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Item 7. Management’s Discussion and Analysis

2026-03-12 compared with 2025-03-13 · 365 added, 325 removed, 954 unchanged (42% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis compares the change in the consolidated financial statements for years ended and February 1, 2025 and February 3, 2024 and should be read together with our consolidated financial statements, the accompanying notes, and other information included in this Annual Report.

The following discussion and analysis compares the change in the consolidated financial statements for years ended and January 31, 2026 and February 1, 2025 and should be read together with our consolidated financial statements, the accompanying notes, and other information included in this Annual Report.

In particular, the risk factors contained in Item 1A may reflect trends, demands, commitments, events, or uncertainties that could materially impact our results of operations and liquidity and capital resources.

For comparisons of years ended February 3, 2024 and January 28, 2023, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of our Annual Report on Form 10-K for the year ended February 3, 2024, filed with the SEC on March 13, 2025 and incorporated herein by reference.

For comparisons of years ended February 1, 2025 and February 3, 2024, see our Management's Discussion and Analysis of Financial Condition and Results of Operations in Item 2 of our Annual Report on Form 10-K for the year ended February 1, 2025, filed with the SEC on March 13, 2025 and incorporated herein by reference.

This discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties.

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See also the section titled “Note Regarding Forward-Looking Statements” in this report.

For Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) related to the year ended January 28, 2023, refer to this same section in our 2023 annual report on Form 10-K as filed with the Securities and Exchange Commission on March 13, 2025.

For Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) related to the year ended February 3, 2024, refer to this same section in our Annual Report on Form 10-K as filed with the Securities and Exchange Commission on March 14, 2024.

Fiscal 2025—A Review of This Past Year

After stimulus driven, record breaking results in fiscal 2021, the absence of stimulus, trend shifts and the compounding multi-year inflationary impact on consumers were significant detriments throughout fiscal year 2022.While negative sales trends continued into fiscal 2023, they lessened in intensity each quarter with fourth quarter comparable sales down 3.9% from the prior year.

The improving sales trends throughout fiscal 2023 reflected positive momentum in emerging brands on the men’s side of the business as the men’s category turned positive in the fourth quarter.

In 2024, sales trends turned positive after the first quarter and we posted positive comparable sales growth in each of the final eight months of the year with comparable sales up 4.0% for the full year (and total sales up 1.6% despite the negative impacts on growth of both the 53 rd week in the prior year worth $12.0 million and closed stores worth $9.0 million).

The turn of our business continues to be driven by the apparel categories across both men's and women's with the men’s business being our largest growth category followed by women’s and footwear.

In fiscal year 2024, product margin increased 54 basis points from the prior year driven by strong private label performance and less discounting with better sales performance.

Fiscal 2024 was the highest product margin in our history excluding fiscal 2021 which was positively impacted by significant stimulus spending.

Gross Margin improved 200 basis points to 34.1% in 2024 driven by leverage on increased sales, strong management of our lease portfolio, negotiated reductions in shipping costs and well-managed distribution operations.

Our Selling General and Administrative expenses were down $44.6 million from the prior year driven by a $41.1 million goodwill impairment charge in fiscal 2023.

Excluding that charge, Selling General and Administrative expenses were reduced by $3.5 million from fiscal 2023 with continued management of expenses that was slightly offset by higher levels of incentive compensation for current year performance.

Our sales growth, combined with increases in product margins and reductions of expense across multiple areas drove a positive $1.9 million in operating profit for the year, an improvement of $66.7 million from 2023, or an improvement of $25.6 million excluding the goodwill impairment charges in 2023.

Due to an effective tax rate of 142.0% related to the distribution of our income across the jurisdictions in which we operate, we had a $0.09 loss per share in fiscal 2024.

This was an improvement from a loss of $3.25 per share in fiscal 2023, or a $1.12 loss per share excluding goodwill impairment charges.

As a leading global lifestyle retailer, we continue to differentiate ourselves through our distinctive brand offering and diverse product selection, as well as the unique customer experience across all of our platforms.

We remained committed to serving our customer launching well over 120 new brands in 2024.

We made investments over several years to integrate the digital and physical channels creating a seamless shopping experience for our customer.

We are continuing to deliver our online orders in North America from our stores, which has provided substantial improvements in the speed of delivery to our customers, eliminated the need to manage two pools of inventory separately for digital and physical demand, and created one cost structure for execution of both physical and digital sales.

Fiscal year 2025 maintained the positive growth trajectory established in early 2024, with the fourth quarter representing the seventh consecutive quarter of comparable sales increases.

Strategic focus on developing trends within private label brands delivered favorable outcomes, as sales from these brands exceeded 30% of total revenue, setting a new fiscal-year record.

All categories experienced positive comparable sales in 2025 with the exception of footwear.

The Hardgoods category, which had experienced negative growth for several years, returned to positive growth in the second quarter and sustained that momentum through year-end.

North America was the primary driver of sales growth, achieving eight consecutive quarters of positive comparable sales with product margin growth in each quarter.

In Europe, efforts were redirected toward full-price selling, supported by reduced promotions and improved product assortments.

Although these changes presented challenges for overall sales, product margins in Europe improved over 250 basis points year-over-year and strengthened as we moved through the year.

Despite negative sales trends during the fourth quarter, we saw strong bottom line growth with product margin improvements and expense discipline.

Consolidated product margin improved 90 basis points year-over-year despite the global supply chain instability driven by tariffs.

Product margin growth was possible during the year through shifting the geography of supply, working with our vendors on pricing and where necessary, adjusting retail prices.

Gross margin improved by 170 basis points from 2024 with the product margin noted above being the main driver.

Beyond product margin, we continue to try to leverage occupancy costs through comparable sales growth and closed 17 underperforming stores.

We had outsized growth in our general and administrative expenses in 2025 primarily driven by $3.6 million in wage and hour litigation settlements in California and increased incentive compensation of $4.4 million due to North America achievement of target results.

These items resulted in a 10 basis point increase in Selling General and Administrative expenses to 34.0% of sales.

Overall earnings per share increased to $0.78 from a loss of $0.09 per share in 2024.

The overall growth in earnings was driven primarily by better operating results but was also aided by our continued return of value to our shareholders through a share repurchase program, purchasing 2.7 million shares at an average price of $14.18 for $38.3 million during the year.

The purchase of shares was worth $0.10 to earnings per share.

We remained committed to serving our customers' desire for newness and discovery through launching well over 150 new brands in 2025.

We made investments over several years to integrate the digital and physical channels creating a seamless shopping experience for our customers.

We are continuing to deliver our online orders in North America from our stores, which provides substantial improvements in the speed of delivery to our customers, eliminates the need to manage two pools of inventory separately for digital and physical demand, and creates a single cost structure for execution of both physical and digital sales.

Internationally we continue to see deeper penetration of localized fulfillment and are in various stages of roll-out in different countries.

In-store fulfillment is a key part of strategy that we believe will drive long-term market share by leveraging the strengths of our store sales team, providing better and faster service to customers, improving product margins, maximizing the productivity of inventory, providing additional selling opportunities, and utilizing one cost structure to serve the customer.

The following table shows net sales, operating profit (loss), operating margin and diluted (loss) earnings per share for fiscal 2024 compared to fiscal 2023:

The following table shows net sales, operating profit, operating margin and diluted earnings (loss) per share for fiscal 2025 compared to fiscal 2024:

Net sales (in thousands) (1)

Operating profit (loss) (in thousands)

Operating profit (in thousands)

Operating margin

Diluted loss per share

Diluted earnings (loss) per share

(1) The increase in net sales was primarily driven by an increase in dollars per transaction, partially offset by a decrease in transactions.

The increase in dollars per transaction was driven by an increase in average unit retail, and an increase in units per transaction.

For the year, our largest growth in comparable sales was in our men’s category, followed by women’s and footwear.

Our largest comparable sales decrease was in our accessories category, followed by hardgoods.

For the year, our largest growth in comparable sales was in our women’s category, followed by men’s, hardgoods and accessories.

Footwear was the only category with a decrease in comparable sales.

Fiscal 2026—A Look At the Upcoming Year

In fiscal 2025, our focus will continue to be serving the customer by bringing differentiated product in a unique sales experience along with strategic investments focused on enhancing the customer experience while increasing market share and creating operational efficiencies to drive long-term operating margin expansion.

After two difficult years the business returned to growth and positive free cash flow.

In fiscal 2026, our focus will continue to be serving the customer by bringing differentiated products in a unique sales experience along with strategic investments focused on enhancing the customer experience while increasing market share and creating operational efficiencies to drive long-term operating margin expansion.

After a difficult period through COVID and the related aftermath marked by stimulus, tariffs, inflation and strained discretionary income, the business began recovering in 2024 and returned profitability in 2025.

The balance sheet remains strong with $160.6 million in cash and marketable securities at the end of fiscal 2025 with no debt.

We are in a solid financial position providing the security to manage through potential difficulties, while also investing strategically in important long-term initiatives and returning value to our shareholders.

While our growth and return to positive operating profit in fiscal 2024 have us optimistic, the macro-economic environment in 2025 remains unclear.

Inflation has moderated, but it is not yet at desired levels.

While our growth and return to positive earnings per share in fiscal 2025 have us optimistic, the macro-economic environment in 2026 remains unclear.

The impact of multiple years of compounding growth in the cost of consumer goods continues to put pressure on the discretionary income of our customer base as consumer savings balances decrease and consumer debt grows.

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Results of Operations

The following table presents selected items on the consolidated statements of (loss) income as a percent of net sales:

The following table presents selected items on the consolidated statements of income (loss) as a percent of net sales:

Cost of goods sold

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Provision for income taxes

Net (loss) income

Net income (loss)

Fiscal 2025 Results Compared With Fiscal 2024

Net sales were $929.1 million for fiscal 2025 compared to $889.2 million for fiscal 2024, an increase of $39.9 million or 4.5%.

The increase in sales was primarily driven by key brands and fashion trends in the market partially offset by a decrease of $12.0 million related to the additional week in the 53-week period, and the impact of closed stores worth $9.0 million.

The increase in sales was primarily driven by a 4.3% increase in comparable sales, reflecting strength in key brands and fashion trends in the market, and was partially offset by the net closure of 11 stores subsequent to fiscal 2024.

Comparable sales increased 4.3% driven by an increase in dollars per transaction and partially offset by a decrease in transactions.

The increase in dollars per transaction was driven by an increase in both average unit retail, and units per transaction.

For the year, our largest growth in comparable sales was in our men’s category, followed by women’s and footwear.

Our largest comparable sales decrease was in our accessories category, followed by hardgoods.

By region, North America sales increased $22.3 million or 3.2% and other international sales decreased $8.6 million or 4.8% during fiscal 2024 compared to fiscal 2023.

Net sales for the year ended February 1, 2025 included a $3.1 million decrease due to the change in foreign exchange rates, which consisted of a $1.7 million decrease in Europe, a decrease of $1.1 million in Canada, and a decrease of $0.3 million in Australia.

The increase in dollars per transaction was driven by an increase in average unit retail, and an increase in units per transaction.

For the year, our largest growth in comparable sales was in our women’s category, followed by men’s, hardgoods, and accessories.

Footwear was the only category with a decrease in comparable sales.

By region, North America sales increased $37.1 million or 5.1% and other international sales increased $2.8 million or 1.7% during fiscal 2025 compared to fiscal 2024.

Net sales for the year ended January 31, 2026, included a $9.6 million increase due to the change in foreign exchange rates, which consisted of a $10.0 million increase in Europe, partially offset by a decrease of $0.3 million in Canada, and a decrease of $0.1 million in Australia.

Excluding the impact of changes in foreign exchange rates, North America sales increased $37.4 million or 5.2% and other international sales decreased $7.1 million or 4.2% during fiscal 2025 compared to fiscal 2024.

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As a percentage of net sales, gross profit increased 170 basis points in fiscal 2025 to 35.8%.

The increase was primarily driven by 80 basis point benefit in web shipping costs, 70 basis point increase in product margin (defined as net sales minus cost of goods sold excluding shrinkage, buying, occupancy, distribution and warehousing costs and freight costs for store merchandise transfers) due to reduced discounting and continued strength of our private label that carries higher product margin, 50 basis point leverage in store occupancy costs, and

30 basis point efficiencies in distribution center cost.

These benefits were partially offset by 20 basis point of negative impact related to increased inventory shrinkage.

The increase was primarily driven by a 90 basis point improvement in product margin (defined as net sales minus cost of goods sold excluding shrinkage, buying, occupancy, distribution and warehousing costs and freight costs for store merchandise transfers), 70 basis points of leverage in store occupancy costs related to both higher sales and closure of underperforming stores.

Selling, General and Administrative Expenses

Selling, general and administrative (“SG&A”) expenses were $301.1 million for fiscal 2024 compared to $345.7 million for fiscal 2023, a decrease of $44.6 million, or 12.9%.

SG&A expenses as a percent of net sales decreased 560 basis points in fiscal 2024 to 33.9%.

The benefit was primarily driven by 480 basis point benefit due to impairment of prior year goodwill worth $41.1 million, 30 basis point benefit due to lower corporate costs, 30 basis point benefit in store wages driven by efficiencies in hours and leverage in higher sales and 30 basis points from store costs not tied to wages primarily impacted by leverage on higher sales.

These decreases were partially offset by a 20 basis point increase in annual incentive compensation.

Net loss for fiscal 2024 was $1.7 million, or $0.09 per diluted share, compared with net loss of $62.6 million, or $3.25 per diluted share, for fiscal 2023.

Selling, general and administrative (“SG&A”) expenses were $315.5 million for fiscal 2025 compared to $301.1 million for fiscal 2024, an increase of $14.4 million, or 4.8%.

SG&A expenses as a percent of net sales increased 10 basis points in fiscal 2025 to 34.0%.

The increase was primarily driven by 50 basis point increase in annual incentive compensation due to improved operating results, 40 basis point increase due to $3.6 million of wage and hour litigation settlements in California, partially offset by 60 basis points in non-wage store operating costs related to closure of store year over year, and 30 basis points of efficiencies in store wages due to higher sales and closure of low performing stores at the end of fiscal 2024.

Net Income (Loss)

Net income for fiscal 2025 was $13.4 million, or $0.78 per diluted share, compared with net loss of $1.7 million, or $0.09 per diluted share, for fiscal 2024.

Our effective income tax rate for fiscal 2025 was 44.4% compared to 142.0% for fiscal 2024.

The change in effective income tax rate for fiscal 2024 compared to fiscal 2023 was primarily related to foreign losses in Austria, which are subject to a valuation allowance.

Due to cumulative and ongoing foreign losses in such jurisdictions, the realization of such deferred tax assets is uncertain and thus subject to a valuation allowance.

The increase in the valuation allowance in fiscal 2024 resulted in $5.1 million of income tax expense when compared to fiscal 2023 of $12.3 million.

The change in effective income tax rate for fiscal 2025 compared to fiscal 2024 was primarily driven by improved operating results and the allocation of foreign losses in certain jurisdictions, which are subject to a valuation allowance.

The introduction of new valuation allowances in certain jurisdictions contributed $4.2 million of income tax expense, while continued losses in jurisdictions with established valuation allowances added $5.0 million, resulting in a $9.2 million total income tax expense for fiscal 2025 compared to $5.1 million in fiscal 2024.

Liquidity and Capital Resources

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Our working capital position benefits from the fact that we generally collect cash from sales to customers the same day or within several days of the related sale, while we typically have longer payment terms with our vendors.

At February 1, 2025 and February 3, 2024, cash, cash equivalents and current marketable securities were $147.6 million and $171.6 million.

Working capital, the excess of current assets over current liabilities, was $166.9 million at the end of fiscal 2024, a decrease of 9% from $182.5 million at the end of fiscal 2023.

The increase in cash, cash equivalents and current marketable securities in fiscal 2024 was due primarily to cash provided by operating activities of $20.7 million, sale of marketable securities net of purchases amounting to $47.6 million, partially offset by the $25.2 million repurchase of common stock, and capital expenditures of $15.0 million primarily related to the opening of 7 new stores and 6 remodels and relocations.

At January 31, 2026 and February 1, 2025, cash, cash equivalents, and current marketable securities were $160.6 million and $147.6 million, respectively.

Working capital, the excess of current assets over current liabilities, was $168.5 million at the end of fiscal 2025, an increase of 0.9% from $166.9 million at the end of fiscal 2024.

The increase in cash, cash equivalents, and current marketable securities in fiscal 2025 was primarily due to cash provided by operating activities of $53.5 million, net proceeds from sale of marketable securities amounting to $4.7 million, partially offset by the $38.3 million repurchase of common stock, and capital expenditures of $11.1 million related to the opening of 6 new stores, 3 store remodels, website enhancements, and other improvements.

The following table summarizes our cash flows from operating, investing and financing activities (in thousands):

Total cash provided by (used in)

Net cash provided by (used in)

Operating activities

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Effect of exchange rate changes on cash and cash

Net increase (decrease) in cash, cash equivalents, and restricted cash

Net change in cash, cash equivalents, and restricted cash

Operating Activities

Net cash provided by operating activities increased by $32.8 million in fiscal 2025 to $53.5 million cash provided by operating activities from $20.7 million cash provided by operating activities in fiscal 2024.

Net cash provided by operating activities increased by $15.1 million in fiscal 2023 to $14.8 million cash provided by operating activities from $0.4 million cash used in operating activities in fiscal 2022.

Net cash provided by operating activities increased by $5.9 million in fiscal 2024 to $20.7 million cash provided by operating activities from $14.8 million cash provided by operating activities in fiscal 2023.

Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for inventory, employee compensation, store occupancy expenses and other operational expenditures.

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Investing Activities

Net cash provided by investing activities was $32.6 million in fiscal 2024 related to $15.0 million of capital expenditures primarily for and existing store remodels or relocations primarily offset by $47.6 million in sales of marketable securities, net of purchases.

Net cash used in investing activities was $8.5 million in fiscal 2023 related to $20.4 million of capital expenditures primarily for new store openings and existing store remodels or relocations primarily offset by $11.7 million in net sales of marketable securities.

Net cash provided by investing activities was $54.2 million in fiscal 2022 related to $79.8 million in net sales of marketable securities and $25.6 million of capital expenditures primarily for new store openings and existing store remodels or relocations.

Net cash used in investing activities was $6.4 million in fiscal 2025 related to $11.1 million of capital expenditures primarily for new stores openings and existing store remodels or relocations, partially offset by $4.7 million in net proceeds from sale of marketable securities.

Net cash provided by investing activities was $32.6 million in fiscal 2024 related to $15.0 million of capital expenditures primarily for new stores openings and existing store remodels or relocations, partially offset by $47.6 million in net proceeds from sale of marketable securities.

Net cash used in investing activities was $8.5 million in fiscal 2023 related to $20.4 million of capital expenditures primarily for new store openings and existing store remodels or relocations partially offset by $11.7 million in net sales of marketable securities.

Financing Activities

Net cash used in financing activities in fiscal 2025 was $37.3 million, related to $38.3 million used in the repurchase of common stock, partially offset by $0.9 million in net proceeds from the issuance and exercise of stock-based awards.

Net cash used in financing activities in fiscal 2024 was $24.6 million, related $25.2 million used in the repurchase of common stock partially offset by $0.6 million in proceeds from the issuance and exercise of stock-based awards.

Net cash provided by financing activities in fiscal 2023 was $0.7 million related to proceeds from the issuance and exercise of stock-based awards.

Net cash used in financing activities in fiscal 2022 was $87.3 million related to $87.9 million used in the repurchase of common stock and $0.5 million in payments for tax withholding obligations upon vesting of restricted stock partially offset by $1.1 million in proceeds from the issuance and exercise of stock-based awards

Capital Expenditures

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Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g., legal contingencies, uncertain tax positions, and other matters.

At February 1, 2025, we did not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

At January 31, 2026, we did not have any “off-balance sheet arrangements,” as defined in relevant SEC regulations that are reasonably likely to have a current or future effect on our financial condition, results of operations, liquidity, capital expenditures or capital resources.

Sources of Liquidity

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However, there can be no assurance that equity or debt financing will be available to us when we need it or, if available, that the terms will be satisfactory to us and not dilutive to our then-current shareholders.

On December 20, 2024, we entered into a credit agreement with PNC Bank, National Association (the “bank”).

As of January 31, 2026, we maintain a secured credit agreement with PNC Bank, National Association (the “bank”) which is scheduled to mature on December 23, 2027.

The credit agreement provides for a revolving credit facility of up to $25 million (the “credit facility”) and is available for general corporate purpose.

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which we terminated on May 3, 2024.

The new Credit Facility is secured by cash and marketable securities that are in an account held and monitored by the Bank.

The credit facility is secured by cash and marketable securities that are in an account held and monitored by the Bank.

The value of this collateral must always be greater than or equal to the new credit facility commitment amount of $25 million.

Amounts borrowed under the new Credit Facility bear interest at the rate of SOFR plus 1.00% per annum.

Amounts borrowed under the credit facility bear interest at the rate of SOFR plus 1.00% per annum.

The Credit Agreement does not provide for any financial covenants but does include standard and customary covenants consistent with credit facilities of this nature.

The new Credit Facility does not carry any ongoing or unused balance fees.

The Credit Facility will mature on December 20, 2025.

There were no borrowings or open commercial letters of credit outstanding under the secured credit facility at February 1, 2025 and February 3, 2024.

We had $2.7 million and $3.5 million in issued, but undrawn, standby letters of credit at February 1, 2025 and February 3, 2024, respectively

The credit facility does not carry any ongoing or unused balance fees.

There were no borrowings or open commercial letters of credit outstanding under the secured credit facility at January 31, 2026 and February 1, 2025.

We had $3.2 million and $2.7 million in issued, but undrawn, standby letters of credit at January 31, 2026 and February 1, 2025, respectively.

Critical Accounting Estimates

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However, if actual results are not consistent with our estimates, we may be exposed to losses or gains that could be material.

Our inventory reserves have increased by $0.4 million in fiscal 2024.

A 10% decrease in the sales price of our inventory at February 1, 2025 would have decreased net income by $0.6 million in fiscal 2024.

A 10% increase in actual physical inventory shrinkage rate at February 1, 2025 would have decreased net income by less than $0.1 million in fiscal 2024.

Our inventory reserves were $3.7 million at January 31, 2026 compared to $3.2 million at February 1, 2025, representing an increase of $0.5 in fiscal 2025.

A 10% decrease in the sales price of our inventory at January 31, 2026 would have decreased net income by $0.6 million in fiscal 2025.

A 10% increase in actual physical inventory shrinkage rate at January 31, 2026 would have decreased net income by less than $0.1 million in fiscal 2025.

Judgments and Uncertainties

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Given the significant operating lease assets and liabilities recorded, changes in the estimates made by management or the underlying assumptions could have a material impact on our consolidated financial statements.

Total undiscounted future payments for lease liabilities were $228.5 million at February 1, 2025.

If the incremental borrowing rate increased 10 basis points from the rate in effect at February 1, 2025, the lease liability balance would decrease by $0.2 million.

Total undiscounted future payments for lease liabilities were $229.3 million at January 31, 2026.

If the incremental borrowing rate increased 10 basis points from the rate in effect at January 31, 2026, the lease liability balance would decrease by $0.2 million.

Judgments and Uncertainties

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However, if actual results are not consistent with our estimates or assumptions, we may be exposed to losses or gains that could be material .

Our sales return reserve has increased by $0.2 million in fiscal 2024.

A 10% increase in our sales return reserve at February 1, 2025 would have decreased net income by $0.3 million in fiscal 2024.

Our sales return reserve decreased by $0.2 million in fiscal 2025.

A 10% increase in our sales return reserve at January 31, 2026 would have decreased net income by $0.3 million in fiscal 2025.

Our gift card breakage reserve has increased by $2.3 million in fiscal 2025.

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Although management believes that the income tax related judgments and estimates are reasonable, actual results could differ and we may be exposed to losses or gains that could be material.

At February 1, 2025 and February 3, 2024, we had valuation allowances on our deferred tax assets of $28.8 million and $25.0 million, respectively.

At January 31, 2026 and February 1, 2025, we had valuation allowances on our deferred tax assets of $42.6 million and $28.8 million, respectively.

Significant changes in performance or estimated taxable income may result in a change in our assessment of the valuation allowance.

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To the extent we borrow under this revolving credit facility, we are exposed to the market risk related to changes in interest rates.

Effective as of May 3, 2024, we terminated our Credit Agreement with Wells Fargo Bank and standby letters of credit were transitioned to restricted deposits.

On December 20, 2024, we entered a new Credit Agreement with PNC Bank, National Association.

See Note 9 Revolving Credit Facilities and Debt for more details of termination and new credit agreement.

At February 1, 2025, we had no borrowings outstanding under the secured revolving credit facility.

At January 31, 2026, we had no borrowings outstanding under the secured revolving credit facility.

See Note 9, Revolving Credit Facilities and Debt, for more details on our credit facility.

Foreign Exchange Rate Risk

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dollar against other currencies affects the reported amounts of revenues, expenses, assets and liabilities.

Assuming a 10% change in foreign exchange rates in fiscal 2024 our net income would have decreased or increased by $1.3 million.

Assuming a 10% decrease in foreign exchange rates in fiscal 2025 our net income would have decreased by $1.3 million.

As we expand our international operations, our exposure to exchange rate fluctuations will continue to increase.

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We carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Securities Exchange Act Rule 13a-15(e)).

Based on this evaluation, our CEO and CFO concluded that, as of February 1, 2025, our disclosure controls and procedures were effective.

Based on this evaluation, our CEO and CFO concluded that, as of January 31, 2026, our disclosure controls and procedures were effective.

Changes in Internal Control Over Financial Reporting .

There has been no change in our internal control over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)) during the quarter ended February 1,

2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

There has been no change in our internal control over financial reporting (as defined in Securities Exchange Act Rule 13a-15(f)) during the quarter ended January 31, 2026 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

Management’s Annual Report on Internal Control over Financial Reporting .

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Furthermore, because of changes in conditions, the effectiveness of internal control may vary over time.

The Company’s management, with the participation of the Chief Executive Officer and Chief Financial Officer, assessed the effectiveness of the Company’s internal control over financial reporting as of February 1, 2025.

Management’s assessment was based on criteria described in the Internal Control—Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of February 1, 2025.

The effectiveness of the Company’s internal control over financial reporting as of February 1, 2025 has been audited by Moss Adams LLP, the Company’s independent registered public accounting firm, as stated in their report, appearing herein under the heading “Report of Independent Registered Public Accounting Firm.”

Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of January 31, 2026.

The effectiveness of the Company’s internal control over financial reporting as of January 31, 2026 has been audited by Baker Tilly US, LLP, the Company’s independent registered public accounting firm, as stated in their report, appearing herein under the heading “Report of Independent Registered Public Accounting Firm.”

OTHE R INFORMATION

Rule 10b5-1 Plan and Non-Rule 10b5-1 Trading Arrangement Adoptions, Terminations, and Modifications

During the company’s fourth quarter ended February 1, 2025 , none of its directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of SEC Regulation S-K.

During the company’s fourth quarter ended January 31, 2026 , none of its directors or “officers” (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of SEC Regulation S-K, except as described below:

On December 16, 2025 , Mr.

Chris Work , the Company’s Chief Financial Officer , adopted a trading arrangement for the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of the Securities Exchange Act Rule 10b5-1(c).

Work’s Rule 10b5-1 Trading Plan, which has a term through January 30, 2027 , and provides for the sale of up to 105,181 shares of common stock pursuant to the terms of the plan.

On December 16, 2025 , Mr.

Chris Visser , the Company’s Chief Legal Officer , adopted a trading arrangement for the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of the Securities Exchange Act Rule 10b5-1(c).

Visser's Rule 10b5-1 Trading Plan, which has a term through December 8, 2026 , and provides for the sale of up to 41,282 shares of common stock pursuant to the terms of the plan.

On December 22, 2025 , Mr.

Tom Campion , the Company’s Chairman , adopted a trading arrangement for the sale of securities of the Company’s common stock (a “Rule 10b5-1 Trading Plan”) that is intended to satisfy the affirmative defense conditions of the Securities Exchange Act Rule 10b5-1(c).

Campion's Rule 10b5-1 Trading Plan, which has a term through December 22, 2027 , and provides for the sale of up to 100,000 shares of common stock pursuant to the terms of the plan.

DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS

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DIRECTORS, EXECUTIVE OF FICERS AND CORPORATE GOVERNANCE

Information regarding our directors and nominees for directorship is presented under the headings “Election of Directors,” in our definitive proxy statement for use in connection with our 2025 Annual Meeting of Shareholders (the “Proxy Statement”) that will be filed within 120 days after our fiscal year ended February 1, 2025 and is incorporated herein by this reference thereto.

Information regarding our directors and nominees for directorship is presented under the headings “Election of Directors,” in our definitive proxy statement for use in connection with our 2026 Annual Meeting of Shareholders (the “Proxy Statement”) that will be filed within 120 days after our fiscal year ended January 31, 2026 and is incorporated herein by this reference thereto.

Information concerning our executive officers is set forth under the heading “Executive Officers” in our Proxy Statement, and is incorporated herein by reference thereto.

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PRINCIPAL ACCOU NTANT FEES AND SERVICES

The Company’s independent registered public accounting firm is Moss Adams LLP , Seattle, WA , PCAOB ID:

The Company’s independent registered public accounting firm is Baker Tilly US, LLP , Seattle, WA , PCAOB ID:

Information concerning principal accounting fees and services is presented under the heading “Fees Paid to Independent Registered Public Accounting Firm for Fiscal 2025 and 2024” in our Proxy Statement, and is incorporated herein by this reference thereto.

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Consolidated Balance Sheets

Consolidated statements of (loss) income

Consolidated statement of comprehensive (loss) income

Consolidated Statements of Income (Loss)

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Changes in Shareholders’ Equity

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We have audited the accompanying consolidated balance sheets of Zumiez, Inc.

(the “Company”) as of February 1, 2025 and February 3, 2024, the related consolidated statements of (loss) income, comprehensive (loss) income, changes in shareholders’ equity and cash flows for each of the three years in the period ended February 1, 2025, and the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of February 1, 2025 and February 3, 2024, and the consolidated results of its operations and its cash flows for each of the three years in the period ended February 1, 2025, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 1, 2025, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

(the “Company”) as of January 31, 2026 and February 1, 2025, the related consolidated statements of income (loss), comprehensive income (loss), changes in shareholders’ equity and cash flows for each of the three years in the period ended January 31, 2026, and the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of the Company as of January 31, 2026 and February 1, 2025, and the consolidated results of its operations and its cash flows for each of the three years in the period ended January 31, 2026, in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2026, based on criteria established in Internal Control - Integrated Framework (2013) issued by COSO.

Basis for Opinions

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Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and

operating effectiveness of internal control based on the assessed risk.

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the

audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which they relate.

Store Assets Impairment

As described in Note 6 to the consolidated financial statements, the Company’s consolidated fixed assets, net balance was $80.2 million and operating lease right-of-use assets was $183.2 million as of February 1, 2025.

For the year ended February 1, 2025, the Company recognized store asset impairment losses of $1.5 million, as disclosed in Note 12, which consists of impairment charges for fixed assets of $0.9 million and impairment charges for operating right-of-use assets of $0.6 million.

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Store Asset Impairment

The Company’s consolidated fixed assets, net balance was $72.8 million and operating lease right-of-use assets balance was $185.6 million as of January 31, 2026.

For the year ended January 31, 2026, the Company recognized store asset impairment losses of $1.8 million, as disclosed in Note 12, which consists of impairment charges for fixed assets of $1.3 million and impairment charges for operating lease right-of-use assets of $0.5 million.

As described in Note 2 to the consolidated financial statements, the Company evaluates the carrying value of long-lived assets or asset groups (defined as a store, corporate facility or distribution center) for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable.

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If the carrying amount exceeds the estimated undiscounted future cash flows, an analysis is performed to estimate the fair value of the assets.

An impairment is recorded if the

fair value of the store’s assets is less than the carrying amount.

An impairment is recorded if the fair value of the store’s assets is less than the carrying amount.

The evaluation of store assets for possible indications of impairment and the determination of the fair value of a store requires management to make significant estimates, complex judgments, and assumptions.

These assumptions include estimated future cash flows, sublease income, and the discount rate.

Given the Company’s evaluation of impairment of store assets requires management to make significant assumptions, performing audit procedures to evaluate whether management appropriately identified events or changes in circumstances indicating that the carrying amounts of store assets may not be recoverable and determine store fair value required a high degree of auditor judgment.

carrying amounts of store assets may not be recoverable and estimating store fair value, where applicable, required a high degree of auditor judgment.

How We Addressed the Matter in Our Audit

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements.

These procedures included evaluating the design and testing the operating effectiveness of internal controls related to management’s identification of indicators of impairment, the assessment of the projected undiscounted cash flows to be generated by stores with indicators of impairment, the determination of the fair value of the stores, and the measurement of any resulting impairment.

These procedures included evaluating the design and testing the operating effectiveness of internal controls related to the Company’s identification of indicators of impairment, the assessment of the projected undiscounted cash flows to be generated by stores with indicators of impairment, the determination of the fair value of the stores, and the measurement of any resulting impairment.

Our audit procedures included the following, among others:

• Evaluating management’s store asset impairment analysis, including inspecting the Company’s analysis of historical results by store to determine if contrary evidence existed as to the completeness of the population of potentially impaired stores.

• Evaluating management’s store asset impairment analysis, including inspecting the Company’s analysis of historical operating results by store to determine if contrary evidence existed as to the completeness of the population of potentially impaired stores.

• Validating the historical operating results and carrying value of assets by store used within management’s assessment are complete and accurate.

• Testing management’s process for determining the projected undiscounted cash flows to be generated by the stores.

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• Evaluating management’s assumptions used to estimate the fair value of the stores by performing a sensitivity analysis to evaluate the changes in the fair value of the individual stores that would result from changes in the underlying assumptions.

/s/ Moss Adams LLP

/s/ Baker Tilly US, LLP

Seattle, Washington

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(In thousands)

February 1, 2025

January 31, 2026

February 1, 2025

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16,971 shares issued

and outstanding at February 1, 2025 and 19,833 shares issued

and outstanding at January 31, 2026 and 19,159 shares issued

and outstanding at February 1, 2025

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See accompanying notes to consolidated financial statements.

CONSOLIDATED STAT EMENTS OF (LOSS) INCOME

CONSOLIDATED STAT EMENTS OF INCOME (LOSS)

(In thousands, except per share amounts)

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

Cost of goods sold

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Interest income, net

Other expense, net

Other income (expense), net

Earnings (loss) before income taxes

Provision for income taxes

Net (loss) income

Basic (loss) earnings per share

Diluted (loss) earnings per share

Weighted average shares used in computation of (loss) earnings per share

Net income (loss)

Basic earnings (loss) per share

Diluted earnings (loss) per share

Weighted average shares used in computation of earnings (loss) per share

See accompanying notes to consolidated financial statements.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Fiscal Year Ended

Net (loss) income

Other comprehensive (loss) income, net of tax:

January 31, 2026

February 1, 2025

February 3, 2024

Net income (loss)

Other comprehensive income (loss), net of tax:

Foreign currency translation

Net change in fair value of marketable debt securities

Other comprehensive (loss) income

Comprehensive (loss) income

Net change in fair value of marketable securities

Other comprehensive income (loss)

Comprehensive income (loss)

See accompanying notes to consolidated financial statements.

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Balance at January 28, 2023

Other comprehensive loss, net

Issuance and exercise of stock-based awards

Stock-based compensation expense

Repurchase of common stock

Balance at January 28, 2023

Other comprehensive income, net

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Stock-based compensation expense

Repurchase of common stock

Repurchase of common stock, including taxes

Balance at February 1, 2025

Other comprehensive income, net

Issuance and exercise of stock-based awards

Stock-based compensation expense

Repurchase of common stock, including taxes

Balance at January 31, 2026

See accompanying notes to consolidated financial statements.

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Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

Cash flows from operating activities:

Net (loss) income

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

Net income (loss)

Adjustments to reconcile net loss to net cash used in operating activities:

Depreciation, amortization and accretion

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Impairment of goodwill and long-lived assets

Foreign currency transaction loss

Foreign currency transaction (gain) loss

Changes in operating assets and liabilities:

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Other liabilities

Net cash provided by (used in) operating activities

Net cash provided by operating activities

Cash flows from investing activities:

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Purchases of marketable securities and other investments

Sales and maturities of marketable securities and other

Net cash provided by (used in) investing activities

Sales and maturities of marketable securities and other investments

Net cash (used in) provided by investing activities

Cash flows from financing activities:

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Payments on revolving credit facilities

Proceeds from issuance and exercise of stock-based awards

Payments for tax withholdings on equity awards

Common stock repurchased

Proceeds from the issuance and exercise of stock-based awards, net of tax

Repurchase of common stock

Net cash (used in) provided by financing activities

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Supplemental disclosure on cash flow information:

Cash paid during the period for income taxes

Accrual for purchases of fixed assets

Accrual for repurchase of common stock

See accompanying notes to consolidated financial statements.

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Each fiscal year consists of four 13-week quarters, with an extra week added to the fourth quarter every five or six years.

The fiscal year ended February 1, 2025 has 52-week period.

The fiscal years ended February 3, 2024 has a 53-week period and January 29, 2022 has a 52-week period.

The fiscal year ended January 31, 2026 has 52-week period.

The fiscal year ended February 1, 2025 has a 52-week period and February 3, 2024 has a 53-week period.

Basis of Presentation— The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America (“U.S.

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All significant intercompany transactions and balances are eliminated in consolidation.

On April 1, 2022, we received 3.2 million Euro ($ 3.6 million) as a taxable subsidy from the German government related to our European business for costs incurred during fiscal 2020 and fiscal 2021 related to the COVID-19 pandemic.

The subsidy was granted free of future obligations to repay and was accounted for using IAS 20, Accounting for Government Grants and Disclosure of Government Assistance by analogy.

The amount was recorded as a reduction to expense in selling, general and administrative expenses on the consolidated statement of (loss) income in the first quarter of fiscal 2022.

Reclassification— Certain prior period amounts have been reclassified to be consistent with current year presentation within our consolidated statement of cash flows and Note 15, Income Taxes.

Reclassification— Certain component of our deferred income taxes from prior year have been reclassified to conform to the current year presentation within Note 15, Income Taxes.

This reclassification did not affect the Company’s consolidated balance sheets, consolidated statements of income (loss), or consolidated statements of cash flows.

Summary of Significant Accounting Policies

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The following table provides a reconciliation of cash, cash equivalents, and restricted cash reported within the consolidated balanc e sheets that sum to the total of the same such amounts shown in the consolidated statement of cash flows (in thousands):

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Cash and cash equivalents

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Shrinkage refers to a reduction in inventory due to shoplifting, employee theft and other matters.

We estimate an inventory shrinkage reserve for anticipated losses and a write down for our merchandise inventories at February 1, 2025 and February 3, 2024 in the amounts of $ 3.2 million and $ 2.8 million, respectively.

We estimate an inventory shrinkage reserve for anticipated losses and a write down for our merchandise inventories at January 31, 2026 and February 1, 2025 in the amounts of $ 3.7 million and $ 3.2 million, respectively.

Fixed Assets— Fixed assets primarily consist of leasehold improvements, fixtures, land, buildings, computer equipment, software and store equipment.

Fixed assets a re stated at cost less accumulated depreciation utilizing the

straight-line method over the assets’ estimated useful lives.

Fixed assets a re stated at cost less accumulated depreciation utilizing the straight-line method over the assets’ estimated useful lives.

The useful lives of our major classes of fixed assets are as follows:

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Computer equipment, software, store equipment & other

The cost and related accumulated depreciation of assets sold or otherwise disposed of is removed from fixed assets and the related gain or loss is recorded in selling, general and administrative expenses on the consolidated statements of (loss) income .

Asset Retirement Obligations— An asset retirement obligation (“ARO”) represents a legal obligation associated with the retirement of a tangible long-lived asset that is incurred upon the acquisition, construction, development or normal operation of that long-lived asset.

Our AROs are associated with leasehold improvements that, at the end of a lease, we are contractually obligated to remove in order to comply with certain lease agreements.

The ARO balance at February 1, 2025 and February 3, 2024 was $ 4.8 million and $ 4.8 million, respectively, and is recorded in other liabilities and other long-term liabilities on the consolidated balance sheets and will be subsequently adjusted for changes in fair value.

The associated estimated asset ret irement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life.

The ARO balance at January 31, 2026 and February 1, 2025 was $ 5.0 million and $ 4.8 million, respectively, and is recorded in other liabilities and other long-term liabilities on the consolidated balance sheets and will be subsequently adjusted for changes in fair value.

The associated estimated asset retirement costs are capitalized as part of the carrying amount of the long-lived asset and depreciated over its useful life.

Valuation of Long-Lived Assets— We review the carrying value of long-lived assets or asset groups (generally defined as a store, corporate facility or distribution center) for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable.

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Additionally, management seeks input from store operations related to local economic conditions.

Impairment charges for operating lease right-of-use assets are included in cost of goods sold and impairment charges for fixed assets are included in selling, general and administrative expenses on the consolidated statements of (loss) income .

Goodwill— Goodwill represents the excess of purchase price over the fair value of acquired tangible and identifiable intangible net assets.

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Key assumptions in the market approaches include identifying companies and transactions with comparable business factors, such as earnings growth, profitability, business and financial risk.

At February 1, 2025, there was no goodwill impairment recorded.

At February 3, 2024 , we recorded a full impairment of Blue Tomato goodwill amounting to $ 41.1 million.

At January 31, 2026 and February 1, 2025 , there was no goodwill impairment recorded.

See Note 7 Goodwill and Intangible Assets for the details of the impairment.

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We test our indefinite-lived intangible assets for impairment on an annual basis, or more frequently if indicators of impairment are present.

We test our indefinite-lived assets by estimating the fair value of the asset and comparing that to the carrying value, an impairment loss is recorded for the amount that carrying value exceeds the estimated fair value.

We test our indefinite-lived assets by estimating the fair value of the asset and comparing that to the carrying value, an impairment loss is recorded for the amount

that carrying value exceeds the estimated fair value.

The fair value of the trade names and trademarks is determined using the relief from royalty method.

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We evaluate the carrying value of right-of-use assets for indicators of impairment and perform an analysis of the recoverability of the related asset group.

If the carrying value of the asset group is determined to be in excess of the estimated fair value, we record an impairment loss in our consolidated statements of (loss) income.

If the carrying value of the asset group is determined to be in excess of the estimated fair value, we record an impairment loss in our consolidated statements of income (loss).

Additionally, we review the carrying value of the right-of-use assets for impairment when events or changes in circumstances indicate that the carrying values may not be recoverable, require reassessment of the leases, and remeasurement if needed.

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Operating lease expense relating to fixed lease payments is recognized on a straight-line basis over the lease term and lease expense relating to variable payments is expensed as incurred.

Operating lease expense is recorded in the cost of goods sold expenses on the consolidated statements of (loss) income .

Operating lease expense is recorded in the cost of goods sold expenses on the consolidated statements of income (loss) .

Claims and Contingencies— We are subject to various claims and contingencies related to lawsuits, insurance, regulatory and other matters arising out of the normal course of business.

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We accrue for estimated sales returns by customers based on historical return experience.

The allowance for sales returns at February 1, 2025 and February 3, 2024 was $ 3.2 million and $ 3.0 million, respectively.

We record the sale of gift cards as a current liability and recognize revenue w hen a customer redeems a gift card.

The current liability for gift cards was $ 3.6 million at February 1, 2025 and $ 4.3 million at February 3, 2024.

The allowance for sales returns at January 31, 2026 and February 1, 2025 was $ 3.0 million and $ 3.2 million, respectively.

We record the sale of gift cards as a current liability and recognize revenue when a customer redeems a gift card.

The current liability for gift cards was $ 4.2 million at January 31, 2026 and $ 3.6 million at February 1, 2025.

Additionally, the portion of gift cards that will not be redeemed (“gift card breakage”) is recognized in proportion of the patterns used by the customer based on our historical redemption patterns.

For the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023, we recorded net sales related to gift card breakage income of $ 2.0 million, $ 1.8 million and $ 1.9 million, respectively.

For the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024, we recorded net sales related to gift card breakage income of $ 1.6 million, $ 2.0 million and $ 1.8 million, respectively.

Loyalty Program— We have a customer loyalty program, the Zumiez STASH, which allows members to earn points for purchases or performance of certain activities.

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Points earned for the performance of activities are recorded as a current liability based on the estimated cost of the points and as marketing expense when redeemed.

The deferred revenue related to our customer loyalty program at February 1, 2025 and February 3, 2024 was $ 1.1 million and $ 1.0 million, respectively.

The deferred revenue related to our customer loyalty program at January 31, 2026 and February 1, 2025 was $ 1.0 million and $ 1.1 million, respectively.

Cost of Goods Sold— Cost of goods sold consists of branded merchandise costs and our private label merchandise costs including design, sourcing, importing and inbound freight costs.

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Advertising expenses are net of sponsorships and vendor reimbursements.

Advertising expense was $ 9.2 million, $ 11.5 million and $ 10.4 million for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023 , respectively.

Advertising expense was $ 9.4 million, $ 9.2 million and $ 11.5 million for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024 , respectively.

Stock-Based Compensation— We account for stock-based compensation by recording the estimated fair value of stock-based awards granted as compensation expense over the vesting period, net of estimated forfeitures.

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Interest and penalties related to income tax matters are classified as a component of income tax expense.

Unrecognized tax benefits of $ 1.9 million and $ 2.6 million are recorded in other long-term liabilities on the consolidated balance sheets at February 1, 2025 and February 3, 2024, respectively.

Unrecognized tax benefits of $ 1.9 million are recorded in other long-term liabilities on the consolidated balance sheets at January 31, 2026 and February 1, 2025.

Our tax provision for interim periods is determined using an estimate of our annual effective rate, adjusted for discrete items, if any, that are taken into account in the relevant period.

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Our operating segments have been aggregated and are reported as one reportable segment based on the similar nature of products sold, production, merchandising and distribution processes involved, target customers and economic characteristics.

Subsequent Event —We performed an evaluation of events that occur after the balance sheet date but before the financial statements are issued, and determined whether adjustments or additional disclosures in the financial statements are necessary.

See Note 19, "Subsequent Event", for additional information.

Recent Accounting Standards—

In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40):

Targeted Improvements to the Accounting for Internal-Use Software, to modernize the capitalization guidance for internal-use software development costs by removing all references to software project development stages and provide further guidance on when an entity is required to start capitalizing eligible costs.

This ASU is effective for annual periods beginning after December 15, 2027, and interim periods within those annual reporting periods.

The Company is currently evaluating the impact of adopting this ASU on its consolidated financial statements and disclosures.

In November 2024, the FASB issued Accounting Standards Update ("ASU") 2024-03, Comprehensive Income (Topic 220):

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The Company is currently evaluating the effect that the new ASU will have on its disclosures.

In November 2023, the Financial Accounting Standards Board (“FASB”) issued ASU No.

2023-07, Improvements to Reportable Segment Disclosures (Topic 280).

This ASU updates reportable segment disclosure requirements by requiring disclosures of significant reportable segment expenses that are regularly provided to the Chief Operating Decision Maker (“CODM”) and included within each reported measure of a segment's profit or loss.

This ASU also requires disclosure of the title and position of the individual identified as the CODM and an explanation of how the CODM uses the reported measures of a segment’s profit or loss in assessing segment performance and deciding how to allocate resources.

The ASU is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024.

Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements.

Early adoption is also permitted.

We adopted this ASU for the fiscal year ending February 1, 2025, which resulted in additional disclosures to Note 18, Segment Reporting.

In December 2023, the FASB issued ASU No.

2023-09, Improvements to Income Tax Disclosures (Topic 740).

The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid.

The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024.

Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance.

This ASU will result in the required additional disclosures being included in our consolidated financial statements, once adopted.

The Company plans to adopt ASU 2023-09 effective for fiscal 2025.

ASU 2023-09 requires enhanced income tax disclosures, including additional disaggregated information related to the effective tax rate reconciliation, the underlying nature and category of individual reconciling items, and income taxes paid by jurisdictions.

We adopted ASU 2023-09 prospectively in fiscal 2025 for disclosures presented in Note 15, Income Taxes, in the Notes to Consolidated Financial Statements found in Part IV Item 15 of this Form 10-K.

The following table disaggregate net sales by geographic region (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

United States

Net sales for the year ended January 31, 2026 included a $ 9.6 million increase due to the change in foreign exchange rates.

This consisted of $ 10.0 million increase in Europe, partially offset by decreases of $ 0.3 million in Canada, and $ 0.1 million in Australia.

Net sales for the year ended February 1, 2025 included a $ 3.1 million increase due to the change in foreign exchange rates, which consisted of $ 1.7 million in Europe, $ 1.1 million in Canada, and $ 0.3 million in Australia.

Net sales for the year ended February 3, 2024 included a $ 2.5 million increase due to the change in foreign exchange rates, which consisted of $ 4.7 million in Europe, which was offset by decrease of $ 1.2 million in Canada, and decrease of $ 1.0 million in Australia.

Net sales for the year ended January 28, 2023 included a $ 17.7 million decrease due to the change in foreign exchange rates, which consisted of $ 13.7 million in Europe, $ 2.2 million in Canada, and $ 1.8 in Australia.

Cash, Cash Equivalents and Marketable Securities

The following tables summarize the estimated fair value of our cash, cash equivalents and marketable securities and the gross unrealized holdin g gains and losses (in thousands):

February 1, 2025

January 31, 2026

Cash and cash equivalents:

Money market funds

Treasury and agency securities

treasury and government agency securities

Corporate debt securities

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Money market funds

treasury and government agency securities

Corporate debt securities

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Certificates of deposit

State and local government securities

Variable-rate demand notes

Total marketable securities

All of ou r marketable securities have an effective maturity date or weighted average life of five years or less at the time of purchase and may be liquidated, at our discretion, prior to maturity.

All of our marketable securities have an effective maturity date or weighted average life of five years or less at the time of purchase and may be liquidated, at our discretion, prior to maturity.

The following tables summarize the gross unrealized holding losses and fair value for investments in an unrealized loss position, and the length of time that individual securities have been in a continuous loss position (in thousands):

February 1, 2025

January 31, 2026

Less Than Twelve Months

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12 Months or Greater

Cash and cash equivalents:

Corporate debt securities

Total cash and cash equivalents

Marketable securities:

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Corporate debt securities

State and local government securities

Total marketable securities

We did no t record a realized loss for other-than-temporary impairments during the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023 .

We did no t record a realized loss for other-than-temporary impairments during the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024 .

Receivables consisted of the following (in thousands):

February 1, 2025

January 31, 2026

February 1, 2025

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Fixed assets consisted of the following (in thousands):

February 1, 2025

January 31, 2026

February 1, 2025

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Fixed assets, net

Depreciation expense on fixed assets is recognized on our consolidated income statement of (loss) income as follows (in thousands):

Depreciation expense on fixed assets is recognized on our consolidated income statement of income (loss) as follows (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Cost of goods sold

Selling, general and administrative expenses

Cost of goods sold

Depreciation expense

Impairment of Fixed Assets— We recorded $ 0.9 million, $ 1.6 million and $ 1.7 million of impa irment of fixed assets in selling, general and administrative expenses on the consolidated statements of (loss) income for the years ended February 1, 2025, February 3, 2024 and January 28, 2023 , respectively.

Impairment of Fixed Assets— We recorded $ 1.3 million, $ 0.9 million and $ 1.6 million of impairment of fixed assets in selling, general and administrative expenses on the consolidated statements of income (loss) for the years ended January 31, 2026, February 1, 2025 and February 3, 2024 , respectively.

Goodwill and Intangible Assets

The following tables summarize the changes in the carrying amount of goodwill (in thousands):

Balance as of January 28, 2023

Balance at February 3, 2024

Effects of foreign currency translation

Balance as of February 3, 2024

Balance at February 1, 2025

Effects of foreign currency translation

Balance as of February 1, 2025

Balance at January 31, 2026

The company performs annual impairment test over goodwill and intangible assets to determine if fair value exceeds carrying value.

3 unchanged sentences

The guideline public company method involved calculations based on operating data from comparable publicly traded companies.

We recorded a full impairment of Blue Tomato goodwill amounting to $ 41.1 million for the fiscal year ended February 3, 2024.

For our fiscal year 2023, sales at Blue Tomato continued a trend of year-over-year growth.

The trend has been more closely tied to store growth than comparable sales trends needed to keep up with the cost of doing business.

As such, we have experienced increasing operating losses with the prior fiscal year having the largest loss at Blue Tomato since acquisition.

The macroeconomic climate conditions indicated economic instability.

Factors include consumer trends, higher costs of doing business, lingering COVID-19 impacts, war in Ukraine, energy challenges and inflation/interest rate pressures.

These pressures and the continued lack of scalability in the business lead the Board and Company management to prioritize positive cash flow and operating profit in the annual

budget cycle and the resulting 5 and 10-year plans that reduced expected store count by 50 % to align with lower levels of capital and attempt to focus on profitability rather than growth.

This change in store growth directly impacted the future revenue expectations of the business and related present value valuation technique used in our annual impairment test.

Furthermore, we have reduced growth rates going forward to more closely align with historical trends as well as factor in the impact of less maturing stores.

There was no impairment of goodwill for the fiscal years ended February 1, 2025 and January 28, 2023.

There was no impairment of goodwill for the fiscal years ended January 31, 2026 and February 1, 2025.

The following table summarizes the gross carrying amount, accumulated amortization and the net carrying amount of intangible assets (in thousands):

February 1, 2025

January 31, 2026

February 1, 2025

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Intangible Assets, Net

Intangible assets not subject to amortization:

Intangible assets (1)

Trade names and trademarks

Intangible assets subject to amortization:

Developed technology

Customer relationships

Non-compete agreements

Total intangible assets

There was no impairment of intangible assets for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023.

(1) The table above excludes the gross carrying amounts and corresponding accumulated amortization for other intangible assets that were fully amortized as of January 31, 2026 and February 1, 2025 .

There was no impairment of intangible assets for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024.

All amounts in the tables above are denominated in a foreign currency and subject to foreign exchange fluctuation.

We recorded no amortization expense for intangible assets for the years ended February 1, 2025, February 3, 2024 and January 28, 2023.

Amortization expense of intangible assets is recorded in selling, general and administrative expense on the consolidated statements of (loss) income .

We recorded no amortization expense for intangible assets for the years ended January 31, 2026, February 1, 2025 and February 3, 2024.

Amortization expense of intangible assets is recorded in selling, general and administrative expense on the consolidated statements of income (loss) .

Other Current Liabilities

Other current liabilities consisted of the following (in thousands):

February 1, 2025

January 31, 2026

February 1, 2025

Income taxes payable

Accrued indirect taxes

1 unchanged sentence

Unredeemed gift cards

Accrued litigation

Allowance for sales returns

Income taxes payable

Other current liabilities

Deferred revenue

1 unchanged sentence

Revolving Credit Facilities and Debt

On December 20, 2024, we entered into a credit agreement with PNC Bank, National Association (the “bank”).

As of January 31, 2026 , we maintain a secured credit agreement with PNC Bank, National Association (the “bank”) which is scheduled to mature on December 23, 2027.

The credit agreement provides for a revolving credit facility of up to $ 25 million (the “credit facility”) and is available for general corporate purpose.

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which we terminated on May 3, 2024.

The new Credit Facility is secured by cash and marketable securities that are in an account held and monitored by the Bank.

The credit facility is secured by cash and marketable securities that are in an account held and monitored by the Bank.

The value of this collateral must always be greater than or equal to the new credit facility commitment amount of $ 25 million.

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The new credit facility does not carry any ongoing or unused balance fees.

The Credit Facility will mature on December 20, 2025.

There were no borrowings outstanding under the credit facilities at February 1, 2025 or February 3, 2024 .

We had no open commercial letters of credit outstanding under our secured revolving credit facilities at February 1, 2025 or February 3, 2024.

We had $ 2.7 million and $ 3.5 million in issued, but undrawn, standby letters of credit at February 1, 2025 and February 3, 2024, respectively.

At February 1, 2025, we had operating leases for our retail stores, certain distribution and fulfillment facilities, vehicles and equipment.

Our remaining lease terms vary from one month to eleven years , with varying renewal and termination options.

At February 1, 2025 and February 3, 2024, the weighted-average of the remaining lease term was 4.8 years and 5.0 years, respectively, and the weighted-average operating lease discount rate was 4.6 % and 3.4 % , respectively.

There were no borrowings or open commercial letters of credit outstanding under the secured credit facility at January 31, 2026 or February 1, 2025 .

We had no open commercial letters of credit outstanding under our secured revolving credit facilities at January 31, 2026 or February 1, 2025.

We had $ 3.2 million and $ 2.7 million in issued, but undrawn, standby letters of credit at January 31, 2026 and February 1, 2025, respectively .

At January 31, 2026, we had operating leases for our retail stores, certain distribution and fulfillment facilities, vehicles and equipment.

Our remaining lease terms vary from one month to ten years , with varying renewal and termination options.

At January 31, 2026 and February 1, 2025, the weighted-average of the remaining lease term was 4.7 years and 4.8 years, respectively, and the weighted-average operating lease discount rate was 4.9 % and 4.6 %, respectively.

The following table presents components of lease expense (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Operating lease expense

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Supplemental cash flow information related to leases is as follows (in thousands):

February 1, 2025

January 31, 2026

February 1, 2025

2 unchanged sentences

Right-of-use assets obtained in exchange for new operating lease liabilities

At February 1, 2025, the maturities of our operating leases liabilities are as follows (in thousands):

At January 31, 2026, the maturities of our operating leases liabilities are as follows (in thousands):

Total minimum lease payments

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(2) Amounts in the table do not include contingent rent, common area maintenance charges and other non-lease components.

At February 1, 2025, we have excluded from the table above $ 2.2 million of operating leases that were contractually executed, but have not yet commenced.

At January 31, 2026, we have excluded from the table above $ 5.0 million of operating leases that were contractually executed, but have not yet commenced.

These operating leases are expected to commence in fiscal 2026 .

Commitments and Contingencies

Purchase Commitments— At February 1, 2025 and February 3, 2024, we had outstanding purchase orders to acquire merchandise from vendors of $ 173.0 million and $ 180.9 million, respectively.

Purchase Commitments— At January 31, 2026 and February 1, 2025, we had outstanding purchase orders to acquire merchandise from vendors of $ 201.9 million and $ 173.0 million, respectively.

We have an option to cancel these commitments with no notice prior to shipment, except for certain private label, packaging supplies and international purchase orders in which we are obligated to repay contractual amounts upon cancellation.

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The lawsuit alleges a series of wage and hour violations under California’s Labor Code.

Zumiez has answered the complaint.

We are in the process of investigating the claims and we intend to vigorously defend ourselves.

After mediation on April 18, 2025, the parties have entered into a Memorandum of Understanding and reached a settlement in the amount of $ 2,890,000 that is subject to preliminary and final court approval.

The parties anticipate that a motion seeking preliminary approval of the settlement will be filed in the next 45 to 60 days.

Insurance Reserves— We use a combination of third-party insurance and self-insurance for a number of risk management activities including workers’ compensation, general liability and employee-related health care benefits.

We maintain reserves for our self-insured losses, which are estimated based on actuarial based analysis of historical claims experience.

The self-insurance reserve, which is recorded under Accrued payroll and payroll taxes in the consolidated balance sheets, was $ 1.5 million and $ 1.7 million for fiscal years ended February 1, 2025 and February 3, 2024 , respectively.

The self-insurance reserve, which is recorded under Accrued payroll and payroll taxes in the consolidated balance sheets, was $ 2.5 million and $ 1.5 million for fiscal years ended January 31, 2026 and February 1, 2025 , respectively.

Fair Value Measurements

4 unchanged sentences

The following tables summarize assets measured at fair value on a recurring basis (in thousands):

February 1, 2025

January 31, 2026

Cash equivalents:

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Money market funds

treasury and government agency securities

Corporate debt securities

3 unchanged sentences

Certificates of deposit

State and local government securities

Variable-rate demand notes

Long-term other assets:

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These assets are measured at fair value if determined to be impaired.

We recorded impairment charges for operating lease right-of-use assets of $ 0.6 million in cost of sales.

We recorded impairment charges for fixed asset of $ 0.9 million in selling, general and administrative expenses on the consolidated statement of (loss) income for the year ended February 1, 2025.

We recorded impairment charges for operating right-of-use assets of $ 1.3 million in costs of sales.

We recorded impairment charges for fixed assets and goodwill of $ 1.6 million and $ 41.1 million, respectively, in selling, general and administrative expenses on the consolidated statement of (loss) income for the year ended February 3, 2024 .

We recorded impairment losses for operating lease right-of-use assets of $ 0.5 million in cost of sales.

We recorded impairment losses for fixed asset of $ 1.3 million in selling, general and administrative expenses on the consolidated statement of income (loss) for the year ended January 31, 2026.

We recorded impairment losses for operating lease right-of-use assets of $ 0.6 million in costs of sales.

We recorded impairment losses for fixed assets of $ 0.9 million in selling, general and administrative expenses on the consolidated statement of income (loss) for the year ended February 1, 2025 .

Stockholders’ Equity

Share Repurchase— On June 5, 2024, Zumiez Inc.

Share Repurchase— On March 12, 2025, Zumiez Inc.

approved the repurchase of up to an aggregate of $ 25 million of its Common Stock which was completed in the first quarter of the fiscal year.

On June 4, 2025, Zumiez Inc.

approved the repurchase of up to an aggregate of $ 15 million of its Common Stock (the “Repurchase Program”).

As of February 1, 2025 , we have used all of $ 25 million approved amount to repurchase common stock under the share repurchase program.

The repurchases will be made from time to time on the open market at prevailing market prices.

The Repurchase Program is expected to continue through June 30, 2026, unless the time period is extended or shortened by the Board of Directors.

As of January 31, 2026, there remains $ 1.7 million available to repurchase common stock under the share Repurchase Program.

The following table summarizes common stock repurchase activity (in thousands, except per share amounts):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Number of shares repurchased

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Total cost of shares repurchased

Accumulated Other Comprehensive Loss — The component of accumulated other comprehensive loss and the adjustments to other comprehensive (loss) income for amounts reclassified from accumulated other comprehensive loss into net (loss) income is as follows (in thousands):

Accumulated Other Comprehensive Loss — The components of accumulated other comprehensive loss and the related adjustments to other comprehensive income for amounts reclassified from accumulated other comprehensive loss into net income (loss) are as follows (in thousands):

adjustments (4)

Net unrealized

gains (losses)

on marketable

debt securities

Net change in fair value of marketable securities

Accumulated other

1 unchanged sentence

Balance at January 28, 2023

Other comprehensive loss, net (3)

Balance at January 28, 2023

Other comprehensive (loss) income, net (3)

Balance at February 3, 2024

Other comprehensive (loss) income, net (1)

Other comprehensive income (loss), net (2)

Balance at February 1, 2025

(1) Other comprehensive income before reclassifications was $ 0.8 million, net of taxes for net unrealized income on marketable debt securities for the fiscal year ended February 1, 2025.

Other comprehensive income, net (1)

Balance at January 31, 2026

(1) Other comprehensive income before reclassifications was $ 0.8 million, net of taxes, for net unrealized income on marketable securities for the fiscal year ended January 31, 2026.

There were no unrealized losses, net of taxes, reclassified from accumulated other comprehensive loss for the year ended January 31, 2026.

(2) Other comprehensive income before reclassifications was $ 0.8 million, net of taxes, for net unrealized income on marketable securities for the fiscal year ended February 1, 2025.

There were no unrealized losses, net of taxes, reclassified from accumulated other comprehensive loss for the year ended February 1, 2025.

(2) Other comprehensive income before reclassifications was $ 1.8 million, net of taxes for net unrealized income on marketable debt securities for the fiscal year ended February 3, 2024.

(3) Other comprehensive income before reclassifications was $ 1.8 million, net of taxes, for net unrealized income on marketable securities for the fiscal year ended February 3, 2024.

There were no unrealized losses, net of taxes, reclassified from accumulated other comprehensive income for the year ended February 3, 2024.

(3) Other comprehensive loss before reclassifications was $ 3.8 million, net of taxes for net unrealized losses on marketable debt securities for the fiscal year ended January 28, 2023.

There were $ 0.1 million net unrealized losses, net of taxes reclassified from accumulated other comprehensive loss for the year ended January 28, 2023.

(4) Foreign currency translation adjustments are not adjusted for income taxes as they relate to permanent investments in our international securities.

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General— We maintain several equity incentive plans under which we may grant incentive stock options, nonqualified stock options, stock bonuses, restricted stock awards, restricted stock units and stock appreciation rights to employees (including officers), non-employee directors and consultants.

Stock-Based Compensation— Total stock-based compensation expense is recognized on our consolidated statements of (loss) income as follows (in thousands):

Stock-Based Compensation— Total stock-based compensation expense is recognized on our consolidated statements of income (loss) as follows (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Cost of goods sold

Selling, general and administrative expenses

Cost of goods sold

Total stock-based compensation expense

At February 1, 2025, there was $ 9.4 million of total unrecognized compensation cost related to unvested stock options and restricted stock.

At January 31, 2026, there was $ 9.7 million of total unrecognized compensation cost related to unvested stock options and restricted stock.

This cost has a weighted-average recognition period of 1.2 years.

Restricted Equity Awards — The following table summarizes the activity of restricted stock awards and restricted stock units, collectively defined as “restricted equity awards” (in thousands, except grant date weighted-average fair value):

Restricted Equity Awards — The following table summarizes the activity of restricted st ock awards and restricted stock units, collectively defined as “restricted equity awards” (in thousands, except grant date weighted-average fair value):

Equity Awards

Outstanding at January 28, 2023

Outstanding at February 3, 2024

Outstanding at February 1, 2025

Outstanding at January 31, 2026

The following table summarizes additional information related to restricted equity awards activity (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Vest date fair value of restricted stock vested

Stock Options —We had 0.4 million stock options outstanding at February 1, 2025, 0.3 million stock options outstanding at February 3, 2024 and 0.4 million stock options outstanding at January 28, 2023 with a grant date weighted average exercise price of $ 21.24 , $ 26.51 and $ 29.30 , respectively.

Stock Options —We had 0.6 million stock options outstanding at January 31, 2026, 0.4 million stock options outstanding at February 1, 2025, 0.3 million stock options outstanding at February 3, 2024 with a grant date weighted average exercise price of $ 19.35 , $ 21.24 and $ 26.51 , respectively.

Employee Stock Purchase Plan— We offer an Employee Stock Purchase Plan (“ESPP”) for eligible employees to purchase our common stock at a 15 % discount of the lesser of fair market value of the stock on the first business day or the last business day of the offering period, subject to maximum contribution thresholds.

The number of shares issued under our ESPP was less than 0.1 million for each of the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023 .

On December 20, 2021, the Organization for Economic Co-operation and Development ("OECD") has published a proposal to establish a new global minimum corporate tax rate of 15 %, commonly referred to as Pillar Two.

While the U.S.

has not yet adopted the Pillar Two framework into law, several countries in which we operate have enacted tax legislation based on the Pillar Two framework with certain components of the minimum tax rules effective beginning in fiscal year 2024 and further rules becoming effective beginning in fiscal year 2025.

These rules are not expected to materially impact the Company’s Consolidated Financial Statements, considering the Co mpany does not have material operations in jurisdictions with tax rates lower than the Pillar Two minimum rate.

We considered the applicable tax law changes on Pillar Two implementation in the relevant countries, and there is no material impact to our tax provision for the year ended February 1, 2025.

We will continue to evaluate the impact of these tax law changes on future reporting periods.

The number of shares issued under our ESPP was less than 0.1 million for each of the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024 .

The components of earnings (loss) before income taxes are (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

United States

2 unchanged sentences

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

State and local

4 unchanged sentences

The reconciliation of the income tax provision at the U.S.

federal statutory rate to our effective income tax rate is as follows:

federal statutory rate to our effective income tax rate is as follows (in thousands, except percentages):

Fiscal Year Ended

January 31, 2026

federal statutory tax rate

State and local income taxes, net of federal effect (1)

Foreign tax effects

Rate differential between Austria and the United States

Changes in valuation allowance

GAAP to stat adjustment

Changes in valuation allowance

Discrete impact of loss carryforwards

Rate differential between Australia and the United States

Changes in valuation allowance

Other Foreign Jurisdictions

Stock-based Compensation

Nontaxable or Nondeductible Items

Other nontaxable or nondeductible items

Changes in unrecognized tax benefits

Other Adjustments

Tax account roll forward adjustment

Provision for income taxes

(1) State taxes in California, New York, New York City, Oregon, and Texas, made up a majority (greater than 50%) of the tax effect in this category.

The following table presents required disclosures prior to the adoption of ASU 2023-09 and displays the reconciliation between the income tax provision at the U.S.

federal statutory tax rate to our effective income tax rate.

February 1, 2025

February 3, 2024

federal statutory tax rate

State and local income taxes, net of federal effect

Change in valuation allowance

8 unchanged sentences

The components of deferred income taxes are (in thousands):

February 1, 2025

January 31, 2026

February 1, 2025

3 unchanged sentences

Employee benefits, including stock-based compensation

Deferred losses

Accrued liabilities

Deferred losses

Property and equipment

Total deferred tax assets

2 unchanged sentences

Goodwill and intangible assets

Prepaid expenses

Property and equipment

Prepaid expenses

Total deferred tax liabilities

1 unchanged sentence

Net deferred tax assets

At February 1, 2025 and February 3, 2024, we had foreign net operating loss carryovers that could be utilized to reduce future years’ tax liabilities of $ 130.8 million and $ 111.2 million, respectively.

The tax-effected foreign net operating loss carryo vers were $ 30.0 million and $ 25.6 million at February 1, 2025 and February 3, 2024, respectively.

At January 31, 2026 and February 1, 2025, we had foreign net operating loss carryovers that could be utilized to reduce future years’ tax liabilities of $ 210.8 million and $ 130.8 million, respectively.

Net operating loss carryovers for the year ended January 31, 2026 included a $ 24.6 million increase due to change in foreign exchange rates, which consisted of increases in Europe and Australia amounting to $ 22.0 million and $ 2.6 million, respectively.

Net operating loss carryovers for the year ended February 1, 2025 included a $ 5.7 million decrease due to change in foreign exchange rates in Europe.

The tax-effected foreign net operating loss carryovers were $ 44.7 million and $ 30.0 million at January 31, 2026 and February 1, 2025, respectively.

The net operating loss carryovers have an indefinite carryforward period and currently will not expire.

At February 1, 2025 and February 3, 2024, we had state net operating loss carryovers that could be utilized to reduce future year's tax liabilities of $ 21.4 million and $ 16.8 , respectively, which, if unused will expire in years 2033 through 2043 .

The tax-effected state net operating loss carryovers were $ 0.3 million and $ 0.3 at February 1, 2025 and February 3, 2024, respectively.

At February 1, 2025 and February 3, 2024, we had tax credit carryovers that could be utilized to reduce future year's tax liabilities of $ 0.3 million and $ 0.7 million, respectively, which if unused will expire in years 2028 through 2034 .

At February 1, 2025 and February 3, 2024, we had capital loss and charitable deduction limitation carryovers that could be utilized to reduce future year's tax liabilities of $ 0.4 million and $ 0.7 million, which if unused will expire in years 2026-2029.

At February 1, 2025 and February 3, 2024, we had valuation allowances on our deferred tax assets of $ 28.8 million and $ 25.0 million, respectively, prima rily due to the uncertainty of the realization of certain deferred tax assets related to foreign net operating loss carryovers.

At January 31, 2026 and February 1, 2025, we had state net operating loss carryovers that could be utilized to reduce future years' tax liabilities of $ 21.5 million and $ 21.4 million, respectively, which, if unused will expire in 2044 .

The tax-effected state net operating loss carryovers were $ 0.3 million at January 31, 2026 and February 1, 2025.

At January 31, 2026 and February 1, 2025, we had tax credit carryovers that could be utilized to reduce future years' tax liabilities of $ 0.3 million, which if unused will expire in years 2028 through 2044 .

At January 31, 2026 and February 1, 2025, we had capital loss limitation carryovers that could be utilized to reduce future years' tax liabilities of $ 0.4 million, which if unused will expire in years 2026 through 2030 .

At January 31, 2026 and February 1, 2025, we had valuation allowances on our deferred tax assets of $ 42.6 million and $ 28.8 million, respectively, primarily due to the uncertainty of the realization of certain deferred tax assets related to foreign net operating loss carryovers.

The following table summarizes the activity related to our unrecognized tax benefits (in thousands):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

Beginning unrecognized tax benefits

4 unchanged sentences

Ending unrecognized tax benefits

At February 1, 2025 we had $ 1.9 million of gross unrecognized tax benefits of which $ 1.2 million, if recognized, would affect our effective tax rate.

We recognized a benefit of $ 0.07 million, an expense of $ 0.01 million, an expense of $ 0.1 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2024, 2023 and 2022, respectively.

As of February 1, 2025 and February 3, 2024, we had accrued interest and penalties of $ 0.2 million and $ 0.3 million, respectively, within our consolidated balance sheets.

At January 31, 2026 we had $ 1.9 million of gross unrecognized tax benefits of which $ 1.0 million, if recognized, would affect our effective tax rate.

We recognized a benefit of $ 0.07 million, a benefit of $ 0.07 million, an expense of $ 0.01 million of interest and penalties in income tax expense, prior to the benefit of the federal tax deduction, for fiscal 2025, 2024 and 2023, respectively.

As of January 31, 2026 and February 1, 2025, we had accrued interest and penalties of $ 0.2 million, within our consolidated balance sheets.

Net cash paid (refunds received) for income taxes consisted of the following (in thousands):

Fiscal Year Ended

January 31, 2026

Aggregated state and Local

Disaggregated State and local

Net cash paid (refunds received) for income taxes

The income taxes paid for the years ended February 1, 2025 and February 3, 2024 were $ 2.5 million and $ 2.1 million, respectively.

We file income tax returns in the U.S.

2 unchanged sentences

state and local examinations for years before fiscal 2021.We are no longer subject to examination for all foreign income tax returns before fiscal 2019 .

(Loss) Earnings per Share, Basic and Diluted

The following table sets forth the computation of basic and diluted (loss) earnings per share (in thousands, except per share amounts):

Earnings (Loss) Per Share

The following table sets forth the computation of basic and dilute d earnings (loss) per share (in thousands, except per share amounts):

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Net (loss) income

Weighted average common shares for basic (loss) earnings per share

Net income (loss)

Weighted average common shares for basic earnings (loss) per share

Dilutive effect of stock options and restricted stock

Weighted average common shares for diluted (loss) earnings per

Basic (loss) earnings per share

Diluted (loss) earnings per share

Weighted average common shares for diluted earnings (loss) per share

Basic earnings (loss) per share

Diluted earnings (loss) per share

Total anti-dilutive common stock options not included in the calculation of diluted earnings per share were

0.5 million for the fiscal years ended February 1, 2025 and February 3, 2024,and 0.1 million and for the fiscal years ended January 28, 2023 .

0.2 million for the fiscal years ended January 31, 2026, 0.5 million for the fiscal years ended February 1, 2025 and February 3, 2024 .

Related Party Transactions

1 unchanged sentence

Our Chairman of the Board is also the President of the Zumiez Foundation.

We committed charitable contributions to the Zumiez Foundation of less than $ 0.1 million, $ 0.1 million and $ 0.9 million for the fiscal years ended February 1, 2025, February 3, 2024, and January 28, 2023, respectively.

There were no accruals for charitable contributions payable to the Zumiez Foundation as of February 1, 2025 and February 3, 2024.

Accrued charitable contributions payable to the Zumiez Foundation amounted to $ 0.5 m illion as of January 28, 2023.

We committed charitable contributions to the Zumiez Foundation of less than $ 0.1 million for the fiscal years ended January 31, 2026, February 1, 2025, and February 3, 2024 , respectively.

There were no accruals for charitable contributions payable to the Zumiez Foundation as of January 31, 2026, February 1, 2025, and February 3, 2024 .

Segment Reporting

We identify our operating segments according to how our business activities are managed and evaluated.

As of February 1, 2025 , our operating segments included our United States operations, Canadian operations, European operations, and Australian operations.

As of January 31, 2026 , our operating segments included our United States operations, Canadian operations, European operations, and Australian operations.

4 unchanged sentences

Fiscal Years Ended

January 31, 2026

February 1, 2025

February 3, 2024

Product COGS (1)

9 unchanged sentences

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Men's Apparel

2 unchanged sentences

Fiscal Year Ended

January 31, 2026

February 1, 2025

February 3, 2024

January 28, 2023

Net sales (1):

1 unchanged sentence

Total net sales

February 1, 2025

January 31, 2026

February 1, 2025

10 unchanged sentences

The repurchases will be made from time to time on the open market at prevailing market prices.

The Repurchase Program is expected to continue through March 31, 2026, unless the time period is extended or shortened by the Board of Directors.

The Repurchase Program is expected to continue through January 29, 2028, unless the time period is extended or shortened by the Board of Directors.

The Repurchase Program supersedes the prior authorization approved by the Board of Directors on June 4, 2025 that was set to expire on June 20, 2026.

EXHIBIT INDEX

2 unchanged sentences

Bylaws, as amended and restated May 21, 2014 and Amendment No.1, dated as of May 21, 2015, to Bylaws of Zumiez Inc.

(as previously Amended and Restated as of May 21, 2014 [Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 23, 2014 and Exhibit to the Company’s Form 8-K filed on May 22, 2015]

(as previously Amended and Restated as of May 21, 2014).

[Incorporated by reference to Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on May 23, 2014 and Exhibit to the Company’s Form 8-K filed on May 22, 2015]

Form of Common Stock Certificate of Zumiez Inc.

18 unchanged sentences

[Incorporated by reference to Exhibit 10.29 to the Company’s Current Report on Form 8-K filed on October 18, 2021]

2023 Equity Incentive Plan [Incorporated by reference to Exhibit 10.30 to the Company's Current Report on Form 8-K filed by the Company on June 2, 2023]

Form of Restricted Stock Award Agreement and Terms and Conditions [Incorporated by reference to Exhibit 10.31 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Form of Restricted Stock Unit Award Agreement and Terms and Conditions [Incorporated by reference to Exhibit 10.32 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Form of Stock Option Award Agreement and Terms and Conditions [Incorporated by reference to Exhibit 10.33 to the Company's Current Report on Form 8-K filed on June 2, 2023]

2023 Employee Stock Purchase Plan [Incorporated by reference to Exhibit 10.34 to the Company's Current Report on Form 8-K filed by the Company on June 2, 2023]

2023 Equity Incentive Plan.

[Incorporated by reference to Exhibit 10.30 to the Company's Current Report on Form 8-K filed by the Company on June 2, 2023]

Form of Restricted Stock Award Agreement and Terms and Conditions.

[Incorporated by reference to Exhibit 10.31 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Form of Restricted Stock Unit Award Agreement and Terms and Conditions.

[Incorporated by reference to Exhibit 10.32 to the Company's Current Report on Form 8-K filed on June 2, 2023]

Form of Stock Option Award Agreement and Terms and Conditions.

[Incorporated by reference to Exhibit 10.33 to the Company's Current Report on Form 8-K filed on June 2, 2023]

2023 Employee Stock Purchase Plan.

[Incorporated by reference to Exhibit 10.34 to the Company's Current Report on Form 8-K filed by the Company on June 2, 2023]

Second Amendment to Credit Agreement dated effective as of July 27, 2023 by and among Zumiez Inc., Zumiez Services Inc.

5 unchanged sentences

[Incorporated by reference to Exhibit 10.37 to the Form 8-K filed by the Company on December 24, 2024]

First Amendment to Credit Agreement dated as of December 17, 2025 by and among Zumiez Inc., Zumiez Services Inc.

and PNC Bank, National Association.

[Incorporated by reference to Exhibit 10.38 to the Form 8-K filed by the Company on December 22, 2025]

Insider Trading Policy.

[Incorporated by reference to Exhibit 19.1 to the Form 10-K filed by the Company on March 13, 2025]

Subsidiaries of the Company.

Consent of Moss Adams LLP, Independent Registered Public Accounting Firm.

Consent of Baker Tilly US, LLP, Independent Registered Public Accounting Firm.

Certification of the Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as amended, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

3 unchanged sentences

Policy for Recovery of Erroneously Awarded Compensation.

The following materials from Zumiez Inc.’s Annual Report on Form 10-K for the annual period ended February 1, 2025, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets at February 1, 2025 and February 3, 2024;

(ii) Consolidated statements of (loss) income for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023;

(iii) Consolidated statement of comprehensive (loss) income for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023;

(iv) Consolidated Statements of Changes in Shareholders’ Equity for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023;

(v) Consolidated Statements of Cash Flows for the fiscal years ended February 1, 2025, February 3, 2024 and January 28, 2023;

[Incorporated by reference to Exhibit 97.1 to the Form 10-K filed by the Company on March 13, 2025]

The following materials from Zumiez Inc.’s Annual Report on Form 10-K for the annual period ended January 31, 2026, formatted in iXBRL (Inline eXtensible Business Reporting Language):

(i) Consolidated Balance Sheets at January 31, 2026 and February 1, 2025;

(ii) Consolidated statements of income (loss) for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024;

(iii) Consolidated statements of comprehensive income (loss) for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024;

(iv) Consolidated Statements of Changes in Shareholders’ Equity for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024;

(v) Consolidated Statements of Cash Flows for the fiscal years ended January 31, 2026, February 1, 2025 and February 3, 2024;

and (vi) Notes to Consolidated Financial Statements.

24 unchanged sentences

Smith, Director

/ S / CARMEN R.

March 13, 2025

/ S / S COTT A.

March 13, 2025

Bauza, Director

Bailey, Director

/ S / L ILIANA G IL V ALLETTA

4 unchanged sentences

Harkless, Director

/ S / CARMEN R.

March 12, 2026

Bauza, Director

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis