What changed in this filing

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Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-17 · 160 added, 168 removed, 350 unchanged (48% of the section changed)

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We opened our first store in Burlington, New Jersey in 1972, selling primarily coats and outerwear.

Since then, we have expanded our store base to 1,108 stores as of February 1, 2025 in 46 states, Washington D.C.

Since then, we have expanded our store base to 1,212 stores as of January 31, 2026 in 46 states, Washington D.C.

and Puerto Rico.

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Store Openings, Closings and Relocations

During the fiscal year ended February 1, 2025 (Fiscal 2024), we opened 147 new stores, inclusive of 31 relocations, and closed 15 stores, exclusive of the aforementioned relocations, bringing our store count as of February 1, 2025 to 1,108 stores.

During the fiscal year ended February 1, 2025 (Fiscal 2025), we opened 131 new stores, inclusive of 18 relocations, and closed nine stores, exclusive of the aforementioned relocations, bringing our store count as of January 31, 2026 to 1,212 stores.

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

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We report fiscal years under a 52/53-week format and as a result, certain fiscal years will contain 53 weeks.

Fiscal 2024 included 52 weeks, the fiscal year ended February 3, 2024 (Fiscal 2023) included 53 weeks, and the fiscal year ended January 28, 2023 (Fiscal 2022) included 52 weeks.

Fiscal 2025 included 52 weeks, the fiscal year ended February 1, 2025 (Fiscal 2024) included 52 weeks, and the fiscal year ended February 3, 2024 (Fiscal 2023) included 53 weeks.

Fiscal 2026 will have 52 weeks.

Ongoing Initiatives for Fiscal 2026

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

These initiatives include, but are not limited to:

• Driving Comparable Store Sales Growth.

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

• More Effectively Chasing the Sales 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 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.

• 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 our offerings in certain existing categories, such as ladies’ and junior apparel, beauty, and home merchandise, and maintain the flexibility to introduce new categories as we expand our merchandising capabilities.

• Expanding and Enhancing Our Retail Store Base.

We intend to expand and enhance our retail store base through the following initiatives:

• Adhering to a Market Focused and Financially Disciplined Real Estate Strategy.

We have grown our store base consistently since our founding in 1972.

We believe there is significant opportunity to expand our retail store base in the United States.

As a result of our smaller store prototype, we have identified numerous market opportunities that we believe will allow us to operate 2,000 stores over the long term.

We expect to average about 100 net new stores per year, for a total of 500 net new stores over the five-year period from Fiscal 2024 through Fiscal 2028.

• Enhancing the Store Experience.

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 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.

We intend to increase our operating margins through the following initiatives:

• Improving Operational Flexibility.

Our store and supply chain teams must continue to respond to the sales chase, enhancing their ability at flexing up and down based on trends, and allowing 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 compared to historical levels, we expect to drive faster turns, which should reduce the amount of markdowns taken compared to historical levels.

• Optimizing the Supply Chain .

Our transportation initiatives have led to lower freight costs compared to recent levels, and we believe our efficiency and labor productivity initiatives will continue to result in lower supply chain costs over the next several years.

We also believe there are longer-term supply chain opportunities through investments in automation and new purpose built processing buildings, and owning (rather than leasing) a larger portion of our warehouse network going forward.

• Challenging Expenses to Drive Operating Leverage.

We believe sales growth will drive fixed cost operating leverage.

In addition, by more conservatively planning our comparable store sales growth, we are forcing even tighter expense control throughout all areas of our business.

We believe that this should put us in a strong position to drive favorable operating leverage on any sales ahead of the plan.

Additionally, we plan to continue challenging the processes and operating norms throughout the organization with the belief that this will lead to incremental efficiency improvements and savings.

We continue to focus on several ongoing strategic initiatives aimed at operating with flexibility, responsiveness, and efficiency in everything we do, while delivering great value to our customers through continued improvement in the execution of our off-price model.

These initiatives are outlined below.

Merchandising

Our merchandising strategy is centered on delivering compelling value while remaining responsive to evolving customer preferences.

Key initiatives include:

• focusing on fashion, quality, brand, and price to inform our buying decisions and provide customers with outstanding value on their purchases;

• delivering remarkable value every day with speed and agility through a culture of customer focus and continuous learning and innovation;

• enabling buyers to spend more time in the market and take data-driven actions informed by current trends and opportunities;

• following the off-price principles of opportunistic buying and in-season purchasing to more effectively chase the sales trend;

• building capabilities to localize the assortment by region and store;

• continuing to grow our merchandising talent base.

We remain focused on delivering a neat, clean, easy-to-shop, organized, and consistent shopping experience for our customers while maintaining disciplined cost and inventory controls.

Key initiatives include:

• redesigning our stores with new interior layouts, signage and fixtures to better highlight our selection of trend-right, branded merchandise, and create an inviting environment for customers that accentuates the thrill of the treasure hunt;

• optimizing shortage reduction by identifying risks and implementing innovative physical security solutions and technologies;

• getting fresh receipts out to the sales floor rapidly and efficiently.

We continue to selectively expand our store footprint in attractive locations to support long-term growth.

Key initiatives include:

• opening 100 stores per year on average, which we believe will allow us to operate 2,000 stores over the long-term;

• prioritizing 25,000 square foot stores located in busy, convenient strip malls;

• downsizing existing stores to incorporate our new store designs and reduce occupancy costs.

We continue to invest in supply chain capabilities to support growth and improve operational efficiency.

Key initiatives include:

• driving cost savings through speed, flexibility, and efficiency in distribution and transportation;

• expanding and modernizing our supply chain network with flexible and efficient distribution centers purpose-built to execute our off-price business model.

Our marketing efforts are focused on building a strong and renewed reputation with consumers.

Key initiatives include:

• communicating a strong value message to new and existing shoppers;

• investing in advertising that drives traffic to our stores.

Uncertainties and Challenges

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General Economic Conditions.

There remains a high level of uncertainty in the current macroeconomic and geopolitical environments, and prolonged inflationary pressures continue to negatively impact the discretionary spending of the low-income shopper, our core customer.

In addition to inflation, consumer spending habits, including spending for the merchandise that we sell, are affected by, among other things, prevailing global economic conditions, the costs of basic necessities and other goods, levels of employment, salaries and wage rates, prevailing interest rates, reductions in government benefits and lower tax refunds, housing costs, energy costs, commodities pricing, income tax rates and policies, consumer confidence and consumer perception of economic conditions.

There remains a high level of uncertainty in the current macroeconomic and geopolitical environments, and prolonged inflationary pressures could continue to negatively impact the discretionary spending of the low-income shopper, our core customer.

In addition to inflation, consumer spending habits, including spending for the merchandise that we sell, are affected by, among other things, prevailing global economic conditions, the costs of basic necessities and other goods, levels of employment, salaries and wage rates, prevailing interest rates, reductions in government benefits and lower tax refunds, housing and food costs, energy and fuel costs, commodities pricing, income tax rates and policies, immigration policies, consumer confidence and consumer perception of economic conditions.

In addition, consumer purchasing patterns are generally influenced by consumers’ disposable income, credit availability and debt levels.

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

Conversely, if inflation continues to decline, it could benefit our core customers who have been impacted by the higher cost of living since early 2022, and if economic growth slows, it could cause moderate and higher-income shoppers to become more value conscious.

Conversely, if inflation declines, it could benefit our core customers who have been impacted by higher cost of living, and if economic growth slows, it could cause moderate and higher-income shoppers to become more value conscious.

Either of these developments, if they occur, would be expected to improve our business.

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Our financial condition and operations could be impacted by changes in government regulations, initiatives or programs in areas including, but not limited to, trade and tariffs, taxes, healthcare, and immigration.

In addition, trade and tariff regulations could have an indirect impact on consumer prices.

In addition, trade and tariff regulations have had and are expected to continue to

have an indirect impact on consumer prices.

We will continue to monitor changes in tariff policy and the impact of these changes on our industry and the economy and seek to adjust to these changes as efficiently as possible.

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, could lead to a decrease in spending by consumers.

In addition, natural disasters, public health issues, industrial accidents and acts of war or conflicts in various parts of the world (such as the conflict in the Middle East), 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 or conflicts in various parts of the world (such as the conflict in Ukraine or the conflict in the Middle East), 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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Fiscal Year Ended

Reconciliation of net income to Adjusted Net Income:

Net favorable lease costs (a)

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Litigation matters (d)

Tax effect (e)

Layaway liabilities (e)

Security tags (f)

Tax effect (g)

Adjusted Net Income

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(b) Fiscal 2024 amount relates to the partial write-off of the original issue discount and deferred debt costs related to the September 2024 extension and upsize of the Term Loan Facility.

Prior year amounts relate to the partial repurchases of the 2025 Convertible Notes in Fiscal 2023 and Fiscal 2022, and the exchange of a portion of the 2025 Convertible Notes in Fiscal 2023.

(c) Fiscal 2024 amount relates to the September 2024 extension and upsizing of the Term Loan Facility in the third quarter of Fiscal 2024.

Fiscal 2023 amount relates to the Term Loan Facility amendment in the second quarter of Fiscal 2023 changing from the Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.

Fiscal 2023 amount relates to the partial repurchases of the 2.25% Convertible Senior Notes due 2025 (the “2025 Convertible Notes”) and the exchange of a portion of the 2025 Convertible Notes.

Fiscal 2024 amount relates to the September 2024 extension and upsizing of the Term Loan Facility.

Fiscal 2023 amount relates to the Term Loan Facility amendment changing from the Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.

(d) Represents amounts charged for certain litigation matters.

(e) 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 (d).

(e) Represents a one-time settlement of certain layaway liabilities on our Consolidated Balance Sheet, resulting in a gain.

(f) Represents a one-time write-off to amortization related to certain merchandise security tags on our Consolidated Balance Sheet.

(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).

Adjusted EBIT and Adjusted EBITDA have limitations as analytical tools, and should not be considered either in isolation or as a substitute for net income or other data prepared in accordance with GAAP.

Among other limitations, Adjusted EBIT does not reflect:

Among other limitations, Adjusted EBIT and Adjusted EBITDA do not reflect:

• net interest expense;

• net favorable lease costs;

• losses on the extinguishment of debt;

• losses on the extinguishments of debt;

• costs related to debt issuances and amendments;

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During Fiscal 2025, Adjusted EBIT improved $141.7 million to $887.1 million.

During Fiscal 2024, Adjusted EBITDA improved $204.9 million to $1,093.0 million.

During Fiscal 2025, Adjusted EBITDA increased $200.3 million to $1,293.3 million.

These increases were primarily driven by higher sales and increased gross margin rate.

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The following table shows our reconciliation of net income to Adjusted EBIT and Adjusted EBITDA for Fiscal 2025, Fiscal 2024 and Fiscal 2023:

(in thousands)

Fiscal Year Ended

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Litigation matters (d)

Layaway liabilities (e)

Security tags (f)

Income tax expense

Adjusted EBIT

Depreciation and amortization

Depreciation and amortization (g)

Adjusted EBITDA

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(b) Fiscal 2024 amount relates to the partial write-off of the original issue discount and deferred debt costs related to the September 2024 extension and upsize of the Term Loan Facility.

Prior year amounts relate to the partial repurchases of the 2025 Convertible Notes in Fiscal 2023 and Fiscal 2022, and the exchange of a portion of the 2025 Convertible Notes in Fiscal 2023.

(c) Fiscal 2024 amount relates to the September 2024 extension and upsizing of the Term Loan Facility in the third quarter of Fiscal 2024.

Fiscal 2023 amount relates to the Term Loan Facility amendment in the second quarter of Fiscal 2023 changing from the Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.

Fiscal 2023 amount relates to the partial repurchases of the 2025 Convertible Notes and the exchange of a portion of the 2025 Convertible Notes.

Fiscal 2024 amount relates to the September 2024 extension and upsizing of the Term Loan Facility.

Fiscal 2023 amount relates to the Term Loan Facility amendment changing from the Adjusted LIBOR Rate to the Adjusted Term SOFR Rate.

(d) Represents amounts charged for certain litigation matters.

(e) Represents a one-time settlement of certain layaway liabilities on our Consolidated Balance Sheet, resulting in a gain.

(f) Represents a one-time write-off to amortization related to certain merchandise security tags on our Consolidated Balance Sheet.

(g) Depreciation and amortization excludes the write-off of security tags in item (f).

Comparable Store Sales .

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The table below depicts the change in our comparable store sales during Fiscal 2025, Fiscal 2024 and Fiscal 2023, all of which are calculated on a 52-week basis.

Fiscal Year Ended

February 1, 2025

February 3, 2024

January 28, 2023

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.

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We include in our “Cost of sales” 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 43.2% during Fiscal 2024, compared with 42.5% during Fiscal 2023, driven primarily by higher merchandise margins and improved freight costs.

Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 50 basis points as a percentage of net sales during the fiscal year ended February 3, 2024, compared with the fiscal year ended February 3, 2024, primarily driven by supply chain efficiency initiatives.

Gross margin as a percentage of net sales expanded to 43.8% during Fiscal 2025, compared with 43.2% during Fiscal 2024, driven primarily by improved merchandise margin and freight costs.

Product sourcing costs, which are included in selling, general and administrative expenses, decreased approximately 20 basis points as a percentage of net sales during the fiscal year ended January 31, 2026, compared with the fiscal year ended February 1, 2025.

Product sourcing costs include the costs of processing goods through our supply chain and buying costs.

Inventory at February 1, 2025 increased to $1,250.8 million from $1,087.8 million at February 3, 2024.

This increase primarily relates to 101 net new stores since the end of Fiscal 2023 and an increase in reserve inventory, partially offset by a decrease in comparable store inventory.

Inventory as of January 31, 2026 increased to $1,311.9 million from $1,250.8 million at February 1, 2025.

This increase primarily relates to an increase in comparable store inventory and new store inventory at 104 net new stores since the end of Fiscal 2024.

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

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Loss on extinguishment of debt

Interest income

Interest expense

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Income tax expense

Performance for Fiscal Year Ended February 1, 2025 (Fiscal 2024) Compared with Fiscal Year Ended February 3, 2024 (Fiscal 2023)

Net sales improved $907.8 million, or 9.3%, to $10,616.7 million, primarily driven by 101 net new stores since the end of Fiscal 2023 and an increase of 4% in comparable store sales during Fiscal 2024.

Performance for Fiscal Year Ended January 31, 2026 (Fiscal 2025) Compared with Fiscal Year Ended February 1, 2025 (Fiscal 2024)

Net sales improved $932.9 million, or 8.8%, to $11,549.6 million, primarily driven by both an increase in net sales of $691.4 million from our new stores and non-comparable stores as well as an increase of 2%, or $241.5 million, in comparable store sales during Fiscal 2025.

Cost of sales

Cost of sales as a percentage of net sales decreased to 56.8% during Fiscal 2024, compared with 57.5% during Fiscal 2023, primarily driven by higher merchandise margins and improved freight costs.

Cost of sales as a percentage of net sales decreased to 56.2% during Fiscal 2025, compared with 56.8% during Fiscal 2024, primarily driven by improved merchandise margin and freight costs.

On a dollar basis, cost of sales increased $461.7 million, or 7.7%, primarily driven by our overall increase in sales.

Selling, general and administrative expenses

Selling, general and administrative expenses as a percentage of net sales decreased to 33.4% during the fiscal year ended February 1, 2025, compared to 33.9% during the fiscal year ended February 3, 2024.

The decrease was primarily driven by supply chain efficiency initiatives and leverage on fixed expenses, partially offset by investments in store payroll and higher incentive costs.

On a dollar basis, selling, general and administrative expenses increased by $258.7 million, or 7.9%, to $3,547.0 million during the fiscal year ended February 1, 2025.

Selling, general and administrative expenses as a percentage of net sales decreased to 33.1% during the fiscal year ended January 31, 2026, compared to 33.4% during the fiscal year ended February 1, 2025.

The decrease was primarily driven by supply chain efficiency initiatives and store payroll costs, partially offset by increased occupancy costs.

On a dollar basis, selling, general and administrative expenses increased by $270.2 million, or 7.6%, to $3,817.2 million during the fiscal year ended January 31, 2026.

The increase was primarily driven by our 104 net new stores opened since the end of Fiscal 2024.

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Depreciation and amortization expense amounted to $417.9 million during Fiscal 2025, compared with $347.6 million during Fiscal 2024.

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

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

Impairment charges—long-lived assets

Impairment charges related to long-lived assets were $9.9 million and $12.9 million during Fiscal 2025 and Fiscal 2024, respectively.

Fiscal 2024 relates to two owned stores selling below carrying value, unrecoverable fixed assets at six underperforming stores, and two stores relocated and closed before the end of the respective lease-end dates.

Fiscal 2023 relates to unrecoverable fixed assets at eleven underperforming stores and unrecoverable lease assets at three of those stores.

Fiscal 2025 relates to an owned store selling below carrying value, unrecoverable assets at underperforming stores, as well as stores relocated and closed before the end of the respective lease-end dates.

Fiscal 2024 relates to two owned stores selling below carrying value, unrecoverable assets at underperforming stores, and stores relocated and closed before the end of the respective lease-end dates.

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 and other assumptions.

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Other income, net improved $14.6 million to $31.3 million during Fiscal 2025.

The improvement in other income was primarily driven by increased interest income from higher cash balance and interest rates.

The improvement in other income was primarily driven by a one-time settlement of certain layaway liabilities, resulting in a gain.

Loss on Extinguishment of Debt

There were no loss on extinguishment of debt charges during Fiscal 2025.

During Fiscal 2024, debt extinguishment charges amounted to $1.4 million related to the partial write-off of the original issue discount and deferred debt costs, as a result of the September 2024 extension and upsize of our Term Loan Facility.

During Fiscal 2023 we entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes, whereby the holders exchanged $241.2 million in aggregate principal amount of 2025 Convertible Notes held by them for $255.0 million in aggregate principal amount of 2027 Convertible Notes, as well as $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for $133.3 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $38.3 million.

Refer to Note 5, “Long Term Debt,” for further discussion regarding our debt transactions.

Interest income

Interest income decreased $10.6 million to $20.9 million.

The decrease was primarily driven by more investments in Fiscal 2024 compared to Fiscal 2025.

Interest expense

Interest expense decreased $8.9 million to $69.5 million.

This decrease was primarily related to accumulated other comprehensive income on our previous interest rate swap, which was fully amortized as of the end of Fiscal 2023.

Additionally, we had a lower average balance of 2025 Convertible Notes, and a lower interest rate on the 2027 Convertible Notes compared to the 2025 Convertible Notes that were extinguished, partially offset by a higher average balance due to the September 2024 extension and upsize of the Term Loan Facility during the third quarter of Fiscal 2024.

The average interest rate on the Term Loan Facility was 7.0% and 7.2% for the fiscal year ended February 1, 2025 and the fiscal year ended February 3, 2024, respectively.

The average balance on the Term Loan Facility, excluding the original issue discount, was $1,047.0 million and $942.5 million for the fiscal year ended February 1, 2025 and the fiscal year ended February 3, 2024, respectively.

Interest expense increased $1.5 million to $71.0 million.

The increase is related to the upsize of the Term Loan Facility, partially offset by increased capitalized interest as a result of the ongoing construction of a distribution center and paydown of the 2025 Convertible Notes during the first quarter of Fiscal 2025.

The average interest rate on the Term Loan Facility was 5.9% and 7.0% for the fiscal year ended January 31, 2026 and the fiscal year ended February 1, 2025, respectively.

The average balance on the Term Loan Facility, excluding the original issue discount, was $1,561.2 million and $1,047.0 million for the fiscal year ended January 31, 2026 and the fiscal year ended February 1, 2025, respectively.

Income tax expense

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The effective tax rate was 25.2% related to pretax income of $816.1 million for Fiscal 2025, and 25.4% related to pretax income of $674.8 million for Fiscal 2024.

The increase in income tax expense is primarily due to higher pre-tax income.

The higher tax rate in the prior period is primarily attributable to the disallowance of certain debt extinguishment costs related to the partial repurchase of the 2025 Convertible Notes in Fiscal 2023.

The increase in income tax expense is primarily driven by higher pre‑tax income.

We earned net income of $610.2 million during Fiscal 2025 compared with net income of $503.6 million for Fiscal 2024.

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Net income included $26.4 million and $11.7 million of expense, net of income taxes, for Fiscal 2025 and Fiscal 2024, respectively, related to the bankruptcy acquired leases.

Performance for Fiscal Year Ended February 3, 2024 (Fiscal 2023) Compared with Fiscal Year Ended January 28, 2023 (Fiscal 2022)

Performance for Fiscal Year Ended February 1, 2025 (Fiscal 2024) Compared with Fiscal Year Ended February 3, 2024 (Fiscal 2023)

For a discussion related to Fiscal 2024 performance compared to Fiscal 2023 performance, refer to Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” included in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 (Fiscal 2024 10-K).

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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.

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 for at least the next twelve months as well as the foreseeable future, including planned capital expenditures and repayment of the 2025 Convertible Notes.

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.

However, there can be no assurance that we would be able to offset declines in our comparable store sales with savings initiatives.

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Net cash provided by operating activities amounted to $1,231.4 million and $863.4 million during Fiscal 2025 and Fiscal 2024, respectively.

The decrease in our operating cash flows was primarily driven by changes in working capital, partially offset by improved net income.

The increase in our operating cash flows was primarily driven by improved net income as well as changes in working capital.

Net cash used in investing activities was $1,055.1 million and $882.3 million during Fiscal 2025 and Fiscal 2024, respectively.

This change was primarily the result of an increase in capital expenditures related to supply chain initiatives resulting from the purchase of the distribution center in Ellabell, Georgia, as well as increased store openings.

This change was primarily the result of investments in our supply chain infrastructure, as well as new store construction.

Net cash provided by financing activities was $61.5 million during Fiscal 2025 compared to a use of $88.2 million during Fiscal 2024.

This change was primarily driven by the September 2024 extension and upsizing of the Term Loan Facility during the third quarter of Fiscal 2024 as well as net payment on the Convertible Notes during Fiscal 2023.

This change was primarily driven by the settlement of the 2025 Convertible Notes during the first quarter of Fiscal 2025 and an increase in treasury stock repurchases, partially offset by net proceeds related to the upsize of the Term Loan Facility during the second quarter of Fiscal 2025.

Changes in working capital also impact our cash flows.

Working capital equals current assets minus current liabilities.

We had working capital at February 1, 2025 of $356.3 million compared with $298.2 million at February 3, 2024.

The increase in working capital was primarily driven by increased inventory, increased cash balance, and increased prepaid assets, partially offset by increased current maturities of long term debt related to the 2025 Convertible Notes and increased accounts payable.

We had working capital at January 31, 2026 of $522.3 million compared with $356.3 million at February 1, 2025.

The increase in working capital was primarily driven by increased cash balance and a decrease in current maturity of long term debt, partially offset by a decrease in prepaid assets.

Cash Flows for Fiscal 2024 Compared with Fiscal 2023

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For Fiscal 2025, capital expenditures, net of $56.9 million of landlord allowances, amounted to $1,104.1 million (inclusive of accrued capital expenditures).

These capital expenditures include approximately $334.9 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures).

In addition, we made capital expenditures of $384.8 million to support our supply chain initiatives, largely related to the purchase of the distribution center in Ellabell, Georgia, with the remaining capital to support information technology and other business initiatives.

We incurred capital expenditures of $522.5 million (inclusive of accrued capital expenditures), net of approximately $14.6 million of landlord allowances, during Fiscal 2023.

We estimate that we will spend approximately $950 million, net of approximately $55 million of landlord allowances, in capital expenditures during Fiscal 2025, including approximately $390 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, remodels and other store expenditures).

In addition, we estimate that we will spend approximately $460 million to support our supply chain initiatives, largely related to a purchase agreement for the Cactus Ave.

distribution center in Riverside, California, which was negotiated during Fiscal 2024.

These capital expenditures include approximately $482.0 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, downsizes, remodels and other store expenditures).

In addition, we made capital expenditures of $464.0 million to support our supply chain initiatives, largely related to the purchase of the distribution center in California and build-out of the distribution center in Georgia, with the remaining capital to support information technology and other business initiatives.

During Fiscal 2024, we incurred capital expenditures of $843.9 million (inclusive of accrued capital expenditures), net of approximately $28.9 million of landlord allowances.

We estimate that we will spend approximately $875 million, net of approximately $55 million of landlord allowances, in capital expenditures during Fiscal 2026, including approximately $420 million, net of the previously mentioned landlord allowances, for store expenditures (new stores, downsizes, remodels and other store expenditures).

In addition, we estimate that we will spend approximately $290 million to support our supply chain initiatives, largely related to completing the build-out of the distribution center in Georgia and beginning construction on a distribution center in Arizona.

The remaining capital will be used to support our information technology and other business initiatives.

Share Repurchase Program

On August 15, 2023, our Board of Directors authorized the repurchase of up to $500 million of common stock, which is authorized to be executed through August 2025.

On August 15, 2023, our Board of Directors authorized the repurchase of up to $500.0 million of common stock, which expired on August 15, 2025.

On May 20, 2025, 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 May 20, 2027.

During Fiscal 2025, we repurchased 985,594 shares of common stock for $251.4 million under our share repurchase program.

As of February 1, 2025, we had $263.2 million remaining under our share repurchase authorization.

As of January 31, 2026, we had $385.0 million remaining under our share repurchase authorization.

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 the Company's capital expenditures, business initiatives, and to support any potential opportunistic capital structure initiatives.

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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Debt and Hedging

As of February 1, 2025, our obligations, inclusive of original issue discount, include $1,238.9 million under our Term Loan Facility, $453.2 million of Convertible Notes and no outstanding borrowings on our ABL Line of Credit.

Our debt obligations also include $25.0 million of finance lease obligations as of February 1, 2025.

As of January 31, 2026, our obligations, inclusive of original issue discount, include $1,719.4 million under our Term Loan Facility, $297.1 million of 2027 Convertible Notes and no outstanding borrowings on our ABL Line of Credit.

Our debt obligations also include $22.9 million of finance lease obligations as of January 31, 2026.

Refer to Note 5 to our Consolidated Financial Statements, “Long Term Debt,” for an overview of the terms and conditions of these instruments.

Term Loan Facility

BCFWC and certain of its subsidiaries and holding companies are party to a Credit Agreement (as amended, supplemented and otherwise modified, the Term Loan Facility) that provides for term loans in an aggregate principal amount as of February 1, 2025 of $1,246.9 million maturing on September 24, 2031.

On September 24, 2024, we entered into an amendment to the Term Loan Facility dated as of February 24, 2011 (the "Amendment"), which among other things, (i) refinanced the outstanding $933 million principal amount of Term B-6 Loans with Term B-7 Loans in an aggregate principal amount of $1,250 million, which includes incremental term loans in an aggregate principal amount of $317 million, (ii) extended the maturity date from June 24, 2028 to September 24, 2031, and (iii) reduced the interest rate margins applicable to our term loan facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to 1.75%, in the case of SOFR loans, with a 0.00% SOFR floor, and removed the SOFR adjustment.

BCFWC and certain of its subsidiaries and holding companies are party to a Credit Agreement (as amended, supplemented and otherwise modified, the Term Loan Facility) that provides for term loans in an aggregate principal amount as of January 31, 2026 of $1,730.6 million maturing on September 24, 2031.

On September 24, 2024, we entered into an amendment to the Term Loan Facility dated as of February 24, 2011 (the "Amendment"), which among other things, (i) refinanced the outstanding $933.0 million principal amount of Term B-6 Loans with Term B-7 Loans in an aggregate principal amount of $1,250.0 million, which includes incremental term loans in an aggregate principal amount of $317.0 million, (ii) extended the maturity date from June 24, 2028 to September 24, 2031, and (iii) reduced the interest rate margins applicable to our term loan facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to

1.75%, in the case of SOFR loans, with a 0.00% SOFR floor, and removed the SOFR adjustment.

The Term B-7 Loans were issued with an original issue discount of 99.5.

On June 11, 2025, we entered into an amendment to the Term Loan Facility, which among other things, provided for $500.0 million of incremental term loans under the Term Loan Credit Agreement as additional Term B-7 Loans.

The incremental term loans were issued with an original issue discount of 99.0 and are otherwise on terms identical to, and fungible with, the existing Term B-7 Loans.

The Term Loan Facility is collateralized by a first lien on BCFWC’s and each guarantor’s equity interests, equipment, intellectual property, and certain favorable leases and real estate, and certain related assets and proceeds thereof (subject to certain exceptions), and a second lien on BCFWC’s and each guarantor’s other assets and proceeds thereof (subject to certain exceptions).

At February 1, 2025, our borrowing rate related to the Term Loan Facility was 6.1%.

At January 31, 2026, our borrowing rate related to the Term Loan Facility, exclusive of the impact of interest rate swaps, was 5.4%.

ABL Line of Credit

The interest rate margin applicable under the ABL Line of Credit is 1.125% to 1.375% in the case of a daily Secured Overnight Financing Rate (SOFR) rate or a term SOFR rate (in each case, plus a credit spread adjustment of 0.10%), and 0.125% to 0.375% in the case of a prime rate, depending on the average daily availability of the lesser of (a) the total commitments or (b) the borrowing base.

BCFWC and certain of its subsidiaries and holding companies are party to a Second Amended and Restated Credit Agreement (as amended, supplemented and otherwise modified, the ABL Line of Credit) that provides for $1,000.0 million of revolving commitments (subject to a borrowing base limitation) maturing on July 25, 2030, and, subject to the satisfaction of certain conditions, BCFWC can increase the aggregate amount of commitments up to an amount not to exceed the sum of (i) the greater of (x) $300.0 million and (y) the amount by which the Borrowing Base exceeds the aggregate Commitments, plus (iii) the amount of all permanent reductions in commitments after July 25, 2025.

The interest rate margin applicable under the ABL Line of Credit is 1.125% to 1.375% in the case of a daily SOFR rate or a term SOFR rate, and 0.125% to 0.375% in the case of a prime rate, depending on the average daily availability of the lesser of (a) the total commitments or (b) the borrowing base.

The ABL Line of Credit is collateralized by a first priority lien on BCFWC’s and each guarantor's inventory, receivables, bank accounts, and certain related assets and proceeds thereof (subject to certain exceptions), and a second priority lien on BCFWC’s and each guarantor's other assets and proceeds thereof (other than real estate and subject to certain exceptions)

On June 26, 2023, BCFWC entered into a Fifth Amendment to the Second Amended and Restated Credit Agreement, which increased the sublimit for letters of credit thereunder from $150 million to $250 million.

The letter of credit sublimit was subsequently reduced to $200 million.

At February 1, 2025, we had $827.0 million available under the ABL Line of Credit.

We did not have any borrowings during Fiscal 2024.

On July 25, 2025, we entered into an amendment to the ABL Line of Credit in order to, among other things, (i) increase the aggregate principal amount of the commitments from $900.0 million to $1,000.0 million and (ii) extend the maturity date of the commitments and loans from December 22, 2026 to July 25, 2030.

At January 31, 2026, we had $934.5 million available under the ABL Line of Credit.

Average borrowings during Fiscal 2025 amounted to $20.2 million at an average interest rate of 5.5%.

2025 Convertible Notes

On April 16, 2020, we issued $805.0 million of 2025 Convertible Notes.

The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of the Company’s common stock), subject to adjustment if certain events occur.

The 2025 Convertible Notes are general unsecured obligations of the Company.

The 2025 Convertible Notes bear interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears on April 15 and October 15 of each year, beginning on October 15, 2020.

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

During the first quarter of Fiscal 2023, we entered into separate, privately negotiated exchange agreements with certain holders of the 2025 Convertible Notes.

Under the terms of the exchange agreements, the holders exchanged $110.3 million in aggregate principal amount of 2025 Convertible Notes held by them for $133.3 million in cash.

These exchanges resulted in aggregate pre-tax debt extinguishment charges of $24.6 million.

The 2025 Convertible Notes are convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of April 15, 2025.

The 2025 Convertible Notes have an initial conversion rate of 4.5418 shares per $1,000 principal amount of 2025 Convertible Notes (equivalent to an initial conversion price of approximately $220.18 per share of our common stock), subject to adjustment if certain events occur.

The initial conversion price represents a conversion premium of approximately 32.50% over $166.17 per share, the last reported sale price of our common stock on April 13, 2020 (the pricing date of the offering) on the New York Stock Exchange.

During the first quarter of Fiscal 2021, the Company made an irrevocable settlement election for any conversions of the 2025 Convertible Notes.

Upon conversion, we will pay cash for the principal amount.

For any excess above principal, we will deliver shares of its common stock.

We are able to redeem for cash all or any portion of the 2025 Convertible Notes, at our option, if the last reported sale price of the Company’s common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the principal aggregate amount of the 2025 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

Holders of the 2025 Convertible Notes may require us to repurchase their 2025 Convertible Notes upon the occurrence of certain events that constitute a fundamental change under the indenture governing the 2025 Convertible Notes at a purchase price equal to 100% of the principal amount thereof, plus accrued and unpaid interest to, but excluding, the date of repurchase.

In connection with certain corporate events or if we issue a notice of redemption, it will, under certain circumstances, increase the

conversion rate for holders who elect to convert their 2025 Convertible Notes in connection with such corporate event or during the relevant redemption period for such 2025 Convertible Notes.

On April 16, 2020, we issued 2025 Convertible Notes, which matured on April 15, 2025.

The 2025 Convertible Notes were general unsecured obligations of the Company and bore interest at a rate of 2.25% per year, payable semi-annually in cash, in arrears, on April 15 and October 15 of each year.

Prior to maturity, holders of the 2025 Convertible Notes submitted conversion notices with respect to approximately $155.5 million aggregate principal amount of the 2025 Convertible Notes.

On the conversion settlement date, the Company paid to the converting holders the aggregate principal amount of 2025 Convertible Notes subject to conversion, and issued and delivered to such holders 57,149 shares of common stock, in respect of the remainder of its conversion obligation in excess of such aggregate principal amount.

At maturity, the Company paid in cash the principal balance and related accrued and unpaid interest on the 2025 Convertible Notes not previously converted.

There was no resulting debt extinguishment charge from this transaction.

2027 Convertible Notes

On September 12, 2023, we closed the issuance of approximately $297.1 million aggregate principal amount of our 2027 Convertible Notes pursuant to separate, privately negotiated exchange and subscription agreements with a limited number of holders of our 2025 Convertible Notes and certain investors, in each case pursuant to exemptions from registration under the Securities Act of 1933.

We exchanged approximately $241.2 million in aggregate principal amount of the 2025 Convertible Notes for approximately $255.0 million in aggregate principal amount of the 2027 Convertible Notes.

We also issued approximately $42.1 million in aggregate principal amount of 2027 Convertible Notes in a private placement to certain investors.

An aggregate of up to 1,422,568 shares of common stock may be issued upon conversion of the 2027 Convertible Notes, which number is subject to adjustment up to an aggregate of 1,911,372 shares following certain corporate events that occur prior to the maturity date or if we issue a notice of redemption, and which is also subject to certain anti-dilution adjustments.

The 2027 Convertible Notes bear interest at a rate of 1.25% per year, payable semi-annually in arrears on June 15 and December 15 of each year, beginning on December 15, 2023.

The 2027 Convertible Notes bear interest at a rate of 1.25% per year, payable semi-annually in arrears on June 15 and December 15 of each year.

The 2027 Convertible Notes will mature on December 15, 2027, unless earlier converted, redeemed or repurchased.

Prior to the close of business on the business day immediately preceding September 15, 2027, the 2027 Convertible Notes will be convertible at the option of the holders only upon the occurrence of certain events and during certain periods.

Thereafter, the 2027 Convertible Notes will be convertible at the option of the holders at any time until the close of business on the second scheduled trading day immediately preceding the maturity date of December 15, 2027.

The 2027 Convertible Notes have an initial conversion rate of 4.8560 shares per $1,000 principal amount of 2027 Convertible Notes (equivalent to an initial conversion price of approximately $205.93 per share of our common stock), subject to adjustment if certain events occur.

The initial conversion price represents a conversion premium of approximately 32.50% over $155.42 per share, the last reported sale price of our common stock on September 7, 2023 on The New York Stock Exchange.

Upon conversion, we will pay cash for the aggregate principal amount of 2027 Convertible Notes being converted, and pay (and deliver, if applicable) cash, shares of our common stock or a combination thereof, at our election, in respect of the remainder (if any) of our conversion obligation in excess of such aggregate principal amount.

Upon conversion, we will pay cash up to the aggregate principal amount of 2027 Convertible Notes being converted, and pay (and deliver, if applicable) cash, shares of our common stock or a combination thereof, at its election, in respect of the remainder (if any) of our conversion obligation in excess of such aggregate principal amount.

We will not be able to redeem the 2027 Convertible Notes prior to December 20, 2025.

On or after December 20, 2025 and prior to the 21st scheduled trading day immediately preceding December 15, 2027, we will be able to redeem for cash all or any portion of the 2027 Convertible Notes, at our option, if the last reported sale price of our common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the aggregate principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

On or after December 20, 2025 and prior to the 21st scheduled trading day immediately preceding December 15, 2027, we will be able to redeem for cash all or any portion of the 2027 Convertible Notes, at its option, if the last reported sale price of our common stock is equal to or greater than 130% of the conversion price for a specified period of time, at a redemption price equal to 100% of the aggregate principal amount of the 2027 Convertible Notes to be redeemed, plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

If we undergo a fundamental change, subject to certain conditions, holders of the 2027 Convertible Notes may require us to repurchase for cash all or any portion of our 2027 New Convertible Notes.

The fundamental change repurchase price will be 100% of the aggregate principal amount of the 2027 Convertible Notes to be repurchased plus any accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

We have interest rate swaps which hedge $800.0 million of variable rate exposure under our Term Loan Facility.

On March 12, 2026 and March 13, 2026, we entered into separate, privately negotiated exchange agreements with certain holders of the 2027 Convertible Notes.

Under the terms of the Exchange Agreements, the holders have agreed to exchange $111.0 million in aggregate principal amount of 2027 Convertible Notes held by them for a combination of an aggregate of $128.6 million in cash and 150,831 shares of our common stock.

These exchange transactions are expected to close on or around March 19, 2026, subject to the satisfaction of customary closing conditions.

During the second quarter of Fiscal 2025, we entered into a $200.0 million interest rate swap agreement with a fixed interest rate of 3.76%.

On the same date, we also entered into a $100.0 million interest rate swap agreement with a fixed interest rate of 3.73%.

In total, we have interest rate swaps which hedge $1,100.0 million of variable rate exposure under our Term Loan Facility.

The interest rate swaps are designated as cash flow hedges and expire on September 24, 2031.

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Certain Information Concerning Material Cash Requirements

The following table sets forth certain information regarding our obligations to make future payments under current contracts as of February 1, 2025:

The following table sets forth certain information regarding our obligations to make future payments under current contracts as of January 31, 2026:

Payments Due By Period

(in thousands)

Debt obligations(1)

Interest on debt obligations(2)

Finance lease obligations(3)

Operating lease obligations(4)

Purchase obligations(5)

(1) Represents future principal payments on outstanding borrowings as of February 1, 2025.

(2) Represents interest payments on (i) the outstanding balance of the Term Loan Facility with an interest rate of 6.1%;

Debt obligations (a)

Interest on debt obligations (b)

Finance lease obligations (c)

Operating lease obligations (d)

Purchase obligations (e)

(a) Represents future principal payments on outstanding borrowings as of January 31, 2026.

(b) Represents interest payments on (i) the outstanding balance of the Term Loan Facility with an interest rate of 5.4%;

(ii) 1,100.0 million interest rate swap;

(iii) the outstanding balance of the 2025 Convertible Notes;

and (iv) the outstanding balance of the 2027 Convertible Notes.

(3) Finance lease obligations include future interest payments.

(4) Represents minimum rent payments for operating leases under the current terms.

The above table excludes approximately $451.4 million for 66 stores that we have committed to open or relocate but have not yet taken possession of the space.

(5) Represents commitments to purchase merchandise that have not been received as of February 1, 2025.

The table above excludes estimated commitments for non-merchandise goods of approximately $395 million, which primarily relates to capital expenditures for our stores and supply chain, largely related to a purchase agreement for the Cactus Ave.

distribution center in Riverside, California, as well as other miscellaneous operating expenses.

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

and (iii) the outstanding balance of the 2027 Convertible Notes.

(d) Represents minimum rent payments for operating leases under the current terms.

The above table excludes approximately $536.9 million for 96 stores and one office that we have committed to open or relocate but have not yet taken possession of the space.

(e) Represents commitments to purchase merchandise that have not been received as of January 31, 2026.

The table above excludes estimated commitments for non-merchandise goods of approximately $225 million, which primarily relates to capital expenditures for our stores as well as other miscellaneous operating expenses.

(f) Represents severance payments in the normal course of business that are included in the line item “Selling, general and administrative expenses” in our Consolidated Statements of Income.

The table above excludes ASC Topic No.

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740 liability was $5.8 million, inclusive of $4.3 million of interest and penalties, neither of which is presented in the table above as we are not certain if and when these payments would be required.

The table above excludes our irrevocable letters of credit guaranteeing payment and performance under certain leases, insurance contracts, debt agreements, merchandising agreements and utility agreements in the amount of $52.5 million as of February 1, 2025.

As of February 1, 2025, insurance reserves amounted to $102.8 million.

As of January 31, 2026, insurance reserves amounted to $111.0 million.

These amounts are excluded from the table above as we are not certain if and when these payments would be required.

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An increase in workers’ compensation claims by employees, health insurance claims by employees or general liability claims may result in a corresponding increase in our costs related to these claims.

Insurance reserves amounted to $102.8 million and $94.8 million at February 1, 2025 and February 3, 2024, respectively.

Insurance reserves amounted to $111.0 million and $102.8 million at January 31, 2026 and February 1, 2025, respectively.

Recent Accounting Pronouncements

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Primary exposures include changes in interest rates, as borrowings under our ABL Line of Credit and Term Loan Facility bear interest based on SOFR, 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 5 to our Consolidated Financial Statements, “Long Term Debt.” On September 24, 2024, the Company entered into an amendment to the Credit Agreement dated as of February 24, 2011, which among other things, (i) refinanced the outstanding $933 million principal amount of term B-6 loans with term B-7 loans in an aggregate principal amount of $1,250 million, which includes incremental term loans in an aggregate principal amount of $317 million, (ii) extended the maturity date from June 24, 2028 to September 24, 2031, and (iii) reduced the interest rate margins applicable to the Company’s term loan facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to 1.75%, in the case of SOFR loans, with a 0.00% SOFR floor, and removing the SOFR adjustment.

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 5 to our Consolidated Financial Statements, “Long Term Debt.” On September 24, 2024, we entered into an amendment to the Credit Agreement dated as of February 24, 2011, which among other things, (i) refinanced the outstanding $933 million principal amount of term B-6 loans with term B-7 loans in an aggregate principal amount of $1,250 million, which includes incremental term loans in an aggregate principal amount of $317 million, (ii) extended the maturity date from June 24, 2028 to September 24, 2031, and (iii) reduced the interest rate margins applicable to our term loan facility from 1.00% to 0.75%, in the case of prime rate loans, and from 2.00% to 1.75%, in the case of SOFR loans, with a 0.00% SOFR floor, and removing the SOFR adjustment.

The incremental term loans were issued with an original issue discount of 99.0 and are otherwise on terms identical to, and fungible with, the existing Term B-7 Loans.

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

For our floating-rate debt, interest rate changes generally impact our earnings and cash flows, assuming other factors are held constant.

On September 27, 2024, the Company terminated the previous $450 million interest rate swap, and entered into a new interest rate swap in the notional amount of $500 million with a blended interest rate of 2.83%.

On this same date, the Company also entered into a new interest rate swap for $300 million with an interest rate of 3.37%.

On September 27, 2024, we terminated the previous $450.0 million interest rate swap, and entered into a new interest rate swap in the notional amount of $500.0 million with a blended interest rate of 2.83%.

On this same date, we also entered into a new interest rate swap for $300.0 million with an interest rate of 3.37%.

On June 12, 2025, we entered into an interest rate swap agreement with a notional amount of $200.0 million and a fixed interest rate of 3.76%.

On the same date, we also entered into an interest rate swap agreement with a notional amount of $100.0 million and a fixed interest rate of 3.73%.

These interest rate swap agreements are designated as cash flow hedges.

Refer to Note 6, “Derivative Instruments and Hedging Activities,” for further discussion regarding our derivative transactions.

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 February 1, 2025, we had $1,246.9 million of floating-rate debt, exclusive of original issue discount.

Based on this, a one percentage point interest rate increase or decrease as of February 1, 2025 ( 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 $4.4 million per year.

At January 31, 2026, we had $1,730.6 million of floating-rate debt, exclusive of original issue discount.

Based on this, a one percentage point interest rate increase or decrease as of January 31, 2026 ( 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 $6.3 million per year.

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

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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