Item 1. FINANCIAL STATEMENTS (UNAUDITED)

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

			For the Thirteen Weeks Ended												For the Thirty-nine Weeks Ended
(In thousands, except per share amounts)			October 27, 2024						October 29, 2023						October 27, 2024						October 29, 2023
Net revenues			$	1,800,668					$	1,853,650					$	5,249,323					$	5,471,715
Cost of goods sold			958,953						1,031,290						2,778,767						3,216,729
Gross profit			841,715						822,360						2,470,556						2,254,986
Selling, general and administrative expenses			521,072						507,283						1,536,169						1,468,884
Operating income			320,643						315,077						934,387						786,102
Interest income, net			11,802						7,182						43,063						16,015
Earnings before income taxes			332,445						322,259						977,450						802,117
Income taxes			83,492						84,974						237,086						206,794
Net earnings			$	248,953					$	237,285					$	740,364					$	595,323
Basic earnings per share			$	1.99					$	1.85					$	5.81					$	4.60
Diluted earnings per share			$	1.96					$	1.83					$	5.74					$	4.56
Shares used in calculation of earnings per share:
Basic			125,333						128,285						127,334						129,436
Diluted			126,892						129,549						129,019						130,596

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

			For the Thirteen Weeks Ended												For the Thirty-nine Weeks Ended
(In thousands)			October 27, 2024						October 29, 2023						October 27, 2024						October 29, 2023
Net earnings			$	248,953					$	237,285					$	740,364					$	595,323
Other comprehensive income (loss):
Foreign currency translation adjustments			(13)						(4,028)						(1,404)						(4,062)
Change in fair value of derivative financial instruments, net of tax of $0, $27, $0, and $57.			—						78						1						163
Reclassification adjustment for realized gains (losses) on derivative financial instruments, net of tax of $0, $40, $(33), and $316.			—						(114)						94						(896)
Comprehensive income			$	248,940					$	233,221					$	739,055					$	590,528

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

			As of
(In thousands, except per share amounts)			October 27, 2024						January 28, 2024						October 29, 2023
ASSETS
Current assets
Cash and cash equivalents			$	826,784					$	1,262,007					$	698,807
Accounts receivable, net			105,620						122,914						124,238
Merchandise inventories, net			1,450,135						1,246,369						1,396,864
Prepaid expenses			84,810						59,466						100,045
Other current assets			19,432						29,041						27,381
Total current assets			2,486,781						2,719,797						2,347,335
Property and equipment, net			1,019,874						1,013,189						1,026,819
Operating lease right-of-use assets			1,147,673						1,229,650						1,235,425
Deferred income taxes, net			109,444						110,656						76,272
Goodwill			77,301						77,306						77,279
Other long-term assets, net			127,267						122,950						120,639
Total assets			$	4,968,340					$	5,273,548					$	4,883,769
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	665,803					$	607,877					$	675,505
Accrued expenses			235,146						264,306						203,958
Gift card and other deferred revenue			583,022						573,904						528,403
Income taxes payable			28,400						96,554						53,139
Operating lease liabilities			231,667						234,517						231,236
Other current liabilities			101,272						103,157						96,745
Total current liabilities			1,845,310						1,880,315						1,788,986
Long-term operating lease liabilities			1,083,809						1,156,104						1,163,631
Other long-term liabilities			132,612						109,268						117,918
Total liabilities			3,061,731						3,145,687						3,070,535
Commitments and contingencies – See Note F
Stockholders’ equity
Preferred stock: $0.01 par value; 7,500 shares authorized; none issued			—						—						—
Common stock: $0.01 par value; 253,125 shares authorized; 123,876, 128,301 and 128,270 shares issued and outstanding at October 27, 2024, January 28, 2024 and October 29, 2023, respectively			1,239						1,284						1,283
Additional paid-in capital			545,205						587,960						571,765
Retained earnings			1,377,461						1,555,595						1,260,216
Accumulated other comprehensive loss			(16,861)						(15,552)						(18,604)
Treasury stock, at cost: 4, 6 and 6 shares as of October 27, 2024, January 28, 2024 and October 29, 2023, respectively			(435)						(1,426)						(1,426)
Total stockholders’ equity			1,906,609						2,127,861						1,813,234
Total liabilities and stockholders’ equity			$	4,968,340					$	5,273,548					$	4,883,769

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

			Common Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Total Stockholders’ Equity
(In thousands)			Shares						Amount
Balance at January 28, 2024			128,301						$	1,284					$	587,960					$	1,555,595					$	(15,552)					$	(1,426)					$	2,127,861
Net earnings			—						—						—						265,666						—						—						265,666
Foreign currency translation adjustments			—						—						—						—						(1,342)						—						(1,342)
Change in fair value of derivative financial instruments, net of tax			—						—						—						—						1						—						1
Release of stock-based awards 1			687						6						(86,787)						—						—						(227)						(87,008)
Repurchases of common stock			(313)						(2)						(957)						(42,822)						—						—						(43,781)
Reissuance of treasury stock under stock-based compensation plans 1			—						—						(1,218)						—						—						1,218						—
Stock-based compensation expense			—						—						22,191						—						—						—						22,191
Dividends declared			—						—						—						(74,030)						—						—						(74,030)
Balance at April 28, 2024			128,675						$	1,288					$	521,189					$	1,704,409					$	(16,893)					$	(435)					$	2,209,558
Net earnings			—						—						—						225,745						—						—						225,745
Foreign currency translation adjustments			—						—						—						—						(49)						—						(49)
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						—						—						—						94						—						94
Release of stock-based awards 1			35						—						(1,842)						—						—						—						(1,842)
Repurchases of common stock 2			(922)						(10)						(2,808)						(127,700)						—						—						(130,518)
Stock-based compensation expense			—						—						21,633						—						—						—						21,633
Dividends declared			—						—						—						(74,391)						—						—						(74,391)
Balance at July 28, 2024			127,788						$	1,278					$	538,172					$	1,728,063					$	(16,848)					$	(435)					$	2,250,230
Net earnings			—						—						—						248,953						—						—						248,953
Foreign currency translation adjustments			—						—						—						—						(13)						—						(13)
Release of stock-based awards 1			17						—						(1,883)						—						—						—						(1,883)
Repurchases of common stock 2			(3,929)						(39)						(12,155)						(526,955)						—						—						(539,149)
Stock-based compensation expense			—						—						21,071						—						—						—						21,071
Dividends declared			—						—						—						(72,600)						—						—						(72,600)
Balance at October 27, 2024			123,876						$	1,239					$	545,205					$	1,377,461					$	(16,861)					$	(435)					$	1,906,609

1**Amounts are shown net of shares withheld for employee taxes.

2**Repurchases of common stock include accrued excise taxes of $6.0 million as of October 27, 2024, which is recorded in retained earnings.

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY

(Unaudited)

			Common Stock												Additional Paid-in Capital						Retained Earnings						Accumulated Other Comprehensive Income (Loss)						Treasury Stock						Total Stockholders’ Equity
(In thousands)			Shares						Amount
Balance at January 29, 2023			132,453						$	1,325					$	572,455					$	1,141,819					$	(13,809)					$	(739)					$	1,701,051
Net earnings			—						—						—						156,531						—						—						156,531
Foreign currency translation adjustments			—						—						—						—						(2,205)						—						(2,205)
Change in fair value of derivative financial instruments, net of tax			—						—						—						—						242						—						242
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						—						—						—						(486)						—						(486)
Release of stock-based awards 1			996						10						(49,327)						—						—						(201)						(49,518)
Repurchases of common stock 2			(5,005)						(50)						(14,778)						(286,573)						—						(1,000)						(302,401)
Reissuance of treasury stock under stock-based compensation plans 1			—						—						(334)						(180)						—						514						—
Stock-based compensation expense			—						—						23,282						—						—						—						23,282
Dividends declared			—						—						—						(59,671)						—						—						(59,671)
Balance at April 30, 2023			128,444						$	1,285					$	531,298					$	951,926					$	(16,258)					$	(1,426)					$	1,466,825
Net earnings			—						—						—						201,507						—						—						201,507
Foreign currency translation adjustments			—						—						—						—						2,171						—						2,171
Change in fair value of derivative financial instruments, net of tax			—						—						—						—						(157)						—						(157)
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						—						—						—						(296)						—						(296)
Release of stock-based awards 1			25						—						(432)						—						—						—						(432)
Repurchases of common stock 2			(180)						(2)						(547)						(9,547)						—						—						(10,096)
Stock-based compensation expense			—						—						20,547						—						—						—						20,547
Dividends declared			—						—						—						(59,114)						—						—						(59,114)
Balance at July 30, 2023			128,289						$	1,283					$	550,866					$	1,084,772					$	(14,540)					$	(1,426)					$	1,620,955
Net earnings			—						—						—						237,285						—						—						237,285
Foreign currency translation adjustments			—						—						—						—						(4,028)						—						(4,028)
Change in fair value of derivative financial instruments, net of tax			—						—						—						—						78						—						78
Reclassification adjustment for realized (gain) loss on derivative financial instruments, net of tax			—						—						—						—						(114)						—						(114)
Release of stock-based awards 1			24						—						(1,159)						—						—						—						(1,159)
Repurchases of common stock 2			(43)						—						(131)						(2,883)						—						—						(3,014)
Stock-based compensation expense			—						—						22,189						—						—						—						22,189
Dividends declared			—						—						—						(58,958)						—						—						(58,958)
Balance at October 29, 2023			128,270						$	1,283					$	571,765					$	1,260,216					$	(18,604)					$	(1,426)					$	1,813,234

1**Amounts are shown net of shares withheld for employee taxes.

2**Repurchases of common stock include accrued excise taxes of $2.5 million as of October 29, 2023, which is recorded in retained earnings.

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

			For the Thirty-nine Weeks Ended
(In thousands)			October 27, 2024						October 29, 2023
Cash flows from operating activities:
Net earnings			$	740,364					$	595,323
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization			171,657						166,027
Loss on disposal/impairment of assets			4,494						19,143
Non-cash lease expense			192,501						186,764
Deferred income taxes			(9,003)						(7,993)
Tax benefit related to stock-based awards			10,472						12,455
Stock-based compensation expense			66,061						66,435
Other			(2,205)						(2,411)
Changes in:
Accounts receivable			17,287						(8,928)
Merchandise inventories			(203,937)						56,770
Prepaid expenses and other assets			(21,393)						(35,857)
Accounts payable			37,239						164,958
Accrued expenses and other liabilities			(17,060)						(48,978)
Gift card and other deferred revenue			9,367						49,878
Operating lease liabilities			(200,947)						(200,168)
Income taxes payable			(68,154)						(8,005)
Net cash provided by operating activities			726,743						1,005,413
Cash flows from investing activities:
Purchases of property and equipment			(154,354)						(134,830)
Other			360						402
Net cash used in investing activities			(153,994)						(134,428)
Cash flows from financing activities:
Repurchases of common stock			(707,477)						(313,001)
Payment of dividends			(208,861)						(174,571)
Tax withholdings related to stock-based awards			(90,733)						(51,108)
Net cash used in financing activities			(1,007,071)						(538,680)
Effect of exchange rates on cash and cash equivalents			(901)						(842)
Net (decrease) increase in cash and cash equivalents			(435,223)						331,463
Cash and cash equivalents at beginning of period			1,262,007						367,344
Cash and cash equivalents at end of period			$	826,784					$	698,807

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

NOTE A. FINANCIAL STATEMENTS - BASIS OF PRESENTATION

These financial statements include Williams-Sonoma, Inc. and its wholly owned subsidiaries ("Company," “we,” “us” or “our”). The Condensed Consolidated Balance Sheets as of October 27, 2024, January 28, 2024 and October 29, 2023, the Condensed Consolidated Statements of Earnings, the Condensed Consolidated Statements of Comprehensive Income, and the Condensed Consolidated Statements of Stockholders’ Equity for the thirteen and thirty-nine weeks then ended and the Condensed Consolidated Statements of Cash Flows for the thirty-nine weeks then ended, have been prepared by us, and have not been audited. In our opinion, the financial statements include all adjustments (which include normal recurring adjustments) necessary to present fairly the financial position at the balance sheet dates and the results of operations for the thirteen and thirty-nine weeks then ended. Intercompany transactions and accounts have been eliminated in our consolidation. The balance sheet as of January 28, 2024, presented herein, has been derived from our audited Consolidated Balance Sheet included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.

The Company's fiscal year ends on the Sunday closest to January 31. All references to "fiscal 2024" represent the 53-week fiscal year that will end on February 2, 2025 and to "fiscal 2023" represent the 52-week fiscal year that ended January 28, 2024.

The results of operations for the thirteen and thirty-nine weeks ended October 27, 2024 are not necessarily indicative of the operating results of the full year.

Certain information and footnote disclosures normally included in the annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) have been omitted. These financial statements should be read in conjunction with the Consolidated Financial Statements and notes thereto included in our Annual Report on Form 10-K for the fiscal year ended January 28, 2024.

Beginning in fiscal 2021 and continuing through fiscal 2022, global supply chain disruptions caused delays in inventory receipts and backorder delays, increased raw material costs, and higher shipping-related charges. These disruptions improved in the fourth quarter of fiscal 2022. However, the costs from these supply chain challenges impacted our Condensed Consolidated Statement of Earnings in the first half of fiscal 2023.

Common Stock Split

On July 9, 2024, the Company effected a 2-for-1 stock split of its common stock through a stock dividend. All historical share and per share amounts, excluding treasury share amounts, in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the stock split. The shares of common stock retain a par value of $0.01 per share. Accordingly, an amount equal to the par value of the increased shares resulting from the stock split was reclassified from additional paid-in capital to common stock.

Out-of-Period Adjustment

Subsequent to the filing of our Form 10-K, in April 2024, the Company determined that it over-recognized freight expense in fiscal years 2021, 2022 and 2023 for a cumulative amount of $49.0 million. The Company evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. The Company then evaluated whether the cumulative amount of the over-accrual was material to its projected fiscal 2024 results, and determined the cumulative amount was not material. Therefore, the Condensed Consolidated Financial Statements for the thirty-nine weeks ended October 27, 2024 include an out-of-period adjustment of $49.0 million, recorded in the first quarter of fiscal 2024, to reduce cost of goods sold and accounts payable, which corrected the cumulative error on the Consolidated Balance Sheet as of January 28, 2024.

Recently Issued Accounting Pronouncements

In November 2023, the Financial Accounting Standards Board ("FASB") issued accounting standards update ("ASU") 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures. The ASU updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This ASU is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. We are currently assessing the impact of this ASU on our Consolidated Financial Statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The improvements in the ASU address investor requests for enhanced income tax information primarily through changes to the rate reconciliation and income taxes paid information. This ASU is effective for fiscal years beginning after December 15, 2024,

with early adoption permitted. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU requires public business entities to disclose in the notes to the financial statements, among other things, specific information about certain costs and expenses including purchases of inventory, employee compensation, and depreciation and amortization. This ASU is effective for fiscal years beginning after December 15, 2026 and interim reporting periods beginning after December 15, 2027, with early adoption permitted. We are currently evaluating the impact of this ASU on our Consolidated Financial Statements and related disclosures.

NOTE B. BORROWING ARRANGEMENTS

Credit Facility

We have a credit facility (the "Credit Facility") which provides for a $500 million unsecured revolving line of credit (the “Revolver”). Our Revolver may be used to borrow revolving loans or to request the issuance of letters of credit. We may, upon notice to the administrative agent, request existing or new lenders, at such lenders’ option, to increase the Revolver by up to $250 million to provide for a total of up to $750 million of unsecured revolving credit.

During the thirteen and thirty-nine weeks ended October 27, 2024 and October 29, 2023, we had no borrowings under our Revolver. Additionally, as of October 27, 2024, issued but undrawn standby letters of credit of $12.1 million were outstanding under our Revolver. The standby letters of credit were primarily issued to secure the liabilities associated with workers’ compensation and other insurance programs. Our Revolver matures on September 30, 2026, at which time all outstanding borrowings must be repaid and all outstanding letters of credit must be cash collateralized. We may elect to extend the maturity date, subject to lender approval.

The interest rate applicable to the Revolver is variable and may be elected by us as: (i) the Secured Overnight Financing Rate ("SOFR") plus 10 basis points and an applicable margin based on our leverage ratio, ranging from 0.91% to 1.775% or (ii) a base rate as defined in the Credit Facility, plus an applicable margin based on our leverage ratio, ranging from 0% to 0.775%.

Our Credit Facility contains certain restrictive loan covenants, including, among others, a financial covenant requiring a maximum leverage ratio (funded debt adjusted for operating lease liabilities to earnings before interest, income tax, depreciation, amortization and rent expense), and covenants limiting our ability to incur indebtedness, grant liens, make acquisitions, merge or consolidate, and dispose of assets. As of October 27, 2024, we were in compliance with our financial covenants under our Credit Facility and, based on our current projections, we expect to remain in compliance throughout the next 12 months.

Letter of Credit Facilities

We have three unsecured letter of credit facilities for a total of $35 million. Our letter of credit facilities contain covenants that are consistent with our Credit Facility. Interest on unreimbursed amounts under our letter of credit facilities accrues at a base rate as defined in the Credit Facility, plus an applicable margin based on our leverage ratio. As of October 27, 2024, the aggregate amount outstanding under our letter of credit facilities was $0.8 million, which represents only a future commitment to fund inventory purchases to which we had not taken legal title. On August 16, 2024, we renewed two of our letter of credit facilities totaling $30 million on substantially similar terms. The two letter of credit facilities mature on August 18, 2025, and the latest expiration date possible for future letters of credit issued under these facilities is January 15, 2026. One of the letter of credit facilities totaling $5 million matures on September 30, 2026, which is also the latest expiration date possible for future letters of credit issued under the facility.

NOTE C. STOCK-BASED COMPENSATION

Equity Award Programs

Our Amended and Restated 2001 Long-Term Incentive Plan (the “Plan”) provides for grants of incentive stock options, nonqualified stock options, stock-settled stock appreciation rights, restricted stock awards, restricted stock units (including those that are performance-based), deferred stock awards (collectively, “stock awards”) and dividend equivalents up to an aggregate of 85.4 million shares. As of October 27, 2024, there were approximately 9.4 million shares available for future grant. Awards may be granted under our Plan to officers, associates and non-associate members of the Board of Directors of the Company (the “Board”) or any parent or subsidiary. Shares issued as a result of award exercises or releases are primarily funded with the issuance of new shares.

Stock Awards

Annual grants of stock awards are limited to two million shares on a per person basis. Stock awards granted to associates generally vest evenly over a period of four years for service-based awards. Certain performance-based awards, which have variable payout conditions based on predetermined financial targets, generally vest three years from the date of grant. Certain stock awards and other agreements contain vesting acceleration clauses which cover events including, but not limited to, retirement, disability, death, merger or a similar corporate event. Stock awards granted to non-associate Board members generally vest in one year. Non-associate Board members automatically receive stock awards on the date of their initial election to the Board and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve as a non-associate Board member). Non-associate directors may also elect, on terms prescribed by the Company, to receive all of their annual cash compensation to be earned in respect of the applicable fiscal year either in the form of (i) fully vested stock units or (ii) fully vested deferred stock units.

Stock-Based Compensation Expense

During the thirteen and thirty-nine weeks ended October 27, 2024, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses ("SG&A") of $21.3 million and $66.1 million, respectively. During the thirteen and thirty-nine weeks ended October 29, 2023, we recognized total stock-based compensation expense, as a component of SG&A of $22.2 million and $66.4 million, respectively.

NOTE D. EARNINGS PER SHARE

Basic earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding for the period. Diluted earnings per share is computed as net earnings divided by the weighted-average number of common shares outstanding and common stock equivalents outstanding for the period using the treasury stock method. Common stock equivalents consist of shares subject to stock-based awards to the extent their inclusion would be dilutive.

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

(In thousands, except per share amounts)			Net Earnings						Weighted Average Shares						Earnings Per Share
Thirteen weeks ended October 27, 2024
Basic			$	248,953					125,333						$	1.99
Effect of dilutive stock-based awards									1,559
Diluted			$	248,953					126,892						$	1.96
Thirteen weeks ended October 29, 2023
Basic			$	237,285					128,285						$	1.85
Effect of dilutive stock-based awards									1,264
Diluted			$	237,285					129,549						$	1.83
Thirty-nine weeks ended October 27, 2024
Basic			$	740,364					127,334						$	5.81
Effect of dilutive stock-based awards									1,685
Diluted			$	740,364					129,019						$	5.74
Thirty-nine weeks ended October 29, 2023
Basic			$	595,323					129,436						$	4.60
Effect of dilutive stock-based awards									1,160
Diluted			$	595,323					130,596						$	4.56

The effect of anti-dilutive stock-based awards was not material for the thirteen and thirty-nine weeks ended October 27, 2024 and October 29, 2023, respectively.

NOTE E. SEGMENT REPORTING

We identify our operating segments according to how our business activities are managed and evaluated. Each of our brands are operating segments. Because they share similar economic and other qualitative characteristics, we have aggregated our operating segments into a single reportable segment.

The following table summarizes our net revenues by brand for the thirteen and thirty-nine weeks ended October 27, 2024 and October 29, 2023.

			For the Thirteen Weeks Ended 1												For the Thirty-nine Weeks Ended 1
(In thousands)			October 27, 2024						October 29, 2023						October 27, 2024						October 29, 2023
Pottery Barn			$	718,240					$	777,475					$	2,120,898					$	2,331,497
West Elm			450,490						466,360						1,339,578						1,402,859
Williams Sonoma			252,125						252,408						730,231						736,342
Pottery Barn Kids and Teen			287,259						276,715						768,469						748,923
Other 2			92,554						80,692						290,147						252,094
Total 3			$	1,800,668					$	1,853,650					$	5,249,323					$	5,471,715
1**Includes business-to-business net revenues within each brand.
2**Primarily consists of net revenues from Rejuvenation, our international franchise operations, Mark and Graham, and GreenRow.
3**Includes net revenues related to our international operations (including our operations in Canada, Australia, the United Kingdom, and our franchise businesses) of approximately $76.8 million and $72.5 million for the thirteen weeks ended October 27, 2024 and October 29, 2023, respectively, and approximately $229.3 million and $225.3 million for the thirty-nine weeks ended October 27, 2024 and October 29, 2023, respectively.

Long-lived assets by geographic location, which excludes deferred income taxes, goodwill, and intangible assets, are as follows:

			As of
(In thousands)			October 27, 2024						January 28, 2024						October 29, 2023
U.S.			$	2,212,022					$	2,273,905					$	2,285,829
International			70,569						79,720						85,256
Total			$	2,282,591					$	2,353,625					$	2,371,085

NOTE F. COMMITMENTS AND CONTINGENCIES

We are involved in lawsuits, claims and proceedings incident to the ordinary course of our business. These disputes, which are not currently material, are increasing in number as our business expands and our company grows. We review the need for any loss contingency reserves and establish reserves when, in the opinion of management, it is probable that a matter would result in liability, and the amount of loss, if any, can be reasonably estimated. In view of the inherent difficulty of predicting the outcome of these matters, it may not be possible to determine whether any loss is probable or to reasonably estimate the amount of the loss until the case is close to resolution, in which case no reserve is established until that time. Any claims against us, whether meritorious or not, could result in costly litigation, require significant amounts of management time and result in the diversion of significant operational resources. The results of these lawsuits, claims and proceedings cannot be predicted with certainty. However, we believe that the ultimate resolution of these current matters will not have a material adverse effect on our Condensed Consolidated Financial Statements taken as a whole.

NOTE G. STOCK REPURCHASE PROGRAMS AND DIVIDENDS

Stock Repurchase Programs

During the thirteen weeks ended October 27, 2024, we repurchased 3,929,491 shares of our common stock at an average cost of $135.86 per share for an aggregate cost of $533.9 million, excluding excise taxes on stock repurchases (net of issuances) of $5.3 million. During the thirty-nine weeks ended October 27, 2024, we repurchased 5,164,755 shares of our common stock at an average cost of $136.98 per share for an aggregate cost of $707.5 million, excluding excise taxes on stock repurchases (net of issuances) of $6.0 million. As of October 27, 2024, there was $292.5 million remaining under the $1.0 billion stock repurchase program we announced in March 2024. In September 2024, our Board of Directors authorized a new $1.0 billion stock repurchase program. The total stock repurchase authorization remaining under these programs was approximately $1.3 billion.

During the thirteen weeks ended October 29, 2023, we repurchased 42,868 shares of our common stock at an average cost of $70.00 per share for an aggregate cost of $3.0 million, excluding excise taxes on stock repurchases (net of issuances). During the thirty-nine weeks ended October 29, 2023, we repurchased 5,243,722 shares of our common stock at an average cost of $59.69 per share for an aggregate cost of $313.0 million, excluding excise taxes on stock repurchases (net of issuances) of $2.5 million.

As of October 27, 2024, January 28, 2024 and October 29, 2023, we held treasury stock of $0.4 million, $1.4 million and $1.4 million, respectively, that represents the cost of shares available for issuance intended to satisfy future stock-based award settlements in certain foreign jurisdictions.

Stock repurchases under our programs may be made through open market and privately negotiated transactions at times and in such amounts as management deems appropriate. The timing and actual number of shares repurchased will depend on a variety of factors including price, corporate and regulatory requirements, capital availability and other market conditions.

Dividends

On July 9, 2024, the Company effected a 2-for-1 stock split of its common stock through a stock dividend. The prior cash dividends per share have been retroactively adjusted to reflect the stock split. See Note A for further information.

We declared cash dividends of $0.57 and $0.45 per common share during the thirteen weeks ended October 27, 2024 and October 29, 2023, respectively.

We declared cash dividends of $1.71 and $1.35 during the thirty-nine weeks ended October 27, 2024 and October 29, 2023. Our quarterly cash dividend may be limited or terminated at any time.

NOTE H. FAIR VALUE MEASUREMENTS

Fair value is the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

We determine the fair value of financial and non-financial assets and liabilities using the fair value hierarchy established by ASC 820, Fair Value Measurement, which defines three levels of inputs that may be used to measure fair value, as follows:

• Level 1: inputs which include quoted prices in active markets for identical assets or liabilities;

• Level 2: inputs which include observable inputs other than Level 1 inputs, such as quoted prices in active markets for similar assets or liabilities; quoted prices for identical or similar assets or liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the asset or liability; and

• Level 3: inputs which include unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the underlying asset or liability.

The fair values of our cash and cash equivalents are based on Level 1 inputs, which include quoted prices in active markets for identical assets.

Long-lived Assets

We review the carrying value of all long-lived assets for impairment, primarily at an individual store level, whenever events or changes in circumstances indicate that the carrying value of an asset may not be recoverable. We measure property and equipment at fair value on a nonrecurring basis using Level 3 inputs as defined in the fair value hierarchy. We measure right-of-use assets on a nonrecurring basis using Level 2 inputs that are corroborated by market data. Where Level 2 inputs are not readily available, we use Level 3 inputs. Fair value of these long-lived assets is based on the present value of estimated future cash flows using a discount rate commensurate with the risk.

The significant unobservable inputs used in the fair value measurement of our store assets are sales growth/decline, gross margin, employment costs, lease escalations, market rental rates, changes in local real estate markets in which we operate, inflation and the overall economics of the retail industry. Significant fluctuations in any of these inputs individually could significantly impact our measurement of fair value.

During the thirteen weeks ended October 27, 2024, we recognized impairment charges of $1.6 million, which consisted of (i) the write-off of property and equipment of $1.0 million and (ii) the write-down of operating lease right-of-use-assets of $0.6 million, for one underperforming store. During the thirty-nine weeks ended October 27, 2024, we recognized impairment charges of $2.9 million, which consisted of (i) the write-down of operating lease right-of-use-assets of $1.6 million for four underperforming stores and (ii) the write-off of property and equipment of $1.3 million for two underperforming stores.

During the thirteen weeks ended October 29, 2023, we recognized impairment charges of $1.6 million, which consisted of (i) the write-down of leasehold improvements of $1.1 million for four underperforming stores and (ii) the write-down of operating lease right-of-use-assets of $0.5 million. During the thirty-nine weeks ended October 29, 2023, we recognized impairment charges of $13.0 million, which consisted of (i) the write-down of leasehold improvements of $4.9 million for eight underperforming stores, (ii) the write-down of operating lease right-of-use-assets of $4.4 million, and (iii) the write-off of property and equipment of $3.7 million resulting from the exit of Aperture, a division of our Outward, Inc. subsidiary.

There were no transfers in and out of Level 3 categories during the thirteen and thirty-nine weeks ended October 27, 2024 and October 29, 2023.

NOTE I. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows:

(In thousands)			Foreign Currency Translation						Cash Flow Hedges						Accumulated Other Comprehensive Income (Loss)
Balance at January 28, 2024			$	(15,457)					$	(95)					$	(15,552)
Foreign currency translation adjustments			(1,342)						—						(1,342)
Change in fair value of derivative financial instruments			—						1						1
Other comprehensive income (loss)			(1,342)						1						(1,341)
Balance at April 28, 2024			$	(16,799)					$	(94)					$	(16,893)
Foreign currency translation adjustments			(49)						—						(49)
Reclassification adjustment for realized (gain) loss on derivative financial instruments			—						94						94
Other comprehensive income (loss)			(49)						94						45
Balance at July 28, 2024			$	(16,848)					$	—					$	(16,848)
Foreign currency translation adjustments			(13)						—						(13)
Other comprehensive income (loss)			(13)						—						(13)
Balance at October 27, 2024			$	(16,861)					$	—					$	(16,861)
Balance at January 29, 2023			$	(14,458)					$	649					$	(13,809)
Foreign currency translation adjustments			(2,205)						—						(2,205)
Change in fair value of derivative financial instruments			—						242						242
Reclassification adjustment for realized (gain) loss on derivative financial instruments			—						(486)						(486)
Other comprehensive income (loss)			(2,205)						(244)						(2,449)
Balance at April 30, 2023			$	(16,663)					$	405					$	(16,258)
Foreign currency translation adjustments			2,171						—						2,171
Change in fair value of derivative financial instruments			—						(157)						(157)
Reclassification adjustment for realized (gain) loss on derivative financial instruments			—						(296)						(296)
Other comprehensive income (loss)			2,171						(453)						1,718
Balance at July 30, 2023			$	(14,492)					$	(48)					$	(14,540)
Foreign currency translation adjustments			(4,028)						—						(4,028)
Change in fair value of derivative financial instruments			—						78						78
Reclassification adjustment for realized (gain) loss on derivative financial instruments			—						(114)						(114)
Other comprehensive income (loss)			(4,028)						(36)						(4,064)
Balance at October 29, 2023			$	(18,520)					$	(84)					$	(18,604)

NOTE J. REVENUE

Merchandise Sales

Revenues from the sale of our merchandise through our e-commerce channel, at our retail stores as well as to our business-to-business customers and franchisees are, in each case, recognized at a point in time when control of merchandise is transferred to the customer. Merchandise can either be picked up in our stores, or delivered to the customer. For merchandise picked up in the store, control is transferred at the time of the sale to the customer. For merchandise delivered to the customer, control is transferred either when delivery has been completed, or when we have a present right to payment which, for certain merchandise, occurs upon conveyance of the merchandise to the carrier for delivery. We exclude from revenue any taxes assessed by governmental authorities, including value-added and other sales-related taxes, that are imposed on and are concurrent with revenue-generating activities. Our payment terms are primarily at the point of sale for merchandise sales and for most services. We have elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation.

Revenue from the sale of merchandise is reported net of sales returns. We estimate future returns based on historical return trends together with current product sales performance. As of October 27, 2024, January 28, 2024 and October 29, 2023, we recorded a liability for expected sales returns of approximately $29.2 million, $52.4 million and $47.1 million, respectively, within other current liabilities and a corresponding asset for the expected net realizable value of the merchandise inventory to be returned of approximately $7.2 million, $16.3 million and $14.9 million, respectively, within other current assets in our Condensed Consolidated Balance Sheets.

See Note E for the disclosure of our net revenues by operating segment.

Gift Card and Other Deferred Revenue

We defer revenue and record a liability when cash payments are received in advance of satisfying performance obligations, primarily associated with our merchandise sales, stored-value cards, customer loyalty programs, and incentives received from credit card issuers.

We issue stored-value cards that may be redeemed on future merchandise purchases. Our stored-value cards have no expiration dates. Revenue from stored-value cards is recognized at a point in time upon redemption of the card and as control of the merchandise is transferred to the customer. Breakage is recognized in a manner consistent with our historical redemption patterns taking into consideration escheatment laws as applicable. Breakage is recognized over the estimated period of redemption of our cards of approximately four years, the majority of which is recognized within one year of the card issuance. Breakage revenue is not material to our Condensed Consolidated Financial Statements.

We have customer loyalty programs, which allow members to earn points for each qualifying purchase. Customers can earn points through spend on both our private label and co-branded credit cards, or can earn points as part of our non-credit card related loyalty program. Points earned through both loyalty programs enable members to receive certificates that may be redeemed on future merchandise purchases. This customer option is a material right and, accordingly, represents a separate performance obligation to the customer. The allocated consideration for the points or certificates earned by our loyalty program members is deferred based on the standalone selling price of the points and recorded within gift card and other deferred revenue within our Condensed Consolidated Balance Sheet. The measurement of standalone selling prices takes into consideration the discount the customer would receive in a separate transaction for the delivered item, as well as our estimate of certificates expected to be issued and redeemed, based on historical patterns. This measurement is applied to our portfolio of performance obligations for points or certificates earned, as all obligations have similar economic characteristics. We believe the impact to our Condensed Consolidated Financial Statements would not be materially different if this measurement was applied to each individual performance obligation. Revenue is recognized for these performance obligations at a point in time when certificates are redeemed by the customer. These obligations relate to contracts with terms less than one year, as our certificates generally expire within six months from issuance.

We enter into agreements with credit card issuers in connection with our private label and co-branded credit cards, whereby we receive cash incentives in exchange for promised services, such as licensing our brand names and marketing the credit card program to customers. These separate non-loyalty program related services promised under these agreements are interrelated and are thus considered a single performance obligation. Revenue is recognized over time as we transfer promised services throughout the contract term.

As of October 27, 2024, January 28, 2024 and October 29, 2023, we had recorded $583.0 million, $573.9 million and $528.4 million, respectively, for gift card and other deferred revenue within current liabilities in our Condensed Consolidated Balance Sheets. The increase in our gift card and other deferred revenue balance as of October 27, 2024 compared to October 29, 2023 was primarily due to advance payments collected on certain product categories.