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Item 1A. Risk Factors

2026-03-31 compared with 2025-04-02 · 111 added, 92 removed, 327 unchanged (38% of the section changed)

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Failure to execute our opportunistic buying strategy and successfully manage our inventory could adversely affect our results.

Key elements of our off-price business strategy, including opportunistic buying, operating with relatively lean inventory levels and frequent inventory turns, subject us to risks.

Key elements of our off-price business strategy, including opportunistic buying, operating with relatively lean inventory levels, frequent inventory turns and our treasure hunt experience, subject us to risks.

Our customer transactions and our sales, margins and other financial results could be adversely affected if we do not obtain and allocate the right merchandise at the right times, in the right quantities, at the right prices, in the right mix and into the right stores.

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If our merchandise is not generally purchased at prices sufficiently below prices paid by conventional retailers, we may not be able to maintain our desired value gap at various times or in some segments, banners, product categories or geographies, which could also affect our sales, margins and other financial results.

In addition, to respond to customer demand and effectively manage pricing and markdowns, we need to allocate and deliver merchandise to our stores appropriately, maintain an appropriate mix and level of inventory in each store and be flexible in our allocation of floor space at our stores across product categories.

We also base our inventory purchases, in part, on our sales forecasts.

If our sales forecasts fail to predict customer demand with sufficient accuracy, or we do not allocate and deliver merchandise to stores, maintain inventory mix and levels, or maintain flexibility in our allocation of floor space across product categories effectively, we may have higher inventory levels than we planned and may need to take markdowns on excess or slow-moving inventory, or we may have insufficient inventory to meet customer demand, either of which could impact sales in a way that could adversely affect our financial performance.

If our sales forecasts fail to predict customer demand with sufficient accuracy, or we do not appropriately allocate and deliver merchandise to stores, maintain inventory mix and levels, or maintain flexibility in our allocation of floor space across product categories effectively, then we may either have higher inventory levels than we planned and may need to take markdowns on excess or slow-moving inventory, or have insufficient inventory to meet customer demand, either of which could impact sales in a way that could adversely affect our financial performance.

In addition to the above factors, a variety of external factors have impacted, and may continue to impact, execution of our opportunistic buying strategy and inventory management.

In the past, our ability to allocate, deliver and maintain our preferred mix and level of inventory has been impacted by temporary store closures, inflationary pressures, global supply chain disruptions and other challenges as a result of external events.

For more information, see “External and Economic Risks” below.

Failure to identify consumer trends and preferences, or to otherwise meet customer demand or expectations, in new or existing markets or channels could negatively impact our performance.

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Trends and preferences in markets may differ from what we anticipate and could change rapidly.

Although our business model allows us greater flexibility to meet consumer product preferences and trends than many traditional retailers (for example, by expanding and contracting merchandise categories in response to consumers’ changing tastes), we may not successfully do so, which could impact inventory turns, customer transactions and sales, and may have a negative impact on our ability to attract new customers, retain existing customers and/or encourage frequent customer visits and/or cross-shopping of our multiple retail banners, any of which could adversely affect our results.

Although our business model allows us greater flexibility to meet consumer product preferences and trends than many traditional retailers (for example, by rapidly expanding and contracting merchandise categories in response to consumers’ changing tastes), we may not successfully do so, which could impact inventory turns, customer transactions and sales, and may have a negative impact on our ability to attract new customers, retain existing customers and/or encourage frequent customer visits and/or cross-shopping of our multiple retail banners, any of which could adversely affect our results.

Customers also may have expectations about how they shop in stores or through e-commerce or more generally engage with businesses across different channels (including digital/social media platforms).

These expectations may vary both across and within demographics and geographies and may evolve rapidly or be impacted by external factors.

For example, changes to our store layout or security protocols may impact the shopping experience and customer transactions.

For example, changes to our store layout, loss prevention, or digital security protocols may impact the shopping experience and customer transactions.

Similarly, platforms that help consumers engage with our brands may change in meaningful ways, negatively impacting the consumer experience and reducing or eliminating benefits to us from that channel.

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We compete with local, regional, national and international retailers that sell apparel, home fashions and other merchandise that we may carry, including retailers that operate through stores, e-commerce and/or other media, as well as omnichannel retailers.

Some of our competitors are larger than we are or have more experience selling certain product lines or through certain channels than we do.

Competitors may increase their presence in markets in which we operate, consolidate with other retailers, expand their merchandise offerings, expand their e-commerce capabilities, add new sales channels, change their pricing strategies and/or adopt new processes or technologies that may allow them to compete more effectively.

Some of our competitors are larger than we are, hold greater financial resources, have more experience selling certain product lines, provide certain product categories more consistently, or provide products through different channels than we do.

Competitors may increase their presence in markets in which we operate, consolidate with other retailers, expand their merchandise offerings, expand their e-commerce and delivery capabilities, add new sales channels, change their pricing strategies and/or adopt new processes or technologies that may allow them to compete more effectively.

We could be at a competitive disadvantage if, over time, our competitors are more effective than we are in their use and integration of rapidly evolving technologies, including artificial intelligence or other emerging technologies.

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Our competitors’ marketing programs may also resonate with consumers more than ours do.

Changes to online search, email delivery, and digital/social media (including algorithmic changes) can increase customer acquisition costs, reduce the effectiveness of digital marketing and/or alter traffic patterns to our e-commerce sites and/or stores.

We may not be able to develop or implement strategies effectively in rapidly evolving digital/social media channels, which may adversely impact some of our banners, segments, or overall business.

We also may face challenges appropriately managing consistent strategies for our different banners across geographies.

Further, partnerships with celebrities, social media content creators, influencers or other individuals who are viewed as representing our banners may expose us to reputational or other risks.

We also may face challenges appropriately managing strategies for our different banners across geographies.

Further, our marketing partners, celebrities, social media content creators, influencers or other individuals who are viewed as representing our banners may expose us to reputational or other risks.

For delivery of our marketing we depend on a variety of partners whose financial health, reputation and/or ability to attract talent could negatively impact the results of our marketing.

If our marketing efforts are not as successful or cost effective as anticipated, our revenue and results of operations could be adversely affected.

Failure to continue to expand our business successfully could adversely affect our financial results.

Our growth strategy includes successfully expanding our business within our current markets and/or into new geographic regions, appropriately calibrating product lines and channels (including within our e-commerce sites) and, as appropriate, adding new businesses, whether by development, investment, or acquisition.

Our growth strategy includes, whether by development, investment, or acquisition, successfully expanding our business within our current markets and/or into new geographic regions, appropriately calibrating product lines and channels (including within our e-commerce sites) and, as appropriate, adding new businesses.

If any aspect of our expansion strategy does not achieve the success we expect, in whole or in part, we may fail to meet our financial performance expectations generally or within certain markets or divisions, and we may be required to increase or decrease investments or slow our planned growth.

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significant additional attention from our management and other functions across our business, including compliance and risk management;

development of new capabilities, processes and controls;

increased staffing and Associate training and/or retention and management of appropriate third-party providers, including training or coordinating with those operating businesses in which we are invested or with which we share certain responsibilities.

attention to varied health and safety requirements;

integration of existing or development of new capabilities, processes and controls;

increased staffing and Associate training and retention, including in new or unfamiliar labor markets;

and management of appropriate third-party providers, including training or coordinating with those operating businesses in which we are invested or with which we share certain responsibilities.

These requirements may increase with further growth, particularly if we expand into additional countries.

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Failure to effectively manage the large size and scale of our operations may adversely affect our financial results.

The substantial size of our business can make it challenging to run our complex operations effectively and to manage suitable internal resources and third-party providers with appropriate oversight, including, for example, for teams managing administration, information technology systems, merchandising, sourcing, marketing, store operations, distribution, logistics and compliance.

The large size and scale of our operations, our multiple banners and locations across the U.S., Canada, Europe and Australia and the autonomy afforded to the banners in some aspects of the business also increase the risk that our systems, controls, practices and policies may not be implemented effectively or consistently throughout our company, or that information may not be appropriately shared across our operations.

The size and scale of our business also creates challenges in human resources administration and effectively managing, training, retaining and engaging a large, disparate workforce, including those with a remote or hybrid work arrangement.

The substantial size of our business can make it challenging to run our complex operations effectively and to manage suitable internal resources and third-party providers with appropriate oversight, including, for example, for teams managing information technology (“IT”) systems, merchandising, sourcing, marketing, store operations, distribution, logistics, compliance, finance and administrative support.

The large size and scale of our operations, our multiple banners and locations across the U.S., Canada, Europe and Australia and the autonomy afforded to the banners in some aspects of the business also increase the risk that our systems, controls, practices and policies may not be effectively or consistently implemented or updated on a timely basis throughout our company, or that information may not be appropriately shared across our operations.

The size and scale of our business also create challenges in human resources administration and effectively recruiting, managing, training, retaining and engaging a large, disparate workforce, including Associates in on-site, remote and hybrid roles.

These challenges may increase if a portion of our workforce is unable to work on site or is temporarily furloughed, as has occurred in the past.

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– problems with third-party distribution and warehousing, logistics, transportation and other supply chain interruptions;

– information technology challenges;

– IT security or resiliency challenges;

– strikes, threats of strikes and other events affecting delivery;

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– compliance with product laws and regulations of the destination country;

– product liability claims from customers or investigations, enforcement or penalties from government agencies relating to products that are recalled, defective or otherwise noncompliant or alleged to be harmful;

– product liability claims from customers or investigations, enforcement actions or penalties by or from government agencies relating to products that are recalled, defective or otherwise noncompliant or alleged to be harmful;

– pandemics and epidemics (such as the COVID-19 pandemic) affecting sourcing, including manufacturing, buying or delivery;

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– concerns about environmental impact where merchandise is produced or materials are sourced, including relating to greenhouse gas emissions, waste, water usage, deforestation, biodiversity and the impact of these activities on human health and local communities;

– concerns about human rights, working conditions and other labor rights and conditions in countries where merchandise is produced or materials are sourced;

– concerns about human rights, working conditions and other labor rights and conditions where merchandise is produced or materials are sourced;

– currency exchange rates and financial or economic instability (including potential financial instability related to banking institutions);

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Furthermore, although we have implemented policies and procedures designed to facilitate compliance with laws and regulations relating to production of merchandise, international operations and importing merchandise, our Associates and our contractors, agents, vendors or other third parties with whom we do business or to whom we outsource or coordinate business operations, including retail operations, may nevertheless violate such laws and regulations or our policies, which could subject us to liability and could adversely affect our reputation, operations or operating results.

Compromises of our cybersecurity, disruptions in our information technology systems, or failure to satisfy the information technology needs of our business could result in material loss or liability, materially impact our operating results or materially harm our reputation.

Our business depends on our information technology (“IT”) systems, which collect and process information of customers, Associates and other persons, as well as information of our business and of our suppliers, service providers and other third parties.

Compromises of our cybersecurity, disruptions in our IT systems, or failure to satisfy the IT needs of our business could result in material loss or liability, materially impact our operating results or materially harm our reputation.

Our business depends on our IT systems, which collect and process information of customers, Associates and other persons, as well as information of our business and of our suppliers, service providers and other third parties.

We rely heavily on IT systems, including those operated and maintained by our suppliers, service providers and other third parties, to manage key aspects of our business, including planning;

sales, including point-of-sale processing and e-commerce;

sales, including point-of-sale transaction processing and e-commerce;

supply chain management;

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adopting new technologies (including artificial intelligence or other emerging technologies) appropriately and in a timely manner;

and maintaining effective disaster recovery plans for such systems.

and maintaining effective disaster recovery and resiliency plans for such systems.

Our ongoing operations and successful growth are dependent on our doing these things effectively.

We also are dependent on the ongoing integrity, security and consistent operation of these systems, including related back-up systems.

As is common in the retail industry, our IT systems, as well as those of our suppliers, service providers and other third parties whose information technology systems we utilize directly or indirectly, are targeted by attempts to access or obtain personal or other sensitive information, attempts at monetary theft and attempts to disrupt business.

These attempts include use of malware, ransomware, phishing, vishing, deepfakes, social engineering, denial-of-service attacks, exploitation of system vulnerabilities or misconfigurations, Associate or third-party service provider malfeasance, digital and physical payment card skimmers, account takeovers and other forms of cyber-attacks.

As is common in the retail industry, our IT systems, as well as those of our suppliers, service providers and other third parties with whom we do business directly or indirectly, are targeted by attempts to access or obtain personal or other sensitive information, attempts at monetary theft and attempts to disrupt business.

These attempts include use of malware, ransomware, phishing, vishing, deepfakes, social engineering, denial-of-service attacks, exploitation of system vulnerabilities or misconfigurations, Associate or third-party malfeasance, digital and physical payment card skimmers, account takeovers and other forms of cyber-attacks.

These attempts continue to increase in sophistication (including through the use of artificial intelligence), heightening the risk of compromise or disruption.

While some of these attempts have resulted in cybersecurity incidents, the unauthorized intrusion into our network discovered late in 2006 is the only such cybersecurity incident to date that has been material to the results of our operations.

Our IT systems and those of our suppliers, service providers and other third parties also may be damaged or disrupted, or personal or sensitive information compromised, from a number of other causes, including power outages, system failures, catastrophic events, or Associate or third-party error.

Our IT systems and those of our suppliers, service providers and other third parties with whom we do business directly or indirectly also may be damaged or disrupted, or personal or sensitive information compromised, from a number of other causes, including power outages, system failures, catastrophic events, or Associate or third-party error.

Such damage, disruption or compromise could materially impair our ability to operate our business or otherwise result in material impacts on our operating results.

Changes in the business landscape and the increase of remote working by our Associates, service providers and other third parties have the potential to increase the likelihood of system damage or disruption and increase the risk of a cybersecurity compromise.

Changes in the business landscape and the impact of remote working by our Associates, service providers and other third parties have the potential to increase the likelihood of system damage or disruption and increase the risk of a cybersecurity compromise.

The size, geographic dispersion, and turnover rate of our workforce increase the risk that our controls may not be implemented consistently.

Additionally, there continues to be a heightened risk of cybersecurity incidents as a result of geopolitical events outside of our control.

These factors have led to the need for additional mitigation strategies and investments across our IT Security workforce, technologies and processes.

These factors have led to the need for additional mitigation strategies and investments across our IT workforce, capabilities and processes.

In addition, the global regulatory environment surrounding information security and privacy is increasingly demanding, and cybersecurity compromises and disruptions in our IT systems could result in regulatory enforcement actions, class actions, contract liability or other forms of material legal liability.

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We maintain policies, procedures and controls designed to reduce the risks of cybersecurity compromises and IT failures or disruptions, but these controls vary in maturity across the business and may fail to operate as intended or be circumvented by bad actors.

Additionally, the logging policies, procedures and controls that we have implemented to facilitate the investigation of potential cybersecurity compromises or disruptions may be insufficient to fully investigate all such events.

These policies, procedures and controls also require costly and ongoing investment in technologies, hiring, training and compliance.

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Our results and profitability could be adversely affected by increased labor costs, including wage, pension, health and other costs, or other challenges from our large workforce.

Our Associates are key to supporting our business and operations effectively, and we expect that our operating expenses will continue to reflect increased labor costs.

We have a large and disparate workforce, and our ability to meet our labor needs and manage labor costs is subject to various external factors such as minimum wage laws and benefits requirements;

market pressures, including prevailing wage rates and benefit levels, unemployment levels and competition for labor from other industries;

Our Associates are key to supporting our business and operations effectively, and we expect that our operating expenses will continue to reflect increasing labor costs.

We have a large and disparate workforce, and our ability to meet our labor needs and manage labor costs is subject to various external factors such as minimum wage laws and other pay or benefit mandates;

market pressures, including prevailing wage rates and benefit levels, unemployment levels, competition for labor within and beyond the retail industry, and labor market dynamics related to automation and technology;

economic conditions, including inflation;

changing demographics and workforce trends, including with respect to unionization and collective bargaining;

costs associated with workplace health and safety;

workplace health and safety costs;

interest rate changes;

actuarial assumptions and methods;

the costs of providing and managing retirement, health and other employee benefits, including health and insurance costs and a dynamic regulatory and policy environment, including with respect to health care, immigration, labor, employment, pension and other employee benefits and taxes.

the costs of providing and managing retirement, health and other employee benefits;

governmental programs;

and a dynamic regulatory and policy environment, including with respect to health care, immigration, labor, employment, pension and other employee benefits, and taxation.

Any of these factors could increase, and in the past have increased, our labor costs.

These factors could also increase the labor or other costs of our service providers, which could be passed on to us.

Conversely, failing to offer competitive wages or benefits, or to manage our workforce effectively, could adversely affect our ability to attract or retain appropriate talent sufficient to meet the needs of our business, causing our customer service to suffer, potentially impacting consumers’ desire to shop our stores, among other things, and causing our financial performance to suffer.

Additionally, many Associates in our distribution centers in the United States and Canada are members of unions, and other Associates are members of works councils in Europe.

These factors could also increase the labor or other costs of our service providers, or result in labor disruptions affecting their operations, which could be passed on to us or increase our legal exposure or costs.

Conversely, failing to offer competitive wages or benefits, or to manage our workforce effectively, could adversely affect our ability to attract or retain appropriate talent sufficient to meet the needs of our business, which could cause our customer service or business execution to suffer, and adversely affect our financial performance.

Additionally, many Associates in our distribution network in the United States and Canada are members of unions, and other Associates are members of works councils in Europe.

We are subject to the risk of labor actions or disruptions of various kinds, including work stoppages and decreased flexibility as a result of labor law limitations.

We are subject to risks and potential material expenses associated with multiemployer plans, including from pension plan underfunding, benefit cuts, increased contribution or funding requirements, changes in plan terms, withdrawal liability, increased premium costs, conditions imposed under any governmental assistance programs or the insolvency of other participating employers or governmental insurance programs.

Other portions of our workforce, including, for example, Associates who work in our U.S.

stores, which makes up the largest portion of our workforce, may become unionized, which may subject us to additional requirements, expectations, actions or expense.

Other portions of our workforce that are not covered by collective bargaining agreements, including, for example, Associates who work in our U.S.

stores, who make up the largest portion of our workforce, may become unionized, which may subject us to additional requirements, expectations, actions or expense.

Failure to employ qualified Associates in appropriate numbers and to retain key Associates and management could adversely affect our performance.

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In addition, we have faced and may continue to face additional challenges in recruiting or retaining sufficient talent due to shifts in the labor market, wage pressures and competition, flexible scheduling needs and health and safety concerns, among other factors.

We have faced and may continue to face challenges in engaging, overseeing and training Associates with remote or hybrid work arrangements.

We have faced and may continue to face challenges in engaging, overseeing and training Associates in on-site, remote or hybrid roles.

We also have faced and may continue to face potential challenges relating to Associates’ willingness or ability to staff our stores and distribution centers or otherwise continue employment as a result of economic pressures, health and safety concerns or otherwise.

Our performance also depends on recruiting, hiring, developing, training and retaining talented Associates in key areas such as buying, information technology functions, and other corporate areas.

Our performance also depends on recruiting, hiring, developing, training and retaining talented Associates in key areas such as buying, IT functions, and other corporate areas.

Similar to other retailers, we face challenges in securing and retaining sufficient talent in management and other key areas for many reasons, including competition for talent in the retail industry, from other industries and in various geographic markets.

In addition, because of the distinctive nature of our off-price model, we must provide significant internal training and development, in-person or remotely, and successfully manage transitions for key Associate roles across the Company, including within our buying organization.

In addition, because of the distinctive nature of our off-price model, we must provide significant internal training and development and successfully manage transitions for key Associate roles across the Company, including within our buying organization.

Failure to effectively attract qualified individuals, train them on our business model, support their development, engage them in our business, and retain them in sufficient numbers and at appropriate levels of the organization, and implement appropriate succession plans could disrupt our operations, impair our ability to execute our business model, limit our growth, and negatively impact our business and financial results.

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Our customer relationships and our reputation are based, in part, on perceptions of subjective qualities.

Incidents that erode trust or confidence in our company could adversely affect our reputation and thereby impact our business, particularly if the incidents result in rapid or significant adverse publicity, protest, litigation, boycotts, governmental inquiry or other stakeholder response.

This could include incidents that involve the company;

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the regions where we have operations or investments;

our partners;

celebrities, content creators, social media influencers, or other individuals viewed as representing us or our banners that may draw attention to our retail banners;

our marketing partners;

celebrities, content creators, social media influencers, or other individuals viewed as representing us or our banners (whether or not we partner with them) that may draw attention to our retail banners;

product recalls;

incidents involving workplace safety, harassment or discrimination claims, or labor activity;

inquiries or other communications from governmental agencies about our business or practices;

and our industry more generally.

Information on such incidents that is publicized through traditional or digital/social media platforms and other forums that facilitate rapid, broad communications to an audience of consumers and other interested persons, may adversely affect our reputation and brand, even if the information is inaccurate, incomplete, or unverified.

Similarly, challenges or reactions to action (or inaction), or perceived action (or inaction), by our company to sensitive or polarizing topics, crises, political matters, or on issues related to corporate responsibility or environmental, social and governance (“ESG”) matters, and any perceived lack of transparency about such matters, could harm our reputation.

Information about such incidents that is publicized through traditional or digital/social media platforms or other forums that facilitate rapid, broad communications to an audience of consumers and other interested persons, may adversely affect our reputation and brand, even if the information is inaccurate, incomplete, or unverified.

Similarly, challenges or reactions to action (or inaction), or perceived action (or inaction), by our company to sensitive or polarizing topics, crises, or political matters, or on issues related to corporate responsibility or environmental, social and governance matters, or any perceived lack of transparency about such matters, could harm our reputation.

This kind of reputational damage could occur locally or globally and could impact our company or our individual retail banners.

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limit our ability to attract and retain appropriate talent sufficient to meet the needs of our business;

result in demonstrations, protests, or other altercations at our stores;

result in demonstrations, protests, or altercations at or about our stores;

divert the attention and resources of management, including to respond to inquiries or additional regulatory scrutiny;

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Failure to meet such expectations or comply with regulations could materially impact our operating results or materially harm our reputation.

Various stakeholders, including certain advocacy groups, investors, customers, governmental officials and Associates, have increasingly focused on social impact, environmental sustainability, human capital management, human rights and other related matters in a variety of ways that are not necessarily consistent.

Various stakeholders, including certain advocacy groups, investors, customers, governmental officials and Associates, have increasingly focused on, and, from time to time, communicated with the Company about, topics such as social impact, environmental sustainability, human capital management, human rights and other related matters in a variety of ways that are not necessarily consistent.

From time to time, we have announced certain initiatives related to our corporate responsibility efforts, which we have focused under four pillars:

workplace, environmental sustainability, communities and responsible sourcing, which includes social compliance.

workplace, environmental sustainability, communities and responsible sourcing (which includes social compliance in our supply chain).

These initiatives may be considered to be overreaching by some stakeholders and inadequate by other stakeholders.

We could fail or be perceived to fail or fall short in our pursuit of such initiatives, in going too far in pursuing priorities perceived as outside of our business mission, or in accurately and comprehensively reporting our progress on such initiatives and any related goals and commitments.

If our practices or disclosures in these areas do not meet investor or other stakeholder expectations and standards, including related to climate change, environmental sustainability, human capital management, inclusion and diversity, supply chain management and human rights, or do not meet related regulations and expectations for transparency, our reputation may be impacted negatively, and we may be subject to litigation risk, regulatory enforcement and/or other governmental action, which could materially impact our operating results.

In addition, we could be criticized for the scope of our programs, initiatives or goals, which some may consider too wide and others may perceive as too narrow, or perceived as not acting responsibly in connection with these matters or otherwise, and that evaluation may be based on factors unrelated to the impact of these matters on our business, financial or otherwise.

Our failure, or perceived failure, with these programs or initiatives or more generally to manage reputational threats and meet shifting and, in certain cases, inconsistent, stakeholder expectations or consumer preferences could negatively impact our brand, image, reputation, credibility, Associate retention and the willingness of our customers and suppliers to do business with us.

If our practices or disclosures in these areas do not meet investor or other stakeholder expectations and standards, including related to climate change, environmental sustainability, human capital management, inclusion and diversity, supply chain management and human rights, or do not meet related regulations and expectations, our reputation may be impacted negatively, and we may be subject to litigation risk, regulatory enforcement and/or other governmental scrutiny or action, which could materially impact our operating results.

In addition, we could be criticized for the scope, pace or prioritization of our programs, initiatives or goals, or perceived as not acting responsibly in connection with these matters or otherwise, and that evaluation may be based on factors unrelated to the impact of these matters on our business, financial or otherwise.

Our failure, or perceived failure, with these programs or initiatives or more generally to manage reputational threats and meet shifting and, in certain cases, inconsistent, stakeholder expectations or consumer preferences could negatively impact our brand, image, reputation, credibility, Associate recruitment and retention and the willingness of our customers and suppliers to do business with us.

Further expansion of our international operations could expose us to risks inherent in operating in new countries.

We have a significant retail presence in several countries in Europe and in Canada and Australia.

We also operate buying and other offices around the world and have made recent investments in certain geographies, including our entry into a joint venture in Mexico and our other minority equity investment in the Middle East.

We generally look for opportunities to continue to expand our operations globally.

It can be costly and complex to establish, develop and maintain international operations, to identify appropriate store locations and to promote business in new international jurisdictions, which may differ significantly from other countries in which we currently operate.

As with our current operations, risks are inherent in opening and developing operations in, or making investments in, new countries, including those related to compliance under the U.S.

We also operate buying and other offices around the world and have made investments in certain geographies, including our entry into a joint venture in Mexico and our minority equity investment in the Middle East.

We generally look for opportunities to continue to expand our operations globally, such as our announced expansion into Spain.

It can be costly and complex to establish, develop and maintain international operations, to identify appropriate store locations, to hire, train and integrate Associates, and to promote business in new international jurisdictions, which may differ significantly from other countries in which we currently operate.

As with our current operations, risks are inherent in opening and developing operations in, or making investments in, new countries, including risks related to compliance with the U.S.

Foreign Corrupt Practices Act and the U.K.

Additional risks include, among others, understanding the local retail climate and trends, local customs and cultures, seasonal differences, business practices and competitive conditions;

Additional risks include, among others, understanding the local retail climate and trends, local customs and cultures, local labor markets, seasonal differences, business practices and competitive conditions;

complying with relevant laws, rules and regulations;

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In addition, we maintain a forecasting process that seeks to plan sales and align expenses.

However, if we do not control costs or appropriately adjust costs to actual results, or if actual results differ significantly from our forecast, our financial performance could be adversely affected.

However, if we do not control costs or appropriately adjust costs to actual results, or if actual results differ from our forecast, our financial performance could be adversely affected.

In addition, if we suspend our buyback program, which we have done in the past, or if we have an active buyback program and are repurchasing shares but do not repurchase the number of shares we contemplated pursuant to our financial plans at the rate or in the timing we planned, our earnings per share may be adversely affected.

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Loss may be caused by error or misconduct of Associates, customers, vendors or other third parties, including through organized retail crime and professional theft, and may be further impacted by macroeconomic factors, including the enforcement environment, as well as increased inventory levels in our stores.

We may not be able to determine the cause or extent of the loss in a timely manner or at all.

We may not be able to effectively determine the cause or extent of the loss.

Our inability to prevent and/or minimize or reduce the loss or theft of assets effectively, or to predict and accrue for the impact of those losses accurately, has adversely affected our financial performance in the past and could do so again.

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If we are unable to generate sufficient cash flows or to repatriate cash from our international operations in a manner that is cost effective, our growth plans, capital expenditures, operating expenses and financial performance, including our earnings per share, could be adversely affected.

Changes in the capital and credit markets, including market disruptions, limited liquidity and interest rate fluctuations, have in the past increased and may continue to increase the cost of financing or may restrict our access to these potential sources of liquidity.

Our continued access to these liquidity sources on favorable terms depends on multiple factors, including our operating performance and maintaining strong credit ratings.

On occasion, we borrow money to finance our activities, and if financing were not available to us in adequate amounts and on appropriate terms when needed, that could also adversely affect our financial performance.

If we engage in mergers, acquisitions or investments in new businesses, or divest, close or consolidate any of our current businesses, our business could be subject to additional risks.

Mergers, acquisitions or investments in new businesses, or divesting, closing or consolidating any of our current businesses, subjects our business to additional risks and could adversely affect our results.

We have in the past and may again acquire new businesses;

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Failure to execute on mergers, acquisitions, investments, divestitures, closings and consolidations in an effective or satisfactory manner, including due to circumstances outside our control, could adversely affect our future results of operations and financial condition.

Acquisition, investment or divestiture activities may divert attention of management away from operating the existing businesses.

Acquisition, investment or divestiture activities may divert attention of management away from operating our existing businesses.

We may not effectively evaluate target companies, investments or investment partners or assess the risks, benefits and costs of buying, investing in or closing businesses, or the integration or attendant risks of acquired businesses or investments, all of which can be difficult, time-consuming and dilutive.

These activities may not meet our performance and other expectations and may expose us to unexpected or greater-than-expected costs, liabilities and risks, including from, for example, changes in law, market conditions, economic conditions, the retail industry, political conditions, inaccurate assumptions, or the negligence or malfeasance of our partners or other third parties.

These activities may not meet our performance and other expectations and may expose us to unexpected or greater-than-expected costs, liabilities and risks, including from, for example, changes in law, market conditions, economic conditions, the retail industry, political conditions, human capital matters, inaccurate assumptions, or the negligence or malfeasance of our partners or other third parties.

In addition, in connection with most of our prior acquisitions, we recorded intangible assets and goodwill and the value of the tradenames, and may similarly do so in the future in connection with other acquisitions.

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In addition, when the lease terms for the stores in our ongoing operations expire, we may be unable to negotiate renewals, either on commercially reasonable terms or at all, which could cause us to permanently close stores or to relocate stores within a market on less favorable terms or in a less favorable location.

If we decide to cease operations at any locations that we own, we may be unable to dispose of such real estate (including by selling or leasing such real estate to a third party) on favorable market terms.

In such case, we would continue to incur ownership obligations on unused property, and the cost of these obligations may be significant.

Any or all of these factors could adversely affect our financial results.

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Many of these factors have been present in the market in recent years, including inflation and economic downturn, which has impacted consumer confidence and discretionary spending.

Volatility or uncertainty in regulation or policy, including in areas such as international trade and tariff policies;

threats or occurrences of war or armed conflict (including the ongoing Russia-Ukraine conflict, the conflict in the Middle East, and shipping disruptions in the Red Sea and surrounding waterways);

Volatility or uncertainty in regulation or policy, including in areas such as international diplomacy, trade and tariff policies;

threats or occurrences of war or armed conflict, geopolitical instability or uncertainty, (including in Ukraine and the Middle East, and shipping disruptions in the Red Sea and surrounding waterways);

pandemics or epidemics (such as the COVID-19 pandemic);

supply chain disruptions;

geopolitical instability or uncertainty;

uncertainty regarding the financial stability of banking institutions;

and political or social unrest and/or conflict (locally or across regions) have had and may continue to have significant effects on consumer confidence and spending.

Factors that affect consumer confidence and spending can in turn affect our financial results and impact the retail industry generally.

These conditions and factors also shift trends in consumer spending that could affect our business.

Factors that affect consumer confidence and spending can in turn impact trends in spending, the retail industry generally, and our business and financial results.

Shifts in the market may adversely affect our sales, cash flows, merchandise orders and results of operations and performance.

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Similarly, changes in laws and policies governing foreign trade, manufacturing, development and investment in the countries where we currently operate could adversely affect our business.

government recently announced tariffs on product imports from certain countries, including Canada, Mexico, and China.

government has imposed, and may in the future impose further, tariffs on certain foreign goods and product imports.

These actions have resulted, and are expected to further result, in retaliatory measures on U.S.

If maintained, these recently announced tariffs and the potential escalation of trade disputes could pose a risk to our business that could affect our revenue and cost of sourcing our merchandise.

The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as negotiations between the U.S.

In February 2026, the U.S.

Supreme Court issued a decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”).

The ruling may allow for recovery of IEEPA tariff amounts previously paid, although the timing and administration of any potential IEEPA tariff refunds is unknown and may be subject to further legal and regulatory developments.

Subsequent to the U.S.

Supreme Court’s ruling, an executive order was issued imposing a new global tariff, in addition to any existing non-IEEPA tariffs.

The outlook on further trade policy actions, including trade agreements and potential retaliatory tariffs is unclear.

These tariffs and other potential trade disputes could pose a risk to our business that could affect our revenue and cost of sourcing our merchandise.

The extent and duration of the tariffs and the resulting impact on general economic conditions and on our business are uncertain and depend on various factors, such as further changes to the U.S.

government tariff policies, negotiations between the U.S.

and affected countries, the responses of other countries or regions, exemptions or exclusions that may be granted, availability and cost of alternative sources of merchandise, and our buying organization’s ability to execute our merchandise sourcing model to offset the effects of the tariffs.

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Global financial markets can experience volatility, disruption and credit contraction, which could adversely affect global economic conditions.

Changes in economic conditions could adversely affect sources of liquidity available to us or our costs of capital, including through capital markets.

In particular, prolonged volatility or significant disruption of global financial markets relating to the financial and regulatory environment;

interest rate increases following a period of low interest rates;

On occasion, we borrow money to finance our activities, and if financing were not available to us in adequate amounts and on appropriate terms when needed, that could adversely affect our financial performance.

Changes in the capital and credit markets and general market disruptions, such as prolonged volatility or significant disruption of global financial markets relating to the financial and regulatory environment;

interest rate fluctuations;

geopolitical conflict;

and disruptions impacting traditional banking, could have a negative impact on our ability to access capital markets and other funding sources, on acceptable terms or at all, and impede our ability to comply with debt covenants.

and disruptions impacting traditional banking, have in the past increased and may continue to increase the cost of financing or may restrict our access to potential sources of liquidity on acceptable terms or at all, and impede our ability to comply with debt covenants.

In addition, changes in economic conditions could adversely affect plan asset values and investment performance and increase our pension liabilities, expenses and funding requirements and other related financial exposure with respect to company-sponsored and multiemployer pension plans.

We rely on banks and other financial institutions to safeguard and allow ready access to assets such as cash and cash equivalents.

Our continued access to liquidity sources on favorable terms also depends on factors such as our operating performance and maintaining strong credit ratings.

Our strategies for managing these financial risks and exposures may not be effective or sufficient or may expose us to risk.

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Natural or other disasters, such as hurricanes, tornadoes, floods, wildfires, earthquakes and other extreme weather;

climate conditions, which have recently been increasing in severity and frequency;

climate conditions, which have continued to increase in severity and frequency;

public health issues, such as pandemics and epidemics (such as the COVID-19 pandemic);

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domestic or foreign terrorism or other acts of violence (including riots or active shooter situations);

or cyberterrorism, nation-state cyber-attacks, or other cyber events could disrupt our operations and/or have an adverse effect on our results of operations and financial condition in a number of ways, including by causing injury or serious harm to our Associates or customers;

These effects could include causing injury or serious harm to our Associates or customers;

severely damaging or destroying one or more of our stores, distribution facilities, or office facilities;

or could disrupt the operations of, or require the closure of, one or more of our vendors or other parts of our supply chain located in the affected areas.

Day-to-day operations, including our ability to receive products from our vendors or third-party service providers or to transport products to our stores or to our e-commerce customers could be adversely affected, transportation to and from our stores (by customers or Associates) could be limited, or we could temporarily close stores or distribution centers in the affected areas or in areas served by affected distribution centers for a short or extended period of time.

or disrupting the operations of, or requiring the closure of, third-party service providers, one or more of our vendors or parts of our supply chain located in the affected areas.

Day-to-day operations, including our ability to receive products from our vendors or third-party service providers or to transport products to our stores or to our e-commerce customers could be adversely affected, transportation to and from our stores (by customers or Associates) could be limited, or we could temporarily close stores or facilities within our distribution network in the affected areas or in areas served by affected facilities for a short or extended period of time.

Government regulations and responses to such events or conditions could affect our operations or result in material expenses relating to compliance.

Our business continuity and disaster recovery plans may not be adequate to address all potential scenarios, particularly those involving disruptions of unprecedented scope, severity, or duration.

Our ability to recover from a significant disruption may depend on factors beyond our control, including the availability of transportation, utilities, labor, and third-party services in the affected areas.

Adverse or unseasonable weather, such as storms, severe cold or heat or unseasonable temperatures (even if not extreme), which could increase in both frequency and severity over time, may also affect customers’ buying patterns and willingness to shop at all or in certain categories we offer, particularly in apparel, products viewed as contributing to deforestation or biodiversity loss, or seasonal merchandise, and may affect our ability to source products containing raw materials whose yield is affected by adverse weather, which could impact our sales, customer satisfaction with our stores, and our markdowns, adversely affecting our business.

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Energy and fuel costs can fluctuate dramatically and, at times, have resulted in significant cost increases, particularly for the price of oil and gasoline.

An increase in the price of oil increases our transportation costs for distribution, utility costs for our retail stores and costs to purchase our products from suppliers.

An increase in the price of oil increases our transportation costs for distribution, utility costs for our retail stores and costs to purchase our products from vendors.

Although we typically enter into derivative instruments designed to manage a portion of our transportation costs (a hedging strategy), any such strategy may not be effective or sufficient and could result in increased operating costs.

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Shortages or disruptions, including from increased demand, geopolitical conflicts and other factors, impacting transportation within our supply chain, also negatively impact our cost of business and cause costs to fluctuate in ways we may not be able to anticipate.

For example, in recent years, increased freight costs related to labor, equipment and capacity shortages involving freight hauling, increased interest rates, as well as other factors, had an adverse impact on our margins.

For example, in recent years, increased freight costs related to labor, equipment and capacity shortages involving freight hauling, increased interest rates and other factors, had an adverse impact on our margins.

Geopolitical events have in the past and may again impact fuel resources and operations of third parties along our supply chain such that our inventory flow and financial performance is negatively impacted.

Similarly, food and other commodity prices can fluctuate dramatically.

Such increases can impact the cost of merchandise, which could adversely affect our performance through potentially reduced consumer demand or reduced margins.

Similarly, other commodity prices can fluctuate dramatically.

Commodity price increases can impact the cost of merchandise, which could adversely affect our performance through potentially reduced consumer demand or reduced margins.

Fluctuations in currency exchange rates may lead to lower revenues and earnings.

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These requirements, current or changing, could adversely affect our operating results and may affect our operations, and include those involving:

– labor and employment practices and benefits, including pay transparency requirements, and rules applicable to labor unions and works councils;

– import/export, supply chain, social compliance, trade restrictions and logistics, including resulting from changes to requirements or policies from the Uyghur Forced Labor Prevention Act, the Countering America’s Adversaries Through Sanctions Act and the continuation of widespread sanctions as a result of the ongoing Russia-Ukraine conflict;

– labor and employment practices, including pay and benefits, worker classification, work authorization, and labor unions and works councils;

– import/export, supply chain, social compliance, and trade restrictions and logistics, including resulting from changes to requirements or policies from the Uyghur Forced Labor Prevention Act, the Countering America’s Adversaries Through Sanctions Act and the continuation of widespread sanctions as a result of the ongoing Russia-Ukraine conflict;

– climate change, energy, waste, deforestation, biodiversity, chemicals management and water;

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– financial regulations and reporting, including various climate-related financial disclosure regulations;

– cybersecurity, data protection and privacy, such as to comply with, or fines and penalties related to, General Data Protection Regulation in the European Union and the California Consumer Privacy Act;

– cybersecurity, data protection and privacy;

– artificial intelligence;

– internet regulations, including e-commerce, electronic communications and privacy;

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Particularly in a dynamic regulatory environment, anticipated changes to laws and regulations have required, and are expected to continue to require, us to invest in compliance efforts or otherwise expend resources before changes are certain.

There have been significant and wide-ranging reforms to federal policy and the federal government in the U.S.

since the presidential administration changed at the beginning of 2025, and there is significant uncertainty regarding the impact of such reforms.

There have been and continue to be changes to federal policy and the federal government in the U.S., which have impacted, and may continue to impact, among other things, the U.S.

and global economy, international trade relations, unemployment, immigration, healthcare, taxation, and the U.S.

regulatory environment.

In addition, if we, or third parties that perform services on our behalf, including those operating retail businesses, fail to comply with applicable laws, rules, regulations, standards, interpretations and orders, or are unable to provide us with data or other information needed to meet our regulatory reporting obligations, we may be subject to judgments, fines or other costs or penalties, which may cause reputational harm and could adversely affect our operations and our financial results and condition.

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These may involve inquiries, investigations, lawsuits and other proceedings by local, provincial, state and national governmental entities (in the U.S.

and other countries) and private plaintiffs, including with respect to employment and employee benefits (such as classification, employment rights, discrimination, wage and hour, retaliation, and pay transparency);

whistleblower claims;

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consumer protection;

potential tariff refunds;

privacy/cybersecurity;

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However, our vendors have not always complied with such obligations.

If we, our merchandise vendors, or other third parties performing services on our behalf are unable or fail to comply with regulatory requirements on a timely basis or at all, or to adequately monitor new regulations that may apply to existing or new merchandise categories or in new geographies, or if we sell non-compliant, unsafe, or previously recalled products, we could have to conduct product recalls, incur significant fines or penalties for non-compliance with applicable laws and regulations and have to curtail some aspects of our sales or operations, any of which could have an adverse effect on our financial results.

If we, our vendors, or other third parties performing services on our behalf are unable or fail to comply with regulatory requirements on a timely basis or at all, or to adequately monitor new regulations that may apply to existing or new merchandise categories or in new geographies, or if we sell non-compliant, unsafe, or previously recalled products, we could have to conduct product recalls, incur significant fines or penalties for non-compliance with applicable laws and regulations and have to curtail some aspects of our sales or operations, any of which could have an adverse effect on our financial results.

Allegations of non-compliance with applicable laws and regulations could, and in certain instances in the past have, exposed us to litigation or governmental enforcement action.

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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 1A. Risk Factors