Citi Trends Inc 10-Q

Item 1. Financial Statements. Citi Trends, Inc. Condensed Consolidated Balance Sheets (Unaudited) (in thousands, except share data) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ May 2, ​ ​ ​ January 31, ​ ​ ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2026 ​ ​ ​ Assets ​ ​ ​ ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 81,100 ​ $ 66,092 ​ ​ Inventory ​ 115,246 ​ 113,515 ​ ​ Prepaid and other current assets ​ 16,090 ​ 12,254 ​ ​ Income tax receivable ​ 522 ​ 1,187 ​ ​ Total current assets ​ 212,958 ​ 193,048 ​ ​ Property and equipment, net of accumulated depreciation of $ 306,694 and $ 301,921 as of May 2, 2026 and January 31, 2026, respectively. ​ 56,639 ​ 54,384 ​ ​ Operating lease right of use assets ​ ​ 224,770 ​ ​ 221,775 ​ ​ Other assets ​ 1,824 ​ 1,964 ​ ​ Total assets ​ $ 496,191 ​ $ 471,171 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Liabilities and Stockholders’ Equity ​ ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ ​ Accounts payable ​ $ 113,238 ​ $ 100,693 ​ ​ Operating lease liabilities ​ ​ 44,046 ​ ​ 44,397 ​ ​ Accrued expenses ​ 17,430 ​ 15,134 ​ ​ Accrued compensation ​ 10,216 ​ 12,800 ​ ​ Layaway deposits ​ 1,049 ​ 383 ​ ​ Total current liabilities ​ 185,979 ​ 173,407 ​ ​ Noncurrent operating lease liabilities ​ 182,416 ​ 178,921 ​ ​ Deferred Tax Liability ​ ​ 244 ​ ​ 245 ​ ​ Other long-term liabilities ​ 2,209 ​ 2,278 ​ ​ Total liabilities ​ 370,848 ​ 354,851 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stockholders’ equity: ​ ​ ​ ​ ​ ​ ​ ​ Common stock, $ 0.01 par value. Authorized 32,000,000 shares; 16,556,574 shares issued as of May 2, 2026 and 16,545,723 shares issued as of January 31, 2026; 8,356,768 shares outstanding as of May 2, 2026 and 8,345,917 shares outstanding as of January 31, 2026 ​ 163 ​ 163 ​ ​ Paid in capital ​ 113,621 ​ 112,352 ​ ​ Retained earnings ​ 288,862 ​ 281,108 ​ ​ Treasury stock, at cost; 8,199,806 shares held as of May 2, 2026 and January 31, 2026 ​ ( 277,303 ) ​ ( 277,303 ) ​ ​ Total stockholders’ equity ​ 125,343 ​ 116,320 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Commitments and contingencies (Note 7) ​ ​ ​ ​ ​ ​ ​ ​ Total liabilities and stockholders’ equity ​ $ 496,191 ​ $ 471,171 ​ ​ ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 3 Table of Contents Citi Trends, Inc. Condensed Consolidated Statements of Operations (Unaudited) (in thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ ​ ​ May 2, ​ May 3, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Net sales ​ $ 230,858 ​ $ 201,728 ​ ​ ​ ​ ​ ​ ​ ​ ​ Cost of sales (exclusive of depreciation) ​ ​ ( 138,630 ) ​ ​ ( 121,918 ) ​ Selling, general and administrative expenses ​ ​ ( 79,745 ) ​ ​ ( 74,887 ) ​ Depreciation ​ ​ ( 5,108 ) ​ ​ ( 4,370 ) ​ Asset impairment ​ ​ — ​ ​ ( 64 ) ​ Income from operations ​ ​ 7,375 ​ ​ 489 ​ Interest income ​ ​ 647 ​ ​ 458 ​ Interest expense ​ ​ ( 86 ) ​ ​ ( 76 ) ​ Income before income taxes ​ ​ 7,936 ​ ​ 871 ​ Income tax expense ​ ​ ( 182 ) ​ ​ — ​ Net income ​ $ 7,754 ​ $ 871 ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic net earnings per common share ​ $ 0.95 ​ $ 0.11 ​ Diluted net earnings per common share ​ $ 0.91 ​ $ 0.11 ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average number of shares outstanding ​ ​ ​ ​ ​ ​ ​ Basic ​ ​ 8,126 ​ ​ 8,034 ​ Diluted ​ ​ 8,484 ​ ​ 8,170 ​ ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 4 Table of Contents Citi Trends, Inc. Condensed Consolidated Statements of Cash Flows (Unaudited) (in thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ ​ ​ May 2, ​ May 3, ​ ​ ​ ​ ​ 2026 ​ ​ ​ 2025 Operating activities: ​ ​ ​ ​ ​ ​ ​ Net income ​ $ 7,754 ​ $ 871 ​ Adjustments to reconcile net income to net cash provided by (used in) operating activities: ​ ​ ​ ​ ​ ​ ​ Depreciation ​ ​ 5,108 ​ ​ 4,370 ​ Asset impairment ​ ​ — ​ ​ 64 ​ Non-cash operating lease costs ​ ​ 12,120 ​ ​ 12,252 ​ Loss on disposal of property and equipment ​ ​ 1 ​ ​ — ​ Non-cash stock-based compensation expense ​ ​ 1,303 ​ ​ 968 ​ Changes in assets and liabilities: ​ ​ ​ ​ ​ ​ ​ Inventory ​ ​ ( 1,731 ) ​ ​ 12,709 ​ Prepaid and other current assets ​ ​ ( 3,836 ) ​ ​ ( 3,536 ) ​ Other assets ​ ​ 140 ​ ​ ( 453 ) ​ Accounts payable ​ ​ 12,572 ​ ​ ( 21,911 ) ​ Accrued expenses and other long-term liabilities ​ ​ ( 11,303 ) ​ ​ ( 19,387 ) ​ Accrued compensation ​ ​ ( 2,584 ) ​ ​ 2,562 ​ Income tax receivable/payable ​ ​ 665 ​ ​ 2 ​ Layaway deposits ​ ​ 666 ​ ​ 520 ​ Net cash provided by (used in) operating activities ​ ​ 20,875 ​ ​ ( 10,969 ) ​ Investing activities: ​ ​ ​ ​ ​ ​ ​ Purchases of property and equipment ​ ​ ( 5,833 ) ​ ​ ( 2,104 ) ​ Net cash used in investing activities ​ ​ ( 5,833 ) ​ ​ ( 2,104 ) ​ Financing activities: ​ ​ ​ ​ ​ ​ ​ Cash used to settle withholding taxes on the vesting of nonvested restricted stock ​ ​ ( 34 ) ​ ​ ( 141 ) ​ Repurchases of common stock ​ ​ — ​ ​ ( 6,315 ) ​ Net cash used in financing activities ​ ​ ( 34 ) ​ ​ ( 6,456 ) ​ Net increase (decrease) in cash and cash equivalents ​ ​ 15,008 ​ ​ ( 19,529 ) ​ Cash and cash equivalents: ​ ​ ​ ​ ​ ​ ​ Beginning of period ​ ​ 66,092 ​ ​ 61,085 ​ End of period ​ $ 81,100 ​ $ 41,556 ​ ​ ​ ​ ​ ​ ​ ​ ​ Supplemental disclosures of cash flow information: ​ ​ ​ ​ ​ ​ ​ Cash paid for interest ​ $ 64 ​ $ 43 ​ Cash refunds of income taxes ​ $ ( 483 ) ​ $ ( 2 ) ​ Supplemental disclosures of non-cash investing activities: ​ ​ ​ ​ ​ ​ ​ Accrual for purchases of property and equipment ​ $ 1,530 ​ $ 944 ​ ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ ​ 5 Table of Contents Citi Trends, Inc. Condensed Consolidated Statements of Stockholders’ Equity (Unaudited) (in thousands, except share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid in ​ Retained ​ Treasury Stock ​ ​ ​ ​ ​ Shares ​ Amount ​ Capital ​ Earnings ​ Shares ​ Amount ​ Total Balances — January 31, 2026 16,545,723 ​ $ 163 ​ $ 112,352 ​ $ 281,108 8,199,806 ​ $ ( 277,303 ) ​ $ 116,320 Grant of restricted shares 19,313 ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — Forfeiture of restricted shares ( 7,675 ) ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ — ​ ​ — ​ ​ 1,303 ​ ​ — ​ — ​ ​ — ​ ​ 1,303 Shares withheld for settlement of employee taxes on vesting ( 787 ) ​ ​ — ​ ​ ( 34 ) ​ ​ — ​ — ​ ​ — ​ ​ ( 34 ) Repurchase of common stock ​ — ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ 7,754 ​ — ​ ​ — ​ ​ 7,754 Balances — May 2, 2026 16,556,574 ​ $ 163 ​ $ 113,621 ​ $ 288,862 8,199,806 ​ $ ( 277,303 ) ​ $ 125,343 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Common Stock ​ Paid in ​ Retained ​ Treasury Stock ​ ​ ​ ​ ​ Shares ​ Amount ​ Capital ​ Earnings ​ Shares ​ Amount ​ Total Balances — February 1, 2025 16,497,092 ​ $ 162 ​ $ 108,101 ​ $ 275,901 7,949,251 ​ $ ( 270,988 ) ​ $ 113,176 Grant of restricted shares ​ 2,089 ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — Forfeiture of restricted shares ( 19,398 ) ​ ​ — ​ ​ — ​ ​ — ​ — ​ ​ — ​ ​ — Stock-based compensation expense ​ — ​ ​ — ​ ​ 968 ​ ​ — ​ — ​ ​ — ​ ​ 968 Shares withheld for settlement of employee taxes on vesting ( 6,939 ) ​ ​ — ​ ​ ( 141 ) ​ ​ — ​ — ​ ​ — ​ ​ ( 141 ) Repurchase of common stock ​ — ​ ​ — ​ ​ — ​ ​ — ​ 250,555 ​ ​ ( 6,315 ) ​ ​ ( 6,315 ) Net income (loss) ​ — ​ ​ — ​ ​ — ​ ​ 871 ​ — ​ ​ — ​ ​ 871 Balances — May 3, 2025 16,472,844 ​ $ 162 ​ $ 108,928 ​ $ 276,772 8,199,806 ​ $ ( 277,303 ) ​ $ 108,559 ​ See accompanying notes to the condensed consolidated financial statements (unaudited). ​ 6 Table of Contents Citi Trends, Inc. Notes to the Condensed Consolidated Financial Statements (unaudited) (in thousands, except per share amounts) May 2, 2026 ​ 1. Significant Accounting Policies Basis of Presentation Citi Trends, Inc. 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 May 2, 2026, the Company operated 591 stores in urban, suburban and rural markets in 33 states. The condensed consolidated financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim reporting and are unaudited. In the opinion of management, the condensed consolidated financial statements reflect all adjustments, which are normal and recurring in nature, necessary for fair financial statement presentation. The condensed consolidated balance sheet as of January 31, 2026 is derived from the audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2026 (the “2025 Form 10-K”). These condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the 2025 Form 10-K. Operating results for the first quarter of 2026 are not necessarily indicative of the results that may be expected for the fiscal year as a result of the seasonality of the business and the current economic uncertainty. Fiscal Year The following contains references to fiscal years 2026 and 2025, which represent fiscal years ending or ended on January 30, 2027 and January 31, 2026, respectively. Fiscal 2026 and fiscal 2025 both have 52 -week accounting periods. ​ 2. Cash and Cash Equivalents/Concentration of Credit Risk For purposes of the condensed consolidated balance sheets and condensed consolidated statements of cash flows, the Company considers all highly liquid investments with maturities at date of purchase of three months or less to be cash equivalents. Financial instruments that potentially subject the Company to a concentration of credit risk consist principally of cash and cash equivalents. The Company places its cash and cash equivalents in what it believes to be high credit quality banks and institutional money market funds. The Company maintains cash accounts that exceed federally insured limits. ​ 3. Earnings per Share Basic earnings per common share amounts are calculated using the weighted average number of common shares outstanding for the period. Diluted earnings per common share amounts are calculated using the weighted average number of common shares outstanding plus the additional dilution for all potentially dilutive securities, such as nonvested restricted stock. During loss periods, diluted loss per share amounts are based on the weighted average number of common shares outstanding, because the inclusion of common stock equivalents would be antidilutive. The dilutive effect of stock-based compensation arrangements is accounted for using the treasury stock method. The Company includes the amount of compensation cost attributed to future services and not yet recognized as assumed proceeds. For the first quarter of 2026 and 2025, there were no shares of nonvested restricted stock excluded from the calculation of diluted earnings per share because of antidilution. ​ 7 Table of Contents The following table provides the weighted average number of common shares outstanding used to calculate basic earnings per share to the number of common shares and common stock equivalents outstanding used in calculating diluted earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ ​ ​ ​ May 2, 2026 ​ ​ ​ May 3, 2025 Weighted average number of common shares outstanding (basic) ​ 8,126,151 ​ 8,033,623 Incremental shares from assumed vesting of nonvested restricted stock ​ 357,924 ​ 136,833 Weighted average number of common shares and common stock equivalents outstanding (diluted) ​ 8,484,075 ​ 8,170,456 ​ ​ 4. 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 1.50 % , 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. As of May 2, 2026, the Company had no borrowings under the credit facility and $ 2.2 million of letters of credit outstanding. ​ 5. Income Taxes Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carryforwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. 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. If realization of the deferred tax asset is not considered more likely than not, then a valuation allowance is recorded to reduce the deferred tax asset to its net realizable value. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income, and tax planning strategies in making this assessment. Based upon the level of historical taxable income and projections for future taxable income over the periods in which the deferred tax assets are deductible and income tax credits may be utilized, management believes sufficient negative evidence exists to require a valuation allowance. 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. On July 4, 2025, the President signed H.R. 1, the “One Big Beautiful Bill Act,” into law. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The legislation includes several changes to federal tax law that generally allow for more favorable deductibility of certain business expenses beginning in 2025, including the restoration of immediate expensing of domestic R&D expenditures, reinstatement of 100% bonus depreciation, and more favorable rules for determining the limitation on business interest expense. The Company expects to utilize the more favorable tax legislation in its corresponding tax filings. ​ 8 Table of Contents 6. 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, landlords, employees or former employees. Once it becomes probable that the Company will incur costs in connection with a legal proceeding and such costs can be reasonably estimated, the Company establishes appropriate reserves. While legal proceedings are subject to uncertainties and the outcome of any such matter is not predictable, the Company is not aware of any legal proceedings pending or threatened against it that it expects to have a material adverse effect on its financial condition, results of operations or liquidity. ​ 7. Stock Repurchases The Company periodically repurchases shares of its common stock under board-authorized repurchase programs. Such repurchases may be made in the open market, through block trades or through other negotiated transactions. Share repurchases were as follows: ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ May 2, 2026 ​ ​ ​ May 3, 2025 Total number of shares purchased ​ — ​ ​ 251 Average price paid per share (including commissions) $ — ​ $ 25 Total investment $ — ​ $ 6,315 ​ At May 2, 2026, $ 40.0 million remained available under the Company’s stock repurchase authorization. ​ 8. Recent Accounting Pronouncements In December 2023, the FASB issued ASU 2023-09, “Improvement to Income Tax Disclosures (Topic 740)”, which requires additional disclosures for income tax rate reconciliations, income taxes paid, and certain other tax disclosures. ASU 2023-09 is intended to enhance the transparency and decision usefulness of income tax disclosures. The amendments in ASU 2023-09 address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. Adoption is required for annual periods beginning after December 15, 2024. In fiscal 2025, the Company adopted the new accounting pronouncement ASU 2023-09 in the respective 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): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), which requires public entities to disclose additional information that disaggregates certain expense captions into specified categories in the Notes to the consolidated financial statements. The new standard is effective for fiscal years beginning after December 15, 2026, and interim periods after December 15, 2027, with early adoption permitted. The disclosure updates are required to be applied prospectively with the option for retrospective application. 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. 9 Table of Contents ​ 9. Revenue Revenue Recognition The Company’s primary source of revenue is derived from the sale of clothing and accessories to its customers with the Company’s performance obligations satisfied immediately when the customer pays for their purchase and receives the merchandise. Sales taxes collected by the Company from customers are excluded from revenue. Revenue from layaway sales is recognized at the point in time when the merchandise is paid for and control of the goods is transferred to the customer, thereby satisfying the Company’s performance obligation. The Company defers revenue from the sale of gift cards and recognizes the associated revenue upon the redemption of the cards by customers to purchase merchandise. Sales Returns The Company allows customers to return merchandise for up to 30 days after the date of sale. Expected refunds to customers are recorded based on estimated margin using historical return information. Disaggregation of Revenue The Company’s retail operations represent a single operating segment based on the way the Company manages its business. Operating decisions and resource allocation decisions are made at the Company level in order to maintain a consistent retail store presentation. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers. In the following table, the Company’s revenue from contracts with customers is disaggregated by Division or product category. The following table provides the percentage of net sales for each Division within the merchandise assortment: ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ May 2, ​ ​ ​ May 3, Division 2026 ​ ​ ​ 2025 Women's 27 % ​ 28 % Children's 23 % ​ 22 % Accessories & Beauty 17 % ​ 17 % Men's 16 % ​ 15 % Home & Lifestyle 10 % ​ 11 % Footwear 7 % ​ 7 % ​ ​ 10. Leases The Company leases its retail store locations, distribution centers, and certain office space and equipment. Leases for store locations are typically for a term of five years with options to extend for one or more five-year periods. The Company analyzes all leases at inception to determine if a right-of-use asset and lease liability should be recognized. Leases with an initial term of 12 months or less and leases with mutual termination clauses are not included on the condensed consolidated balance sheets. The lease liability is measured at the present value of future lease payments as of the lease commencement date. Total lease cost is comprised of operating lease costs, short-term lease costs, and variable lease costs, which include rent paid as a percentage of sales, common area maintenance, real estate taxes and insurance for the Company’s real estate leases. Lease costs consisted of the following (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ ​ ​ May 2, 2026 ​ May 3, 2025 ​ Operating lease cost ​ $ 15,965 ​ $ 15,167 ​ Variable lease cost ​ 3,159 ​ 2,610 ​ Short term lease cost ​ 724 ​ 576 ​ Total lease cost ​ $ 19,848 ​ $ 18,353 ​ ​ ​ 10 Table of Contents Future minimum lease payments as of May 2, 2026 are as follows (in thousands): ​ ​ ​ ​ ​ ​ ​ Fiscal Year ​ ​ ​ Lease Costs Remainder of 2026 ​ ​ ​ $ 49,082 ​ ​ 2027 ​ ​ 56,442 ​ ​ 2028 ​ 46,741 ​ ​ 2029 ​ 36,782 ​ ​ 2030 ​ 26,166 ​ ​ Thereafter ​ 97,881 ​ ​ Total future minimum lease payments ​ ​ 313,094 ​ ​ Less: imputed interest ​ ​ ( 86,632 ) (1) ​ Total present value of lease liabilities ​ $ 226,462 (2) ​ ​ (1) Calculated using the incremental borrowing rate for each lease. (2) Includes short-term and long-term portions of operating lease liabilities. Certain operating leases provide for fixed monthly rents, while others provide for contingent rents computed as a percentage of net sales and others provide for a combination of both fixed monthly rents and contingent rents computed as a percentage of net sales. Supplemental cash flows and other information related to operating leases are as follows (in thousands, except for weighted average amounts): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ ​ May 2, 2026 ​ May 3, 2025 Cash paid for operating leases ​ ​ ​ $ 15,813 ​ $ 15,182 Right of use assets obtained in exchange for new operating lease liabilities ​ $ 15,114 ​ $ 16,528 ​ ​ ​ ​ ​ Weighted average remaining lease term (years) - operating leases ​ 6.73 ​ 7.14 Weighted average discount rate - operating leases ​ ​ 6.20 % ​ ​ 5.78 % ​ ​ 11. Segment Reporting The Company is an 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. The Company’s Chief Executive Officer, as our chief operating decision maker (“CODM”), manages and allocates resources to the operations of the Company on a consolidated basis. This enables the Chief Executive Officer to assess the Company’s overall level of available resources and determine how best to deploy these resources across retail stores that are in line with the Company’s long-term company-wide strategic goals. The Company’s retail stores sell similar products, use similar processes to sell those products, and sell their products to similar classes of customers. All sales and assets are located within the United States. The CODM assesses performance based on consolidated net (loss) income that is reported on the statement of operations as part of the annual budgeting and forecasting process. The CODM considers budget-to-actual variances on a monthly basis when making decisions about allocating capital and personnel. The CODM does not review assets in evaluating results, therefore such information is not provided. ​ 11 Table of Contents 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 (in thousands): ​ ​ ​ ​ ​ ​ ​ ​ Thirteen Weeks Ended ​ May 2, 2026 ​ May 3, 2025 Net sales $ 230,858 ​ $ 201,728 Cost of sales (exclusive of depreciation shown separately below) ​ ​ ​ ​ ​ Merchandising and other ​ ( 126,428 ) ​ ​ ( 111,857 ) Freight in and out ​ ( 12,202 ) ​ ​ ( 10,061 ) Selling, general, and administrative expenses ​ ​ ​ ​ ​ Store expenses - payroll and related expenses ​ ( 23,908 ) ​ ​ ( 22,485 ) Store expenses - rent ​ ( 17,701 ) ​ ​ ( 16,327 ) Corporate expenses - payroll and related expenses ​ ( 7,132 ) ​ ​ ( 7,283 ) Distribution center expenses - payroll and related expenses ​ ( 4,590 ) ​ ​ ( 4,555 ) Other segment expenses (1) ​ ( 26,414 ) ​ ​ ( 24,237 ) Depreciation ​ ( 5,108 ) ​ ​ ( 4,370 ) Asset impairment ​ — ​ ​ ( 64 ) Interest income ​ 647 ​ ​ 458 Interest expense ​ ( 86 ) ​ ​ ( 76 ) Income tax expense ​ ( 182 ) ​ ​ — Net income $ 7,754 ​ $ 871 ​ (1) Other segment expenses represent other store, corporate and distribution center expenses including utilities, repairs, supplies, insurance, professional fees and other miscellaneous fees. ​ ​ 12 Table of Contents