What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2026-04-15 compared with 2025-04-16 · 117 added, 112 removed, 401 unchanged (36% of the section changed)

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

FINANCIAL STATEMENTS AND SUPPLEMENTA RY DATA

Citi Trends, Inc.

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We have audited the accompanying consolidated balance sheets of Citi Trends, Inc.

and subsidiary (the "Company") as of February 1, 2025 and February 3, 2024, the related consolidated statements of operations, cash flows, and stockholders ’ equity, for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2025 and February 3, 2024, and the results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 16, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiary (the "Company") as of January 31, 2026 and February 1, 2025, the related consolidated statements of operations, cash flows, and stockholders’ equity, for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the "financial statements").

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2026 and February 1, 2025, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 15, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

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Total current assets

Property and equipment

Property and equipment, net of accumulated depreciation of $ 301,921 and $ 297,396 as of January 31, 2026 and February 1, 2025, respectively.

Operating lease right of use assets

Deferred income taxes

Liabilities and Stockholders’ Equity

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Authorized 32,000,000 shares;

16,497,092 shares issued as of February 1, 2025 and 16,354,714 shares issued as of February 3, 2024;

8,547,841 shares outstanding as of February 1, 2025 and 8,550,701 shares outstanding as of February 3, 2024

16,545,723 shares issued as of January 31, 2026 and 16,497,092 shares issued as of February 1, 2025;

8,345,917 shares outstanding as of January 31, 2026 and 8,547,841 shares outstanding as of February 1, 2025

Paid in capital

1 unchanged sentence

Treasury stock, at cost;

7,949,251 shares held as of February 1, 2025 and 7,804,013 shares held as of February 3, 2024

8,199,806 shares held as of January 31, 2026 and 7,949,251 shares held as of February 1, 2025

Total stockholders’ equity

8 unchanged sentences

Asset impairment

Gain on sale-leasebacks

(Loss) income from operations

Gain on sale of building

Gain on insurance

Income (loss) from operations

Interest income

Interest expense

(Loss) income before income taxes

Income (loss) before income taxes

Income tax (expense) benefit

Net (loss) income

Basic net (loss) income per common share

Diluted net (loss) income per common share

Net income (loss)

Basic net income (loss) per common share

Diluted net income (loss) per common share

Weighted average number of shares outstanding

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Operating activities:

Net (loss) income

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Net income (loss)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:

Non-cash operating lease costs

Asset impairment

Loss on disposal of property and equipment

(Gain) Loss on disposal of property and equipment

Deferred income taxes

1 unchanged sentence

Non-cash stock-based compensation expense

Gain on sale of assets or insurance related activities

Gain on sale of assets

Gain on insurance related activities

Changes in assets and liabilities:

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Layaway deposits

Net cash (used in) provided by operating activities

Net cash provided by (used in) operating activities

Investing activities:

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Insurance proceeds related to investing activities

Proceeds from sale-leasebacks

Net cash (used in) provided by investing activities

Proceeds from sale of building

Net cash used in investing activities

Financing activities:

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Net cash used in financing activities

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents:

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Balances — January 28, 2023

Vesting of nonvested shares

Issuance of nonvested shares

Issuance of common stock under incentive plan, net of shares withheld for taxes

Forfeiture of nonvested shares

Stock-based compensation expense

Net share settlement of nonvested shares

Repurchase of common stock

Balances — January 28, 2023

Vesting of nonvested units

Issuance of nonvested shares

Issuance of common stock under incentive plan, net of shares withheld for taxes

Forfeiture of nonvested shares

Grant of restricted shares

Forfeiture of restricted shares

Stock-based compensation expense

Net share settlement of nonvested shares

Shares withheld for settlement of employee taxes on vesting

Balances — February 3, 2024

Vesting of nonvested units

Issuance of nonvested shares

Forfeiture of nonvested shares

Vesting of restricted shares

Grant of restricted shares

Forfeiture of restricted shares

Stock-based compensation expense

Net share settlement of nonvested shares

Shares withheld for settlement of employee taxes on vesting

Repurchase of common stock

Balances — February 1, 2025

Vesting of restricted shares

Grant of restricted shares

Forfeiture of restricted shares

Stock-based compensation expense

Shares withheld for settlement of employee taxes on vesting

Repurchase of common stock

Balances — January 31, 2026

See accompanying notes to consolidated financial statements.

3 unchanged sentences

Citi Trends, Inc.

and its subsidiary (the “ Company ” ) is a leading off-price value retailer of apparel, accessories and home trends primarily for African American families in the United States.

As of February 1, 2025, the Company operated 591 stores in urban, suburban and rural markets in 33 states.

and its subsidiary (the “Company”) is the leading off-price value retailer of apparel, accessories and home trends primarily for Black families in the United States.

As of January 31, 2026, the Company operated 590 stores in urban, suburban and rural markets in 33 states.

Summary of Significant Accounting Policies

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The Company’s fiscal year ends on the Saturday closest to January 31 of each year.

The years ended February 1, 2025, February 3, 2024 and January 28, 2023 are referred to as fiscal 2024, fiscal 2023 and fiscal 2022, respectively, in the accompanying consolidated financial statements.

The years ended January 31, 2026, February 1, 2025 and February 3, 2024 are referred to as fiscal 2025, fiscal 2024 and fiscal 2023, respectively, in the accompanying consolidated financial statements.

Fiscal years 2025 and 2024 have a 52 -week accounting period, and fiscal year 2023 is comprised of 53 weeks.

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Inventory is recorded net of an allowance for shrink based on the most recent physical inventory counts and other assumptions for shrink activity.

The allowance for inventory shrink was $ 5.2 million as of February 1, 2025 and $ 3.9 million as of February 3, 2024.

Property and Equipment, net

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If facts and circumstances indicate that a long-lived asset may be impaired, the carrying value is reviewed.

If this review indicates that the carrying value of the asset group will not be recovered as determined based on projected undiscounted cash flows related to the asset over its remaining life, the carrying value of the asset is reduced to its estimated fair value.

There was non-cash impairment expense in fiscal 2024 of $ 2.5 million consisting of $ 1.2 million for leasehold improvements and fixtures and equipment at underperforming stores, and $ 1.3 for right of use assets.

If this review indicates that the carrying value of the asset group will not be recovered as determined based on projected undiscounted cash flows expected to be generated by that asset, the carrying value of the asset is reduced to its estimated fair value.

There was non-cash impairment expense in fiscal 2025 of $ 0.6 million consisting of $ 0.3 million for leasehold improvements and fixtures and equipment at underperforming stores, and $ 0.3 million for right of use assets.

There was non-cash impairment expense in fiscal year 2024 of $ 2.5 million consisting of $ 1.2 million for leasehold improvements and fixtures and equipment at an underperforming store, and $ 1.3 million for a right of use asset.

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Expected refunds to customers are recorded based on estimated margin using historical return information.

The refund liability for merchandise returns is recorded in accrued expenses on the consolidated balance sheet and totaled $ 0.2 million as of both February 1, 2025 and February 3, 2024.

The corresponding asset for the recoverable cost of expected refunds is included in prepaid and other current assets and totaled $ 0.1 million as of both February 1, 2025 and February 3, 2024.

The refund liability for merchandise returns is recorded in accrued expenses on the consolidated balance sheet and totaled $ 0.1 million and $ 0.2 million as of January 31, 2026 and February 1, 2025, respectively.

The corresponding asset for the recoverable cost of expected refunds is included in prepaid and other current assets and totaled $ 0.1 million as of both January 31, 2026 and February 1, 2025.

Disaggregation of Revenue

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Cost of sales includes the cost of inventory sold during the period and transportation costs, including inbound freight related to inventory sold, freight from the distribution centers to the stores and freight from vendors to stores, net of discounts and allowances.

Distribution center costs, store occupancy expenses and advertising expenses are not considered components of cost of sales and are included as part of selling, general and administrative expenses.

Distribution center costs, store occupancy expenses and marketing expenses are not considered components of cost of sales and are included as part of selling, general and administrative expenses.

Depreciation is also not considered a component of cost of sales and is included as a separate line item in the consolidated statements of operations.

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For fiscal 2025, 2024 and 2023, respectively, there were 0 , 248,000 , and 273,000 shares of nonvested restricted stock excluded from the calculation of diluted earnings per share because of antidilution.

The Company expenses advertising as incurred.

Advertising expense for fiscal 2024, 2023 and 2022 was $ 2.3 million, $ 1.6 million and $ 0.8 million, respectively.

The Company expenses marketing as incurred.

Marketing expense for fiscal 2025, 2024 and 2023 was $ 1.3 million, $ 2.3 million and $ 1.6 million, respectively.

Operating Leases

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Business Operating Segment

The Company is an off-price value retailer of fashion apparel, accessories and home goods for the entire family.

The Company is the leading off-price value retailer of fashion apparel, accessories and home goods for the entire family.

The retail operations represent a single operating segment based on the way the Company manages its business.

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Adoption is required for annual periods beginning after December 15, 2024.

The Company is currently evaluating the impact of this standard on its consolidated financial statements and related disclosures.

In fiscal 2025, the Company adopted the new accounting pronouncement ASU 2023-09 in the current period and retrospectively.

The adoption of ASU 2023-09 did not have a material impact on the Company’s consolidated financial statements as the requirements impact only annual income tax reporting disclosures in the Notes to the Company’s consolidated financial statements.

Refer to “Note 5.

Income Taxes” for additional information.

In November 2024, the FASB issued ASU 2024-03, “Expense Disaggregation Disclosures (Topic 220):

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The Company is currently evaluating the impact the amended guidance will have on its disclosures.

In September 2025, the FASB issued ASU 2025-06, “Intangibles – Goodwill and Other Internal-Use Software:

Targeted Improvements to the Accounting for Internal-Use Software” (“ASU 2025-06”), which amends the guidance in ASC 350 to revise the criteria for when an entity is required to start capitalizing software costs and requires an entity to consider whether there is significant uncertainty associated with the development activities of the software when evaluating the probable-to-complete recognition threshold.

ASU 2025-06 is required to be adopted in the annual reporting periods beginning after December 15, 2027, including interim periods within those annual reporting periods, with early adoption permitted.

The Company is currently evaluating the impact the amended guidance will have on its consolidated financial statements and related disclosures.

In November 2025, the FASB issued ASU 2025-11, “Interim Reporting (Topic 270):

Narrow-Scope Improvements” (“ASU 2025-11”), which amends the guidance in ASC 270 to clarify the applicability of interim disclosure requirements and enhance the navigability of the existing guidance.

ASU 2025-11 provides a comprehensive list of required interim disclosures and establishes a new disclosure principle requiring entities to disclose events that occur after the end of the last annual reporting period.

The new standard is effective for interim periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted.

The Company is currently evaluating the impact the amended guidance will have on its consolidated financial statements and related disclosures.

Property and Equipment, net

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Accumulated depreciation

Revolving Line of Credit

On October 27, 2011, the Company entered into a five-year , $ 50 million credit facility with Bank of America.

The facility was amended in August 2015 and May 2020 to extend the maturity dates.

The facility was further amended on April 15, 2021 to modify terms and extend the maturity date to April 15, 2026.

In May 2023, the facility was amended to replace the London Interbank Offered Rate ( “ LIBOR ” ) with the Secured Overnight Financing Rate ( “ SOFR ” ).

See Note 10 to the Financial Statements for more information regarding the subsequent amendment to extend the maturity date of the current agreement.

The facility provides a $ 75 million credit commitment and a $ 25 million uncommitted “ accordion ” feature that under certain circumstances could allow the Company to increase the size of the facility to $ 100 million.

Revolving Credit Facility

In October 2011, the Company entered into a five-year , $ 50 million credit facility with Bank of America.

The facility was amended in August 2015, May 2020 and April 2021 to modify terms and extend the maturity dates.

The facility was further amended on April 10, 2025 to extend the maturity date to April 10, 2030.

The amended facility provides a $ 75 million credit commitment and a $ 25 million uncommitted “accordion” feature that under certain circumstances could allow the Company to increase the size of the facility to $ 100 million.

The facility is secured by the Company’s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances.

The facility has an unused commitment fee of 0.25 % and permits the payment of cash dividends subject to certain limitations.

Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10 % plus either 1.25 % , 1.50 % or 1.75 % , or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5 % or (iii) the Eurodollar Rate plus 1.0 % , plus, in each case either 0.25 % , 0.50 % or 0.75 % , based in any such case on the average daily availability for borrowings under the facility.

As of February 1, 2025, the Company had no borrowings under the credit facility and $ 2.2 million of letters of credit outstanding.

Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10 % plus either 1.50 %, 1.75 % or 2.00 %, or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5 % and (iii) the Terms SOFR Rate plus 1.0 %, plus, in each case either 0.50 %, 0.75 % or 1.00 %, based in any such case on the average daily availability for borrowings under the facility.

As of January 31, 2026, the Company had no borrowings under the credit facility and $ 2.2 million of letters of credit outstanding.

Income tax (expense) benefit consists of the following (in thousands):

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Income tax (expense) benefit computed using the federal statutory rate is reconciled to the reported income tax (expense) benefit as follows (in thousands):

(Expense) / Benefit

Statutory rate applied to income before income taxes

State income taxes, net of federal benefit *

State tax credits

State tax credits - valuation allowance (net of federal benefit)

General business credits

State tax credits, net of federal benefit

General business credits, net of nondeductible expenses

Nondeductible compensation

1 unchanged sentence

Valuation Allowance

Changes in tax rates

Nondeductible or nontaxable items

Changes in Unrecognized tax benefits

Income tax (expense) benefit

* The only state that contributes to the majority (greater than 50%) of the tax effect in this category is Louisiana.

Deferred tax assets and deferred tax liabilities consist of the following (in thousands):

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Net deferred tax (liability) asset

The following table summarizes (receipts) payments of income taxes in fiscal 2025 (in thousands):

North Carolina

Other (net of refunds)

Total (receipts) payments of income taxes

The Company files income tax returns in U.S.

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The Company reviews and assesses uncertain tax positions, if any, with recognition and measurement of tax benefit based on a “more-likely-than-not” standard with respect to the ultimate outcome, regardless of whether this assessment is favorable or unfavorable.

As of February 1, 2025, there were no material benefits taken on the Company ’ s income tax returns that do not qualify for financial statement recognition.

As of January 31, 2026, there were no material benefits taken on the Company’s income tax returns that do not qualify for financial statement recognition.

If a tax position does not meet the minimum statutory threshold to avoid payment of penalties and interest, a company is required to recognize an expense for the amount of the interest and penalty in the period in which the company claims or expects to claim the position on its tax return.

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Should such expense be incurred in the future, the Company will classify such interest as a component of interest expense and penalties as a component of income tax expense.

At February 1, 2025, the Company had income tax net operating loss ( “ NOL ” ) carryforwards for federal purposes of $ 39.6 million (gross) and for state purposes of $ 1.7 million (tax effected).

At January 31, 2026, the Company had income tax net operating loss (“NOL”) carryforwards for federal purposes of $ 58.5 million (gross) and for state purposes of $ 2.5 million (tax effected), which are available to offset future state taxable income.

The federal tax NOL carryforwards have an indefinite carryforward, but are limited to offsetting 80 % of taxable income in future years.

The majority of state tax NOL carryforwards either follow federal indefinite carryforward or begin to expire in 2038, with one jurisdiction expiring in 2028.

State NOL rules vary by jurisdiction with respect to carryforward periods, utilization limits, and eligibility requirements.

Depending on the state, carryforward periods generally range from 5 to 20 years , while certain states conform to federal rules and allow indefinite carryforwards for post-2017 NOLs.

Utilization of these NOLs may be subject to annual limitations under Section 382 of the Internal Revenue Code (“IRC”) if the Company experiences an “ownership change,” as defined in the IRC.

An ownership change generally occurs when the aggregate stock ownership of certain significant shareholders increases by more than 50 percentage points over a rolling three ‑ year period.

The Company has performed an analysis under Section 382 and determined that prior ownership changes have resulted in certain annual limitations on the future use of its NOLs.

These limitations may restrict the Company’s ability to offset future taxable income with pre ‑ change NOLs, potentially resulting in increased cash tax liabilities in future periods.

Management will continue to monitor equity transactions and other events that could trigger additional ownership changes and further limit the Company’s ability to utilize its NOLs.

In assessing the realizability of deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized.

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We intend to maintain a valuation allowance until sufficient positive evidence exists to support its reversal, resulting in no deferred tax asset balance being recognized.

At February 1, 2025, the valuation allowance established against the entire net deferred tax asset totaled $ 16.5 million.

In accordance with ASC 740 “Accounting for Income Taxes” (“ASC 740”), the Company evaluates deferred income tax assets quarterly to determine if valuation allowances are required or should be adjusted.

ASC 740 requires that companies assess whether valuation allowances should be established against their deferred tax assets based on consideration of all available evidence, both positive and negative, using a “more likely than not” standard.

The analysis that the Company prepared to determine the valuation allowance required significant judgment and assumptions regarding future market conditions, as well as forecasts for profits, taxable income, and taxable income by jurisdiction.

Due to the sensitivity of the analysis, changes to the assumptions in subsequent periods could have a material effect on the valuation allowance.

At January 31, 2026 and February 1, 2025, the Company had a full valuation allowance on its deferred tax assets.

Based on an evaluation in accordance with the accounting standards, as of January 31, 2026, the valuation allowance established against the entire net deferred tax asset totaled $ 15.4 million.

The effective income tax rate for fiscal 2025, 2024 and 2023 included the recognition of benefits arising from various federal and state tax credits.

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The income tax benefit included $ 0.0 million, $ 0.0 million, and $ 2.2 million related to such credits in each of fiscal 2025, 2024 and 2023, respectively.

The credits generated for fiscal year 2024 were recorded with a full valuation allowance .

The credits generated for fiscal year 2025 and fiscal year 2024 were recorded with a full valuation allowance .

Stockholders’ Equity

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Total investment

At February 1, 2025, $ 46.2 million remained available under the Company ’ s previously announced stock repurchase authorization.

At January 31, 2026, $ 40.0 million remained available under the Company’s previously announced stock repurchase authorization.

Stock-Based Compensation

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The Plan provides for the grant of incentive and nonqualified options, stock appreciation rights, restricted stock, restricted stock units, performance awards and other forms of stock-based and cash-settled equity compensation.

At February 1, 2025, the Company had 360,954 shares reserved for future grants under the Plan.

At January 31, 2026, the Company had 694,570 shares reserved for future grants under the Plan.

During fiscal 2025, 2024 and 2023, non-cash stock-based compensation expense recorded in selling and general and administrative expenses totaled $ 5.4 million, $ 3.3 million and $ 4.1 million, respectively.

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Failure to meet the market conditions for an award does not result in reversal of previously recognized expense, so long as the required service period condition is met.

The Company recognized $ 0.3 million of expense related to the award during the year ended February 1, 2025.

The Company recognized $ 1.5 million and $ 0.3 million of expense related to the award in fiscal 2025 and fiscal 2024, respectively.

The following tables summarize activity related to nonvested restricted stock and PSUs and performance-based restricted stock during fiscal 2025:

2 unchanged sentences

Outstanding as of February 1, 2025

Outstanding as of January 31, 2026

Performance-Based Restricted Stock

1 unchanged sentence

Outstanding as of February 1, 2025

Outstanding as of January 31, 2026

Performance-Based

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Outstanding as of February 1, 2025

At February 1, 2025, there was $ 4.5 million of unrecognized compensation expense related to restricted stock.

Based on current probable performance, we have determined no compensation expense is required on our PSUs.

Outstanding as of January 31, 2026

At January 31, 2026, there was $ 4.5 million of unrecognized compensation expense related to restricted stock, and $ 3.3 million of unrecognized compensation expense related to our PSUs.

Commitments and Contingencies

The Company from time to time is involved in various legal proceedings incidental to the conduct of its business, including claims by customers, employees or former employees.

The Company is, from time to time, involved in legal proceedings arising in the ordinary course of business, including claims by customers, employees, or former employees and matters relating to real estate and contractual disputes.

Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, it establishes appropriate reserves.

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A consolidated class action complaint was filed on February 15, 2024, adding an additional plaintiff, Shykira Scott.

The Company is vigorously defending these lawsuits and filed a motion to dismiss the consolidated class action complaint, as well as a motion to compel individual arbitration and dismiss or stay actions on March 22, 2024.

The Company has successfully settled these class actions without any admission of liability.

In addition, the Attorneys General of Alabama, Connecticut, Indiana and Texas sent inquiry letters to the Company regarding the January 2023 cyber disruption, which the Company has answered.

As of the end of fiscal 2024, the Company had an accrual of $ 0.7 million for estimated losses in connection with these matters recorded in Accrued expenses.

The ultimate loss to the Company for these matters could be materially different from the amount the Company has accrued.

The Company cannot predict or estimate the duration or ultimate outcome of these matters.

These class actions were resolved in fiscal 2025.

The Company is unable to predict whether it may be subject to other lawsuits, claims or inquiries.

While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable and it is possible that we could incur losses associated with these proceedings, the Company does not believe, based on the information available to it at the time of this filing, that any legal proceedings pending or threatened against it will have a material adverse effect on its financial condition, results of operations or liquidity.

While legal proceedings are subject to inherent uncertainties and the outcomes cannot be predicted.

Based on currently available information, the Company does not believe that the resolution of any pending or threatened legal matters is reasonably likely to have a material adverse effect on its financial condition, results of operations, or liquidity.

However, it is possible that future developments could result in losses that are material in a particular period.

The Company is also party to purchase obligations for open merchandise orders of $ 161.7 million that is due within 12 months.

1 unchanged sentence

Leases for store locations are typically for a term of five years with options to extend for one or more five-year periods.

In fiscal 2022, the Company completed sale-leasebacks of its distribution centers.

The Darlington, South Carolina distribution center lease has a 20-year lease term with the option to extend for six additional periods of five years each.

The Roland, Oklahoma distribution center has a 15-year lease term with the option to extend for six additional periods of five years each.

The sale-leaseback transactions resulted in a gain of approximately $ 64.1 million in the Statement of Operations for the year ended January 28, 2023.

The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized.

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Total lease cost

Future minimum lease payments as of February 1, 2025 are as follows (in thousands):

Future minimum lease payments as of January 31, 2026 are as follows (in thousands):

Total future minimum lease payments

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Supplemental cash flow and other information related to operating leases are as follows (in thousands, except for weighted average amounts):

February 1, 2025

February 3, 2024

Cash paid for operating leases

3 unchanged sentences

Segment Reporting

The Company is an off-price value retailer of fashion apparel, accessories and home trends primarily for African American families.

The Company is the leading off-price value retailer of fashion apparel, accessories and home trends primarily for Black families.

The retail operations represent a single operating segment based on the way the Company manages its business.

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The CODM does not review assets in evaluating results, therefore such information is not provided.

The following table summarizes the Company ’ s one reportable segment profit or loss, including significant segment expenses, and includes the reconciliation to consolidated net (loss) income:

The following table summarizes the Company’s one reportable segment profit or loss, including significant segment expenses, and includes the reconciliation to consolidated net income (loss) (in thousands):

Cost of sales (exclusive of depreciation shown separately below)

8 unchanged sentences

Asset impairment

Gain on sale leaseback

Gain on sale of building

Gain on insurance

Interest income

1 unchanged sentence

Income tax (provision) benefit

Net (loss) income

Net income (loss)

(1) Other segment expenses represent other store, corporate and distribution center expenses including utilities, repairs, supplies, insurance, professional fees and other miscellaneous fees.

Subsequent Events

As previously disclosed in the Company ’ s Form 8-K filed on March 27, 2025, the Company entered into an Amended and Restated Cooperation Agreement (the “ Cooperation Agreement ” ) with Fund 1 Investments, LLC, a Delaware limited liability company (the “ Investor ” ) on March 25, 2025.

The Cooperation Agreement amends and restates the cooperation agreement previously entered into by the parties on February 28, 2024.

Pursuant to the Cooperation Agreement, the Company agreed to, among other things, (i) appoint each of Wesley Calvert and Pamela Edwards to the Company ’ s Board of Directors (the “ New Directors ” ) and (ii) nominate each of the New Directors, and David Heath, Charles Liu and Michael Kvitko for election to the Board at the Company ’ s 2025 annual meeting of stockholders (the “ 2025 Annual Meeting ” ).

The Investor also agreed to certain customary standstill provisions prohibiting it from, among other things, (i) soliciting proxies;

(ii) advising or knowingly encouraging any person with respect to the voting or disposition of any securities of the Company, subject to limited exceptions;

(iii) making public announcements regarding certain transactions involving the Company;

and (iv) taking actions to change or influence the Board, management or the direction of certain Company matters;

in each case as further described in the Cooperation Agreement.

Until the Termination Date (as defined in the Cooperation Agreement), the Company and the Investor have also agreed to certain mutual non-disparagement provisions.

The Cooperation Agreement will terminate on the date that is 30 days prior to the closing of the window for the submission of stockholder director nominations for the Company ’ s 2026 annual meeting of stockholders;

provided, however, that the Termination Date will be automatically extended to the date that is 30 days prior to the closing of the window for the submission of stockholder director nominations for the Company ’ s 2027 annual meeting of stockholders if the Company ’ s stock price meets certain thresholds as described in the Cooperation Agreement.

On April 10, 2025 the Company amended the five-year , $ 75 million credit facility with Bank of America to extend the maturity date to April 10, 2030.

The facility is secured by the Company ’ s inventory, accounts receivable and related assets, but not its real estate, fixtures and equipment, and it contains one financial covenant, a fixed charge coverage ratio, which is applicable and tested only in certain circumstances.

The facility has an unused commitment fee of 0.25 % and permits the payment of cash dividends subject to certain limitations.

Borrowings under the credit facility bear interest (a) for SOFR Loans, at a rate equal to the SOFR Rate plus a SOFR adjustment equal to 0.10 % plus either 1.50 % , 1.75 % or 2.00 % , or (b) for Base Rate Loans, at a rate equal to the highest of (i) the prime rate, (ii) the Federal Funds Rate plus 0.5 % and (iii) the Term SOFR Rate plus 1.0 % , plus, in each case either 0.50 % , 0.75 % or 1.00 % , based in any such case on the average daily availability for borrowings under the facility.

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE

1 unchanged sentence

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 8. Financial Statements and Supplementary Data