What changed in this filing

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Item 1A. Risk Factors

2026-04-16 compared with 2025-04-17 · 92 added, 54 removed, 289 unchanged (34% of the section changed)

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Although we took actions to mitigate these pressures, such as strategic price increases on highly sought-after products, there can be no assurance that we will be able continue these actions or that they will be successful in the future.

We expect the inflationary pressures experienced in fiscal 2024 to continue in the fiscal year 2025.

We expect the inflationary pressures experienced in fiscal 2025 to continue in fiscal 2026.

We continue to monitor the impact of inflation and tariffs on our business operations on an ongoing basis and may need to adjust our prices further to mitigate the impacts of changes to the inflation rate during 2026 or in future years.

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Weakened economic conditions, lowered employment levels or recessions in any of our major markets may also significantly impair consumer spending and reduce purchases of our products.

Economic conditions may also be negatively impacted by terrorist attacks, wars, geopolitical shifts, and other conflicts, such as the current Russia-Ukraine crisis and the Israel-Hamas conflict that has heightened geopolitical tensions in the Middle East region, as well as natural disasters, increases in commodity prices or labor costs, or the prospect of such events.

Such a weakened economic and business climate, as well as consumer uncertainty created by such a climate, could harm our revenues and profitability.

Economic conditions may also be negatively impacted by terrorist attacks, wars, geopolitical shifts, and other conflicts, such as the Russia-Ukraine crisis, current geopolitical environment arising from events in the Middle East that has heightened geopolitical tensions in the region, as well as natural disasters, increases in commodity prices or labor costs, or the prospect of such events.

Recent hostilities between the United States, Israel and Iran and others have caused significant disruption in the normal flow of oil, refined petroleum products and related commodities, with consequent price rises of oil as well as other non-petroleum products and associated economic volatility.

Although the length and impact of the ongoing conflicts and geopolitical turmoil are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit and capital markets, as well as supply chain interruptions, changes in consumer purchasing behavior and increased cyber-attacks against U.S.

Additionally, any resulting sanctions could adversely affect the global economy and financial markets.

A weakened economic and business climate, as well as consumer uncertainty created by such a climate, could harm our revenues and profitability.

Our success and profitability depend not only on consumer demand for our products, but also on our ability to produce and sell those products at costs which allow us to make a profit.

Whether due to inflation or other factors, tariffs, rising petroleum and material prices, increased transportation and shipping costs, and increased labor costs in the markets in which our products are manufactured and sold all may further increase the costs we incur to produce and transport our products, which in turn may reduce our margins, reduce our profitability, and harm our business, in particular if we are unable to further adjust prices beyond what we were able to do in fiscal 2024, as discussed above.

The impact of the significant tariffs on countries from which we import is expected to have an impact on our business, mainly our cost of goods and profit margin.

The recent enactment of tariffs by the U.S.

government, including a tariff on all imported goods and targeting specific countries, along with the unpredictability of the rates, poses a significant risk to our business operations.

As a company that sources a substantial portion of our inventory from Vietnam and China, these tariffs are expected to increase the cost of goods sold, which could adversely affect our profit margins.

The tariffs may lead to higher prices for our products, potentially reducing consumer demand and impacting our sales volume.

Inflation, tariffs, rising petroleum and material prices, increased transportation and shipping costs, increased labor costs in the markets in which our products are manufactured and sold, or other factors all may increase the costs we incur to produce and transport our products, which in turn may reduce our margins, reduce our profitability, and harm our business, in particular if we are unable to further adjust prices beyond what we were able to do in fiscal 2025, as discussed above.

Political developments, including in trade relations, in particular as to the impact of the significant tariffs on products sourced from countries from which we import is expected to have an impact on our business, mainly our cost of goods and profit margin.

Changes to trade policy or the breakdown of trade relations with the United States in a country in which we have significant operations, or sales, or from which we source raw materials, supplies, or through which such raw materials or supplies are delivered could adversely affect our business, financial condition, and results of operations.

As a company that sources a substantial portion of our inventory from China and Vietnam, tariffs generally increase our cost of goods sold, which could adversely affect our profit margins.

Global trade policy continues to evolve and the ultimate impact of recent developments with respect to U.S.

tariffs is unclear.

On February 20, 2026, the U.S.

Supreme Court issued a ruling striking down certain tariffs previously imposed under the International Emergency Economic Powers Act ("IEEPA").

Following the Supreme Court’s decision, the U.S.

presidential administration announced its intention to invoke other laws to collect tariffs and announced new tariffs on imports from all countries, in addition to any existing non-IEEPA tariffs.

There remains substantial uncertainty regarding the duration of existing and newly announced tariffs, potential changes or pauses to such tariffs, tariff levels, and whether further additional tariffs or other retaliatory actions may be imposed, modified, or suspended, and the impacts of such actions on our business.

These and future changes in tariffs, trade policies, trade actions, or retaliatory trade measures in response, have resulted and may continue to result in additional inventory costs or supply chain disruptions, higher product prices, potentially reducing consumer demand and impacting our sales volume volatility, which could adversely impact our future sales volume, business, financial condition, and results of operations, materially or in ways that we cannot predict.

Additionally, the increased costs could force us to seek alternative suppliers, which may result in supply chain disruptions and further cost increases.

We are actively monitoring the situation and exploring strategies to mitigate these risks, including negotiating with suppliers, adjusting our pricing strategies, and seeking tariff exemptions where possible.

Any increased trade barriers or restrictions on global trade imposed by the United States, or further retaliatory trade measures or currency controls taken by other countries in response, could further adversely affect our business, financial condition, and results of operations.

We are actively monitoring the situation and exploring strategies to mitigate these risks, including negotiating with suppliers, adjusting our pricing strategies, and seeking refunds.

However, there can be no assurance that these measures will fully offset the negative impact of the tariffs on our business.

Given the uncertainty regarding the scope and duration of the current and potential tariffs, as well as the potential for additional trade actions by the U.S.

or other countries, the specific impact on our business, results of operations, and financial condition is uncertain but could be significant.

Consumer interests can change rapidly, and our success depends on the ongoing effectiveness of our marketing and online initiatives to build consumer affinity for our brand and drive consumer demand for our products and services.

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We compete against a diverse group of competitors.

Because we have mall-based locations, we see our competition as other retailers that compete for prime mall locations, including various apparel, footwear and specialty retailers.

Because we have a significant number of mall-based locations, we see our competition primarily as other retailers that compete for prime mall locations, including various apparel, footwear and specialty retailers.

As a retailer whose signature product is a stuffed animal that is typically purchased as a toy or gift, we also compete with big box retailers and toy stores, as well as manufacturers that sell plush toys.

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The profitability of our business depends to a certain degree upon the price of petroleum products, both as a component of the transportation costs for delivery of inventory from our vendors to our stores and as a raw material used in the production of our plush products and stuffing.

Volatility in petroleum prices can be due to many external factors that are beyond our control including political, environmental, and economic factors such as hostilities or other conflicts in oil producing areas (including the current Russia-Ukraine conflict and tensions in the Middle East), limitations and/or disruptions in refining and pipeline capacity, and worldwide demand for petroleum.

Volatility in petroleum prices can be due to many external factors that are beyond our control including political, environmental, and economic factors such as hostilities or other conflicts in oil producing areas (including the Russia-Ukraine conflict, military actions in Iran and the current geopolitical environment arising from events in the Middle East, including the hostilities between the United States, Israel and Iran and others), limitations and/or disruptions in refining and pipeline capacity, and worldwide demand for petroleum.

We cannot predict the price of crude oil or resulting petroleum products in the future.

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Therefore, any such increase could have an adverse impact on our business and profitability.

In addition, as discussed above under “ Any uncertainty or decline in general global economic conditions, caused by inflation, rising interest rates, geo-political conflicts, or other external factors, could lead to disproportionately reduced discretionary consumer spending and a corresponding reduction in demand for our products and have an adverse effect on our liquidity and profitability ”, these matters could affect broader economic activities beyond the price of petroleum products.

Our use of artificial intelligence technologies presents operational, reputational, data security and legal risks that could adversely affect our business and financial performance, and any failure to effectively leverage artificial technologies in our business could negatively impact our customer engagement and competitive position.

Like many businesses, we incorporate, and expect to continue to incorporate, machine learning and other forms of artificial intelligence (“AI”) into various aspects of our business, including digital marketing, customer engagement, merchandising, finance and other operational and administrative activities.

Ongoing technological advancements may allow us to expand the use of AI, including generative AI, into these and other key operational and/or administrative aspects of our business.

As our reliance on AI increases, our operations may become more dependent on the accuracy, reliability, security and alignment of these technologies with our business objectives and controls.

The use of AI systems, particularly autonomous or agentic AI (systems are designed to reason, plan, and take actions to achieve defined objectives with reduced or no human intervention), by malicious actors may increase our exposure to cybersecurity threats and may inadvertently expose sensitive or confidential business information or personal information if our systems are not properly configured, monitored or secured.

Furthermore, any AI technologies we adopt will be reliant on third party service providers, who may have access to our confidential information, intellectual property and personal data of our customers, employees or business partners.

We may have limited ability to monitor or control their operations, data handling practices, security measures or compliance with applicable laws and contractual requirements.

Failures or vulnerabilities in such third party systems, including those supporting autonomous or agentic AI capabilities, could have cascading effects across our operations.

Any failure by such third parties to adequately protect our data, comply with applicable privacy, security or intellectual property laws or deliver reliable and effective AI solutions could result in operational disruptions, regulatory investigations, litigation, reputational harm, loss of competitive advantage and significant costs.

In addition, our competitors or other third parties may adopt AI technologies more rapidly or deploy them more effectively than we do, which could reduce our ability to compete successfully and adversely affect our results of operations.

AI driven tools could produce outputs that are or are alleged to be deficient, inaccurate, or biased, which could negatively impact our business, financial condition, and results of operations.

The rapid evolution of AI, including potential government regulation of AI, may require significant investments by us to develop, test and maintain our implementations of AI.

Those investments may be significant and there can be no assurances that such investments will yield anticipated operational efficiencies, revenue growth, cost savings or other benefits.

OPERATIONAL RISKS

If we are unable to generate interest in and demand for our interactive retail experience and products, including being able to identify and respond to consumer preferences in a timely manner, our sales, financial condition and profitability could be adversely affected.

We believe that our success depends in large part upon our ability to continue to attract new and repeat guests with our interactive shopping experience, and our ability to anticipate, gauge and respond in a timely manner to changing consumer preferences, such as online buying, and fashion trends including licensed relationships.

We cannot be certain that there will continue to be a demand for our “make-your-own stuffed animal” interactive experience, including our store design and brand appearance, or for our stuffed animals, related apparel and accessories.

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In addition, negative commentary regarding our company or the products we sell may be posted on social media sites and other platforms at any time and may negatively impact our reputation or business.

Our future success depends, in part, on the popularity and consumer demand for brands of licensors such as Sanrio, Disney, NBCUniversal, Lucasfilm, Warner Bros., and Nintendo.

Our future success depends, in part, on the popularity and consumer demand for brands of licensors such as Sanrio, Disney, BBC, Pokémon, NBCUniversal, Warner Bros., Lucasfilm, ViacomCBS and Nintendo.

If we are not able to meet our contractual commitments or are unable to maintain licensing agreements with key brands, our business may be adversely affected.

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If we cannot renew, renegotiate or replace our store leases or enter into leases for new stores on favorable terms, or if we violate any of the terms of our current leases, our revenue and profitability could be harmed.

We lease all of our corporately-managed store locations.

We lease all of our corporately-managed store locations in the U.S., U.K., Canada and the Republic of Ireland.

Most of our store leases contain provisions for base rent plus percentage rent based on sales in excess of an agreed-upon minimum annual sales level.

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and the Republic of Ireland also typically contain provisions requiring rent reviews every five years in which the base rent that we pay is adjusted to current market rates.

These rent reviews require that base rents cannot be reduced if market conditions have deteriorated but can be changed “upwards only.” We may be required to pay base rents that are significantly higher than we have projected.

These rent reviews generally require that base rents can be changed "upwards only" but cannot be reduced if market conditions have deteriorated.

We may be required to pay base rents that are significantly higher than we have projected.

As a result of these and other factors, we may not be able to operate our European store locations profitably.

If we cannot do so, our results of operations and financial condition could be harmed, and we may be required to record significant additional impairment charges.

ure to successfully execute our omnichannel and brand expansion strategy and the cost of our investments in e-commerce and digital transformation may materially adversely affect our financial condition and profitability.

The retail industry continues to evolve rapidly

and consumers continue to embrace digital shopping.

Failure to successfully execute our omnichannel and brand expansion strategy and the cost of our investments in e-commerce and digital transformation may materially adversely affect our financial condition and profitability.

The retail industry continues to evolve rapidly and consumers continue to embrace digital shopping.

As a result, the portion of total consumer expenditures with retailers occurring through digital platforms is increasing, and the pace of this increase could continue to accelerate.

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We may decide to close other stores in the future.

Additionally, in the fiscal year 2024, we operated 25 stores located within other retailers’ stores and 138 stores through our "third-party wholesale" model and franchisees operated 83 stores.

These stores have less corporate influence and as such are subject to the operational risks of these companies, including, but not limited to, ineffective store operations, labor disputes, and negative publicity, all of which could negatively impact our sales and operating performance.

Additionally, in the fiscal year 2025, we operated 25 stores located within other retailers’ stores and 178 stores through our partner-operated model while our franchise partners operated 109 stores.

We have less corporate influence over these stores outside of our corporately-managed locations, and they are therefore subject to the operational risks of these companies, including, but not limited to, ineffective store operations, labor disputes, and negative publicity, all of which could negatively impact the sales and operating performance in these other locations.

Our company-owned distribution center that services the majority of our stores in North America and our third-party distribution center providers used in the western U.S.

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In addition, we rely on third parties to manage all of the warehousing and distribution aspects of our business in the western U.S.

For example, as noted above, in Europe, we contract with a third-party distribution center in Selby, England under an agreement that ends in January 2026.

For example, as noted above, in Europe, we contract with a third-party distribution center in Selby, England under an agreement that ended in January 2026, but which is currently continuing because neither party terminated the agreement.

Any significant interruption in the operation of the distribution centers due to natural disasters or severe weather, events such as fire, accidents, power outages, system failures, public health issues such as pandemics or other health risks, or other unforeseen causes could damage a significant portion of our inventory.

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These vendors in turn contract for the production of merchandise with multiple manufacturing facilities.

Prior to 2020, over 90% of merchandise received annually was produced in China.

However, our efforts to diversify our supply chain reduced China sourcing to 58% of merchandise received as production shifted primarily to Vietnam, which provided 38% of our merchandise in 2024.

Pri or to 2020, over 90% of me rchandise received annually was produced in China.

However, our efforts to diversify our supply chain reduced China sourc ing to 51% of merchandise received as production shifted primarily to Vietnam, which provided 44% of our merchandise in fiscal 2025.

Our relationships with our vendors generally are on a purchase order basis and do not provide a contractual obligation to provide adequate supply or acceptable pricing on a long-term basis.

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We purchase the most of our merchandise directly from manufacturers in foreign countries, primarily in China and Vietnam.

In addition to the risks associated with tariffs discussed in " Impact of the significant tariffs on countries from which we import are expected to have an impact on our business, mainly our cost of goods and profit margin

In addition to the risks associated with tariffs discussed in " Political developments, including in trade relations, in particular as to the impact of the significant tariffs on products sourced from countries from which we import is expected to have an impact on our business, mainly our cost of goods and profit margin

" above, any event causing a disruption of imports, including the imposition of, increase in amount of or uncertainty regarding import restrictions, taxes or fees, labor strikes or lockouts or pandemics, could adversely affect our business.

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For example, we may purchase products in U.S.

dollars but sell them to consumers in local currencies, which exposes us to foreign exchange risk, as described in “ 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 ” below.

dollars but sell them to consumers or to our foreign subsidiaries in local currencies, which exposes us to foreign exchange risk, as described in “ 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 ” above.

In addition, we could experience restrictions on the transfer of funds to and from foreign countries, including potentially negative tax consequences.

If we cannot 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.

As of February 1, 2025, there were 83 Build-A-Bear Workshop international franchised stores and 138 international, third-party-operated locations.

As of January 31, 2026, there were 109 Build-A-Bear Workshop international franchise locations and 178 international, partner-operated locations.

We cannot ensure that our international partners will be successful in identifying and securing desirable locations or in operating their stores.

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These challenges, as well as others, could have a material adverse effect on their business and, in turn, negatively impact our own business, financial condition, and results of operations.

The success of our franchising business depends upon our ability to attract and maintain qualified franchisees with sufficient financial resources to develop and grow their operations and upon the ability of those franchisees to successfully develop and operate their franchised stores.

Franchisees may not operate stores in a manner consistent with our standards and requirements, may not hire and train qualified managers and other store personnel, may not operate their stores profitably and may not pay amounts due to us.

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For example, whereas franchisees are concerned with their individual business objectives, we are responsible for ensuring the success of the Build-A-Bear brand and all of our stores.

In addition, we have recently terminated our franchise agreement covering India resulting in the closure of all stores.

In addition, we have terminated our franchise agreement covering China resulting in the closure of 12 of 14 stores in the country.

This resulted in a total of 109 total franchise locations at the end of the fiscal year.

A key growth initiative for our business is the global expansion of our unique experience locations through international, third-party-operated locations.

At the end of fiscal 2024, we had more than 30 international locations, and additional locations are expected to be opened in 2025 and beyond.

At the end of fiscal 2025, we had opened more than 30 international locations, and additional locations are expected to be opened in 2026 and beyond.

The success of this strategy is dependent on our partners operating locations in a manner consistent with our standards and requirements, hiring and training qualified personnel, and operating the stores profitably so as to continue the relationship.

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There is a risk that we could experience a business interruption, theft of information, or reputational damage as a result of a cyber-attack, such as an infiltration of a data center, or data leakage of confidential information either internally or at our third-party providers.

We may experience operational problems with our information systems as a result of system failures, system implementation issues, viruses, malicious hackers, sabotage, code anomalies, phishing, smishing, artificial intelligence deepfakes, computer viruses, other malware attacks, ransomware attacks, “Acts of God,” human error or other causes.

The nature and scope of threats from artificial intelligence , in particular, represents a new, unpredictable frontier.

Our business involves the storage and transmission of consumers’ personal information, such as personal preferences and credit card information.

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Failure of our systems, including failures due to cyber-attacks that would prevent the ability of systems to function as intended, could cause transaction errors, loss of consumers and sales, and could have negative consequences to us, our employees, and those with whom we do business.

In addition, our workforce's combination of remote work, hybrid, and flexible work schedules opening us up for cyber-security threats and potential breaches as a result of increased employee usage of networks other than company-managed.

In addition, our workforce's combination of remote work, hybrid, and flexible work schedules opens us up for cyber-security threats and potential breaches as a result of increased employee usage of networks other than company-managed.

Any security breach involving the misappropriation, loss, or other unauthorized disclosure of confidential information could also severely damage our reputation, expose us to the risks of litigation and liability, and harm our business.

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We may suffer negative publicity and damage to our reputation if we do not continue to evolve environmental, social, and governance initiatives in a timely manner .

The appeal of our brand may also depend on the success of our environmental, social and governance ("ESG") initiatives, which require company-wide coordination and alignment.

The rise of ESG criteria and reporting has sparked a debate over its potential to either unite or divide stakeholders by prioritizing and disclosing ethical considerations over traditional financial metrics.

We are working to manage risks and costs to us, our licensees and our supply chain that are exposed to the effects of climate change as well as diminishing fossil fuel and water resources.

These risks include any increased public focus, including by governmental and non-governmental organizations, on climate change and other environmental sustainability matters, including packaging and waste, emissions, and land use.

We may receive increased pressure to expand our disclosures in these areas, make commitments, set targets or establish additional goals and take actions to meet them, which could expose us to market, operational and execution costs or risks.

If we expand our ESG disclosures, the metrics we disclose whether they be based on the standards we set for ourselves or those set by others, may influence our reputation and the value of our brand.

Our failure to accurately track or to achieve progress on any goals or objectives that we set on a timely basis, or at all, could adversely affect our business, financial performance, and growth.

By electing to publicly set and share these metrics and expand upon our disclosures, we would also face increased scrutiny related to ESG activities.

For example, “anti-ESG” sentiment has gained momentum across the U.S., with a growing number of states, federal agencies, the executive branch and Congress having enacted, proposed or indicated an intent to pursue “anti-ESG” policies, legislation or issued related legal opinions and engaged in related investigations and litigation.

We could also be subjected to negative responses by governmental actors (such as anti-ESG legislation or retaliatory legislative treatment) or customers (such as boycotts or negative publicity campaigns) that could adversely affect our reputation, results of operations and financial condition.

As a result, we could experience damage to our reputation and the value of our brands if we fail to act responsibly in the areas in which we report or if such reporting exposes us to risks due to "anti-ESG" sentiments.

Any such harm to our reputation or any failure or perceived failure by us to adequately address ESG-related activities in light of evolving circumstances including setting of metrics or enhancing disclosures, could adversely affect our business, financial performance, and growth.

The strength and appeal of our brand may be affected by how we address certain environmental, social and governance ("ESG") matters, which require coordination across our Company.

We face risks related to climate change, resource availability, and increasing public and regulatory focus on environmental sustainability topics such as emissions, packaging and waste.

We may also face pressure to expand ESG-related disclosures, establish goals or commitments, or take actions to meet evolving stakeholder expectations, which could result in increased costs, operational complexity or execution risk.

If we choose to expand our disclosures, the metrics we publish—whether based on internally developed standards or external frameworks—may affect our reputation, and any failure to accurately track, report or achieve stated objectives could adversely affect our business, financial condition and results of operations.

In addition, we may be subject to existing or future laws and regulations requiring disclosures related to sustainability matters, including climate-related risks, greenhouse gas emissions, human capital, or other ESG topics.

Compliance with such requirements, if applicable to us, may require enhancements to systems, controls, processes and governance and could require significant time and financial resources.

Failure to comply with applicable requirements could result in investigations, penalties, enforcement actions or reputational harm.

If we publicly report ESG-related information, we may also be subject to increased scrutiny or criticism, including from stakeholders with differing views on ESG matters.

Such scrutiny, including adverse publicity or legislative or regulatory actions, could negatively impact our reputation, brand value, financial condition and results of operations.

Risks Related to Owning Our Common Stock

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Our operating results for one period may not be indicative of results for other periods, and may fluctuate significantly due to a variety of factors, including:

changes in tariffs and other foreign policy matters that may impact pricing;

changes in tariffs and trade and other foreign policy matters, or increases in the cost of petroleum due to global conflicts, all of which may impact pricing;

changes in foreign exchange rates;

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changes in consumer preferences;

the continued introduction and expansion of merchandise offerings including those associated with major motion pictures;

the continued introduction and expansion of merchandise offerings including those associated with major motion pictures, and our ability to predict which motion pictures will drive product sales;

actions of competitors or mall anchors and co-tenants;

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the timing and frequency of national media appearances and other public relations events;

the impact of a 53rd week in our fiscal year, which occurs approximately every six years, (e.g., occurred in fiscal 2023).

the impact of a 53rd week in our fiscal year, which occurs approximately every six years, (e.g., the last of which occurred in fiscal 2023) and can affect comparability between periods that do not include the 53 rd week.

If our future quarterly results fluctuate significantly or fail to meet the expectations of the investment community, then the market price of our common stock could decline substantially.

Fluctuations in our operating results could reduce our cash flow , or trigger restrictions under our credit agreement, cause use 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 , 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.

From time to time, we have repurchased shares under plans authorized by our Board of Directors, most recently a $100 million program adopted in September 2024.

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As a result, the results of any share repurchase program may not be as beneficial as expected.

Additionally, cash flow decreases could cause us to discontinue the recently announced Board of Director-approved quarterly dividend program.

Additionally, cash flow decreases could cause us to discontinue the Board of Director-approved quarterly dividend program or reduce the dividend relative to prior periods.

Our credit agreement restricts our ability to repurchase shares and issue dividends when certain liquidity conditions exist.

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

The market price of our common stock has been and may continue to be volatile.

During fiscal 2025, the trading price of our common stock fluctuated between $32.55 and $75.85 per share.

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We may not be able to operate successfully if we lose key personnel, are unable to hire qualified additional personnel, or experience turnover of our management team.

The success of our business depends upon the quality of associates throughout our organization and our ability to attract and retain qualified key employees.

The loss of certain key employees, change in management for strategic purposes, our inability to attract and retain other qualified key employees or a labor shortage that reduces the pool of qualified candidates could have a material adverse effect on our business, financial condition and results of operations.

The success of our business depends upon the quality of key personnel and associates throughout our organization and our ability to attract and retain these qualified key employees.

The loss of any of our executive officers or other key senior management team could harm our business, in particular if we have not planned for their succession.

For example, within the last year, two of our executive officers announced their retirement or intention to retire, including our currently president and chief executive officer following a multi-year planned succession process.

While in each case we planned for, and executed, an orderly transition, we may not be able to do so in the future.

The failure to successfully transition and assimilate key management, the effectiveness of our leaders, and any further transitions could adversely affect our business, financial condition, and results of operations.

In addition, our success also depends substantially on the contributions and abilities of our retail store employees, or associates, upon whom we rely on to give our customers a superior interactive in-store retail experience and elevate our brand.

Accordingly, our performance depends on our ability to recruit and retain high-quality store management personnel and other associates to work in and manage our corporately-managed stores, both domestically and internationally.

The loss of these key employees, change in management for strategic purposes, our inability to attract and retain other qualified key employees or a labor shortage that reduces the pool of qualified candidates could have a material adverse effect on our business, financial condition and results of operations.

Because our business is largely based on a vertical retail model, labor-related matters, ranging from union formation to labor disputes, may adversely affect our operations.

We have in the past and could in the future face a variety of labor-related matters and disputes, including but not limited to general discrimination, privacy, wage and hour, Employee Retirement Income Security Act, disability claims, union organization and unfair labor practice charges.

These matters and claims can raise complex factual and legal issues, potentially creating additional risks and uncertainties that could result in litigation or regulatory proceedings being brought against us by various federal and state agencies that regulate our business, including the U.S.

Equal Employment Opportunity Commission and the U.S.

National Labor Relations Board (NLRB).

The recent increase in workers exercising their right to form or join a union, both generally and in the retail industry, in conjunction with the late 2023 NLRB issuance of a number of decisions making it easier for employees to organize (or any additional labor law or regulatory changes to that effect), could disrupt our ability to efficiently operate our retail locations and adversely affect our business.

Recently, unions have attempted to organize our employees at a small number of corporately-managed stores in the U.S.

with employees at one location voting to unionize in December 2025.

Because there can be no assurance that employees at other locations will not elect to be represented by labor unions in the future, the extent to which a significant portion of our employee base would choose to unionize, or attempt to unionize, could negatively impact our overall labor and other related store operations cost.

Additionally, our management and team members may be required to redirect time to respond to union activities, which could be distracting to our operations.

Future union activities, including organizing efforts, slow-downs, strikes, or work stoppages could negatively impact our business and results of operations and consumer sentiment.

We may be unsuccessful in acquiring businesses or engaging in other strategic transactions, which may negatively affect our financial condition and profitability.

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

What changed 10-K

Item 1A. Risk Factors