What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-05-29 compared with 2024-12-05 · 68 added, 87 removed, 183 unchanged (46% of the section changed)

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This discussion contains forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, which reflect our current views with respect to, among other things, future events and financial performance.

You can identify these forward-looking statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words.

You can identify these forward-looking

statements by the use of forward-looking words such as “outlook,” “believes,” “expects,” “plans,” “estimates,” “targets,” “strategies,” or other comparable words.

Any forward-looking statements contained in this Form 10-Q are based upon our historical performance and on current plans, estimates, and expectations.

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Such forward-looking statements are subject to various risks and uncertainties, which include, without limitation:

● macroeconomic conditions, including inflation, elevated interest rates and recessionary concerns, as well as continuing labor cost pressures, and transportation and shipping cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, profitability, and cash flows (including future uncertain impacts);

● changes in the overall level of consumer spending and volatility in the economy, including as a result of macroeconomic conditions and geopolitical events;

● macroeconomic conditions, including inflation and elevated interest rates, as well as prior labor, transportation, and shipping cost pressures, have had, and may continue to have, a negative impact on our business, financial condition, profitability, and cash flows (including future uncertain impacts, especially when combined with increased tariffs);

● changes in the overall level of consumer spending and volatility in the economy, including as a result of macroeconomic conditions, tariffs, and geopolitical events;

● our ability to sustain our growth plans and successfully implement our long-range strategic and financial plan;

● the ability to execute our operational excellence priorities, including continuous improvement, Project SOAR (the replacement of our enterprise resource planning platform), and supply chain optimization;

● the ability to execute our operational excellence priorities, including continuous improvement and supply chain optimization;

● our ability to gauge beauty trends and react to changing consumer preferences in a timely manner;

● the possibility that we may be unable to compete effectively in our highly competitive markets;

● the possibility of significant interruptions in the operations of our distribution centers, fast fulfillment centers, and market fulfillment centers;

● the possibility of significant interruptions in the operations of our distribution centers, fast fulfillment center, and market fulfillment centers;

● the possibility that cybersecurity or information security breaches and other disruptions could compromise our information or result in the unauthorized disclosure of confidential information;

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● a decline in operating results which could lead to asset impairment and store closure charges;

● other risk factors detailed in our public filings with the Securities and Exchange Commission, including risk factors contained in Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended February 3, 2024, as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q (including this report).

● other risk factors detailed in our public filings with the Securities and Exchange Commission (the SEC), including risk factors contained in Item 1A, “Risk Factors” of our Annual Report on Form 10-K for the year ended February 1, 2025, as such may be amended or supplemented in our subsequently filed Quarterly Reports on Form 10-Q (including this report).

Except to the extent required by the federal securities laws, we undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

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and salons and authorized retail outlets for professional hair care products.

We developed a unique specialty retail concept that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment.

We developed a unique specialty retail concept

that offers a broad range of brands and price points, select beauty services, and a convenient and welcoming shopping environment.

We define our target consumer as a beauty enthusiast, a consumer who is passionate about the beauty category, uses beauty for self-expression, experimentation, and self-investment, and has high expectations for the shopping experience.

We believe our strategy provides us with the competitive advantages that have contributed to our financial performance.

Today, we are the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products, and salon services.

Today, we are the largest specialty beauty retailer in the United States and the premier beauty destination for cosmetics, fragrance, skin care products, hair care products, wellness products, and salon services.

Key aspects of our business include:

a differentiated assortment of approximately 25,000 beauty and wellness products across a variety of categories and price points as well as a variety of beauty services, including salon services, in more than 1,400 stores predominantly located in convenient, high-traffic locations;

a differentiated assortment of approximately 29,000 beauty products across a variety of categories and price points as well as a variety of beauty services, including salon services, in more than 1,400 stores predominantly located in convenient, high-traffic locations;

engaging digital experiences delivered through our website, Ulta.com, and our mobile applications;

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fostering authentic, empowering human connections that inspire, delight and engage guests at every touchpoint;

engaging our guests wherever they want to shop by expanding our reach through seamless and immersive omnichannel experiences;

and 4) Loyalty:

building lifelong loyalty and brand love through member growth and personalization;

and 4) Access:

engaging our guests wherever they want to shop by expanding our reach through seamless and immersive omnichannel experiences.

We operate in an attractive and growing U.S.

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Over the long term, our growth strategy is to drive profitable growth and market share leadership in beauty and wellness through growing our comparable sales, expanding omnichannel capabilities, and opening new stores.

Long-term operating profit is expected to increase as a result of our efforts to drive revenue growth, leverage fixed costs, improve merchandise margin, increase operating efficiencies, and grow other revenue, partially offset by incremental investments in new stores and technology to enhance the guest experience, people, assortment, advertising, and depreciation.

Current Trends

Industry trends

Our research indicates that Ulta Beauty has captured meaningful market share across all categories over the last several years.

The overall beauty market expanded in 2023 and into the first 39 weeks of fiscal 2024, supported by on-going consumer engagement with the beauty category.

Industry trend s

The overall beauty market expanded in 2024 and into the first quarter of 2025, supported by on-going consumer engagement with the beauty category.

We remain confident that our differentiated and diverse business model, our commitment to strategic investments, and our highly engaged associates will continue to drive market share gains over the long term.

Impact of inflation and other macroeconomic trends

Persistent inflationary and macroeconomic pressures have impacted consumer spending habits broadly, which we believe may have contributed to lower sales trends through the first 39 weeks of fiscal 2024.

The continuation of inflationary and macroeconomic pressures could lead to a recession and further impact our ability to grow sales and maintain historical profitability levels.

Persistent inflationary and macroeconomic pressures, including existing and potential tariffs, have impacted consumer spending habits broadly, which we believe could contribute to lower sales trends throughout fiscal 2025.

The continuation of inflationary and macroeconomic pressures, including existing and potential tariffs, could further impact our ability to grow sales and maintain historical profitability levels.

In addition, inflation could cause the interest rates on any future debt to remain at an elevated level or increase.

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● the location of new stores in existing store markets;

● competition;

● competition and/or alternative distribution channels;

● our ability to respond on a timely basis to changes in consumer preferences;

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Pre-opening expenses include non-capital expenditures during the period prior to store opening for new, remodeled, and relocated stores including rent during the construction period for new and relocated stores, store set-up labor, management and employee training, and grand opening advertising.

Interest income, net represents interest from cash equivalents, which include highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase.

Interest income represents interest from cash equivalents, which include highly liquid investments such as money market funds and certificates of deposit with an original maturity of three months or less from the date of purchase.

Interest expense includes interest costs and facility fees associated with our credit facility, which is structured as an asset-based lending instrument.

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

The Company’s third quarter in fiscal 2024 and 2023 ended on November 2, 2024 and October 28, 2023, respectively.

The Company’s first quarter in fiscal 2025 and 2024 ended on May 3, 2025 and May 4, 2024, respectively.

Our quarterly results of operations have varied in the past and are likely to do so again in the future.

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13 Weeks Ended

39 Weeks Ended

(Dollars in thousands)

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Interest income, net

Income before income taxes

Income before income taxes and equity net loss of affiliate

Income tax expense

Income before equity net loss of affiliate

Equity net loss of affiliate

Other operating data:

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13 Weeks Ended

39 Weeks Ended

(Percentage of net sales)

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Interest income, net

Income before income taxes

Income tax expense

Comparison of 13 weeks ended November 2, 2024 to 13 weeks ended October 28, 2023

Net sales increased $41.2 million, or 1.7%, to $2.53 billion for the 13 weeks ended November 2, 2024 compared to $2.49 billion for the 13 weeks ended October 28, 2023.

The net sales increase was primarily due to new store contribution, partially offset by a $4.9 million decline in other revenue.

The comparable sales increase of 0.6% for the 13 weeks ended November 2, 2024 was driven by a 0.5% increase in transactions and a 0.1% increase in average ticket.

Gross profit increased $13.6 million, or 1.4%, to $1.0 billion for the 13 weeks ended November 2, 2024, compared to $992.1 million for the 13 weeks ended October 28, 2023.

Gross profit as a percentage of net sales decreased to 39.7% for the 13 weeks ended November 2, 2024, compared to 39.9% for the 13 weeks ended October 28, 2023.

The decrease in gross profit margin was primarily due to deleverage of store and supply chain fixed costs and lower other revenue, partially offset by favorable channel mix and lower inventory shrink.

Selling, general and administrative expenses

Selling, general and administrative (SG&A) expenses increased $20.9 million, or 3.2%, to $682.3 million for the 13 weeks ended November 2, 2024, compared to $661.4 million for the 13 weeks ended October 28, 2023.

SG&A expenses as a percentage of net sales increased to 27.0% for the 13 weeks ended November 2, 2024, compared to 26.6% for the 13 weeks ended October 28, 2023, primarily due to deleverage of store payroll and benefits and corporate overhead, primarily due to strategic investments, partially offset by lower incentive compensation.

Pre-opening expenses

Pre-opening expenses were $4.9 million for the 13 weeks ended November 2, 2024 compared to $3.5 million for the 13 weeks ended October 28, 2023.

Interest income, net

Interest income, net was $1.7 million for the 13 weeks ended November 2, 2024 compared to $2.5 million for the 13 weeks ended October 28, 2023.

As of November 2, 2024 and October 28, 2023, we had $199.7 million and $195.4 million, respectively, outstanding under the credit facility.

We did not have any outstanding borrowings on the credit facility as of February 3, 2024.

Income before income taxes and equity net loss of affiliate

Income tax expense

Income tax expense of $78.0 million for the 13 weeks ended November 2, 2024 represents an effective tax rate of 24.4%, compared to $80.2 million of income tax expense representing an effective tax rate of 24.3% for the 13 weeks ended October 28, 2023.

Net income was $242.2 million for the 13 weeks ended November 2, 2024, compared to $249.5 million for the 13 weeks ended October 28, 2023.

The decrease in net income is primarily due to the $20.9 million increase in SG&A expenses and the $1.4 million increase in pre-opening expenses, partially offset by the $13.6 million increase in gross profit and the $2.2 million decrease in income taxes.

Comparison of 39 weeks ended November 2, 2024 to 39 weeks ended October 28, 2023

Net sales increased $155.0 million, or 2.0%, to $7.8 billion for the 39 weeks ended November 2, 2024, compared to $7.7 billion for the 39 weeks ended October 28, 2023.

The net sales increase was primarily due to new store contribution and

a $10.0 million increase in other revenue.

The comparable sales increase of 0.3% for the 39 weeks ended November 2, 2024 was driven by a 0.3% increase in average ticket.

Gross profit was $3.1 billion for the 39 weeks ended November 2, 2024 compared to $3.0 billion for the 39 weeks ended October 28, 2023.

Gross profit as a percentage of net sales decreased to 39.1% for the 39 weeks ended November 2, 2024, compared to 39.7% for the 39 weeks ended October 28, 2023.

The decrease in gross profit margin was primarily due to lower merchandise margin, partially offset by deleverage of store fixed costs.

Income before equity net loss of affiliate

Equity net loss of affiliate

Comparison of 13 weeks ended May 3, 2025 to 13 weeks ended May 4, 2024

Net sales increased $122.5 million or 4.5%, to $2.8 billion for the 13 weeks ended May 3, 2025, compared to $2.7 billion for the 13 weeks ended May 4, 2024.

The net sales increase was primarily due to increased comparable sales and new store contribution, partially offset by a $3.5 million decrease in other revenue.

The total comparable sales increase of 2.9% was driven by a 2.3% increase in average ticket and a 0.6% increase in transactions.

Gross profit increased $44.4 million or 4.2%, to $1.11 billion for the 13 weeks ended May 3, 2025, compared to $1.07 billion for the 13 weeks ended May 4, 2024.

Gross profit as a percentage of net sales decreased to 39.1% for the 13 weeks ended May 3, 2025, compared to 39.2% for the 13 weeks ended May 4, 2024.

The decrease in gross profit margin was primarily due to deleverage of store and supply chain fixed costs and lower other revenue, partially offset by lower inventory shrink.

Selling, general and administrative expenses

SG&A expenses increased $118.8 million, or 6.3%, to $2.0 billion for the 39 weeks ended November 2, 2024, compared to $1.9 billion for the 39 weeks ended October 28, 2023.

SG&A expenses as a percentage of net sales increased to 25.5% for the 39 weeks ended November 2, 2024, compared to 24.5% for the 39 weeks ended October 28, 2023, primarily due to deleverage of corporate overhead due to strategic investments and deleverage of store payroll and benefits, and store expenses, partially offset by lower incentive compensation.

Selling, general and administrative (SG&A) expenses increased $44.7 million or 6.7%, to $710.6 million for the 13 weeks ended May 3, 2025, compared to $665.9 million for the 13 weeks ended May 4, 2024.

SG&A expenses as a percentage of net sales increased to 24.9% for the 13 weeks ended May 3, 2025, compared to 24.4% for the 13 weeks ended May 4, 2024, primarily due to deleverage of store payroll and benefits and store expenses, partially offset by leverage of corporate overhead.

Pre-opening expenses

Pre-opening expenses were $12.0 million for the 39 weeks ended November 2, 2024 compared to $5.4 million for the 39 weeks ended October 28, 2023.

Pre-opening expenses were $1.8 million for the 13 weeks ended May 3, 2025 compared to $2.9 million for the 13 weeks ended May 4, 2024.

Interest income, net

Interest income, net was $13.1 million for the 39 weeks ended November 2, 2024 compared to $14.3 million for the 39 weeks ended October 28, 2023.

As of November 2, 2024 and October 28, 2023, we had $199.7 million and $195.4 million, respectively, outstanding under the credit facility.

We did not have any outstanding borrowings on the credit facility as of February 3, 2024.

Interest income, net was $3.5 million for the 13 weeks ended May 3, 2025 compared to $6.9 million for the 13 weeks ended May 4, 2024.

We did not have any outstanding borrowings on the credit facility as of May 3, 2025, February 1, 2025, and May 4, 2024.

Income tax expense

Income tax expense of $253.9 million for the 39 weeks ended November 2, 2024 represents an effective tax rate of 23.9%, compared to $278.6 million of income tax expense representing an effective tax rate of 23.7% for the 39 weeks ended October 28, 2023.

Net income was $807.8 million for the 39 weeks ended November 2, 2024 compared to $896.6 million for the 39 weeks ended October 28, 2023.

The decrease in net income is primarily due to the $118.8 million increase in SG&A expenses and the $6.6 million increase in pre-opening expenses, partially offset by the $24.7 million decrease in income taxes and the $13.1 million increase in gross profit.

Income tax expense of $99.6 million for the 13 weeks ended May 3, 2025 represents an effective tax rate of 24.6%, compared to $94.7 million of income tax expense representing an effective tax rate of 23.2% for the 13 weeks ended May 4, 2024.

The higher income tax rate is primarily due to a reduced benefit from income tax accounting for stock-based compensation.

Net income was $305.1 million for the 13 weeks ended May 3, 2025, compared to $313.1 million for the 13 weeks ended May 4, 2024.

The decrease in net income is primarily related to the $44.7 million increase in SG&A expenses, the $4.9 million increase in income tax expense, and the $3.4 million decrease in interest income, net, partially offset by the $44.4 million increase in gross profit.

Liquidity and capital resources

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The most significant components of our working capital are merchandise inventories, cash and cash equivalents, and receivables, reduced by accounts payable, deferred revenue, and accrued liabilities.

As of November 2, 2024, February 3, 2024, and October 28, 2023, we had cash and cash equivalents of $177.8 million, $766.6 million, and $121.8 million, respectively.

As of May 3, 2025, February 1, 2025, and May 4, 2024, we had cash and cash equivalents of $454.6 million, $703.2 million, and $524.6 million, respectively.

Our primary cash needs are for rent, capital expenditures for new, remodeled, and relocated stores, increased merchandise inventories related to store expansion and new brand additions, supply chain improvements, share repurchases, and continued investment in our information technology systems.

Our most significant ongoing short-term cash requirements relate primarily to funding operations (including expenditures for lease expenses, inventory, labor, distribution, advertising and marketing, and tax liabilities) as well as periodic spend for capital expenditures, investments, and share repurchases.

Our working capital needs are greatest from August through November each year as a result of our inventory build-up during this period for the approaching holiday season.

Our working capital needs are greatest from

August through November each year as a result of our inventory build-up during this period for the approaching holiday season.

Long-term cash requirements primarily relate to funding lease expenses and other purchase commitments.

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Operating activities consist of net income adjusted for certain non-cash items, including depreciation and amortization, non-cash lease expense, deferred income taxes, stock-based compensation expense, realized gains or losses on disposal of property and equipment, and the effect of working capital changes.

The decrease in net cash provided by operating activities in the first 39 weeks of fiscal 2024 compared to the first 39 weeks of fiscal 2023 was mainly due to the decrease in net income, the timing of accrued income taxes, prepaid expenses and other current assets, accrued liabilities, accounts payable, and deferred revenue, partially offset by a lower increase in merchandise inventories in the first 39 weeks of fiscal 2024, a decrease in net other assets and liabilities, and an increase in depreciation and amortization.

Merchandise inventories, net were $2.4 billion at November 2, 2024 compared to $2.3 billion at October 28, 2023, representing an increase of $43.9 million or 1.9%.

The increase in total inventory is primarily due to the addition of 63 net new stores opened since October 28, 2023.

The increase in net cash provided by operating activities in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was mainly due to the timing of accounts payable and accrued liabilities and a smaller increase in merchandise inventories in the first quarter of fiscal 2025, partially offset by the net increase in other assets and liabilities and the decrease in net income.

The decrease in net income was primarily due to an increase in SG&A expenses, an increase in income tax expense, and a decrease in interest income, net, partially offset by an increase in gross profit resulting from higher sales.

Merchandise inventories, net were $2.1 billion at May 3, 2025, compared to $1.9 billion at May 4, 2024, representing an increase of $215.5 million or 11.3%.

The increase in total inventory is primarily due to the following:

● $146 million increase due to new brand launches and strategic inventory investments;

● $69 million increase due to the addition of 56 net new stores opened since May 4, 2024.

Investing activities

We have historically used cash primarily for new, remodeled, relocated, and refreshed stores, supply chain investments, short-term investments, and investments in information technology systems.

Investing activities for capital expenditures were $300.5 million during the 39 weeks ended November 2, 2024, compared to $311.0 million during the 39 weeks ended October 28, 2023.

During the 39 weeks ended November 2, 2024, we opened 57 new stores, closed five stores, relocated two stores, and remodeled 36 stores, compared to the 39 weeks ended October 28, 2023, when we opened 20 new stores, closed one store, relocated five stores, and remodeled 16 stores.

The decrease in net cash used in investing activities in the first 39 weeks of fiscal 2024 compared to the first 39 weeks of fiscal 2023 was primarily due to lower capital expenditures for information technology systems, supply chain

investments, and store maintenance, partially offset by higher capital expenditures for new, remodeled, and relocated stores and merchandising fixtures, compared to the first 39 weeks of fiscal 2023.

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems, and supply chain investments we undertake and the timing of these expenditures.

Investing activities for capital expenditures were $79.0 million during the 13 weeks ended May 3, 2025 compared to $91.0 million during the 13 weeks ended May 4, 2024.

During the 13 weeks ended May 3, 2025, we opened six new stores, remodeled four stores, and relocated two stores, compared to the 13 weeks ended May 4, 2024, when we opened 12 new stores, closed two stores, and relocated one store.

The decrease in net cash used in investing activities in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was primarily due to lower capital expenditures for merchandising fixtures and information technology systems, partially offset by higher capital expenditures for supply chain investments, compared to the first quarter of fiscal 2024.

Our future investments will depend primarily on the number of new, remodeled, and relocated stores, information technology systems investments, and supply chain investments that we undertake and the timing of these expenditures.

Based on past performance and current expectations, we believe our sources of liquidity will be sufficient to fund future capital expenditures.

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Purchases of treasury shares represent the fair value of common shares repurchased from plan participants in connection with shares withheld to satisfy minimum statutory tax obligations upon the vesting of restricted stock.

The decrease in net cash used in financing activities in the first 39 weeks of fiscal 2024 compared to the first 39 weeks of fiscal 2023 was primarily due to a decrease in the dollar amount of share repurchases.

As of November 2, 2024 and October 28, 2023, we had $199.7 million and $195.4 million, respectively, outstanding under the credit facility.

We did not have any outstanding borrowings on the credit facility as of February 3, 2024.

The increase in net cash used in financing activities in the first quarter of fiscal 2025 compared to the first quarter of fiscal 2024 was primarily due to an increase in share repurchases.

We had no borrowings outstanding under the credit facility as of May 3, 2025, February 1, 2025, and May 4, 2024.

The zero outstanding borrowings position is due to a combination of factors including sales demand, overall performance of management initiatives including expense control, and inventory and other working capital reductions.

We may require borrowings under the facility from time to time in future periods for unexpected business disruptions, to support our new store program, seasonal inventory needs, or share repurchases.

Share repurchase program

In March 2022, the Board of Directors authorized a share repurchase program (the 2022 Share Repurchase Program) pursuant to which the Company could repurchase up to $2.0 billion of the Company’s common stock.

The 2022 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program.

The 2022 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In March 2024, the Board of Directors authorized a share repurchase program (the March 2024 Share Repurchase Program) pursuant to which the Company could repurchase up to $2.0 billion of the Company’s common stock.

The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the 2022 Share Repurchase Program.

The March 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the earlier share repurchase program.

The March 2024 Share Repurchase Program did not have an expiration date but provided for suspension or discontinuation at any time.

In October 2024, the Board of Directors authorized a new share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock.

The October 2024 Share Repurchase Program authorization revokes the previously authorized but unused amounts from the March 2024 Share Repurchase Program.

In October 2024, the Board of Directors authorized a share repurchase program (the October 2024 Share Repurchase Program) pursuant to which the Company may repurchase up to $3.0 billion of the Company’s common stock.

The October 2024 Share Repurchase Program authorization revoked the previously authorized but unused amounts from the March 2024 Share Repurchase Program.

The October 2024 Share Repurchase Program does not have an expiration date and may be suspended or discontinued at any time.

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JPMorgan Chase Bank, N.A., as Syndication Agent and a Lender;

PNC Bank, National Association,

as Documentation Agent and a Lender;

PNC Bank, National Association, as Documentation Agent and a Lender;

and the other lenders party thereto.

The Loan Agreement matures on March 13, 2029, provides maximum revolving loans equal to the lesser of $800.0 million or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $50.0 million subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $200.0 million, subject to the consent by each lender and other conditions.

The Loan Agreement matures on March 13,

2029, provides maximum revolving loans equal to the lesser of $800.0 million or a percentage of eligible owned inventory and eligible owned receivables (which borrowing base may, at the election of the Company and satisfaction of certain conditions, include a percentage of qualified cash), contains a $50.0 million subfacility for letters of credit and allows the Company to increase the revolving facility by an additional $200.0 million, subject to the consent by each lender and other conditions.

The Loan Agreement contains a requirement to maintain a fixed charge coverage ratio of not less than 1.0 to 1.0 during such periods when availability under the Loan Agreement falls below a specified threshold.

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Outstanding borrowings bear interest, at the Company’s election, at either a base rate plus a margin of 0.5% to 1.0% or the Term Secured Overnight Financing Rate plus a margin of 1.5% to 2.0%, and a credit spread adjustment of 0.10%, with such margins based on the Company’s borrowing availability, and the unused line fee is 0.25% to 0.375% per annum.

As of November 2, 2024 and October 28, 2023, we had $199.7 million and $195.4 million, respectively, outstanding under the credit facility.

The weighted average interest rate was 7.15% and 8.21% for the 39 weeks ended November 2, 2024 and October 28, 2023, respectively.

As of February 3, 2024, we had no borrowings outstanding under the credit facility.

As of November 2, 2024, we were in compliance with all terms and covenants of the Loan Agreement.

As of May 3, 2025, February 1, 2025, and May 4, 2024 we had no borrowings outstanding under the credit facility.

As of May 3, 2025, we were in compliance with all terms and covenants of the Loan Agreement.

Our business is subject to seasonal fluctuation.

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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-Q

Item 2. Management’s Discussion and Analysis