Item 1. FINANCIAL STATEMENTS (UNAUDITED)

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS

(Unaudited)

			For the Thirteen Weeks Ended
(In thousands, except per share amounts)			May 4, 2025						April 28, 2024
Net revenues			$	1,730,113					$	1,660,348
Cost of goods sold			964,304						865,180
Gross profit			765,809						795,168
Selling, general and administrative expenses			475,096						478,056
Operating income			290,713						317,112
Interest income, net			9,533						16,053
Earnings before income taxes			300,246						333,165
Income taxes			68,983						72,749
Net earnings			$	231,263					$	260,416
Basic earnings per share			$	1.88					$	2.03
Diluted earnings per share			$	1.85					$	1.99
Shares used in calculation of earnings per share:
Basic			123,108						128,412
Diluted			124,789						130,629

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

			For the Thirteen Weeks Ended
(In thousands)			May 4, 2025						April 28, 2024
Net earnings			$	231,263					$	260,416
Other comprehensive income (loss):
Foreign currency translation adjustments			5,170						(1,342)
Change in fair value of derivative financial instruments, net of tax			—						1
Comprehensive income			$	236,433					$	259,075

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

			As of
(In thousands, except per share amounts)			May 4, 2025						February 2, 2025						April 28, 2024
ASSETS
Current assets
Cash and cash equivalents			$	1,047,181					$	1,212,977					$	1,254,786
Accounts receivable, net			122,773						117,678						115,215
Merchandise inventories, net			1,335,356						1,332,429						1,211,091
Prepaid expenses			69,442						66,914						62,752
Other current assets			22,570						24,611						22,787
Total current assets			2,597,322						2,754,609						2,666,631
Property and equipment, net			1,031,990						1,033,934						990,166
Operating lease right-of-use assets			1,198,440						1,177,805						1,187,777
Deferred income taxes, net			112,366						120,657						102,203
Goodwill			77,347						77,260						77,292
Other long-term assets, net			139,850						137,342						128,563
Total assets			$	5,157,315					$	5,301,607					$	5,152,632
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable			$	553,655					$	645,667					$	502,136
Accrued expenses			146,692						286,033						153,462
Gift card and other deferred revenue			589,432						584,791						596,340
Income taxes payable			112,390						67,696						147,360
Operating lease liabilities			229,070						234,180						229,555
Other current liabilities			90,604						93,607						90,007
Total current liabilities			1,721,843						1,911,974						1,718,860
Long-term operating lease liabilities			1,139,745						1,113,135						1,112,329
Other long-term liabilities			134,451						134,079						117,135
Total liabilities			2,996,039						3,159,188						2,948,324
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; 122,994, 123,125 and 128,675 shares issued and outstanding at May 4, 2025, February 2, 2025 and April 28, 2024, respectively			1,231						1,232						1,288
Additional paid-in capital			524,405						571,585						521,189
Retained earnings			1,654,078						1,591,630						1,699,159
Accumulated other comprehensive loss			(16,423)						(21,593)						(16,893)
Treasury stock, at cost: 14, 4 and 4 shares as of May 4, 2025, February 2, 2025 and April 28, 2024, respectively			(2,015)						(435)						(435)
Total stockholders’ equity			2,161,276						2,142,419						2,204,308
Total liabilities and stockholders’ equity			$	5,157,315					$	5,301,607					$	5,152,632

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 February 2, 2025			123,125						$	1,232					$	571,585					$	1,591,630					$	(21,593)					$	(435)					$	2,142,419
Net earnings			—						—						—						231,263						—						—						231,263
Foreign currency translation adjustments			—						—						—						—						5,170						—						5,170
Release of stock-based awards 1			468						5						(65,071)						—						—						(290)						(65,356)
Repurchases of common stock 2			(599)						(6)						(1,864)						(86,329)						—						(1,911)						(90,110)
Reissuance of treasury stock under stock-based compensation plans 1			—						—						(448)						(173)						—						621						—
Stock-based compensation expense			—						—						20,203						—						—						—						20,203
Dividends declared			—						—						—						(82,313)						—						—						(82,313)
Balance at May 4, 2025			122,994						$	1,231					$	524,405					$	1,654,078					$	(16,423)					$	(2,015)					$	2,161,276

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

2**Repurchases of common stock include accrued excise taxes of $0.1 million as of May 4, 2025, which is recorded in retained earnings.

See Notes to Condensed Consolidated Financial Statements.

			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			—						—						—						260,416						—						—						260,416
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					$	1,699,159					$	(16,893)					$	(435)					$	2,204,308

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

See Notes to Condensed Consolidated Financial Statements.

WILLIAMS-SONOMA, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

			For the Thirteen Weeks Ended
(In thousands)			May 4, 2025						April 28, 2024
Cash flows from operating activities:
Net earnings			$	231,263					$	260,416
Adjustments to reconcile net earnings to net cash provided by (used in) operating activities:
Depreciation and amortization			56,404						56,996
Loss on disposal/impairment of assets			732						1,264
Non-cash lease expense			60,484						66,821
Deferred income taxes			(1,559)						(538)
Tax benefit related to stock-based awards			10,647						9,347
Stock-based compensation expense			20,390						22,975
Other			(637)						(1,252)
Changes in:
Accounts receivable			(4,919)						7,666
Merchandise inventories			(689)						34,968
Prepaid expenses and other assets			(2,956)						(2,816)
Accounts payable			(96,022)						(116,731)
Accrued expenses and other liabilities			(139,206)						(114,889)
Gift card and other deferred revenue			4,173						22,592
Operating lease liabilities			(63,850)						(70,838)
Income taxes payable			44,694						50,807
Net cash provided by operating activities			118,949						226,788
Cash flows from investing activities:
Purchases of property and equipment			(58,250)						(39,513)
Other			21						31
Net cash used in investing activities			(58,229)						(39,482)
Cash flows from financing activities:
Repurchases of common stock			(89,971)						(43,781)
Payment of dividends			(74,667)						(62,862)
Tax withholdings related to stock-based awards			(65,357)						(87,008)
Net cash used in financing activities			(229,995)						(193,651)
Effect of exchange rates on cash and cash equivalents			3,479						(876)
Net decrease in cash and cash equivalents			(165,796)						(7,221)
Cash and cash equivalents at beginning of period			1,212,977						1,262,007
Cash and cash equivalents at end of period			$	1,047,181					$	1,254,786

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 May 4, 2025, February 2, 2025 and April 28, 2024, the Condensed Consolidated Statements of Earnings, the Condensed Consolidated Statements of Comprehensive Income, and the Condensed Consolidated Statements of Stockholders’ Equity for the thirteen weeks then ended and the Condensed Consolidated Statements of Cash Flows for the thirteen 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 weeks then ended. Intercompany transactions and accounts have been eliminated in our consolidation. The balance sheet as of February 2, 2025, 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 February 2, 2025.

The Company's fiscal year ends on the Sunday closest to January 31. All references to “fiscal 2025” represent the 52-week fiscal year that will end on February 1, 2026 and all references to “fiscal 2024” represent the 53-week fiscal year that ended February 2, 2025.

The results of operations for the thirteen weeks ended May 4, 2025 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 February 2, 2025.

Common Stock Split

On July 9, 2024, we effected a 2-for-1 stock split of our 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 Freight Adjustment in First Quarter of Fiscal 2024

Subsequent to the filing of our fiscal 2023 Form 10-K, in April 2024, we determined that we over-recognized freight expense in fiscal 2021, 2022 and 2023 for a cumulative amount of $49.0 million. We evaluated the error, both qualitatively and quantitatively, and determined that no prior interim or annual periods were materially misstated. We then evaluated whether the cumulative amount of the over-accrual was material to our projected fiscal 2024 results, and determined the cumulative amount was not material. Therefore, the Condensed Consolidated Financial Statements for fiscal 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 December 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“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. 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 and ASU 2025-01*, Income Statement—Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date*. 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. Our Credit Facility 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 Credit Facility by up to $250 million to provide for a total of up to $750 million of unsecured revolving credit.

During the thirteen weeks ended May 4, 2025 and April 28, 2024, we had no borrowings under our Credit Facility. Additionally, as of May 4, 2025, issued but undrawn standby letters of credit of $11.9 million were outstanding under our Credit Facility. The standby letters of credit were primarily issued to secure the liabilities associated with workers’ compensation and other insurance programs. Our Credit Facility 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 Credit Facility 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 May 4, 2025, 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 May 4, 2025, the aggregate amount outstanding under our letter of credit facilities was $0.7 million, which represents only a future commitment to fund inventory purchases to which we had not taken legal title. Two of our 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 May 4, 2025, there were approximately 7.7 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 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 of Directors members generally vest in one year. Non-associate Board of Directors members automatically receive stock awards on the date of their initial election to the Board of Directors and annually thereafter on the date of the annual meeting of stockholders (so long as they continue to serve as a non-associate Board of Directors 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 weeks ended May 4, 2025 and April 28, 2024, we recognized total stock-based compensation expense, as a component of selling, general and administrative expenses ("SG&A") of $20.4 million and $23.0 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 May 4, 2025
Basic			$	231,263					123,108						$	1.88
Effect of dilutive stock-based awards									1,681
Diluted			$	231,263					124,789						$	1.85
Thirteen weeks ended April 28, 2024
Basic			$	260,416					128,412						$	2.03
Effect of dilutive stock-based awards									2,217
Diluted			$	260,416					130,629						$	1.99

The effect of anti-dilutive stock-based awards was not material for the thirteen weeks ended May 4, 2025 and April 28, 2024.

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.

Our single reportable segment derives revenues from sales of merchandise through our e-commerce websites, retail stores and direct-mail catalogs, and includes shipping fees received from customers for delivery of merchandise to their homes. The accounting policies of our single reportable segment are described in the Summary of Significant Accounting Policies within Part II, Item 8 of our Annual Report on Form 10-K for the fiscal year ended February 2, 2025.

Our chief operating decision maker (“CODM”) is our Chief Executive Officer. The CODM assesses performance for our single reportable segment and decides how to allocate resources based on operating income, which is reported on the Condensed Consolidated Statements of Earnings. Segment balance sheet information is not regularly provided to the CODM. The CODM uses operating income to decide whether to reinvest profits into our operating segments or allocate to other purposes, such as for repurchases of common stock, payment of dividends or acquisitions.

Operating income is used to monitor budget versus actual results. The CODM also uses operating income in competitive analysis by benchmarking to our peers. The competitive analysis, along with the monitoring of budget versus actual results, is used in assessing performance of the segment.

The following table summarizes reported net revenues, significant segment expenses, operating income and earnings before income taxes for the thirteen weeks ended May 4, 2025 and April 28, 2024.

			For the Thirteen Weeks Ended
(In thousands)			May 4, 2025						April 28, 2024
Net revenues			$	1,730,113					$	1,660,348
Less:
Cost of merchandise and shipping			766,635						669,025
Occupancy, excluding depreciation			141,829						139,772
Employment			270,430						269,087
Advertising			117,750						123,250
Other segment items 1			86,877						85,719
Depreciation and amortization expense			55,879						56,383
Operating income			290,713						317,112
Interest income, net			9,533						16,053
Earnings before income taxes			$	300,246					$	333,165

1**Other segment items within operating income include general expenses, which consist primarily of credit card fees, data processing expenses and administrative expenses.

The following table summarizes our net revenues by brand for the thirteen weeks ended May 4, 2025 and April 28, 2024.

			For the Thirteen Weeks Ended 1
(In thousands)			May 4, 2025						April 28, 2024
Pottery Barn			$	695,092					$	677,335
West Elm			437,085						430,309
Williams Sonoma			257,493						238,239
Pottery Barn Kids and Teen			229,716						221,802
Other 2			110,727						92,663
Total 3			$	1,730,113					$	1,660,348
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 $77.8 million and $73.5 million for the thirteen weeks ended May 4, 2025 and April 28, 2024, respectively.

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

			As of
(In thousands)			May 4, 2025						February 2, 2025						April 28, 2024
U.S.			$	2,289,438					$	2,268,691					$	2,219,749
International			68,021						68,425						74,189
Total			$	2,357,459					$	2,337,116					$	2,293,938

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, have increased and continue to increase in number as our business expands and we grow as a company. 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 when taken as a whole.

NOTE G. STOCK REPURCHASE PROGRAMS AND DIVIDENDS

Stock Repurchase Programs

During the thirteen weeks ended May 4, 2025, we repurchased 599,191 shares of our common stock at an average cost of $150.15 per share for an aggregate cost of $90.0 million, excluding excise taxes on stock repurchases (net of issuances) of $0.1 million. As of May 4, 2025, there was $102.6 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, which will become effective once the program we announced in March 2024 is fully utilized. As of May 4, 2025, the total stock repurchase authorization remaining under these programs was approximately $1.1 billion.

During the thirteen weeks ended April 28, 2024, we repurchased 313,798 shares of our common stock at an average cost of $139.52 per share for an aggregate cost of $43.8 million, excluding excise taxes on stock repurchases (net of issuances).

As of May 4, 2025, February 2, 2025 and April 28, 2024, we held treasury stock of $2.0 million, $0.4 million and $0.4 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, we effected a 2-for-1 stock split of our 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.

In March 2025, our Board of Directors authorized a 16% increase in our quarterly cash dividend, from $0.57 to $0.66 per common share, subject to capital availability. We declared cash dividends of $0.66 and $0.57 per common share during the thirteen weeks ended May 4, 2025 and April 28, 2024, respectively. 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 Accounting Standards Codification 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 May 4, 2025 and April 28, 2024, no impairment charges were recognized.

There were no transfers in and out of Level 3 categories during the thirteen weeks ended May 4, 2025 and April 28, 2024.

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 February 2, 2025			$	(21,593)					$	—					$	(21,593)
Foreign currency translation adjustments			5,170						—						5,170
Other comprehensive income (loss)			5,170						—						5,170
Balance at May 4, 2025			$	(16,423)					$	—					$	(16,423)
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)

NOTE J. REVENUE

Merchandise Sales

Revenues from the sale of our merchandise through our e-commerce business, 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 May 4, 2025, February 2, 2025 and April 28, 2024, we recorded a liability for expected sales returns of approximately $36.2 million, $42.7 million and $38.6 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 $10.1 million, $12.1 million and $10.6 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 of 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 May 4, 2025, February 2, 2025 and April 28, 2024, we had recorded $589.4 million, $584.8 million and $596.3 million, respectively, for gift card and other deferred revenue within current liabilities in our Condensed Consolidated Balance Sheets.

NOTE K. IMMATERIAL CORRECTION OF 2024 INTERIM PERIOD CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

In connection with our fiscal 2024 year-end close process, we identified that we did not timely record shrink losses for certain inventories not ultimately received, which also impacted our bonus accrual, in the first three quarters of fiscal 2024. Therefore, our previously issued interim financial statements for the first three quarters of fiscal 2024 did not reflect these adjustments. We properly accounted for this matter in our fiscal 2024 annual Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended February 2, 2025.

Management evaluated the materiality of the above items based on an analysis of quantitative and qualitative factors and concluded they were not material to the interim periods of fiscal 2024, individually or in aggregate. The following tables reflect the effects of the correction on all affected line items of our previously reported Condensed Consolidated Financial Statements for the thirteen weeks ended April 28, 2024.

Condensed Consolidated Statement of Earnings (unaudited)

			For the Thirteen Weeks Ended April 28, 2024
(In thousands, except per share amounts)			As Previously Reported						Adjustments						As Corrected
Cost of goods sold			$	857,833					$	7,347					$	865,180
Gross profit			802,515						(7,347)						795,168
Selling, general and administrative expenses			478,687						(631)						478,056
Operating income			323,828						(6,716)						317,112
Earnings before income taxes			339,881						(6,716)						333,165
Income taxes			74,215						(1,466)						72,749
Net earnings			$	265,666					$	(5,250)					$	260,416
Basic earnings per share			$	2.07					$	(0.04)					$	2.03
Diluted earnings per share			$	2.03					$	(0.04)					$	1.99

Condensed Consolidated Statement of Comprehensive Income (unaudited)

			For the Thirteen Weeks Ended April 28, 2024
(In thousands)			As Previously Reported						Adjustments						As Corrected
Net earnings			$	265,666					$	(5,250)					$	260,416
Comprehensive income			$	264,325					$	(5,250)					$	259,075

Condensed Consolidated Balance Sheet (unaudited)

			As of April 28, 2024
(In thousands)			As Previously Reported						Adjustments						As Corrected
Merchandise inventories, net			$	1,218,438					$	(7,347)					$	1,211,091
Total current assets			2,673,978						(7,347)						2,666,631
Total assets			5,159,979						(7,347)						5,152,632
Accrued expenses			154,093						(631)						153,462
Income taxes payable			148,826						(1,466)						147,360
Total current liabilities			1,720,957						(2,097)						1,718,860
Total liabilities			2,950,421						(2,097)						2,948,324
Retained earnings			1,704,409						(5,250)						1,699,159
Total stockholders’ equity			2,209,558						(5,250)						2,204,308
Total liabilities and stockholders’ equity			$	5,159,979					$	(7,347)					$	5,152,632

Condensed Consolidated Statement of Stockholders' Equity (unaudited)

			Retained Earnings						Total Stockholders’ Equity
(In thousands)
As Previously Reported
Balance at January 28, 2024			$	1,555,595					$	2,127,861
Net earnings			265,666						265,666
Balance at April 28, 2024			1,704,409						2,209,558
Adjustments
Net earnings			(5,250)						(5,250)
Balance at April 28, 2024			(5,250)						(5,250)
As Corrected
Balance at January 28, 2024			1,555,595						2,127,861
Net earnings			260,416						260,416
Balance at April 28, 2024			$	1,699,159					$	2,204,308

Condensed Consolidated Statement of Cash Flows (unaudited)

			For the Thirteen Weeks Ended April 28, 2024
(In thousands)			As Previously Reported						Adjustments						As Corrected
Cash flows from operating activities:
Net earnings			$	265,666					$	(5,250)					$	260,416
Changes in:
Merchandise inventories			27,621						7,347						34,968
Accrued expenses and other liabilities			(114,258)						(631)						(114,889)
Income taxes payable			52,273						(1,466)						50,807
Net cash provided by operating activities			$	226,788					$	—					$	226,788