What changed in this filing

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Item 1. Business

2022-03-30 compared with 2021-03-18 · 71 added, 89 removed, 314 unchanged (34% of the section changed)

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We use the term “community” shopping center to refer to a shopping area designed to serve a trade area of 40,000 to 150,000 people where the lead tenant is a variety discount, junior department store and/or supermarket.

We use the term “trade area” to refer to the geographic area from which the majority of a given retailer's customers come from.

We use the term “trade area” to refer to the geographic area from which a given retailer generates a majority of its customers.

Trade areas vary by market based on geographic size, population density, demographics and proximity to alternative shopping opportunities.

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References to "fiscal year 2022" or "fiscal 2022" refer to the period from January 30, 2022 to January 28, 2023, which consists of a 52-week fiscal year.

References to "fiscal year 2021" or "fiscal 2021" refer to the period from January 31, 2021 to January 29, 2022, which consists of a 52-week fiscal year.

References to "fiscal year 2020" or "fiscal 2020" refer to the period from February 2, 2020 to January 30, 2021, which consists of a 52-week fiscal year.

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References to “fiscal year 2017” or “fiscal 2017” refer to the period from January 29, 2017 to February 3, 2018, which consists of a 53-week fiscal year.

References to “fiscal year 2016” or “fiscal 2016” refer to the period from January 31, 2016 to January 28, 2017, which consists of a 52-week fiscal year.

References to 2022, 2021, 2020, 2019, 2018, and 2017 are to our fiscal years unless otherwise specified.

Due to the 53rd week in fiscal 2017, all comparable sales related to any reporting period during the year ended February 2, 2019 are reported on a restated calendar basis using the National Retail Federation's restated calendar comparing similar weeks.

Effects of the COVID-19 Pandemic on our Business and Operations

As a result of the coronavirus (or COVID-19) pandemic in 2020, federal, state and local governments and private entities mandated various restrictions, including travel restrictions, restrictions on public gatherings, stay at home orders and advisories, and quarantining of people who may have been exposed to the virus.

Such mandates required reduction of operating hours and forced temporary closures of certain retailers and other businesses.

As a result of these restrictions and out of concern for our customers and employees, we temporarily closed all of our stores as of March 20, 2020.

We began reopening our stores at the end of April in compliance with federal, state and local requirements.

As a result of the temporary store closures, we withheld store rent for the closure period.

With respect to virtually all of our lease portfolio, we have resumed rent payments and, in most cases, agreed to rent deferrals and abatements related to this closure period with landlords.

As a result, we do not expect that our prior rent withholdings or the associated deferrals and abatements agreed upon with landlords will have a material adverse impact on our business, financial condition and results of future operations.

As a result of the COVID-19 pandemic, our business operations and results of operations, including our net sales, earnings and cash flows, were materially impacted in fiscal 2020 as a result of the temporary closures of our stores in the first half of 2020, and decreased customer traffic in stores, including, without limitation, as the result of limitations on the number of persons permitted in stores at one time by certain local and state regulations.

Although our ability to operate improved in the second half of fiscal 2020, the ultimate health and economic impact of the COVID-19 pandemic remain highly uncertain.

If the pandemic were to worsen, our business operations and results of operations, including our net sales, earnings and cash flows, may be materially impacted for the foreseeable future, as a result of:

• additional temporary closures of our stores;

• continued decreased customer traffic in stores, including, without limitation, as the result of limitations on the number of persons permitted in stores at one time by certain local and state regulations;

• uncertainty of the extent to which customers will continue making purchases through our e-commerce website and through curbside pickup (if and where any stores are closed to the public);

• changes in consumer confidence and consumer spending habits, including spending for the merchandise that we sell, and negative trends in consumer purchasing patterns due to changes in consumers’ disposable income, credit availability and debt levels;

• disruption to our supply chain including the manufacturing, supply, distribution, transportation and delivery of our products;

• increased safety measures for our employees and customers at our stores, distribution centers and home office;

• a slowdown in the U.S.

and global economies, and an uncertain global economic outlook or a potential credit crisis.

To seek to mitigate the effects of the pandemic and to create financial flexibility, we took the following actions:

• a majority of our store and distribution center employees were furloughed in March and we covered the cost of health benefits for such furloughed employees through the end of May;

• we implemented a voluntary temporary base salary reduction of 50% for Joel Anderson, our Chief Executive Officer, and a 25% base salary reduction for the remainder of the executive leadership team that reports into Mr.

This compensation was reinstated in the second fiscal quarter of 2020 after substantially all of our stores were reopened;

• our Board of Directors elected to forgo its quarterly cash retainers for the first fiscal quarter of 2020;

• we implemented a temporary pay reduction for all salaried corporate employees and certain field and supply chain leadership (that has been reinstated now that substantially all of our stores have reopened) and delayed annual salary increases for corporate employees;

• as permitted by the Coronavirus Aid, Relief, and Economic Security ("CARES") Act, we applied for and received payroll tax credits with the IRS, and elected to defer the payment of the employer's portion of FICA taxes;

• we implemented significant temporary non-payroll expense reductions, including advertising, occupancy and other store operating expenses, distribution and corporate office operating expenses, as well as professional and consulting fees;

• we temporarily ceased paying rent on all closed store locations;

as discussed above, with respect to virtually all of our lease portfolio, we have resumed rent payments and, in many cases, agreed to rent deferrals and abatements related to this closure period with landlords;

• we cancelled certain vendor orders and delayed receipts on others in order to manage inventory levels, and extended payment terms for product and non-product vendors, although we have since returned to more normalized payment terms;

• we significantly reduced our 2020 capital expenditure budget, including reducing the number of new stores to be opened in 2020 and delaying purchase and construction of a new Midwest distribution center;

• we amended our Credit Agreement and increased our Revolving Credit Facility from $50 million to $225 million;

• we evolved our product mix to meet the needs of our customers by adding to our assortment of essential products, including consumables (such as cleaning and personal hygiene products), food and drink, fitness products, pet accessories, and products needed to support work-from-home and school-from-home.

Depending on future developments with respect to the COVID-19 pandemic, including any new federal, state and local governmental restrictions that may be imposed, we may determine to reinstate any of the foregoing mitigation measures that have been terminated or take any additional steps that we consider necessary.

All statements in this Annual Report concerning our current and planned operations, including plans concerning opening new stores and associated capital expenditures, are modified by reference to these recent developments, and our ability to carry out those plans are dependent on further developments associated with the COVID-19 pandemic.

For more information, see "Risks Relating to Our Business and Industry - The COVID-19 global pandemic and measures intended to prevent its spread present material uncertainty and risk and have had, and are expected to continue to have, a material adverse impact on our business, results of operations, financial condition, and cash flows." later in this Annual Report.

Five Below is a rapidly growing specialty value retailer offering a broad range of trend-right, high-quality merchandise targeted at the tween and teen customer.

Five Below is a leading high-growth value retailer offering trend-right, high-quality products loved by tweens, teens and beyond.

We know life is way better when you’re free to “let go & have fun” in an amazing experience filled with unlimited possibilities.

We offer a dynamic, edited assortment of exciting products, most priced at $5 and below, including select brands and licensed merchandise across eight worlds:

Style , Room , Sports , Tech , Create , Party, Candy and Now .

We believe we are transforming the shopping experience of our target demographic with a differentiated merchandising strategy and high-energy retail concept, which allows our customers to “Let Go and Have Fun.” Based on our management’s experience and industry knowledge, we believe our customer-centric, experience-first, innovative approach to retail has led to a fiercely loyal customer base and has fostered universal appeal across a variety of age groups beyond our target demographic.

Style, Room, Sports, Tech, Create, Party, Candy and New & Now.

Based on our management’s experience and industry knowledge, we believe our customer-centric, experience-first, innovative approach to retail has led to a fiercely loyal customer base and has fostered universal appeal across a variety of age groups beyond our target demographic.

We opened the first Five Below store in the greater Philadelphia area in 2002 and, since then, have been expanding throughout the United States.

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Our new store model assumes a store size of approximately 9,000 square feet and is typically located within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets.

We opened 120 net new stores in fiscal 2020 and we plan to open approximately 170 to 180 new stores in fiscal 2021.

We opened 170 net new stores in fiscal 2021 and we plan to open approximately 375 to 400 new stores over the next two fiscal years including approximately 160 new stores in fiscal 2022.

We believe that we have the opportunity to grow our store base to more than 3,500 locations over time.

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We launched our e-commerce operation as an additional channel to serve our customers.

All e-commerce sales, which includes shipping and handling revenue, are included in net sales and beginning with the third fiscal quarter of 2016, are included in comparable sales.

During fiscal 2020, we entered into a partnership with an on demand third party delivery service to enable our customers to shop online and receive convenient same day delivery.

All e-commerce sales, which includes shipping and handling revenue, are included in net sales and are included in comparable sales.

Our e-commerce expenses will have components classified as both cost of goods sold and selling, general and administrative expenses.

We believe that our business model has resulted in strong financial performance when considered in light of the economic environment:

• Our comparable sales decreased by 5.5% in fiscal 2020, and increased by 0.6% in fiscal 2019, and 3.9% in fiscal 2018, based on the restated calendar.

• Our comparable sales increased by 30.3% in fiscal 2021, decreased by 5.5% in fiscal 2020, and increased by 0.6% in fiscal 2019.

Comparable sales results in fiscal 2021 and fiscal 2020 were impacted by the COVID-19 pandemic.

• We expanded our store base from 900 stores at the end of fiscal year 2019 to 1,190 stores at the end of fiscal year 2021, representing a compounded annual growth rate of 15.0%.

• Between fiscal 2019 and 2021, our net sales increased from $1.8 billion to $2.8 billion, representing a compounded annual growth rate of 24.2%.

Over the same period, our operating income decreased from $187.2 million to $154.8 million.

Over the same period, our operating income increased from $217.3 million to $379.9 million, representing a compounded annual growth rate of 32.2%.

Our Competitive Strengths

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Our brand concept, merchandising strategy and store ambience work in concert to create an upbeat and vibrant retail experience that is designed to appeal to our target audience, drive traffic to our stores and website, and keep our customers engaged throughout their visits.

We monitor trends in the ever-changing tween and teen markets and are able to quickly identify and respond to trends that become mainstream.

We monitor trends in the ever-changing tween and teen markets and are able to quickly identify and respond to trends.

Our price points enable tweens and teens to shop independently, often using their own money to make frequent purchases of items geared primarily to them and to exercise self-expression through their independent retail purchases.

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We have a broad range of vendors, most of which are domestically-based, which enables us to shorten response lead times, maximizes our speed to market and equips us to make more informed buying decisions.

Our unique approach encourages frequent customer visits and limits the cyclical fluctuations experienced by many other specialty retailers.

The breadth, depth and quality of our product mix and the diversity of our category worlds attract shoppers across a broad range of age and socio-economic demographics.

Our unique approach encourages frequent customer visits, and the breadth, depth and quality of our product mix and the diversity of our category worlds attract shoppers across a broad range of age and socio-economic demographics.

• Exceptional Value Proposition for Customers.

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We maintain a dynamic and collaborative relationship with our vendor partners that provides us with favorable access to quality merchandise at attractive prices.

We also employ an opportunistic buying strategy, capitalizing on select excess inventory opportunities with our vendors.

We also have the ability to employ an opportunistic buying strategy, when appropriate, capitalizing on select excess inventory opportunities with our vendors.

This unique and flexible sourcing strategy allows us to offer high-quality products at exceptional value across all of our category worlds.

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This strategy allows us to benefit from enhanced brand awareness and achieve operational efficiencies.

We opened 150 new stores in fiscal 2019 and 120 net new stores in fiscal 2020, and we plan to open approximately 170 to 180 new stores in fiscal 2021.

Our new store model assumes approximately 9,000 square feet and is primarily in-line locations within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets.

We opened 120 net new stores in fiscal 2020 and 170 net new stores in fiscal 2021, and we plan to open approximately 375 to 400 new stores over the next two fiscal years including approximately 160 new stores in fiscal 2022.

Our new store model assumes approximatel y 9,000 s quare feet and is primarily in-line locations within power, community and lifestyle shopping centers across a variety of urban, suburban and semi-rural markets.

We have a talented and disciplined real estate management team and a rigorous real estate site selection process.

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According to the U.S.

Census Bureau, there were over 63 million people in the United States between the ages of 5 and 19, which represented over 20% of the U.S.

Census Bureau, there were over 62 million people in the United States between the ages of 5 and 19, which represented approximately 20% of the U.S.

population as of April 1, 2020.

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Based on management’s experience and industry knowledge, we believe our compelling value proposition and the dynamic nature of our merchandise offering has fostered universal appeal to customers across a variety of age groups beyond our target demographic.

Our typical store features in excess of 4,000 stock-keeping units, or SKUs, across a number of our category worlds including Style , Room, Sports, Tech , Create , Party, Candy and Now .

Our typical store features in excess of 4,000 stock-keeping units, or SKUs, across a number of our category worlds including Style , Room, Sports, Tech , Create , Party, Candy and New & Now .

We focus our merchandising strategy on maintaining core categories within our stores, but aim to generate high item velocity and sell-through to keep our assortment fresh and drive repeat visits.

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Our style offering also includes products such as nail polish, lip gloss, fragrance, and branded cosmetics.

Consists of items used to complete and personalize our customer’s living space, including glitter lamps, posters, frames, fleece blankets, plush items, pillows, candles, incense, lighting, novelty décor and related items.

We also offer storage options for the customer’s room.

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We also sell chilled drinks via coolers.

• New & Now :

Consists of seasonally-specific items used to celebrate and decorate for events such as Christmas, Easter, Halloween and St.

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As of January 29, 2022, we operated 1,190 stores throughout the United States.

Our new store model assumes a store size of approximately 9,000 square feet.

Our new store model assumes a store size of approxim ately 9,000 squa re feet.

Our stores are primarily located in power, community and lifestyle shopping centers;

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Each of our category worlds is strategically located within our stores in an effort to enhance the customer’s shopping experience.

For example, our Now offerings are located in the front of the store with the goal of catching customers’ attention and being “top of mind,” and specially featured value items and other key items are positioned along the center aisle.

For example, ou r New & Now offerings are located in the front of the store with the goal of catching customers’ attention and being “top of mind,” and specially featured value items and other key items are positioned along the center aisle.

Impulse items and “dollar value” items surround the checkout areas to capture add-on purchases.

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

We opened 120 net new stores in fiscal 2020 and we intend to open approximately 170 to 180 new stores in fiscal 2021 through expansion in existing markets and by entering new markets.

We opened 170 net new stores in fiscal 2021 and we plan to open approximately 375 to 400 new stores over the next two fiscal years including approximately 160 new stores in fiscal 2022 through expansion in existing markets and by entering new markets.

We maintain a pipeline of real estate sites that have been approved by our real estate committee and have executed 89 leases as of January 29, 2022 for new stores in fiscal 2022.

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Our store growth is supported by our new store economics, which we believe to be compelling.

Our new store model assumes a store size of approximately 9,000 square feet that achieves sales of approximately $2.0 million in the first full year of operation and an average new store cash investment of approximately $0.4 million, including our store build-out (net of tenant allowances), inventory (net of payables) and cash pre-opening expenses.

Our new store model assumes a store size of approximate ly 9,000 sq uare feet that achieves sales of approximately $2.0 million in the first full year of operation and an average new store cash investment of approximate ly $0.4 million, including our store build-out (net of tenant allowances), inventory (net of payables) and cash pre-opening expenses.

Our new store model targets an average payback period of less than one year on our initial investment.

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We regularly purchase core merchandise in accordance with our key categories.

We also employ an opportunistic buying strategy, capitalizing on selected excess inventory opportunities, to purchase complementary merchandise based on consumer trends, product availability and favorable economic terms.

We also have the ability to employ an opportunistic buying strategy, when appropriate, capitalizing on selected excess inventory opportunities, to purchase complementary merchandise based on consumer trends, product availability and favorable economic terms.

We work with approximately 1,000 vendors, with no single vendor representing more than 5% of our purchases in fiscal 2021.

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Distribution and Fulfillment

We distribute over 85% of our merchandise for our retail stores from our approximately 1,000,000 square foot distribution center in Pedricktown, New Jersey, our approximately 860,000 square foot distribution center in Conroe, Texas, our approximately 700,000 square foot distribution center in Forsyth, Georgia and our approximately 600,000 square foot distribution center in Olive Branch, Mississippi, with the remaining merchandise shipped directly from the vendor to our stores.

We distribute over 85% of our merchandise for our retail stores from our approximately 1,000,000 square foot distribution center in Pedricktown, New Jersey, our approximately 860,000 square foot distribution center in Conroe, Texas, our approximately 860,000 square foot distribution center in Buckeye, Arizona, our approximately 700,000 square foot distribution center in Forsyth, Georgia and our approximately 600,000 square foot distribution center in Olive Branch, Mississippi, with the remaining merchandise shipped directly from the vendor to our stores.

We realize cost savings by working with our vendors to streamline and reduce packaging to diminish shipping costs.

For our direct-to-customer e-commerce business, we commenced fulfillment operations in Pedricktown, New Jersey in fiscal 2018 and in Cincinnati, Ohio in fiscal 2019.

For our direct-to-customer e-commerce business, we commenced fulfillment operations in Pedricktown, New Jersey in fiscal 2018, Cincinnati, Ohio in fiscal 2019 and Buckeye, Arizona in fiscal 2021.

We generally ship merchandise from our distribution centers to our stores between two and four times a week, depending on the season and the volume of a specific store.

We use contract carriers to ship merchandise to our stores.

From time to time, we augment our distribution facilities with third-party warehousing.

We continuously assess ways to maximize the productivity and efficiency of our existing distribution facilities and evaluate opportunities for additional distribution centers.

In March 2019, we completed the purchase of an approximately 700,000 square foot distribution center in Forsyth, Georgia.

The total amount paid for the land and building was approximately $42 million.

We began operating the distribution center in April 2019.

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In July 2020, we acquired land in Buckeye, Arizona, to build an approximately 860,000 square foot distribution center.

The total cost of the land and building is expected to be approximately $65 million, of which approximately $36 million has been paid through January 30, 2021.

We expect to occupy the distribution center in Buckeye, Arizona in the second half of 2021.

We are planning to lease or build new distribution centers over the next few years to support our growth objectives.

The total amount paid for the land and building was approximately $65 million.

We began operating the distribution center in August 2021.

In March 2021, we acquired land in Indianapolis, Indiana, to build an approximately 1,030,000 square foot distribution center.

The total cost of the land and building is expected to be approximately $61 million, of which approximate ly $43 million has been paid thro ugh January 29, 2022.

We expect to occupy the distribution center in the first half of fiscal 2022.

As a result of the significant expansion of our network of distribution facilities over the last several years, including the planned opening in the first half of fiscal 2022 of our Indianapolis, Indiana distribution center, we expect to cease operations at our distribution centers in Olive Branch, Mississippi and Cincinnati, Ohio in the first half of fiscal 2022, and expect the costs incurred to be immaterial to our consolidated statements of operations.

Marketing and Advertising

Our cost-effective marketing strategy is designed to promote brand awareness and drive store and website traffic with our target demographic, as well as other value-oriented customers.

Our strategy includes highlighting our brand and exceptional value proposition predominantly through the use of digital advertising, commercials (on television and through streaming), and local marketing, with a focus on peak selling seasons.

Additionally, we rely on the strong visibility and the presence of our store locations, email messaging and community fundraising to promote and further our brand image and drive traffic.

Our digital experience, anchored by our mobile e-commerce website and social media presence is growing rapidly as we utilize Facebook, Instagram, YouTube and Snapchat to engage our customers with compelling digital content on a daily basis.

Our marketing team works with our merchandising team to develop novel and dynamic techniques to display our products, including distinctive merchandise fixtures and colorful and stimulating signage, which attract customers, encourage hands-on interaction with our products and convey our value pricing.

For new store openings, we seek to create community awareness and consumer excitement predominantly through digital advertising, public relations and community outreach promoting the grand opening and by creating an engaging grand opening event that includes contests, giveaways and signature “Five Cent” hot dogs.

Our strategy includes highlighting our brand, exceptional value and quality proposition predominantly through the use of digital advertising, commercials (on television and through streaming), syndicated talk show integrations and local marketing, with a focus on peak selling seasons.

Additionally, we rely on the strong visibility and the presence of our store locations, email messaging and philanthropic community fundraising to promote and further our brand image and drive traffic.

Our digital experience, anchored by our mobile e-commerce website, app and social media presence is growing rapidly as we utilize TikTok, Instagram, Facebook, YouTube and Snapchat to engage our customers with compelling digital content on a frequent basis.

We also aim to execute multiple store openings in a given new market on the same day in order to leverage marketing efforts to produce maximum impact.

In addition to our marketing and advertising efforts described above, we also maintain an e-commerce website ( www.fivebelow.com ) and, over the last few years, our online following has grown substantially.

We use both our website and social media channels to highlight our featured products, value proposition, store locations, employment opportunities, and grand openings.

We use both our website and social media channels to highlight our featured products, value/quality proposition, store locations, employment opportunities, and grand openings.

We compete with a broad range of retailers including discount, mass merchandise, grocery, drug, convenience, variety and other specialty stores with both physical locations and online stores.

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We also compete with online retailers who do not have traditional brick and mortar locations.

The principal basis upon which we compete is by offering a dynamic, edited assortment of trend-right products, with most priced at $5 and below, and including select brands and licensed merchandise, targeted at the tween and teen customer.

The principal basis upon which we compete is by offering a dynamic, edited assortment of trend-right products, with most priced at $5 and below and also inclusive of select brands and licensed merchandise, targeted at the tweens, teens and beyond.

We believe we are transforming the shopping experience of our target demographic with a unique merchandising strategy and high-energy retail concept that our customers consider fun and exciting.

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We own several trademarks that have been registered with the U.S.

Patent and Trademark Office, including Five Below ® and Five Below Hot Stuff.

Patent and Trademark Office, including Five Below ® , Five Beyond ® and Five Below Hot Stuff.

Cool Prices ® .

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Government Regulation

We are subject to labor and employment laws, laws governing advertising, privacy laws, safety regulations and other laws, including consumer protection regulations that regulate retailers and/or govern the promotion and sale of merchandise and the operation of stores and warehouse facilities.

We monitor changes in these laws and believe that we are in material compliance with applicable laws.

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As a result of these restrictions and out of concern for our customers and employees, we temporarily closed all of our stores as of March 20, 2020.

We began reopening our stores at the end of April and continued in operation throughout fiscal 2020 in compliance with federal, state and local requirements.

While we were able to quickly reopen our stores and maintain operational throughout the remainder of fiscal 2020, there can be no guarantee that federal, state and local governments will not adopt restrictions that further serve to restrict our ability to operate.

We began reopening our stores at the end of April 2020 and continued in operation throughout fiscal 2020 and fiscal 2021 in compliance with federal, state and local requirements.

While we were able to quickly reopen our stores and maintain operations throughout the remainder of fiscal 2020 and fiscal 2021, there can be no guarantee that federal, state and local governments will not adopt restrictions that further serve to restrict our ability to operate in the event of future COVID-19 surges.

We maintain third-party insurance for a number of risk management activities including but not limited to workers’ compensation, cyber, directors & officers, general liability, property and employee-related health care benefits.

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As of January 29, 2022, we employed approximately 6,100 full-time and 14,100 part-time employees.

Of our total employees, approximately 500 were corporate, approximately 900 were based at our distribution centers in Pedricktown, New Jersey, Olive Branch, Mississippi, Forsyth, Georgia, Conroe, Texas and Cincinnati, Ohio and approximately 17,600 were store employees located in 38 states throughout the United States.

Of our total employees, approximately 600 were corporate, approximately 1,100 were based at our distribution centers in Pedricktown, New Jersey, Olive Branch, Mississippi, Forsyth, Georgia, Conroe, Texas, Cincinnati, Ohio and Buckeye, Arizona and approximately 18,500 were store employees located in 40 states throughout the United States.

The number of part-time employees fluctuates depending on seasonal needs.

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As a result of the COVID-19 pandemic, we responded quickly to put the safety of our employees first.

For the health and safety of our corporate employees, we implemented a work from home policy in March 2020, which has continued ever since.

For the health and safety of our corporate employees, we implemented a work from home policy in March 2020.

In our distribution centers, we remained operational as we quickly adopted safety protocols.

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Mitigation Measure Corporate Stores Distribution Centers

Mandatory face coverings for all employees and, where required by law, customers X X X

Daily health checks (with temperature checks when warranted) X X X

Mandatory face coverings for all employees and customers, where required by law X X X

Daily health checks, where required by law X X X

Additional signage, floor decals and reminder messaging regarding social distancing X X X

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Implemented work from home policy and limited mandatory in-person meetings X

Installation of plexiglass barriers at workstations / point-of-sale X X

Installation of plexiglass barriers at workstations / point-of-sale, where required by law X X

Adopted occupancy limitations (employees and customers as applicable) X X

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Prescription drug coverage included with every medical plan

Dental (with a choice of two plans)

Dental (with a choice of three plans)

Vision plan (with a choice of two plans)

Health savings account with Company match

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Mental health support with medical benefits coverage

Employee assistance program

Fertility program

Life and Disability No cost life and disability coverage provided for all employees

Employee assistance program with supplemental mental health support

Medical option for part-time employees

Life and Disability No cost life and disability coverage provided for all full-time employees

Supplemental life plan at option and cost of employees

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Paid time off provided to all full-time employees

Paid parental leave

Identification theft, pet insurance, legal services access, as well as supplemental accident, hospital indemnity, and critical illness coverage

Paid parental leave provided to all full-time employees

Identification theft, pet insurance, legal services access, term life, as well as supplemental accident, hospital indemnity, and critical illness coverage

Employment Practices

We aim to provide challenging, meaningful and rewarding opportunities for personal and professional growth of all employees, and encourages all employees to bring their unique backgrounds and experiences to the table to work together.

We aim to provide challenging, meaningful and rewarding opportunities for personal and professional growth of all employees and encourage all employees to bring their unique backgrounds and experiences to the table to work together.

In order to promote the desired work environment, we have adopted policies which describe the standards of respect, inclusivity and professionalism expected of all employees.

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We promote and strive to maintain a safe and healthy work environment and conduct our business in ways that protect our employees’ safety and are sensitive to the environment.

We are committed to maintaining a drug-free work place and prohibit the manufacture, distribution, sale, purchase, transfer, possession, or use of illegal substances in the workplace, while representing us outside the workplace or if such activity affects work performance or the work environment of the Company.

We are committed to maintaining a drug-free workplace and prohibit the manufacture, distribution, sale, purchase, transfer, possession, or use of illegal substances in the workplace, while representing us outside the workplace or if such activity affects work performance or the work environment of the Company.

We encourage open, timely communications that help us achieve organizational goals, share information, increase understanding, participate in the decision-making process, enhance our pride in the organization and provide recognition for our work-related successes.

We believe our policies and practices are in compliance with all applicable laws and have been designed with significant inputs from the employees themselves.

Retention of our talented employees is an important focus for us.

We, therefore, monitor employee turnover, particularly at the store management level and employ various strategies to strive to improve our turnover rate.

Employee Engagement

We engage our employees in a variety of ways, including:

conducting an annual employee survey to directly engage with, and collect feedback from our employees, maintaining an open-door policy for employees to report concerns, and providing an anonymous reporting hotline, available in multiple languages and managed by an independent company not affiliated with us, to allow employees to voice concerns freely.

We conduct an annual employee survey to measure employee engagement.

The survey results help us understand the employee experience, evaluate our performance, identify our strengths, and pinpoint opportunities for improvement.

Starting in fiscal 2020, we partnered with Gallup, Inc., a global analytics and advisory firm, to monitor and improve the engagement of our workforce.

We utilize the survey results to identify strengths and weaknesses and create action plans to improve engagement and, ultimately, team performance.

In 2021 a high percentage of our employees participated in the survey, and the results demonstrated that our overall engagement levels exceed Gallup’s averages in retail, in the United States and worldwide.

The results also reflected that we are a mission-driven company with employees’ response on our strength of purpose far exceeding Gallup’s measurement for world class.

Our business is seasonal in nature with the highest level of net sales and net income generated in the fourth fiscal quarter due to the year-end holiday season and, therefore, operating results for any fiscal quarter are not necessarily indicative of results for the full fiscal year.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business