What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2026-03-19 compared with 2025-03-26 · 183 added, 277 removed, 190 unchanged (71% of the section changed)

1 unchanged sentence

You should read the following discussion together with the financial statements and related notes included elsewhere in this Annual Report on Form 10-K.

The statements in this

discussion regarding expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements.

These forward-looking statements are subject to numerous risks and uncertainties,

including, but not limited to, the risks and uncertainties described in “Item 1A, Risk Factors” and “Cautionary note regarding forward-looking statements.” Our actual results may differ materially from those contained in or implied by any

forward-looking statements.

We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday nearer

January 31 of the following year.

References to “2024” refer to the 52-week fiscal year ended February 1, 2025 and references to “2023” refer to the 53-week fiscal year ended February 3, 2024.

References to “2025” refer to the 52-week fiscal year

ending January 31, 2026.

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 “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 store performance as evidenced by our store base expansion from 388 stores to 559 stores and net sales

growth from $1.809 billion to $2.272 billion from 2020 to 2024 and average annual net sales per store of $4.3 million for the five-year period.

Our Growth Strategy

The statements in this discussion regarding

expectations of our future performance, liquidity and capital resources and other non-historical statements are forward-looking statements.

These forward-looking statements are subject to numerous risks and uncertainties, including, but not limited

to, the risks and uncertainties described in “Item 1A, Risk Factors” and “Cautionary note regarding forward-looking statements.” Our actual results may differ materially from those contained in or implied by any forward-looking statements.

We operate on a fiscal calendar widely used by the retail industry that results in a given fiscal year consisting of a 52- or 53-week period ending on the Saturday nearer January 31 of the

following year.

References to “2025” refer to the 52-week fiscal year ended January 31, 2026 and references to “2024” refer to the 52-week fiscal year ended February 1, 2025.

References to “2026” refer to the 52-week fiscal year ending January 30,

Ollie’s Bargain Outlet is a leading off-price retailer of brand name household products.

Since our founding in 1982, the Company’s mission has been to sell Good Stuff Cheap®.

We do this through a flexible buying

model that focuses on closeout merchandise and excess inventory from suppliers and manufacturers around the world.

Our stores offer Real Brands!

Real Bargains!

® in a treasure hunt shopping environment at prices up to 70% below traditional

Our highly experienced merchandise team is constantly scouring the market and leveraging deep, long-standing relationships across the supply chain to find the best products at the best prices.

We focus on buying

cheap and selling cheap, and source products as unique buying opportunities present themselves.

While the individual products sold in our stores are constantly changing, our overall merchandise mix is designed to save people money on a wide variety

of brand name household products that they need and use in their everyday lives.

Our primary point of differentiation against other retailers is the pricing of our products.

Our goal is to be the lowest priced retailer of any product offered by our stores.

We believe our flexible business model,

opportunistic buying strategy, low cost structure, experienced merchant team with deep relationships across the vendor community, and long history of experience of buying and selling closeout merchandise and excess inventory differentiates us from

traditional retailers.

Since the founding of Ollie’s in 1982, our principal growth strategy has been the opening of new stores.

5 unchanged sentences

We follow a contiguous unit growth strategy that combines backfilling existing markets and states with entering new markets and states in a contiguous manner.

As of February 1, 2025 we have grown to

As of January 31, 2026 we have grown to

645 stores in 34 states.

Our stores are supported by four distribution centers, one each in York, PA, Commerce, GA, Lancaster, TX, and Princeton, IL.

We completed the construction of our Princeton,

IL distribution center in the second quarter of 2024 and began shipping product in July 2024.

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

We have invested in our associates, infrastructure, distribution network, and information systems to allow us to continue to rapidly grow our store footprint, including:

growing our merchant buying team to increase our access to brand name/closeout merchandise;

adding members to our senior management team;

expanding the capacity of our distribution centers to their current 3.0 million square feet;

investing in information technology, accounting, and warehouse management systems.

Our business model has produced consistent and predictable store growth over the past several years, during both strong and weaker economic cycles.

We plan to continue to enhance our competitive positioning and

drive growth in sales and profitability by executing on the following strategies:

growing our store base;

increasing our offerings of great bargains;

leveraging and expanding Ollie’s Army.

We have a proven portable, flexible, and highly profitable store model that has produced consistent financial results and returns.

Our new store model targets a store size between 25,000 to 35,000 square feet and an

average initial cash investment of approximately $1.0 million, which includes store fixtures and equipment, store-level and distribution center inventory (net of payables) and pre-opening expenses.

We target new store sales of approximately $4.0

million in their first full year of operations .

While we are focused on driving comparable store sales and managing our expenses, our revenue and profitability growth will primarily come from opening new stores.

The core elements of our business model are

procuring great deals, offering extreme values to our customers and creating consistent, predictable store growth, and margins.

In addition, our new stores generally open strong, contributing to the growth in net sales and profitability of our

From 2020 to 2024, net sales grew at a CAGR of 5.9%.

We plan to achieve continued net sales growth, including comparable stores sales, by adding stores to our store base and by continuing to provide quality merchandise at a value for our

customers as we scale and gain more access to purchase directly from major manufacturers.

We also plan to leverage and expand our Ollie’s Army database marketing strategies.

In addition, we plan to continue to manage our selling, general, and

administrative expenses (“SG&A”) by continuing to make process improvements and by maintaining our standard policy of reviewing our operating costs.

Our ability to grow and our results of operations may be impacted by additional factors and uncertainties, such as consumer spending habits, which are subject to macroeconomic conditions and changes in discretionary

Our customers’ discretionary income is primarily impacted by gas prices, wages, rising interest rates, inflation, and consumer trends and preferences, which fluctuate depending on the environment.

The potential consolidation of our

competitors or other changes in our competitive landscape could also impact our results of operations or our ability to grow, even though we compete with a broad range of retailers.

Our key competitive advantage is our direct buying relationships with many major manufacturers, wholesalers, distributors, brokers, and retailers for our brand name closeout products and unbranded goods.

augment our product mix with private label brands.

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

How We Assess the Performance of Our Business and Key Line Items

We consider a variety of financial and operating measures in assessing the performance of our business.

The key measures we use are number of new stores, net sales, comparable store sales, gross profit and gross

margin, SG&A, pre-opening expenses, operating income, EBITDA, and Adjusted EBITDA.

Number of New Stores

While we are focused on driving comparable store sales and managing our expenses, the biggest driver of our net sales and profitability growth has historically been the opening of new stores.

As we continue to grow,

we believe we will have greater access to brand name closeout merchandise and an increased deal selection, resulting in more potential offerings for our customers.

Our ability to grow and our results of operations may be impacted by additional factors and uncertainties, such as consumer spending levels, which are subject to macroeconomic conditions and changes in discretionary

Our customers’ discretionary income is impacted by changes in wages, gasoline and energy prices, interest rates, inflation, housing prices, rental rates, and consumer trends and preferences.

The potential consolidation of our competitors

or other changes in our competitive landscape could also impact our results of operations or our ability to grow.

However, because we offer a broad selection of merchandise at extreme values, we believe we are generally less impacted than other

retailers by economic cycles that correspond with declines in general consumer spending habits.

We believe we also benefit from periods of increased consumer spending.

Management looks at a number of financial and operating measures in assessing the performance of the business, including new store openings, net sales, comparable store sales, gross profit and gross margin, operating

expenses, operating income, earnings per share, EBITDA, and Adjusted EBITDA.

The number of new stores reflects the number of stores opened during a particular reporting period.

2 unchanged sentences

We also make initial capital investments in fixtures and equipment, which we amortize over time.

We opened 50 new stores in 2024.

We expect new store growth to be the primary driver of our sales growth.

Our initial lease terms are approximately seven years with options to renew for three to

five successive five-year periods.

Our portable and predictable real estate model focuses on backfilling existing markets and entering new markets in contiguous states.

Our new stores often open with higher sales levels as a result of greater

advertising and promotional spend in connection with grand opening events, but decline shortly thereafter to our new store model levels.

We recognize retail sales in our stores when merchandise is sold and the customer takes possession of the merchandise.

Also included in net sales is revenue allocated to certain redeemed discounts earned via the

Ollie’s Army loyalty program, gift card breakage, and income from our co-branded credit card program.

Net sales are presented net of returns and sales tax.

Net sales consist of sales from comparable stores and non-comparable stores, described

below under “Comparable Store Sales.” Growth of our net sales is primarily driven by the expansion of our store base in existing and new markets.

As we continue to grow, we believe we will have greater access to brand name closeout merchandise

and an increased deal selection, resulting in more potential offerings for our customers.

Net sales are impacted by product mix, merchandise mix and availability, as well as promotional activities and the spending habits of our customers.

broad selection of offerings across diverse product categories supports growth in net sales by attracting new customers, which results in higher spending levels and frequency of shopping visits from our customers, including Ollie’s Army members.

The spending habits of our customers are subject to macroeconomic conditions and changes in discretionary income.

Our customers’ discretionary income is primarily impacted by gas prices, wages, inflation, and

consumer trends and preferences, which fluctuate depending on the environment.

However, because we offer a broad selection of merchandise at extreme values, we believe we are generally less impacted than other retailers by economic cycles that

correspond with declines in general consumer spending habits.

We believe we also benefit from periods of increased consumer spending.

Comparable Store Sales

Sales of new stores are typically strong in the first few months of operation because of the advertising and

marketing spending associated with a new store grand opening and the word of mouth in the local community.

Comparable store sales measure performance of a store during the current reporting period against the performance of the same store in the corresponding period of the previous year.

1 unchanged sentence

net sales from our stores beginning on the first day of the sixteenth full fiscal month following the store’s opening, which is when we believe comparability is achieved.

Comparable store sales are impacted by the same factors that impact net

We define comparable stores to be stores that:

have been remodeled while remaining open;

are closed for five or fewer days in any fiscal month;

are closed temporarily and relocated within their respective trade areas;

have expanded, but are not significantly different in size, within their current locations.

Non-comparable store sales consist of new store sales and sales for stores not open for a full 15 months.

Stores which are closed temporarily, but for more than five days in any fiscal month, are included in

non-comparable store sales beginning in the fiscal month in which the temporary closure begins until the first full month of operation once the store re-opens, at which time they are included in comparable store sales.

Opening new stores is the primary component of our growth strategy and as we continue to execute on our growth strategy, we expect a significant portion of our sales growth will be attributable to non-comparable

Accordingly, comparable store sales are only one measure we use to assess the success of our growth strategy.

Gross Profit and Gross Margin

Stores that remain open during a remodel or refresh process, stores that are

relocated within the same trade area, and stores that changed in size are generally classified in the same way as the original store, and we believe that the impact to our change in consolidated comparable store sales percentage is immaterial.

Comparable store sales are also referred to as “same-store” sales by other retail companies.

Gross profit is equal to our net sales less our cost of sales.

Cost of sales includes merchandise costs, inventory markdowns, shrinkage and transportation, distribution, and warehousing costs, including depreciation

and amortization.

Gross margin is gross profit as a percentage of our net sales.

Gross margin is a measure used by management to indicate whether we are selling merchandise at an appropriate gross profit.

In addition, our gross margin is impacted by product mix, as some products generally provide higher gross margins, by our merchandise mix and availability, and by our merchandise cost, which can vary.

Our gross profit is variable in nature and generally follows changes in net sales.

We regularly analyze the components of gross profit, as well as gross margin.

Specifically, our product margin and merchandise mix

is reviewed by our merchant team and senior management, ensuring strict adherence to internal margin goals.

Our disciplined buying approach has produced consistent gross margins and we believe helps to mitigate adverse impacts on gross profit and

results of operations.

The components of our cost of sales may not be comparable to the components of cost of sales or similar measures of our competitors and other retailers.

As a result, our gross profit and gross margin may not be

comparable to similar data made available by our competitors and other retailers.

Selling, General, and Administrative Expenses

SG&A are comprised of payroll and benefits for store, field support, and support center associates.

SG&A also include marketing and advertising expense, occupancy costs for stores and the store support

center, insurance, corporate infrastructure, and other general expenses.

The components of our SG&A remain relatively consistent per store and for each new store opening.

SG&A generally increase as we grow our store base and as our net

sales increase.

A significant portion of our expenses is primarily fixed in nature, and we expect to continue to maintain strict discipline while carefully monitoring SG&A as a percentage of net sales.

We expect that our SG&A will continue

to increase in future periods with future growth.

The components of our SG&A may not be comparable to the components of SG&A or similar measures of our competitors and other retailers.

As a result, our SG&A may not be comparable to similar data made

available by our competitors and other retailers.

Depreciation and Amortization Expenses

Property and equipment are stated at original cost less accumulated depreciation and amortization.

Depreciation and amortization expenses are calculated over the estimated useful lives of the

related assets, or in the case of leasehold improvements, the lesser of the useful lives or the remaining term of the lease.

Expenditures for additions, renewals, and betterments are capitalized;

expenditures for maintenance and repairs are charged

to expense as incurred.

Depreciation and amortization are computed on the straight-line method for financial reporting purposes.

Depreciation and amortization as it relates to our distribution centers is included within cost of sales on the

consolidated statements of income.

Pre-Opening Expenses

Pre-opening expenses consist of expenses of opening new stores and distribution centers, as well as store remodel and store closing costs.

For opening new stores, pre-opening expenses include grand opening

advertising costs, payroll expenses, travel expenses, employee training costs, rent expenses, and store setup costs.

Pre-opening expenses for new stores are expensed as they are incurred, which is typically within 30 to 45 days of opening a new

For opening distribution centers, pre-opening expenses primarily include inventory transportation costs, employee travel expenses, and occupancy costs.

Store remodel costs primarily consist of payroll expenses, travel expenses, and store

setup costs expensed as they are incurred.

Store closing costs primarily consist of insurance deductibles, rent, and store payroll.

Operating Income

Operating income is gross profit less SG&A, depreciation and amortization, and pre-opening expenses.

Operating income excludes net interest income or expense, and income tax expense.

We use operating income as

an indicator of the productivity of our business and our ability to manage expenses.

EBITDA and Adjusted EBITDA

Included in cost of sales are:

merchandise costs, inventory markdowns, inventory shrinkage and transportation, distribution, and warehousing costs,

including wages, benefits, and depreciation and amortization.

Selling, general, and administrative (SG&A) expenses are comprised of wages and benefits for store, field support, and support center associates.

SG&A expenses also include marketing and advertising expense,

occupancy and operating costs for stores and the store support center, insurance, corporate infrastructure, and other general expenses.

Pre-opening expenses consist of all expenses associated with the opening of new stores and distribution centers, as well as all expenses associated with the remodel and/or closing of an existing store.

The method of calculating comparable store sales, gross profit, SG&A and pre-opening expenses varies across the retail industry.

As a result, our calculation of these items may not necessarily be compatible with

similarly titled measures reported by other retail companies.

EBITDA and Adjusted EBITDA are key metrics used by management and our Board to assess our financial performance.

1 unchanged sentence

parties to evaluate companies in our industry.

We use Adjusted EBITDA to supplement U.S.

Generally Accepted Accounting Principles (“GAAP”) measures of performance to evaluate the effectiveness of our

business strategies, to make budgeting decisions, to evaluate our performance in connection with compensation decisions and to compare our performance against that of other peer companies using similar measures.

Management believes it is useful to

investors and analysts to evaluate these non-GAAP measures on the same basis as management uses to evaluate the Company’s operating results.

We believe that excluding items from operating income, net income, and net income per diluted share that

may not be indicative of, or are unrelated to, our core operating results, and that may vary in frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.

We use Adjusted EBITDA to supplement GAAP measures of performance to evaluate the effectiveness of our business strategies, to make budgeting decisions, to evaluate our performance in connection with

compensation decisions and to compare our performance against that of other peer companies using similar measures.

Management believes it is useful to investors and analysts to evaluate these non-GAAP measures on the same basis as management uses

to evaluate the Company’s operating results.

We believe that excluding items from operating income, net income, and net income per diluted share that may not be indicative of, or are unrelated to, our core operating results, and that may vary in

frequency or magnitude, enhances the comparability of our results and provides a better baseline for analyzing trends in our business.

We define EBITDA as net income before net interest income or expense, depreciation and amortization expenses, and income taxes.

11 unchanged sentences

This section includes comparisons of certain 2025 financial information to the same information for 2024.

Year-to-year comparisons of the 2023 financial information to the same information for fiscal 2022, the

52-week period ended January 28, 2023 (“2022”), are contained in Item 7 of our Form 10-K for 2023 filed with the SEC on March 27, 2024 and available through the SEC’s website at https://www.sec.gov/edgar/searchedgar/companysearch.html.

Year-to-year comparisons of the 2024 financial information to the same information

for fiscal 2023, the 53-week period ended February 3, 2024 (“2023”), are contained in Item 7 of our Form 10-K for 2024 filed with the SEC on March 26, 2025, as amended on April 11, 2025, and available through the SEC’s website at

https://www.sec.gov/edgar/searchedgar/companysearch.html.

The following tables summarize key components of our results of operations for 2025 and 2024, both in dollars and as a percentage of our net sales.

40 unchanged sentences

increase of 3.7%.

Excluding the 53rd week, sales increased 9.8% year over year.

Comparable store sales increased 3.7% in 2025 compared with a 2.8% increase in 2024.

1 unchanged sentence

Gross Profit and Gross Margin

Gross profit increased to $914.5 million in 2024 from $832.4 million in 2023, an increase of $82.1 million, or 9.9%.

Gross profit increased to $1.073 billion in 2025 from $914.5 million in 2024, an increase of $158.5 million, or 17.3%.

Gross margin increased 20 basis points to 40.5% in 2025 from 40.3% in 2024.

The increase in gross

margin in fiscal 2024 is primarily due to favorable supply chain costs.

The increase in

gross margin in fiscal 2025 is primarily due to higher merchandise margins, partially offset by higher supply chain costs, including incremental tariff expense.

Selling, General, and Administrative Expenses

SG&A increased to $709.0 million in 2025 from $612.4 million in 2024, an increase of $96.6 million, or 15.8%.

Included in SG&A expenses in 2024 is a one-time expense of $5.5 million for the accelerated

expense resulting from the modification of existing equity awards for our Executive Chairman.

Excluding this one-time expense, SG&A increased 7.9% to $606.9 million in 2024 from $562.7 million in 2023.

This increase was primarily driven by

higher selling expenses associated with our new store unit growth.

As a percentage of net sales, SG&A, exclusive of the one-time stock awards expense, decreased 10 basis points to 26.7% in 2024 from 26.8% in 2023.

This decrease is primarily

the result of increased leverage of fixed expenses from the increase in comparable store sales.

Excluding a one-time expense of $5.5 million for the accelerated expense resulting from the

modification of existing equity awards for our Executive Chairman in 2024, SG&A increased 16.8% to $709.0 million in 2025 from $606.9 million in 2024.

This increase was primarily driven by higher selling expenses related to new store growth.

As a percentage of net sales, SG&A, exclusive of the one-time stock awards expense, increased 10 basis points to 26.8% in 2025 from 26.7% in 2024.

This increase is primarily the result of higher medical and casualty claims, partially offset by

the leverage of fixed costs from higher sales and optimization efforts in marketing.

Depreciation and Amortization Expenses

Depreciation and amortization expenses increased to $33.2 million in 2024 from $27.8 million in 2023, an increase of $5.4 million, or 19.4%, the result of the i ncreased asset

base due to new store growth and investments in existing stores .

Depreciation and amortization expenses increased to $41.0 million in 2025 from $33.2 million in 2024, an increase of $7.8 million, or 23.4%, resulting from the increased asset base due to new store growth and

investments in existing stores.

Pre-Opening Expenses

Pre-opening expenses increased to $25.3 million in 2025 from $19.3 million in 2024, an increase of $6.0 million, or 30.9%.

The increase is primarily due to the earlier timing of new store openings in fiscal 2025 as

compared to fiscal 2024, start-up costs related to opening the Princeton, IL distribution center, and dark rent expense associated with the bankruptcy acquired new store locations.

We opened 50 new stores and closed three stores in 2024 compared

with having opened 45 new stores and closed one store in 2023.

The increase was primarily driven by new store growth and dark rent expense of $5.2 million

associated with the bankruptcy acquired stores.

We opened 86 stores in 2025 compared to 50 stores opened and three stores closed in 2024.

Of the 86 store openings, 63 of these were bankruptcy acquired leases that carried higher levels of dark

As a percentage of net sales, pre-opening expenses increased 10 basis points to 1.0% in 2025 from 0.9% in 2024.

1 unchanged sentence

Interest income, net was $18.7 million in 2025 compared with $16.3 million in 2024.

The increase in interest income, net in 2024 is primarily due to higher average cash and cash equivalent and short-term investments

balances compared to 2023.

The increase in interest income, net in 2025 is primarily due to higher average cash and cash equivalent and investments balances,

partially offset by lower interest rates.

Income Tax Expense

1 unchanged sentence

The effective tax rates for 2025 and 2024 were 24.0% and 24.9%, respectively.

The variance in

the effective tax rates between the periods was primarily due to an increase in discrete tax benefits related to stock-based compensation.

Discrete tax benefits totaled $2.8 million and $1.1 million in 2024 and 2023, respectively.

information, see Note 8 under “Notes to Consolidated Financial Statements.”

The decrease in

the effective tax rate was driven by the impact of discrete items recognized, primarily lower excess tax benefits related to stock-based compensation, partially offset by the impact of higher non-deductible compensation.

For further information,

see Note 8 under “Notes to Consolidated Financial Statements.”

As a result of the foregoing, net income increased to $240.6 million in 2025 from $199.8 million in 2024, an increase of $40.8 million, or 20.4%.

1 unchanged sentence

Adjusted EBITDA increased to $366.0 million in 2025 from $313.1 million in 2024, an increase of $52.9 million, or 16.9%.

Adjusted EBITDA margin was 13.8% for 2025 and 2024.

Liquidity and Capital Resources

Our primary sources of liquidity are net cash flows provided by operating activities and available borrowings under our $100.0 million Revolving Credit Facility.

As of February 1, 2025, we had $428.7 million of cash

As of January 31, 2026, we had $296.3 million of cash

and cash equivalents and short-term investments on hand and $86.5 million available to borrow under our Revolving Credit Facility.

7 unchanged sentences

respectively.

We opened 50 new stores and closed three store in 2024.

Capital expenditures in 2025 are planned to be approximately $83 to $88 million, primarily for the opening of 75 new stores, store-level initiatives at our existing stores, as well as general corporate capital

expenditures, including information technology.

We opened 86 new stores in 2025.

Capital expenditures in 2026 are planned to be approximately $103 to $113 million, primarily for the opening of 75 new stores, store-level initiatives at our existing stores, the expansion of two existing

distribution centers, as well as general corporate capital expenditures, including information technology.

We have experienced, and may continue to experience, delays in construction and permitting of new stores and other projects.

16 unchanged sentences

Share Repurchase Program

On December 15, 2020, the Board of Directors of the Company authorized the repurchase of up to $100.0 million of shares of the Company’s common stock.

On March 16, 2021, the Board of Directors of the Company

authorized an increase of $100.0 million in the Company’s share repurchase program, resulting in $200.0 million approved for share repurchases through January 13, 2023.

On November 30, 2021, the Board authorized an additional $200.0 million to

repurchase stock pursuant to the Company’s share repurchase program, expiring on December 15, 2023.

On November 30, 2023, the Company’s Board of Directors authorized an extension to the existing share repurchase program set to expire on December

15, 2023, until March 31, 2026.

On March 19, 2025, the Company announced the Board of Directors approved a new share repurchase authorization of an additional $300.0 million of the Company’s outstanding common stock, effective through March 31,

The shares to be repurchased may be purchased from time to time in open market conditions (including blocks), privately negotiated transactions, accelerated share repurchase programs or other derivative transactions, issuer self-tender

offers or any combination of the foregoing.

The timing of repurchases and the actual amount purchased will depend on a variety of factors, including the market price of our shares, general market, economic and business conditions, and other

corporate considerations.

Repurchases may be made pursuant to plans intended to comply with Rule 10b5-1 under the Securities Exchange Act of 1934, which could allow us to purchase our shares during periods when we otherwise might be prevented from

doing so under insider trading laws or because of self-imposed trading blackout periods.

Repurchases are expected to be funded from cash on hand or through the utilization of our Revolving Credit Facility.

The repurchase authorization does not

require the purchase of a specific number of shares and is subject to suspension or termination by our Board of Directors at any time.

In December 2020, our Board of Directors authorized common stock repurchases under a share repurchase program.

The authorized amount of the program, which has been increased from time to time, is authorized for up

to $700.0 million of the Company’s stock as of January 31, 2026.

The share repurchase program is effective through March 31, 2029.

The shares to be repurchased may be purchased from time to time in open market conditions (including blocks),

privately negotiated transactions, accelerated share repurchase programs or other derivative transactions, issuer self-tender offers or any combination of the foregoing.

The timing of repurchases and the actual amount purchased will depend on a

variety of factors, including the market price of our shares, general market, economic and business conditions, and other corporate considerations.

Repurchases may be made pursuant to plans intended to comply with Rule 10b5-1 under the Securities

Exchange Act of 1934, which could allow us to purchase our shares during periods when we otherwise might be prevented from doing so under insider trading laws or because of self-imposed trading blackout periods.

Repurchases are expected to be

funded from cash on hand or through the utilization of our Revolving Credit Facility.

The repurchase authorization does not require the purchase of a specific number of shares and is subject to suspension or termination by our Board at any time.

During 2025, we repurchased 636,640 shares of our common stock for $73.8 million, inclusive of transaction costs, pursuant to our share repurchase program, and during 2024, we repurchased 639,788 shares of our common

1 unchanged sentence

These expenditures were funded by cash generated from operations.

As of February 1, 2025, we had approximately $32.7 million remaining under our share repurchase authorization.

As of January 31, 2026, we had approximately $258.8 million remaining under our share repurchase authorization.

be no assurances that any additional repurchases will be completed, or as to the timing or amount of any repurchases.

8 unchanged sentences

Net cash provided by operating activities in 2025 totaled $296.5 million compared with $227.5 million in 2024.

The decrease in net cash provided by operating activities in 2024 was primarily due to changes in

working capital, most notably the timing of tax and merchandise payments, partially offset by higher net income year over year.

Operating cash flow was positively impacted by higher net income, the timing of merchandise payments,

and higher operating expense related accruals, partially offset by an increase in inventory resulting from new store growth.

Cash Used in Investing Activities

Net cash used in investing activities totaled $179.9 million in 2025 compared with $255.3 million in 2024.

The increase in cash used in investing activities is primarily due to a larger investment in capital

expenditures related to the development of new stores, the completion of our fourth distribution center in Princeton, IL, the acquisition of former 99 Cents Only Store locations and the acquisition of former Big Lots store leases, and purchases of

short-term investments of $482.7 million in the current year, partially offset by maturities of short-term investments of $347.5 million.

Cash used in investing activities includes purchases of property and equipment of $101.9 million and

purchases of investments, net of maturities, of $78.3 million.

Cash Used in Financing Activities

Net cash used in financing activities totaled $62.1 million in 2025 compared with $33.3 million in 2024.

The change in cash outflow in 2024 is primarily due to $24.0 million of proceeds from stock option exercises

in fiscal 2024 as compared to $6.7 million of proceeds from stock option exercises in fiscal 2023.

Cash used in financing activities reflects payments of $73.8 million for the

repurchase of common stock, partially offset by $18.7 million of proceeds from stock option exercises.

Credit Facilities

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”).

In addition, the Company may at any time add term loan facilities or additional revolving commitments up to $150.0 million pursuant to terms and conditions set out

in the Credit Facility.

On January 9, 2024, the Company refinanced its credit facility (the “Credit Facility”), pursuant to which the maturity date for any loans under the revolving credit facility was extended for a period of five years and a zero

percent (0.0%) interest rate floor was added to the option for the SOFR Loan Rate (as defined in the Amendment).

The Company’s 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”).

In addition, the Company may at any time add term loan facilities or additional revolving commitments up to $150.0 million pursuant to terms and conditions set out in the Credit Facility.

On January 9, 2024, the

Company refinanced its Credit Facility, pursuant to which the maturity date for any loans under the revolving credit facility was extended for a period of five years and a zero percent (0.0%) interest rate floor was added to the option for the SOFR

Loan Rate (as defined in the Amendment).

Loans under the Revolving Credit Facility mature on January 9, 2029.

5 unchanged sentences

The SOFR Loan Rate is subject to a 0% floor.

Under the terms of the Revolving Credit Facility, as of February 1, 2025, we could borrow up to 90.0% of the most recent appraised value (valued at cost, discounted for the current net orderly liquidation value) of

Under the terms of the Revolving Credit Facility, as of January 31, 2026, we could borrow up to 90.0% of the most recent appraised value (valued at cost, discounted for the current net orderly liquidation value) of

our eligible inventory, as defined, up to $100.0 million.

As of February 1, 2025, we had no outstanding borrowings under the Revolving Credit Facility, with $85.8 million of borrowing availability, outstanding letters of credit commitments of $14.0 million and $0.2 million

As of January 31, 2026, we had no outstanding borrowings under the Revolving Credit Facility, with $86.5 million of borrowing availability, outstanding letters of credit commitments of $13.3 million and $0.2 million

of rent reserves.

6 unchanged sentences

of the Credit Facility during 2025.

The provisions of the Credit Facility restrict all of the net assets of the Company’s consolidated subsidiaries, which constitutes all of the net assets on our consolidated balance sheet as of February 1, 2025, from

being used to pay any dividends or make other restricted payments to the Company without prior written consent from the financial institutions that are a party to the Credit Facility, subject to material exceptions including proforma compliance

2 unchanged sentences

We enter into long-term contractual obligations and commitments in the normal course of business, primarily operating leases.

The following table summarizes our material cash requirements over the next several periods from known contractual

obligations, including contractual lease obligations:

The following table summarizes our material cash requirements over the next several

periods from known contractual obligations, including contractual lease obligations:

Less than 1 year

4 unchanged sentences

Operating lease payments exclude $49.7 million of legally binding minimum lease payments for leases signed but not yet commenced.

Purchase obligations are primarily for materials and construction agreements for new store build-outs and purchase commitments for

material handling equipment at the Company’s distribution centers.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial

condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Purchase obligations are primarily for materials and construction agreements for new store build-outs and distribution center expansion as well as purchase

commitments for material handling equipment at the Company’s distribution centers.

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of

operations, liquidity, capital expenditures or capital resources that is material to investors.

Our business is seasonal in nature and demand is generally the highest in our fourth fiscal quarter due to the holiday sales season.

9 unchanged sentences

Our consolidated financial statements have been prepared in accordance with GAAP.

A summary of our significant accounting policies can be found in Note 1 to our audited

consolidated financial statements included elsewhere in this Annual Report on Form 10-K.

The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets,

liabilities, revenues, expenses, and related disclosures.

A summary of our significant accounting policies can be found in Note 1 to our audited consolidated financial statements included

elsewhere in this Annual Report on Form 10-K.

The preparation of these consolidated financial statements requires us to make judgments and estimates that affect the reported amounts of assets, liabilities, revenues, expenses, and related

These judgments and estimates are based on historical and other factors believed to be reasonable under the circumstances.

We have identified the policies below as critical to

our business operations and understanding of our results of operations.

We have identified the policies below as critical to our business operations and understanding of our results

of operations.

Inventories are stated at the lower of cost or market determined using the retail inventory method on a first-in, first-out basis.

The cost of inventories includes the merchandise cost,

transportation costs, and certain distribution and storage costs.

The cost of inventories includes the merchandise cost, transportation costs, and

certain distribution and storage costs.

Such costs are thereafter expensed as cost of sales upon the sale of the merchandise.

Under the retail inventory method, which is widely used in the retail industry, inventory is segregated into departments of merchandise having similar characteristics.

The valuation of

inventories and the resulting gross profit is derived by applying a calculated cost-to-retail ratio to the retail value of inventories for each department.

Inherent in the retail inventory method are certain management judgments and estimates including, among others, merchandise markups, the amount and timing of permanent markdowns, and shrinkage,

which may significantly impact both the ending inventory valuation and gross profit.

Factors considered in the determination of permanent markdowns include uncertainties related to inventory obsolescence, excess inventories, current and anticipated demand, age of the merchandise

and customer preferences.

A significant increase in the demand for merchandise could result in a short-term increase in inventory purchases while a significant decrease in demand could result in an increase in the amount of excess inventory

quantities on-hand.

The valuation of inventories and the resulting

gross profit is derived by applying a calculated cost-to-retail ratio to the retail value of inventories for each department.

Inherent in the retail inventory method are certain management judgments and estimates including, among others, merchandise markups, the amount and timing of permanent markdowns, and shrinkage, which may

significantly impact both the ending inventory valuation and gross profit.

Factors considered in the determination of permanent markdowns include uncertainties related to inventory obsolescence, excess inventories, current and anticipated demand, age of the merchandise and customer

If our inventory is determined to be overvalued in the future, we would be required to recognize such costs in cost of sales and reduce operating income at the time of such determination.

Therefore, although every effort is

made to ensure the accuracy of forecasts of merchandise demand, any significant unanticipated changes in demand or in economic conditions within our markets could have a significant impact on the value of our inventory and reported operating

Therefore, although every effort is made to

ensure the accuracy of forecasts of merchandise demand, any significant unanticipated changes in demand or in economic conditions within our markets could have a significant impact on the value of our inventory and reported operating results.

Similarly, if higher than anticipated levels of shrinkage were to occur, it could have a material effect on our results of operations.

We calculate our shrink provision based on actual physical inventory results during the fiscal period

and an accrual for estimated shrink occurring subsequent to a physical inventory through the end of the fiscal reporting period.

This accrual is calculated as a percentage of sales for each retail store, at a department level, based on the

company’s most recent historical shrink rate adjusted, if necessary, for current economic conditions and business trends.

To the extent that subsequent physical inventories yield different results than the estimated accrual, our effective shrink

rate for a given reporting period will include the impact of adjusting to the actual results.

We have not made any material changes in the methodology used to recognize permanent markdowns or inventory shrinkage in the financial periods presented nor do we anticipate material changes in

assumptions we use for permanent markdowns or shrinkage.

We calculate our shrink provision based on actual physical inventory results during the fiscal period and an

accrual for estimated shrink occurring subsequent to a physical inventory through the end of the fiscal reporting period.

This accrual is calculated as a percentage of sales for each retail store, at a department level, based on the Company’s most

recent historical shrink rate adjusted, if necessary, for current economic conditions and business trends.

To the extent that subsequent physical inventories yield different results than the estimated accrual, our effective shrink rate for a given

reporting period will include the impact of adjusting to the actual results.

We have not made any material changes in the methodology used to recognize permanent markdowns or inventory shrinkage in the financial periods presented nor do we anticipate material changes in assumptions we use for

permanent markdowns or shrinkage.

As previously stated, however, if our actual experience does not accurately reflect our assumptions and forecasts, we may be exposed to losses or gains that could be material.

10% change in our assumptions as of February 1, 2025 would have impacted net income by approximately $1.0 million in 2024.

We believe a 10% change in our

assumptions as of January 31, 2026 would have impacted net income by approximately $1.6 million in 2025.

Goodwill/Intangible Assets

We amortize intangible assets over their useful lives unless we determine such lives to be indefinite.

Goodwill and intangible assets having indefinite useful lives are not amortized to earnings,

but instead are subject to annual impairment testing or more frequently if events or circumstances indicate that the value of goodwill or intangible assets having indefinite useful lives might be impaired.

Goodwill and intangible assets having indefinite useful lives are not amortized to earnings, but instead are

subject to annual impairment testing or more frequently if events or circumstances indicate that the value of goodwill or intangible assets having indefinite useful lives might be impaired.

Goodwill and intangible assets having indefinite useful lives are tested for impairment annually in the fiscal month of October.

We have the option to evaluate qualitative factors to determine if

it is more likely than not that the carrying amount of our sole reporting unit or our nonamortizing intangible assets (consisting of a tradename) exceed their implied respective fair value and whether it is necessary to perform a quantitative

analysis to determine impairment.

As part of this qualitative assessment, we weigh the relative impact of factors that are specific to our sole reporting unit or our nonamortizing intangible assets as well as industry, regulatory and macroeconomic

factors that could affect the inputs used to determine the fair value of the assets.

If management determines a quantitative goodwill impairment test is required, or it elects to perform a quantitative test, the test is performed by determining the fair value of our sole

reporting unit.

Fair value is determined based on our public market capitalization.

The carrying value of goodwill is considered impaired when the reporting unit’s fair value is less than its carrying value and the Company would record an

impairment loss equal to the difference, not to exceed the total amount of goodwill allocated to the reporting unit.

If management determines a quantitative analysis of intangible assets having indefinite useful lives is required, the test is performed using the discounted cash flow method based on management’s

projection of future revenues and an estimated royalty rate to determine the fair value of the asset, specifically, our tradename.

An impairment loss is recognized for any excess of the carrying amount of the asset over the implied fair value of

Our impairment calculations contain uncertainties as they require management to make assumptions and apply judgment to qualitative factors as well as estimate future cash flows by forecasting

financial performance.

We have the option to evaluate qualitative factors to determine if it is more likely

than not that the carrying amount of our sole reporting unit or our nonamortizing intangible assets (consisting of a tradename) exceed their implied respective fair value and whether it is necessary to perform a quantitative analysis to determine

affect the inputs used to determine the fair value of the assets.

If management determines a quantitative goodwill impairment test is required, or it elects to perform a quantitative test, the test is performed by determining the fair value of our sole reporting unit.

Fair value is

determined based on our public market capitalization.

The carrying value of goodwill is considered impaired when the reporting unit’s fair value is less than its carrying value and the Company would record an impairment loss equal to the

difference, not to exceed the total amount of goodwill allocated to the reporting unit.

If management determines a quantitative analysis of intangible assets having indefinite useful lives is required, the test is performed using the discounted cash flow method based on management’s projection of future

revenues and an estimated royalty rate to determine the fair value of the asset, specifically, our tradename.

An impairment loss is recognized for any excess of the carrying amount of the asset over the implied fair value of that asset.

Our impairment calculations contain uncertainties as they require management to make assumptions and apply judgment to qualitative factors as well as estimate future cash flows by forecasting financial performance.

Our policy is to conduct impairment testing based on our most current business plans, which reflect anticipated changes in the economy and the retail industry.

Should significant changes in our overall business strategy,

future results or economic events cause us to adjust our projected cash flows, future estimates of fair value may not support the carrying amount of these assets.

If actual results prove inconsistent with our assumptions and judgments, we could be

exposed to an impairment charge.

Should significant changes in our overall business strategy, future results or economic

events cause us to adjust our projected cash flows, future estimates of fair value may not support the carrying amount of these assets.

If actual results prove inconsistent with our assumptions and judgments, we could be exposed to an impairment

For 2025 and 2024, we completed an impairment test of our goodwill and determined that no impairment of goodwill existed.

Similarly, for 2024 and 2023, we completed an impairment test of our

tradename and determined that no impairment of the asset existed.

Similarly, for 2025 and 2024, we completed an impairment test of our tradename and determined

that no impairment of the asset existed.

Quantitative and Qualitative Disclosures about Market Risks

Interest Rate Risk

Our operating results are subject to risk from interest rate fluctuations on our Credit Facility, which carries variable interest rates.

As of January 31, 2026, our Credit Facility consisted solely of a Revolving

Credit Facility with advances tied to a borrowing base.

Because our Credit Facility bears interest at a variable rate, we are exposed to market risks relating to changes in interest rates.

As of January 31, 2026, we had no outstanding variable

rate debt under our Revolving Credit Facility.

We do not use derivative financial instruments for speculative or trading purposes, but this does not preclude our adoption of specific hedging strategies in the future.

Impact of Inflation

Our results of operations and financial condition are presented based on historical cost.

While it is difficult to accurately measure the impact of inflation due to the imprecise nature of the estimates required, we

believe the effects of inflation, if any, on our historical results of operations and financial condition have been immaterial.

We cannot be assured that our results of operations and financial condition will not be materially impacted by inflation

in the future.

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 7. Management’s Discussion and Analysis