(2) See Part II, Item 2 - Unregistered Sales of Equity Securities and Use of Proceeds for further detail on the 2025 first quarter share repurchases.

The following table summarizes our quarterly dividend payments for the 2025 first quarter (amounts in thousands, except per share amounts):

The following table summarizes our quarterly dividend payments in 2025 first and second quarters (amounts in thousands, except per share amounts):

Dividend per Share Total Dividends Paid Stockholder Date of Record

First Quarter (February 2, 2025 to May 3, 2025) $ 0.13 $ 8,716 March 25, 2025

Second Quarter (May 4, 2025 to August 2, 2025) 0.13 8,649 June 19, 2025

Total Dividends Paid $ 17,365

On June 5, 2025, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended May 3, 2025, of $0.13 per share of the Company's common stock, payable on July 17, 2025, to stockholders of record as of the close of business on June 19, 2025.

On August 28, 2025, the Company's Board of Directors declared a quarterly cash dividend with respect to the fiscal quarter ended August 2, 2025, of $0.13 per share of the Company's common stock, payable on October 9, 2025, to stockholders of record as of the close of business on September 11, 2025.

Capital Expenditures

The following table summarizes our capital expenditures for the thirteen weeks ended May 3, 2025 and May 4, 2024 (amounts in thousands):

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

The following table summarizes our capital expenditures for the twenty-six weeks ended August 2, 2025 and August 3, 2024 (amounts in thousands):

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

New stores $ 49,368 $ 37,504

Corporate, e-commerce and information technology programs 20,522 21,115

Updates for existing stores and distribution centers 1,907 5,732

Existing stores, distribution centers and other

37,686 14,806

Total capital expenditures $ 107,576 $ 73,425

We expect capital expenditures for fiscal year 2025 to be between $180 million and $220 million.

We expect capital expenditures for fiscal 2025 to be between $180 million and $220 million.

The following table summarizes our forecasted allocation of capital expenditures for fiscal year 2025:

1 unchanged sentence

Corporate, e-commerce and information technology programs 20 %

Updates for existing stores and distribution centers 20 %

Existing stores, distribution centers and other

We review forecasted capital expenditures throughout the year and will adjust our capital expenditures based on business conditions at that time.

Cash Flows for the Thirteen Weeks Ended May 3, 2025 and May 4, 2024

Cash Flows for the Twenty-Six Weeks Ended August 2, 2025 and August 3, 2024

Our unaudited statements of cash flows are summarized as follows (in thousands):

Thirteen Weeks Ended

May 3, 2025 May 4, 2024

Twenty-Six Weeks Ended

August 2, 2025 August 3, 2024

Net cash provided by operating activities $ 236,047 $ 291,023

5 unchanged sentences

Typically, cash flows from operations are used to build inventory in advance of peak selling seasons, with the fourth quarter pre-holiday season inventory increase being the most significant.

Cash provided by operating activities in the 2025 first quarter decreased $42.2 million, compared to 2024 first quarter.

Cash provided by operating activities for the year-to-date 2025 decreased $55.0 million, compared to year-to-date 2024.

This decrease is attributable to:

1 unchanged sentence

• $42.3 million net decrease in cash flows provided by operating assets and liabilities;

partially offset by

• $34.8 million net increase in non-cash charges.

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

• $88.5 million decrease in cash flows from merchandise inventories, net due to increased inventory receipts relative to the prior year first quarter;

• $81.6 million decrease in cash flows from working capital due to pull-forward of inventory purchases at pre-tariff rates relative to the prior year period;

partially offset by

• $45.3 million increase in cash flows from accounts payable, due to timing of payments relative to the prior year first quarter;

• $20.7 million increase in cash flows from prepaid expenses and other current assets, largely driven by timing of construction reimbursement payments received in the 2025 first quarter relative to the prior year first quarter.

• $40.3 million increase in cash flows from prepaid expenses and other current assets, largely driven by timing of construction reimbursement payments received

Investing Activities .

Cash used in investing activities increased $18.6 million in the 2025 first quarter compared to the 2024 first quarter.

The increase in cash used in investing activities is primarily related to:

• $18.6 million increase in capital expenditures, primarily driven by increased spending related to Corporate, E-commerce, and information technology programs in the 2025 first quarter relative to the prior year first quarter.

Cash used in investing activities increased $34.2 million in the year-to-date 2025 compared to the year-to-date 2024.

The increase in cash used in investing activities was primarily attributable to:

• $34.2 million increase in capital expenditures, primarily driven by increased spending related to updates for existing stores and distribution centers, as well as new stores in the year-to-date 2025 compared to the year-to-date 2024.

Financing Activities .

Cash used in financing activities decreased $26.8 million in the 2025 first quarter, compared to the 2024 first quarter.

Cash used in financing activities decreased $124.4 million in the year-to-date 2025, compared to the year-to-date 2024.

The primary driver of the decrease was:

• $23.4 million decrease in cash outflows for repurchases of common stock in the current year period.

• $121.3 million decrease in cash outflows for repurchases of common stock in the year-to-date 2025.

Critical Accounting Policies and Estimates

8 unchanged sentences

Recent Accounting Pronouncements

The information set forth in Note 2 to our unaudited consolidated financial statements under Part I, Item 1 of this Quarterly Report is incorporated herein by reference.

The information set forth in Note 2 to our unaudited consolidated financial statements included under Part I, Item 1 of this Quarterly Report is incorporated herein by reference.

Income Tax Regulations

On July 4, 2025, an Act to provide for reconciliation pursuant to title II of H.

14, commonly referred to as the One Big Beautiful Bill Act (“OBBBA”), was enacted into law in the United States.

The OBBBA introduces significant changes to U.S.

tax law, including full deductibility of qualified capital expenditures, full deductibility of domestic research and development expenditures, changes to the business interest limitation, and modifications to the international tax framework.

For the fiscal year ending January 31, 2026, the Company anticipates a material decrease to the current tax expense and corresponding increase to deferred tax expense that results in no net impact to the effective tax rate.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

1 unchanged sentence

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-Q

Item 2. Management’s Discussion and Analysis