What changed in this filing

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Item 5. Market for Registrant’s Common Equity

2023-03-13 compared with 2022-03-16 · 156 added, 215 removed, 497 unchanged (43% of the section changed)

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Our common stock is listed on the New York Stock Exchange under the symbol “BURL.”

As of February 26, 2022, we had 217 holders of record of our common stock.

As of February 25, 2023, we had six holders of record of our common stock.

This figure does not include the significantly greater number of beneficial holders of our common stock.

During the past two fiscal years, we have not declared, and do not anticipate declaring in the near term, dividends on shares of our common stock.

We have not declared, and do not anticipate declaring in the near term, dividends on shares of our common stock.

We currently do, and intend to continue to, retain all available funds and any future earnings to fund all of the Company's capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives.

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with the SEC for purposes of Section 18 of the Exchange Act, or otherwise subject to the liabilities under that Section, and shall not be deemed to be incorporated by reference into any future filing under the Securities Act or the Exchange Act, except to the extent that we specifically incorporate it by reference into such filing.

The following graph compares the cumulative total stockholder return on our common stock from the closing prices as of the end of each fiscal year from January 28, 2017 through January 29, 2022, with the return on the Standard & Poor’s (S&P) 500 Index

and the S&P Retailing Index over the same period.

This graph assumes an initial investment of $100 and assumes the reinvestment of dividends, if any.

The following graph compares the cumulative total stockholder return on our common stock from the closing prices as of the end of each fiscal year from February 3, 2018 through January 28, 2023, with the return on the Standard & Poor’s (S&P) 500 Index, the Dow Jones United States Apparel Retailers Index, and the S&P Retailing Index over the same period.

Beginning with Fiscal 2022, we added the Dow Jones United States Apparel Retailers Index due to the similarities of the companies in that index with our line of business, and we will no longer provide a comparison to the S&P Retailing Index in future years.

This graph assumes an initial

investment of $100 and assumes the reinvestment of dividends, if any.

Such returns are based on historical results and are not intended to suggest future performance.

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S&P 500 Index

Dow Jones U.S.

Apparel Retailers Index

S&P Retailing Index

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October 30, 2022 through November 26, 2022

November 28, 2021 through January 1, 2022

November 27, 2022 through December 31, 2022

January 1, 2023 through January 28, 2023

(1) The number of shares purchased between October 31, 2021 and November 27, 2021, and between November 28, 2021 and January 1, 2022 include 155 shares and 284 shares, respectively, which were withheld for tax payments due upon the vesting of employee restricted stock awards, and do not reduce the dollar value that may yet be purchased under our publicly announced share repurchase programs.

There were no shares repurchased between January 2, 2022 and January 29, 2022.

(1) The number of shares purchased between October 30, 2022 and November 26, 2022, and between November 27, 2022 and December 31, 2022 include 16 shares and 207 shares, respectively, which were withheld for tax payments due upon the vesting of employee restricted stock awards, and do not reduce the dollar value that may yet be purchased under our share repurchase program.

There were no shares withheld for tax payments between January 1, 2023 and January 28, 2023.

(2) Includes commissions for the shares repurchased under our publicly announced share repurchase programs.

(3) On August 18, 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, which is authorized to be executed through August 2023.

Subsequent to January 29, 2022 (February 16, 2022), our Board of Directors authorized the repurchase of up to $500.0 million of common stock, which is authorized to be executed through February 2024.

For a further discussion of our share repurchase programs, see “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Share Repurchase Programs.”

(3) On February 16, 2022, our Board of Directors authorized the repurchase of $500.0 million of common stock, which is authorized to be executed through February 2024.

As of January 28, 2023, we had $347.3 million remaining under our share repurchase authorization.

For a further discussion of our share repurchase program, see “Part II, Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations—Liquidity and Capital Resources—Share Repurchase Program.”

Management’s Discussion and Analysis of Financial Condition and Results of Operations

For purposes of the following “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”

unless the context requires otherwise, references to “the Company,”

“we,”

“our,”

or “us”

refer to Burlington Stores, Inc.

and its consolidated subsidiaries.

The following discussion summarizes the significant factors affecting our consolidated operating results, financial condition, liquidity and cash flows as of and for the periods presented below.

The following discussion and analysis should be read in conjunction with our Consolidated Financial Statements, including the notes thereto, appearing elsewhere in this Annual Report.

In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions set forth under the caption above entitled “Cautionary Statement Regarding Forward-Looking Statements.”

In addition to historical information, this discussion and analysis contains forward-looking statements based on current expectations that involve risks, uncertainties and assumptions, such as our plans, objectives, expectations and intentions as further described under the caption above entitled “Cautionary Statement Regarding Forward-Looking Statements.”

Our actual results or other events and the timing of events may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth in Item 1A, Risk Factors and elsewhere in this Annual Report.

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Executive Summary

On March 11, 2020, the World Health Organization declared the novel coronavirus (known as COVID-19) outbreak to be a global pandemic.

As a result, we began the temporary closing of some of our stores, and effective March 22, 2020, we made the decision to temporarily close all of our stores, distribution centers (other than processing of received inventory) and corporate offices to combat the rapid spread of COVID-19.

These developments caused significant disruptions to our business and had a significant adverse impact on our financial condition, results of operations and cash flows.

We began re-opening stores on May 11, 2020, with substantially all stores re-opened by the end of the second quarter of Fiscal 2020.

In response to the COVID-19 pandemic and the temporary closing of our stores, we provided two weeks of financial support to associates impacted by these store closures and by the shutdown of distribution centers.

We temporarily furloughed most store and distribution center associates, as well as some corporate associates, but continued to provide benefits to furloughed associates in accordance with our benefit plans.

In addition, we paid 100% of their medical benefit premiums during the period they were furloughed.

During the second quarter of Fiscal 2020, we recalled all furloughed associates at our re-opened stores, as well as our corporate and distribution facilities.

In order to maintain maximum financial flexibility during the pandemic, we completed several debt transactions in the first quarter of Fiscal 2020.

Refer to Note 7, “Long Term Debt,”

for further discussion regarding these debt transactions.

Additionally, we took the following steps to further enhance our financial flexibility:

Carefully managed operating expenses, working capital and capital expenditures, including ceasing substantially all buying activities while stores were closed.

We subsequently resumed our buying activities, while continuing our conservative approach toward operating expenses and capital expenditures.

Negotiated rent deferral agreements with landlords, which are substantially complete as of the end of Fiscal 2021.

Suspended our share repurchase program, which resumed during the third quarter of Fiscal 2021.

Our CEO voluntarily agreed to not take a salary, our Board of Directors voluntarily forfeited their cash compensation, our executive leadership team voluntarily agreed to decrease their salary by 50% and smaller salary reductions were temporarily put in place for all associates through a certain level.

This compensation was reinstated once substantially all of our stores re-opened.

The annual incentive bonus payments related to Fiscal 2019 performance were delayed to the second quarter of Fiscal 2020, and merit pay increases for Fiscal 2020 were delayed to the third quarter of Fiscal 2020.

Due to the aging of inventory related to the temporary store closures discussed above, as well as the impact of seasonality on our merchandise, we recognized inventory markdown reserves of $271.9 million during the three month period ended May 2, 2020.

These reserves covered markdowns taken during the second quarter of Fiscal 2020.

These charges were included in “Cost of sales”

on our Consolidated Statement of Income (Loss).

On March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the CARES Act) was signed into law, which provided emergency economic assistance for American workers, families and businesses affected by the COVID-19 pandemic.

As a result of amending prior returns to carry back the federal net operating loss generated on the Fiscal 2020 tax return, we expect to obtain a one-time tax refund of $245.5 million, which is included in the line item “Prepaid and other current assets”

on our Consolidated Balance Sheet.

Store Openings, Closings and Relocations

During Fiscal 2021, we opened 101 new stores, inclusive of 17 relocations, and closed five stores, exclusive of the aforementioned relocations, bringing our store count as of January 29, 2022 to 840 stores.

During Fiscal 2022, we opened 113 new stores, inclusive of 22 relocations, and closed four stores, exclusive of the aforementioned relocations, bringing our store count as of January 28, 2023 to 927 stores.

We continue to pursue our growth plans and invest in capital projects that meet our financial requirements.

During the fiscal year ending January 28, 2023 (Fiscal 2022), we plan to open approximately 90 net new stores, which includes approximately 120 gross new stores, along with approximately 30 store relocations and closings.

During the fiscal year ending February 3, 2024 (Fiscal 2023), we plan to open approximately 70-80 net new stores, which includes approximately 90-100 gross new stores.

Results for Fiscal 2020 were significantly impacted by the COVID-19 pandemic.

All our stores were temporarily closed for a portion of Fiscal 2020, resulting in a sales decline and higher inventory markdowns.

These store closures did not repeat in Fiscal 2021 or Fiscal 2022.

However, certain lingering economic effects of the pandemic did continue to impact results, including supply chain disruptions.

Ongoing Initiatives for Fiscal 2023

Since the beginning of the COVID-19 pandemic, protecting the health and safety of our customers, associates, and the communities that we serve has been our top priority.

Accordingly, we moved quickly to close our stores, distribution centers, and corporate offices in March 2020.

As we’ve re-opened our stores and distribution centers, we continue to keep health and safety as a top priority.

We continue to focus on a number of ongoing initiatives aimed at increasing our overall profitability.

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Driving Comparable Store Sales Growth.

We intend to continue to increase comparable store sales through the following initiatives:

We strive to increase comparable store sales through the following initiatives:

More Effectively Chasing the Sales Trend.

We plan sales using conservative comparable stores sales growth, holding and controlling liquidity, closely analyzing the sales trend by business, and remaining ready to chase that trend.

We plan sales using conservative comparable store sales growth, holding and controlling liquidity, closely analyzing the sales trend by business, and remaining ready to chase that trend.

We believe that these actions will also allow us to take more advantage of great opportunistic buys.

Operating with Leaner Inventories.

We are planning to carry less inventory in our stores going forward, which we believe should result in the customer finding a higher mix of fresh receipts and great merchandise values.

We are planning to carry less inventory in our stores going forward compared to historical levels, which we believe should result in the customer finding a higher mix of fresh receipts and great merchandise values.

We believe that this should drive faster turns and lower markdowns, while simultaneously improving our customers’

shopping experience.

Making a Greater Investment in Merchandising Capabilities.

We intend to invest in incremental headcount, especially in growing or under-developed businesses, training and coaching, improved tools and reporting, and other forms of merchant support.

We believe that these investments should improve our ability to develop vendor relationships, source great merchandise buys, more accurately assess value, and better forecast and chase the sales trend.

Investment in Merchandising Capabilities.

We plan to continue investing in training and coaching, improved tools and reporting, incremental headcount, especially in growing or under-developed businesses, and other forms of

merchant support.

We believe that these investments should improve our ability to strengthen vendor relationships, source great merchandise buys, more accurately assess value, and better forecast and chase the sales trend.

Enhancing Existing Categories and Introducing New Categories.

We have opportunities to expand the depth and breadth of certain existing categories, such as ladies’

apparel, children’s products, bath and cosmetic merchandise,

housewares, décor for the home and beauty as we continue to de-weather our business, and maintain the flexibility to introduce new categories as we expand our merchandising capabilities.

We have opportunities to expand our offerings in certain existing categories, such as ladies’

apparel, bath and cosmetic merchandise, housewares, and décor for the home, and maintain the flexibility to introduce new categories as we expand our merchandising capabilities.

Expanding and Enhancing Our Retail Store Base.

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We continue to invest in select store relocations and downsizes to improve the customer experience, taking into consideration the age, size, sales, and location of a store.

Relocations provide an opportunity, upon leases expiration, to right-size our stores, improve our competitive positioning, incorporate our new prototype store designs and reduce occupancy costs.

Downsizes provide an opportunity to right-size our stores, within our existing space, improve co-tenancy, incorporate all of our new store designs and reduce occupancy costs During Fiscal 2021, we relocated or downsized a total of 20 stores.

Relocations provide an opportunity, upon lease expirations, to right-size our stores, improve our competitive positioning, incorporate our new prototype store designs and reduce occupancy costs.

Downsizes provide an opportunity to right-size our stores, within our existing space, improve co-tenancy, incorporate our new store designs and reduce occupancy costs.

Enhancing Operating Margins.

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Our store and supply chain teams must continue to respond to the challenge of becoming more responsive to the sales chase, enhancing their ability at flexing up and down based on trends.

Their ability to appropriately flex based on the ongoing trends allows us to maximize leverage on sales, regardless of the trend.

Their ability to appropriately flex based on the ongoing trends allows us to maximize leverage on sales.

Optimizing Markdowns.

We believe that our markdown system allows us to maximize sales and gross margin dollars based on forward-looking sales forecasts, sell-through targets and exit dates.

Additionally, as we plan to carry less inventory in our stores, we expect to drive faster turns, which in turn will reduce the amount of markdowns taken.

Additionally, as we plan to carry less inventory in our stores compared to historical levels, we expect to drive faster turns, which in turn should reduce the amount of markdowns taken.

Enhancing Purchasing Power.

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Uncertainties and Challenges

As we strive to increase profitability through achieving positive comparable store sales and leveraging productivity initiatives focused on improving the in-store experience, more efficient movement of products from the vendors to the selling floors, and modifying our marketing plans to increase our core customer base and increase our share of our current customers’

spending, there are uncertainties and challenges that we face as an off-price retailer of apparel and accessories for men, women and children and home furnishings that could have a material impact on our revenues or income.

The extent of the continuing impact of the COVID-19 pandemic on our business will depend largely on future developments, including the production and administration of effective medical treatments and vaccines, the timing and extent of the recovery in traffic and consumer spending at our stores, additional costs and delays related to our supply chain, reduced workforces or labor shortages and scarcity of raw materials, and any future required store closures because of COVID-19 resurgences.

presents material uncertainty and risk with respect to our business, financial performance and condition, operating results, liquidity and cash flows.

As we strive to increase profitability, there are uncertainties and challenges that we face that could have a material impact on our revenues or income.

General Economic Conditions.

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A broad, protracted slowdown in the U.S.

economy, an extended period of high unemployment rates, an uncertain global economic outlook or a credit crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis.

economy, an extended period of high unemployment rates, inflation rates, an uncertain global economic outlook or a credit crisis could adversely affect consumer spending habits resulting in lower net sales and profits than expected on a quarterly or annual basis.

Consumer confidence is also affected by the domestic and international political situation.

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The outbreak or escalation of war, or the occurrence of terrorist acts or other hostilities in or affecting the U.S., or public health issues such as pandemics or epidemics, including the continuing COVID-19 pandemic, could lead to a decrease in spending by consumers.

In addition, natural disasters, public health issues, industrial accidents and acts of war in various parts of the world, such as the current conflict in Ukraine, could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S.

In addition, natural disasters, public health issues, industrial accidents and acts of war in various parts of the world, such as the current war in Ukraine, could have the effect of disrupting supplies and raising prices globally which, in turn, may have adverse effects on the world and U.S.

economies and lead to a downturn in consumer confidence and spending.

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In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income.

Weather continues to be a contributing factor to the sale of our clothing.

Weather continues to be a contributing factor to the sale of our merchandise.

Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring.

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At various times throughout the year, traditional full-price department store chains and specialty shops offer brand-name merchandise at substantial markdowns, which can result in prices approximating those offered by us at our Burlington Stores.

Recently, an overhang of inventory across the retail industry has driven a surge in promotional activity at other retailers.

We anticipate that competition will increase in the future.

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retail industry continues to face increased pressure on margins as overall challenging retail conditions have led consumers to be more value conscious.

Additionally, lower-to-moderate income shoppers continue to face economic pressure due to higher cost of living.

Our strategy to chase the sales trend allows us the flexibility to purchase less pre-season merchandise with the balance purchased in-season and opportunistically.

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This enables us to obtain better terms with our suppliers, which we expect to help offset any rising costs of goods.

Industry-wide supply chain issues have led to increased freight and labor costs during Fiscal 2021 and may continue to add pressure on margins into Fiscal 2022.

These costs significantly impacted results in Fiscal 2021 and there remains significant uncertainty around when and if freight costs will return to pre-pandemic levels.

Additionally, the higher our sales volume is, and the more sales we chase above our initial plans, the more these increased supply chain costs will impact our margins.

We have also experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods.

There can be no assurance that we will be able to offset inflationary pressure in the future, or that our business will not be negatively affected by continued inflation in the future.

Key Performance Measures

Industry-wide supply chain issues led to increased freight and labor costs during Fiscal 2021 and continued to add pressure on margins in Fiscal 2022.

These costs significantly impacted results in Fiscal 2021 and Fiscal 2022, and there remains significant uncertainty around when and if freight costs will return to pre-pandemic levels.

We have also experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods, as well as in occupancy and other operating costs.

There can be no assurance that we will be able to offset inflationary pressure in the future by increasing prices or through other means, or that our business will not be negatively affected by continued inflation in the future.

Key Performance and Non-GAAP Measures

We consider numerous factors in assessing our performance.

Key performance measures used by management include net income (loss), Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory, store payroll and liquidity.

Key performance and non-GAAP measures used by management include net income (loss), Adjusted Net Income (Loss), Adjusted EBITDA, Adjusted EBIT, comparable store sales, gross margin, inventory, store payroll and liquidity.

Net income (loss) .

We earned net income of $408.8 million during Fiscal 2021 compared with a net loss of $216.5 million during Fiscal 2020.

This increase was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our sales growth during Fiscal 2021, partially offset by debt extinguishment charges during Fiscal 2021.

We earned net income of $230.1 million during Fiscal 2022 compared with of $408.8 million during Fiscal 2021.

This decrease was primarily driven by lower sales, as well as decreased gross margin rate, partially offset by decreased loss on debt extinguishment charges.

Refer to the section below entitled “Results of Operations”

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(v) amounts related to certain litigation matters;

(vi) non-cash interest on the Convertible Notes;

(vi) non-cash interest on the 2.25% Convertible Senior Notes due 2025 (Convertible Notes);

(vii) costs related to closing the e-commerce store;

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Among other limitations, Adjusted Net Income (Loss) does not reflect the following items, net of their tax effect:

favorable lease costs;

net favorable lease costs;

costs related to debt issuances and amendments;

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other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

During Fiscal 2021, Adjusted Net Income (Loss) improved $742.7 million to $573.2 million.

This increase was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our sales growth during Fiscal 2021.

During Fiscal 2022, Adjusted Net Income (Loss) decreased $292.4 million to $280.8 million.

This decrease was primarily driven by lower sales, as well as decreased gross margin rate.

Refer to the section below entitled “Results of Operations”

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Loss on extinguishment of debt (d)

Impairment charges

Impairment charges - long-lived assets

Litigation matters (e)

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Adjusted Net Income (Loss)

(a) Net favorable lease costs represents the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of purchase accounting related to the April 13, 2006 Bain Capital acquisition of Burlington Coat Factory Warehouse Corporation (the Merger Transaction).

(a) Net favorable lease costs represent the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of purchase accounting related to the April 13, 2006 Bain Capital acquisition of Burlington Coat Factory Warehouse Corporation (the Merger Transaction).

These expenses are recorded in the line item “Selling, general and administrative expenses”

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(c) Represents costs incurred in connection with the review and execution of refinancing opportunities, as well as the issuance of the $300.0 million 6.25% Senior Secured Notes due 2025 (Secured Notes) and the Convertible Notes.

(d) Amounts relate to the partial repurchase of the Convertible Notes, the full redemption of the Secured Notes, as well as the refinancing of the Term Loan Credit Agreement governing our senior secured credit term loan facility (Term Loan Facility).

(d) Relates to the partial repurchases of the Convertible Notes, the redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.

(e) Represents amounts charged for certain litigation matters.

(f) Represents costs related to the closure of our e-commerce store.

(g) Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, for the tax impact of items (a) through (f).

(g) Tax effect is calculated based on the effective tax rates (before discrete items) for the respective periods, adjusted for the tax effect for the impact of items (a) through (f).

The effective tax rate during Fiscal 2020 includes the benefit of loss carrybacks to prior years with higher statutory tax rates.

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other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

During Fiscal 2021, Adjusted EBITDA improved $1,113.6 million to $1,050.9 million.

This increase was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our sales growth during Fiscal 2021.

During Fiscal 2022, Adjusted EBITDA decreased $350.2 million to $700.7 million.

This decrease was primarily driven by lower sales, as well as decreased gross margin rate.

Refer to the section below entitled “Results of Operations”

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Depreciation and amortization (e)

Impairment charges

Impairment charges - long-lived assets

Income tax expense (benefit)

Adjusted EBITDA

(a) Amounts relate to the partial repurchase of the Convertible Notes, the full redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.

(a) Relates to the partial repurchases of the Convertible Notes, the redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.

(b) Represents costs incurred in connection with the review and execution of refinancing opportunities, as well as the issuance of the Secured Notes and the Convertible Notes.

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other unusual, non-recurring or extraordinary expenses, losses, charges or gains.

During Fiscal 2021, Adjusted EBIT improved $1,084.6 million to $801.7 million.

This increase was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our sales growth during Fiscal 2021.

During Fiscal 2022, Adjusted EBIT decreased $371.4 million to $430.3 million.

This decrease was primarily driven by lower sales, as well as decreased gross margin rate.

Refer to the section below entitled “Results of Operations”

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Net favorable lease costs (c)

Impairment charges

Impairment charges - long-lived assets

Litigation matters (d)

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Adjusted EBIT

(a) Amounts relate to the partial repurchase of the Convertible Notes, the full redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.

(a) Relates to the partial repurchases of the Convertible Notes, the redemption of the Secured Notes, as well as the refinancing of the Term Loan Facility.

(b) Represents costs incurred in connection with the review and execution of refinancing opportunities, as well as the issuance of the Secured Notes and the Convertible Notes.

(c) Net favorable lease costs represents the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of the Merger Transaction.

(c) Net favorable lease costs represent the non-cash expense associated with favorable and unfavorable leases that were recorded as a result of the Merger Transaction.

These expenses are recorded in the line item “Selling, general and administrative expenses”

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Comparable Store Sales .

Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of the previous year.

Due to the impact of the COVID-19 pandemic, including the temporary closing of all stores during Fiscal 2020, we are using Fiscal 2019 as the comparable previous year period when calculating comparable store sales for Fiscal 2021.

Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of a prior year.

Comparable store sales were not meaningful for Fiscal 2020 due to the extended store closures resulting from the COVID-19 pandemic.

Additionally, due to the impact of the COVID-19 pandemic in Fiscal 2020, we are using Fiscal 2019 as the comparable previous year period when calculating comparable store sales for Fiscal 2021.

The method of calculating comparable store sales varies across the retail industry.

As a result, our definition of comparable store sales may differ from other retailers.

For Fiscal 2021, we define comparable store sales as merchandise sales of those stores, commencing on the first day of the fiscal month two years after the end of their grand opening activities, which normally conclude within the first two months of operations.

If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable stores sales for any such month, as well as during the month(s) of their grand re-opening activities.

Comparable store sales increased 15% and 3% in full year periods for Fiscal 2021 and Fiscal 2019, respectively.

Comparable store sales were not meaningful for Fiscal 2020 due to the temporary store closures resulting from the COVID-19 pandemic.

Various factors affect comparable store sales, including weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition and the success of marketing programs.

For Fiscal 2022, we define comparable store sales as merchandise sales of those stores commencing on the first day of the fiscal month one year after the end of their grand opening activities, which normally conclude within the first two months of operations.

If a store is closed for seven or more days during a month, our policy is to remove that store from our calculation of comparable store sales for any such month, as well as during the month(s) of their grand re-opening activities.

The change in our comparable store sales was as follows:

Fiscal Year Ended

January 28, 2023

January 29, 2022

Various factors affect comparable store sales, including, but not limited to, weather conditions, current economic conditions, the timing of our releases of new merchandise and promotional events, the general retail sales environment, consumer preferences and buying trends, changes in sales mix among distribution channels, competition, and the success of marketing programs

Gross Margin .

Gross margin is the difference between net sales and the cost of sales.

Our cost of sales and gross margin may not be comparable to those of other entities, since some entities include all of the costs related to their buying and distribution functions, certain store-related costs and other costs, in cost of sales.

Our cost of sales and gross margin may not be comparable to those of other entities, since some entities may include all of the costs related to their buying and distribution functions, certain store-related costs and other costs, in cost of sales.

We include certain of these costs in the line items “Selling, general and administrative expenses”

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line item all costs of merchandise (net of purchase discounts and certain vendor allowances), inbound freight, distribution center outbound freight and certain merchandise acquisition costs, primarily commissions and import fees.

Gross margin as a percentage of net sales expanded to 41.6% during Fiscal 2021, compared with 38.2% during Fiscal 2020, driven primarily by inventory markdowns in Fiscal 2020 due to aged inventory at closed stores and warehouses, partially offset by increased freight costs in Fiscal 2021.

Gross margin as a percentage of net sales decreased to 40.4% during Fiscal 2022, compared with 41.6% during Fiscal 2021, driven primarily by decreased merchandise margins, primarily due to higher markdowns and increased shortage, as well as increased freight costs.

Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 120 basis points as a percentage of net sales.

Inventory at January 28, 2023 increased to $1,182.0 million from $1,021.0 million at January 29, 2022.

This increase was primarily due to our 79 net new stores since the end of Fiscal 2020.

Comparable store inventory at January 29, 2022 decreased 30% compared to February 1, 2020, driven by the continued execution of our strategy to operate with leaner in-store inventory.

Reserve inventory was 50% of total inventory as of January 29, 2022, compared with 33% as of February 1, 2020.

Reserve inventory includes all inventory that is being stored by our warehouses and distribution centers for release either later in the season, or in a subsequent season.

This increase primarily relates to a 32% increase in comparable store inventory, a 30% increase in reserve inventory, and 87 net new stores since the end of Fiscal 2021.

In Fiscal 2021, as we came into the spring season, our comparable store inventories were too lean, and this hurt our sales trend in the first quarter of Fiscal 2022.

Therefore, the significant increase in our comparable store inventories was by design.

Our comparable store inventory is still below pre-pandemic levels.

The difference between inventory and comparable store inventory is primarily the result of the latter not including distribution center and warehouse inventory or inventory at new and non-comparable stores.

Inventory held at our warehouses and distribution centers includes merchandise being readied for shipment to our stores and reserve inventory acquired opportunistically for future store release.

The magnitude of reserve inventory, at any one point in time, is dependent on the buying opportunities identified in the marketplace.

Reserve inventory includes all inventory that is being stored for release either later in the season, or in a subsequent season.

We intend to use our reserve merchandise to effectively chase sales trends.

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By appropriately managing our inventories, we believe we will be better able to deliver a continual flow of fresh merchandise to our customers.

Store Payroll .

Store Payroll as a Percentage of Net Sales .

Store payroll as a percentage of net sales measures our ability to manage our payroll in accordance with increases or decreases in net sales.

The method of calculating store payroll varies across the retail industry.

As a result, our store payroll may differ from other retailers.

As a result, our store payroll as a percentage of net sales may differ from other retailers.

We define store payroll as regular and overtime payroll for all store personnel as well as regional and territory personnel, exclusive of payroll charges related to corporate and warehouse employees.

As a result of the COVID-19 pandemic, we temporarily furloughed most store associates in March 2020, while providing two weeks of financial support to impacted associates.

We also continued to provide benefits to furloughed associates, including paying 100% of their current medical benefit premiums while they were furloughed.

As a result of these actions, store payroll costs increased to $754.9 million during Fiscal 2021, compared with $572.0 million during Fiscal 2020.

Store payroll as a percentage of net sales was 8.0% and 8.1% during Fiscal 2022 and Fiscal 2021, respectively.

Liquidity measures our ability to generate cash.

Management measures liquidity through cash flow, which is the measure of cash generated from or used in operating, financing, and investing activities.

Cash and cash equivalents, including restricted cash and cash equivalents, decreased $289.2 million during Fiscal 2021, compared with an increase of $977.2 million during Fiscal 2020.

Cash and cash equivalents, including restricted cash and cash equivalents, decreased $218.5 million during Fiscal 2022, compared with a decrease of $289.2 million during Fiscal 2021.

Refer to the section below entitled “Liquidity and Capital Resources”

for further explanation.

During Fiscal 2020, we took several steps to effectively manage our liquidity during the COVID-19 pandemic, including careful management of operating expenses, working capital and capital expenditures, as well as temporarily suspending our share repurchase program.

We resumed the share repurchase program during the third quarter of Fiscal 2021, with $250.0 million repurchased in total during the year.

During Fiscal 2020, we borrowed $400 million on our existing ABL Line of Credit, issued $805 million of our Convertible Notes, and through Burlington Coat Factory Warehouse Corporation, an indirect subsidiary of the Company (BCFWC), issued $300 million of our Secured Notes.

We repaid $150.0 million on the ABL Line of Credit during the second quarter of Fiscal 2020, and the remaining $250.0 million during the fourth quarter of Fiscal 2020.

On June 11, 2021, BCFWC redeemed the full $300.0 million aggregate principal amount of the Secured Notes.

During Fiscal 2021, we redeemed $160.4 million and $72.3 million related to partial repurchases of the Convertible Notes.

At January 29, 2022, we had $594.6 million available under the ABL Line of Credit.

We also had irrevocable letters of credit in the amount of $55.4 million as of January 29, 2022.

Results of Operations

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Performance for Fiscal Year Ended January 28, 2023 (Fiscal 2022) Compared with Fiscal Year Ended January 29, 2022 (Fiscal 2021)

Net sales improved $3,555.0 million, or 61.8%, to $9,306.5 million, primarily due to the temporary closure of all our stores during Fiscal 2020.

This improvement was also driven by net sales from our 79 net new stores opened since the end of Fiscal 2020.

Net sales decreased $622.0 million, or 6.7%, to $8,684.5 million, primarily driven by a decrease of 13% in comparable store sales during Fiscal 2022.

We believe this decrease in comparable store sales was driven by economic pressure on our core customers and promotional activity throughout the retail environment, as well as strong comparable store sales of 15% in the prior period.

The decrease in net sales was partially offset by 87 net new stores since the end of Fiscal 2021.

Other revenue

Other revenue improved $3.3 million to $15.7 million, primarily driven by increased revenue from our private label credit card.

Other revenue improved $2.4 million to $18.1 million, primarily driven by increased revenue from our private label credit card and increased layaway service fees.

Cost of sales

Cost of sales as a percentage of net sales improved to 58.4% during Fiscal 2021, driven primarily by a $271.9 million charge against aged inventory in the first quarter of Fiscal 2020 due to the extended store closures, partially offset by increased industry-wide supply chain costs during Fiscal 2021.

On a dollar basis, cost of sales increased $1,881.1 million, or 52.9%, primarily driven by our overall increase in sales as well as increased industry-wide supply chain costs.

Cost of sales as a percentage of net sales increased to 59.6% during Fiscal 2022, primarily driven by decreased merchandise margins, as a result of higher markdowns and increased shortage, as well as increased freight costs.

On a dollar basis, cost of sales decreased $264.4 million, or 4.9%, primarily driven by our overall decrease in sales.

Product sourcing costs, which are included in the line item “Selling, general and administrative expenses”

in our Consolidated Statements of Income (Loss), were $618.3 million during Fiscal 2021, compared to $433.8 million during Fiscal 2020.

in our Consolidated Statements of Income (Loss), were $677.6 million during Fiscal 2022, compared to $618.3 million during Fiscal 2021, primarily driven by increased supply chain costs.

Selling, general and administrative expenses

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Selling, general and administrative expenses

The decrease in selling, general and administrative expenses as a percentage of net sales was primarily driven by the overall increase in sales .

On a dollar basis, the increase in selling, general and administrative expenses was primarily due to our higher store count and sales volume, which drove increases in store related costs, primarily store payroll and occupancy costs, as well as product sourcing costs.

Additionally, significant steps were taken to reduce selling, general and administrative expenses during the period stores were closed during Fiscal 2020.

Costs related to debt issuances and amendments

During Fiscal 2021, we incurred $3.4 million of legal and placement fees related to the refinancing of our Term Loan Facility.

During Fiscal 2020, we incurred legal fees related to the issuance of our Secured Notes of $2.5 million, as well as legal and placement fees of $1.1 million related to the refinancing our Term Loan Facility.

Refer to Note 7, “Long Term Debt,”

for further discussion regarding our debt transactions.

The increase in selling, general and administrative expenses as a percentage of net sales was primarily driven by deleverage in occupancy and increased product sourcing costs, partially offset by decreased incentive compensation, store payroll costs, and advertising costs.

The dollar basis increase was primarily due to the same drivers listed above.

Depreciation and amortization

Depreciation and amortization expense amounted to $270.4 million during Fiscal 2022, compared with $249.2 million during Fiscal 2021.

The increase in depreciation and amortization expense was primarily driven by capital expenditures related to our new and non-comparable stores.

The increase in depreciation and amortization expense was primarily driven by capital expenditures related to our supply chain, as well as new and non-comparable stores.

Impairment charges—long-lived assets

Impairment charges related to long-lived assets were $7.7 million and $6.0 million during Fiscal 2021 and Fiscal 2020, respectively, related to store-level assets and lease assets at 9 stores and 14 stores during Fiscal 2021 and Fiscal 2020, respectively.

The recoverability assessment related to these store-level assets requires various judgments and estimates, including estimates related to future revenues, gross margin rates, store expenses, market rent rates and other assumptions.

Impairment charges related to long-lived assets were $21.4 million and $7.7 million during Fiscal 2022 and Fiscal 2021, respectively, related to four stores sold below carrying value as well as impairment of store-level assets and lease assets at twelve stores during Fiscal 2022, compared to impairment of store-level assets and lease assets at nine stores during Fiscal 2021.

We base these estimates upon our past and expected future performance.

We believe our estimates are appropriate in light of current market conditions.

However, future impairment charges could be required if we do not achieve our current revenue or cash flow projections for each store.

However, future

impairment charges could be required if we do not achieve our current revenue or cash flow projections for each store.

Refer to Note 6, “Impairment Charges,”

for further discussion.

Other income, net

Other income, net (consisting of gains and losses on insurance proceeds, interest income, net gains and losses on disposition of assets, gift card breakage, and other miscellaneous items ) improved $3.3 million to $11.6 million during Fiscal 2021.

The improvement in other income was primarily driven by increased recycling income due to store and distribution center closures in Fiscal 2020 and the sale of New Jersey Grow tax credits in Fiscal 2021, partially offset by losses on fixed asset disposal in Fiscal 2021.

Other income, net improved $15.3 million to $26.9 million during Fiscal 2022.

The improvement in other income was primarily driven by the gain on sale of real estate related assets, increased interest rates as a result of shifting cash to a higher yielding vehicle, interest income on a tax refund, and insurances recoveries, partially offset by the sale of the NJ Grow tax credit in Fiscal 2021.

Loss on Extinguishment of Debt

During Fiscal 2022, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $64.6 million in aggregate principal amount of Convertible Notes held by them for $78.2 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $14.7 million.

During Fiscal 2021, we incurred debt extinguishment charges of $124.6 million related to the partial repurchases of the Convertible Notes, $30.2 million related to the premium paid on redemption of the Secured Notes, as well as $1.2 million related to the refinancing of our Term Loan Facility.

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Interest expense improved $1.0 million to $66.5 million.

The decrease was primarily driven by the adoption of ASU 2020-06, which eliminated the amortization of debt discount previously associated with the Convertible Notes.

The decrease was also driven by the partial repurchase of $232.7 million of Convertible Notes and redemption in full of the $300.0 million Secured Notes in Fiscal 2021, as well as the paydown of our ABL Line of Credit during Fiscal 2020.

The decrease was driven by the redemption in full of the $300.0 million aggregate principal amount of Secured Notes and repurchase of $297.3 million of Convertible Notes, partially offset by the increase in LIBOR rates on the unhedged portion of our Term Loan Facility.

Our average interest rates and average balances related to our variable rate debt for Fiscal 2022 compared with Fiscal 2021 are summarized in the table below:

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(a) Excludes original issue discount

Income tax expense (benefit)

Income tax expense (benefit) was an expense of $136.5 million for Fiscal 2021 compared with a benefit of $221.1 million for Fiscal 2020.

The effective tax rate was 25.0% related to pretax income of $545.3 million for Fiscal 2021, and 50.5% related to pretax loss of $437.6 million for Fiscal 2020.

The income tax benefit in the prior year was a result of the pre-tax loss and the carry-back of net operating losses arising in Fiscal 2020 to the five prior tax years, as permitted under the CARES Act.

The higher effective tax rate in the prior year was a function of losses facilitating a refund receivable upon amending previously filed returns at a 35% tax rate.

Additionally, excess tax benefit from stock compensation drove an increase in the tax rate related to pre-tax loss in Fiscal 2020, compared to a decrease in the tax rate related to pre-tax income in Fiscal 2021.

Net income (loss)

We earned net income of $408.8 million during Fiscal 2021 compared with a net loss of $216.5 million for Fiscal 2020.

This improvement was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our sales growth during Fiscal 2021, partially offset by debt extinguishment charges during Fiscal 2021.

Performance for Fiscal Year Ended January 30, 2021 (Fiscal 2020) Compared with Fiscal Year Ended February 1, 2020 (Fiscal 2019)

Income tax expense

Income tax expense was $77.4 million for Fiscal 2022 compared with $136.5 million for Fiscal 2021.

The effective tax rate was 25.2% related to pretax income of $307.5 million for Fiscal 2022, and 25.0% related to pretax income of $545.3 million for Fiscal 2021.

The decrease in tax expense is primarily driven by the decrease in pretax income.

We earned net income of $230.1 million during Fiscal 2022 compared with net income of $408.8 million for Fiscal 2021.

This decrease was primarily driven by lower sales, as well as decreased gross margin rate, partially offset by a smaller debt extinguishment charge.

Performance for Fiscal Year Ended January 29, 2022 (Fiscal 2021) Compared with Fiscal Year Ended January 30, 2021 (Fiscal 2020)

For a discussion related to Fiscal 2021 performance compared to Fiscal 2020 performance, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,”

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Liquidity and Capital Resources

Our ability to satisfy interest and principal payment obligations on our outstanding debt will depend largely on our future performance which, in turn, is subject to prevailing economic conditions and to financial, business and other factors beyond our control.

If we do not have sufficient cash flow to service interest and principal payment obligations on our outstanding indebtedness, and if we cannot borrow or obtain equity financing to satisfy those obligations, our business and results of operations will be materially adversely affected.

We cannot be assured that any replacement borrowing or equity financing could be successfully completed on terms similar to our current financing agreements, or at all.

As a result of the uncertainty regarding the COVID-19 pandemic, we took a number of measures to manage its cash flow.

These measures included carefully managing operating expenses, working capital and capital expenditures, as well as temporarily suspending our share repurchase program.

We resumed the share repurchase program during the third quarter of Fiscal 2021, with $250.0 million repurchased in total during the year.

We completed several debt transactions in order to facilitate increased financial flexibility in response to the COVID-19 pandemic.

During March 2020, we borrowed $400.0 million on our existing ABL Line of Credit.

We repaid $150.0 million on the ABL Line of Credit during the second quarter of Fiscal 2020, and the remaining $250.0 million during the fourth quarter of Fiscal 2020.

On April 16, 2020, we issued $805.0 million of our Convertible Notes, and through BCFWC, issued $300.0 million of Secured Notes.

The proceeds of the Convertible Notes are being used for general corporate purposes.

On June 11, 2021, BCFWC redeemed the

full $300.0 million aggregate principal amount of the Secured Notes.

The redemption price of the Secured Notes was $323.7 million, plus accrued and unpaid interest to, but not including, the date of redemption.

Additionally, we repurchased $160.4 million and $72.3 million of principal on the Convertible Notes during the third quarter and fourth quarter of Fiscal 2021, respectively.

Refer to "Debt and Hedging" below for recent debt transactions completed.

We believe that cash generated from operations, along with our existing cash and our ABL Line of Credit, will be sufficient to fund our expected cash flow requirements and planned capital expenditures for at least the next twelve months as well as the foreseeable future.

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Cash Flows for Fiscal 2022 Compared with Fiscal 2021

We used $289.2 million of cash flows during Fiscal 2021 compared with net proceeds of $977.2 million during Fiscal 2020.

We used $218.5 million of cash flows during Fiscal 2022 compared with $289.2 million during Fiscal 2021.

Net cash provided by operating activities amounted to $596.4 million and $833.2 million during Fiscal 2022 and Fiscal 2021, respectively.

The increase in our operating cash flows was primarily driven by the temporary closure of all our stores during Fiscal 2020, caused by the COVID-19 pandemic, as well as our strong sales performance during Fiscal 2021.

The decrease in our operating cash flows was primarily driven by lower sales and margin in Fiscal 2022, as well as changes in working capital (primarily due to an accounts payable policy change resulting in earlier payments to vendors, partially offset by receipt of a tax refund).

Net cash used in investing activities was $423.1 million and $344.4 million during Fiscal 2022 and Fiscal 2021, respectively.

This change was primarily the result of an increase in capital expenditures related to our stores (new stores, remodels and other store expenditures), reflective of our cash management decisions due to COVID-19.

Net cash used in financing activities was $778.0 million during Fiscal 2021 compared to proceeds of $1,032.2 million during Fiscal 2020.

This change was primarily driven by our cash flow management efforts during Fiscal 2020 in response to the COVID-19 pandemic, including our borrowings on the Secured Notes and the Convertible Notes during Fiscal 2020.

During Fiscal 2021, BCFWC redeemed the Secured Notes in full, and we partially redeemed the Convertible Notes.

Additionally, we repurchased shares of common stock for $150.0 million and $100.0 million under our share repurchase program during the third quarter and fourth quarter of Fiscal 2021, respectively.

The share repurchase program was suspended during Fiscal 2020.

This change was primarily the result of an increase in capital expenditures related to our stores (new stores, remodels and other store expenditures) and supply chain growth initiatives.

Net cash used in financing activities was $391.7 million during Fiscal 2022 compared to $778.0 million during Fiscal 2021.

This change was primarily driven by higher debt redemptions in Fiscal 2021 compared to Fiscal 2022, partially offset by more share repurchases in Fiscal 2022.

Changes in working capital also impact our cash flows.

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We had working capital at January 28, 2023 of $365.3 million compared with $593.4 million at January 29, 2022.

The decrease in working capital was primarily driven by the decreased cash balance due to the Convertible Notes repurchases during the third quarter and fourth quarter of Fiscal 2021 and redemption of the Secured Notes, as well as an increased accounts payable balance, partially offset by increased merchandise inventory balance.

The decrease in working capital was primarily due to a decrease in cash and cash equivalents, primarily driven by payments on the Convertible Notes and share repurchases, partially offset by decreased accounts payable and increased inventory.

Cash Flows for Fiscal 2021 Compared with Fiscal 2020

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Share Repurchase Program

On August 18, 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, which is authorized to be executed through August 2023.This repurchase program was funded using our available cash and borrowings on our ABL Line of Credit.

On August 18, 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, which was authorized to be executed through August 2023.

This authorization was completed during the second quarter of Fiscal 2022.

On February 16, 2022, our Board of Directors authorized the repurchase of up to an additional $500.0 million of common stock, which is authorized to be executed through February 2024.

During Fiscal 2022, we repurchased 1,756,811 shares of common stock for $302.7 million under our share repurchase program.

As of January 28, 2023, we had $347.3 million remaining under our share repurchase authorization.

Subsequent to January 29, 2022 (February 16, 2022), our Board of Directors authorized the repurchase of up to $500.0 million of common stock, which is authorized to be executed through February 2024.

We are authorized to repurchase shares of our outstanding common stock from time to time on the open market or in privately negotiated transactions under our repurchase program.

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Our share repurchase program may be suspended, modified or discontinued at any time, and we have no obligation to repurchase any amount of our common stock under the program.

We currently do, and intend to continue to, retain all available funds and any future earnings to fund all of our capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives.

Therefore, at this time, we do not anticipate paying cash dividends in the near term.

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Term Loan Facility

On June 24, 2021, BCFWC entered into Amendment No.

On June 24, 2021, Burlington Coat Factory Warehouse Corporation, an indirect subsidiary of the Company (BCFWC), entered into Amendment No.

9 (the Ninth Amendment) to the Term Loan Credit Agreement governing the Term Loan Facility.

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ABL Line of Credit

On July 20, 2022, we entered into a Fourth Amendment to the Second Amended and Restated Credit Agreement (the “Amendment”), by and among BCFWC, as lead borrower and the other borrowers party thereto, the facility guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent, which Amendment amends that certain Second Amended and Restated Credit Agreement dated as of September 2, 2011, by and among the BCFWC, the other borrowers party thereto, the facility guarantors party thereto, the lenders party thereto and Bank of America, N.A., as administrative agent and collateral agent.

The Amendment increased the aggregate principal amount of the commitments of the ABL Line of Credit

from $650.0 million to $900.0 million and replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions based on a term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR, available for borrowings up to $100 million, or up to the full amount of the commitments if the term SOFR rate is not available).

At January 28, 2023, we had $795.7 million available under the ABL Line of Credit.

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The Convertible Notes will mature on April 15, 2025, unless earlier converted, redeemed or repurchased.

During the third quarter of Fiscal 2021, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $160.4 million in aggregate principal amount of Convertible Notes held by them for a combination of an aggregate of $90.8 million in cash and 513,991 shares of our common stock.

During the fourth quarter of Fiscal 2021, we entered into additional separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.

During the second half of Fiscal 2021, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $232.7 million in aggregate principal amount of Convertible Notes held by them for a combination of an aggregate of $199.8 million in cash and 513,991 shares of common stock.

During the first quarter of Fiscal 2022, we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $64.6 million in aggregate principal amount of Convertible Notes held by them for $78.2 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $124.6 million in Fiscal 2021.

See Note 7, “Long Term Debt,”

for additional information.

Subsequent to January 29, 2022 (March 15, 2022), we entered into separate, privately negotiated exchange agreements with certain holders of the Convertible Notes.

Under the terms of the exchange agreements, the holders have agreed to exchange $55.6 million in aggregate principal amount of Convertible Notes held by them for an amount in cash to be calculated based on the volume-weighted average price of our common stock over a two-day measurement period beginning on March 16, 2022.

These exchange transactions are expected to close on March 21, 2022, subject to the satisfaction of customary closing conditions.

Secured Notes

On April 16, 2020, BCFWC, issued $300.0 million of Senior Secured Notes.

On April 16, 2020, BCFWC, issued $300.0 million of Secured Notes.

The Secured Notes were senior, secured obligations of BCFWC, and interest was payable semiannually in cash at a rate of 6.25% per annum on April 15 and October 15 of each year, beginning on October 15, 2020.

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The redemption price of the Secured Notes was $323.7 million, plus accrued and unpaid interest to, but not including, the date of redemption.

This redemption resulted in a pre-tax debt extinguishment charge of $30.2 million.

Refer to Note 7, “Long Term Debt,”

for further discussion regarding our debt transactions.

On June 24, 2021, we terminated its previous interest rate swap and entered into a new interest rate swap.

On June 24, 2021, the Company terminated its previous interest rate swap and entered into a new interest rate swap.

The new interest rate swap, which hedges $450 million of variable rate exposure under our Term Loan Facility, is designated as a cash flow hedge and expires on June 24, 2028.

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(1) Represents future principal payments on outstanding borrowings as of January 28, 2023.

(2) Represents interest payments on (i) the outstanding balance of the Term Loan Facility, with an average interest rate of 2.0% during Fiscal 2021;

and (ii) the outstanding balance of the Convertible Notes, with an interest rate of 2.25%.

(2) Represents interest payments on (i) the outstanding balance of the Term Loan Facility, with an interest rate of 6.4% as of January 28, 2023;

(ii) $450.0 million interest rate swap with a fixed LIBOR of 2.2%;

and (iii) the outstanding balance of the Convertible Notes, with an interest rate of 2.25%.

(3) Finance lease obligations include future interest payments.

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(5) Represents commitments to purchase goods that have not been received as of January 28, 2023.

The table above excludes estimated commitments for services used in our business of up to approximately $105 million over the next five years.

The table above excludes estimated commitments for services to be used in our business of up to approximately $185 million over the next five years.

(6) Represents severance payments in the normal course of business that are included in the line item “Selling, general and administrative expenses”

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Actual results may differ from these estimates under different assumptions or conditions.

As of the end of Fiscal 2021, the impact of the COVID-19 pandemic continues to unfold.

As a result, many of our estimates and judgments carry a higher degree of variability and volatility.

As events continue to evolve and additional information becomes available, our estimates may change materially in future periods.

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Recent Accounting Pronouncements

Refer to Note 2 to our Consolidated Financial Statements, “Recent Accounting Pronouncements,”

for a discussion of recent accounting pronouncements and their impact in our Consolidated Financial Statements.

There were no new accounting standards that had a material impact on the Company’s Consolidated Financial Statements during Fiscal 2022, and there were no new accounting standards or pronouncements that were issued but not yet effective as of January 28, 2023 that the Company expects to have a material impact on its financial position or results of operations upon becoming effective.

Fluctuations in Operating Results

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Certain of the general factors that may cause such fluctuations are discussed in Item 1A, Risk Factors and elsewhere in this Annual Report.

Our business, like that of most retailers, is subject to seasonal influences.

In the second half of the year, which includes the back-to-school and holiday seasons, we generally realize a higher level of sales and net income.

Weather is also a contributing factor to the sale of our clothing.

Generally, our sales are higher if the weather is cold during the Fall and warm during the early Spring.

Sales of cold weather clothing are increased by early cold weather during the Fall, while sales of warm weather clothing are improved by early warm weather conditions in the Spring.

Although we have diversified our product offerings, we believe traffic to our stores is still driven, in part, by weather patterns.

During Fiscal 2021, we have experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods.

During Fiscal 2022 and Fiscal 2021, we have experienced inflationary pressure in our supply chain and with respect to raw materials and finished goods.

There can be no assurance that we will be able to offset inflationary pressure in the future, or that our business will not be negatively affected by continued inflation in the future.

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Any decreases in consumer discretionary spending could result in a decrease in store traffic and same store sales, all of which could negatively affect our business, operations, liquidity, financial results and/or stock price, particularly if consumer spending levels are depressed for a prolonged period of time.

We do not believe that our operating results were materially affected by inflation during Fiscal 2020 or Fiscal 2019.

We do not believe that our operating results were materially affected by inflation during Fiscal 2020.

Historically, as the costs of merchandising and related operating expenses have increased, we have been able to mitigate the effect of such impact on our operations.

retail industry continues to face increased pressure on margins as commodity prices increase and the overall challenging retail conditions have led consumers to be more value conscious.

Additionally, lower-to-moderate income shoppers continue to face economic pressure due to higher cost of living.

Our strategy of chasing sales, in which we purchase both pre-season and in-season merchandise, allows us the flexibility to purchase less pre-season with the balance purchased in-season and opportunistically.

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The objective of our financial risk management is to minimize the negative impact of interest rate fluctuations on our earnings and cash flows.

We manage interest rate risk through the use of our interest rate cap contracts.

We manage interest rate risk through the use of our interest rate swap contracts.

As more fully described in Note 8 to our Consolidated Financial Statements, “Derivative Instruments and Hedging Activities,”

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We are exposed to certain market risks as part of our ongoing business operations.

Primary exposures include changes in interest rates, as borrowings under our ABL Line of Credit and Term Loan Facility bear interest at floating rates based on LIBOR or the base rate, in each case plus an applicable borrowing margin.

Primary exposures include changes in interest rates, as borrowings under our ABL Line of Credit bear interest based on SOFR and borrowings under our Term Loan Facility bear interest at floating rates based on LIBOR or the base rate, in each case plus an applicable borrowing margin.

The interest rate of our Term Loan Facility is also dependent on the prime rate, and the federal funds rate as further discussed in Note 7 to our Consolidated Financial Statements, “Long Term Debt.”

To address the transition away from LIBOR, the Term Loan Facility and ABL Line of Credit agreements each provide for an agreed upon methodology to amend such agreements to substitute LIBOR with an agreed replacement rate, subject to our consent and the applicable administrative agent, and in each case subject to a short lender negative consent period.

During Fiscal 2022, an amendment to the ABL Line of Credit replaced the LIBOR-based interest rate benchmark provisions with interest rate benchmark provisions based on a term secured overnight financing rate (SOFR) or a daily SOFR rate (in the case of daily SOFR, available for borrowings up to $100 million, or up to the full amount of the commitments if the term SOFR rate is not available).

We manage our interest rate risk through the use of interest rate derivative contracts.

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for further discussion regarding our derivative transactions.

On June 24, 2021, we entered into Amendment No.

9 (the Ninth Amendment) to the Term Loan Credit Agreement governing the Term Loan Facility.

The Ninth Amendment, among other things, extended the maturity date from November 17, 2024 to June 24, 2028, and changed the interest rate margins applicable to the Term Loan Facility from 0.75% to 1.00%, in the case of prime rate loans, and from 1.75% to 2.00%, in the case of LIBOR loans, with a 0.00% LIBOR floor.

We have unlimited interest rate risk related to borrowings on our variable rate debt in excess of the notional principal amount of our interest rate swap contract.

At January 28, 2023, we had $947.0 million of floating-rate debt, exclusive of original issue discount.

Based on $956.6 million outstanding as floating-rate debt, a one percentage point interest rate increase as of January 29, 2022 ( after considering our interest rate swap contract and assuming current borrowing level remains constant), would cause an increase to cash interest expense of $5.1 million per year.

This sensitivity analysis assumes our mix of financial instruments and all other variables will remain constant in future periods.

Based on $947.0 million outstanding as floating-rate debt, a one percentage point interest rate increase or decrease as of January 28, 2023 ( after considering our interest rate swap contract and assuming current borrowing level remains constant), would cause an increase or decrease, respectively, to cash interest expense of $4.8 million per year.

This sensitivity analysis assumes our mix of financial instruments and all other

variables will remain constant in future periods.

These assumptions are made in order to facilitate the analysis and are not necessarily indicative of our future intentions.

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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 5. Market for Registrant’s Common Equity