SHOE STATION GROUP INC 10-K

ITEM 2. PROPERTIES Physical Stores As of our Fiscal 2023 year end, we leased our 400 stores located across 35 states and Puerto Rico. Approximately 96% of the leases for our existing stores provide for fixed minimum rentals and approximately 54% provide for contingent rental payments based upon various specified percentages of sales. Certain leases also contain escalation clauses for increases in minimum rentals, operating costs and taxes. Our traditional Shoe Carnival store prototype typically utilizes between 8,000 and 12,000 square feet of leased space and our Shoe Station store prototype utilizes between 12,000 to 20,000 square feet of leased space. The sales area comprises substantially all (greater than 80%) of our typical gross store footprint. Following is a roll forward of our leased locations over the last five years: Historical Store Count Fiscal Years 2023 2022 2021 2020 2019 Stores open at the beginning of the year 397 393 383 392 397 New store openings 5 4 1 4 1 Stores acquired 0 0 21 0 0 Store closings (2 ) 0 (12 ) (13 ) (6 ) Stores open at the end of the year 400 397 393 383 392 Stores relocated 0 0 2 0 4 Over the last several years, we performed a store improvement plan. As part of that plan, which was completed in Fiscal 2021, we identified underperforming stores and worked to address these stores' performance through renegotiation of lease terms, relocation, or closure. While we continue to actively monitor the store portfolio, we do not expect any further significant closures over the next several years. The following table identifies the number of our stores in each state and Puerto Rico as of our Fiscal 2023 year end: State/Territory State/Territory Alabama 22 New Jersey 1 Arkansas 10 New York 2 Arizona 3 North Carolina 18 Colorado 3 North Dakota 3 Delaware 1 Ohio 18 Florida 31 Oklahoma 7 Georgia 21 Pennsylvania 11 Idaho 4 Puerto Rico 5 Iowa 11 South Carolina 11 Illinois 31 South Dakota 2 Indiana 26 Tennessee 18 Kansas 5 Texas 48 Kentucky 12 Utah 2 Louisiana 11 Virginia 6 Michigan 13 Wisconsin 3 Missouri 22 West Virginia 6 Mississippi 9 Wyoming 1 Montana 1 Total Stores 400 Nebraska 2 27 Distribution Center Our primary 410,000 square foot distribution center is located in Evansville, Indiana. This facility can support the processing and distribution needs for approximately 470 stores. With additional resources added, including our right to expand the facility by 200,000 square feet, the current location could provide processing capacity for approximately 650 stores. We lease the facility from a third party. The lease expires in 2034. Corporate Headquarters We own our corporate headquarters located in Evansville, Indiana and lease office space for our Southern office located in Fort Mill, South Carolina. ITEM 3. LEGA L PROCEEDINGS From time to time, we are involved in certain legal proceedings in the ordinary course of conducting our business. While the outcome of any legal proceeding is uncertain, we do not currently expect that any such proceedings will have a material adverse effect on our financial position or results of operations. ITEM 4. MINE S AFETY DISCLOSURES Not applicable. 28 PART II