What changed in this filing

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Item 1. Financial Statements

2024-03-06 compared with 2023-12-06 · 195 added, 99 removed, 544 unchanged (35% of the section changed)

35 unchanged sentences

Common stock, $ 0.01 par value, authorized 100.0 shares;

61.9 shares issued and 59.4 shares outstanding at October 28, 2023;

61.9 shares issued and 59.4 shares outstanding at January 27, 2024;

61.0 shares issued and 58.5 shares outstanding at July 29, 2023

13 unchanged sentences

(in millions, except for per share data)

13-Week Period Ended

2023 October 29,

13-Week Period Ended 26-Week Period Ended

2024 January 28,

2023 January 27,

2024 January 28,

Net sales $ 7,775 $ 7,816 $ 15,327 $ 15,348

4 unchanged sentences

Loss (gain) on sale of assets and other asset charges 5 1 24 ( 4 )

Operating (loss) income ( 16 ) 99

Operating income 16 63 — 162

Net periodic benefit income, excluding service cost ( 4 ) ( 7 ) ( 7 ) ( 14 )

19 unchanged sentences

(in millions)

13-Week Period Ended

2023 October 29,

13-Week Period Ended 26-Week Period Ended

2024 January 28,

2023 January 27,

2024 January 28,

Net (loss) income including noncontrolling interests $ ( 14 ) $ 22 $ ( 53 ) $ 89

Other comprehensive (loss) income:

Recognition of pension and other postretirement benefit obligations, net of tax 1 1 1 1

Recognition of interest rate swap cash flow hedges, net of tax (1)

( 4 ) ( 4 ) ( 7 ) 14

Foreign currency translation adjustments 2 1 ( 1 ) ( 2 )

Recognition of other cash flow derivatives, net of tax (2)

( 1 ) ( 2 ) — ( 2 )

Total other comprehensive (loss) income ( 2 ) ( 4 ) ( 7 ) 11

2 unchanged sentences

$ ( 17 ) $ 15 $ ( 61 ) $ 96

(1) Amounts are net of tax (benefit) expense of $( 1 ) million and $ 6 million for the first quarters of fiscal 2024 and 2023 , respectively.

(1) Amounts are net of tax (benefit) expense of $( 1 ) million and $( 1 ) million for the second quarters of fiscal 2024 and 2023, respectively, and $( 2 ) million and $ 5 million for fiscal 2024 and 2023 year-to-date, respectively.

(2) Amounts are net of tax (benefit) expense of $ 0 million and $( 1 ) million for the second quarters of fiscal 2024 and 2023, respectively, and $ 0 million and $( 1 ) million for fiscal 2024 and 2023 year-to-date, respectively.

See accompanying Notes to Condensed Consolidated Financial Statements.

2 unchanged sentences

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 13-week periods ended October 28, 2023 and October 29, 2022

For the 13-week periods ended January 27, 2024 and January 28, 2023

(in millions)

1 unchanged sentence

Paid-in Capital Accumulated

Comprehensive (Loss) Income Retained Earnings Total United Natural Foods, Inc.

Comprehensive Loss Retained Earnings Total United Natural Foods, Inc.

Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity

Shares Amount Shares Amount

Balances at October 28, 2023 61.9 $ 1 2.5 $ ( 86 ) $ 606 $ ( 33 ) $ 1,211 $ 1,699 $ — $ 1,699

Share-based compensation — — — — 10 — — 10 — 10

Other comprehensive loss — — — — — ( 2 ) — ( 2 ) — ( 2 )

Distributions to noncontrolling interests — — — — — — — — ( 1 ) ( 1 )

Net (loss) income — — — — — — ( 15 ) ( 15 ) 1 ( 14 )

Balances at January 27, 2024 61.9 $ 1 2.5 $ ( 86 ) $ 616 $ ( 35 ) $ 1,196 $ 1,692 $ — $ 1,692

Balances at October 29, 2022 60.9 $ 1 1.0 $ ( 36 ) $ 583 $ ( 5 ) $ 1,292 $ 1,835 $ — $ 1,835

Restricted stock vestings — — — — ( 2 ) — — ( 2 ) — ( 2 )

Share-based compensation — — — — 11 — — 11 — 11

Repurchases of common stock — — 0.3 ( 17 ) — — — ( 17 ) — ( 17 )

Other comprehensive loss — — — — — ( 4 ) — ( 4 ) — ( 4 )

Net income — — — — — — 19 19 3 22

Balances at January 28, 2023 60.9 $ 1 1.3 $ ( 53 ) $ 592 $ ( 9 ) $ 1,311 $ 1,842 $ 3 $ 1,845

See accompanying Notes to Condensed Consolidated Financial Statements.

UNITED NATURAL FOODS, INC.

AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (unaudited)

For the 26-week periods ended January 27, 2024 and January 28, 2023

(in millions)

Common Stock Treasury Stock Additional

Paid-in Capital Accumulated

Comprehensive Loss Retained Earnings Total United Natural Foods, Inc.

Stockholders’ Equity Noncontrolling Interests Total Stockholders’ Equity

Shares Amount Shares Amount

Balances at July 29, 2023 61.0 $ 1 2.5 $ ( 86 ) $ 606 $ ( 28 ) $ 1,250 $ 1,743 $ 1 $ 1,744

3 unchanged sentences

Distributions to noncontrolling interests — — — — — — — — ( 2 ) ( 2 )

Net loss — — — — — — ( 39 ) ( 39 ) — ( 39 )

Balances at October 28, 2023 61.9 $ 1 2.5 $ ( 86 ) $ 606 $ ( 33 ) $ 1,211 $ 1,699 $ — $ 1,699

Net (loss) income — — — — — — ( 54 ) ( 54 ) 1 ( 53 )

Balances at January 27, 2024 61.9 $ 1 2.5 $ ( 86 ) $ 616 $ ( 35 ) $ 1,196 $ 1,692 $ — $ 1,692

Balances at July 30, 2022 58.9 $ 1 0.6 $ ( 24 ) $ 608 $ ( 20 ) $ 1,226 $ 1,791 $ 1 $ 1,792

5 unchanged sentences

Net income — — — — — — 85 85 4 89

Balances at October 29, 2022 60.9 $ 1 1.0 $ ( 36 ) $ 583 $ ( 5 ) $ 1,292 $ 1,835 $ — $ 1,835

Balances at January 28, 2023 60.9 $ 1 1.3 $ ( 53 ) $ 592 $ ( 9 ) $ 1,311 $ 1,842 $ 3 $ 1,845

See accompanying Notes to Condensed Consolidated Financial Statements.

3 unchanged sentences

26-Week Period Ended

(in millions) October 28,

2023 October 29,

(in millions) January 27,

2024 January 28,

CASH FLOWS FROM OPERATING ACTIVITIES:

Net (loss) income including noncontrolling interests $ ( 53 ) $ 89

Adjustments to reconcile net (loss) income to net cash used in operating activities:

Adjustments to reconcile net (loss) income to net cash (used in) provided by operating activities:

Depreciation and amortization 152 147

Share-based compensation 16 23

Gain on sale of long-lived assets ( 7 ) ( 5 )

Gain on sale of assets ( 7 ) ( 9 )

Long-lived asset impairment charges 21 —

2 unchanged sentences

LIFO charge 13 50

Provision (recoveries) for losses on receivables 2 ( 3 )

Non-cash interest expense and other adjustments 5 8

Changes in operating assets and liabilities ( 213 ) ( 22 )

Net cash used in operating activities

( 254 ) ( 262 )

Net cash (used in) provided by operating activities

CASH FLOWS FROM INVESTING ACTIVITIES:

6 unchanged sentences

Proceeds from borrowings under revolving credit line 1,422 1,944

Proceeds from issuance of other loans 14 —

Repayments of borrowings under revolving credit line ( 1,180 ) ( 1,861 )

5 unchanged sentences

Other ( 1 ) —

Net cash provided by financing activities

Net cash provided by (used in) financing activities

EFFECT OF EXCHANGE RATE ON CASH — —

4 unchanged sentences

Cash paid for interest $ 74 $ 65

Cash (refunds) for federal, state, and foreign income taxes, net $ ( 12 ) $ ( 1 )

Cash (refunds) payments for federal, state, and foreign income taxes, net $ ( 13 ) $ 3

Leased assets obtained in exchange for new operating lease liabilities $ 298 $ 133

11 unchanged sentences

Fiscal 2024 will contain 53 weeks with the fourth quarter of fiscal 2024 containing 14 weeks.

References to the first quarter of fiscal 2024 and 2023 relate to the 13-week fiscal quarters ended October 28, 2023 and October 29, 2022, respectively.

References to the second quarter of fiscal 2024 and 2023 relate to the 13-week fiscal quarters ended January 27, 2024 and January 28, 2023, respectively.

References to fiscal 2024 and 2023 year-to-date relate to the 26-week fiscal periods ended January 27, 2024 and January 28, 2023, respectively.

Basis of Presentation

18 unchanged sentences

Checks outstanding in excess of bank balances create book overdrafts, which are recorded in Accounts payable in the Condensed Consolidated Balance Sheets and are reflected as an operating activity in the Condensed Consolidated Statements of Cash Flows.

As of October 28, 2023 and July 29, 2023, the Company had net book overdrafts of $ 328 million and $ 308 million, respectively.

As of January 27, 2024 and July 29, 2023, the Company had net book overdrafts of $ 283 million and $ 308 million, respectively.

Inventories, Net

4 unchanged sentences

Allowances for inventory shortages are recorded based on the results of these counts.

The LIFO reserve was approximately $ 351 million and $ 344 million as of October 28, 2023 and July 29, 2023, respectively, which is recorded within Inventories, net on the Condensed Consolidated Balance Sheets.

The LIFO reserve was approximately $ 357 million and $ 344 million as of January 27, 2024 and July 29, 2023, respectively, which is recorded within Inventories, net on the Condensed Consolidated Balance Sheets.

NOTE 2—RECENTLY ADOPTED AND ISSUED ACCOUNTING PRONOUNCEMENTS

14 unchanged sentences

The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company’s consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

ASU 2023-09 requires disclosure of specific categories in the rate reconciliation and additional information for reconciling items that meet a quantitative threshold.

The amendments also require disclosure on an annual basis of income taxes paid disaggregated by federal, state and foreign taxes as well as the amount of income taxes paid by individual jurisdiction.

In addition, the amendments require disclosures of disaggregated pretax income and income tax expense and remove the requirement to disclose certain items that are no longer considered cost beneficial or relevant.

The Company is required to adopt the amendments in this update in fiscal 2026.

Early adoption is permitted.

The amendments in this update should be applied on a prospective basis, but can also be applied retrospectively.

The Company is currently reviewing the provisions of the amendments in this update and evaluating their impact on the Company’s consolidated financial statements.

NOTE 3—REVENUE RECOGNITION

9 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) October 28, 2023

(in millions) January 27, 2024

Customer Channel Wholesale Retail Other Eliminations (1)

7 unchanged sentences

Net Sales for the 13-Week Period Ended

(in millions) October 29, 2022

(in millions) January 28, 2023

Customer Channel Wholesale Retail Other Eliminations (1)

6 unchanged sentences

Total $ 7,514 $ 660 $ 56 $ ( 414 ) $ 7,816

Net Sales for the 26-Week Period Ended

(in millions) January 27, 2024

Customer Channel Wholesale Retail Other Eliminations (1)

Chains $ 6,450 $ — $ — $ — $ 6,450

Independent retailers 3,806 — — — 3,806

Supernatural 3,363 — — — 3,363

Retail — 1,237 — — 1,237

Other 1,149 — 112 — 1,261

Eliminations — — — ( 790 ) ( 790 )

Total $ 14,768 $ 1,237 $ 112 $ ( 790 ) $ 15,327

Net Sales for the 26-Week Period Ended

(in millions) January 28, 2023

Customer Channel Wholesale Retail Other Eliminations (1)

Chains $ 6,546 $ — $ — $ — $ 6,546

Independent retailers 3,927 — — — 3,927

Supernatural 3,172 — — — 3,172

Retail — 1,273 — — 1,273

Other 1,128 — 116 — 1,244

Eliminations — — — ( 814 ) ( 814 )

Total $ 14,773 $ 1,273 $ 116 $ ( 814 ) $ 15,348

(1) Eliminations primarily includes the net sales elimination of Wholesale to Retail sales and the elimination of sales from segments included within Other to Wholesale.

4 unchanged sentences

Accounts and notes receivable are as follows:

(in millions) October 28, 2023 July 29, 2023

(in millions) January 27, 2024 July 29, 2023

Customer accounts receivable $ 977 $ 887

4 unchanged sentences

Long-term notes receivable, net, included within Other long-term assets

During the prior year, the Company entered into an agreement to sell, on a revolving basis, certain customer accounts receivable to a third-party financial institution.

Accounts receivable that the Company is servicing on behalf of the financial institution, which would have otherwise been outstanding as of October 28, 2023 and July 29, 2023 , was approximately $ 326 million and $ 310 million, respectively.

In fiscal 2023, the Company entered into an agreement to sell, on a revolving basis, certain customer accounts receivable to a third-party financial institution.

Accounts receivable that the Company is servicing on behalf of the financial institution, which would have otherwise been outstanding as of January 27, 2024 and July 29, 2023, was approximately $ 333 million and $ 310 million, respectively.

Net proceeds received are included within cash from operating activities in the Condensed Consolidated Statements of Cash Flows in the period of sale.

The loss on sale of receivables was $ 5 million during the first quarter of fiscal 2024, and is recorded within Loss (gain) on sale of assets and other asset charges in the Condensed Consolidated Statements of Operations.

The loss on sale of receivables was $ 5 million for the second quarters of fiscal 2024 and 2023, and $ 10 million and $ 5 million for fiscal 2024 and 2023 year-to-date, respectively, and is recorded within Loss (gain) on sale of assets and other asset charges in the Condensed Consolidated Statements of Operations.

NOTE 4—PROPERTY AND EQUIPMENT, NET

In the first quarter of fiscal 2024, the Company determined that it was more likely than not that it would dispose of one of its corporate-owned office locations before the end of its previously estimated useful life.

As a result, the Company conducted an impairment review and recorded a $ 21 million non-cash asset impairment charge in the first quarter of fiscal 2024.

In fiscal 2024, the Company determined that it was more likely than not that it would dispose of one of its corporate-owned office locations before the end of its previously estimated useful life.

As a result, the Company conducted an impairment review and recorded a $ 21 million non-cash asset impairment charge in fiscal 2024 year-to-date.

The fair value utilized in the Company’s impairment review was determined based on the market approach.

The impairment charge is recorded within Loss (gain) on sale of assets and other asset charges in the Condensed Consolidated Statements of Operations.

There were no asset impairment charges recorded in the first quarter of fiscal 2023.

There were no asset impairment charges recorded in the second quarter of fiscal 2024 and for fiscal 2023 year-to-date.

NOTE 5—GOODWILL AND INTANGIBLE ASSETS, NET

3 unchanged sentences

Change in foreign exchange rates — — —

Goodwill as of October 28, 2023

(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million as of July 29, 2023 and October 28, 2023.

(2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million as of July 29, 2023 and October 28, 2023.

Goodwill as of January 27, 2024

(1) Wholesale amounts are net of accumulated goodwill impairment charges of $ 717 million as of July 29, 2023 and January 27, 2024.

(2) Other amounts are net of accumulated goodwill impairment charges of $ 10 million as of July 29, 2023 and January 27, 2024.

Identifiable intangible assets, net consisted of the following:

October 28, 2023 July 29, 2023

January 27, 2024 July 29, 2023

(in millions) Gross Carrying

12 unchanged sentences

Intangibles assets, net $ 1,159 $ 474 $ 685 $ 1,160 $ 438 $ 722

Amortization expense was $ 18 million for the first quarters of fiscal 2024 and 2023.

The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of October 28, 2023 is as shown below:

Amortization expense was $ 18 million for the second quarters of fiscal 2024 and 2023, respectively, and $ 36 million for fiscal 2024 and 2023 year-to-date, respectively.

The estimated future amortization expense for each of the next five fiscal years and thereafter on amortizing intangible assets existing as of January 27, 2024 is as shown below:

(in millions)

4 unchanged sentences

The following tables provide the fair value hierarchy for financial assets and liabilities measured on a recurring basis:

Condensed Consolidated Balance Sheets Location Fair Value at October 28, 2023

Condensed Consolidated Balance Sheets Location Fair Value at January 27, 2024

(in millions) Level 1 Level 2 Level 3

Fuel derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 1 $ —

Foreign currency derivatives designated as hedging instruments Prepaid expenses and other current assets $ — $ 1 $ —

Interest rate swaps designated as hedging instruments Prepaid expenses and other current assets $ — $ 13 $ —

Interest rate swaps designated as hedging instruments Other long-term assets $ — $ 1 $ —

Fuel derivatives designated as hedging instruments Accrued expenses and other current liabilities $ — $ 1 $ —

Interest rate swaps designated as hedging instruments Other long-term liabilities $ — $ 1 $ —

Condensed Consolidated Balance Sheets Location Fair Value at July 29, 2023

6 unchanged sentences

The interest rate swap contracts are valued using an income approach interest rate swap valuation model incorporating observable market inputs including interest rates, SOFR swap rates and credit default swap rates.

As of October 28, 2023, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately $ 6 million;

As of January 27, 2024, a 100-basis point increase in forward SOFR interest rates would increase the fair value of the interest rate swaps by approximately $ 11 million;

a 100-basis point decrease in forward SOFR interest rates would decrease the fair value of the interest rate swaps by approximately $ 12 million.

5 unchanged sentences

In the table below, the carrying value of the Company’s long-term debt is net of original issue discounts and debt issuance costs.

October 28, 2023 July 29, 2023

January 27, 2024 July 29, 2023

(in millions) Carrying Value Fair Value Carrying Value Fair Value

5 unchanged sentences

Interest rate swap contracts are entered into for periods consistent with related underlying exposures and do not constitute positions independent of those exposures.

The Company’s interest rate swap contracts are designated as cash flow hedges as of October 28, 2023.

The Company’s interest rate swap contracts are designated as cash flow hedges as of January 27, 2024.

Interest rate swap contracts are reflected at their fair values in the Condensed Consolidated Balance Sheets.

Refer to Note 6—Fair Value Measurements of Financial Instruments for further information on the fair value of interest rate swap contracts.

Details of active swap contracts as of October 28, 2023, which are all pay fixed and receive floating, are as follows:

Details of active swap contracts as of January 27, 2024, which are all pay fixed and receive floating, are as follows:

Effective Date Swap Maturity Notional Value (in millions) Pay Fixed Rate Receive Floating Rate Floating Rate Reset Terms

October 26, 2018 October 31, 2023 100 2.7880 % One-Month Term SOFR Monthly

January 11, 2019 March 28, 2024 100 2.3600 % One-Month Term SOFR Monthly

7 unchanged sentences

January 24, 2019 October 22, 2025 50 2.4750 % One-Month Term SOFR Monthly

December 29, 2023 June 3, 2027 100 3.7525 % One-Month Term SOFR Monthly

December 29, 2023 June 3, 2027 100 3.7770 % One-Month Term SOFR Monthly

The Company performs an initial quantitative assessment of hedge effectiveness using the “Hypothetical Derivative Method” in the period in which the hedging transaction is entered.

4 unchanged sentences

The location and amount of gains or losses recognized in the Condensed Consolidated Statements of Operations for interest rate swap contracts for each of the periods, presented on a pre-tax basis, are as follows:

13-Week Period Ended

October 28, 2023 October 29, 2022

(in millions) Interest expense, net

13-Week Period Ended 26-Week Period Ended

January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

(in millions) Interest expense, net Interest expense, net

Total amounts of expense line items presented in the Condensed Consolidated Statements of Operations in which the effects of cash flow hedges are recorded

$ 40 $ 39 $ 75 $ 74

Gain on cash flow hedging relationships:

3 unchanged sentences

(in millions) Average Interest Rate at

October 28, 2023

Fiscal Maturity Year October 28,

January 27, 2024

Fiscal Maturity Year January 27,

2024 July 29,

9 unchanged sentences

On October 22, 2020, the Company issued $ 500 million of unsecured 6.750 % senior notes due October 15, 2028 (the “Senior Notes”).

The Senior Notes, which are presented net of debt issuance costs of $ 6 million as of October 28, 2023 in the Condensed Consolidated Balance Sheets, are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility or the Term Loan Facility (defined below).

The Senior Notes, which are presented net of debt issuance costs of $ 6 million as of January 27, 2024 in the Condensed Consolidated Balance Sheets, are guaranteed by each of the Company’s subsidiaries that are borrowers under or that guarantee the ABL Credit Facility or the Term Loan Facility (defined below).

ABL Credit Facility

10 unchanged sentences

The assets included in the Condensed Consolidated Balance Sheets securing the outstanding obligations under the ABL Credit Facility on a first-priority basis were as follows:

(in millions) October 28,

(in millions) January 27,

2024 July 29,

3 unchanged sentences

Total $ 2,442 $ 2,443

As of October 28, 2023, the Borrowers’ Borrowing Base was $ 2,550 million, reflecting the advance rates described above and $ 101 million of reserves, which is below the $ 2,600 million limit of availability.

As of January 27, 2024, the Borrowers’ Borrowing Base was $ 2,606 million, reflecting the advance rates described above and $ 105 million of reserves, which is above the $ 2,600 million limit of availability.

This resulted in total availability of $ 2,600 million for loans and letters of credit under the ABL Credit Facility.

The Company’s unused credit under the ABL Credit Facility was as follows:

(in millions) October 28, 2023

(in millions) January 27, 2024

Total availability for ABL loans and letters of credit $ 2,600

3 unchanged sentences

The applicable interest rates, unutilized commitment fees and letter of credit fees under the ABL Credit Facility are variable and are dependent upon the prior fiscal quarter’s daily Average Availability (as defined in the ABL Loan Agreement), and were as follows:

Range of Facility Rates and Fees (per annum) October 28, 2023

Range of Facility Rates and Fees (per annum) January 27, 2024

Borrowers’ applicable margin for base rate loans 0.00 % - 0.25 %

11 unchanged sentences

The Term Borrowers’ obligations under the Term Loan Facility and the Guarantors’ obligations under the related guarantees are secured by (i) a first-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ assets other than the ABL Assets and (ii) a second-priority lien on substantially all of the Term Borrowers’ and the Guarantors’ ABL Assets, in each case, subject to customary exceptions and limitations, including an exception for owned real property with net book values of less than $ 10 million.

As of October 28, 2023 and July 29, 2023, there was $ 612 million and $ 617 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

As of January 27, 2024 and July 29, 2023, there was $ 608 million and $ 617 million, respectively, of owned real property pledged as collateral that was included in Property and equipment, net in the Condensed Consolidated Balance Sheets.

The Company must prepay loans outstanding under the Term Loan Facility no later than 130 days after the fiscal year end in an aggregate principal amount equal to a specified percentage (which percentage ranges from 0 to 75 percent depending on the Consolidated First Lien Net Leverage Ratio as of the last day of such fiscal year) of Excess Cash Flow (as defined in the Term Loan Agreement), minus certain types of voluntary prepayments of indebtedness made during such fiscal year.

The potential amount of prepayment from Excess Cash Flow in fiscal 2024 that may be required in fiscal 2025 is not reasonably estimable as

of October 28, 2023.

As of October 28, 2023, the Company had borrowings of $ 670 million outstanding under the Term Loan Facility, which are presented in the Condensed Consolidated Balance Sheets net of debt issuance costs of $ 7 million and an original issue discount on debt of $ 6 million.

As of October 28, 2023, no amount of the Term Loan Facility was classified as current.

As of October 28, 2023, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either:

The potential amount of prepayment from Excess Cash Flow in fiscal 2024 that may be required in fiscal 2025 is not reasonably estimable as of January 27, 2024.

As of January 27, 2024, the Company had borrowings of $ 645 million outstanding under the Term Loan Facility, which are presented in the Condensed Consolidated Balance Sheets net of debt issuance costs of $ 5 million and an original issue discount on debt of $ 5 million.

As of January 27, 2024, no amount of the Term Loan Facility was classified as current.

As of January 27, 2024, the borrowings under the Term Loan Facility bear interest at rates that, at the Term Borrowers’ option, can be either:

(i) a base rate plus a margin of 2.25 % or (ii) a SOFR rate plus a margin of 3.25 %, provided that the SOFR rate shall never be less than 0.0 %.

NOTE 9—COMPREHENSIVE (LOSS) INCOME AND ACCUMULATED OTHER COMPREHENSIVE LOSS

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2024 were as follows:

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2024 year-to-date were as follows:

(in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total

Accumulated other comprehensive (loss) income at July 29, 2023 $ — $ ( 21 ) $ ( 21 ) $ 14 $ ( 28 )

Other comprehensive income (loss) before reclassifications 1 — ( 3 ) 1 ( 1 )

Other comprehensive loss before reclassifications — — ( 1 ) — ( 1 )

Amortization of amounts included in net periodic benefit income — 1 — — 1

Amortization of cash flow hedges — — — ( 7 ) ( 7 )

Net current period Other comprehensive income (loss) — 1 ( 1 ) ( 7 ) ( 7 )

Accumulated other comprehensive income (loss) at October 28, 2023 $ 1 $ ( 21 ) $ ( 24 ) $ 11 $ ( 33 )

Changes in Accumulated other comprehensive loss by component, net of tax, for the first quarter of fiscal 2023 were as follows:

Accumulated other comprehensive (loss) income at January 27, 2024 $ — $ ( 20 ) $ ( 22 ) $ 7 $ ( 35 )

Changes in Accumulated other comprehensive loss by component, net of tax, for fiscal 2023 year-to-date were as follows:

(in millions) Other Cash Flow Derivatives Benefit Plans Foreign Currency Translation Swap Agreements Total

1 unchanged sentence

Other comprehensive (loss) income before reclassifications ( 3 ) — ( 2 ) 17 12

Amortization of amounts included in net periodic benefit income — 1 — — 1

Amortization of cash flow hedges 1 — — ( 3 ) ( 2 )

Net current period Other comprehensive (loss) income ( 2 ) 1 ( 2 ) 14 11

Accumulated other comprehensive income (loss) at October 29, 2022 $ 2 $ ( 3 ) $ ( 22 ) $ 18 $ ( 5 )

Accumulated other comprehensive income (loss) at January 28, 2023 $ — $ ( 2 ) $ ( 21 ) $ 14 $ ( 9 )

Items reclassified out of Accumulated other comprehensive loss had the following impact on the Condensed Consolidated Statements of Operations:

13-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations

(in millions) October 28,

2023 October 29,

13-Week Period Ended 26-Week Period Ended Affected Line Item on the Condensed Consolidated Statements of Operations

(in millions) January 27,

2024 January 28,

2023 January 27,

2024 January 28,

Pension and postretirement benefit plan net assets:

Amortization of amounts included in net periodic benefit income (1)

$ 1 $ 1 $ 1 $ 1 Net periodic benefit income, excluding service cost

Income tax expense (benefit) — — — — (Benefit) provision for income taxes

Total reclassifications, net of tax $ 1 $ 1 $ 1 $ 1

Swap agreements:

Reclassification of cash flow hedges $ ( 5 ) $ ( 4 ) $ ( 10 ) $ ( 4 ) Interest expense, net

Income tax expense (benefit) 1 — (Benefit) provision for income taxes

Income tax expense 2 1 3 1 (Benefit) provision for income taxes

Total reclassifications, net of tax $ ( 3 ) $ ( 3 ) $ ( 7 ) $ ( 3 )

1 unchanged sentence

Reclassification of cash flow hedge $ — $ 1 $ — $ 2 Cost of sales

Income tax expense (benefit) — — (Benefit) provision for income taxes

Income tax benefit — ( 1 ) — ( 1 ) (Benefit) provision for income taxes

Total reclassifications, net of tax $ — $ — $ — $ 1

As of October 28, 2023, the Company expects to reclassify $ 15 million related to unrealized derivative gains out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

(1) Reclassification of amounts included in net periodic benefit income include reclassification of prior service cost as reflected in Note 11—Benefit Plans.

As of January 27, 2024, the Company expects to reclassify $ 11 million related to unrealized derivative gains out of Accumulated other comprehensive loss and primarily into Interest expense, net during the following twelve-month period.

NOTE 10—SHARE-BASED AWARDS

As of October 28, 2023, there were 2.2 million shares available for issuance under the Second Amended and Restated 2020 Equity Incentive Plan.

In fiscal 2024 year-to-date, the Company granted restricted stock units and performance share units to its directors, executive officers and certain employees representing a right to receive an aggregate of 3.3 million shares.

As of January 27, 2024, there were 1.7 million shares available for issuance under the Third Amended and Restated 2020 Equity Incentive Plan.

NOTE 11—BENEFIT PLANS

2 unchanged sentences

Pension Benefits Other Postretirement Benefits

(in millions) October 28, 2023 October 29, 2022 October 28, 2023 October 29, 2022

(in millions) January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Interest cost $ 18 $ 15 $ — $ —

Expected return on plan assets ( 23 ) ( 23 ) — —

Net periodic benefit income $ ( 3 ) $ ( 7 ) $ — $ —

Amortization of prior service cost — — 1 1

Net periodic benefit (income) cost $ ( 5 ) $ ( 8 ) $ 1 $ 1

Contributions to benefit plans $ — $ — $ — $ —

26-Week Period Ended

Pension Benefits Other Postretirement Benefits

(in millions) January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Interest cost $ 37 $ 32 $ — $ —

Expected return on plan assets ( 45 ) ( 47 ) — —

Amortization of prior service cost — — 1 1

Net periodic benefit (income) cost $ ( 8 ) $ ( 15 ) $ 1 $ 1

Contributions to benefit plans $ — $ — $ — $ —

Contributions

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Multiemployer Pension Plans

The Company contributed $ 13 million and $ 11 million in the first quarters of fiscal 2024 and 2023, respectively, to multiemployer pension plans, which contributions are included within Operating expenses.

The Company contributed $ 13 million and $ 12 million in the second quarters of fiscal 2024 and 2023, respectively, and $ 26 million and $ 23 million in fiscal 2024 and 2023 year-to-date, respectively, to multiemployer pension plans, which contributions are included within Operating expenses.

NOTE 12—INCOME TAXES

The effective tax rate for the first quarter of fiscal 2024 was a benefit rate of 18.8 % on pre-tax loss compared to an expense rate of 6.9 % on pre-tax income for the first quarter of fiscal 2023.

The change from the first quarter of fiscal 2023 is primarily driven by the reduction of discrete tax benefits related to employee stock award vestings in the first quarter of fiscal 2024.

The effective tax rate for the second quarter of fiscal 2024 was a benefit rate of 26.3 % on pre-tax loss compared to an expense rate of 29.0 % on pre-tax income for the second quarter of fiscal 2023.

The change from the second quarter of fiscal 2023 is primarily driven by the reduction in pre-tax income during the second quarter of fiscal 2023.

The effective tax rate for fiscal 2024 year-to-date was a benefit rate of 20.9 % on pre-tax loss compared to an expense rate of 13.6 % on pre-tax income for fiscal 2023 year-to-date.

The change from fiscal 2023 year-to-date is primarily driven by the reduction of discrete tax benefits related to employee stock award vestings in the first quarter of fiscal 2024.

In addition, the first quarter of fiscal 2023 included a tax benefit from the release of reserves for unrecognized tax positions that did not recur in the first quarter of fiscal 2024.

The primary driver for the variation between the Company’s statutory tax rate and its effective tax rate for the first quarters of fiscal 2024 and fiscal 2023 were discrete tax detriments and benefits, respectively, resulting from share award vestings.

The primary drivers for the variation between the Company’s statutory tax rate and its effective tax rate for fiscal 2024 and fiscal 2023 year-to-date were discrete tax detriments and benefits, respectively, resulting from share award vestings.

NOTE 13—EARNINGS PER SHARE

The following is a reconciliation of the basic and diluted number of shares used in computing earnings per share:

13-Week Period Ended

(in millions, except per share data) October 28,

2023 October 29,

13-Week Period Ended 26-Week Period Ended

(in millions, except per share data) January 27,

2024 January 28,

2023 January 27,

2024 January 28,

Basic weighted average shares outstanding 59.4 59.8 59.0 59.3

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The following table provides information by reportable segment, including Net sales, Adjusted EBITDA, with a reconciliation to (Loss) income before income taxes, depreciation and amortization, and payments for capital expenditures:

13-Week Period Ended

(in millions) October 28, 2023 October 29, 2022

13-Week Period Ended 26-Week Period Ended

(in millions) January 27, 2024 January 28, 2023 January 27, 2024 January 28, 2023

Wholesale (1)

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Retail 631 660 1,237 1,273

Other 52 56 112 116

Eliminations ( 395 ) ( 414 ) ( 790 ) ( 814 )

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Retail 8 28 7 48

Other 4 15 7 34

Eliminations ( 2 ) 1 ( 4 ) ( 2 )

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Business transformation costs

( 14 ) ( 4 ) ( 29 ) ( 9 )

Other adjustments — — ( 4 ) —

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Wholesale $ 66 $ 62 $ 133 $ 126

Retail 8 10 16 18

Other — 1 3 3

Total depreciation and amortization $ 74 $ 73 $ 152 $ 147

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Wholesale $ 64 $ 74 $ 135 $ 131

Retail 3 10 6 20

Total capital expenditures $ 67 $ 84 $ 141 $ 151

(1) As presented in Note 3—Revenue Recognition, the Company recorded $ 321 million and $ 334 million for the first quarters of fiscal 2024 and 2023, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale to Retail sales that have been eliminated upon consolidation.

(1) As presented in Note 3—Revenue Recognition, the Company recorded $ 330 million and $ 353 million for the second quarters of fiscal 2024 and 2023, respectively, and $ 651 million and $ 687 million in fiscal 2024 and 2023 year-to-date, respectively, within Net sales in its Wholesale reportable segment attributable to Wholesale to Retail sales that have been eliminated upon consolidation.

Total assets by reportable segment were as follows:

(in millions) October 28, 2023 July 29, 2023

(in millions) January 27, 2024 July 29, 2023

Wholesale $ 6,718 $ 6,405

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Guarantees and Contingent Liabilities

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of October 28, 2023.

The Company has outstanding guarantees related to certain leases, fixture financing loans and other debt obligations of various retailers as of January 27, 2024.

These guarantees were generally made to support the business growth of wholesale customers.

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The Company reviews performance risk related to its guarantee obligations based on internal measures of credit performance.

As of October 28, 2023, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 14 million ($ 11 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of October 28, 2023, a total estimated loss of $ 1 million is recorded in the Condensed Consolidated Balance Sheets.

As of January 27, 2024, the maximum amount of undiscounted payments the Company would be required to make in the event of default of all guarantees was $ 11 million ($ 9 million on a discounted basis).

Based on the indemnification agreements, personal guarantees and results of the reviews of performance risk, as of January 27, 2024, a total estimated loss of less than $ 1 million is recorded in the Condensed Consolidated Balance Sheets.

The Company is a party to a variety of contractual agreements under which it may be obligated to indemnify the other party for certain matters in the ordinary course of business, which indemnities may be secured by operation of law or otherwise.

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These contracts typically include either volume commitments or fixed expiration dates, termination provisions and other standard contractual considerations.

As of October 28, 2023, the Company had approximately $ 606 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

As of October 28, 2023, the Company had commitments of $ 778 million for future undiscounted minimum lease payments on leases signed but not yet commenced with terms of up to 21 years from commencement date.

As of January 27, 2024, the Company had approximately $ 657 million of non-cancelable future purchase obligations, most of which will be paid and utilized in the ordinary course within one year.

As of January 27, 2024, the Company had commitments of $ 323 million for future undiscounted minimum lease payments on leases signed but not yet commenced with terms of up to 21 years from commencement date.

A lease agreement for a facility in Manchester, Pennsylvania entered into in fiscal 2023 commenced in the second quarter of fiscal 2024 resulting in the recognition of a $ 205 million right-of-use asset and operating lease liability in the Condensed Consolidated Balance Sheets.

Legal Proceedings

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On February 1, 2022, the state court denied the motion to dismiss.

On November 27, 2023, the court held a scheduling conference and will enter a scheduling order setting various discovery and expert deadlines.

The Company anticipates the trial date will be set for July 21, 2025.

On November 27, 2023, the court held a scheduling conference and thereafter entered a scheduling order setting various discovery and expert deadlines.

The trial date is set for July 21, 2025.

The Company believes these claims are without merit and is vigorously defending this matter.

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On August 12, 2021, the Seventh Circuit affirmed the District Court’s decision granting summary judgment in defendants’ favor.

On September 23, 2021, the relators filed a petition for rehearing.

On December 3, 2021, the Seventh Circuit denied the petition for rehearing.

On September 23, 2021, the relators filed a petition for rehearing which was denied on December 3, 2021.

On April 1, 2022, the relators filed a petition for a writ of certiorari with the United States Supreme Court which was granted on January 13, 2023.

Oral argument took place in the Supreme Court on April 18, 2023.

On June 1, 2023, the Supreme Court reversed and vacated the lower court’s judgment and remanded the case to the Seventh Circuit for further proceedings.

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On October 11, 2023, each of the Company and the relators filed a motion for summary judgment.

Responses to the motions were filed on October 21, 2023, and replies are due December 15, 2023.

Briefing is complete and oral argument is scheduled for May 20, 2024.

On February 16, 2024, the defendants filed a motion to reconsider the Court’s August 5, 2019 partial grant of summary judgment to the relators and to continue the trial date.

On February 27, 2024, the Court granted the defendants’ motion for a trial date continuance and vacated the April 29, 2024 trial date.

The trial is now scheduled to begin September 30, 2024.

From time to time, the Company receives notice of claims or potential claims or becomes involved in litigation, alternative dispute resolution, such as arbitration, or other legal and regulatory proceedings that arise in the ordinary course of its business, including investigations and claims regarding employment law, including wage and hour (including class actions);

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Management regularly monitors the Company’s exposure to the loss contingencies associated with these matters and may from time to time change its predictions with respect to outcomes and estimates with respect to related costs and exposures.

As of October 28, 2023, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

As of January 27, 2024, no material accrued obligations, individually or in the aggregate, have been recorded for these legal proceedings.

Although management believes it has made appropriate assessments of potential and contingent loss in each of these cases based on current facts and circumstances, and application of prevailing legal principles, there can be no assurance that material differences in actual outcomes from management’s current assessments, costs and exposures relative to current predictions and estimates, or material changes in such predictions or estimates will not occur.

1 unchanged sentence

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