ZUMZ 10-K & 10-Q changes, risk factors and insider trading

In times when there is a decline in disposable income and consumer confidence, there could be a trend to consumers seeking more inexpensive or value-oriented merchandise. As a retailer that sells a substantial majority of branded merchandise, this could disproportionately impact us more than vertically integrated private label retailers or we may be forced to rely on promotional sales to compete in our marketmarket, which could have a material adverse effect on our financial position.

The teenage and young adult retail apparel, footwear, accessories and hardgoods industry is highly competitive. We compete with other retailers for vendors, teenage and young adult customers, suitable store locations, qualified store associates, management personnel, online marketing content, social media engagement and ecommerce traffic. Some of our competitors are larger than we are and have substantially greater financial and marketing resources, including advanced ecommerce market capabilities. Additionally, some of our competitors may offer more options for free and/or expedited shipping for ecommerce sales. Direct competition with these and other retailers may increase significantly in the future, which could require us, among other things, to lower our prices and could result in the loss of our customers. Current and increased competition could have a material adverse effect on our business, results of operations and financial condition.

We planhave to continue to open newopened stores in the European and Australian markets.markets and will review opportunities to open stores in those markets as our operating results improve. We may continue to expand internationally into other markets, either organically or through additional acquisitions. International markets may have different competitive conditions, consumer tastes and discretionary spending patterns than our existing North America market. The expansion strategy may present competitive, merchandising, hiring and distribution challenges that are different from those currently encountered. In addition, it will place increased demands on our operational, managerial and administrative resources. As a result, operations in international markets may be less successful than our operations in the North America. Additionally, consumers in international markets may not be familiar with us or the brands we sell, and we may need to build brand awareness in the markets. Furthermore, we have limited experience with the legal and regulatory environments and market practices in new international markets and cannot guarantee that we will be able to penetrate or successfully operate in these new international markets. We also expect to incur additional costs in complying with applicable foreign laws and regulations as they pertain to both our products and our operations. Accordingly, for the reasons noted above, our plans for international expansion include risks that could have a negative impact on our results of operations.

Information systems are susceptible to an increasing threat of continually evolving cybersecurity risks. Similar to many other retail companies, we expect to continue to experience cyber attacks,cyberattacks, including phishing, social engineering, and other attempts to breach, or gain unauthorized access to our systems and databases. To date, these attacks have not had a material impact on our operations, but we cannot provide assurance that they will not have an impact in the future. Unauthorized access, theft, use, destruction, or other compromises are becoming increasingly sophisticated and may occur through a variety of methods. The rapid evolution and increased adoption of artificial intelligence technologies by attackers may intensify our cybersecurity risks. If we fail to maintain or adequately maintain security systems, devices, and activity monitoring to prevent unauthorized access to our network, systems and databases containing confidential, proprietary and personally identifiable information, we may be subject to additional risk of adverse publicity, litigation or significant expense. Nevertheless, if unauthorized parties gain access to our networks, systems, or databases, they may be able to steal, publish, delete or modify confidential information. In such circumstances, we could be held liable to our customers or other parties or be subject to regulatory or other actions for breaching privacy rules and we may be exposed to reputation damage and loss of customers’ trust and business. This could result in costly investigations and litigation, civil or criminal penalties and adverse publicity that could adversely affect our financial condition, results of operations and reputation. Actual or anticipated attacks may cause us to incur increasing costs, including costs to deploy additional resources, train employees and engage third parties. Further, the regulatory environment surrounding information security, cybersecurity and privacy is increasingly demanding. If we are unable to comply with the new and changing security standards, we may be subject to fines, restrictions, and financial exposure, which could adversely affect our retail operations.

Companies across many industries are facing increasing scrutiny related to their environmental, social and governance (ESG) practices. Our employees, customers, various types of investors, and other stakeholders are also increasingly focused on ESG practices and in recent years have placed increasing importance on the non-financial impacts. If our ESG practices do not meet stakeholder expectations, which continue to evolve, we may incur additional costs and our brand may be harmed.

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 February 3, 2024 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 3,1, 20242025 and JanuaryFebruary 28,3, 2023,2024, 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 3,1, 2024,2025, filed with the SEC on March 13, 2025 and incorporated herein by reference.

For Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) related to the year ended JanuaryFebruary 28,3, 2023,2024, refer to this same section in our 2023Annual annual reportReport on Form 10-K as filed with the Securities and Exchange Commission on March 13,14, 2025.2024.

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 customercustomers' desire for newness and discovery through launching well over 120150 new brands in 2024.2025. We made investments over several years to integrate the digital and physical channels creating a seamless shopping experience for our customer.customers. We are continuing to deliver our online orders in North America from our stores, which has providedprovides substantial improvements in the speed of delivery to our customers, eliminatedeliminates the need to manage two pools of inventory separately for digital and physical demand, and createdcreates onea 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 termlong-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),profit, operating margin and diluted earnings (loss) earnings per share for fiscal 20242025 compared to fiscal 20232024:

(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’swomen’s category, followed by women’smen’s, hardgoods and footwear.accessories. OurFootwear largestwas the only category with a decrease in comparable sales decrease was in our accessories category, followed by hardgoods.sales.

In fiscal 2025,2026, our focus will continue to be serving the customer by bringing differentiated productproducts 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 twoa difficult yearsperiod through COVID and the related aftermath marked by stimulus, tariffs, inflation and strained discretionary income, the business returnedbegan torecovering growthin 2024 and positivereturned freeprofitability cashin flow.2025. The balance sheet remains strong with $147.6$160.6 million in cash and marketable securities at the end of fiscal 20242025 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 operatingearnings profitper share in fiscal 20242025 have us optimistic, the macro-economic environment in 20252026 remains unclear. Inflation has moderated, but it is not yet at desired levels. 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. The impact of global events and regulation change could also continue to make things less clear on the consumer and potentially result in a pullback of spending. However, with sales momentum as we exit fiscal 2024,2025, our focus will be to further capitalize on the positive trends in the business and provide the newness that our customers expect from Zumiez. Trend cycles continue to move quickly, and we will invest in our ability to better understand our customers, communicate with them and serve their needs to drive market share gains.

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

Net sales were $929.1 million for fiscal 2025 compared to $889.2 million for fiscal 2024 compared to $875.5 million for fiscal 2023,2024, an increase of $13.7$39.9 million or 1.6%.4.5%. 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 marketmarket, and was partially offset by athe decreasenet closure of $12.011 millionstores relatedsubsequent to thefiscal additional week in the 53-week period, and the impact of closed stores worth $9.0 million.2024.

Comparable sales increased 4.0%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 an increase in units per transaction. For the year, our largest growth in comparable sales was in our men’swomen’s category, followed by women’smen’s, hardgoods, and footwear.accessories. OurFootwear largestwas the only category with a decrease in comparable sales decrease was in our accessories category, followed by hardgoods.sales.

By region, North America sales increased $22.3$37.1 million or 3.2%5.1% and other international sales decreasedincreased $8.6$2.8 million or 4.8%1.7% during fiscal 20242025 compared to fiscal 2023.2024. Net sales for the year ended FebruaryJanuary 1,31, 20252026, included a $3.1$9.6 million decreaseincrease due to the change in foreign exchange rates, which consisted of a $1.7$10.0 million decreaseincrease in Europe, partially offset by a decrease of $1.1$0.3 million in Canada, and a decrease of $0.3$0.1 million in Australia. Excluding the impact of changes in foreign exchange rates, North America sales increased $23.5$37.4 million or 3.4%5.2% and other international sales decreased $6.7$7.1 million or 3.8%4.2% during fiscal 20242025 compared to fiscal 2023.2024.

Gross profit was $332.5 million for fiscal 2025 compared to $303.0 million for fiscal 2024 compared to $280.9 million for fiscal 2023,2024, an increase of $22.1$29.5 million, or 7.9%.9.7%. As a percentage of net sales, gross profit increased 200170 basis points in fiscal 20242025 to 34.1%.35.8%. The increase was primarily driven by 80a 90 basis point benefit in web shipping costs, 70 basis point increaseimprovement 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, 5070 basis pointpoints of 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 impactcosts related to increasedboth inventoryhigher shrinkage.sales and closure of underperforming stores.

Net Income (Loss)

Net lossincome for fiscal 20242025 was $1.7$13.4 million, or $0.09$0.78 per diluted share, compared with net loss of $62.6$1.7 million, or $3.25$0.09 per diluted share, for fiscal 2023.2024. Our effective income tax rate for fiscal 20242025 was 142.0%44.4% compared to -1.2%142.0% for fiscal 2023.2024. The change in effective income tax rate for fiscal 20242025 compared to fiscal 20232024 was primarily relateddriven toby improved operating results and the allocation of foreign losses in Austria,certain jurisdictions, which are subject to a valuation allowance. DueThe tointroduction cumulativeof andnew ongoingvaluation foreign lossesallowances in suchcertain jurisdictions,jurisdictions thecontributed 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$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 whenfor fiscal 2025 compared to $5.1 million in fiscal 2023 of $12.3 million.2024.

At January 31, 2026 and February 1, 2025 and February 3, 2024,2025, cash, cash equivalentsequivalents, and current marketable securities were $147.6$160.6 million and $171.6$147.6 million.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, a decrease of 9% from $182.5 million at the end of fiscal 2023.2024. The increase in cash, cash equivalentsequivalents, and current marketable securities in fiscal 20242025 was primarily due primarily to cash provided by operating activities of $20.7$53.5 million, net proceeds from sale of marketable securities net of purchases amounting to $47.6$4.7 million, partially offset by the $25.2$38.3 million repurchase of common stock, and capital expenditures of $15.0$11.1 million primarily related to the opening of 76 new storesstores, 3 store remodels, website enhancements, and 6other remodels and relocations.improvements.

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 $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. 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. 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. Cash received from our customers generally corresponds to our net sales. Because our customers primarily use credit and debit cards or cash to buy from us, our receivables from customers settle quickly. Changes to our operating cash flows have historically been driven primarily by changes in operating income, which is impacted by changes to non-cash items such as depreciation, impairment, amortization and accretion, deferred taxes, and changes to the components of working capital.

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 relocationsrelocations, primarilypartially offset by $47.6 million in salesnet proceeds from sale of marketable securities, net of purchases.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 primarilypartially 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 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

At FebruaryJanuary 1,31, 2025,2026, 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.

OnAs Decemberof 20,January 2024,31, 2026, we entered intomaintain a secured credit agreement with PNC Bank, National Association (the “bank”). which is scheduled to mature on December 23, 2027. The Creditcredit Agreementagreement provides for a revolving credit facility of up to $25 million (the “credit facility”) and is available for general corporate purpose. This Creditcredit Facilityfacility also provides for the issuances of standby letters of credit in an amount not to exceed $17.5 million, commercial letters of credit in an amount not to exceed $10 million and borrowings in foreign currency with a borrowing sublimit not to exceed $15 million in equivalent U.S. dollars. The amount of borrowing available at any time under the Creditcredit Facilityfacility is reduced by the amount of standby and commercial letters of credit outstanding at that time. This credit facility replaced our previously maintained agreement with Wells Fargo Bank, N.A. which we terminated on May 3, 2024.

The newcredit Credit Facilityfacility 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 Creditcredit Facilityfacility commitment amount of $25 million. Amounts borrowed under the newcredit Credit Facilityfacility 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 newcredit Credit Facilityfacility 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 FebruaryJanuary 1,31, 20252026 and February 3,1, 2024.2025. We had $2.7$3.2 million and $3.5$2.7 million in issued, but undrawn, standby letters of credit at FebruaryJanuary 1,31, 20252026 and February 3,1, 2024,2025, respectivelyrespectively.

Fiscal 2026 is the 52-week period ending January 30, 2027. Fiscal 2025 was the 52-week period ending January 31, 2026. The first threesix months of fiscal 2026 was the 13-week26-week period ended MayAugust 2,1, 2026. The first threesix months of fiscal 2025 was the 13-week26-week period ended MayAugust 3,2, 2025.

Net sales. Net sales constitute gross sales, net of sales returns and deductions for promotions, and shipping revenue. Net sales includesinclude comparable sales and new store sales for all our store and ecommerce businesses. We consider net sales to be an important indicator of our current performance. Net sales results are important to achieve leveraging of our costs, including store payroll and store occupancy. Net sales also have a direct impact on our operating profit, cash and working capital.

Three Months (13 weeks) Ended MayAugust 2,1, 2026 Compared With Three Months (13 weeks) Ended MayAugust 3,2, 2025

Net sales were $193.3$209.0 million for the three months ended MayAugust 2,1, 2026 compared to $184.3$214.3 million for the three months ended MayAugust 3,2, 2025, ana increasedecrease of $9.0$5.3 million, or 4.9%.2.5%. The increasedecrease in sales was primarily driven by a 4.0%2.1% increasedecrease in comparable salessales, and impact of foreign exchange rate, partially offset by the net closure of 16 stores subsequent to MayAugust 3,2, 2025. By region, North America sales increaseddecreased $5.8$6.2 million or 3.9%3.4% and other international sales (which consists of Europe and Australia sales) increased $3.2$0.9 million or 9.1%2.5% for the three months ended MayAugust 2,1, 2026 compared to the three months ended MayAugust 3,2, 2025. Excluding the impact of changes in foreign exchange rates, North America sales increaseddecreased $5.5$6.0 million or 3.7%,3.3% whileand other international sales wereincreased relatively$0.3 flatmillion or 0.8% for the three months ended MayAugust 2,1, 2026 compared to the three months ended MayAugust 3,2, 2025.

Comparable sales increaseddecreased 4.0%2.1% (reflecting a 4.4%2.9% increasedecrease in North America and a 2.2%2.1% increase in other international) for the three months ended MayAugust 2,1, 2026, driven by a decrease in transactions, partially offset by an increase in dollars per transaction, partially offset by a decrease in transactions.transaction. Dollars per transaction increased due to an increase in bothunits per transaction, partially offset by a decrease in average unit retail and units per transaction.retail. By category, comparable sales were primarily driven by increasesdecreases in men'sfootwear, clothing,hardgoods hardgoods,and women's clothing, accessories, partially offset by a decreaseincreases in footwear.accessories and men's clothing.

Gross profit was $61.3$73.9 million for the three months ended MayAugust 2,1, 2026 compared to $55.3$76.0 million for the three months ended MayAugust 3,2, 2025, ana increasedecrease of $6.0$2.2 million, or 10.9%.2.9%. As a percent of net sales, gross profit increaseddecreased 17020 basis points for the three months ended MayAugust 2,1, 2026 to 31.7%.35.3%. The increasedecrease was driven by 7060 basis points of 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), 50 basis points of leveragedeleverage in store occupancy costs primarily related to bothlower highersales, salespartially andoffset closureby of underperforming stores, 30 basis points of benefit in web shipping cost, and 2050 basis points of benefit from decreasedtariff inventory shrinkage.refunds.

Net loss for the three months ended MayAugust 2,1, 2026 was $13.3$2.7 million, or $0.82$0.17 loss per diluted share, compared with net loss of $14.3$1.0 million, or $0.79$0.06 loss per diluted share, for the three months ended MayAugust 3,2, 2025. Our effective income tax rate for the three months ended MayAugust 2,1, 2026 was a 8.2%91.5% benefitprovision fromfor income taxes compared to a 9.1%210.0% benefitprovision fromfor income taxes for the three months ended MayAugust 3,2, 2025. The decrease in effective income tax rate was primarily driven by improved U.S. operating results, losses in jurisdictions where we maintain a full valuation allowances,allowance andagainst one-timerelated deferred tax assets, as well as discrete tax items.items, resulting in income tax expense that is not directly correlated to consolidated loss before income taxes.

The significant components of our working capital are inventories and liquid assets such as cash, cash equivalents, current marketable securities and receivables, reduced by accounts payablepayable, and accrued expenses. 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.

Net cash used in operating activities increased by $6.0$17.8 million to $28.1$27.3 million used in operating activities for the threesix months ended MayAugust 2,1, 2026 from $22.1$9.5 million used in operating activities for the threesix months ended MayAugust 3,2, 2025. Net cash used in operating activities was $28.1$27.3 million for the threesix months ended MayAugust 2,1, 2026 related to $36.2$58.8 million in unfavorable changes in our operating assets and liabilities and a $13.3$16.0 million net loss, excluding $21.4$47.5 million of noncash charges included within net loss for the period. Net cash used in operating activities was $22.1$9.5 million for the threesix months ended MayAugust 3,2, 2025 related to $27.8$39.9 million in unfavorable changes in our operating assets and liabilities and a $14.3$15.3 million net loss, excluding $20.0$45.7 million of noncash charges included within net loss for the period. Our operating cash flows primarily result from cash received from our customers, offset by cash payments we make for inventory, employee compensation, store occupancy expenses and other operational expenditures. Cash received from our customers generally corresponds to our net sales. Because our customers primarily use credit cards or cash to buy from us, our receivables from customers settle quickly. Historically, changes to our operating cash flows have been driven primarily by changes in operating income, which is impacted by changes to non-cash items such as depreciation, amortization and accretion, deferred taxes, and changes to the components of working capital.

Net cash usedflows infrom investing activities increaseddecreased by $22.1$23.4 million to $26.3$19.9 million used in investing activities for the threesix months ended MayAugust 2,1, 2026 from $4.2$3.5 million usedprovided inby investing activities for the threesix months ended MayAugust 3,2, 2025. Net cash used in investing activities was $26.3$19.9 million for the threesix months ended MayAugust 2,1, 2026 related to $24.5$15.0 million in purchases, net of sales,sales and maturities, of marketable securities, and $1.7 million of capital expenditures primarily for existing store remodels or relocation. Net cash used in investing activities was $4.2 million for the three months ended May 3, 2025, related to $2.0 million in purchases, net of sales, of marketable securities, and $2.2$4.9 million of capital expenditures primarily for new store openings, existingremodels, and relocations. Net cash provided by investing activities was $3.5 million for the six months ended August 2, 2025, related to $8.8 million in sales, net of purchases, of marketable securities, partially offset by $5.3 million of capital expenditures primarily for new store remodelsopenings, orand relocation.relocations.

Net cash used in financing activities decreased by $19.0$3.6 million to $6.0$28.9 million used in financing activities for the threesix months ended MayAugust 2,1, 2026 from $25.0$32.5 million used in financing activities for the threesix months ended MayAugust 3,2, 2025. Net cash used in financing activities for the threesix months ended MayAugust 2,1, 2026 was $6.0 million, related to $6.0$28.9 million used in the repurchase of common stock. Net cash used in financing activities for the threesix months ended MayAugust 3,2, 2025 was $25.0$32.5 million, related to $25.2$32.7 million used in the repurchase of common stock and $0.2 million in net proceeds from the issuance and exercise of stock-based awards.

As of MayAugust 2,1, 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. This credit facility also provides for the issuances of standby letters of credit in an amount not to exceed $17.5 million, commercial letters of credit in an amount not to exceed $10 million and borrowings in foreign currency with a borrowing sublimit not to exceed $15 million in equivalent U.S. dollars. The amount of borrowing available at any time under the credit facility is reduced by the amount of standby and commercial letters of credit outstanding at that time.

There were no borrowings or open commercial letters of credit outstanding under the secured credit facility at MayAugust 2,1, 2026 or January 31, 2026. We had $2.9 million and $3.2 million in issued, but undrawn, standby letters of credit backed by restricted cash deposits and marketable securities at the bank as of MayAugust 2,1, 2026 and January 31, 2026.2026, respectively.

At MayAugust 2,1, 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 operation, liquidity, capital expenditures or capital resources.