What changed in this filing

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Item 1. Financial Statements

2021-09-03 compared with 2021-06-04 · 138 added, 56 removed, 281 unchanged (41% of the section changed)

3 unchanged sentences

(In thousands, except share data)

July 31, 2021

January 30, 2021

August 1, 2020

Current Assets:

Cash and cash equivalents

Marketable securities

Accounts receivable

27 unchanged sentences

(In thousands, except per share data)

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

Cost of sales (including buying, distribution

12 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

Thirteen Weeks Ended

(In thousands, except per share data)

Balance at May 1, 2021

Dividends declared ($ 0.070 per share)

Employee stock purchase plan purchases

Restricted stock awards

Purchase of common stock for treasury

Stock-based compensation expense

Balance at July 31, 2021

Balance at May 2, 2020

Dividends declared ($ 0.045 per share)

Employee stock purchase plan purchases

Restricted stock awards

Shares surrendered by employees to pay taxes

on restricted stock

Stock-based compensation expense

Balance at August 1, 2020

Twenty-six Weeks Ended

(In thousands, except per share data)

Balance at January 30, 2021

4 unchanged sentences

on restricted stock

Purchase of common stock for treasury

Stock-based compensation expense

Balance at May 1, 2021

Balance at July 31, 2021

Balance at February 1, 2020

5 unchanged sentences

Stock-based compensation expense

Balance at May 2, 2020

Balance at August 1, 2020

See notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

July 31, 2021

August 1, 2020

Cash Flows From Operating Activities

1 unchanged sentence

Adjustments to reconcile net income/(loss) to net cash

provided by (used in) operating activities:

provided by operating activities:

Depreciation and amortization

8 unchanged sentences

Accounts payable and accrued liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash Flows From Investing Activities

Purchases of property and equipment

Investments in marketable securities and other

Net cash used in investing activities

4 unchanged sentences

Dividends paid

Purchase of common stock for treasury

Shares surrendered by employees to pay taxes on restricted stock

Net cash used in financing activities

Net increase (decrease) in cash and cash equivalents

Net increase in cash and cash equivalents

Cash and cash equivalents at beginning of period

11 unchanged sentences

is one of the nation’s largest family footwear retailers, providing customers the convenience of shopping at any of our store locations or online.

We offer customers a broad assortment of dress, casual and athletic footwear for men, women and children with an emphasis on national name brands.

We offer customers a broad assortment of dress, casual and athletic footwear and accessories for men, women and children with an emphasis on national name brands.

We differentiate our retail concept from our competitors by our distinctive, fun and promotional marketing efforts.

6 unchanged sentences

The unaudited Condensed Consolidated Financial Statements should be read in conjunction with the audited Consolidated Financial Statements and the notes thereto contained in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021.

On June 21, 2021, our Board of Directors authorized a two-for-one stock split of the shares of our common stock, which was effected in the form of a dividend.

The stock split entitled each shareholder of record at the close of business on July 6, 2021 to receive one additional share of common stock for each share of common stock owned as of that date and was paid on July 19, 2021.

Upon the completion of the stock split, our outstanding shares increased from approximately 14.1 million shares to approximately 28.2 million shares.

In accordance with the provisions of our 2017 Equity Incentive Plan (the “2017 Plan”) and our Employee Stock Purchase Plan, and as determined by the Compensation Committee of our Board of Directors, the following, among other items, were adjusted to equitably reflect the effect of the two-for-one stock split:

The number of shares reserved and available for issuance;

The number of shares subject to outstanding equity awards;

The exercise prices and maximum gain of our outstanding stock appreciation rights;

The annual diluted net income per share targets associated with our outstanding performance stock units granted under the 2017 Plan.

All share and per share amounts in this quarterly report on Form 10-Q give effect to the stock split and have been adjusted retroactively for all periods presented.

Note 2 - Net Income/(Loss) Per Share

1 unchanged sentence

Thirteen Weeks Ended

July 31, 2021

August 1, 2020

(In thousands, except per share data)

Basic Net Income per Share:

Net income available for basic common shares

and basic net income per share

Diluted Net Income per Share:

Conversion of share-based compensation

Net income available for diluted common

shares and diluted net income per share

Twenty-six Weeks Ended

July 31, 2021

August 1, 2020

(In thousands, except per share data)

Basic Net Income/(Loss) per Share:

Income/(Loss)

Net income/(loss) available for basic common shares

8 unchanged sentences

A small portion of these awards that were outstanding at the beginning of fiscal 2020 had a non-forfeitable right to dividends.

The computation of diluted net income/(loss) per share excluded approximately 3,000 unvested share-settled awards for the first quarter of fiscal 2021 because the impact would be anti-dilutive.

During the first quarter of fiscal 2020, approximately 198,000 unvested share-settled awards were excluded from the computation because the impact would have been anti-dilutive.

No unvested share-settled awards were excluded from the computation of diluted net income/(loss) per share for the thirteen and twenty-six weeks ended July 31, 2021, or the thirteen weeks ended August 1, 2020.

During the twenty-six weeks ended August 1, 2020, approximately 162,000 unvested share-settled awards were excluded from the computation because the impact would have been anti-dilutive.

Note 3 – Recently Issued Accounting Pronouncements

12 unchanged sentences

Our e-commerce platform has been fully operational during the pandemic with e-commerce orders generally fulfilled by our store locations.

Due to the pandemic, we did not have any stores closed as of May 1, 2021 or for extended periods during the first quarter of fiscal 2021.

We did not have any stores closed as of July 31, 2021 or for extended periods during the first six months of fiscal 2021 due to the pandemic.

The COVID-19 pandemic will likely continue to impact our financial condition and results of operations for the foreseeable future.

12 unchanged sentences

Fair Value of Financial Instruments

The following table presents financial instruments that are measured at fair value on a recurring basis at May 1, 2021, January 30, 2021 and May 2, 2020.

The following table presents financial instruments that are measured at fair value on a recurring basis at July 31, 2021, January 30, 2021 and August 1, 2020.

Fair Value Measurements

(In thousands)

As of May 1, 2021

As of July 31, 2021

Cash equivalents - money market mutual funds

Marketable securities - mutual funds that fund

deferred compensation

As of January 30, 2021

Cash equivalents - money market mutual funds

As of May 2, 2020

As of August 1, 2020

Cash equivalents - money market mutual funds

During the second quarter of fiscal 2021, we invested approximately $ 17.5 million in publicly traded mutual funds with readily determinable fair values.

These marketable securities are designed to mitigate volatility in our Condensed Consolidated Statements of Income associated with our non-qualified deferred compensation plan.

As of July 31, 2021, these marketable securities were principally invested in equity-based mutual funds, consistent with the allocation in our deferred compensation plan.

As of July 31, 2021, the balance in our deferred compensation plan was $ 17.5 million, of which $ 6.1 million was in Accrued and other liabilities based on scheduled payments due within the next 12 months and $ 11.4 million was in Deferred compensation.

We classify these marketable securities as current assets because we have the ability to convert the securities into cash at our discretion and these marketable securities are not held in a rabbi trust.

The fair values of cash and cash equivalents, accounts receivable, accounts payable, accrued expenses and other current liabilities approximate their carrying values because of their short-term nature.

Long-Lived Asset Impairment Testing

We periodically evaluate our long-lived assets if events or circumstances indicate that the carrying value may not be recoverable.

We periodically evaluate our long-lived assets for impairment if events or circumstances indicate that the carrying value may not be recoverable.

The carrying value of long-lived assets is considered impaired when the carrying value of the assets exceeds the expected future cash flows to be derived from their use.

2 unchanged sentences

If the estimated, undiscounted future cash flows for a store are determined to be less than the carrying value of the store’s assets, an impairment loss is recorded for the difference between estimated fair value and carrying value.

Assets subject to impairment are adjusted to estimated fair value and, if applicable, an impairment loss is recorded in selling, general

and administrative expenses.

Assets subject to impairment are adjusted to estimated fair value and, if applicable, an impairment loss is recorded in selling, general and administrative expenses.

If the operating lease right-of-use asset is impaired, we would amortize the remaining right-of-use asset on a straight-line basis over the remaining lease term .

1 unchanged sentence

Our estimates are derived from an income-based approach considering the cash flows expected over the remaining lease term for each location.

These projections are primarily based on management’s estimates of store-level sales, exercise of future lease renewal options and the store’s contribution to cash flows and, by their nature, include judgments about how current initiatives will impact future performance.

These projections are primarily based

on management’s estimates of store-level sales, exercise of future lease renewal options and the store’s contribution to cash flows and, by their nature, include judgments about how current initiatives will impact future performance.

We estimate the fair value of operating lease right-of-use assets using the market value of rents applicable to the leased asset, discounted using the remaining lease term.

3 unchanged sentences

If actual operating results or market conditions differ from those anticipated, the carrying value of certain of our assets may prove unrecoverable and we may incur additional impairment charges in the future.

During the thirteen weeks ended May 1, 2021 and May 2, 2020, we recorded impairment charges of $ 724,000 and $ 2.3 million associated with two stores and seven stores, respectively.

During the thirteen and twenty-six weeks ended July 31, 2021, we recorded impairment charges of $ 243,000 and $ 967,000 associated with one store and three stores, respectively.

During the thirteen and twenty-six weeks ended August 1, 2020, we recorded impairment charges of $ 182,000 and $ 2.5 million associated with one store and eight stores, respectively.

These charges were included in selling, general and administrative expenses.

No impairments of operating right-of-use assets have been recorded in either period.

No impairments of operating right-of-use assets have been recorded in any of these periods.

Note 6 - Stock-Based Compensation

2 unchanged sentences

Additionally, we recognize stock-based compensation expense for the discount on shares sold to employees through our Employee Stock Purchase Plan and for cash-settled stock appreciation rights.

Stock-based compensation expense for the employee stock purchase plan was $ 11,000 before the income tax benefit of $ 3,000 for each of the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively.

For the thirteen and twenty-six weeks ended July 31, 2021, stock-based compensation expense for the Employee Stock Purchase Plan was $ 5,000 before the income tax benefit of $ 1,000 and $ 16,000 before the income tax benefit of $ 4,000 , respectively.

For the thirteen and twenty-six weeks ended August 1, 2020, stock-based compensation expense for the Employee Stock Purchase Plan was $ 7,000 before the income tax benefit of $ 2,000 and $ 18,000 before the income tax benefit of $ 6,000 , respectively.

Share-Settled Equity Awards

5 unchanged sentences

Restricted stock units and performance stock units at

The total fair value at grant date of restricted stock units and performance stock units that vested during the thirteen weeks ended May 1, 2021 and May 2, 2020 was $ 3.1 million and $ 4.4 million, respectively.

The weighted-average grant date fair value of restricted stock units and performance stock units granted during the thirteen weeks ended May 1, 2021 and May 2, 2020 was $ 56.42 and $ 14.88 , respectively.

There were no restricted stock awards granted during the thirteen weeks ended May 1, 2021 or May 2, 2020.

There were no restricted stock awards that vested during the thirteen weeks ended May 1, 2021 and the total fair value at grant date of restricted stock awards that vested during the thirteen weeks ended May 2, 2020 was $ 1.2 million.

July 31, 2021

The total fair value at grant date of restricted stock units and performance stock units that vested during the twenty-six weeks ended July 31, 2021 and August 1, 2020 was $ 3.1 million and $ 4.4 million, respectively.

The weighted-average grant date fair value of restricted stock units and performance stock units granted during the twenty-six weeks ended July 31, 2021 and August 1, 2020 was $ 28.21 and $ 7.44 , respectively.

The following table summarizes transactions for our restricted stock and other stock awards:

Average Grant

Date Fair Value

Restricted stock at January 30, 2021

Forfeited or expired

Restricted stock at July 31, 2021

The weighted-average grant date fair value of restricted stock and other stock awards granted during the twenty-six weeks ended July 31, 2021 and August 1, 2020 was $ 32.65 and $ 12.46 , respectively.

The total fair value at grant date of restricted stock and other stock awards that vested during the twenty-six weeks ended July 31, 2021 and August 1, 2020 was $ 26,000 and $ 1.3 million, respectively.

The following table summarizes information regarding stock-based compensation expense recognized for all share-settled equity awards (restricted stock units, performance stock units and restricted stock awards):

(In thousands)

Weeks Ended May 1, 2021

Weeks Ended May 2, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Stock-based compensation expense before the

2 unchanged sentences

Additional income tax (benefit)/expense on vesting of awards

As of May 1, 2021 approximately $ 7.8 million of unrecognized compensation expense remained related to our share-settled equity awards.

As of July 31, 2021 approximately $ 6.2 million of unrecognized compensation expense remained related to our share-settled equity awards.

The cost is expected to be recognized over a weighted average period of approximately 1.2 years.

3 unchanged sentences

The SARs granted during the first quarter of fiscal 2021 will vest and become fully exercisable on March 31, 2022 and any unexercised SARs will expire on March 31, 2024.

SARs granted during the first quarter of fiscal 2020 vested and became fully exercisable on March 31, 2021 and any unexercised SARs will expire on March 31, 2023.

SARs granted during the first quarter of fiscal 2020 vested and became fully exercisable on March 31, 2021.

The remaining unexercised SARs from the first quarter fiscal 2020 grant were exercised in the second quarter of fiscal 2021.

SARs granted during the first quarter of fiscal 2019 vested and became fully exercisable on March 31, 2020.

The remaining unexercised SARs from the first quarter fiscal 2019 grant were exercised in the first quarter of fiscal 2021.

The SARs issued have a defined maximum gain of $ 10.00 over the exercise price of $ 61.88 for awards granted in fiscal 2021 and over the exercise price of $ 13.79 for awards granted in fiscal 2020.

The SARs issued have a defined maximum gain of $ 5.00 over the exercise price of $ 30.94 for awards granted in fiscal 2021.

The following table summarizes the SARs activity:

1 unchanged sentence

Outstanding at January 30, 2021

Outstanding at May 1, 2021

Forfeited or expired

Outstanding at July 31, 2021

The fair value of these liability awards are remeasured, using a trinomial lattice model, at each reporting period until the date of settlement.

Increases or decreases in stock-based compensation expense are recognized over the vesting period, or immediately for vested awards.

The weighted-average fair value of outstanding SAR awards as of May 1, 2021 was $ 2.70 .

The weighted-average fair value of outstanding SAR awards as of July 31, 2021 was $ 2.76 .

The fair value was estimated using a trinomial lattice model with the following assumptions:

July 31, 2021

August 1, 2020

Risk free interest rate yield curve

3 unchanged sentences

Expected volatility

1.92 - 2.92 Years

1.91 - 2.91 Years

Exercise multiple

3 unchanged sentences

Treasury yield curve in effect at the end of the reporting period.

The expected dividend yield was based on our historical quarterly cash dividends, with the assumption that quarterly dividends would continue at that rate.

The expected dividend yield was based on our historical quarterly cash dividends, with the assumption that quarterly dividends would continue at

Expected volatility was based on the historical volatility of our common stock.

2 unchanged sentences

(In thousands)

Weeks Ended May 1, 2021

Weeks Ended May 2, 2020

Stock-based compensation expense/(benefit) before the

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Stock-based compensation expense before the

recognized income tax effect

Income tax effect at statutory rate

As of May 1, 2021, approximately $ 109,000 in unrecognized compensation expense remained related to non-vested SARs.

As of July 31, 2021, approximately $ 167,000 in unrecognized compensation expense remained related to non-vested SARs.

This expense is expected to be recognized over a period of approximately 0.7 years.

2 unchanged sentences

Revenue is disaggregated by product category below.

Net sales and percentage of net sales for the thirteen weeks ended May 1, 2021 and May 2, 2020 were as follows:

Net sales and percentage of net sales for the thirteen and twenty-six weeks ended July 31, 2021 and August 1, 2020 were as follows:

(In thousands)

Thirteen Weeks

Ended May 1, 2021

Ended July 31, 2021

Thirteen Weeks

Ended May 2, 2020

Ended August 1, 2020

Non-Athletics:

Accessories and Other

(In thousands)

Twenty-six Weeks

Ended July 31, 2021

Twenty-six Weeks

Ended August 1, 2020

Non-Athletics:

Accessories and Other

Accounting Policy and Performance Obligations

14 unchanged sentences

The transaction price is the amount of consideration we expect to receive from our customers and is reduced by any stated promotional discounts at the time of purchase.

The transaction price may be variable due to terms that permit customers to exchange

or return products for a refund.

The transaction price may be variable due to terms that permit customers to exchange or return products for a refund.

The implicit contract with the customer reflected in the transaction receipt states the final terms of the sale, including the description, quantity, and price of each product purchased.

8 unchanged sentences

We recognize the related revenue when control has been transferred to the customer (i.e., when the product is picked up by the customer or shipped to the customer).

Unearned revenue related to our Shoes 2U program was not material to our Condensed Consolidated Financial Statements at May 1, 2021, January 30, 2021 and May 2, 2020.

Unearned revenue related to our Shoes 2U program was not material to our Condensed Consolidated Financial Statements at July 31, 2021, January 30, 2021 or August 1, 2020.

Returns and Refunds

2 unchanged sentences

The estimated cost of merchandise inventory is recorded as a reduction to cost of sales and an increase in merchandise inventories.

Approximately $ 740,000 of refund liabilities and $ 495,000 of right of return assets associated with estimated product returns were recorded in accrued and other liabilities as of May 1, 2021 and January 30, 2021.

Approximately $ 718,000 of refund liabilities and $ 500,000 of right of return assets associated with estimated product returns were recorded in accrued and other liabilities at May 2, 2020.

Approximately $ 718,000 of refund liabilities and $ 500,000 of right of return assets associated with estimated product returns were recorded in accrued and other liabilities at August 1, 2020.

Contract Liabilities

When a gift card is issued, the issuance is recorded as an increase to contract liabilities at the time of issuance and a decrease to contract liabilities when a customer redeems a gift card.

The issuance of a gift card is recorded as an increase to contract liabilities and a decrease to contract liabilities when a customer redeems a gift card.

Estimated breakage is determined based on historical breakage percentages and recognized as revenue based on expected gift card usage.

We do not record breakage revenue when escheat liability to relevant jurisdictions exists.

At May 1, 2021, January 30, 2021 and May 2, 2020, approximately $ 1.4 million, $ 1.7 million and $ 1.3 million of contract liabilities associated with unredeemed gift cards were recorded in accrued and other liabilities, respectively.

At July 31, 2021, January 30, 2021 and August 1, 2020, approximately $ 1.5 million, $ 1.7 million and $ 1.3 million of contract liabilities associated with unredeemed gift cards were recorded in Accrued and other liabilities, respectively.

We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions within two years.

Breakage revenue associated with our gift cards of $ 42,000 and $ 19,000 was recognized in net sales during the thirteen weeks ended May 1, 2021 and May 2, 2020, respectively.

Breakage revenue associated with our gift cards of $ 38,000 and $ 80,000 was recognized in net sales during the thirteen and twenty-six weeks ended July 31, 2021, respectively.

Breakage revenue associated with our gift cards of $ 23,000 and $ 42,000 was recognized in net sales during the thirteen and twenty-six weeks ended August 1, 2020, respectively.

Our Shoe Perks rewards program allows customers to accrue points and provides customers with the opportunity to earn rewards.

4 unchanged sentences

We then recognize revenue based on an estimate of when customers redeem rewards, which incorporates an estimate of points expected to expire using historical rates.

During the thirteen weeks ended May 1, 2021 and May 2, 2020, approximately $ 1.3 million and $ 957,000 , respectively, of loyalty rewards were recognized in net sales.

At May 1, 2021, January 30, 2021 and May 2, 2020, approximately $ 1.1 million, $ 755,000 and $ 406,000 of contract liabilities associated with loyalty rewards were recorded in our Condensed Consolidated Balance Sheets, respectively.

During the thirteen and twenty-six weeks ended July 31, 2021, approximately $ 1.6 million and $ 2.9 million, respectively, of loyalty rewards were recognized in net sales.

During the thirteen and twenty-six weeks ended August 1, 2020, approximately $ 922,000 and $ 1.9 million, respectively, of loyalty rewards were recognized in net sales.

At July 31, 2021, January 30, 2021 and August 1, 2020, approximately $ 1.1 million, $ 755,000 and $ 827,000 of contract liabilities associated with loyalty rewards were recorded in Accrued and other liabilities, respectively.

We expect the revenue associated with these liabilities to be recognized in proportion to the pattern of customer redemptions in less than one year.

3 unchanged sentences

All of our leases are operating leases.

Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties as of May 1, 2021.

Lease costs, including related common area maintenance (“CAM”), property taxes, and insurance, reported in our Condensed Consolidated Statements of Income were as follows for the thirteen weeks ended May 1, 2021 and May 2, 2020:

Leases with terms of twelve months or less are immaterial and are expensed as incurred, and we did not have any leases with related parties as of July 31, 2021.

(In thousands)

Weeks Ended May 1, 2021

Weeks Ended May 2, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Operating lease cost

2 unchanged sentences

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

What changed 10-Q

Item 1. Financial Statements