What changed in this filing

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Item 1. Financial Statements

2021-11-29 compared with 2021-09-03 · 117 added, 118 removed, 301 unchanged (44% of the section changed)

3 unchanged sentences

(In thousands, except share data)

July 31, 2021

October 30, 2021

January 30, 2021

August 1, 2020

October 31, 2020

Current Assets:

30 unchanged sentences

(In thousands, except per share data)

July 31, 2021

August 1, 2020

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

October 30, 2021

October 31, 2020

Cost of sales (including buying, distribution

1 unchanged sentence

Selling, general and administrative expenses

Operating income/(loss)

Operating income

Interest income

Interest expense

Income/(loss) before income taxes

Income tax expense/(benefit)

Net income/(loss)

Net income/(loss) per share:

Income before income taxes

Income tax expense

Net income per share:

Weighted average shares:

4 unchanged sentences

(In thousands, except per share data)

Balance at May 1, 2021

Balance at July 31, 2021

Dividends declared ($ 0.070 per share)

Employee stock purchase plan purchases

Restricted stock awards

Stock-based compensation awards

Shares surrendered by employees to pay taxes

on stock-based compensation awards

Purchase of common stock for treasury

Stock-based compensation expense

Balance at July 31, 2021

Balance at May 2, 2020

Balance at October 30, 2021

Balance at August 1, 2020

Dividends declared ($ 0.045 per share)

Employee stock purchase plan purchases

Restricted stock awards

Stock-based compensation awards

Shares surrendered by employees to pay taxes

on restricted stock

on stock-based compensation awards

Stock-based compensation expense

Balance at August 1, 2020

Twenty-six Weeks Ended

Balance at October 31, 2020

Thirty-nine Weeks Ended

(In thousands, except per share data)

2 unchanged sentences

Employee stock purchase plan purchases

Restricted stock awards

Stock-based compensation awards

Shares surrendered by employees to pay taxes

on restricted stock

on stock-based compensation awards

Purchase of common stock for treasury

Stock-based compensation expense

Balance at July 31, 2021

Balance at October 30, 2021

Balance at February 1, 2020

1 unchanged sentence

Employee stock purchase plan purchases

Restricted stock awards

Stock-based compensation awards

Shares surrendered by employees to pay taxes

on restricted stock

on stock-based compensation awards

Stock-based compensation expense

Balance at August 1, 2020

Balance at October 31, 2020

See notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

(In thousands)

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

Cash Flows From Operating Activities

Net income/(loss)

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

Adjustments to reconcile net income to net cash

provided by operating activities:

20 unchanged sentences

Purchase of common stock for treasury

Shares surrendered by employees to pay taxes on restricted stock

Shares surrendered by employees to pay taxes on stock-based compensation awards

Net cash used in financing activities

Net increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Cash and cash equivalents at beginning of period

20 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.

On June 21, 2021, our Board of Directors authorized a two-for-one stock split of the shares of our common stock.

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.

2 unchanged sentences

The number of shares reserved and available for issuance;

The number of shares subject to outstanding equity awards;

The number of shares subject to outstanding equity awards under our stock-based compensation programs;

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

1 unchanged sentence

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

The following tables set forth the computation of basic and diluted net income/(loss) per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

Note 2 - Net Income Per Share

The following tables set forth the computation of basic and diluted net income per share as shown on the face of the accompanying Condensed Consolidated Statements of Income:

Thirteen Weeks Ended

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

(In thousands, except per share data)

3 unchanged sentences

Diluted Net Income per Share:

Conversion of share-based compensation

Conversion of stock-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

Thirty-nine Weeks Ended

October 30, 2021

October 31, 2020

(In thousands, except per share data)

Basic Net Income/(Loss) per Share:

Net income/(loss) available for basic common shares

and basic net income/(loss) per share

Diluted Net Income/(Loss) per Share:

Net income/(loss)

Conversion of share-based compensation

Net income/(loss) available for diluted common

shares and diluted net income/(loss) per share

The computation of basic net income/(loss) per share of common stock is based on the weighted average number of common shares outstanding during the period.

The computation of diluted net income/(loss) per share is based on the weighted average number of shares outstanding plus the dilutive incremental shares that would be outstanding assuming the vesting of share-settled compensation arrangements involving restricted stock, restricted stock units and performance stock units.

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 stock-based compensation

Net income available for diluted common

shares and diluted net income per share

The computation of basic net income per share of common stock is based on the weighted average number of common shares outstanding during the period.

The computation of diluted net income per share is based on the weighted average number of shares outstanding plus the dilutive incremental shares that would be outstanding assuming the vesting of stock-based compensation arrangements involving restricted stock, restricted stock units and performance stock units.

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

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.

No unvested stock-based awards that will be settled in shares were excluded from the computation of diluted net income per share for the thirteen and thirty-nine weeks ended October 30, 2021.

During the thirteen and thirty-nine weeks ended October 31, 2020, unvested stock-based awards that will be settled in shares excluded from the computation were approximately 2,000 and 3,000 , respectively, 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.

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.

We did not have any stores closed as of October 30, 2021 or for extended periods during the first nine 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 July 31, 2021, January 30, 2021 and August 1, 2020.

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

Fair Value Measurements

(In thousands)

As of July 31, 2021

As of October 30, 2021

Cash equivalents - money market mutual funds

3 unchanged sentences

Cash equivalents - money market mutual funds

As of August 1, 2020

As of October 31, 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.

During the second quarter of fiscal 2021, we invested 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.

As of October 30, 2021, these marketable securities were principally invested in equity-based mutual funds, consistent with the allocation in our deferred compensation plan.

As of October 30, 2021, the balance in our deferred compensation plan was $ 16.7 million, of which $ 4.8 million was in Accrued and other liabilities based on scheduled payments due within the next 12 months and $ 11.9 million was in Deferred compensation.

To the extent there are funds in excess of the total non-qualified deferred compensation plan liability, such funds are invested in a stable value mutual fund.

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.

For the thirteen and thirty-nine weeks ended October 30, 2021, we recognized unrealized gains of $ 390,000 and $ 338,000 , respectively, related to equity securities still held at October 30, 2021.

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.

9 unchanged sentences

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.

External factors, such as the local environment in which the store is located, including store traffic and competition, are evaluated in terms of their effect on sales trends.

Changes in sales and operating income assumptions or unfavorable changes in external factors can significantly impact the estimated future cash flows.

Changes in sales and operating income assumptions or unfavorable changes in external factors

can significantly impact the estimated future cash flows.

An increase or decrease in the projected cash flow can significantly impact the fair value of these assets, which may have an effect on the impairment recorded.

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 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.

During the thirteen and thirty-nine weeks ended October 30, 2021, we recorded impairment charges of $ 15,000 and $ 983,000 associated with one store and four stores, respectively.

During the thirteen and thirty-nine weeks ended October 31, 2020, we recorded impairment charges of $ 211,000 and $ 2.7 million associated with one store and nine stores, respectively.

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

4 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.

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.

For the thirteen and thirty-nine weeks ended October 30, 2021, stock-based compensation expense for the Employee Stock Purchase Plan was $ 5,000 before the income tax benefit of $ 1,000 and $ 22,000 before the income tax benefit of $ 6,000 , respectively.

For the thirteen and thirty-nine weeks ended October 31, 2020, stock-based compensation expense for the Employee Stock Purchase Plan was $ 8,000 before the income tax benefit of $ 2,000 and $ 27,000 before the income tax benefit of $ 6,000 , respectively.

Share-Settled Equity Awards

2 unchanged sentences

Date Fair Value

Restricted stock units and performance stock units at

January 30, 2021

Restricted stock units and performance stock units at

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.

Outstanding at January 30, 2021

Outstanding at October 30, 2021

The total fair value at grant date of restricted stock units and performance stock units that vested during the thirty-nine weeks ended October 30, 2021 and October 31, 2020 was $ 3.7 million and $ 4.4 million, respectively.

The weighted-average grant date fair value of restricted stock units and performance stock units granted during the thirty-nine weeks ended October 30, 2021 and October 31, 2020 was $ 28.21 and $ 7.44 , respectively.

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

1 unchanged sentence

Date Fair Value

Restricted stock at January 30, 2021

Outstanding 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):

Outstanding at October 30, 2021

The total fair value at grant date of restricted stock and other stock awards that vested during the thirty-nine weeks ended October 30, 2021 and October 31, 2020 was $ 26,000 and $ 1.3 million, respectively.

The weighted-average grant date fair value of restricted stock and other stock awards granted during the thirty-nine weeks ended October 30, 2021 and October 31, 2020 was $ 32.79 and $ 12.46 , respectively.

(In thousands)

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended October 30, 2021

Weeks Ended October 31, 2020

Weeks Ended October 30, 2021

Weeks Ended October 31, 2020

Stock-based compensation expense before the

2 unchanged sentences

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

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

As of October 30, 2021 approximately $ 4.7 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 1.1 years.

12 unchanged sentences

Forfeited or expired

Outstanding at July 31, 2021

Outstanding at October 30, 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 July 31, 2021 was $ 2.76 .

The weighted-average fair value of outstanding SAR awards as of October 30, 2021 was $ 3.02 .

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

July 31, 2021

August 1, 2020

October 30, 2021

October 31, 2020

Risk free interest rate yield curve

8 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

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

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

2 unchanged sentences

(In thousands)

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended October 30, 2021

Weeks Ended October 31, 2020

Weeks Ended October 30, 2021

Weeks Ended October 31, 2020

Stock-based compensation expense before the

1 unchanged sentence

Income tax effect at statutory rate

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

As of October 30, 2021, approximately $ 111,000 in unrecognized compensation expense remained related to non-vested SARs.

This expense is expected to be recognized over a period of approximately 0.4 years.

2 unchanged sentences

Revenue is disaggregated by product category below.

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:

Net sales and percentage of Net sales for the thirteen and thirty-nine weeks ended October 30, 2021 and October 31, 2020 were as follows:

(In thousands)

Thirteen Weeks

Ended July 31, 2021

Ended October 30, 2021

Thirteen Weeks

Ended August 1, 2020

Ended October 31, 2020

Non-Athletics:

1 unchanged sentence

(In thousands)

Twenty-six Weeks

Ended July 31, 2021

Twenty-six Weeks

Ended August 1, 2020

Thirty-nine Weeks

Ended October 30, 2021

Thirty-nine Weeks

Ended October 31, 2020

Non-Athletics:

1 unchanged sentence

Accounting Policy and Performance Obligations

We operate as a multi-channel, family footwear retailer and provide the convenience of shopping at our physical stores or shopping online through our e-commerce platform.

As part of our multi-channel strategy, we offer Shoes 2U, a program that enables us to ship product to a customer’s home or selected store if the product is not in stock at a particular store.

We operate as an omnichannel, family footwear retailer and provide the convenience of shopping at our physical stores or shopping online through our e-commerce platform.

As part of our omnichannel strategy, we offer Shoes 2U, a program that enables us to ship product to a customer’s home or selected store if the product is not in stock at a particular store.

We also offer “buy online, pick up in store” services for our customers.

22 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 July 31, 2021, January 30, 2021 or August 1, 2020.

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

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 October 30, 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 October 31, 2020.

Contract Liabilities

2 unchanged sentences

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

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.

At October 30, 2021, January 30, 2021 and October 31, 2020, approximately $ 1.4 million, $ 1.7 million and $ 1.2 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 $ 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.

Breakage revenue associated with our gift cards of $ 41,000 and $ 121,000 was recognized in Net sales during the thirteen and thirty-nine weeks ended October 30, 2021, respectively.

Breakage revenue associated with our gift cards of $ 27,000 and $ 69,000 was recognized in Net sales during the thirteen and thirty-nine weeks ended October 31, 2020, respectively.

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

Points under Shoe Perks are earned primarily by making purchases through any of our multi-channel points of sale .

Points under Shoe Perks are earned primarily by making purchases through any of our omni channel points of sale .

Once a certain threshold of accumulated points is reached, the customer earns a reward certificate, which is redeemable through any of our sales channels .

2 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 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.

During the thirteen and thirty-nine weeks ended October 30, 2021, approximately $ 1.7 million and $ 4.5 million, respectively, of loyalty rewards were recognized in Net sales.

During the thirteen and thirty-nine weeks ended October 31, 2020, approximately $ 1.3 million and $ 3.2 million, respectively, of loyalty rewards were recognized in Net sales.

At October 30, 2021, January 30, 2021 and October 31, 2020, approximately $ 1.0 million, $ 755,000 and $ 828,000 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 July 31, 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 and twenty-six weeks ended July 31, 2021 and August 1, 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 October 30, 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 and thirty-nine weeks ended October 30, 2021 and October 31, 2020:

(In thousands)

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended July 31, 2021

Weeks Ended August 1, 2020

Weeks Ended October 30, 2021

Weeks Ended October 31, 2020

Weeks Ended October 30, 2021

Weeks Ended October 31, 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