What changed in this filing

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Item 1. Financial Statements

2022-12-01 compared with 2022-08-25 · 45 added, 33 removed, 260 unchanged (23% of the section changed)

32 unchanged sentences

51,029 , 52,311 , and 54,170 shares outstanding;

at July 30, 2022 (unaudited), January 29, 2022, and July 31, 2021 (unaudited), respectively

at October 29, 2022 (unaudited), January 29, 2022, and October 30, 2021 (unaudited), respectively

Treasury stock-common, at cost

49 unchanged sentences

Effect of exchange rate changes on cash and cash equivalents

Net increase (decrease) in cash and cash equivalents

Net decrease in cash and cash equivalents

Cash and cash equivalents at beginning of period

20 unchanged sentences

Balance – July 30, 2022

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – October 29, 2022

See accompanying notes to consolidated financial statements.

17 unchanged sentences

Balance – July 31, 2021

Stock-based compensation

Stock options exercised and other awards

Purchase of treasury shares

Repurchase of common shares

Balance – October 30, 2021

See accompanying notes to consolidated financial statements.

8 unchanged sentences

and its consolidated subsidiaries.

As of July 30, 2022, the Company operated 1,325 stores across 50 states, as shown in the table below.

As of October 29, 2022, the Company operated 1,343 stores across 50 states, as shown in the table below.

New Hampshire

10 unchanged sentences

The Company’s business is subject to seasonal fluctuation, with significant portions of net sales and net income being realized during the fourth quarter of the fiscal year due to the holiday selling season.

The results for the 13 and 26 weeks ended July 30, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending January 28, 2023, or for any other future interim period or for any future year, in particular as a result of the uncertainty around the continuing effects of the COVID-19 pandemic, geo-political events, and inflationary cost pressures on future periods.

The results for the 13 and 39 weeks ended October 29, 2022 are not necessarily indicative of the results to be expected for the fiscal year ending January 28, 2023, or for any other future interim period or for any future year, in particular as a result of the uncertainty around the continuing effects of the COVID-19 pandemic, geopolitical events, and inflationary cost pressures on future periods.

These unaudited interim consolidated financial statements and the related notes should be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 29, 2022.

5 unchanged sentences

The Company’s quarterly periods are the 13 weeks ending on the Saturday closest to April 30, July 31, October 31, and January 31.

The second quarter in fiscal 2022 and 2021 ended on July 30, 2022 and July 31, 2021, respectively.

The third quarter in fiscal 2022 and 2021 ended on October 29, 2022 and October 30, 2021, respectively.

Use of estimates

3 unchanged sentences

The Company considers its accounting policies relating to inventory valuations, vendor allowances, impairment of long-lived tangible and right-of-use assets, loyalty program and income taxes to be the most significant accounting policies that involve management estimates and judgments.

Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, geo-political events, and inflationary cost pressures, will be reflected in the consolidated financial statements in future periods.

Significant changes, if any, in those estimates and assumptions resulting from continuing changes in the economic environment, including those related to the impacts of the COVID-19 pandemic, geopolitical events, and inflationary cost pressures, will be reflected in the consolidated financial statements in future periods.

Net sales include retail stores and e-commerce merchandise sales as well as salon services and other revenue.

Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target, and deferred revenue related to the loyalty program and gift card breakage.

Other revenue includes the private label and co-branded credit card programs, royalties derived from the partnership with Target Corporation, and deferred revenue related to the loyalty program and gift card breakage.

Disaggregated revenue

9 unchanged sentences

In addition, breakage on gift cards is recognized proportionately as redemption occurs.

The following table provides a summary of the changes included in deferred revenue during the 13 and 26 weeks ended July 30, 2022 and July 31, 2021:

The following table provides a summary of the changes included in deferred revenue during the 13 and 39 weeks ended October 29, 2022 and October 30, 2021:

13 Weeks Ended

7 unchanged sentences

(2) Revenue recognized in the current period related to the beginning liability.

Other amounts included in deferred revenue were $ 10,658 and $ 9,235 at July 30, 2022 and July 31, 2021, respectively.

Other amounts included in deferred revenue were $ 8,141 and $ 9,405 at October 29, 2022 and October 30, 2021, respectively.

Goodwill and other intangible assets

Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $ 10,870 at July 30, 2022, January 29, 2022, and July 31, 2021.

No additional goodwill was recognized during the 13 and 26 weeks ended July 30, 2022.

Goodwill, which represents the excess of cost over the fair value of net assets acquired, was $ 10,870 at October 29, 2022, January 29, 2022, and October 30, 2021.

No additional goodwill was recognized during the 13 and 39 weeks ended October 29, 2022.

The recoverability of goodwill is reviewed annually during the fourth quarter or more frequently if an event occurs or circumstances change that would indicate that impairment may exist.

18 unchanged sentences

Operating lease assets obtained in exchange for operating lease liabilities (non-cash)

(1) Excludes $ 13,363 and $ 16,923 related to cash received for tenant incentives for the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

(1) Excludes $ 21,347 and $ 24,570 related to cash received for tenant incentives for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

Commitments and contingencies

12 unchanged sentences

Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0 % to 0.125 % or the London Interbank Offered Rate plus a margin of 1.125 % to 1.250 %, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.20 % per annum.

As of July 30, 2022, January 29, 2022, and July 31, 2021, there were no borrowings outstanding under the credit facility.

As of July 30, 2022, the Company was in compliance with all terms and covenants of the Loan Agreement.

As of October 29, 2022, January 29, 2022, and October 30, 2021, there were no borrowings outstanding under the credit facility.

As of October 29, 2022, the Company was in compliance with all terms and covenants of the Loan Agreement.

Fair value measurements

4 unchanged sentences

● Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions.

As of July 30, 2022, January 29, 2022, and July 31, 2021, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 36,071 , $ 40,839 , and $ 38,077 , respectively.

As of October 29, 2022, January 29, 2022, and October 30, 2021, there were liabilities related to the non-qualified deferred compensation plan included in other long-term liabilities on the consolidated balance sheets of $ 34,839 , $ 40,839 , and $ 38,333 , respectively.

The liabilities are categorized as Level 2 as they are based on third-party reported values, which are based primarily on quoted market prices of underlying assets of the funds within the plan.

14 unchanged sentences

The Company does not currently pay a regular dividend.

The Company granted 48 and 61 stock options during the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense for stock options was $ 2,164 and $ 3,101 for the 13 weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense for stock options was $ 4,506 and $ 5,998 for the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

The weighted-average grant date fair value of these stock options was $ 149.14 and $ 109.72 for the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

At July 30, 2022, there was approximately $ 13,822 of unrecognized stock-based compensation expense related to unvested stock options.

There were 56 and 58 restricted stock units issued during the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense for restricted stock units was $ 4,987 and $ 5,149 for the 13 weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense for restricted stock units was $ 9,439 and $ 9,984 for the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

At July 30, 2022, there was approximately $ 32,535 of unrecognized stock-based compensation expense related to restricted stock units.

There were 37 and 46 performance-based restricted stock units issued during the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense for performance-based restricted stock units was $ 5,368 and $ 1,869 for the 13 weeks ended July 30, 2022 and July 31, 2021, respectively.

Stock-based compensation expense for performance-based restricted stock units was $ 8,930 and $ 3,115 for the 26 weeks ended July 30, 2022 and July 31, 2021, respectively.

At July 30, 2022, there was approximately $ 29,861 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

The Company granted 48 and 61 stock options during the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

Stock-based compensation expense for stock options was $ 1,646 and $ 2,712 for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively.

Stock-based compensation expense for stock options was $ 6,152 and $ 8,710 for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

The weighted-average grant date fair value of these stock options was $ 149.14 and $ 109.72 for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

At October 29, 2022, there was approximately $ 12,073 of unrecognized stock-based compensation expense related to unvested stock options.

There were 58 and 60 restricted stock units issued during the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

Stock-based compensation expense for restricted stock units was $ 4,544 and $ 4,622 for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively.

Stock-based compensation expense for restricted stock units was $ 13,983 and $ 14,606 for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

At October 29, 2022, there was approximately $ 28,260 of unrecognized stock-based compensation expense related to restricted stock units.

There were 37 and 46 performance-based restricted stock units issued during the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

Stock-based compensation expense for performance-based restricted stock units was $ 3,489 and $ 1,786 for the 13 weeks ended October 29, 2022 and October 30, 2021, respectively.

Stock-based compensation expense for performance-based restricted stock units was $ 12,419 and $ 4,901 for the 39 weeks ended October 29, 2022 and October 30, 2021, respectively.

At October 29, 2022, there was approximately $ 27,039 of unrecognized stock-based compensation expense related to performance-based restricted stock units.

Income tax expense reflects the federal statutory tax rate and the weighted average state statutory tax rate for the states in which the Company operates stores.

Income tax expense of $ 95,859 for the 13 weeks ended July 30, 2022 represents an effective tax rate of 24.5 %, compared to $ 80,989 of tax expense representing an effective tax rate of 24.4 % for the 13 weeks ended July 31, 2021.

Income tax expense of $ 201,771 for the 26 weeks ended July 30, 2022 represents an effective tax rate of 24.3 %, compared to $ 155,666 of tax expense representing an effective tax rate of 24.4 % for the 26 weeks ended July 31, 2021.

Income tax expense of $ 88,120 for the 13 weeks ended October 29, 2022 represents an effective tax rate of 24.3 %, compared to $ 68,537 of tax expense representing an effective tax rate of 24.1 % for the 13 weeks ended October 30, 2021.

Income tax expense of $ 289,891 for the 39 weeks ended October 29, 2022 represents an effective tax rate of 24.3 %, compared to $ 224,203 of tax expense representing an effective tax rate of 24.4 % for the 39 weeks ended October 30, 2021.

On August 16, 2022, the Inflation Reduction Act of 2022 was enacted into law, which, among other things, introduces a 15 % corporate alternative minimum tax on book income of certain large corporations and creates a 1 % excise tax on net share repurchases.

The corporate alternative minimum tax will be effective in fiscal 2024, and the excise tax applies to share repurchases made after December 31, 2022.

The corporate alternative minimum tax and the excise tax are not expected to have a material impact on the consolidated financial statements.

Net income per common share

7 unchanged sentences

Net income per common share:

The denominator for diluted net income per common share for the 13 weeks ended July 30, 2022 and July 31, 2021 excludes 67 and 152 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income per common share for the 26 weeks ended July 30, 2022 and July 31, 2021 excludes

125 and 207 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income per common share for the 13 weeks ended October 29, 2022 and October 30, 2021 excludes 50 and 144 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

The denominator for diluted net income per common share for the 39 weeks ended October 29, 2022 and October 30, 2021 excludes 119 and 173 employee stock options and restricted stock units, respectively, due to their anti-dilutive effects.

Outstanding performance-based restricted stock units are included in the computation of dilutive shares only to the extent that the underlying performance conditions are satisfied prior to the end of the reporting period or would be considered satisfied if the end of the reporting period were the end of the related contingency period and the results would be dilutive under the treasury stock method.

12 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