# Ross Stores, Inc.: Form 10-Q for the period ended Apr 29, 2023

- Company: [Ross Stores, Inc.](/companies/rost.md) (CIK 745732)
- Form: 10-Q
- Filed: 2023-06-07
- Accepted by EDGAR: Jun 6, 2023, 21:39 ET
- Period: 2023-04-29
- Accession: 0000745732-23-000040
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/745732/000074573223000040/rost-20230429.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/745732/000074573223000040/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2023-04-29.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2023-01-29 to 2023-04-29 | $4.49bn | us-gaap:RevenueFromContractWithCustomerExcludingAssessedTax |
| Cost of revenue | 3 months, 2023-01-29 to 2023-04-29 | $3.29bn | us-gaap:CostOfGoodsAndServicesSold |
| Selling, general and administrative | 3 months, 2023-01-29 to 2023-04-29 | $746.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Income tax | 3 months, 2023-01-29 to 2023-04-29 | $116.1m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2023-01-29 to 2023-04-29 | $371.2m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2023-01-29 to 2023-04-29 | $1.09 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2023-01-29 to 2023-04-29 | $1.10 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2023-01-29 to 2023-04-29 | 340,044,000 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2023-01-29 to 2023-04-29 | $413.2m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2023-01-29 to 2023-04-29 | $167.3m | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Dividends paid | 3 months, 2023-01-29 to 2023-04-29 | $114.8m | us-gaap:PaymentsOfDividendsCommonStock |
| Share repurchases | 3 months, 2023-01-29 to 2023-04-29 | $234.5m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Cash and equivalents | at 2023-04-29 | $4.42bn | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2023-04-29 | $7.04bn | us-gaap:AssetsCurrent |
| Total assets | at 2023-04-29 | $13.62bn | us-gaap:Assets |
| Current liabilities | at 2023-04-29 | $3.78bn | us-gaap:LiabilitiesCurrent |
| Long-term debt | at 2023-04-29 | $2.46bn | us-gaap:LongTermDebtNoncurrent |
| Shareholders' equity | at 2023-04-29 | $4.31bn | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 25,819 characters.

### OPERATIONS

This section and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed below under the caption “Forward-Looking Statements” and also those in Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for fiscal 2022. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for fiscal 2022. All information is based on our fiscal calendar.

### Overview

Ross Stores, Inc. operates two brands of off-price retail apparel and home fashion stores—Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®. Ross is the largest off-price apparel and home fashion chain in the United States, with 1,704 locations in 40 states, the District of Columbia, and Guam as of April 29, 2023. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. We also operate 330 dd’s DISCOUNTS stores in 22 states that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 70% off moderate department and discount store regular prices every day.

There remains a high level of uncertainty in the current macroeconomic and geopolitical environments, and prolonged inflationary pressures continue to negatively impact the discretionary spending of our low-to-moderate income customers. As a result of today’s uncertain external conditions and inflationary pressures, shoppers continue to seek even stronger values when visiting our stores. We plan to carefully manage our expenses and inventory, while closely monitoring market share trends for the off-price industry. We believe our market share gains can continue to grow through continued focus on bringing value and convenience to our consumers.

### Results of Operations

The following table summarizes the financial results for the three month periods ended April 29, 2023 and April 30, 2022:

| Sales | Three Months Ended April 29, 2023 | April 30, 2022 |
| --- | ---: | ---: |
| Sales (millions) | **$4,495** | $4,333 |
| Sales growth (decline) | **3.7%** | (4.1%) |
| Comparable store sales growth (decline)1 | **1%** | (7%) |
| **Costs and expenses (as a percent of sales)** |  |  |
| Cost of goods sold | **73.3%** | 73.8% |
| Selling, general and administrative | **16.6%** | 15.4% |
| Interest (income) expense, net | **(0.7%)** | 0.4% |
| **Earnings before taxes (as a percent of sales)** | **10.8%** | 10.4% |
| **Net earnings (as a percent of sales)** | **8.3%** | 7.8% |
| 1 Comparable stores are stores open for more than 14 complete months. |  |  |

16

**Stores.** Our long-term strategy is to open additional stores based on market penetration, local demographic characteristics, competition, expected store profitability, and the ability to leverage overhead expenses. We continually evaluate opportunistic real estate acquisitions and opportunities for potential new store locations. We also evaluate our current store locations and determine store closures based on similar criteria.

We opened 19 new stores in the first quarter of fiscal 2023 and expect to open a total of approximately 100 new stores throughout the year.

The following table summarizes the stores opened and closed during the three month periods ended April 29, 2023 and April 30, 2022:

| Store Count Ross Dress for Less | Three Months Ended April 29, 2023 |  | April 30, 2022 |  |
| --- | ---: | ---: | ---: | ---: |
| Beginning of the period | **1,693** |  | 1,628 |  |
| Opened in the period | **11** | 1 | 22 |  |
| Closed in the period | **—** |  | (2) | 2 |
| Total Ross Dress for Less stores end of period | **1,704** |  | 1,648 |  |
| **dd’s DISCOUNTS** |  |  |  |  |
| Beginning of the period | **322** |  | 295 |  |
| Opened in the period | **8** |  | 8 |  |
| Closed in the period | **—** |  | — |  |
| Total dd’s DISCOUNTS stores end of period | **330** |  | 303 |  |
| Total stores end of period | **2,034** |  | 1,951 |  |
| 1 Includes the reopening of a store previously temporarily closed due to a weather event. |  |  |  |  |
| 2 Includes the temporary closure of a store impacted by a weather event. |  |  |  |  |

**Sales.** Sales for the three month period ended April 29, 2023 increased $161.6 million or 3.7% compared to the three month period ended April 30, 2022, primarily due to the opening of 83 net new stores between April 30, 2022 and April 29, 2023, and a 1% comparable store sales increase for the three month period ended April 29, 2023.

Our sales mix for the three month periods ended April 29, 2023 and April 30, 2022 is shown below:

|  | Three Months Ended April 29, 2023 | April 30, 2022 |
| --- | ---: | ---: |
| Home Accents and Bed and Bath | **26%** | 26% |
| Ladies | **24%** | 24% |
| Men’s | **14%** | 14% |
| Accessories, Lingerie, Fine Jewelry, and Cosmetics | **14%** | 14% |
| Shoes | **13%** | 13% |
| Children’s | **9%** | 9% |
| Total | **100%** | 100% |

We intend to address the uncertain and competitive climate for apparel and home goods by pursuing and refining our existing strategies, continuing to strengthen our merchant organization, refining our merchandise mix, and further developing our systems to improve our merchandise offerings. We cannot be sure that our strategies and store expansion program will result in sales growth or an increase in net earnings.

**Cost of goods sold.** Cost of goods sold for the three month period ended April 29, 2023 increased $96.2 million compared to the three month period ended April 30, 2022, primarily due to higher sales from the opening of 83 net new stores between

April 30, 2022 and April 29, 2023, and the 1% comparable store sales increase, increased distribution costs, and higher buying costs, partially offset by lower ocean and domestic freight costs.

Cost of goods sold as a percentage of sales for the three month period ended April 29, 2023 decreased approximately 50 basis points compared to the three month period ended April 30, 2022, primarily due to a 120 basis point increase in merchandise margin mainly due to lower ocean freight costs and a 60 basis point decrease in domestic freight costs. Partially offsetting these items were higher distribution expenses of 65 basis points primarily due to the timing of packaway inventory carrying costs and the deleveraging effect from the opening of our Brookshire, Texas distribution center, a 60 basis point increase in buying costs primarily due to higher incentive compensation expense, and a 5 basis point deleverage in occupancy costs.

We expect lower ocean freight costs and higher incentive compensation expense to continue through fiscal 2023.

**Selling, general and administrative expenses.** For the three month period ended April 29, 2023, selling, general and administrative expenses (“SG&A”) increased $76.7 million compared to the three month period ended April 30, 2022. This increase was primarily due to higher incentive compensation expense, the opening of 83 net new stores between April 30, 2022 and April 29, 2023, and increased store wages.

SG&A as a percentage of sales for the three month period ended April 29, 2023 increased 115 basis points, compared to the three month period ended April 30, 2022, primarily due to higher incentive compensation expense and increased store wages.

We expect SG&A to continue to increase as a result of higher incentive compensation expense and increasing store wages.

**Interest (income) expense, net.** For the three month period ended April 29, 2023, interest (income) expense, net increased $49.1 million compared to the three month period ended April 30, 2022, primarily due to increased interest income from higher interest rates.

Interest (income) expense, net for the three month periods ended April 29, 2023 and April 30, 2022 consists of the following:

|  | Three Months Ended April 29, 2023 | April 30, 2022 |
| --- | ---: | ---: |
| Interest expense on long-term debt | **$21,166** | $21,154 |
| Other interest expense | **373** | 388 |
| Capitalized interest | **(2,108)** | (2,651) |
| Interest income | **(50,828)** | (1,195) |
| Interest (income) expense, net | **$(31,397)** | $17,696 |

**Taxes on earnings.** Our effective tax rates for the three month periods ended April 29, 2023 and April 30, 2022 were approximately 24% and 25%, respectively. Our effective tax rate is impacted by changes in tax law and accounting guidance, location of new stores, level of earnings, tax effects associated with stock-based compensation, and uncertain tax positions.

**Net earnings.** Net earnings as a percentage of sales for the three month periods ended April 29, 2023 and April 30, 2022 were 8.3% and 7.8%, respectively. Net earnings as a percentage of sales for the three month period ended April 29, 2023 were higher primarily due to higher interest income and lower cost of goods sold, partially offset by higher SG&A expenses.

**Earnings per share.** Diluted earnings per share for the three month period ended April 29, 2023 was $1.09 compared to $0.97 for the three month period ended April 30, 2022. The $0.12 increase in the diluted earnings per share for the three month period ended April 29, 2023 was primarily attributable to a 10% increase in net earnings and a 2% reduction in weighted-average diluted shares outstanding, largely due to stock repurchases under our stock repurchase program.

### Financial Condition

### Liquidity and Capital Resources

The primary sources of funds for our business activities are cash flows from operations and short-term trade credit. Our primary ongoing cash requirements are for merchandise inventory purchases, payroll, operating and variable lease costs, taxes, capital expenditures in connection with new and existing stores, and investments in distribution centers, information systems, and buying and corporate offices. We also use cash to pay dividends, to repay debt as it becomes due, and to repurchase stock under active stock repurchase programs.

|  | Three Months Ended April 29, 2023 | April 30, 2022 |
| --- | ---: | ---: |
| Cash provided by (used in) operating activities | **$413,152** | $(416,267) |
| Cash used in investing activities | **(167,253)** | (109,848) |
| Cash used in financing activities | **(380,635)** | (380,669) |
| Net decrease in cash, cash equivalents, and restricted cash and cash equivalents | **$(134,736)** | $(906,784) |

### Operating Activities

Net cash provided by operating activities was $413.2 million for the three month period ended April 29, 2023. This was primarily driven by net earnings and higher accounts payable leverage (defined as accounts payable divided by merchandise inventory). Net cash used in operating activities was $416.3 million for the three month period ended April 30, 2022. This was primarily driven by higher packaway inventory receipts and higher associated payments combined with shorter payment terms, and by payment of fiscal 2021 incentive bonuses, partially offset by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation.

The increase in cash flow from operating activities for the three month period ended April 29, 2023 compared to the same period in the prior year was primarily driven by lower incentive compensation payments, higher accounts payable leverage, and higher earnings.

Accounts payable leverage was 92% and 81% as of April 29, 2023 and April 30, 2022, respectively. The increase in accounts payable leverage was primarily due to the timing of inventory receipts and related payments versus last year.

As a regular part of our business, packaway inventory levels will vary over time based on availability of compelling merchandise purchase opportunities in the marketplace and our decisions on the timing for release of that inventory. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date. The timing of the release of packaway inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation to our store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage less than six months. We expect to continue to take advantage of packaway inventory opportunities to maximize our ability to deliver bargains to our customers.

Changes in packaway inventory levels impact our operating cash flow. As of April 29, 2023, packaway inventory was 42% of total inventory, compared to 40% at the end of fiscal 2022. As of April 30, 2022, packaway inventory was 43% of total inventory, compared to 40% at the end of fiscal 2021.

### Investing Activities

Net cash used in investing activities was $167.3 million and $109.8 million for the three month periods ended April 29, 2023 and April 30, 2022, respectively, and was related to our capital expenditures. Our capital expenditures include costs to build, expand, and improve distribution centers, open new stores and improve existing stores, and for various other expenditures related to our information technology systems and buying and corporate offices.

The increase in cash used in investing activities for the three month period ended April 29, 2023, compared to the same period in the prior year, was primarily due to higher capital expenditures related to the construction of our new Buckeye, Arizona distribution center and the construction of new stores and existing store projects.

Capital expenditures for fiscal 2023 are currently projected to be approximately $810 million. Our planned capital expenditures for fiscal 2023 are for investments in our supply chain to support long-term growth, including construction of our next distribution centers, costs for fixtures and leasehold improvements to open new Ross and dd’s DISCOUNTS stores, investments in information technology systems, and for various other expenditures related to our stores, distribution centers, and buying and corporate offices. We expect to fund capital expenditures with available cash.

### Financing Activities

Net cash used in financing activities was $380.6 million and $380.7 million for the three month periods ended April 29, 2023 and April 30, 2022, respectively, primarily resulting from stock repurchases under our current $1.9 billion stock repurchase program and payment of dividends.

**Revolving credit facilities.** We have a $1.3 billion senior unsecured revolving credit facility (“Credit Facility”). As of April 29, 2023, we had no borrowings or standby letters of credit outstanding under the Credit Facility, the $1.3 billion Credit Facility remained in place and available, and we were in compliance with the financial covenant. Refer to Note E: Debt in the Notes to Condensed Consolidated Financial Statements for additional information.

**Senior notes.** As of April 29, 2023, we had approximately $2.5 billion of outstanding unsecured Senior Notes. Refer to Note E: Debt in the Notes to Condensed Consolidated Financial Statements for additional information.

**Other financing activities.** In March 2022, our Board of Directors approved a two-year program to repurchase up to $1.9 billion of our common stock through fiscal 2023.

For the three month period ended April 29, 2023, we repurchased 2.2 million shares of common stock for $234.5 million, excluding excise tax due under the Inflation Reduction Act of 2022. We repurchased 2.5 million shares of common stock for $239.6 million during the three month period ended April 30, 2022. We also acquired 0.4 million shares of treasury stock under our employee equity compensation programs, for aggregate purchase prices of approximately $37.5 million and $38.1 million during the three month periods ended April 29, 2023 and April 30, 2022, respectively.

On May 17, 2023, our Board of Directors declared a quarterly cash dividend of $0.335 per common share, payable on June 30, 2023. The Board of Directors declared a cash dividend of $0.335 per common share in February 2023 and $0.310 per common share in March, May, August, and November 2022.

For the three month periods ended April 29, 2023 and April 30, 2022, we paid cash dividends of $114.8 million and $108.9 million, respectively.

Short-term trade credit represents a significant source of financing for merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from all sources and expect to be able to maintain adequate trade credit, bank credit, and other credit sources to meet our capital and liquidity requirements, including lease and interest payment obligations.

We ended the first quarter of fiscal 2023 with $4.4 billion of unrestricted cash balances, which were held primarily in overnight money market funds invested in U.S. treasury and government instruments across a highly diversified set of banks and other financial institutions. We also have $1.3 billion available under our Credit Facility. We estimate that existing cash and cash equivalent balances, cash flows from operations, bank credit, and trade credit are adequate to meet our operating cash needs and to fund our planned capital investments, common stock repurchases, quarterly dividend payments, and interest payment obligations for at least the next 12 months.

### Contractual Obligations and Off-Balance Sheet Arrangements

The table below presents our significant contractual obligations as of April 29, 2023:

| Recorded contractual obligations: | Less than one year | Greater than one year | Total¹ |
| --- | ---: | ---: | ---: |
| Senior notes | $— | $2,474,991 | $2,474,991 |
| Operating leases | 686,717 | 2,644,431 | 3,331,148 |
| New York buying office ground lease2 | 7,552 | 1,107,370 | 1,114,922 |
| Unrecorded contractual obligations: |  |  |  |
| Real estate obligations3 | 17,900 | 288,876 | 306,776 |
| Interest payment obligations | 80,316 | 394,976 | 475,292 |
| Purchase obligations4 | 4,153,686 | 80,438 | 4,234,124 |
| Total contractual obligations | $4,946,171 | $6,991,082 | $11,937,253 |
| 1 We have a $56.5 million liability for unrecognized tax benefits that is included in Other long-term liabilities on our interim Condensed Consolidated Balance Sheet. This liability is excluded from the schedule above as the timing of payments cannot be reasonably estimated. |  |  |  |
| 2 Our New York buying office building is subject to a 99-year ground lease. |  |  |  |
| 3 Minimum lease payments for leases signed that have not yet commenced. |  |  |  |
| 4 Purchase obligations primarily consist of merchandise inventory purchase orders, commitments related to construction projects, store fixtures and supplies, and information technology services, transportation, and maintenance contracts. |  |  |  |

Other than the unrecorded contractual obligations noted above, we do not have any material off-balance sheet arrangements as of April 29, 2023.

**Standby letters of credit and collateral trust.** We use standby letters of credit outside of our Credit Facility in addition to a funded trust to collateralize some of our insurance obligations. As of April 29, 2023 and January 28, 2023, we had $2.6 million in standby letters of credit outstanding and $58.4 million and $57.8 million, respectively, in a collateral trust. As of April 30, 2022, we had $3.3 million in standby letters of credit outstanding and $56.7 million in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust consists of restricted cash and cash equivalents.

**Trade letters of credit.** We had $10.3 million, $7.6 million, and $24.9 million in trade letters of credit outstanding at April 29, 2023, January 28, 2023, and April 30, 2022, respectively.

**Dividends.** In May 2023, our Board of Directors declared a cash dividend of $0.335 per common share, payable on June 30, 2023.

### Critical Accounting Estimates

During the first quarter of fiscal 2023, there have been no significant changes to the critical accounting estimates discussed in our Annual Report on Form 10-K for the year ended January 28, 2023.

### Forward-Looking Statements

This report contains a number of forward-looking statements regarding, without limitation, projected sales, costs and earnings, planned new store growth, capital expenditures, liquidity, and other matters. These forward-looking statements reflect our then-current beliefs, plans, and estimates with respect to future events and our projected financial performance, operations, and competitive position. The words “plan,” “expect,” “target,” “anticipate,” “estimate,” “believe,” “forecast,” “projected,” “guidance,” “outlook,” “looking ahead,” and similar expressions identify forward-looking statements.

Future impact from inflation, interest rate increases, ongoing military conflicts and economic sanctions, the COVID-19 pandemic, climate change, and other economic, regulatory, consumer spending, and industry trends that could potentially impact our revenue, profitability, operating conditions, and growth are difficult to predict. Our forward-looking statements are subject to risks and uncertainties which could cause our actual results to differ materially from those forward-looking statements and our previous expectations, plans, and projections. Such risks are not limited to but may include:

- Impacts from the macroeconomic environment, including inflation, interest rates, housing costs, energy and fuel costs, financial and credit market conditions, recession concerns, geopolitical conditions (including the current Russia-Ukraine conflict), the COVID-19 pandemic, or public health and public safety issues, that affect our costs, consumer confidence, and consumer disposable income.
- Unexpected changes in the level of consumer spending on, or preferences for, apparel and home-related merchandise, which could adversely affect us.
- Competitive pressures in the apparel and home-related merchandise retailing industry.
- Our need to effectively manage our inventories, markdowns, and inventory shortage in order to achieve our planned gross margins.
- Risks associated with importing and selling merchandise produced in other countries, including risks from supply chain disruption, shipping delays, and higher than expected ocean freight costs.
- Unseasonable weather that may affect shopping patterns and consumer demand for seasonal apparel and other merchandise.
- Our dependence on the market availability, quantity, and quality of attractive brand name merchandise at desirable discounts, and on the ability of our buyers to anticipate consumer preferences and to purchase merchandise to enable us to offer customers a wide assortment of merchandise at competitive prices.
- Information or data security breaches, including cyber-attacks on our transaction processing and computer information systems, which could result in theft or unauthorized disclosure of customer, credit card, employee, or other private and valuable information that we handle in the ordinary course of our business.
- Disruptions in our supply chain or in our information systems, including from ransomware or other cyber-attacks, that could impact our ability to process sales and to deliver product to our stores in a timely and cost-effective manner.
- Our need to obtain acceptable new store sites with favorable consumer demographics to achieve our planned new store openings.
- Our need to expand in existing markets and enter new geographic markets in order to achieve planned market penetration.
- Consumer problems or legal issues involving the quality, safety, or authenticity of products we sell, which could harm our reputation, result in lost sales, and/or increase our costs.
- An adverse outcome in various legal, regulatory, or tax matters, or the adoption of new federal or state tax legislation that increases tax rates or adds new taxes, that could increase our costs.
- Damage to our corporate reputation or brands that could adversely affect our sales and operating results.
- Our need to continually attract, train, and retain associates with the retail talent necessary to execute our off-price retail strategies.
- Our need to effectively advertise and market our business.
- Changes in U.S. tax, tariff, or trade policy regarding apparel and home-related merchandise produced in other countries, which could adversely affect our business.
- Possible volatility in our revenues and earnings.
- An additional public health or public safety crisis, demonstrations, natural or man-made disaster in California or in another region where we have a concentration of stores, offices, or a distribution center that could harm our business.
- Our need to maintain sufficient liquidity to support our continuing operations and our new store openings.

The factors underlying our forecasts are dynamic and subject to change. As a result, any forecasts or forward-looking statements speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time. We disclaim any obligation to update or revise these forward-looking statements.

## Market risk

As filed, 1,510 characters.

We are exposed to market risks, which primarily include changes in interest rates. We do not engage in financial transactions for trading or speculative purposes.

We may occasionally use forward contracts to hedge against fluctuations in foreign currency prices. We had no outstanding forward contracts as of April 29, 2023.

Interest that is payable on our Credit Facility is based on variable interest rates and is therefore affected by changes in market interest rates. As of April 29, 2023, we had no borrowings outstanding under the Credit Facility.

As of April 29, 2023, we have outstanding seven series of unsecured Senior Notes. Interest that is payable on all series of our Senior Notes is based on fixed interest rates, and is therefore unaffected by changes in market interest rates.

We receive interest payments on our cash and cash equivalents and restricted cash and cash equivalents. Changes in interest rates may impact the interest income we recognize in the future.

A hypothetical 100 basis point increase or decrease in prevailing market interest rates would not have had a material negative impact on our condensed consolidated financial position, results of operations, cash flows, or the fair values of our cash and cash equivalents and restricted cash and cash equivalents as of and for the three month period ended April 29, 2023. We do not consider the potential losses in future earnings and cash flows from reasonably possible, near-term changes in interest rates to be material.

## Controls and procedures

As filed, 1,574 characters.

### Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at that reasonable assurance level as of the end of the period covered by this report.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

### Quarterly Evaluation of Changes in Internal Control Over Financial Reporting

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the first fiscal quarter of 2023 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our management concluded that there was no such change during the first fiscal quarter of 2023.

## Risk factors

As filed, 175 characters.

See Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended January 28, 2023 for a description of the risks and uncertainties associated with our business.

Filed Jun 7, 2023.
Source: SEC EDGAR, the filing index for accession 0000745732-23-000040. Last ingested by Listed: Oct 24, 2026, 14:54 ET. No prices; not investment advice.