Management’s Discussion and Analysis of Financial Condition and Results of Operations
−Removed: The following discussion and analysis of our financial condition and results of operations for the year ended February 1, 2025 (“2024”) and the year ended February 3, 2024 (“2023”) should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended February 1, 2025 (this “Annual Report”).
+Added: The following discussion and analysis of our financial condition and results of operations for the year ended January 31, 2026 (“2025”) and the year ended February 1, 2025 (“2024”) should be read together with our consolidated financial statements and related notes included elsewhere in this Annual Report for the fiscal year ended January 31, 2026 (this “Annual Report”).
Year-to-year comparisons between 2024 and 2023 have been omitted from this Annual Report, but may be found in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part II, Item 7 of the Company’s Annual Report on Form 10-K for the year ended February 1, 2025.
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Fiscal Year Ended Weeks
+Added: 2025 January 31, 2026 52
2024 February 1, 2025 52
2023 February 3, 2024 53
−Removed: 2022 January 28, 2023 52
We are a leading full-line sporting goods and outdoor recreation retailer in the United States.
Our mission is to provide “Fun for All” and we fulfill this mission with a localized merchandising strategy and value proposition that deeply connect with a broad range of consumers.
−Removed: Our product assortment focuses on key categories of outdoors, apparel, sports & recreation and footwear (representing 30%, 27%, 23% and 20% of our 2024 net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.
+Added: Our product assortment focuses on key categories of outdoors, sports & recreation, apparel, and footwear (representing 31%, 22%, 27% and 20% of our 2025 net sales, respectively) through both leading national brands and a portfolio of private label brands, which go well beyond traditional sporting goods and apparel offerings.
Our business is subject to seasonal fluctuations.
A significant portion of our net sales and profits is driven by summer holidays, such as Memorial Day, Father’s Day and Independence Day, during the second quarter.
−Removed: Our net sales and profits are also impacted by the August/September back-to-school selling season during the third quarter, the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.
−Removed: As of February 1, 2025, we operat ed 298 sto res that range in size from approximately 40,000 to 130,000 gross square feet, with an average size of approxima tely 70,000 gro ss square feet, through out 19 cont iguous states located primarily in the southern United States.
+Added: Our net sales and profits are also impacted by the July/August back-to-school selling season during the second and third quarters, the November/December holiday selling season, and in part by the sales of cold weather sporting goods and apparel during the fourth quarter.
+Added: As of January 31, 2026, we operated 322 stores that range in size from approximately 40,000 to 130,000 gr oss square feet, with an average size of approxima tel y 70,000 gro ss square feet, through ou t 21 contiguous states located primarily in the southern United States.
Our stores are supported by approxi mately 23,000 team members, three distribution centers, and our e-commerce platform, which includes our website at www.academy.com and our mobile app.
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Beginning stores 298 282 268
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Relocated stores — — —
−Removed: How We Assess the Performance of Our Business and Recent Trends
+Added: Tariffs and Other Macroeconomic Trends
+Added: 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.
+Added: The impact of the evolving macroeconomic environment on our financial results is uncertain.
+Added: We have worked diligently to mitigate the impact of tariffs on our business.
+Added: 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.
+Added: How We Assess the Performance of Our Business
Our management considers a number of financial and operating metrics, including the following key metrics, to evaluate our business, measure our performance, identify trends affecting our business, determine the allocation of resources, make decisions regarding corporate strategies and evaluate projections.
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Increases or decreases in e-commerce between periods being compared directly impact the comparable sales results.
−Removed: Various other factors affect comparable sales, including consumer preferences, buying trends and overall economic trends;
+Added: Various other factors affect comparable sales, including consumer preferences;
+Added: buying trends and overall economic trends;
our ability to identify and respond effectively to customer preferences and local and regional trends;
4 unchanged sentences
the number of items purchased per visit and average order value;
+Added: unseasonal or extreme weather;
a shift in the timing of a holiday between comparable periods;
and the number of stores that have been in operation for more than thirteen months.
−Removed: The comparable sales metric for 2024 (52 week fiscal year) compares the fiscal year ending February 1, 2025 to the final 52 weeks of the fiscal year 2023 ended February 3, 2024.
−Removed: Fiscal year 2023 was a 53 week year.
−Removed: Merchandise net sales for the 2023 53rd week were $73.3 million.
Transactions and average ticket.
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Net sales are derived from in-store and e-commerce merchandise sales, net of sales tax and an allowance for merchandise returns.
−Removed: 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.
+Added: Net sales fluctuations can be driven by new store openings, comparable sales increases or decreases including e-commerce sales, our ability to adjust inventory based on sales fluctuations, our management of vendor relations and meeting customer demand, allowances and logistics, seasonality, unseasonal or extreme weather, changes in consumer shopping preferences, consumer discretionary spending, and changes in product mix and pricing, including promotional activities.
We must maintain sufficient inventory levels of merchandise that our customers desire to successfully operate our business.
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Conversely, we also must seek to avoid accumulating excess inventory to avoid markdowns and clearance, which negatively impact sales and gross margin.
−Removed: We have deployed several new tools over recent years to improve inventory handling and vendor management, including third-party programs to analyze our inventory stock and execute a disciplined markdown strategy throughout the year at every location.
−Removed: This implementation, along with other factors, has allowed us to improve our inventory management in stores over the past few years.
−Removed: We have coupled these tools with the data we have been able to collect from our Academy Credit Card program, our customer database and targeted customer surveys, so that we can better estimate future inventory requirements.
+Added: We deploy several tools to improve inventory handling and vendor management, including third-party programs to analyze our inventory stock, execute a disciplined markdown strategy and improve our inventory management throughout the year at every location.
+Added: We have coupled these tools with the data we collect from our myAcademy Rewards program, our customer database and targeted customer surveys, so that we can better estimate future inventory requirements.
It is imperative that we continue to find innovative ways to strengthen our inventory management if we are to remain competitive and expand our margins on a go-forward basis.
−Removed: Our broad assortment gives us an advantage over mass general merchants who typically do not carry the leading national brands sold at Academy.
−Removed: 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.
−Removed: A shift in our sales mix in which we sell more units of our private label brand products and fewer units of the national brand products would generally have a positive impact on our gross margin but an adverse impact on our total net sales.
+Added: Our broad assortment gives us an advantage over mass general merchants who typically do not carry the full assortment of leading national brands sold at Academy.
+Added: We have also continued to add private label brands to our assortment of products, which we generally price lower than the national brand products of comparable quality that we also offer.
+Added: A shift in our sales mix in which we sell more units of our private label brand products and fewer units of the national brand products would generally have a positive impact on our gross margin rate but an adverse impact on our total net sales.
Furthermore, our softgoods merchandise divisions, which consist of apparel and footwear, have higher margins than our hardgoods merchandise divisions, which consist of outdoors and sports and recreation.
−Removed: A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin.
−Removed: The expansion and enhancement of our omnichannel capabilities has resulted in increased sales in recent years.
−Removed: We continue to invest in initiatives that will increase traffic to our stores and e-commerce platform, which includes our website and mobile app, and drive increased sales conversion.
−Removed: These initiatives include investments in our new customer data platform and the development of strategies, which focus on customer segmentation with the intention of improving customer identification and increasing customer engagement.
−Removed: 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.
−Removed: Our improved e-commerce platform supports our stores with digital marketing and our BOPIS and ship-to-store programs.
−Removed: 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.
+Added: A shift in sales mix toward softgoods would generally have a positive impact on gross margin and a shift in sales mix towards hardgoods would generally have a negative impact on gross margin rate.
+Added: The expansion and enhancement of our omnichannel capabilities have contributed to increased sales in recent years.
+Added: We continue to invest in initiatives designed to drive traffic to our stores and e-commerce platforms, including our website and mobile application, improve conversion, and support our long-term objective of continuing to increase our e-commerce penetration of sales.
+Added: These initiatives include investments in our customer data ecosystem (data lake and Customer Data Platform), enabling customer-level attributes and models that power personalization and deepen engagement.
+Added: We are implementing enhancements to the online shopping experience, including a redesigned homepage, expanded BOPIS functionality, enhanced shipping notifications, and ongoing improvements in product discovery and site experience.
+Added: Our e-commerce platform supports store operations by driving customer demand, providing real-time product discovery and inventory visibility, and enabling store-fulfilled transactions such as BOPIS, ship-to-store, and ship-from-store.
During 2025, stores facilitated approximately 95% of our total sales, including ship-from-store, BOPIS, and in-store retail sales.
−Removed: 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.
+Added: We expect to continue investing in the expansion and enhancement of our omnichannel capabilities, including our mobile application, website experience optimization, fulfillment improvements, and emerging digital commerce capabilities such as artificial intelligence-enabled shopping experiences and social and marketplace commerce integrations.
+Added: These initiatives are intended to support long-term growth and improve customer experience, and will require ongoing investment.
We expect that new stores will be a key driver of growth in our net sales and gross margin in the future as we execute our new store opening growth plans.
−Removed: Our growth strategy encompasses both deepening our presence in existing markets as well as entering new markets, leveraging enhanced brand awareness and operational efficiencies.
+Added: Our growth strategy encompasses both deepening our presence in legacy and existing markets as well as entering new markets, leveraging enhanced brand awareness and operational efficiencies.
Our new store model favors off-mall locations within power centers or stand-alone buildings.
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Gross margin is our net sales less cost of goods sold.
−Removed: Our cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution, which consist primarily of payroll and benefits, distribution center occupancy costs and freight and are generally variable in nature relative to our sales volume.
+Added: Cost of goods sold includes the direct cost of merchandise and costs related to procurement, warehousing and distribution.
+Added: These costs consist primarily of tariffs, payroll and benefits, distribution center occupancy costs, depreciation and freight, and are generally variable in nature relative to our inventory receipts and sales volume.
Our gross margin depends on a number of factors, such as net sales increases or decreases, our promotional activities, product mix including private label brand merchandise sales, and our ability to control cost of goods sold, such as inventory and logistics cost management.
−Removed: Our gross margin is also impacted by variables including duties, tariffs, commodity costs, freight costs, shrinkage (discussed below), inventory processing costs, and e-commerce shipping costs.
+Added: Our gross margin is also impacted by variables including tariffs, commodity costs, freight costs, shrinkage (discussed below), inventory processing costs, and e-commerce shipping costs.
We track and measure gross margin as a percentage of net sales in order to evaluate our performance against profitability targets.
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We track and measure operating expenses as a percentage of net sales in order to evaluate our performance against profitability targets.
−Removed: 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.
+Added: Management of SG&A expenses depends on our ability to balance operating costs, such as store and corporate headcount, information technology infrastructure and marketing and advertising expenses, while efficiently and effectively servicing our customers.
+Added: Selling, general, and administrative expenses on the Consolidated Statements of Income includes gains of approximately $15.4 million in 2025 and $7.1 million in 2024 related to multiple sale-leaseback transactions which qualified for sale accounting under ASC 606 (see Note 11).
Pre-opening expenses represent non-capital expenditures associated with the opening of new stores and distribution centers prior to sales generation or start of operations, which consist primarily of occupancy costs, marketing, payroll and recruiting costs, and are expensed as incurred.
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Number of new stores opened 24 16 14
Pre-opening expenses (in millions) $ 14.6 $ 13.9 $ 8.3
−Removed: During the fourth quarter of 2024, we closed on a sale-leaseback agreement involving a store property in Cypress, Texas.
−Removed: We determined that the sale-leaseback transaction qualifies as a sale in accordance with ASC 842 (See Note 11).
−Removed: In connection with the sale-leaseback transaction, we recognized a net gain of approximately $7.1 million in Selling, General, and Administrative expenses on the Consolidated Statements of Income.
Interest Expense.
−Removed: Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4 to the accompanying financial statements) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt.
−Removed: In 2022 and 2023, we utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings on our Term Loan.
−Removed: However, this prepayment in principal on our Term Loan was largely offset by increases made by the Federal Reserve to the federal funds benchmark rate during 2022 and 2023, resulting in a decrease in interest expense in 2024 compared to 2023.
+Added: Interest expense includes regular interest payable related to our Term Loan, Notes and ABL Facility (see Note 4) and the amortization of our deferred loan costs and original issuance discounts associated with the acquisition of the debt.
Income Tax Expense.
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Results of Operations
−Removed: A discussion regarding Results of Operations and Analysis of Financial Condition for the fiscal year ended February 3, 2024, as compared to the fiscal year ended January 28, 2023, is included in “Part II – Item 7.
+Added: A discussion regarding Results of Operations and Analysis of Financial Condition for the fiscal year ended February 1, 2025, as compared to the fiscal year ended February 3, 2024, is included in “Part II – Item 7.
Management’s Discussion and Analysis of Financial Condition and Results of Operations” to our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.
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The following table sets forth amounts and information derived from our Consolidated Statements of Income for the periods indicated as follows (dollar amounts in thousands):
−Removed: Fiscal Year Ended (a)
−Removed: February 1, 2025 February 3, 2024 Dollars Percent
+Added: Fiscal Year Ended Change
+Added: January 31, 2026 February 1, 2025 Dollars Percent
Net sales $ 6,053,414 100.0 % $ 5,933,450 100.0 % $ 119,964 2.0 %
4 unchanged sentences
Interest expense, net 36,214 0.6 % 36,873 0.6 % (659) (1.8) %
−Removed: Loss on early retirement of debt
−Removed: — 0.0 % 1,525 0.0 % (1,525) (100.0) %
Write-off of deferred loan costs — 0.0 % 449 0.0 % (449) (100.0) %
−Removed: 449 0.0 % — 0.0 % 449 100.0 %
Other income, net 10,087 0.2 % 36,908 0.6 % (26,821) (72.7) %
2 unchanged sentences
Net income $ 376,768 6.2 % $ 418,447 7.1 % $ (41,679) (10.0) %
−Removed: Fiscal year 2023 consisted of 53 weeks compared with 52 weeks in fiscal year 2024.
−Removed: Merchandise net sales for the 53rd week in 2023 were $73.3 million.
* Percentages in table may not sum properly due to rounding.
−Removed: Net sales decreased $225.8 million, or 3.7%, in fiscal year 2024 (a 52 week year) over fiscal year 2023 (a 53 week year).
−Removed: This is primarily a result of decreased comparable sales, which was partially offset by $88.5 million of net sales, including e-commerce, generated by 16 new stores opened since the end of the 2023 fiscal year.
+Added: Net sales increased $120.0 million, or 2.0%, in fiscal year 2025 compared to fiscal year 2024, which was driven by increased sales of 3.6% in the sports and recreation merchandise division, 2.4% in the apparel merchandise division, 1.2% in the footwear merchandise division and 1.2% in the outdoor division.
+Added: We opened 24 new stores since the end of the 2024 fiscal year, 5 of which opened throughout the 2025 fourth quarter.
+Added: During the 2025 fiscal year, these 24 stores generated $142.8 million of net sales, including e-commerce.
Since re-launching our new store program in 2022, we have opened 63 new stores, 39 of which have been open for at least twelve months.
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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.
−Removed: Comparable sales decreased 5.1% driven by lower sales across all merchandise divisions as a result of a 6.3% decrease in comparable transactions, partially offset by an increase in average ticket of 1.2%.
−Removed: The decrease of 3.7% in net sales was driven by decreased sales of 6.5% in the sports and recreation merchandise division, 5.8% in the apparel division and 3.9% in the footwear division, partially offset by an increase of 0.7% in the outdoor merchandise division.
−Removed: Fiscal year 2024 was a 52 week year compared to fiscal year 2023, which was a 53 week year.
−Removed: Merchandise net sales for the 53rd week in 2023 were $73.3 million.
−Removed: E-commerce sales represented 10.5% of merchandise sales for 2024 compared to 10.7% for 2023.
+Added: Comparable sales decreased 1.5% driven by lower comparable sales across all merchandise divisions, except the sports and recreation merchandise division, as a result of a 4.2% decrease in comparable transactions, partially offset by an increase in average ticket of 2.9%.
+Added: E-commerce net sales represented 11.7% of merchandise sales for fiscal year 2025 compared to 10.5% for fiscal year 2024.
+Added: E-commerce net sales increased 13.6% for fiscal year 2025 compared to fiscal year 2024.
Gross Margin.
−Removed: Gross margin decreased $98.8 million, or 4.7%.
−Removed: As a percentage of net sales, gross margin decreased 40 basis points from 34.3% in 2023 to 33.9% in 2024.
−Removed: The decrease of 40 basis points in gross margin was primarily attributable to:
−Removed: • 30 basis points of unfavorability due to increased supply chain costs associated with our transition to a new warehouse management system at our Georgia distribution center and increased freight costs;
−Removed: • 10 basis points of unfavorability in merchandise margin as a result of a higher sales mix of hard goods
+Added: Gross margin increased $94.2 million, or 4.7%, to $2,105.6 million for fiscal year 2025 from $2,011.5 million for fiscal year 2024.
+Added: As a percentage of net sales, gross margin increased 90 basis points from 33.9% in 2024 to 34.8% in 2025.
+Added: The increase of 90 basis points in gross margin was primarily attributable to favorability in merchandise margin due to promotions and managing prices in response to increased tariff costs, while maintaining alignment with our value pricing strategy.
Selling, General and Administrative Expenses.
−Removed: SG&A expenses increased $40.5 million, or 2.8%, to $1,472.8 million in 2024 from $1,432.4 million in 2023, primarily as a result of our increased strategic investments of $66.4 million in new stores and technology and deleverage from decreased sales.
−Removed: This was partially offset by an additional week of SG&A expense in the prior year of approximately $17.1 million as fiscal year 2023 was a 53-week year.
−Removed: Loss on early retirement of debt.
−Removed: We utilized cash on hand to voluntarily prepay $100 million of outstanding borrowings under the Term Loan in February of 2024, which resulted in a loss on early retirement of debt of $1.5 million for 2023.
+Added: SG&A expenses increased $120.6 million, or 8.2%, to $1,593.4 million in 2025 from $1,472.8 million in 2024, primarily as a result of our increased strategic investments of $109.0 million, including $84.8 million in new stores and $13.1 million in technology.
Write-off of Deferred Loan Costs.
−Removed: Write off of Deferred Loan Costs increased by $0.4 million for the year-to-date 2024 when compared with the year-to-date 2023, in connection with the amendment in the 2024 first quarter that led to the write off of deferred loan costs on the ABL Facility.
+Added: Write-off of deferred loan costs decreased by $0.4 million for fiscal year 2025 when compared with fiscal year 2024, in connection with the amendment in the 2024 first quarter that led to the write-off of deferred loan costs on the ABL Facility.
Interest Expense.
−Removed: Interest expense decreased $9.2 million, or 19.9%, to $36.9 million in 2024 from $46.1 million in 2023 resulting primarily from a lower outstanding balance on our long-term debt, driven by a voluntary prepayment of $100.0 million under the Term Loan made on February 1, 2024.
+Added: Interest expense decreased $0.7 million, or 1.8%, to $36.2 million in 2025 from $36.9 million in 2024, primarily driven by lower interest rates and a lower outstanding balance on our Term Loan.
Other Income, net.
−Removed: Other (Income), net, increased $4.0 million in 2024 when compared to 2023, primarily driven by increased money market investments in the current year.
+Added: Other income, net, decreased $26.8 million in 2025 when compared to 2024, primarily driven by the settlement of a legal matter with a non-trade vendor that resulted in a net gain of approximately $15.0 million in 2024 (see Note 2) as well as lower interest rates in the current year.
Income Tax Expense.
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ASO, Inc.'s effective tax rate for 2025 was 22.5% compared to 22.3% in 2024.
−Removed: The increase in effective tax rate was largely driven by the decrease in pre-tax income in the current year, as well as decreased permanent adjustments related to stock compensation awards during 2024.
+Added: The increase in effective tax rate was primarily driven by the decrease in pre-tax income in the current year.
Non-GAAP Measures
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Net income (a) $ 376,768 $ 418,447 $ 519,190
8 unchanged sentences
Adjusted EBIT $ 543,447 $ 602,176 $ 735,109
−Removed: (a) Net income for the year ended February 1, 2025, includes a $15.0 million gain pertaining to a litigation settlement and a $7.1 million gain on a sale-leaseback transaction, both of which occurred in the fourth quarter of 2024.
+Added: (a) Net income for the year ended February 1, 2025, includes a $15.0 million gain pertaining to a litigation settlement which occurred in the fourth quarter of 2024.
Net income for the year ended February 3, 2024, includes a $15.9 million net gain relative to a credit card litigation settlement which occurred in the fourth quarter of 2023.
−Removed: Net income for the year ended January 28, 2023, included a $7.2 million gain from a business interruption insurance recovery and a $3.7 million gain from the sale of a tariff relief litigation claim, both of which occurred in the fourth quarter of 2022.
−Removed: See Note 2 of the accompanying financial statements.
−Removed: (b) Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors, timing and valuation of awards, achievement of performance targets and equity award forfeitures.
+Added: (b) 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.
Adjusted Net Income and Adjusted Earnings per Share
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Net income (a) $ 376,768 $ 418,447 $ 519,190
3 unchanged sentences
Tax effects of these adjustments (c) (4,761) (6,038) (5,621)
−Removed: (6,038) (5,621) (5,382)
Adjusted Net Income $ 393,183 $ 439,487 $ 539,471
8 unchanged sentences
Diluted 68,034 73,048 77,469
−Removed: (a) Net income for the year ended February 1, 2025, includes a $15.0 million gain pertaining to a litigation settlement and a $7.1 million gain on a sale-leaseback transaction, both of which occurred in the fourth quarter of 2024.
+Added: (a) Net income for the year ended February 1, 2025, includes a $15.0 million gain pertaining to a litigation settlement which occurred in the fourth quarter of 2024.
Net income for the year ended February 3, 2024, includes a $15.9 million net gain relative to a credit card litigation settlement which occurred in the fourth quarter of 2023.
−Removed: Net income for the year ended January 28, 2023, included a $7.2 million gain from a business interruption insurance recovery and a $3.7 million gain from the sale of a tariff relief litigation claim, both of which occurred in the fourth quarter of 2022.
−Removed: See Note 2 of the accompanying financial statements.
−Removed: (b) Represents non-cash charges related to equity based compensation, which vary from period to period depending on certain factors including timing and valuation of awards, achievement of performance targets and equity award forfeitures.
−Removed: Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate.
+Added: (b) 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.
+Added: (c) Represents the tax effect of the total adjustments made to arrive at Adjusted Net Income at our historical tax rate.
Adjusted Free Cash Flow
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Net cash provided by operating activities
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Our principal liquidity requirements are for working capital, capital expenditures and cash used to pay our debt obligations and related interest expense.
−Removed: We also use cash to pay dividends and use cash to repurchase our common stock.
+Added: We also use cash to pay dividends and to repurchase our common stock.
We may fund our liquidity requirements through cash and cash equivalents, cash generated from operating activities, and borrowings under our ABL Facility (as defined below).
−Removed: On February 1, 2025, our cash and cash equivalents totaled $288.9 million.
+Added: On January 31, 2026, our cash and cash equivalents totaled $330.3 million.
We believe our existing cash and cash equivalents, cash flows from operations, as well as availability under the ABL Facility, will be sufficient to fund our cash requirements for the foreseeable future.
Long-Term Debt
−Removed: As of February 1, 2025, the Company's long-term debt consists of:
+Added: As of January 31, 2026, the Company's long-term debt consists of:
• Notes - 6.00% fixed rate senior secured notes with $400 million in principal outstanding and full principal maturing November 15, 2027;
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Average funds drawn $ — $ 32 $ —
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Liquidity information related to the ABL Facility (amounts in thousands) as of:
−Removed: February 1, 2025 February 3, 2024
+Added: January 31, 2026 February 1, 2025
Outstanding borrowings $ — $ —
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We predominantly lease store locations, distribution centers, office space and certain equipment under operating leases expiring between fiscal years 2026 and 2045.
−Removed: Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at February 1, 2025.
−Removed: In the fiscal year ended February 1, 2025, we opened 16 new locations.
+Added: Operating lease obligations include future minimum lease payments under all of our non-cancelable operating leases at January 31, 2026.
+Added: In the fiscal year ended January 31, 2026, we opened 24 new locations.
The following table summarizes our operating lease obligations by fiscal year:
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(1) Minimum lease payments have not been reduced by sublease rentals of $1.4 million due in the future under non-cancelable subleases.
−Removed: (2) These balances include stores where we have an executed contract but have not taken possession of the location as of February 1, 2025.
+Added: (2) These balances include stores where we have an executed contract but have not taken possession of the location as of January 31, 2026.
Share Repurchases
−Removed: On November 29, 2023, the Board of Directors authorized a new share repurchase program (the “2023 Share Repurchase Program”) under which the Company may purchase up to $600 million of its outstanding shares during the three-year period ending November 29, 2026.
−Removed: Under the 2023 Share Repurchase Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, privately negotiated transactions, accelerated share repurchase programs and/or Rule 10b5-1 or other a non-discretionary trading plans, all in compliance with the rules of the SEC and other applicable legal requirements.
−Removed: The timing, manner, price and amount of any common share repurchases under the 2023 Share Repurchase Program are determined by the Company in its discretion and depend on a variety of factors, including legal requirements, price and economic and market conditions.
−Removed: The 2023 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.
−Removed: On December 4, 2024, the Company's Board of Directors authorized a new share repurchase program under which the Company is authorized to purchase up to $700 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.
+Added: 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 previously approved share repurchase program.
Under the 2024 Share Repurchase Program, repurchases can be made using a variety of methods, which may include open market purchases, block trades, accelerated share repurchase programs , privately negotiated transactions and/or Rule 10b5-1 or other non-discretionary trading plans, all in compliance with the rules of the SEC and other applicable legal requirements.
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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.
−Removed: The following table summarizes our share repurchases for the fiscal year ended February 1, 2025 (dollar amounts in thousands, except per share amounts):
+Added: As of January 31, 2026, the Company had $436.6 million remaining for share repurchases under the 2024 Share Repurchase Program.
+Added: See Note 2 to the consolidated financial statements.
+Added: The following table summarizes our share repurchases for the fiscal year ended January 31, 2026 (dollar amounts in thousands, except per share amounts):
Total Number of Shares Purchased Average Price Paid per Share (1)
3 unchanged sentences
Third Quarter (August 3, 2025 to November 1, 2025) — — —
−Removed: Fourth Quarter (November 3, 2024 to February 1, 2025) (2)
+Added: Fourth Quarter (November 2, 2025 to January 31, 2026) (2)
1,849,900 54.03 99,947
−Removed: Total Shares Repurchased 6,544,337 $ 55.76 $ 364,912
+Added: Total Share Repurchase Activity 3,930,672 $ 50.62 $ 198,978
(1) Excludes the impact of excise taxes.
(2) See Part II, Item 5 - Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities for further detail on the 2025 fourth quarter share repurchases.
−Removed: The following table summarizes our quarterly dividend payments for the fiscal year ended February 1, 2025 (amounts in thousands, except per share amounts):
+Added: The following table summarizes our quarterly dividend payments for the fiscal year ended January 31, 2026 (amounts in thousands, except per share amounts):
Dividends Paid per Share Total Dividends Paid Stockholder Date of Record
2 unchanged sentences
Third Quarter (August 3, 2025 to November 1, 2025) $ 0.13 8,663 September 11, 2025
−Removed: Fourth Quarter (November 3, 2024 to February 1, 2025) $ 0.11 7,621 December 18, 2024
+Added: Fourth Quarter (November 2, 2025 to January 31, 2026) $ 0.13 8,629 December 18, 2025
Total Dividends Paid $ 34,657
−Removed: On March 6, 2025, the Company announced that the Board of Directors declared a quarterly cash dividend with respect to the quarter ended February 1, 2025 of $0.13 per share of common stock, payable on April 17, 2025, to stockholders of record as of the close of business on March 25, 2025.
+Added: On March 5, 2026, the Company announced that the Board of Directors declared a quarterly cash dividend with respect to the quarter ended January 31, 2026 of $0.15 per share of common stock, payable on April 10, 2026, to stockholders of record as of the close of business on March 20, 2026.
Capital Expenditures
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Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
−Removed: New stores and relocations $ 107,703 $ 100,419 $ 42,735
+Added: January 31, 2026 February 1, 2025 February 3, 2024
+Added: New stores $ 119,902 $ 107,703 $ 100,419
Corporate, e-commerce, and information technology programs 41,291 70,474 81,992
−Removed: Updates for existing stores and distribution centers 21,412 25,359 15,550
+Added: Existing stores, distribution centers and other 51,475 21,412 25,359
Total capital expenditures $ 212,668 $ 199,589 $ 207,770
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Corporate, e-commerce, and information technology programs 20 %
−Removed: Updates for existing stores and distribution centers 20 %
+Added: Existing stores, distribution centers and other 20 %
We review forecasted capital expenditures throughout the year and will adjust our capital expenditures based on business conditions at that time.
1 unchanged sentence
Fiscal Year Ended
−Removed: February 1, 2025 February 3, 2024 January 28, 2023
+Added: January 31, 2026 February 1, 2025 February 3, 2024
Net cash provided by operating activities $ 434,798 $ 528,082 $ 535,779
8 unchanged sentences
• $41.7 million decrease in net income;
+Added: • $99.9 million net decrease in cash flows provided by operating assets and liabilities;
partially offset by
−Removed: • $28.0 million net increase in non-cash charges offset by a $7.1 million gain, net of fees, on a sale-leaseback transaction in the fourth quarter of fiscal year 2024 (see Note 11);
−Removed: • $71.7 million net increase in cash flows provided by operating assets and liabilities.
−Removed: The increase in cash flows from operating assets and liabilities was primarily attributable to:
−Removed: • $208.1 million increase in cash flows from accounts payable, due to timing of payments for increased merchandise inventories relative to the prior year period;
−Removed: • $40.1 million increase in cash flows from prepaid expenses and other current assets primarily due to an increase of $25 million related to a legal settlement in the fourth quarter of 2024 as well as timing of payments relative to the prior year period;
−Removed: • $38.7 million increase in cash flows from accrued expenses and other current liabilities, partially offset by
−Removed: • $204.0 million decrease in cash flows from merchandise inventories, net due to lower sales in the current year period;
−Removed: • $22.9 million decrease in cash flows from income taxes payables, due to timing of payments relative to the prior year period
+Added: • $48.3 million net increase in non-cash charges, primarily related to increased deferred income taxes as a result of the enactment of the “OBBBA” (see Note 10).
+Added: The decrease in cash flows from operating assets and liabilities was primarily attributable to:
+Added: • $118.7 million decrease in cash flows from working capital due to the pull-forward of inventory purchases at pre-tariff rates relative to the prior year period;
+Added: • $20.6 million decrease in cash flows from accounts receivable due to timing of payments received;
+Added: partially offset by
+Added: • $37.0 million increase in cash flows from prepaid expenses and other current assets, largely driven by timing of construction reimbursement payments received.
Investing Activities .
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The decrease in cash used in investing activities is primarily related to:
−Removed: • $8.2 million decrease in capital expenditures, primarily driven by decreased spending related to Corporate, e-commerce, and information technology programs in the year-to-date 2024 compared to the year-to-date 2023;
−Removed: • $14.2 million increase in cash inflows from proceeds from a sale-leaseback transaction related to our retail store in Cypress, TX (see Note 11).
−Removed: Financing Activities .
−Removed: Cash used in financing activities increased $82.1 million in 2024, compared to 2023.
−Removed: The primary drivers of the increase were:
−Removed: • $162.1 million increase in cash outflows primarily caused by an increase in repurchases and simultaneous retirement of common stock in the current year;
−Removed: • $12.3 million decrease in proceeds from the exercise of stock options;
+Added: • $27.2 million in additional proceeds from sale-leaseback transactions in 2025 compared to 2024 (see Note 11);
partially offset by
−Removed: • $100 million decrease in cash outflows due to the prepayment of $100 million on our Term Loan in fiscal year 2023
+Added: • $13.1 million increase in capital expenditures related to store properties purchased and subsequently sold as part of sale-leaseback transactions (see Note 11).
+Added: Financing Activities .
+Added: Cash used in financing activities decreased $179.6 million in 2025 compared to 2024.
+Added: The primary drivers of the decrease were:
+Added: • $165.9 million decrease in cash outflows for repurchases of common stock in 2025;
+Added: • $10.5 million in proceeds received as of the end of fiscal year 2025 for the sale of a portion of rights to tariff relief litigation claims.
Future Liquidity
−Removed: We expect our existing cash balances, internally generated cash flows and available borrowings under our ABL Facility will be fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities for the foreseeable future.
−Removed: As of February 1, 2025, we had $955.5 million of available capacity under our ABL Facility and $288.9 million of cash and cash equivalents.
+Added: We expect our existing cash balances, internally generated cash flows and available borrowings under our ABL Facility to fulfill anticipated obligations such as capital expenditures, dividends, stock repurchases, working capital needs and scheduled debt maturities for the foreseeable future.
+Added: As of January 31, 2026, we had $992.4 million of available capacity under our ABL Facility and $330.3 million of cash and cash equivalents.
+Added: As discussed in Note 12, the Company previously sold a portion of its rights to potential tariff relief litigation claims and does not expect to receive refunds associated with the portion of the rights sold.
+Added: Accordingly, the Company does not expect potential tariff refunds to represent a significant incremental future source of liquidity.
Critical Accounting Policies and Estimates
7 unchanged sentences
Merchandise inventories are stated at the lower of weighted average cost and net realizable value.
−Removed: Merchandise inventories include the direct cost of merchandise and capitalized costs related to procurement, warehousing and distribution and are reflected net of shrinkage, vendor allowances and other valuation reserves.
+Added: Merchandise inventories include the direct cost of merchandise (including tariffs), capitalized costs related to procurement, and warehousing and distribution.
+Added: Merchandise inventories are reflected net of shrinkage, vendor allowances and other valuation reserves.
Judgments and Uncertainties:
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For inventory shrinkage, our reserves may be inaccurate if our historical physical inventory shrinkage rates, used in our assumptions, differ significantly from actual rates due to consistent misses to our accrual.
−Removed: However, due to the frequency with which we perform full physical inventory counts, our assumptions are regularly updated, and we constantly analyze the physical inventory results to our accruals and, where necessary, adjust our store accruals to compensate for consistent patterns identified.
+Added: However, due to the frequency with which we perform full physical inventory counts, our assumptions are regularly updated, and we regularly analyze the physical inventory results to our accruals and, where necessary, adjust our store accruals to compensate for consistent patterns identified.
We have not had a history of significant differences to our reserves for vendor allowances, and the assumptions generally do not have a significant impact on reserves since they are typically short-term and contractual in nature.
1 unchanged sentence
Additionally, for slow moving or obsolete inventory, we book reserves based on historical margins received for marked down inventory with similarly slow historical sell-through rates.
−Removed: A 20% decrease in assumed margins would not have a material impact to our financial statements.
+Added: A 20% decrease in assumed margins used in these reserves would not have a material impact to our financial statements.
We believe our long history of operations has given us sufficient data to enable us to accurately predict these reserves.
Impairment of long-lived assets
−Removed: We review the carrying value of long-lived assets, including property and equipment at our stores, for indicators of impairment regularly and whenever events and circumstances indicate that the carrying value of an asset may not be recoverable.
+Added: We review the carrying value of long-lived assets, including property and equipment at our stores and right-of-use assets, for indicators of impairment regularly and whenever events and circumstances indicate that the carrying value of an asset may not be recoverable.
Judgments and Uncertainties:
7 unchanged sentences
In addition to variables considered in developing projected long-term store income, assumptions are made to develop the assumed discount rate based on company specific factors.
−Removed: There is significant judgment used in determining these assumptions used in the assessment of store impairment and variability in the assumptions could cause us to reach a materially different conclusion on impairment, however, we do not believe the net book value of any individual store assets are material to the Company’s operations.
+Added: There is significant judgment used in determining these assumptions used in the assessment of store impairment and variability in the assumptions could cause us to reach a materially different conclusion on impairment;
+Added: however, we do not believe the net book value of any individual store assets are material to the Company’s operations.
+Added: The Company has not recognized any long-lived asset impairment charges during 2025, 2024, or 2023.
Goodwill represents the excess of the purchase price of an acquired business over the amounts assigned to assets acquired and liabilities assumed in a business combination.
18 unchanged sentences
There is significant judgment used in determining these assumptions used in the assessment of goodwill impairment and variability in the assumptions could cause us to reach a different conclusion on impairment.
−Removed: In 2024, we performed a quantitative impairment assessment and determined that the fair value of the reporting unit exceeded its carrying amount by a significant margin.
−Removed: The Company has not recorded any impairment charges related to goodwill during fiscal 2024, fiscal 2023, or fiscal 2022.
+Added: In 2025, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary.
+Added: The Company has not recorded any impairment charges related to goodwill during 2025, 2024, or 2023.
Intangible Assets
18 unchanged sentences
There is significant judgment used in determining these assumptions on intangible asset impairment and variability in the assumptions could cause us to reach a different conclusion on impairment.
−Removed: In 2024, we performed a quantitative impairment assessment and determined that the fair value of Trade Name exceeded its carrying amount by a significant margin.
+Added: In 2025, we performed a qualitative impairment assessment and determined a quantitative assessment was not necessary.
The Company has not recorded any impairment charges related to intangible assets during fiscal 2025, fiscal 2024, or fiscal 2023.
2 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.