What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-06-09 compared with 2020-12-08 · 75 added, 89 removed, 76 unchanged (68% of the section changed)

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The factors that may result in actual results differing from such forward-looking information include, but are not limited to:

uncertainties relating to general economic conditions, including any deterioration whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory);

the ongoing COVID-19 pandemic and associated containment and remediation efforts;

the potential negative impacts of COVID-19 on the global economy and foreign sourcing;

the impacts of COVID-19 on the Company’s financial condition, business operation and liquidity, including the re-closure of any of the Company’s retail stores and distribution centers;

the impacts of COVID-19 on the Company's financial condition, business operation and liquidity, including the re-closure of any or all of the Company’s retail stores and distribution centers, growth risks, consumer spending patterns;

competition within the industry;

competition in our markets;

the ability to anticipate and respond to fashion trends;

the duration and extent of any economic stimulus programs;

transportation and distribution delays or interruptions;

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interruptions in suppliers’ businesses;

a deterioration in general economic conditions, whether caused by acts of war, terrorism, political or social unrest (including any resulting store closures, damage or loss of inventory), or other factors;

the results of pending or threatened litigation;

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and other factors described in the section titled “Item 1A.

Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended February 1, 2020, as amended, and in Part II, “Item 1A.

Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021 and in Part II, “Item 1A.

Risk Factors” and elsewhere in the Company’s Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.

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Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.

We are a value-priced retailer of fashion apparel, accessories and home goods for the entire family.

Our merchandise offerings are designed to appeal to the fashion preferences of value-conscious consumers, particularly African-Americans.

We operated 585 stores in both urban and rural markets in 33 states as of October 31, 2020.

We are a growing specialty value retailer of apparel, accessories and home trends primarily for African American and Latinx families.

Our high-quality and trend-right merchandise offerings at everyday low prices are designed to appeal to the fashion and trend preferences of value-conscious customers.

As of May 1, 2021, we operated 584 stores in urban, suburban and rural markets in 33 states.

COVID-19 Pandemic

In December 2019, a novel coronavirus (“COVID-19”) emerged and spread worldwide.

On March 11, 2020, the World Health Organization declared COVID-19 a pandemic.

After closely monitoring and taking into consideration the guidance from federal, state and local governments, we temporarily closed all of our retail store locations and distribution centers effective March 20, 2020.

Beginning April 24, 2020, we started to reopen stores in select states in accordance with state and local government guidelines.

In March 2020, the World Health Organization declared COVID-19 a global pandemic.

Since that time, the global economy has been, and continues to be, affected by COVID-19.

The pandemic has caused and may continue to cause significant disruptions in the U.S.

economy as the virus continues to spread or has a resurgence in certain jurisdictions.

Effective March 20, 2020, we temporarily closed all of our retail store locations and distribution centers as governments implemented measures in an effort to contain the virus, including lockdowns, physical distancing, travel restrictions, limitations on public gatherings, work from home and restrictions on nonessential businesses.

At the end of April 2020, we started to reopen stores in select states in accordance with government guidelines.

As of July 18, 2020, we safely reopened all of our stores.

We have taken numerous measures to protect the health of our associates, customers and communities we serve.

Such measures include implementing occupancy limits, providing personal protective equipment for our associates and customers, encouraging social distancing, adjusting our processes for merchandise returns and implementing new cleaning procedures.

We have incurred, and expect we will continue to incur, incremental costs for personal protective equipment, including masks, gloves and hand sanitizer for our associates and customers, as well as additional cleaning supplies.

The temporary closure of our stores has had, and may continue to have, an adverse impact on our financial condition, results of operations and liquidity as described in more detail below.

In the first quarter of 2020, we took several steps to increase our cash position and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic, including (i) the drawdown of $43.7 million in principal amount under the revolving credit facility on March 20, 2020 and an amendment to the revolving credit facility to extend the term to August 2021;

(ii) temporary furloughs of substantially all store and distribution center personnel and a significant portion of the corporate staff, with employee benefits for eligible employees continued through the temporary furloughs;

(iii) temporary tiered salary reductions for management level corporate employees and a reduction to the cash portion of non-employee director fees;

(iv) extensions of payment terms with vendors and suppliers;

and (v) temporarily suspending share repurchases.

Other measures taken by the Company to mitigate the impact of the pandemic that began in the first quarter of 2020 and are continuing include negotiating rent concessions with landlords and executing substantial reductions in operating expenses, store occupancy costs, capital expenditures and other costs.

We have continued to navigate through macro changes in the consumer landscape, including unpredictable and non-traditional back-to-school timing and learning methods and the ongoing uncertainties stemming from the COVID-19 pandemic.

We will continue to monitor and evaluate the COVID-19 pandemic and work to respond appropriately to the impacts on our business, including those on our customers, vendors and the communities we serve.

The COVID-19 pandemic has resulted in a period of disruption, including the temporary closure of our stores and limited store operating hours, reduced customer traffic and consumer spending, and delays in the manufacturing and shipping of

We saw improvement in our financial results and positive trends during the latter half of fiscal 2020 and into the first quarter of 2021 as certain governments began to gradually ease restrictions and provide economic stimulus and vaccine distribution accelerated, leading to an increase in spending and increased customer demand.

We took numerous actions beginning in the first quarter of fiscal 2020 in light of the uncertainties resulting from the pandemic, including:

(i) the drawdown of $43.7 million in principal amount under the revolving credit facility on March 20, 2020, which we fully repaid on September 11, 2020;

(ii) an amendment to the revolving credit facility to extend the term to August 2021;

(iii) temporary furloughs of substantially all store and distribution center personnel and a significant portion of the corporate staff, with employee benefits for eligible employees continued through the temporary furloughs;

(iv) temporary tiered salary reductions for management level corporate employees and a reduction to the cash portion of non-employee director fees;

(v) extensions of payment terms with vendors and suppliers;

(vi) the suspension of share repurchases;

(vii) negotiations of rent concessions with landlords, some of which are ongoing;

and (viii) a substantial reduction in operating expenses, store occupancy costs, capital expenditures and other costs.

We expect continued uncertainty in our business and the global economy, although the extent and duration is unknown, by the COVID-19 pandemic and its effects on the economy in a variety of ways, potentially including volatility in employment trends and consumer confidence, the direction or extent of current or future restrictive actions that may be imposed by governments or public health authorities, timing and effectiveness of vaccines, the duration and extent of any economic stimulus programs, supply chain interruptions, increased distribution and transportation costs, increased payroll expenses, and increased costs in an effort to maintain safe work and shopping environments.

Due to the significant uncertainty surrounding the COVID-19 pandemic and its effects, there may be consequences that we do not anticipate at this time or that develop in unexpected ways.

The impacts of the pandemic have had, and may continue to have, an adverse impact on the Company’s financial condition, results of operations and liquidity.

We will continue to monitor the effects of COVID-19 and take the necessary actions to serve our associates, customers, communities and shareholders.

For a further discussion of trends, uncertainties and other factors that could affect our future operating results related to the effects of the COVID-19 pandemic, see the section entitled "RISK FACTORS"

in ITEM 1A in the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2021.

Accounting Periods

The following discussion contains references to fiscal years 2020 and 2019, which represent fiscal years ending or ended on January 30, 2021 and February 1, 2020, respectively.

The following discussion contains references to fiscal years 2021 and 2020, which represent fiscal years ending or ended on January 29, 2022 and January 30, 2021, respectively.

Fiscal 2021 and fiscal 2020 both have 52-week accounting periods.

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Expenses and, to a greater extent, operating income, vary by quarter.

Results of a period shorter than a full year may not be indicative of results expected for the entire year, as a result of changes in our business, consumer spending patterns, and the macroeconomic environment, including those resulting from the COVID-19 pandemic.

Furthermore, as a result of the closure of our stores due to the COVID-19 pandemic for at least five weeks beginning on March 20, 2020, comparisons of expense ratios and year-over-year trends are not a meaningful way to evaluate our operating results for the thirty-nine weeks ended October 31, 2020.

Results of a period shorter than a full year may not be indicative of results expected for the entire year, particularly in light of the current uncertainty surrounding the economic impact of the COVID-19 pandemic.

Furthermore, as a result of the closure of our stores for at least five weeks in fiscal 2020 related to the COVID-19 pandemic, comparisons of expense ratios and year-over-year trends are not a meaningful way to evaluate our operating results for the first quarter of 2021.

Key Operating Statistics

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Finally, we monitor corporate expenses against budgeted amounts.

Thirty-Nine Weeks Ended October 31, 2020 and November 2, 2019

Net sales decreased $39.5 million, or 6.9%, to $531.4 million in the thirty-nine weeks ended October 31, 2020 from $570.9 million in the thirty-nine weeks ended November 2, 2019.

The decrease in sales was due to closing all 574 of our stores as a result of the COVID-19 pandemic from March 20 until April 23, at which point we began to gradually reopen certain stores, with all stores safely reopened as of July 18, 2020.

In the first quarter of 2020, net sales decreased $88.9 million, or 43.4%.

Prior to the onset of the COVID-19 pandemic, comparable store sales increased 3.1% from the beginning of the first quarter through March 7, 2020.

In the second quarter of 2020, net sales increased $33.4 million, or 18.2%, with an increase in comparable store sales of 32.2% for reopened stores from their respective opening dates.

In the third quarter of 2020, net sales increased $16.0 million, or 8.8%, as the result of a 6.3% increase in comparable store sales and the opening of 22 stores since the third quarter of last year, partially offset by the impact of closing three stores since the third quarter of last year.

Thirteen Weeks Ended May 1, 2021 and May 2, 2020

Net sales increased $169.3 million, or 145.8%, to $285.4 million in the first quarter of 2021 from $116.1 million in the first quarter of 2020.

The increase in sales was due to a 142.0% increase in comparable store sales and the opening of 17 new stores since the end of the first quarter last year, partially offset by the impact of closing seven stores.

The increase in comparable store sales was due primarily to the temporary closure in the first quarter of last year of all 574 of our stores as a result of the COVID-19 pandemic.

Compared to the first quarter of 2019, comparable store sales in the first quarter of 2021 increased 35.0%, driven primarily by an increase in the average basket combined with a slight increase in the number of transactions.

Cost of sales (exclusive of depreciation).

Cost of sales (exclusive of depreciation) decreased $30.1 million, or 8.4%, to $327.3 million in the thirty-nine weeks ended October 31, 2020 from $357.4 million in the thirty-nine weeks ended November 2, 2019.

Cost of sales as a percentage of sales decreased to 61.6% in the thirty-nine weeks of fiscal 2020 from 62.6% in the same period of fiscal 2019 due to an increase of 80 basis points in the core merchandise margin (initial mark-up, net of markdowns), along with an improvement of 20 basis points in shrinkage.

Cost of sales (exclusive of depreciation) increased $79.4 million, or 94.1%, to $163.8 million in the first quarter of 2021 from $84.4 million in the first quarter of 2020.

Cost of sales as a percentage of sales decreased to 57.4% in the first quarter of 2021 from 72.7% in the first quarter of 2020, due primarily to a decrease of 1,330 basis points in merchandise markdowns, as more markdowns were taken in the first quarter last year on transitional or seasonal merchandise due to our temporary store closures.

Compared to the first quarter of 2019, cost of sales decreased 510 basis points, due to an improvement of 490 basis points in the core merchandise margin (initial mark-up, net of markdowns) and an improvement of 100 basis points in shrinkage, partially offset by an increase of 80 basis points in freight costs as a result of pressures in the trucking industry.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses decreased $11.1 million, or 5.8%, to $180.9 million in the thirty-nine weeks ended October 31, 2020 from $192.0 million in the thirty-nine weeks ended November 2, 2019 due primarily to a $10.1 million decrease in payroll expenses as a result of associate furloughs and government credits under the CARES Act, as well as decreases in variable costs related to the temporary closures of our stores and distribution centers.

These decreases were partially offset by $1.7 million of incremental supplies costs related to COVID-19 for personal protective equipment and cleaning supplies, as well as the impact on expenses of opening 22 new stores since the third quarter of last year.

As a percentage of sales, selling, general and administrative expenses increased to 34.0% in the thirty-nine weeks of fiscal 2020 from 33.6% in the thirty-nine weeks of fiscal 2019.

Selling, general and administrative expenses increased $23.8 million, or 44.0%, to $77.9 million in the first quarter of 2021 from $54.1 million in the first quarter of 2020.

The increase was due primarily to expense reductions in the first quarter of 2020 due to the pandemic, consisting of lower payroll costs as a result of associate furloughs and decreases in other variable costs such as credit card processing fees and travel expenses.

As a percentage of sales, selling, general and administrative expenses decreased to 27.3% in the first quarter of 2021 from 46.6% in the first quarter of 2020 and 30.9% in the first quarter of 2019.

Depreciation.

Depreciation expense increased $0.9 million, or 6.1%, to $14.6 million in the thirty-nine weeks of fiscal 2020 from $13.7 million in the thirty-nine weeks of fiscal 2019.

Depreciation expense decreased $0.2 million, or 5.0%, to $4.7 million in the first quarter of 2021 from $4.9 million in the first quarter of 2020.

Asset Impairment.

Impairment charges related to an underperforming store totaled $0.3 million in the thirty-nine weeks of fiscal 2020, comprised of $0.2 million for an operating lease right-of-use asset and $0.1 million for leasehold improvements and fixtures and equipment.

In the thirty-nine weeks of fiscal 2019, impairment charges related to underperforming stores totaled $0.5 million, comprised of $0.3 million for leasehold improvements and fixtures and equipment, and $0.2 million for an operating lease right-of-use asset.

Income Tax Expense.

Income tax expense increased $0.5 million to $1.8 million in the thirty-nine weeks of fiscal 2020 compared to $1.3 million in the thirty-nine weeks of fiscal 2019 due to lower federal and state tax credits this year.

Net income decreased $1.2 million, or 16.1%, to $5.9 million in the thirty-nine weeks of fiscal 2020 from $7.1 million in the thirty-nine weeks of fiscal 2019 due to the factors discussed above.

Thirteen Weeks Ended October 31, 2020 and November 2, 2019

Net sales increased $16.0 million, or 8.8%, to $199.1 million in the third quarter of 2020 from $183.1 million in the third quarter of 2019.

The increase in sales was due to a 6.3% increase in comparable store sales and the opening of 22 new stores since the third quarter of last year, partially offset by the impact of closing three stores since the third quarter of last year.

The increase in comparable store sales was reflected in an increase of 21% in the average ticket size, partially offset by a decrease of 12% in customer transactions.

Comparable store sales changes by major merchandise class were as follows:

Children’s +5%;

and Accessories +1%.

Cost of sales (exclusive of depreciation).

Cost of sales (exclusive of depreciation) increased $1.2 million, or 1.1%, to $115.8 million in the third quarter of 2020 from $114.6 million in the third quarter of 2019.

Cost of sales as a percentage of sales decreased to 58.2% in the third quarter of 2020 from 62.6% in the third quarter of last year due to an increase of 390 basis points in the core merchandise margin (initial mark-up, net of markdowns), along with an improvement of 30 basis points in shrinkage and an improvement of 20 basis points in freight costs.

Selling, General and Administrative Expenses.

Selling, general and administrative expenses increased $3.7 million, or 5.6%, to $69.2 million in the third quarter of 2020 from $65.5 million in last year’s third quarter.

The increase was due primarily to a $2.8 million increase in incentive compensation resulting from favorable third quarter operating results in relation to budget, incremental supply costs of $0.5 million related to COVID-19 for personal protective equipment and cleaning supplies, and the impact on expenses of opening 22 new stores since the third quarter of last year.

These increases were partially offset by a decrease of $1.1 million in professional fees due primarily to higher costs incurred in the third quarter of last year associated with our CEO transition and changes to the Company’s board of directors.

As a percentage of sales, selling, general and administrative expenses decreased to 34.8% in the third quarter of 2020 from 35.8% in the third quarter of 2019.

Depreciation.

Depreciation expense increased $0.2 million, or 4.0%, to $4.7 million in the third quarter of 2020 from $4.5 million in the third quarter of 2019.

There was no impairment expense recorded in the first quarter of 2021.

In the first quarter of 2020, impairment charges related to an underperforming store totaled $0.3 million, comprised of $0.2 million for an operating lease right-of-use asset and $0.1 million for leasehold improvements and fixtures and equipment.

Income Tax Expense/Benefit.

Income tax expense was $2.2 million in the third quarter of 2020 compared to income tax benefit of $0.1 million in the third quarter of 2019, as a result of pretax income in the third quarter of this year compared to a pretax loss in the third quarter of last year.

Income tax expense was $8.1 million in the first quarter of 2021 compared to an income tax benefit of $6.6 million in the first quarter of 2020, as a result of pretax income this year versus the pretax loss in the first quarter of last year.

Net Income/Loss.

Net income was $7.0 million in the third quarter of 2020 compared to a net loss of $1.1 million in the third quarter of 2019 due to the factors discussed above.

Net income was $30.9 million in the first quarter of 2021 compared to a net loss of $20.9 million in the first quarter of 2020 due to the factors discussed above.

Liquidity and Capital Resources

Our principal sources of liquidity consist of:

(i) cash and cash equivalents (which equaled $96.8 million as of October 31, 2020);

(i) cash and cash equivalents (which equaled $131.3 million as of May 1, 2021);

(ii) short-term trade credit;

(iii) cash generated from operations on an ongoing basis as we sell our merchandise inventory;

and (iv) a revolving credit facility with a $50.0 million credit commitment (with no borrowings as of October 31, 2020).

and (iv) a revolving credit facility with a $75.0 million credit commitment (with no borrowings as of May 1, 2021).

Trade credit represents a significant source of financing for inventory purchases and arises from customary payment terms and trade practices with our vendors.

Cash Flows From Operating Activities .

Net cash provided by operating activities was $63.0 million in the thirty-nine weeks ended October 31, 2020 compared to $21.1 million in the thirty-nine weeks ended November 2, 2019.

Sources of cash in the thirty-nine weeks of 2020 included net income adjusted for non-cash expenses such as depreciation, non-cash operating lease costs, asset impairment, loss on disposal of property and equipment, deferred income taxes and stock-based compensation expense, totaling $59.6 million (compared to $57.9 million in the thirty-nine weeks of 2019).

Other significant sources of cash in the thirty-nine weeks of 2020 included (1) a $23.9 million decrease in inventory (compared to a $4.1 million decrease in the thirty-nine weeks of 2019) due to efforts to improve inventory turns and maintain as much inventory liquidity as possible in order to take advantage of opportunistic deals and trend changes;

(2) a $7.7 million increase in accounts payable (compared to a $1.8 million decrease in the thirty-nine weeks of 2019) due to a high volume of merchandise receipts during the final two months of the third quarter of 2020, with nearly all of such purchases still in accounts payable at the end of the quarter;

and (3) a $3.4 million increase in accrued compensation (compared to a $3.2 million decrease in the first thirty-nine weeks of 2019) due to an increase in incentive compensation resulting from favorable third quarter operating results in relation to budget, combined with an increase in deferred payroll taxes under the CARES Act.

Significant uses of cash from operating activities in the thirty-nine weeks of 2020 were (1) a $25.3 million decrease in accrued expenses and other long-term liabilities (compared to a $33.1 million decrease in the thirty-nine weeks of 2019) due primarily to payments of operating lease liabilities;

and (2) a $7.4 million increase in prepaid and other current assets (compared to a $1.1 million increase in the thirty-nine weeks of 2019) due to an employee retention credit receivable under the CARES Act, combined with increases in receivables for tenant improvement dollars and charge card receivables.

Net cash provided by operating activities was $61.7 million in the thirteen weeks ended May 1, 2021 compared to $12.8 million in the same period of 2020.

Sources of cash in the first quarter of 2021 included net income (adjusted for insurance proceeds and non-cash expenses) totaling $50.4 million (compared to a net loss in the first quarter of 2020).

Other significant sources of cash in the first quarter of 2021 included (1) a $24.5 million increase in accounts payable (compared to a $14.0 million increase in the first quarter of 2020) due to a high volume of merchandise receipts during the final two months of the third quarter of 2020, with nearly all of such purchases still in accounts payable at

the end of the quarter;

and (2) a $7.0 million increase in income tax payable (compared to a $1.1 million decrease in income tax receivable in the first quarter of 2020).

Significant uses of cash during the first quarter of 2021 included (1) an $11.2 million decrease in accrued compensation (compared to a $5.5 million decrease in the first quarter of 2020) due to payment in the first quarter of 2021 of incentive compensation accrued in fiscal 2020;

and (2) an $8.6 million decrease in accrued expenses and other long-term liabilities (compared with a $6.8 million decrease in the first quarter of 2020) due primarily to payments of operating lease liabilities.

Cash Flows From Investing Activities.

Cash provided by investing activities was $31.3 million in the thirty-nine weeks of 2020 compared to cash used of $2.0 million in the thirty-nine weeks of 2019.

Sales and redemptions of investment securities, net of purchases, provided cash of $43.3 million and $10.7 million in the thirty-nine weeks of 2020 and 2019, respectively.

Cash used for purchases of property and equipment totaled $11.9 million and $13.2 million in the thirty-nine weeks of 2020 and 2019, respectively.

Cash used in investing activities was $5.7 million in the first quarter of 2021 compared to cash provided of $39.3 million in the first quarter of 2020.

Cash used in the first quarter of 2021 consisted primarily of purchases of property and equipment.

Cash provided in the first quarter of 2020 was primarily from the sales of investment securities due to the pandemic, partially offset by $4.0 million used for purchases of property and equipment.

Cash Flows From Financing Activities.

Cash used in financing activities was $17.6 million in the thirty-nine weeks of 2020 compared to cash used of $13.2 million in the thirty-nine weeks of 2019.

Cash used for repurchases of common stock and dividends paid to shareholders totaled $16.9 million in the thirty-nine weeks of 2020 compared to $12.6 million in the same period of 2019.

Cash used in financing activities was $47.9 million in the first quarter of 2021 compared to cash provided from financing activities of $36.1 million in the first quarter of 2020.

The principal use of cash in the first quarter of 2021 was share repurchases of $45.5 million.

Cash provided in the first quarter of 2020 was the result of a drawdown of $43.7 million on our revolving credit facility due to the pandemic, partially offset by $7.1 million of combined share repurchases and dividend payments.

Cash Requirements

Our cash requirements are primarily for working capital and capital expenditures for stores, distribution infrastructure and information systems.

We also use cash to repurchase stock under our stock repurchase program.

Historically, we have met these cash requirements using cash flow from operations and short-term trade credit.

As part of the actions we have taken to increase our cash position and preserve financial flexibility in light of uncertainties resulting from the COVID-19 pandemic, as described above in “COVID-19 Pandemic,” on March 20, 2020, we drew down $43.7 million on our revolving credit facility.

During the second quarter of 2020, we repaid $2.1 million of the borrowings.

On September 11, 2020, we repaid the full amount outstanding under the credit facility.

In addition, we reduced our operating expenses and adjusted capital expenditure plans and inventory receipts, as appropriate.

The Company previously announced a share repurchase program on March 13, 2020.

On March 23, 2020, due to the economic uncertainty stemming from the COVID-19 pandemic, we suspended any repurchases and dividend payments.

On September 14, 2020, we announced the reinstatement of the share repurchase program.

During the third quarter of 2020, we repurchased shares of our common stock at an aggregate cost of $9.9 million.

Based on our current expectations regarding the impact of COVID-19, we expect to be able to meet future cash requirements for at least the next 12 months with cash flow from operations, short-term trade credit, existing balances of cash and cash equivalents, and borrowings under our revolving credit facility.

We intend to carefully monitor and manage our cash position in light of ongoing conditions and results of operations.

We have also used cash to repurchase stock under our stock repurchase program.

In the first quarter of 2021, pursuant to our stock repurchase program, we repurchased 287,496 shares of our common stock at an aggregate cost of $23.6 million.

In addition, we repurchased in a block trade 250,000 shares of our common stock at an aggregate cost of $21.9 million.

We believe that our existing sources of liquidity will be sufficient to fund our operations for at least the next 12 months as well as the foreseeable future.

However, any significant reduction in customer willingness to visit shopping centers or levels of customer spending at our stores, or any future temporary closures of our stores or distribution centers, or any disruptions in the supply chains related to our merchandise could require us to take actions that could include material changes in our operations and seeking additional debt or equity capital.

We will continue to monitor the situation and take action as necessary to reduce our expenses and preserve our financial flexibility.

Recent Accounting Pronouncements

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Actual results could differ from those estimates.

There have been no other material changes to the Critical Accounting Policies outlined in the Company’s Annual Report on Form 10-K for the year ended February 1, 2020, as amended.

There have been no material changes to the Critical Accounting Policies outlined in the Company’s Annual Report on Form 10-K for the year ended January 30, 2021.

Quantitative and Qualitative Disclosures About Market Risk.

There have been no material changes in our market risk during the thirty-nine weeks ended October 31, 2020 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended February 1, 2020, as amended.

There have been no material changes in our market risk during the thirteen weeks ended May 1, 2021 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended January 30, 2021.

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-Q

Item 2. Management’s Discussion and Analysis