What changed in this filing

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Item 1. Business

2024-03-27 compared with 2023-03-24 · 112 added, 791 removed, 317 unchanged (74% of the section changed)

Ollie’s is a highly differentiated and fast-growing, extreme value retailer of brand name merchandise at drastically reduced prices.

Known for our assortment of products offered as “Good Stuff Cheap,”

we offer customers a broad selection of brand name products, including housewares, bed and bath, food, floor coverings, health and beauty aids, books and stationery, toys and electronics.

Our differentiated go-to market strategy is characterized by a

unique, fun and engaging treasure hunt shopping experience, compelling customer value proposition and witty, humorous in-store signage and advertising campaigns.

These attributes have driven our rapid growth and strong and consistent store

Ollie’s was founded based on the idea that “everyone in America loves a bargain.” Since opening our first store in Mechanicsburg, PA in 1982, we have grown organically by backfilling existing markets

and leveraging our brand awareness, marketing, and infrastructure to expand into new markets in contiguous states.

We have grown to 468 stores in 29 states as of January 28, 2023.

Our no-frills, “semi-lovely” warehouse style stores average

approximately 33,000 square feet and generate consistently strong financial returns across all vintages, geographic regions, population densities, demographic groups, real estate formats and regardless of any co-tenant.

Our business model has

resulted in positive financial performance during strong and weak economic cycles.

We believe there is opportunity for more than 1,050 Ollie’s locations across the United States based on internal estimates and third party research conducted by

Hoffman Strategy Group, a retail real estate feasibility consultant that provides market analysis and strategic planning and consulting services.

Ollie’s is America’s largest retailer of closeout merchandise and excess inventory.

Our stores sell name brand household related items that consumers use in their everyday lives at prices that are

typically 20% to 70% below traditional retailers.

Known for our assortment of products offered as “Good Stuff Cheap,” we offer customers a broad selection of brand name products, including housewares, bed and bath, food, floor coverings, health and

beauty aids, books and stationery, toys and electronics.

Our differentiated go-to market strategy is characterized by a unique, fun and engaging treasure hunt shopping experience, compelling customer value proposition and witty, humorous in-store

signage, and advertising campaigns.

These attributes have driven our rapid growth and strong and consistent store performance.

Ollie’s was founded based on the idea that “everyone in America loves a bargain.” Since opening our first store in Mechanicsburg, PA in 1982, Ollie’s has been offering customers high quality brand name

products at drastically reduced prices through the buying and selling of closeout merchandise and excess inventory.

Our store base has grown organically by backfilling existing markets and leveraging our brand awareness, marketing, and infrastructure

to expand into new markets in contiguous states.

We have grown to 512 stores in 30 states as of February 3, 2024.

Our no-frills, “semi-lovely” warehouse style stores average approximately 33,000 square feet and generate consistently strong financial

returns across all vintages, geographic regions, population densities, demographic groups, real estate formats and regardless of any co-tenant.

Our business model has resulted in positive financial performance during strong and weak economic cycles.

We recently completed our latest Real Estate feasibility study, which utilizes population and demographic data to look at store count and density across a changing United States landscape.

The migration trend out of larger metropolitan areas and into

rural suburban areas is a positive trend for Ollie’s and our latest analysis concludes that we could operate as many as 1,300 stores nationwide, up from a previous target of 1,050.

The closeout industry is large, highly fragmented, and growing.

Fueling the growth is the consolidation of retailers and manufacturers around the globe.

Larger retailers are being supplied by larger

manufacturers and this is leading to larger order and product flows.

In addition, manufacturers are constantly developing and introducing new products, new packaging, and working around endless changes and disruptions in the marketplace and supply

This is driving growth in the number of products being offered for sale by manufacturers at closeout type of prices.

At the same time, the retail side of the closeout industry is highly fragmented, with many independent operators and small

format stores.

Our constantly changing merchandise assortment is procured by a highly experienced merchant team, who leverage deep, long-standing relationships with hundreds of major manufacturers, wholesalers,

distributors, brokers, and retailers.

These relationships enable our merchant team to find and select only the best buys from a broad range of brand name and closeout product offerings and to pass drastically reduced prices along to our customers.

we grow, we believe our increased scale has provided and will continue to provide us with even greater access to brand name products as many large manufacturers favor large buyers capable of acquiring an entire deal.

Our merchant team augments these

deals with directly sourced products, including Ollie’s own private label brands and other products exclusive to Ollie’s.

These relationships enable our merchant team to find and select only the best buys from a broad range of brand name closeout product offerings and to pass drastically reduced prices along to our customers.

grow, we believe our increased scale has provided and will continue to provide us with even greater access to brand name products as larger manufacturers seek larger buyers capable of acquiring an entire deal.

Our merchant team augments these deals

with directly sourced products, including Ollie’s own private label brands and other products exclusive to Ollie’s.

Our business model has produced consistently strong growth and financial performance.

From 2019 through 2023:

Our store base expanded from 303 stores to 468 stores, a compound annual growth rate, or CAGR, of 11.5% and we entered six new states;

Our store base expanded from 345 stores to 512 stores, a compound annual growth rate, or CAGR, of 10.4% and we entered five new states;

Comparable store sales grew at an average rate of 1.0% per year;

Net sales increased from $1.408 billion to $2.103 billion, a CAGR of 10.5%.

(1) 2023 consisted of 53 weeks compared with 52 weeks in the prior-year periods.

Our competitive strengths

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Our stores offer something for everyone across a diverse

range of merchandise categories at prices up to 70% below department and fancy stores and up to 20-50% below mass market retailers.

Our product assortment frequently changes based on the wide variety of deals available from the hundreds of brand name

suppliers we have relationships with.

We augment these opportunistic deals on brand name merchandise with directly-sourced unbranded products or those under our own private label brands and exclusively licensed recognizable brands and celebrity

Brand name and closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively represented approximately 35% of the retail value of our 2022 merchandise purchases.

Our treasure hunt shopping

environment and slogan “when it’s gone, it’s gone” help to instill a “shop now” sense of urgency that encourages frequent customer visits.

Highly experienced and disciplined merchant team .

Our merchant team maintains strong, long-standing relationships with a diverse group of

suppliers, allowing us to procure branded merchandise at compelling values for our customers.

We have been doing business with our top 15 suppliers for an average of over 15 years.

Our well-established relationships with our suppliers, together with

our scale, buying power, financial credibility and responsiveness, often make Ollie’s the first call for available deals.

Our direct relationships with our suppliers have increased as we have grown and we continuously strive to broaden our supplier

These factors provide us with increased access to goods, which enable us to be more selective in our deal-making and, we believe, help us provide compelling value and assortment of goods to our customers and fuel our continued profitable

range of merchandise categories at prices typically 20 to 70% off traditional retailers.

Our product assortment frequently changes based on the wide variety of deals available from the hundreds of brand name suppliers we have relationships with.

augment these opportunistic deals on brand name merchandise with directly-sourced unbranded products or those under our own private label brands and exclusively licensed recognizable brands and celebrity names.

Brand name closeout merchandise

represented approximately 65% and non-closeout goods and private label products collectively represented approximately 35% of the retail value of our 2023 merchandise purchases.

Our treasure hunt shopping environment and slogan “when it’s gone, it’s

gone” help to instill a “shop now” sense of urgency that encourages frequent customer visits.

Our growing scale and highly experienced and disciplined merchant team .

Since our founding in 1982, Ollie’s has been offering customers

high quality brand name products at drastically reduced prices through the buying and selling of closeout merchandise and excess inventory.

As we grow, we believe our increased scale provides us with even greater access to brand name closeout

products as larger manufacturers seek larger buyers.

Our merchant team maintains strong, long-standing relationships with a diverse group of suppliers, allowing us to procure branded merchandise at compelling values for our customers.

doing business with our top 15 suppliers for an average of over 15 years.

Our well-established relationships with our suppliers, together with our scale, buying power, financial credibility and responsiveness, often make Ollie’s the first call for

available deals.

Our direct relationships with our suppliers have increased as we have grown and we continuously strive to broaden our supplier network.

These factors provide us with increased access to goods, which enable us to be more selective in

our deal-making and, we believe, help us provide compelling value and assortment of goods to our customers and fuel our continued profitable growth.

Distinctive brand and engaging shopping experience .

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Our best customers are members of our Ollie’s Army customer loyalty program, which stands at

13.2 million members as of January 28, 2023.

14.0 million members as of February 3, 2024.

For 2023, over 80% of our sales were from Ollie’s Army members, and we grew our base of loyal members by 5.9% in 2023.

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Our highly flexible real estate approach has proven successful across all vintages, geographic regions, population densities, demographic groups, real estate formats and regardless of any

New stores opened from 2017 to 2021 have generated an average of $4.6 million in net sales in their first 12 months of operations and produced an average payback period of approximately two years.

We believe that our consistent store

performance, strategically-located distribution centers, and disciplined approach to site selection support the portability and predictability of our new unit growth strategy.

New stores have consistently opened strong, with higher net sales in their first 12 months of operations, than average existing stores due to the brand excitement surrounding grand openings and produced an average payback period of

approximately two years.

We believe that our consistent store performance, strategically-located distribution centers, and disciplined approach to site selection support the portability and predictability of our new unit growth strategy.

Highly experienced and passionate management team .

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We will continue to enhance our supplier relationships and develop additional sources to acquire

brand name and closeout products for our customers.

Our direct buying relationships with many major manufacturers, wholesalers, distributors, brokers, and retailers provide us with significant opportunities to expand our ever-changing assortment of

brand name and closeout merchandise at extreme values.

As we continue to grow, we believe our increased scale will provide us with even greater access to brand name and closeout products as major manufacturers seek a single buyer to acquire an

We plan to further invest in our merchandising team in order to expand and enhance our sourcing relationships and product categories, which we expect will drive shopping frequency and increase customer spending.

brand name closeout products for our customers.

Our direct buying relationships with many major manufacturers, wholesalers, distributors, brokers, and retailers provide us with significant opportunities to expand our ever-changing assortment of brand

name closeout merchandise at extreme values.

As we continue to grow, we believe our increased scale will provide us with even greater access to brand name closeout products as major manufacturers seek a single buyer to acquire an entire deal.

plan to further invest in our merchandising team in order to expand and enhance our sourcing relationships and product categories, which we expect will drive shopping frequency and increase customer spending.

Leverage and expand Ollie’s Army.

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Our ever-changing assortment of “Good Stuff

Cheap” includes brand name and closeout merchandise from leading manufacturers.

Cheap” includes brand name closeout merchandise from leading manufacturers.

We augment our brand name merchandise with opportunistic purchases of unbranded goods and our own domestic and direct-import private label brands in underpenetrated

categories to further enhance the assortment of products that we offer.

Brand name and closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively represented approximately 35% of the retail value

of our 2022 merchandise purchases.

Brand name closeout merchandise represented approximately 65% and non-closeout goods and private label products collectively represented approximately 35% of the retail value of

our 2023 merchandise purchases.

We believe our compelling value proposition and the unique nature of our merchandise offerings have fostered our customer appeal across a variety of demographics and socioeconomic profiles.

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hunt to discover the next deal.

The common element of our dynamic merchandise selection is the consistent delivery of great deals to our customers, with products offered at prices up to 70% below department stores and fancy stores and

up to 20-50% below mass market retailers.

Our product price tags allow customers to compare our competitor’s price against Ollie’s price to further highlight the savings they can realize by shopping at our stores.

The common element of our dynamic merchandise selection is the consistent delivery of great deals to our customers, with products offered at prices typically 20 to 70% off traditional retailers.

product price tags allow customers to compare our competitor’s price against Ollie’s price to further highlight the savings they can realize by shopping at our stores.

Examples of our product offerings include:

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household goods including bedding, towels, curtains, and associated hardware;

packaged food including coffee, bottled non-carbonated beverages, salty snacks, candy, condiments, sauces, spices, dry pasta, canned goods,

cereal, and cookies;

packaged food including coffee, bottled non-carbonated beverages, salty snacks, candy, condiments, sauces, spices, dry pasta, canned goods, cereal,

Floor coverings:

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Books and stationery:

novels, children’s, how-to, business, cooking, inspirational and coffee table books, greeting cards and various office supplies,

and party goods;

novels, children’s, how-to, business, cooking, inspirational and coffee table books, greeting cards and various office supplies, and

home electronics, cellular accessories, and as seen on television;

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We maintain consistent average margins across our primary product categories described below.

Brand name and closeout merchandise

Brand name and closeout merchandise represented approximately 65% of the retail value of our 2022 merchandise purchases.

Our focus is to provide huge savings to our customers primarily through brand

name products across a broad range of merchandise.

Brand name closeout merchandise

Brand name closeout merchandise represented approximately 65% of the retail value of our 2023 merchandise purchases.

Our focus is to provide huge savings to our customers primarily through brand name

products across a broad range of merchandise.

Our experienced merchant team purchases deeply discounted, branded or closeout merchandise primarily from manufacturers, retailers, distributors, and brokers.

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We also have a variety of domestic and direct-import private label merchandise and exclusive products sold under numerous brands.

quality products are developed in key categories such as housewares and are designed to create brand-like excitement and complement our brand name merchandise.

We also have licenses for private label products that use recognizable celebrity names or

high-quality products are developed in key categories such as housewares and are designed to create brand-like excitement and complement our brand name merchandise.

We also have licenses for private label products that use recognizable celebrity

names or brand names.

We routinely evaluate the quality and condition of these private label goods to ensure that we are delivering our customer a high-quality product at a great price.

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We have made significant investments in our distribution network and personnel to support our store growth plan.

Currently, we distribute approximately 95% of our merchandise from our distribution

centers in York, PA (603,000 square feet), Commerce, GA (962,000 square feet), and Lancaster, TX (615,000 square feet).

We are in the process of expanding our York, PA distribution center, which will provide an additional 201,000 square feet of

distribution capacity, and is expected to be completed in the first half of 2023.

In order to minimize the amount of time our retail stores devote to inventory management, our merchandise is seeded with price tickets and labeled with a bar code for

On October 17, 2022, we entered into a purchase agreement to acquire a parcel of land in Princeton, Illinois for the construction of our fourth distribution center.

The purchase agreement is subject to

customary post-execution, pre-closing activities with an anticipated closing date in the first quarter of fiscal 2023.

Our stores generally receive shipments from our distribution centers one to two times a week, depending on the season and specific store size and sales volume.

We utilize independent third party freight

With the expansion of our York, PA distribution center and the addition of our fourth distribution center, we believe our distribution capabilities will support over 700 stores.

As of January 28, 2023, we operated 468 stores, averaging approximately 33,000 square feet, across 29 contiguous states in the eastern half of the United States.

Our stores generally receive shipments from our distribution centers one to two times a

week, depending on the season and specific store size and sales volume.

We utilize independent third party freight carriers.

Currently, we distribute approximately 95% of our merchandise from our distribution centers in York, PA, which completed a 201,000 square feet expansion in the beginning of fiscal 2023 (804,000 square

feet), Commerce, GA (962,000 square feet), and Lancaster, TX (615,000 square feet).

During the first quarter of fiscal 2023, the Company purchased a parcel of land in Princeton, Illinois for its fourth distribution center and broke ground on construction of the 615,000 square feet

facility in April 2023, the distribution center is expected to be operational in the second half of fiscal 2024.

With the expansion of our York, PA distribution center and the addition of our fourth distribution center, we believe our distribution capabilities will support up to 750 stores.

As of February 3, 2024, we operated 512 stores, averaging approximately 33,000 square feet, across 30 contiguous states in the eastern half of the United States.

Our highly flexible real estate approach

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economic cycles.

We have successfully opened stores in six new states since 2018, highlighting the portability of our new store model.

The following map shows the number of stores in each of the states in which we operated as of January 28, 2023:

We have successfully opened stores in five new states since 2019, highlighting the portability of our new store model.

In fiscal 2022, the Company implemented an ongoing store improvement initiative to provide our customers with an updated shopping experience, which showcases our tremendous value and the amazing deals

we offer in an organized and easy to navigate store format.

We have remodeled 56 stores to date and 35 stores in fiscal 2023 and continue to see a sales uplift in newly remodeled locations.

With a relatively low upfront investment, our remodels have

produced on average a payback period of approximately two years.

The following map shows the number of stores in each of the states in which we operated as of February 3, 2024:

Store design and layout

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relatively low investment costs and strong new store opening performance, we target first-year annual new store sales of approximately $4.0 million.

New stores opened from 2017 to 2021 have generated an average of $4.6 million in net sales in their

first full year of operations and produced an average payback period of approximately two years.

We believe that our consistent store performance, corporate infrastructure, including our distribution centers, and disciplined approach to site

selection support the portability and predictability of our new unit growth strategy.

New stores have consistently opened strong, with higher net sales in their first 12 months of

operations, than average existing stores due to brand excitement surrounding grand openings and produced an average payback period of approximately two years.

We believe that our consistent store performance, corporate infrastructure, including our

distribution centers, and disciplined approach to site selection support the portability and predictability of our new unit growth strategy.

Store-level management and training

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At the store level, the leadership

team consists of a store team leader (manager), co-team leader (first level assistant manager) and assistant team leader (second level assistant manager).

Supervisors oversee specific areas within each store.

team consists of a store team leader and potentially a co-team leader and/or an assistant team leader, who supervise the full and part-time associated within the store.

Each store team leader is responsible for the daily operations of the store, including the processing of merchandise to the sales floor and the presentation of goods throughout the store.

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During 2023, we distributed over 650 million highly recognizable flyers.

Our flyers are distributed 22 times per year and serve as the foundation of

our marketing strategy.

They highlight current deals to create shopping urgency and drive traffic and increase frequency of store visits;

Our flyers are typically distributed

semi-monthly, for a total of 22 times per year, with increased frequency in peak shopping periods, and serve as the foundation of our marketing strategy to remain top of mind with our shoppers.

They highlight

current deals to create shopping urgency and drive traffic and increase frequency of store visits;

Television and radio :

We selectively utilize creative television and radio advertising campaigns in targeted markets at certain times of the year, particularly during the

holiday sales season, to create brand awareness and support new store openings;

We selectively utilize creative television/ o ver the top television (“OTT”) and radio

advertising campaigns in targeted markets throughout the year, to create brand awareness and support new store openings;

Charity and community events :

We are dedicated to maintaining a visible presence in the communities in which our stores are located through the sponsorship of charitable

organizations such as Feeding America, Toys for Tots, Children’s Miracle Network, Cal Ripken, Sr.

Foundation, and the Kevin Harvick Foundation.

We believe supporting these organizations promotes our brand, underscores our values and builds a

sense of community;

organizations such as Feeding America, Toys for Tots, Children’s Miracle Network, and the Cal Ripken, Sr.

We believe supporting these organizations promotes our brand, underscores our values and builds a sense of community;

Digital marketing and social media :

We maintain an active online presence and promote our brand through our website, our mobile app and social media channels.

We also utilize

targeted email marketing to highlight our latest brand name offerings and drive traffic to our stores.

In addition, we invest in digital marketing where we target both our current and prospective customers.

Our customer loyalty program, Ollie’s Army, stands at 13.2 million members as of January 28, 2023, an increase of 4.8% from 2021.

We maintain an active online presence and promote our brand through our website, our mobile app, and digital and social media platforms,

including influencers across TikTok, Instagram, YouTube and Facebook.

We also utilize targeted email marketing to highlight our latest brand name offerings and drive traffic to our stores.

Our customer loyalty program, Ollie’s Army, stands at 14.0 million members as of February 3, 2024, an increase of 5.9% from 2022.

In 2023, Ollie’s Army members accounted for over 82% of net sales and

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turnover rates and administers our talent and training programs and review process to support the development of our talent pipeline.

As of January 28, 2023, we employed over 10,700 associates, approximately 4,900 of whom were full-time and approximately 5,800 of whom were part-time.

As of February 3, 2024, we employed over 11,500 associates, approximately 5,500 of whom were full-time and approximately 6,000 of whom were part-time.

Of our total associate base, approximately 1,100 were based at our

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The number of associates in a fiscal year fluctuates depending on the business needs at different times of the year.

of January 28, 2023, approximately 60% of our workforce is self-identified female and approximately 40% is self-identified male.

of February 3, 2024, approximately 60% of our workforce is self-identified female and approximately 40% is self-identified male.

Over 40% of our workforce has self-identified as having a racial or ethnic minority background.

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high-potential team members for greater responsibility.

Our current team of district managers and store managers have an average tenure of approximately six and four years, respectively.

We believe internal promotions, coupled with the hiring of

individuals with previous retail experience, will provide the management structure necessary to support our long-term strategic growth initiatives.

We believe internal promotions, coupled with the hiring of individuals with previous retail experience, will provide the management structure necessary to support our long-term strategic

growth initiatives.

Our Ollie’s Leadership Institute (“OLI”) is a program that is used to equip field associates with the ability to advance their career.

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reports, proxy, and information statements and other information regarding issuers that file electronically with the SEC.

Investing in our common stock involves a high degree of risk.

You should carefully consider the following risk factors, as well as other information in this Annual Report on Form

10-K, before deciding whether to invest in the shares of our common stock.

The occurrence of any of the events described below could have a material adverse effect on our business, financial condition or results of operations.

In the case of such an

event, the trading price of our common stock may decline and you may lose all or part of your investment.

RISK FACTOR SUMMARY

We are providing the following summary of the risk factors contained in our Form 10-K to enhance the readability and accessibility of our risk factor disclosures.

We encourage our stockholders to

carefully review the full risk factors contained in this Form 10-K in their entirety for additional information regarding the risks and uncertainties that could cause our actual results to vary materially from recent results or from our anticipated

future results.

Risks Related to Business and Operations

We may not be able to execute our opportunistic buying strategy;

Fluctuations in comparable store sales and results of operations, including fluctuations on a quarterly basis, could cause our business performance to decline substantially;

Consumer confidence and spending may be reduced in light of factors beyond our control and our financial results may suffer;

Competition may increase in our segment of the retail market, which could put negative pressure on our results of operations and financial condition;

Identification of potential store locations and lease negotiations may not keep pace with our growth strategy;

We are a “brick and mortar only” retailer.

Our lack of an online shopping option may mean that we face challenges to grow and retain customers.

Our customers, including our loyalty program members, may determine to shop at other stores or

through web-enabled services and therefore not be as likely to shop at our stores;

We may not be able to develop and operate our multiple distribution centers in an efficient or effective manner and that could mean that we do not have sufficient inventory in our store locations.

The loss or disruption of one or more of

our distribution centers or disruption of our supply chain or third-party shipping carriers could also make it difficult for us to timely receive or distribute goods to our stores;

External economic pressures over which we have no or limited control, including inflation, occupancy costs, and transportation costs may reduce our profitability;

Inventory management and/or shrinkage or the loss or theft of inventory can result in material negative impacts on our results of operations;

We need to be able to hire and retain the right people to run our stores and our distribution centers.

We also need to hire and retain managerial personnel, a merchant team, and

executive officers.

If we are not effective in these areas, our results may suffer;

Comparable store sales and results of operations have fluctuated in the past and may do so again in the future.

Risks Related to Legal and Regulatory Issues

We are subject to governmental regulations, procedures, and requirements that can lead to substantial penalties if we fail to achieve compliance;

We are subject to risks associated with laws and regulations generally applicable to retailers;

From time to time we are involved in legal proceedings from customers, suppliers, employees, governments, or competitors;

From time to time we are involved in legal proceedings from stockholders.

Risks Related to Technology and Cybersecurity

We may fail to maintain the security of information we hold relating to personal information or payment card data of our customers, employees, and suppliers;

We may not adequately prepare for or respond to existing and future privacy legislation;

We may not be able to timely or adequately maintain or upgrade our technology systems needed for operations.

Risks Related to Accounting and Financial Matters

If our estimates or judgments relating to significant accounting policies prove to be incorrect, we could suffer negative financial results;

Changes to the accounting rules or regulations could have material adverse effects on our results of operations.

Risks Related to Ownership of Our Common Stock and Corporate Governance

There is risk associated with our fluctuating quarterly operating results and we may fall short of prior periods, our projections or the expectations of securities analysts or investors;

We may not declare dividends on our common stock in the foreseeable future;

There are provisions in our organizational documents that could delay or prevent a change of control.

Risks Related to Our Indebtedness and Capitalization

Our credit facility can limit our ability to find other sources of financing;

There are covenants contained in our credit facility that we must meet in order to be able to use it;

If we are unable to generate sufficient cash flow to meet debt service it could negatively impact our liquidity;

We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value.

For a more complete discussion of the material risks facing our business, see below.

BUSINESS AND OPERATIONS

We may not be able to execute our opportunistic buying strategy, adequately manage our supply of inventory or anticipate customer demand, which could have a

material adverse effect on our business, financial condition and results of operations.

Our business is dependent on our ability to strategically source a sufficient volume and variety of brand name merchandise at opportunistic pricing.

We do not have significant control over the supply,

design, function, cost or availability of many of the products that we offer for sale in our stores.

Additionally, because a substantial amount of our store products are sourced by us from suppliers on a closeout basis or with significantly reduced

prices for specific reasons, we are not always able to purchase specific merchandise on a recurring basis.

We do not have long-term contracts with our suppliers and, therefore, we have no contractual assurances of pricing or access to products and

any supplier could discontinue sales to us at any time or offer us less favorable terms on future transactions.

We generally make individual purchase decisions for products that become available, and these purchases may be for large quantities that

we may not be able to sell on a timely or cost-effective basis.

To the extent that certain of our suppliers are better able to manage their inventory levels and reduce the amount of their excess inventory, the amount of discount or closeout

merchandise available to us could also be materially reduced, potentially compromising profit margin goals for procured merchandise.

Due to economic uncertainties, governmental orders, or other challenges, one or more of our suppliers could become

unable to continue supplying discounted or closeout merchandise on terms or in quantities acceptable or desirable to us.

We also compete with other retailers, wholesalers and jobbers for discounted or closeout merchandise to sell in our stores.

businesses may be better able to anticipate customer demand or procure desirable goods.

Shortages or disruptions in the availability of brand name or unbranded products of a quality acceptable to our customers and us could have a material adverse

effect on our business, financial condition and results of operations and also may result in customer dissatisfaction.

In addition, we may significantly overstock products that prove to be undesirable and be forced to take significant markdowns.

cannot ensure that our merchant team will continue to identify the appropriate customer demand and take advantage of appropriate buying opportunities, which could have a material adverse effect on our business, financial condition, and results of

Risks associated with or faced by our suppliers could adversely affect our financial performance.

We source our merchandise from a variety of suppliers, and we depend on them to supply merchandise in a timely and efficient manner.

If one or more of our current suppliers became unable to supply

goods, seeking alternative sources could increase our merchandise costs and supply chain lead time, potentially resulting in temporary reduction in store inventory levels, and reduce the selection and quality of our merchandise.

An inability to

obtain alternative sources could materially decrease our sales.

Additionally, if a supplier fails to deliver on its commitments, we could experience merchandise out-of-stocks that could lead to lost sales and reputational harm.

Further, failure of

suppliers to meet our compliance protocols could prolong our procurement lead time, resulting in lost sales and adverse margin impact.

Changes to the prices and flow of certain goods are, at times, for reasons beyond our control, such as political or

civil unrest, acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in countries in which foreign suppliers are located, the financial instability of suppliers, failure to meet our

terms and conditions or our standards, issues with our suppliers’ labor practices or labor disruptions they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the

availability and cost of raw materials, pandemic outbreaks, merchandise quality or safety issues, transport availability and cost, increases in wage rates and taxes, transport security, inflation, and other factors relating to suppliers.

could adversely affect our operations and profitability.

Fluctuations in comparable store sales and results of operations, including fluctuations on a quarterly basis, could cause our business performance to decline

substantially.

Our results of operations have fluctuated in the past, including on a quarterly basis, and can be expected to continue to fluctuate in the future.

Our comparable store sales and results of operations are affected by a variety of factors, including:

national and regional economic trends in the United States;

changes in gasoline prices;

changes in our merchandise mix;

changes in pricing;

changes in the timing of promotional and advertising efforts;

holidays or seasonal periods.

If our future comparable store sales fail to meet expectations, then our cash flow and profitability could decline substantially, which could have a material adverse effect on our business, financial condition, and

results of operations.

We rely on third parties to move goods through ports and transport them from ports to our centralized distribution centers.

Our ability to timely and effectively deliver goods to our stores relies in part on shipping and transportation partners to timely and safely move our goods from manufacturing facilities to ports and

then onto oceangoing carriers.

The demand for space onboard oceangoing vessels can vary and costs to secure space can vary greatly.

We may be subject to higher transportation costs or be unable to secure space for containers on economically

reasonable terms.

In addition, there may be labor or other disputes at either ports of departure or at ports of entry that may delay or otherwise hinder the flow of goods.

Additional factors, such as customs or border control policies, may further

delay or hinder transportation of goods or the costs to obtain them.

There are multiple factors in the transportation of goods from the manufacturer that are both outside of our control and which may negatively impact the cost of the goods or the

timeframes in which we receive them.

Factors such as inflation, cost increases and energy prices could have a material adverse effect on our business, financial condition and results of operations.

Future increases in costs, such as the cost of merchandise, shipping rates, freight costs (including import costs) and store occupancy costs, may reduce our profitability, given our pricing model.

cost increases may be the result of inflationary pressures, geopolitical factors, or public policies, which could further reduce our sales or profitability.

Increases in other operating costs, including changes in energy prices, wage rates, and lease

and utility costs, may increase our cost of goods sold or selling, general, and administrative expenses.

Our low-price model and competitive pressures in our industry may have the effect of inhibiting our ability to reflect these increased costs in

the prices of our products and, therefore, reduce our profitability and have a material adverse effect on our business, financial condition, and results of operations.

Our ability to generate revenues is dependent on consumer confidence and spending, which may be subject to factors beyond our control, including changes in economic and political

conditions, and health concerns.

The success of our business depends, to a significant extent, on the level of consumer confidence and spending.

A number of factors beyond our control affect the level of customer confidence and spending on merchandise

that we offer, including, among other things:

energy and gasoline prices;

disposable income of our customers, which may be impacted by unemployment levels, personal debt levels and minimum wages;

interest rates and inflation;

discounts, promotions, and merchandise offered by our competitors;

negative reports and publicity about the discount retail industry;

outbreak of viruses or widespread illness, including COVID-19, and behavioral changes from a fear of contracting such viruses or illness;

general economic and industry conditions;

the state of the housing market;

customer confidence in future economic conditions;

fluctuations in the financial markets;

tax rates and policies;

natural disasters, war, terrorism and other hostilities.

Reduced customer confidence and spending cutbacks may result in reduced demand for our merchandise, including discretionary items, and may force us to take inventory markdowns.

Reduced demand also may require increased

selling and promotional expenses.

Adverse economic conditions and any related decrease in customer demand for our merchandise could have a material adverse effect on our business, financial condition, and results of operations.

Many of the factors identified above also affect commodity rates, transportation costs, costs of labor, insurance and healthcare, the strength of the U.S.

dollar, lease costs, measures that create barriers to or

increase the costs associated with international trade, changes in other laws and regulations and other economic factors, all of which may impact our cost of goods sold and our selling, general, and administrative expenses, which could have a

material adverse effect on our business, financial condition, and results of operations.

We do not compete in the growing online retail marketplace, which could have a material adverse effect on our business, financial condition, and results of

Our long-term business strategy does not presently include the development of online retailing capabilities.

To the extent that we implement online operations, we would incur substantial expenses

related to such activities and would be exposed to additional cybersecurity risks.

Furthermore, any development of an online retail marketplace is a complex undertaking, and there is no guarantee that any resources we apply to this effort will result

in increased revenues or operating performance.

However, with the growing acceptance of online shopping, which may have accelerated as a result of the COVID-19 pandemic, both among consumers who previously shopped online and consumers who did not

previously do so, or did not do so as frequently, we may continue to face challenges related to customers shopping in brick and mortar stores.

In addition, the increased proliferation of mobile devices, enhanced and robust connections to mobile

networks, competition from other retailers in the online retail marketplace is expected to continue to increase and may negatively impact our results of operations.

Certain of our competitors and a number of pure online retailers have established

robust online operations.

Increased competition from online retailers and our lack of an online retail presence may reduce our customers’ desire to purchase goods from us and could have a material adverse effect on our business, financial condition,

and results of operations.

If consumers determine to shop more online due to cultural or health concerns, they may be less likely to return to brick and mortar retailers in the future.

Labor shortages and increased turnover or increases in employee and employee-related costs could have adverse effects on our profitability.

We have recently experienced, and expect to continue to experience, increased labor shortages at some of our locations.

While we have historically experienced some level of ordinary course turnover of

employees, the COVID-19 pandemic and resulting actions and impacts have exacerbated labor shortages and increased turnover.

A number of factors have had and may continue to have adverse effects on the labor force available to us, including reduced

employment pools, federal unemployment subsidies and other government regulations, which include laws and regulations related to workers’ health and safety, wage and hour practices, and immigration.

Labor shortages and increased turnover rates within

our team members have led to and could in the future lead to increased costs, such as increased overtime to meet demand and increased wage rates to attract and retain employees and could negatively affect our ability to efficiently operate our

production facilities or otherwise operate at full capacity.

An overall or prolonged labor shortage, lack of skilled labor, increased turnover or labor inflation could have a material adverse impact on our operations, results of operations,

liquidity, or cash flows.

We face intense competition, which could limit our growth opportunities and adversely impact our financial performance.

We compete with a highly fragmented group of competitors, including discount, closeout, mass merchant, department, grocery, drug, convenience, hardware, variety, online, and other specialty stores.

We compete with

these retailers with respect to product price, store location, supply and quality of merchandise, assortment and presentation, and customer service.

This competitive environment subjects us to the risk of an adverse impact to our financial

performance because of the lower prices, and thus the lower margins, that are required to maintain our competitive position.

A number of different competitive factors outside of our control could impact our ability to compete effectively, including:

entry of new competitors in our markets;

increased operational efficiencies of competitors;

online retail capabilities of our competitors;

competitive pricing strategies, including deep discount pricing by a broad range of retailers during periods of poor customer confidence, low discretionary income, or economic uncertainty;

continued and prolonged promotional activity by our competitors;

liquidation sales by our competitors that have filed or may file in the future for bankruptcy;

geographic expansion by competitors into markets in which we currently operate;

adoption by existing competitors of innovative store formats or retail sales methods, including online.

A number of our competitors also have greater financial and operational resources, greater brand recognition, longer operating histories, and a broader geographic presence than us.

We remain vulnerable to the marketing

power and high level of customer recognition of these larger competitors and to the risk that these or other competitors could attract our customer base, including, but not limited to, the members of Ollie’s Army.

In addition, if any of our competitors were to consolidate their operations, such consolidation may result in competitors with greatly improved financial resources, improved access to merchandise, greater market

penetration and other improvements in their competitive positions, as well as result in the provision of a wider variety of products and services at competitive prices by these consolidated companies, which could adversely affect our financial

We cannot guarantee that we will continue to be able to successfully compete against either existing or future competitors.

Our inability to respond effectively to competitive pressures, improved performance by our

competitors and changes in the retail markets could result in lost market share and have a material adverse effect on our business, financial condition, and results of operations.

If we fail to open new profitable stores on a timely basis, successfully enter new markets or implement other elements of our long-term growth strategy, our

financial performance could be materially adversely affected.

Our primary growth strategy is to open new profitable stores and expand our operations into new geographic regions.

We opened 40 and 46 new stores in 2022 and 2021, respectively, as we continue to

backfill in existing markets and expand into contiguous geographies.

Our ability to timely open new stores depends in part on several factors, including the availability of attractive rents and store locations;

the absence of occupancy delays;

ability to negotiate and enter into leases with acceptable terms;

our ability to obtain and retain permits and licenses;

our ability to hire and train new personnel, especially store managers, in a cost effective manner;

our ability to adapt and grow

our distribution and other operational and management systems to a changing network of stores;

the availability of capital funding for expansion;

our ability to respond to demographic shifts in areas where our stores are located and general economic

We may not anticipate all of the challenges imposed by the expansion of our operations into new geographic markets.

Some new stores may be located in areas with different competitive and market

conditions, customer tastes and discretionary spending patterns than our existing markets.

We may face a higher cost of entry, difficulties attracting labor, alternative customer demands, reduced brand recognition and minimal operating experience in

Although we are extremely sensitive to cannibalizing existing stores, opening new stores in our established markets may also result in inadvertent oversaturation, sales volume transfer from existing stores to new stores and reduced

comparable store sales, thus adversely affecting our overall financial performance.

We may not manage our expansion effectively, and our failure to achieve or properly execute our expansion plans could limit our growth or have a material adverse

effect on our business, financial condition, and results of operations.

We may not be able to retain the loyalty of our customers, particularly Ollie’s Army members, which could have a material adverse effect on our business, financial

condition, and results of operations.

We depend on our loyal customer base, particularly members of Ollie’s Army, for our consistent sales and sales growth.

Competition for customers has intensified as competitors have moved into, or

increased their presence in, our geographic markets and from the use of mobile and web-based technology that facilitates online shopping and real-time product and price comparisons.

We expect this competition to continue to increase.

Our competitors

may be able to offer consumers promotions or loyalty program incentives that could attract our customer base, including members of Ollie’s Army, or divide their loyalty among several retailers.

If we are unable to retain the loyalty of our customers,

our net sales could decrease and we may not be able to grow our store base as planned, which could have a material adverse effect on our business, financial condition, and results of operations.

The failure to timely acquire, develop, open and operate, or the loss of, disruption, or interruption in the operations of, our centralized distribution centers

could materially adversely affect our business and operations.

With few exceptions, inventory is shipped directly from suppliers to our distribution centers in York, PA, Commerce, GA, and Lancaster, TX, where the inventory is then processed, sorted and shipped to

We depend in large part on the orderly operation of this receiving and distribution process, which depends, in turn, on adherence to shipping schedules and effective management of our distribution centers.

Increases in transportation

costs (including increases in fuel costs), supplier-side delays, reductions in the capacity of carriers, changes in shipping companies, the impact of COVID-19 on our workforce, labor strikes, or shortages in the transportation industry and unexpected

delivery interruptions also have the potential to derail our orderly distribution process.

We also may not anticipate changing demands on our distribution system or timely develop and open any necessary additional facilities.

In addition, events

beyond our control, such as disruptions in operations due to fire or other catastrophic events or labor disagreements, may result in delays in the delivery of merchandise to our stores.

While we maintain business interruption insurance, in the event

our distribution centers are shut down for any reason, such insurance may not be sufficient, and any related insurance proceeds may not be timely paid to us.

In addition, our new store locations receiving shipments may be further away from our

distribution centers, which may increase transportation costs and may create transportation scheduling strains.

Any repeated, intermittent, or long-term disruption in the operations of our distribution centers would hinder our ability to provide

merchandise to our stores and could have a material adverse effect on our business, financial condition, and results of operations.

Our new store growth is dependent on our ability to successfully expand our distribution network capacity, and failure to achieve or sustain these plans could

adversely affect our performance.

We maintain distribution centers in York, PA, Commerce, GA, and Lancaster, TX and are building a fourth in Princeton, IL to support our existing stores and our growth objectives.

We continuously assess

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

Processing delays or difficulties in operations at our existing distribution centers or delays in

opening, processing delays or difficulties in operations at our new distribution centers, including our Princeton, IL distribution center, could adversely affect our current operations by causing existing stores to have insufficient inventory, and

affect future operations by slowing store growth, which could, in turn, reduce sales growth.

In addition, any distribution-related construction or expansion projects entail risks which could cause delays and cost overruns, such as shortages of

materials, shortages of skilled labor or work stoppages, unforeseen construction, scheduling, engineering, environmental or geological problems, COVID-19 or other strains or types of contagion, weather interference, fires or other casualty losses and

unanticipated cost increases.

The completion date and ultimate cost of future projects, including our Princeton, IL distribution center, could differ significantly from initial expectations due to construction-related or other reasons.

guarantee that any project will be completed on time or within established budgets.

If we are not successful in managing our inventory balances, it could have a material adverse effect on our business, financial condition, and results of

Efficient inventory management is a key component of our profitability and ability to generate revenue.

To be successful, we must maintain sufficient inventory levels and an appropriate product mix to

meet our customers’ demands without allowing those levels to increase to such an extent that the costs to store and hold the goods adversely impact our results of operations.

If our buying decisions do not accurately correspond to customer

preferences, if we inappropriately price products or if our expectations about customer spending levels are inaccurate, we may have to take unanticipated markdowns to dispose of any excess inventory, which could have a material adverse effect on our

business, financial condition, and results of operations.

We continue to focus on ways to reduce these risks, but we cannot ensure that we will be successful in our inventory management.

Inventory shrinkage could have a material adverse effect on our business, financial condition and results of operations.

We are subject to the risk of inventory loss and theft.

We cannot ensure that actual rates of inventory loss and theft in the future will be within our estimates or that the measures we are taking will

effectively reduce the problem of inventory shrinkage.

Although some level of inventory shrinkage is an unavoidable cost of doing business, if we were to experience higher rates of inventory shrinkage or incur increased security costs and other costs

to combat inventory theft, it could have a material adverse effect on our business, financial condition, and results of operations.

Our success depends on our executive officers, our merchant team and other key personnel.

If we lose key personnel or are unable to hire additional qualified personnel, it could have a

material adverse effect on our business, financial condition and results of operations.

Our future success depends to a significant degree on the skills, experience and efforts of our executive officers, our merchant team and other key personnel.

The unexpected loss of services of any of

our executive officers or senior members of our merchant team could materially adversely affect our business and operations.

Competition for skilled and experienced management in the retail industry is intense, and our future success will also depend

on our ability to attract and retain qualified personnel, including our merchant team, which is responsible for purchasing and negotiating the terms of our merchandise.

Failure to attract and retain new qualified personnel could have a material

adverse effect on our business, financial condition, and results of operations.

If we are unable to attract, train, and retain highly qualified managerial personnel and sales associates in our stores and our distribution centers, our sales, financial

performance, and business operations may be materially adversely affected.

We focus on providing our customers with a memorable and engaging shopping experience.

To grow our operations and meet the needs and expectations of our customers, we must attract, train, and retain a large number of

highly qualified store management personnel and sales associates, while controlling labor costs.

Our ability to control labor costs is subject to numerous external factors and compliance with regulatory structures, including competition for and

availability of qualified personnel in a given market, unemployment levels within those markets, governmental regulatory bodies such as the Equal Employment Opportunity Commission (“EEOC”) and the National Labor Relations Board (“NLRB”), prevailing

wage rates and wage and hour laws, minimum wage laws, the impact of legislation governing labor and employee relations or benefits, such as the Affordable Care Act (“ACA”), health insurance costs, healthcare costs, including those related to COVID-19

or other potential pandemics or disease outbreaks and related testing and vaccination costs, and our ability to maintain good relations with our associates.

We compete with other retail businesses for many of our store management personnel and sales

associates in hourly and part-time positions.

These positions have had historically high turnover rates, which can lead to increased training and retention costs.

We also rely on associates in our distribution centers to ensure the efficient

processing and delivery of products from our suppliers to our stores.

If we are unable to attract and retain quality associates, and other management personnel, fail to comply with the regulations and laws impacting personnel, or have difficulty

accurately predicting employee-related costs, including healthcare costs, and establishing accurate budgetary reserves for such costs, it could have a material adverse effect on our business, financial condition, and results of operations.

Our success depends on our marketing, advertising, and promotional efforts.

If we are unable to implement them successfully, or if our competitors are more

effective than we are, it could have a material adverse effect on our business, financial condition, and results of operations.

We use marketing and promotional programs to attract customers to our stores and to encourage purchases by our customers.

Although we use various media for our promotional efforts, including regular and

Ollie’s Army mailers, email campaigns, radio and television advertisements and sports marketing, we primarily advertise our in-store offerings through printed flyers.

In 2022, over 60% of our advertising spend was for the printing and distribution of

If the efficacy of printed flyers as an advertising medium declines, or if we fail to successfully develop and implement new marketing, advertising and promotional strategies, such as an effective social media strategy, our competitors may be

able to attract the interest of our customers, which could reduce customer traffic in our stores.

Changes in the amount and degree of promotional intensity or merchandising strategy by our competitors could cause us to have difficulties in retaining

existing customers and attracting new customers.

If the efficacy of our marketing or promotional activities declines or if such activities of our competitors are more effective than ours, or if for any other reason we lose the loyalty of our

customers, including our Ollie’s Army members, it could have a material adverse effect on our business, financial condition, and results of operations.

Because our business is seasonal, with the highest volume of net sales during the holiday season, adverse events during our fourth fiscal quarter could materially

adversely affect our business, operations, cash flows, and financial condition.

We generally recognize our highest volume of net sales in connection with the holiday sales season, which occurs in the fourth quarter of our fiscal year.

In anticipation of the holiday sales season, we

purchase substantial amounts of seasonal inventory and hire many part-time associates.

Because a significant percentage of our net sales and operating income are generated in our fourth fiscal quarter, we have limited ability to compensate for

shortfalls in our fourth fiscal quarter sales or earnings by changing our operations or strategies in other fiscal quarters.

Adverse events, such as deteriorating economic conditions, higher unemployment, higher gas prices, public transportation

disruptions, errors in anticipating consumer demand for our products, or unanticipated adverse or unseasonable weather conditions could result in lower than planned sales during the holiday sales season.

If our fourth fiscal quarter sales results

were substantially below expectations, we would realize less cash flows from operations, and may be forced to mark down our merchandise, especially our seasonal merchandise, which could have a material adverse effect on our business, financial

condition, and results of operations.

Our business requires that we lease substantial amounts of space and there can be no assurance that we will be able to continue to lease space on terms as favorable as the leases

negotiated in the past.

We lease the majority of our store locations, our corporate headquarters and our distribution facilities in York, PA and Commerce, GA.

Our stores are leased from third parties, with typical initial lease terms of

approximately seven years with options to renew for successive five-year periods.

We believe that we have been able to negotiate favorable rental rates over the last few years due in large part to the general state of the economy, the increased

availability of vacant big box retail sites, and our careful identification of favorable lease opportunities.

While we will continue to seek out advantageous lease opportunities, there is no guarantee that we will continue to be able to find low-cost

second generation sites or obtain favorable lease terms.

Many of our lease agreements have defined escalating rent provisions over the initial term and any extensions.

Increases in our occupancy costs and difficulty in identifying economically

suitable new store locations could have significant negative consequences, which include:

requiring that a greater portion of our available cash be applied to pay our rental obligations, thus reducing cash available for other purposes and reducing profitability;

increasing our vulnerability to general adverse economic and industry conditions;

limiting our flexibility in planning for, or reacting to changes in, our business, or in the industry in which we compete.

We depend on cash flows from operations to pay our lease expenses and to fulfill our other cash needs.

If our business does not generate sufficient cash flows from operating activities to fund these expenses and needs

and sufficient funds are not otherwise available to us, we may not be able to service our lease expenses, grow our business, respond to competitive challenges, or fund our other liquidity and capital needs, which could harm our business.

sites that we lease may be subject to long-term non-cancelable leases if we are unable to negotiate our current standard lease terms.

If an existing or future store is not profitable, and we decide to close it, we may nonetheless be committed to

perform our obligations under the applicable lease including, among other things, paying the base rent for the balance of the lease term.

Moreover, even if a lease has an early cancellation clause, we may not satisfy the contractual requirements for

early cancellation under that lease.

In addition, if we are not able to enter into new leases or renew existing leases on terms acceptable to us, this could have a material adverse effect on our business, financial condition, and results of

Risks associated with the current geopolitical climate could adversely affect our business, financial condition, and results of operations.

Our business, financial condition and results of operations may differ materially as we cannot predict the impact of the current geopolitical climate.

Risks associated with heightened geopolitical instability include,

among others, reductions in consumer confidence, heightened inflation, production disruptions, cyber disruptions or attacks, higher natural gas costs, higher manufacturing costs, and higher supply chain costs.

Climate change may have a long-term impact on our business.

There are inherent climate-related risks wherever our business is conducted.

Changes in market dynamics, shareholder expectations, local, national and international climate change policies, and the frequency and

intensity of extreme weather events on critical infrastructure in the United States and abroad, all have the potential to disrupt our business and operations.

Global climate change is resulting, and may continue to result, in certain natural

disasters and adverse weather, such as drought, wildfires, storms, sea-level rise, and flooding, occurring more frequently or with greater intensity.

These events and their impacts could otherwise disrupt and adversely affect our business and could

materially affect our financial condition and results of operations.

Natural disasters, whether or not caused by climate change, epidemic or pandemic outbreaks, such as COVID-19, unusual weather conditions, terrorist acts and

political events could disrupt our business and result in lower sales and otherwise adversely affect our financial performance.

The occurrence of one or more natural disasters, such as tornadoes, hurricanes, fires, floods and earthquakes, epidemic outbreaks, unusual weather conditions, terrorist attacks or disruptive political

events in certain regions where our stores are located could adversely affect our business and result in lower sales.

Epidemic or pandemic outbreaks, such as COVID-19, could impact our management and sales associates, our inventory supply, delivery

schedules, our ability to keep our stores open due to mandatory governmental restrictions or may cause our customers to avoid shopping at brick and mortar retailers or reduce the number of trips they will make to our stores.

To the extent these

events also impact one or more of our key suppliers or result in the closure of one or more of our centralized distribution centers or our corporate headquarters, we may be unable to maintain delivery schedules or provide other support functions to

In addition, severe weather, such as heavy snowfall or extreme temperatures, may discourage or restrict customers in a particular region from traveling to our stores, thereby reducing our sales and profitability.

If severe weather

conditions occur during the second or fourth quarter of our fiscal year, the adverse impact to our sales and profitability could be even greater than at other times during the year because we generate a larger portion of our sales and profits during

these periods.

Natural disasters, which may include tornadoes, hurricanes, floods, and earthquakes, may impact our store locations or other operations.

In addition, climate change may have an impact on the frequency and/or severity of such natural

We have a growing number of store locations in areas that may be impacted by weather events and natural disasters such as the types listed above.

To the extent that such weather events or natural disasters may damage our stores or other

operations, we may be unable to operate stores or other facilitates and our consolidated financial results may be materially adversely affected.

This could have a sustained material adverse effect on our business, financial condition and results of

LEGAL AND REGULATORY

We are subject to governmental regulations, procedures, and requirements.

A significant change in, or noncompliance with, these regulations could have a material

adverse effect on our business, financial condition, and results of operations.

We routinely incur significant costs in complying with federal, state and local laws, and regulations.

The complexity of the regulatory environment in which we operate, and the related cost of

compliance, are increasing due to expanding and additional legal and regulatory requirements and increased enforcement efforts.

New laws or regulations, including those dealing with healthcare reform, product safety, consumer credit, privacy and

information security, the environment and labor and employment, among others, or changes in existing federal, state and local laws and regulations, particularly those governing the sale of products and food safety and quality (including changes in

labeling or disclosure requirements), federal or state wage requirements, employee rights, health care, social welfare or entitlement programs such as health insurance, paid leave programs, other changes in workplace regulation, and compliance with

laws regarding public access to our stores, may result in significant added expenses or may require extensive system and operating changes that may be difficult to implement and/or could materially increase our cost of doing business.

compliance or noncompliance with applicable laws or regulations or untimely or incomplete execution of a required product recall can result in the imposition of penalties, including loss of licenses or significant fines or monetary penalties, class

action litigation or other litigation, in addition to reputational damage.

Additionally, changes in tax laws, the interpretation of existing laws, or our failure to sustain our reporting positions on examination could materially adversely affect our

effective tax rate and could have a material adverse effect on our business, financial condition, and results of operations.

If we fail to protect our brand names, competitors may adopt trade names that dilute the value of these assets.

We may be unable or unwilling to strictly enforce our trademarks in each jurisdiction in which we do business.

Also, we may not always be able to successfully enforce our trademarks against competitors

or against challenges by others.

Our failure to successfully protect our trademarks could diminish the value and efficacy of our brand recognition and could cause customer confusion, which could have a material adverse effect on our business,

financial condition, and results of operations.

We rely on manufacturers in foreign countries for merchandise and a significant amount of our domestically-purchased merchandise is manufactured abroad.

business may be materially adversely affected by risks associated with international trade.

We purchase merchandise directly from suppliers outside of the United States.

In 2022, substantially all of our private label inventory purchases were direct imports.

Additionally, a significant amount

of our domestically-purchased merchandise is manufactured abroad.

Our ability to identify qualified suppliers and to access products in a timely and efficient manner is a significant challenge, especially with respect to goods sourced outside of

North America.

Global sourcing and foreign trade involve numerous factors and uncertainties beyond our control, including possible changes to U.S.

trade policy, increased shipping costs, the timing of shipments, increased import duties, more

restrictive quotas, loss of most favored nation trading status, currency, work stoppages, transportation delays, port of entry issues, economic uncertainties such as inflation, foreign government regulations, political unrest, natural disasters, war,

terrorism, trade restrictions, political instability, the financial stability of vendors, merchandise quality issues, unexpected contagion, existing viruses or illnesses, and tariffs.

Moreover, negative press or reports about internationally

manufactured products may sway public opinion, and thus customer confidence, away from the products sold in our stores.

These and other issues affecting our international vendors could have a material adverse effect on our business, financial

condition, and results of operations.

The cost of compliance with product safety regulations and risks related to product liability claims and product recalls could damage our reputation, increase our

cost of doing business and could have a material adverse effect on our business, financial condition, and results of operations.

New federal or state legislation, including new product safety laws and regulations, may negatively impact our operations.

Future changes in product safety legislation or regulations may lead to product

recalls and the disposal or write-off of merchandise.

While we work to comply in all material respects with applicable legislation and regulations, and to execute product recalls in a timely manner, if our merchandise, including food and consumable

products and flooring, does not meet applicable governmental safety standards or our customers’ expectations regarding quality or safety, we could experience lost sales and increased costs, be exposed to legal and reputational risk and face fines or

penalties which could materially adversely affect our financial results.

We also purchase a material portion of our products on a closeout basis.

Some of these products are obtained through brokers or intermediaries rather than through manufacturers.

The closeout nature of a portion of our products sometimes makes it more difficult for us to investigate all aspects of these products.

Furthermore, customers have asserted claims, and may in the future assert claims, that they have sustained

injuries from merchandise offered by us, and we may be subject to lawsuits relating to these claims.

There is a risk that these claims may exceed, or fall outside the scope of, our insurance coverage.

Even with adequate insurance and indemnification

from third-party suppliers, such claims, even if unsuccessful or not fully pursued, could significantly damage our reputation and customer confidence in our products.

If this occurs, it may be difficult for us to regain lost sales, which could have a

material adverse effect on our business, financial condition, and results of operations.

Our current insurance program may expose us to unexpected costs and negatively affect our financial performance.

Our insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar provisions that we believe are prudent based on the nature of our operations.

However, there are

types of losses we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, employee and certain other crime, wage and hour, and certain other

employment-related claims, public accommodation claims, class actions, and some natural disasters.

If we incur these losses and they are material, our business could suffer.

Certain material events may result in sizable losses for the insurance

industry and adversely impact the availability of adequate insurance coverage or result in excessive premium increases.

To offset negative insurance market trends, we may elect to self-insure, accept higher deductibles or reduce the amount of

coverage in response to these market changes.

In addition, we self-insure a significant portion of expected losses under our workers’ compensation, general liability and group health insurance programs.

Unanticipated changes in any applicable

actuarial assumptions and management estimates underlying our recorded liabilities for these losses, including expected increases in medical and indemnity costs, could result in materially different expenses than expected under these programs, which

could have a material adverse effect on our results of operations and financial condition.

We continue to maintain property insurance for catastrophic events at our store support center, distribution centers, and stores.

In addition, because of

ongoing changes in healthcare law, among other things, we may experience an increase in participation in our group health insurance programs, which may lead to a greater number of medical and related claims.

While we have coverage for some

cyber-related incidents, the nature and scope of any potential attack or breach may result in substantial costs that would exceed the scope of coverage or limits of coverage.

If we experience a greater number of these losses than we anticipate, it

could have a material adverse effect on our business, financial condition, and results of operations.

We face litigation risks from customers, associates, suppliers, stockholders and other third parties in the ordinary course of business.

Our business is subject to the risk of litigation by customers, current and former associates, suppliers, stockholders, intellectual property rights holders, government agencies, and others through

private actions, class actions, collective actions, administrative proceedings, regulatory actions, or other litigation.

From time to time, such lawsuits are filed against us and the outcome of any litigation, particularly class or collective action

lawsuits and regulatory actions, is difficult to assess or quantify.

Plaintiffs in these types of lawsuits may seek recovery of very large or indeterminate amounts, and the magnitude of the potential loss relating to such lawsuits may remain unknown

for substantial periods of time.

The cost to defend any such lawsuits may be significant and may negatively affect our operating results if changes to our business operations are required.

There may also be negative publicity associated with

litigation that could decrease customer acceptance of merchandise offerings, regardless of whether the allegations are valid or whether we are ultimately found liable.

As a result, litigation may adversely affect our business, financial condition,

results of operations, or liquidity.

TECHNOLOGY AND CYBERSECURITY

Any disruptions to our information technology systems or breaches of our network security could disrupt or interrupt our operations, compromise our reputation,

expose us to litigation, government enforcement actions and costly response measures and could have a material adverse effect on our business, financial condition, and results of operations.

We rely on the integrity, security and successful functioning of our information technology systems and network infrastructure across our operations, including point-of-sale processing at our stores.

connection with sales, we transmit encrypted confidential credit and debit card information.

We are compliant with the Payment Card Industry Data Security Standard (“PCI”) issued by the Payment Card Industry Security Standards Council.

However, there can be no assurance that in the future we

will be able to operate our facilities and our customer service and sales operations in accordance with PCI or other industry recommended or contractually required practices.

We expect to incur additional expenses, and the time and effort of our

information technology staff, to maintain PCI compliance.

Even though we are compliant with such standards, we still may not be able to prevent or timely detect security breaches.

An increasingly significant portion of our sales depends on the continuing operation of our information technology and communications systems, including, but not limited to, our point-of-sale system and

our credit card processing systems.

Our information technology, communications systems, and electronic data may be vulnerable to damage or interruption from computer viruses, ransomware attacks, loss of data, unauthorized data breaches, usage errors

by our associates or our contractors or other attempts to harm our systems, including cyber-security attacks or other breaches of cardholder data, earthquakes, acts of war or terrorist attacks, floods, fires, tornadoes, hurricanes, power loss and

outages, computer, and telecommunications failures.

Some of our systems are not fully redundant, and our disaster recovery planning cannot account for all eventualities.

The occurrence of intentional sabotage, unauthorized access, natural disaster,

or other unanticipated problems could result in lengthy interruptions in our service.

Any errors or vulnerabilities in our systems, or damage to or failure of our systems, could result in interruptions in our services, non-compliance with certain

regulations, substantial remediation costs, and liability for lost or stolen information, any of which could have a material adverse effect on our business, financial condition, and results of operations.

Data protection requirements increase our operating costs and a breach in information privacy or other related risks could negatively impact our operations.

We have access to, collect or maintain private or confidential information regarding our customers, associates and suppliers, as well as our business.

The protection of our customer, associate,

supplier, and company data is critical to us.

In recent years, there has been increasing regulation, enforcement and litigation activity in the area of privacy, data protection and information security in the United States and in various other

countries, with the frequent imposition of new and changing requirements across the many states in which we conduct our business.

The California Consumer Privacy Act of 2018 (“CCPA”) and other state privacy acts have imposed and likely will impose

additional data protection obligations on companies considered to be doing business in California and provides for substantial fines for non-compliance and, in some cases, a private right of action to consumers who are victims of data breaches.

Complying with the CCPA and similar emerging and changing privacy, data protection and information security requirements may cause us to incur substantial costs or compliance risks due to, among other things, system changes and the development of new

processes and business initiatives.

Our failure to comply with privacy, data protection and information security laws could result in potentially significant regulatory and/or governmental investigations and/or actions, litigation, fines, sanctions,

ongoing regulatory monitoring, and customer attrition.

In addition, our customers have a high expectation that we will adequately protect their personal information from cyber-attack or other security breaches.

We have procedures in place to evaluate the

integrity of our systems, and to safeguard such data and information.

However, the landscape is evolving at a rapid pace, and we may be unable to effectively anticipate or respond to attacks to or breaches of our security systems or implement

adequate preventative measures.

A breach of customer, employee, supplier, or company data could attract a substantial amount of negative media attention, damage our customer and supplier relationships and our reputation, and result in lost sales,

costly fines, other expenses and/or lawsuits, any of which could have a material adverse effect on our business, financial condition and results of operations.

If we are unable to maintain or upgrade our information technology systems or if we are unable to convert to alternate systems in an efficient and timely manner,

our operations may be disrupted or become less efficient.

We depend on a variety of information technology systems for the efficient functioning of our business.

We rely on certain hardware, telecommunications and software vendors to maintain and periodically

upgrade many of these systems so that we can continue to support our business.

Various components of our information technology systems, including hardware, networks and software, are licensed to us by third party vendors.

We rely extensively on our

information technology systems to process transactions, summarize results, and manage our business.

We are in compliance with PCI, and compliance with PCI and implementing related procedures, technology and information security measures requires

significant resources and ongoing attention.

Costs and potential problems and interruptions associated with the implementation of new or upgraded systems and technology such as those necessary to achieve compliance with PCI or with maintenance or

adequate support of existing systems could also disrupt or reduce the efficiency of our operations.

Any material interruptions or failures in our payment-related systems could have a material adverse effect on our business, financial condition, and

results of operations.

If our information technology systems are damaged or cease to function properly, we may have to make a significant investment to fix or replace them.

If there are amendments to PCI, the cost of

re-compliance could also be substantial and we may suffer loss of critical data and interruptions or delays in our operations as a result.

In addition, we may have to upgrade our existing information technology systems from time to time in order for

such systems to withstand the increasing needs of our expanding business.

Any material interruption experienced by our information technology systems could have a material adverse effect on our business, financial condition, and results of

Costs and potential interruptions associated with the implementation of new or upgraded systems and technology or with maintenance or adequate support of our existing systems could disrupt or reduce the efficiency of our business.

ACCOUNTING AND FINANCIAL

If our estimates or judgments relating to our significant accounting policies prove to be incorrect, our operating results could be adversely affected.

The preparation of financial statements in conformity with U.S.

Generally Accepted Accounting Principles (“GAAP”) requires management to make estimates and assumptions that affect the amounts reported

in the accompanying consolidated financial statements and notes.

We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances.

The results of these estimates form the basis

for making judgments about the carrying values of assets, liabilities and equity, and the amount of revenue and expenses that are not readily apparent from other sources.

Our operating results may be adversely affected if our assumptions change or if

actual circumstances differ from those in our assumptions, which could cause our operating results to fall below the expectations of securities analysts and investors, resulting in a decline in our stock price.

Changes to accounting rules or regulations could have a material adverse effect on our business, financial condition, and results of operations.

Changes to existing accounting rules or regulations may impact our future results of operations or cause the perception that we are more highly leveraged.

Other new accounting rules or regulations and

varying interpretations of existing accounting rules or regulations have occurred and may occur in the future.

Future changes to accounting rules or regulations could have a material adverse effect on our business, financial condition, and results of

RISKS RELATED TO COMMON STOCK AND CORPORATE GOVERNANCE

As a public company, our management is required to devote substantial time to compliance initiatives.

The Sarbanes-Oxley Act and rules implemented by the SEC and the NASDAQ Stock Market LLC (“NASDAQ”) have imposed various requirements on public companies, including establishment and maintenance of effective disclosure

and financial controls and corporate governance practices.

Implementing and maintaining internal controls is time consuming and costly.

If we fail to maintain an effective internal control environment or to comply with the numerous legal and

regulatory requirements imposed on public companies, we could make material errors in, and be required to restate, our financial statements.

Any such restatement could result in a loss of public confidence in the reliability of our financial

statements and sanctions imposed on us by the SEC.

If we are unable to satisfy our obligations as a public company, we could be subject to delisting of our common stock, fines, sanctions and other regulatory action and potentially civil litigation.

Anti-takeover provisions in our third amended and restated certificate of incorporation and fourth amended and restated bylaws and under Delaware law could make an acquisition of

us more difficult, limit attempts by our stockholders to replace or remove our current management and limit the market price of our common stock.

Provisions in our third amended and restated certificate of incorporation and fourth amended and restated bylaws may have the effect of delaying or preventing a change of control or changes in our management.

amended and restated certificate of incorporation and fourth amended and restated bylaws include provisions that:

authorize our Board to issue, without further action by the stockholders, up to 50,000,000 shares of undesignated preferred stock;

subject to certain exceptions, require that any action to be taken by our stockholders be effected at a duly called annual or special meeting and not by written consent;

specify that special meetings of our stockholders can be called only by a majority of our Board or upon the request of the Chairperson of the Board or the Chief Executive Officer;

establish an advance notice procedure for stockholder proposals to be brought before an annual meeting, including proposed nominations of persons for election to our Board;

prohibit cumulative voting in the election of directors;

provide that vacancies on our Board may be filled only by a majority of directors then in office, even though less than a quorum.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for stockholders to replace members of our Board, which is responsible

for appointing the members of our management.

Our third amended and restated certificate of incorporation designates the Court of Chancery of the State of Delaware as the exclusive forum for certain litigation that may be

initiated by our stockholders, which could increase costs of bringing a claim, discourage claims, or limit our stockholders’ ability to obtain a favorable judicial forum for disputes with us or our directors, officers, or employees.

Specifically, the certificate of incorporation provides that, unless we consent in writing in advance to the selection of an alternative forum, the Court of Chancery of the State of Delaware is the sole and exclusive

forum, to the fullest extent provided by law, for the following types of actions or proceedings:

any derivative action or proceeding brought on behalf of the Company;

any action asserting a claim of breach of a fiduciary duty owed by, or any wrongdoing by, any director, officer, or employee of the Company to the Company, or the Company’s stockholders;

any action asserting a claim arising pursuant to any provision of the Delaware General Corporate Law, the certification of incorporation (including as it may be amended from time to time), or the fourth amended and restated bylaws;

any action to interpret, apply, enforce or determine the validity of our certificate of incorporation or the fourth amended and restated bylaws;

any action asserting a claim governed by the internal affairs doctrine.

Application of the choice of forum provision may be limited in some instances by law.

Section 27 of the Securities Exchange Act of 1934 (“Exchange Act”) provides for exclusive federal court jurisdiction over Exchange

Accordingly, to the extent the exclusive forum provision is held to cover a shareholder derivative action asserting claims under the Exchange Act, such claims could not be brought in the Delaware Court of Chancery and would instead be

within the jurisdiction of the federal district court for the District of Delaware.

Section 22 of the Securities Act of 1933 (“Securities Act”) creates concurrent jurisdiction for federal and state courts over all suits brought to enforce any duty or

liability created by the Securities Act or the rules and regulations thereunder.

Moreover, our stockholders will not be deemed by operation of our choice of forum provision to have waived our compliance with the federal securities laws and the

regulations promulgated thereunder.

It is also possible that, notwithstanding the forum selection clause, a court could rule that such a provision is inapplicable or unenforceable, which could adversely impact our results of operations, financial

position, and cash flows.

If securities analysts or industry analysts downgrade our shares, publish negative research or reports, or do not publish reports about our business, our share price and trading

volume could decline.

The trading market for our common stock is to some extent influenced by the research and reports that industry or securities analysts publish about us, our business, and our industry.

If no or few analysts commence

coverage of us, the trading price of our stock could decrease.

Even if we do obtain analyst coverage, if one or more analysts adversely change their recommendation regarding our shares or our competitors’ stock, our share price might decline.

or more analysts cease coverage of us or fail to regularly publish reports on us, we might lose visibility in the financial markets, which, in turn, could cause our share price or trading volume to decline.

Future sales of our common stock in the public market could cause the market price of our common stock to decrease significantly.

Sales of substantial amounts of our common stock in the public market by our existing stockholders or upon the exercise of outstanding stock options or grant of stock options or restricted stock units

in the future may cause the market price of our common stock to decrease significantly.

As of January 28, 2023, we have an aggregate of 1,485,529 shares of common stock issuable upon exercise of outstanding options and the vesting of restricted stock

units under the 2015 Equity Incentive Plan (the “2015 Plan” and together with the 2012 Equity Incentive Plan, the “Equity Plans”) (509,073 of which are fully vested).

The perception that such sales could occur could also depress the market price of our common stock.

Any such sales could also create public perception of difficulties or problems with our business and

might also make it more difficult for us to raise capital through the sale of equity securities in the future at a time and price that we deem appropriate.

Our stock price has been and may continue to be volatile.

The market price of our common stock has fluctuated substantially in the past and may continue to fluctuate significantly.

For example, during the fiscal year ended January 28, 2023, our stock price

fluctuated from a high of $72.27 to a low of $37.67.

Future announcements or disclosures concerning us or any of our competitors, our strategic initiatives, our sales and profitability, our financial condition, any quarterly variations in actual or

anticipated operating results or comparable sales, any failure to meet analysts’ expectations and sales of large blocks of our common stock, among other factors, could cause the market price of our common stock to fluctuate substantially.

addition, the stock market has experienced price and volume fluctuations that have affected the market price of many retail and other stocks that have often been unrelated or disproportionate to the operating performance of these companies.

We are a holding company and rely on dividends and other payments, advances, and transfers of funds from our subsidiaries to meet our obligations and pay any

We have no direct operations and no significant assets other than ownership of 100% of the capital stock of our subsidiaries.

Because we conduct operations through our subsidiaries, we depend on those

entities for dividends and other payments to generate the funds necessary to meet financial obligations and to pay any dividends with respect to our common stock.

Legal and contractual restrictions in the Credit Facility (defined below) and other

agreements which may govern future indebtedness of our subsidiaries, as well as the financial condition and operating requirements of our subsidiaries, may limit our ability to obtain cash from our subsidiaries.

The earnings from, or other available

assets of, our subsidiaries might not be sufficient to pay dividends or make distributions or loans to enable us to pay any dividends on our common stock or other obligations.

Any of the foregoing could materially and adversely affect our business,

financial condition, results of operations, and cash flows.

We do not expect to pay any cash dividends for the foreseeable future.

The continued operation and expansion of our business will require substantial funding.

We do not anticipate that we will pay any dividends to holders of our common stock for the foreseeable future.

payment of cash dividends will be at the discretion of our Board and will depend on our financial condition, capital requirements, legal requirements, earnings and other factors.

Our ability to pay dividends is restricted by the terms of our Credit

Facility and might be restricted by the terms of any indebtedness that we incur in the future.

Accordingly, realization of any gain on our common stock will depend on the appreciation of the price of the shares of our common stock, which may never

Our business and reputation may be adversely affected by environmental, social and governance matters.

Investor and regulatory focus is intensifying with respect to certain environmental, social and governance (“ESG”) matters.

These matters include, among others, efforts and mitigation of the impact of

climate change, human rights matters, ethics and compliance with law, diversity, equity and inclusion, and the role of the Board in supervising various sustainability issues.

Additionally, in the retail industry, the materials used in the products we

sell as well as where we source our products is of particular importance.

In addition, investment in funds that specialize in companies that perform well in ESG assessments are increasingly popular, and major institutional investors and advisors have publicly emphasized the

importance of ESG measures to their investment decisions and recommendations.

Investors who are focused on ESG matters may seek enhanced disclosures or require implementation of policies that may be adverse to our business, and there can be no

assurances that shareholders will not advocate, via proxy contests, media campaigns or other public or private means, for us to take ESG focused actions on an accelerated timeline.

Additionally, there can be no certainty that we will successfully navigate or manage ESG issues or that we will successfully meet investors or others expectations.

Any failure or perceived failure by us

in this regard could have a material adverse effect on our reputation with governments, customers, employees, other third parties and the communities and industries in which we operate, as well as, on our business, share price, financial condition,

access to capital, or results of operations.

INDEBTEDNESS AND CAPITALIZATION

Indebtedness may limit our ability to invest in the ongoing needs of our business and if we are unable to comply with our financial covenants, it could have a material adverse

effect on our liquidity and our business, financial condition, and results of operations.

The Company’s credit facility (the “Credit Facility”) provides for a five-year $100.0 million revolving credit facility, which includes a $45.0 million sub-facility for letters of credit and a $25.0

million sub-facility for swingline loans (the “Revolving Credit Facility”).

As of January 28, 2023, we had no outstanding borrowings on the Revolving Credit Facility, with $87.0 million of borrowing availability.

We may, from time to time, incur

additional indebtedness.

The agreements governing our Credit Facility place certain conditions on us, including that they:

increase our vulnerability to adverse general economic or industry conditions;

limit our flexibility in planning for, or reacting to, changes in our business or the industries in which we operate;

make us more vulnerable to increases in interest rates, as borrowings under our Credit Facility are at variable rates;

limit our ability to obtain additional financing in the future for working capital or other purposes;

require us to utilize our cash flows from operations to make payments on indebtedness, reducing the availability of our cash flows to fund working capital, capital expenditures, development activity, and other general corporate purposes;

place us at a competitive disadvantage compared to our competitors that have less indebtedness.

Our Credit Facility places certain limitations on our ability to incur additional indebtedness.

However, subject to the qualifications and exceptions in our Credit Facility, we may be permitted to incur substantial

additional indebtedness and may incur obligations that do not constitute indebtedness under the terms of the Credit Facility.

Our Credit Facility also places certain limitations on, among other things, our ability to enter into certain types of

transactions, financing arrangements and investments, to make certain changes to our capital structure and to guarantee certain indebtedness.

Our Credit Facility also places certain restrictions on the payment of dividends and distributions and

certain management fees.

These restrictions limit or prohibit, among other things, our ability to:

pay dividends on, redeem or repurchase our stock or make other distributions;

incur or guarantee additional indebtedness;

sell stock in our subsidiaries;

create or incur liens;

make acquisitions or investments;

transfer or sell certain assets or merge or consolidate with or into other companies;

make certain payments or prepayments of indebtedness subordinated to our obligations under our Credit Facility;

enter into certain transactions with our affiliates.

Failure to comply with certain covenants or the occurrence of a change of control under our Credit Facility could result in the acceleration of our obligations under the Credit Facility, which would

materially adversely affect our liquidity, capital resources and results of operations.

Under certain circumstances, our Credit Facility requires us to comply with certain financial covenants regarding our fixed charge coverage ratio.

Failure to comply could result in a default and an

acceleration of our obligations under the Credit Facility, which could have a material adverse effect on our liquidity and our business, financial condition and results of operations.

Management’s Discussion and Analysis of Financial

Condition and Results of Operations - Liquidity and Capital Resources - Credit Facilities.”

We may be unable to generate sufficient cash flows to satisfy debt service obligations, which could have a material adverse effect on our business, financial

condition and results of operations.

Our ability to make principal and interest payments on and to refinance indebtedness will depend on our ability to generate cash in the future and is subject to general economic, financial, competitive,

legislative, regulatory, and other factors that are beyond our control.

If our business does not generate sufficient cash flows from operations, in the amounts projected or at all, or if future borrowings are not available to us in amounts sufficient

to fund our other liquidity needs, our business, financial condition and results of operations could be materially adversely affected.

If we cannot generate sufficient cash flows from operations to make scheduled principal and interest payments in

the future, we may need to refinance all or a portion of indebtedness on or before maturity, sell assets, delay capital expenditures, or seek additional equity.

The terms of future debt agreements, including our Credit Facility, may also restrict us

from affecting any of these alternatives.

Further, changes in the credit and capital markets, including market disruptions and interest rate fluctuations, may increase the cost of financing, make it more difficult to obtain favorable terms, or

restrict our access to these sources of future liquidity.

If we are unable to refinance indebtedness on commercially reasonable terms or at all or to effect any other action relating to indebtedness on satisfactory terms or at all, it could have a

material adverse effect on our business, financial condition, and results of operations.

We cannot guarantee that our share repurchase program will be fully consummated or that it will enhance long-term stockholder value.

We have adopted a share repurchase program under which we are currently authorized to repurchase up to $200.0 million of shares of our common stock through December 2023.

While the authorization of the

repurchase program has an expiration date, the authorizations are subject to extension or earlier termination by the Board of Directors at any time and we are not obligated to repurchase a specified number or dollar value of shares under our share

repurchase program.

Even if our share repurchase program is fully implemented, it may not enhance long-term stockholder value.

Also, the amount, timing, and execution of our share repurchase program may fluctuate based on our priorities for the use

of cash for other purposes and because of changes in cash flows, tax laws, and the market price of our common stock.

Unresolved Staff Comments

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