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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-14 · 85 added, 93 removed, 225 unchanged (44% of the section changed)

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The following discussion contains forward-looking statements that reflect our plans, estimates and assumptions.

Our actual results could differ materially from those discussed in the forward-looking statements.

Our actual results could differ

materially from those discussed in the forward-looking statements.

Factors that could cause such differences are discussed in “Item 1A.

Risk Factors”.

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to the last day of January.

Accordingly, references herein to "fiscal year 2024" and "fiscal year 2022" relate to the 52 weeks ended February 1, 2025 and January 28, 2023, respectively, and references herein to "fiscal year 2023" relate to the 53 weeks ended February 3, 2024.

BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily on the eastern half of the United States.

We deliver significant value to our members, consistently offering 25% or more savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors.

We provide a curated assortment focused on groceries, continuously refreshed general merchandise, gasoline and other ancillary services, coupon books, and promotions to deliver a differentiated shopping experience that is further enhanced by our digital capabilities.

We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31.

Accordingly, references herein to “fiscal year 2025” and “fiscal year 2024” relate to the 52 weeks ended January 31, 2026 and February 1, 2025, respectively, and references herein to “fiscal year 2023” relate to the 53 weeks ended February 3, 2024.

BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily in the eastern half of the United States.

We deliver significant value to our members, consistently offering up to 25% savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors.

We provide a curated assortment focused on groceries, fresh foods, general merchandise, gasoline, and other ancillary services to deliver a differentiated shopping experience that is further enhanced by our digital capabilities.

Additionally, we provide access to coupons and promotions to deliver further value to our members.

Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 263 large-format, high volume warehouse clubs and 199 gas stations spanning 21 states as of the date of this filing.

In our core New England market, which has high population density and generates a disproportionate part of U.S.

gross domestic product, we operate more than three times the number of clubs compared to the next largest warehouse club competitor.

In our originating New England market, which has high population density and generates a disproportionate part of U.S.

GDP, we operate nearly three times the number of clubs compared to the next largest warehouse club competitor.

In addition to shopping in our clubs, members are able to shop when and how they want through our website, bjs.com, and our highly rated mobile app, which allows them to use our BOPIC service, curbside delivery, same-day delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces.

We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for either unlimited or twelve same-day deliveries over a one-year period.

We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for unlimited same-day deliveries over a one-year period.

Additionally, members may use ExpressPay® to skip checkout lines when they shop in club and pay via their mobile devices.

Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee.

We have over 8 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline.

Through December 31, 2024, the annual membership fee for our Club Card membership was generally $55, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, was generally $110.

Effective January 1, 2025, the Club Card membership fee increased to $60 per year and the Club+ membership fee increased to $120 per year.

We believe that these membership fee increases will allow us to invest in an even stronger value proposition for our growing member base.

We believe that members can save over ten times their $55 Club Card membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries.

The annual membership fee for our Club membership is generally $60 and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $120.

Prior to January 1, 2025, the Club and Club+ membership fees were $55 and $110 per year, respectively.

We believe that members can save over ten times their $60 Club membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries.

In addition to providing significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also carry our own exclusive brands that enable members to save on price without compromising on quality.

Our two private label brands, Wellsley Farms® and Berkley Jensen®, represent approximately 26% of the Company's annual sales.

Our two private label brands, Wellsley Farms ® and Berkley Jensen ® , represent approximately 27% of our total net sales, excluding gasoline.

Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth.

Our membership fee income was $499.8 million for fiscal year 2025.

Our business is moderately seasonal in nature.

Historically, our business has realized a slightly higher portion of net sales, operating income, and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday season, respectively.

Our business is subject to some seasonality.

Historically, our business has generally realized a slightly higher portion of net sales and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday season, respectively.

Our quarterly results have been, and will continue to be, affected by the timing of new club openings and their associated pre-opening expenses.

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We have made significant investments in our business that we believe have laid the foundation for continued profitable growth.

We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, same-day delivery, and ExpressPay will enable us to replicate our profitable club format and provide a differentiated shopping experience.

We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, same-day delivery, ExpressPay, and a digital coupon gallery will enable us to replicate our profitable club format and provide a differentiated shopping experience.

We expect these infrastructure investments to support our successful operating model across our club operations.

Gasoline prices

The market price of gasoline impacts our net sales and comparable club sales, and large fluctuations in the price of gasoline may produce a short-term impact on our margins.

The market price of gasoline impacts our net sales and comparable club sales, and large fluctuations in the price of gasoline may produce a short-term impact on our sales and margins.

Retail gasoline prices are driven by daily crude oil and wholesale commodity market changes and are volatile, as they are influenced by factors that include changes in demand and supply of oil and refined products, global geopolitical events, regional market conditions, and supply interruptions caused by severe weather conditions.

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Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, which could lead to a reduction in our sales, as well as greater margin pressure, as costs may not be able to be passed on to consumers.

Changes in commodity prices and changes in inflation rates have impacted several categories of our business in fiscal year 2024 and may continue to do so.

Changes in commodity prices and changes in inflation rates have impacted several categories of our business and may continue to do so.

Inflationary volatility can be attributed to macro economic factors including supply chain disruptions, government stimulus, interest rates, tariffs, and other factors.

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Statement of Operations Data Fiscal Year Ended

(dollars in thousands, except per share amounts) February 1, 2025 February 3, 2024

(dollars in thousands, except per share amounts) January 31, 2026 February 1, 2025

Net sales $ 20,957,502 $ 20,045,329

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Interest expense, net 42,393 51,359

Income from continuing operations before income taxes 720,847 735,892

Income before income taxes 774,211 720,847

Provision for income taxes 195,834 186,430

Income from continuing operations 534,417 523,652

Income from discontinued operations, net of income taxes — 89

Net income $ 578,377 $ 534,417

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Comparable club sales (b)

2.5 % (1.0) %

Merchandise comparable club sales (b)

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Fiscal Year 2025 Compared to Fiscal Year 2024

Full year results for fiscal year 2023 included one additional week (the "53rd week") compared to the full year results for fiscal year 2024.

Net sales are derived from direct retail sales to our customers, net of merchandise returns and discounts.

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Net sales for fiscal year 2025 were $20.96 billion, a 4.6% increase from net sales reported for fiscal year 2024 of $20.05 billion.

The increase was due primarily to strength in the perishables, grocery, and sundries division, an increase in gasoline sales, and seven club openings during fiscal 2024.

The increase was due primarily to traffic and unit growth, particularly in the perishables, grocery, and sundries division,

as well as a net increase of thirteen clubs and gas stations from the prior year period, partially offset by a decrease in the average retail price-per-gallon of gasoline.

Comparable Club Sales and Merchandise Comparable Club Sales

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Sales comparisons can be influenced by certain factors that are beyond our control such as changes in the cost of gasoline and macro-economic factors such as inflation.

The higher comparable club sales, the more we can leverage certain of our selling, general and administrative ("SG&A") expenses, reducing them as a percentage of sales and enhancing profitability.

The higher comparable club sales, the more we can leverage certain of our SG&A expenses, reducing them as a percentage of sales and enhancing profitability.

Fiscal Year Ended

February 1, 2025

Comparable club sales 2.5 %

Impact from gasoline sales 0.3 %

January 31, 2026

Merchandise comparable club sales 2.6 %

Merchandise comparable club sales increased by 2.8% in fiscal year 2024 compared to fiscal year 2023 driven by increased sales of perishables, of approximately 3.2% as well as increased sales of general merchandise and services of approximately 0.7%.

In the perishables, grocery, and sundries division, growth was led by fresh produce, dairy, fresh beef, nutrition, beverages, and paper categories compared to fiscal year 2023, partially offset by a decrease in sales of alcohol.

General merchandise and services increased during fiscal year 2024 due to increased demand for toys and electronics, including video games, apparel, and home categories compared to fiscal year 2023, partially offset by a decrease in consumer spending in certain seasonal categories.

The impact of gasoline sales on comparable club sales is due to a decrease in retail prices year-over-year, partially offset by an increase in comparable gallons sold in fiscal year 2024 compared to fiscal year 2023 and an increase of twelve gas stations.

Gasoline comparable sales (1.6) %

Comparable club sales 1.0 %

Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline operations for the applicable period.

Merchandise comparable club sales increased 2.6% in fiscal year 2025 compared to fiscal year 2024, driven by increased sales in the perishables, grocery, and sundries division of approximately 2.9% as well as increased sales of general merchandise and services of approximately 1.0%.

In the perishables, grocery, and sundries division, growth was led by fresh meat and produce, as well as dairy, nutrition, candy, and snack categories when compared to fiscal year 2024.

General merchandise and services exhibited growth during fiscal year 2025 compared to fiscal year 2024 due to strength in consumer electronics and apparel, partially offset by headwinds in large ticket discretionary items in home and seasonal categories.

The impact of gasoline sales is primarily the result of a decrease in retail prices year-over-year, partially offset by an increase in comparable gallons sold in fiscal year 2025 compared to fiscal year 2024, as well as a net increase of thirteen gas stations.

Membership fee income

Membership fee income was $456.5 million in fiscal year 2024, compared to $420.7 million in fiscal year 2023, an 8.5% increase.

The increase was primarily driven by strength in membership acquisition, retention and higher tier membership penetration across both new and existing clubs.

We continued to add new members from our seven new club openings in fiscal year 2024 as well as the five new clubs that opened in the fourth quarter of fiscal year 2023.

As noted above, we increased our membership fees effective January 1, 2025 which we anticipate will positively impact membership fee income in fiscal year 2025, and had a minimal impact on fiscal year 2024 results.

Membership fee income was $499.8 million in fiscal year 2025, compared to $456.5 million in fiscal year 2024, a 9.5% increase.

The increase was primarily driven by strength in membership acquisition, retention, and higher-tier membership penetration across both new and existing clubs, as well as the increase in annual membership fees, which became effective in January 2025.

Cost of sales

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Cost of sales was $17.46 billion, or 83.3% of net sales, in fiscal year 2025, compared to $16.74 billion, or 83.5% of net sales, in fiscal year 2024.

Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased approximately 10 basis points compared to fiscal year 2023.

Merchandise margins were negatively impacted by the mix of sales, as well as our continued investments in the business.

Merchandise gross margin rate, which excludes gasoline sales and membership fee income, remained flat compared to fiscal year 2024.

The Company continues to manage the business to drive profitable growth across the broader merchandise assortment.

Selling, general, and administrative expenses

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SG&A increased by 6.4% to $3.15 billion in fiscal year 2025 from $2.96 billion in fiscal year 2024.

The year-over-year increase in SG&A was primarily driven by increased labor and occupancy costs as a result of new club and gas station openings and an increase in incentive compensation.

Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense.

The increase in SG&A was partially offset by the favorable net impact of legal settlements reached of approximately $20 million during the third quarter of fiscal year 2024, as well as the impact of the 53rd week in fiscal year 2023.

The year-over-year increase in SG&A was primarily driven by increased labor, occupancy, and operational costs mainly as a result of new club and gas station openings.

Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense year-over-year.

In fiscal year 2024, the Company benefitted from the net impact of legal settlements reached of approximately $20 million, which contributed to a reduction in SG&A expenses compared to fiscal year 2025.

We remain focused on investing in member engagement, marketing, and digital strategies.

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Pre-opening expenses were $29.4 million in fiscal year 2025 compared to $28.3 million in fiscal year 2024.

Pre-opening expenses increased due to timing of spend and the number of club openings year-over-year.

Pre-opening expenses fluctuated due to timing of spend and the number of club openings year-over-year.

Interest expense, net

Interest expense, net was $42.4 million for fiscal year 2025 compared to $51.4 million for fiscal year 2024.

The decrease was primarily due to a reduction in average outstanding borrowings and fluctuations in interest rates, partially offset by an increase in expense related to finance leases and failed sale-leaseback transactions year-over-year.

The decrease was primarily due to fluctuations in outstanding borrowings and interest rates year-over-year, partially offset by an increase in interest expense on financing obligations related to failed sale-leaseback transactions.

Provision for income taxes

The Company’s effective income tax rate from continuing operations was 25.9% for fiscal year 2024 and 28.8% for fiscal year 2023.

The decrease in the effective income tax rate was primarily driven by higher tax benefits from stock-based compensation year-over-year.

The Company’s effective income tax rate was 25.3% for fiscal year 2025 and 25.9% for fiscal year 2024.

The decrease in the effective income tax rate was attributable to benefits recognized from the utilization of income tax credits, as well as increased current year research and development tax credits, partially offset by decreased tax benefits from stock-based compensation compared to the prior year period.

Non-GAAP Financial Measures

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These measures are customary for our industry and commonly used by competitors.

These non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and should not be construed

as an inference that our future results will be unaffected by unusual or non-recurring items.

These non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

In addition, adjusted net income, adjusted EPS, adjusted EBITDA, adjusted free cash flow, and comparable club sales may not be comparable to similarly titled measures used by other companies in our industry or across different industries.

See Results of Operations above for our comparable club sales and merchandise comparable club sales results Adjusted free cash flow is discussed within Liquidity and Capital Resources section below.

See Results of Operations above for our comparable club sales and merchandise comparable club sales results.

Adjusted free cash flow is discussed within Liquidity and Capital Resources section below.

Adjusted Net Income and Adjusted EPS

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Fiscal Year Ended

(in thousands, except per share amounts) February 1, 2025 February 3, 2024

(in thousands, except per share amounts) January 31, 2026 February 1, 2025

Net income as reported $ 578,377 $ 534,417

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Restructuring (b)

Other adjustments (c)

Tax impact of adjustments to net income (d)

Tax impact of adjustments to net income (c)

(1,141) (2,603)

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Weighted-average diluted shares outstanding 132,066 133,605

Adjusted EPS (e)

Adjusted EPS (d)

$ 4.40 $ 4.05

Represents the expensing of fees, deferred fees, and original issue discount associated with the amendment of the senior secured first lien term loan.

Represents charges related to the restructuring of certain corporate functions including, costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Other non-cash items related to the reclassification into earnings of accumulated other comprehensive income/ loss associated with the de-designation of hedge accounting and other adjustments.

Represents charges related to the restructuring of certain corporate and club functions including, costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%.

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Adjusted EBITDA

Adjusted EBITDA is defined as income from continuing operations before interest expense, net, provision for income taxes and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense, restructuring, and other adjustments.

The following is a reconciliation of our income from continuing operations to adjusted EBITDA for the periods presented:

Adjusted EBITDA is defined as net income interest expense, net, provision for income taxes, and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense, restructuring, and other adjustments.

The following is a reconciliation of our net income to adjusted EBITDA for the periods presented:

Fiscal Year Ended

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

(In thousands)

Income from continuing operations

$ 578,377 $ 534,417

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$ 1,157,579 $ 1,090,595

Represents charges related to the restructuring of certain corporate functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Represents charges related to the restructuring of certain corporate and club functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees.

Other non-cash items, including non-cash accretion on asset retirement obligations and obligations associated with our post-retirement medical plan.

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Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility.

As of February 1, 2025, cash and cash equivalents totaled $28.3 million and we had $1.0 billion of unused capacity under our ABL Revolving Facility.

Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures;

fund share repurchases, and meet debt service and principal repayment obligations.

As of January 31, 2026, cash and cash equivalents totaled $46.2 million and we had $1.04 billion of unused capacity under our ABL Revolving Facility.

Our principal liquidity needs for the next twelve months and beyond are to fund normal recurring operational expenses and anticipated capital expenditures, fund share repurchases, and meet debt service and principal repayment obligations.

We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months.

During fiscal year 2024, we repurchased 2,181,885 shares under the 2021 Repurchase Program for a total purchase price of $190.9 million, inclusive of associated costs, fully exhausting the $500.0 million authorization under such program.

During fiscal year 2025, we repurchased 2,599,000 shares under the 2024 Repurchase Program for a total purchase price of $252.4 million, inclusive of associated costs.

We continue to prioritize disciplined capital allocation, balancing reinvestment in growth and returns to share holders through share repurchases.

We do not have any off-balance sheet arrangements that have, or are, in the opinion of management, reasonably likely to have, a current or future material effect on our results of operations or financial position.

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Fiscal Year Ended

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

(In thousands)

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Net cash used in financing activities (309,739) (319,083)

Net (decrease) increase in cash and cash equivalents $ (7,777) $ 2,134

Net increase (decrease) in cash and cash equivalents $ 17,973 $ (7,777)

Net Operating Cash Flows

Net cash provided by operating activities was $900.9 million for fiscal year 2024, compared to $718.9 million for fiscal year 2023.

The $182.0 million increase was primarily due to fluctuations in working capital, including $82.6 million related to accounts payable as a result of timing of inventory receipts and vendor payments;

$64.3 million of lease-related activity primarily due to a decrease in prepaid rent based on the timing of year-end;

$61.3 million related to accrued expenses, primarily driven by the change in accrued incentive compensation as a result of differences in the expected achievement from period-to-period;

$22.1 million related to merchandise inventories, primarily driven by changes in inventory levels in our perishables and general merchandise divisions;

$15.9 million related to prepaid expenses and other current assets, primarily driven by prepaid advertising and IT maintenance contracts;

partially offset by $62.4 million related to accounts receivable due to timing of vendor and customer cash receipts.

Also contributing to the increase in net operating cash flow was a $10.7 million increase in net income, inclusive of a $34.4 million increase in depreciation and amortization and a net decrease in deferred income tax provisions of $44.1 million.

Net cash provided by operating activities was $1.03 billion for fiscal year 2025, compared to $900.9 million for fiscal year 2024.

The $129.2 million increase was primarily due to a $44.0 million increase in net income, inclusive of a $26.5 million increase in depreciation and amortization and a net increase in deferred income tax provisions of $26.3 million, partially offset by $35.5 million of additional operating lease and other activity primarily due to the timing of lease payments.

Also impacting net operating cash flows were fluctuations in working capital, including a positive impact of $76.4 million related to accounts receivable due to timing of vendor and customer cash receipts and $16.7 million related to accrued expenses, primarily driven by timing of income tax payments and purchased tax credits, partially offset by timing of membership fee billings and changes in accrued incentive compensation.

These positive working capital fluctuations were offset by $72.5 million related to prepaid expenses and other current assets, primarily driven by increases in income taxes receivable and payments related to advertising contracts, and $16.3 million related to accounts payable as a result of timing and volume of inventory purchases and vendor payments.

Our net cash from operating activities can fluctuate from period to period due to several factors, including:

the timing and mix of sales, which are typically higher in the second and fourth quarters due to seasonality;

the timing of inventory purchases as the Company prepares for holiday seasons, lease-related activity, income tax and other payments.

the timing and mix of sales, the timing of inventory purchases as the Company prepares for holiday seasons, lease-related activity, income tax and other payments.

Net Investing Cash Flows

Net cash used in investing activities was $702.3 million in fiscal year 2025, compared to $589.6 million in fiscal year 2024.

This fluctuation is primarily driven by an increase in capital spending of $120.9 million as our growth profile includes a greater mix of owned clubs as opposed to leased clubs.

The increase in cash used was primarily driven by an increase in capital spending of $114.1 million as we continue to execute on our growth strategy with new clubs in our pipeline and expanded supply chain capabilities.

Net Financing Cash Flows

Net cash used in financing activities in fiscal year 2025 was $309.7 million compared to $319.1 million in fiscal year 2024.

The increase in cash used in fiscal year 2024 is primarily due to a $58.0 million increase in net payments on our ABL Revolving Facility, as well as an increased outflow of $64.5 million for the acquisition of treasury stock which exhausted the authorization on our previous share repurchase program;

partially offset by a $50.0 million net decrease in principal payments on our First Lien Term Loan and an increase in net cash received from stock option exercises of $15.7 million.

The decrease in cash used was primarily due to an $89.0 million decrease in net payments on our ABL Revolving

Facility, partially offset a $67.2 million increase in the acquisition of treasury stock and a $13.3 million decrease in net cash received from stock option exercises.

Adjusted Free Cash Flow

We present adjusted free cash flow because we believe it assists investors and analysts in evaluating our liquidity.

We present adjusted free cash flow, a non-GAAP measure, because we believe it assists investors and analysts in evaluating our liquidity.

Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure.

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Fiscal Year Ended

February 1, 2025 February 3, 2024

January 31, 2026 February 1, 2025

(In thousands)

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Adjusted free cash flow increased to $331.0 million for fiscal year 2025 compared to $312.9 million for fiscal year 2024.

The increase is driven by higher cash flows from operating activities primarily due to favorable fluctuations in working capital, timing of lease payments, and higher net income, partially offset by an increase in capital spending.

The increase is driven by higher cash flows from operating activities primarily due to higher net income and favorable fluctuations in working capital, partially offset by an increase in capital spending.

Debt and Borrowing Capacity

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Debt and Credit Arrangements” of our consolidated financial statements included in this Annual Report on Form 10-K.

On July 28, 2022, the Company entered into the ABL Revolving Facility with an aggregate ABL Revolving Commitment of $1.2 billion pursuant to that certain credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and other lenders party thereto.

On July 28, 2022, the Company entered into the ABL Revolving Facility with an ABL Revolving Commitment of $1.20 billion pursuant to that certain credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and other lenders party thereto.

The maturity date of the ABL Revolving Facility is July 28, 2027.

On October 12, 2023, the Company amended the First Lien Term Loan to extend the maturity date from February 3, 2027 to February 3, 2029 and reduce applicable margin in respect of the interest rate from SOFR plus 275 basis points per annum to SOFR plus 200 basis points per annum.

Prior to the amendment, the Company repaid $50.0 million of the principal amount outstanding under the First Lien Term Loan.

On February 3, 2024, there was $319.0 million outstanding in loans under the ABL Revolving Facility and $18.2 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 6.44%.

On February 3, 2024, the interest rate for the First Lien Term Loan was 7.33% and there was $400.0 million outstanding.

On November 4, 2024, the Company amended the First Lien Term Loan to reduce applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum.

At February 1, 2025, there was $175.0 million outstanding in loans under the ABL Revolving Facility and $11.1 million in outstanding letters of credit.

On November 4, 2024, the Company entered into the Fifth Amendment the First Lien Term Loan with Nomura Corporate Funding Americas, LLC, as administrative agent and collateral agent, and the lender party thereto.

The Fifth Amendment, among other things, provided for a new tranche of term loans in an aggregate principal amount of $400.0 million, which refinanced and replaced in full the existing Tranche B term loans outstanding under the First Lien Term Loan Credit Agreement immediately prior to the effectiveness of the Fifth Amendment.

In addition, the Fifth Amendment reduced applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum.

The maturity date of the First Lien Term Loan is February 3, 2029.

As of January 31, 2026, there was $120.0 million outstanding in loans under the ABL Revolving Facility and $9.6 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 4.77%, and unused capacity was $1.04 billion.

At February 1, 2025, the interest rate for the First Lien Term Loan was 6.08% and there was $400.0 million outstanding.

As of January 31, 2026, the interest rate for the First Lien Term Loan was 5.43% and there was $400.0 million outstanding.

As of February 1, 2025, there was $175.0 million outstanding in loans under the ABL Revolving Facility and $11.1 million in outstanding letters of credit.

The interest rate on the revolving credit facility was 5.41%.

As of February 1, 2025, the interest rate for the First Lien Term Loan was 6.08% and there was $400.0 million outstanding.

Material Cash Commitments

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Other Non-current Liabilities” for long-term liabilities for which it is not reasonably possible for us to predict when they may be paid, including insurance reserves and asset retirement obligations, as well as financing obligations arising from sale-leaseback transactions.

We also have cancellable and non-cancellable purchase obligations under purchase orders for merchandise inventory, agreements for capital items, gasoline, products and services used in our business, information technology, executive employment, and other agreements.

As of January 31, 2026, we had a cash commitment of approximately $91 million, expected to be paid in the first half of fiscal year 2026, related to the purchase of transferable tax credits.

Critical Accounting Policies and Estimates

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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 7. Management’s Discussion and Analysis