What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2024-12-12 compared with 2024-09-12 · 93 added, 104 removed, 248 unchanged (44% of the section changed)

20 unchanged sentences

we may not be able to operate our international corporately-managed locations profitably;

our merchandise is manufactured by foreign manufacturers and we transact business in various foreign countries, and the availability and costs of our products, as well as our product pricing, may be negatively affected by risks associated with international manufacturing and trade and foreign currency fluctuations;

if we are unable to effectively manage our international partner-operated locations, attract new partners or if the laws relating to our international partners change, our growth and profitability could be adversely affected, and we could be exposed to additional liability;

7 unchanged sentences

fluctuations in our quarterly results of operations could cause the price of our common stock to substantially decline;

fluctuations in our operating results could reduce our cash flow, or trigger restrictions under our credit agreement, cause us to be unable to repurchase shares at all, at the times or in the amounts we desire, cause the results of our share repurchase program may not be as beneficial as we would like, or cause us to discontinue our quarterly dividend program;

fluctuations in our operating results could reduce our cash flow, trigger restrictions under our credit agreement, cause us to be unable to repurchase shares at all, at the times or in the amounts we desire, cause the results of our share repurchase program to not be as beneficial as we would like, or cause us to discontinue our quarterly dividend program;

our relatively low market capitalization can cause the market price of our common stock to become volatile;

19 unchanged sentences

By leveraging our brand strength and owned intellectual properties through the creation of engaging short-form and long-form content for kids and adults, we endeavor to develop a circle of continuous engagement to increase purchase occasions and to continue to broaden the consumer base beyond children by adding tweens, teens and adults with entertainment and sports licensing, plus collectible and gifting offerings.

As of August 3, 2024, we had 361 corporately-managed stores globally and 6 seasonal locations, 107 partner-operated locations operating through our "third-party retail" model in which we sell our products on a wholesale basis to other companies that execute our retail experience, and 80 international franchised stores, all under the Build-A-Bear Workshop brand.

As of November 2, 2024, we had 362 corporately-managed stores globally and 4 seasonal locations, 123 partner-operated locations operating through our "third-party retail" model in which we sell our products on a wholesale basis to other companies that execute our retail experience, and 80 international franchised stores, all under the Build-A-Bear Workshop brand.

In addition to these stores, we sell products on our company-owned e-commerce sites and third-party marketplace sites, our franchisees sell products through sites that they manage as well as other third-party marketplace sites and other parties sell products on their sites under wholesale agreements.

3 unchanged sentences

International franchising – Royalties as well as products and fixtures sales from other international operations under franchise agreements.

Selected financial data attributable to each segment for the thirteen and twenty-six weeks ended August 3, 2024 and July 29, 2023 are set forth in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Selected financial data attributable to each segment for the thirteen and thirty-nine weeks ended November 2, 2024 and October 28, 2023 are set forth in the notes to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Business Update

9 unchanged sentences

The global expansion of our unique experience locations.

During the first half of fiscal 2024, we opened a net 23 Build-A-Bear Workshop retail experience locations, through a combination of corporately-managed, third-party operated, and franchise business models.

During the first thirty-nine weeks of fiscal 2024, we opened a net 40 Build-A-Bear Workshop retail experience locations, through a combination of corporately-managed, third-party operated, and franchise business models.

In fiscal 2024, we expect net new unit growth of at least 65 locations in North America and internationally through our three store business models.

4 unchanged sentences

In addition to growing our e-commerce channel, this includes our marketing and loyalty programs, including our Count Your Candles offer, and content and entertainment initiatives, such as our first-ever animated theatrical film in 2023 “Glisten and the Merry Mission.” Our digital transformation is designed to elevate our business efficiency, integrate our customer communications to acquire new customers and increase purchase occasions, and expand our total addressable market by reaching beyond our core kid base and to continue to acquire new tween, teen and adult consumers by new offerings including gifting and personalization programs.

Our 2023 e-commerce sales, inclusive of softness during the year, have tripled since 2018, which was prior to the implementation of key digital initiatives.

In early 2024, we created a new position of Chief Customer & Digital Officer to further align our operating structure with our digital strategy.

In September 2024, we created a new position of Chief Revenue Officer to further align our operating structure with our digital strategy.

Drive profitable growth through investment initiatives while maintaining a commitment to return capital to shareholders.

1 unchanged sentence

This higher-level of cash flows has been used to increase support for key initiatives to deliver long-term profitable growth, while also returning capital to shareholders through dividends and share repurchases.

The Company returned capital to shareholders through two special dividends paid December 27, 2021, and April 6, 2023, totaling $42 million, through share repurchases from a $25 million stock repurchase program that was adopted in November 2021, through a $50 million stock repurchase program announced in August 2022, and through a new Board-approved $100 million stock repurchase program announced in September 2024.

Furthermore, the Company announced the initiation of a quarterly dividend program on March 13, 2024, and during the first and second quarters of fiscal 2024, the Company declared cash dividends of $0.20 per share, totaling $2.9 million and $2.7 million, respectively.

Additionally, the Board of Directors declared a quarterly cash dividend of $0.20 per share on the issued and outstanding common stock of the company, which will be paid on October 10, 2024 , to all stockholders of record as of September 26, 2024 .

The Company returned capital to shareholders through two special dividends paid December 27, 2021, and April 6, 2023, totaling $42 million, through share repurchases from a $25 million stock repurchase program that was adopted in November 2021, through a $50 million stock repurchase program announced in August 2022, and through a Board-approved $100 million stock repurchase program announced in September 2024.

Furthermore, the Company announced the initiation of a quarterly dividend program on March 13, 2024, and during the first, second and third quarters of fiscal 2024, the Company declared cash dividends of $0.20 per share, totaling $2.9 million, $2.7 million and $2.7 million, respectively.

Additionally, the Board of Directors declared a quarterly cash dividend of $0.20 per share on the issued and outstanding common stock of the company, which will be paid on January 9 , 2025 , to all stockholders of record as of Novem ber 27, 2024 .

Retail Stores:

1 unchanged sentence

The table below sets forth the number of Build-A-Bear Workshop corporately-managed stores in North America and Europe for the periods presented:

Twenty-six weeks ended

August 3, 2024

July 29, 2023

Thirty-nine weeks ended

November 2, 2024

October 28, 2023

North America

2 unchanged sentences

End of period

As of August 3, 2024, 47% of our corporately-managed stores were in an updated Discovery format.

As of November 2, 2024, 51% of our corporately-managed stores were in an updated Discovery format.

We also expect to close certain stores in accordance with natural lease events as an ongoing part of our real estate management and day-to-day operational plans.

2 unchanged sentences

The number of third-party retail locations opened and closed for the periods presented below is summarized as follows:

Twenty-six weeks ended

August 3, 2024

July 29, 2023

Thirty-nine weeks ended

November 2, 2024

October 28, 2023

Beginning of period

End of period

Through our third-party retail model, there were 107 stores in operation at the end of the second quarter of 2024 with relationships that included Carnival Cruise Line, Great Wolf Lodge Resorts, Landry's and Girl Scouts of the USA.

Through our third-party retail model, there were 123 stores in operation at the end of the third quarter of 2024 with relationships that included Carnival Cruise Line, Great Wolf Lodge Resorts, Landry's and Girl Scouts of the USA.

The third-party retail model is capital light for us, with the partner company building out and operating the workshops including providing the real estate location and covering the cost of labor and inventory, which is purchased from us on a wholesale basis.

3 unchanged sentences

All franchised stores have similar signage, store layout, merchandise characteristics and guest experience as our corporately-managed stores.

As of August 3, 2024, we had 5 master franchise agreements, which typically grant franchise rights for a particular country or group of countries, covering an aggregate of 8 countries.

As of November 2, 2024, we had 5 master franchise agreements, which typically grant franchise rights for a particular country or group of countries, covering an aggregate of 8 countries.

The number of franchised stores opened and closed for the periods presented below are summarized as follows:

Twenty-six weeks ended

August 3, 2024

July 29, 2023

Thirty-nine weeks ended

November 2, 2024

October 28, 2023

Beginning of period

10 unchanged sentences

Thirteen weeks ended

Twenty-six weeks ended

Thirty-nine weeks ended

Net retail sales

9 unchanged sentences

Selling, general and administrative

Interest (income) expense, net

Interest income, net

Income before income taxes

6 unchanged sentences

retail gross margin percentage represents retail gross margin divided by net retail sales.

Thirteen weeks ended August 3, 2024 compared to thirteen weeks ended July 29, 2023

Thirteen weeks ended November 2, 2024 compared to thirteen weeks ended October 28, 2023

Total revenues.

Consolidated revenues increased 2.4%, primarily driven by a $2.3 million or 47% increase in Commercial revenue when compared to fiscal second quarter 2023.

The increase was due to higher sales from our wholesale customers that was driven by new wholesale customers and opening 31 third-party retail stores since the second quarter of 2023.

Net retail sales for the thirteen weeks ended August 3, 2024 were $103.5 million, compare d to $103.5 mi llion for the thirteen weeks ended July 29, 2023.

The components of the similar performance are as follows (dollars in thousands):

Consolidated revenues increased 11.0%, primarily driven by a $9.1 million or 9.1% increase in Net Retail sales and a $2.6 million or 43% increase in Commercial revenue when compared to the third fiscal quarter of 2023.

The increase in net retail sales was driven primarily by growth at existing stores.

The increased commercial revenue was due to higher sales from our wholesale customers that was driven by new wholesale customers and opening 38 third-party retail stores since the third quarter of 2023.

Net retail sales for the thirteen weeks ended November 2, 2024 were $109.5 million, compare d to $100.4 mi llion for the thirteen weeks ended October 28, 2023.

The components of the improved performance are as follows (dollars in thousands):

Thirteen weeks ended

August 3, 2024

Digital sales

November 2, 2024

Existing stores

53rd week shift

Gift card discounts

Foreign currency translation

Store closures

Existing stores

Digital sales

Gift card discounts

Gift card breakage

Foreign currency translation

The flat retail revenue performance was primarily the result of a decline in web demand offset by sales from new stores and the impact of the calendar shift (53 rd week shift).

Thus far in third quarter, web demand has improved due a stronger product launch schedule and improved organic search results, as well as improved store performance driven by higher store conversion.

Commercial revenue was $7.3 million for the thirteen weeks ended August 3, 2024 compared to $5.0 million for the thirteen weeks ended July 29, 2023.

The higher retail revenue performance was primarily the result of an increase at existing stores and new stores partially offset by the impact of the calendar shift (53 rd week shift), the effect of store closures and a decline in web demand.

Commercial revenue was $8.6 million for the thirteen weeks ended November 2, 2024 compared to $6.0 million for the thirteen weeks ended October 28, 2023.

The $2.6 million increase is primarily due to increased sales volume from our wholesale accounts through our partner-operated third-party retail model.

International franchising revenue was $1.0 million for the thirteen weeks ended August 3, 2024 compared to $0.8 million for the thirteen weeks ended July 29, 2023.

International franchising revenue was $1.3 million for the thirteen weeks ended November 2, 2024 compared to $1.1 million for the thirteen weeks ended October 28, 2023.

The change is primarily the result of the timing of product shipments.

Retail gross margin.

Retail gross margin dollars increased $0.1 million to $55.8 million from $55.7 million for the thirteen weeks ended July 29, 2023.

The retail gross margin rate increased 10 basis points compared to the prior year primarily driven by lower merchandise and freight costs offset by an increase in occupancy costs compared to the fiscal 2023 second quarter.

Retail gross margin dollars increased $6.5 million to $59.4 million from $52.9 million for the thirteen weeks ended October 28, 2023.

The retail gross margin rate increased 160 basis points compared to the prior year driven by lower merchandise, freight and occupancy costs compared to the third quarter of fiscal 2023.

Selling, general and administrative.

SG&A expenses were $49.2 million, or 44.0% of consolidated revenue, for the thirteen weeks ended August 3, 2024, compared to $48.3 million, or 44.2% of consolidated revenue, for the thirteen weeks ended July 29, 2023.

The increase in overall expense was driven by higher wage rates, expense timing and general inflationary pressures.

SG&A expenses were $51.7 million, or 43.3% of consolidated revenue, for the thirteen weeks ended November 2, 2024, compared to $46.6 million, or 43.3% of consolidated revenue, for the thirteen weeks ended October 28, 2023.

The consistent performance as a percentage of revenue was driven by lower expenses for advertising and information technology costs offset by higher wage rates, increased healthcare costs and general inflationary pressures.

Interest income, net.

Interest income was $188,000 for the thirteen weeks ended August 3, 2024 compared to interest income of $167,000 for the thirteen weeks ended July 29, 2023.

The increase in interest income compared to the prior year is the result of the Company's cash management strategy to invest cash on-hand in short-term, highly liquid investments.

Interest income was $0.1 million for the thirteen weeks ended November 2, 2024 compared to interest income of $0.3 million for the thirteen weeks ended October 28, 2023.

Provision for income taxes .

Income tax expense was $2.8 million with a tax rate of 23.8% for the thirteen weeks ended August 3, 2024, as compared to $2.1 million with a tax rate of 20.4% for the thirteen weeks ended July 29, 2023.

In the second quarter of fiscal 2024 and 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense.

Income tax expense was $3.2 million with a tax rate of 24.5% for the thirteen weeks ended November 2, 2024, as compared to income tax expense of $2.8 million with a tax rate of 26.7% for the thirteen weeks ended October 28, 2023.

In the third quarter of fiscal 2024 and 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense.

In the fourth quarter of fiscal 2023, the Company reversed the valuation allowance on deferred tax assets expected to be realized in the U.K.

The Company remains in a full valuation in certain other foreign jurisdictions.

Twenty-six weeks ended August 3, 2024 compared to twenty-six weeks ended July 29, 2023

Thirty-nine weeks ended November 2, 2024 compared to thirty-nine weeks ended October 28, 2023

Total revenues.

Consolidated revenues decreased 1.2%, primarily driven by a 3.9% decrease in North America and partially offset by a 19.7% increase in Europe.

Although a decline was expected as a result of economic uncertainty and business volatility from our ongoing marketing and website transitions, the impacts were greater than expected, with web demand (online orders fulfilled from either the Company’s warehouse or its stores) being a significant contributor to our total revenue decline.

Additionally, the decrease also resulted from the expected negative timing due to the calendar shift (53rd week shift).

Net retail sales for the twenty-six weeks ended August 3, 2024 were $211.3 million, compare d to $215.6 mi llion for the twenty-six weeks ended July 29, 2023, a decrease of $4.2 million, or 2.0% , compared to the prior year period.

The components of this decrease are as follows (dollars in thousands):

Twenty-six weeks ended

August 3, 2024

Digital sales

Consolidated revenues increased 2.7%, primarily driven by a 24% increase in commercial revenue and a 1.5% increase in net retail sales.

Net retail sales for the thirty-nine weeks ended November 2, 2024 were $320.8 million, compare d to $316.0 mi llion for the thirty-nine weeks ended October 28, 2023, an increase of $4.9 million, or 1.5% , compared to the prior year period.

The components of this increase are as follows (dollars in thousands):

Thirty-nine weeks ended

November 2, 2024

Existing stores

Gift card discounts

Store closures

Digital sales

53rd week shift

Gift card breakage

Store closures

Foreign currency translation

The retail revenue decrease was primarily the result of a decline in web demand, decreased sales through existing and closed stores as well as the expected negative timing due to the calendar shift (53 rd week shift).

Additionally, we experience small declines in both traffic and dollars per transaction impacting retail revenue for the fiscal 2024 first half.

Thus far in third quarter, web demand has improved due a stronger product launch schedule and improved organic search results, as well as improved store performance driven by higher store conversion.

Commercial revenue was $13.3 million for the twenty-six weeks ended August 3, 2024 compared to $11.7 million for the twenty-six weeks ended July 29, 2023.

The $1.6 million increase is primarily the result of timing of product shipments to wholesale customers compared to the same period prior year.

International franchising revenue was $1.9 million for the twenty-six weeks ended August 3, 2024 compared to $2.0 million for the twenty-six weeks ended July 29, 2023.

Gift card discounts

Gift card breakage

The increase in net retail sales was primarily the result of higher sales at existing stores and new stores, partially offset by a decline in web demand, the impact of the 53rd week shift and the effect of store closures.

Commercial revenue was $21.9 million for the thirty-nine weeks ended November 2, 2024 compared to $17.7 million for the thirty-nine weeks ended October 28, 2023.

The $4.2 million increase is primarily the result of the adding new wholesale customers as part of our third-party retail model.

International franchising revenue was $3.3 million for the thirty-nine weeks ended November 2, 2024 compared to $3.2 million for the thirty-nine weeks ended October 28, 2023.

The change is primarily the result of the timing of product shipments.

Retail gross margin.

Retail gross margin dollars decreased $2.6 million to $114.3 million from $116.9 million for the twenty-six weeks ended July 29, 2023.

The retail gross margin rate decreased 20 basis points compared to the prior year primarily driven by higher occupancy costs offset by a decrease in merchandise and warehousing and distribution costs compared to the fiscal 2023 first half.

Retail gross margin dollars for the thirty-nine weeks ended November 2, 2024, increased $3.9 million to $173.7 million from $169.8 million for the thirty-nine weeks ended October 28, 2023.

The retail gross margin rate increase of 40 basis points from the prior year was driven by lower merchandise costs partially offset by increased occupancy, warehousing and distribution costs compared to the first three quarters of fiscal 2023.

Selling, general and administrative.

SG&A expenses were $96.8 million, or 42.7% of consolidated revenue, for the twenty-six weeks ended August 3, 2024, compared to $94.0 million, or 41.0% of consolidated revenue, for the twenty-six weeks ended July 29, 2023.

SG&A expenses were $148.4 million, or 42.9% of consolidated revenue, for the thirty-nine weeks ended November 2, 2024, compared to $140.5 million, or 41.7% of consolidated revenue, for the thirty-nine weeks ended October 28, 2023.

The increase in overall expense was driven by higher wage rates, expense timing and general inflationary pressures.

Interest income, net.

Interest income was $614,000 for the twenty-six weeks ended August 3, 2024 compared to interest income of $243,000 for the twenty-six weeks ended July 29, 2023.

Interest income was $0.7 million for the thirty-nine weeks ended November 2, 2024 compared to interest income of $0.5 million for the thirty-nine weeks ended October 28, 2023.

The increase in interest income compared to the prior year is the result of the Company's cash management strategy to invest cash on-hand in short-term, highly liquid investments.

Provision for income taxes .

Income tax expense was $6.3 million with a tax rate of 24.0% for the twenty-six weeks ended August 3, 2024, as compared to $6.9 million with a tax rate of 23.1% for the twenty-six weeks ended July 29, 2023.

In the first half of fiscal 2024 and 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense partially offset by the tax impact of equity awards vesting.

Income tax expense was $9.5 million with a tax rate of 24.1% for the thirty-nine weeks ended November 2, 2024, as compared to $9.6 million with a tax rate of 24.0% for the thirty-nine weeks ended October 28, 2023.

In the first thirty-nine weeks of fiscal 2024 and 2023, the effective tax rate differed from the statutory rate of 21% primarily due to state income tax expense partially offset by the tax impact of equity awards vesting.

In the fourth quarter of fiscal 2023, the Company reversed the valuation allowance on deferred tax assets expected to be realized in the U.K.

9 unchanged sentences

Thirteen weeks ended

Twenty-six weeks ended

August 3, 2024

July 29, 2023

August 3, 2024

July 29, 2023

Thirty-nine weeks ended

November 2, 2024

October 28, 2023

November 2, 2024

October 28, 2023

Income before income taxes (pre-tax)

2 unchanged sentences

Earnings before interest, taxes, depreciation, and amortization

EBITDA for the thirteen weeks ended August 3, 2024 increased $1.5 million, or 10.7% to $15.0 million from $13.5 million for the thirteen weeks ended July 29, 2023.

The increase was driven by gross profit driven by increased commercial margins partially offset by higher SG&A expenses.

EBITDA for the twenty-six weeks ended August 3, 2024, decreased $2.6 million, or 7.4%, to $33.3 million from $35.9 million for the twenty-six weeks ended July 29, 2023.

The decrease in EBITDA was driven by an increase in SG&A expenses due to higher wages, expense timing, and general inflationary pressures coupled with a decrease in retail gross margin.

EBITDA for the thirteen weeks ended November 2, 2024 increased $3.4 million, or 25.3% to $16.7 million from $13.3 million for the thirteen weeks ended October 28, 2023.

The increase was driven by gross profit driven by increased retail and commercial margins partially offset by higher SG&A expenses.

EBITDA for the thirty-nine weeks ended November 2, 2024, increased $0.7 million, or 1.5%, to $49.9 million from $49.2 million for the thirty-nine weeks ended October 28, 2023.

The increase in EBITDA was driven by retail and commercial margins partially offset by higher SG&A expenses.

Seasonality and Quarterly Results

25 unchanged sentences

Liquidity and Capital Resources

As of August 3, 2024, we had a consolidated cash balance of $25.2 million, 83% of which w as domiciled within the U.S.

As of November 2, 2024, we had a consolidated cash balance of $29.0 million, 79% of which w as domiciled within the U.S.

Historically, our cash requirements have been primarily for the relocation and remodeling of existing stores in our new design, opening of new stores, investments in information technology infrastructure and working capital.

Over the past several years, we have met these requirements through capital generated from cash flow provided by operations.

Additionally, during 2024 we have used cash on-hand to invest in short-term, highly liquid investments with original maturities of three months or less resulting in interest income of $0.6 million during the thirteen weeks ended August 3, 2024

Additionally, during 2024 we have used cash on-hand to invest in short-term, highly liquid investments with original maturities of three months or less resulting in interest income of $0.7 million during the thirty-nine weeks ended November 2, 2024.

A summary of our operating, investing and financing activities is shown in the following table (dollars in thousands):

Twenty-six weeks ended

Thirty-nine weeks ended

Net cash provided by operating activities

4 unchanged sentences

Operating Activities.

Cash provided by operating activities decreased $19.4 million for the twenty-six weeks ended August 3, 2024, as compared to the twenty-six weeks ended July 29, 2023.

This decrease in cash from operating activities was primarily driven by decreased sales volume, resulting in lower net income, coupled with an increase in cash spent on inventory purchases.

Cash provided by operating activities decreased $5.2 million for the thirty-nine weeks ended November 2, 2024, as compared to the thirty-nine weeks ended October 28, 2023.

This decrease in cash from operating activities was primarily driven by increased cash spent on inventory purchases in anticipation of the uncertainty in cost due to potential tariffs and higher accounts receivable resulting from higher commercial revenue offset by increases in payables and accrued expenses.

Investing Activities.

Cash used in investing activities decreased $0.4 million for the thirteen weeks ended August 3, 2024, as compared to the twenty-six weeks ended July 29, 2023.

This decrease in cash used in investing activities was primarily driven by lower spending on capital expenditures related to information technology projects.

Cash used in investing activities decreased $1.6 million for the thirty-nine weeks ended November 2, 2024, as compared to the thirty-nine weeks ended October 28, 2023.

This decrease in cash used in investing activities was primarily driven by lower spending on capital expenditures.

Financing Activities.

Cash used in financing activities decreased $9.4 million for the twenty-six weeks ended August 3, 2024, as compared to the twenty-six weeks ended July 29, 2023.

This decrease in cash used in financing activities was driven primarily by the payment in 2023 fiscal first quarter of a special cash dividend of $22.1 million compared to quarterly dividends of $2.7 million and $2.9 million paid in the fiscal first and second quarters of 2024.

This was partially offset by an in crease in repurchases of our common stock during the twenty-six weeks ended August 3, 2024.

Cash used in financing activities decreased $5.7 million for the thirty-nine weeks ended November 2, 2024, as compared to the thirty-nine weeks ended October 28, 2023.

This decrease in cash used in financing activities was driven primarily by the payment in 2023 fiscal first quarter of a special cash dividend of $22.1 million compared to quarterly dividends of $2.9 million, $2.7 million and $2.7 million paid respectively in the first, second and third fiscal quarters of 2024.

This was partially offset by an in crease in repurchases of our common stock during the thirty-nine weeks ended November 2, 2024.

Capital Resources:

We have a revolving credit and security agreement with PNC Bank, as agent, that provides for a secured revolving loan in aggregate principal of up to $25.0 million, subject to a borrowing base formula.

As of August 3, 2024, borrowings under the agreement would bear interest at (a) a base rate determined under the agreement, or (b) the borrower's option, at a rate based on SOFR, plus in either case a margin based on average undrawn availability as determined in accordance with the agreement.

As of August 3, 2024, our borrowing base was $25.0 million.

As a result of a $250 ,000 letter of credit outstanding against the line of credit, approximately $24.7 million was available for borrowing as of August 3, 2024.

We had no outstanding borrowings as of August 3, 2024.

As of November 2, 2024, borrowings under the agreement would bear interest at (a) a base rate determined under the agreement, or (b) the borrower's option, at a rate based on SOFR, plus in either case a margin based on average undrawn availability as determined in accordance with the agreement.

As of November 2, 2024, our borrowing base was $25.0 million.

As a result of a $250 ,000 letter of credit outstanding against the line of credit, approximately $24.7 million was available for borrowing as of November 2, 2024.

We had no outstanding borrowings as of November 2, 2024.

Most of our corporately-managed retail stores are located within shopping malls and all are operated under leases classified as operating leases.

13 unchanged sentences

Rents are invoiced monthly or quarterly and paid in advance.

Capital spending through the twenty-six weeks ended August 3, 2024 totaled $5.7 million for information technology projects and new store openings, and we expect to spend approximately $18 to $20 million on capital expenditures in fiscal 2024 .

Total inventory at quarter end was $67.0 million, an increase of $0.6 million or 1% from the end of the fiscal 2023 second quarter.

Capital spending through the thirty-nine weeks ended November 2, 2024 totaled $9.6 million for information technology projects and new store openings, and we expect to spend approximately $18 to $20 million on capital expenditures in fiscal 2024 .

Total inventory at quarter end was $70.8 million, an increase of $6.3 million or 10% from the end of the fiscal 2023 third quarter.

We accelerated the acquisition of our core products in anticipation of the uncertainty in cost due to potential tariffs.

We are comfortable with the level and composition of our inventory.

We have various contractual or other obligations, including operating lease commitments and obligations under deferred compensation plans.

As of August 3, 2024, we had purchase obligations totaling approximately $103.3 million, of whi ch $30.2 million are due in the next 12 months.

As of November 2, 2024, we had purchase obligations totaling approximately $99.7 million, of whi ch $29.0 million are due in the next 12 months.

We believe our operating cash flows are sufficient to meet our material cash requirements for at least the next 12 months.

We utili zed $18.2 million in cash to repurchase 685,027 shares during the twenty-six weeks ended August 3, 2024, compared to using $11.1 million in cash to repurchase 526,706 shares during the twenty-six weeks ended July 29, 2023.

Since the end of the second fiscal quarter, we utilized $2.0 million in cash to repurchase 73,274 shares leaving $5.9 million available under the August 2022 Stock Repurchase Program.

On September 11, 2024, we announced that our Board of Directors terminated the August 2022 Stock Repurchase Program and authorized a new share repurchase program of up to $100 million.

The primary source of funding for the share repurchase program is expected to be cash on hand.

The timing and amount of share repurchases, if any, will depend on price, market conditions, applicable regulatory requirements, and other factors.

The program authorizes us to repurchase shares through September 30, 2028 , does not require us to repurchase any specific number of shares, and may be modified, suspended or terminated at any time without prior notice.

Shares repurchased under the program will be subsequently retired.

We believe that the multi-year, multi-million dollar share buy-back program is reflective of the strong confidence that the Board of Directors has in the future of the Company.

We utili zed $23.0 million in cash to repurchase 832,944 shares during the thirty-nine weeks ended November 2, 2024, compared to using $15.2 million in cash to repurchase 672,734 shares during the thirty-nine weeks ended October 28, 2023.

Since the end of the third fiscal quarter, we utilized $0.2 million in cash to repurchase 5,288 shares leaving $97.0 million available under the September 2024 Stock Repurchase Program.

Off-Balance Sheet Arrangements

24 unchanged sentences

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis