# Citi Trends Inc: Form 10-Q for the period ended Nov 3, 2018

- Company: [Citi Trends Inc](/companies/ctrn.md) (CIK 1318484)
- Form: 10-Q
- Filed: 2018-12-10
- Accepted by EDGAR: Dec 10, 2018, 10:01 ET
- Period: 2018-11-03
- Accession: 0001558370-18-009650
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1318484/000155837018009650/ctrn-20181103x10q.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1318484/000155837018009650/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2018-11-03.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Revenue | 3 months, 2018-08-05 to 2018-11-03 | $175.4m | us-gaap:Revenues |
| Revenue | 9 months, 2018-02-04 to 2018-11-03 | $568.4m | us-gaap:Revenues |
| Selling, general and administrative | 3 months, 2018-08-05 to 2018-11-03 | $61.2m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Selling, general and administrative | 9 months, 2018-02-04 to 2018-11-03 | $186.5m | us-gaap:SellingGeneralAndAdministrativeExpense |
| Operating income | 3 months, 2018-08-05 to 2018-11-03 | −$1.0m | us-gaap:OperatingIncomeLoss |
| Operating income | 9 months, 2018-02-04 to 2018-11-03 | $16.3m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2018-08-05 to 2018-11-03 | $39.0k | us-gaap:InterestExpense |
| Interest expense | 9 months, 2018-02-04 to 2018-11-03 | $114.0k | us-gaap:InterestExpense |
| Income tax | 3 months, 2018-08-05 to 2018-11-03 | −$237.0k | us-gaap:IncomeTaxExpenseBenefit |
| Income tax | 9 months, 2018-02-04 to 2018-11-03 | $3.2m | us-gaap:IncomeTaxExpenseBenefit |
| Net income | 3 months, 2018-08-05 to 2018-11-03 | −$506.0k | us-gaap:NetIncomeLossAvailableToCommonStockholdersBasic |
| Net income | 9 months, 2018-02-04 to 2018-11-03 | $14.0m | us-gaap:ProfitLoss |
| Diluted EPS | 3 months, 2018-08-05 to 2018-11-03 | −$0.04 | us-gaap:EarningsPerShareDiluted |
| Diluted EPS | 9 months, 2018-02-04 to 2018-11-03 | $1.06 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2018-08-05 to 2018-11-03 | −$0.04 | us-gaap:EarningsPerShareBasic |
| Basic EPS | 9 months, 2018-02-04 to 2018-11-03 | $1.06 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2018-08-05 to 2018-11-03 | 12,780,472 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Diluted shares (weighted) | 9 months, 2018-02-04 to 2018-11-03 | 13,269,405 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 9 months, 2018-02-04 to 2018-11-03 | $14.3m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 9 months, 2018-02-04 to 2018-11-03 | $9.0m | us-gaap:PaymentsToAcquireProductiveAssets |
| Dividends paid | 9 months, 2018-02-04 to 2018-11-03 | $3.2m | us-gaap:PaymentsOfDividends |
| Share repurchases | 9 months, 2018-02-04 to 2018-11-03 | $25.0m | us-gaap:PaymentsForRepurchaseOfCommonStock |
| Current assets | at 2018-11-03 | $226.3m | us-gaap:AssetsCurrent |
| Total assets | at 2018-11-03 | $300.2m | us-gaap:Assets |
| Current liabilities | at 2018-11-03 | $96.3m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2018-11-03 | $104.3m | us-gaap:Liabilities |
| Shareholders' equity | at 2018-11-03 | $195.9m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 24,257 characters.

### Forward-Looking Statements

Except for specific historical information, many of the matters discussed in this Form 10-Q may express or imply projections of revenues or expenditures, statements of plans and objectives for future operations, growth or initiatives, statements of future economic performance, capital allocation expectations or statements regarding the outcome or impact of pending or threatened litigation. These, and similar statements, are forward-looking statements concerning matters that involve risks, uncertainties and other factors that may cause the actual performance of the Company to differ materially from those expressed or implied by these statements. All forward-looking information should be evaluated in the context of these risks, uncertainties and other factors. The words “believe,” “anticipate,” “project,” “plan,” “expect,” “estimate,” “objective,” “forecast,” “goal,” “intend,” “could,” “will likely result,” or “will continue” and similar words and expressions generally identify forward-looking statements, although not all forward-looking statements contain such language. The Company believes the assumptions underlying these forward-looking statements are reasonable; however, any of the assumptions could be inaccurate, and therefore, actual results may differ materially from those projected in the forward-looking statements.

The factors that may result in actual results differing from such forward-looking information include, but are not limited to: transportation and distribution delays or interruptions; changes in freight rates; the Company’s ability to negotiate effectively the cost and purchase of merchandise; inventory risks due to shifts in market demand; the Company’s ability to gauge fashion trends and changing consumer preferences; changes in consumer spending on apparel; changes in product mix; interruptions in suppliers’ businesses; a deterioration in general economic conditions caused by acts of war or terrorism or other factors; the results of pending or threatened litigation; temporary changes in demand due to weather patterns; seasonality of the Company’s business; delays associated with building, opening and operating new stores; delays associated with building, opening or expanding new or existing distribution centers; and other factors described in the section titled “Item 1A. Risk Factors” and elsewhere in the Company’s Annual Report on Form 10-K for the fiscal year ended February 3, 2018 and in Part II, “Item 1A. Risk Factors” and elsewhere in the Company’s Quarterly Reports on Form 10-Q and any amendments thereto and in the other documents the Company files with the SEC, including reports on Form 8-K.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this Form 10-Q. Except as may be required by law, the Company undertakes no obligation to update or revise publicly any forward-looking statements contained herein to reflect events or circumstances occurring after the date of this Form 10-Q or to reflect the occurrence of unanticipated events. Readers are advised, however, to read any further disclosures the Company may make on related subjects in its public disclosures or documents filed with the SEC, including reports on Form 8-K.

### Overview

We are a value-priced retailer of urban fashion apparel and accessories for the entire family. Our merchandise offerings are designed to appeal to the fashion preferences of value-conscious consumers, particularly African-Americans. We operated 557 stores in both urban and rural markets in 32 states as of November 3, 2018.

### Accounting Periods

The following discussion contains references to fiscal years 2018 and 2017, which represent fiscal years ending or ended on February 2, 2019 and February 3, 2018, respectively. Fiscal 2018 has a 52-week accounting period and fiscal 2017 had a 53-week accounting period. This discussion and analysis should be read with the unaudited condensed consolidated financial statements and the notes thereto.

### Results of Operations

The following discussion of the Company’s financial performance is based on the unaudited condensed consolidated financial statements set forth herein. The nature of the Company’s business is seasonal. Historically, sales in the first and fourth quarters have been higher than sales achieved in the second and third quarters of the fiscal year. Expenses and, to a greater extent, operating income, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year. Furthermore, the seasonal nature of the Company’s business may affect comparisons between periods.

### Key Operating Statistics

We measure performance using key operating statistics. One of the main performance measures we use is comparable store sales growth. We define a comparable store as a store that has been opened for an entire fiscal year. Therefore, a store will not be considered a comparable store until its 13th month of operation at the earliest or until its 24th month at the latest. As an example, stores opened in fiscal 2017 and fiscal 2018 are not considered comparable stores in fiscal 2018. Relocated and expanded stores are included in the comparable store sales results. We also use other operating statistics, most notably average sales per store, to measure our performance. As we typically occupy existing space in established shopping centers rather than sites built specifically for our stores, store square footage (and therefore sales per square foot) varies by store. We focus on overall store sales volume as the critical driver of profitability.

In addition to sales, we measure cost of sales as a percentage of sales and store operating expenses, with a particular focus on labor, as a percentage of sales. These results translate into store level contribution, which we use to evaluate overall performance of each individual store. Finally, we monitor corporate expenses against budgeted amounts. All of the statistics discussed above are critical components of earnings before interest, taxes, depreciation and amortization (“EBITDA”) and Adjusted EBITDA (comprised of EBITDA, as adjusted for non-cash asset impairment expense and expenses related to our proxy contest in fiscal 2017), which are considered our most important operating statistics. We believe that excluding non-cash impairment expense and proxy contest expenses from our financial results reflects operating results that are more indicative of our ongoing operating performance while improving comparability to prior and future periods, and as such, provides an enhanced understanding of our past financial performance and prospects for the future.

Although non-GAAP measures such as EBITDA and Adjusted EBITDA provide useful information on an operating cash flow basis, they are limited measures in that they exclude the impact of cash requirements for capital expenditures, income taxes and interest expense. Therefore, EBITDA and Adjusted EBITDA should be used as supplements to results of operations and cash flows as reported under U.S. GAAP and should not be used as a singular measure of operating performance or as a substitute for U.S. GAAP results. Furthermore, such non-GAAP measures may not be comparable to similarly titled measures of other companies.

Provided below is a reconciliation of net income (loss) to EBITDA and to Adjusted EBITDA for the thirty-nine and thirteen week periods ended November 3, 2018 and October 28, 2017 (in thousands):

|  | Thirty-Nine Weeks Ended November 3, 2018 | October 28, 2017 | Thirteen Weeks Ended November 3, 2018 | October 28, 2017 |
| --- | ---: | ---: | ---: | ---: |
| Net income (loss) | $14,027 | $9,327 | $(506) | $647 |
| Plus: |  |  |  |  |
| Interest expense | 114 | 112 | 39 | 38 |
| Income tax expense | 3,152 | 4,238 | - | 286 |
| Depreciation | 14,250 | 13,863 | 4,600 | 4,976 |
| Less: |  |  |  |  |
| Interest income | (979) | (617) | (321) | (216) |
| Income tax benefit | - | - | (237) | - |
| EBITDA | 30,564 | 26,923 | 3,575 | 5,731 |
| Asset impairment | 1,122 | 77 | 180 | - |
| Proxy contest expenses | - | 2,516 | - | - |
| Adjusted EBITDA | $31,686 | $29,516 | $3,755 | $5,731 |

13

### Thirty-Nine Weeks Ended November 3, 2018 and October 28, 2017

*Net Sales.* Net sales increased $25.3 million, or 4.7%, to $568.4 million in the thirty-nine weeks ended November 3, 2018 from $543.1 million in the thirty-nine weeks ended October 28, 2017. Sales comparisons to the prior year for fiscal 2018 are affected by the calendar shift caused by last year having 53 weeks. Each of the first three quarters in fiscal 2018 begins and ends one week later than the same quarter of fiscal 2017, which can have an impact on quarterly sales comparisons if the beginning and ending weeks of the quarter have different sales volumes. The increase in sales was due to a 2.8% increase in comparable store sales (2.0% increase on a comparable weeks basis) and the opening of 14 new stores since last year’s third quarter, partially offset by the impact of closing six stores since the third quarter of 2017. The increase in comparable store sales on a comparable weeks basis was reflected in a 1.5% increase in the average number of items per transaction, together with a 1% increase in the average unit sale, partially offset by a decrease in the number of customer transactions of less than 1%. Comparable store sales changes by major merchandise class were as follows in the first thirty-nine weeks of fiscal 2018: Home +15%; Accessories +3%; Men’s +2%; Children’s +1%; and Ladies’ -1%.

The 2.0% increase in comparable store sales on a comparable weeks basis resulted in an increase of $10.8 million in sales, store opening and closing activity resulted in a net increase of $10.6 million in sales, and the aforementioned calendar shift contributed $3.9 million to the sales increase.

*Cost of Sales (exclusive of depreciation).* Cost of sales (exclusive of depreciation) increased $15.5 million, or 4.7%, to $350.2 million in the thirty-nine weeks ended November 3, 2018 from $334.7 million in the thirty-nine weeks ended October 28, 2017. Cost of sales as a percentage of sales was unchanged at 61.6% in the thirty-nine weeks ended November 3, 2018 compared to the thirty-nine weeks ended October 28, 2017. A 30 basis points reduction in shrinkage and a 10 basis points improvement in the core merchandise margin (initial mark-up, net of markdowns) were offset by a 40 basis points increase in freight costs related to pressures on the trucking industry and higher fuel costs. The factors impacting freight costs are expected to continue in the fourth quarter of fiscal 2018.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased $5.1 million, or 2.8%, to $186.5 million in the thirty-nine weeks ended November 3, 2018 from $181.4 million in the thirty-nine weeks ended October 28, 2017 due primarily to normal inflationary pressure on expenses such as rent and payroll, together with the impact on expenses of opening 14 new stores since last year’s third quarter. These factors that caused the increase in selling, general and administrative expenses were partially offset by $2.5 million in expenses incurred last year in connection with our proxy contest. As a percentage of sales, selling, general and administrative expenses decreased to 32.8% in the first thirty-nine weeks of fiscal 2018 from 33.4% in the first thirty-nine weeks of fiscal 2017 due primarily to last year’s non-recurring proxy contest expenses.

*Depreciation.* Depreciation expense increased $0.4 million, or 2.8%, to $14.3 million in the first thirty-nine weeks of fiscal 2018 from $13.9 million in the first thirty-nine weeks of fiscal 2017 due primarily to the acceleration of our store opening pace in relation to previous years, along with the completion of an expansion of our Roland, Oklahoma distribution center.

*Asset Impairment.* Impairment charges related to property and equipment at certain underperforming stores totaled $1.1 million in the first thirty-nine weeks of fiscal 2018 and $0.1 million during the first thirty-nine weeks of fiscal 2017.

*Income Tax Expense.* Income tax expense decreased $1.0 million, or 25.6%, to $3.2 million in the first thirty-nine weeks of fiscal 2018 from $4.2 million in the first thirty-nine weeks of fiscal 2017, due to a decrease in the effective income tax rate from 31.2% to 18.3%. This decrease was a result of the reduction in the federal income tax rate from 35% to 21% included in the Tax Cuts and Jobs Act that went into effect on January 1, 2018.

*Net Income.* Net income increased $4.7 million, or 50.4%, to $14.0 million in the first thirty-nine weeks of fiscal 2018 from $9.3 million in the first thirty-nine weeks of fiscal 2017 due to the factors discussed above.

### Thirteen Weeks Ended November 3, 2018 and October 28, 2017

*Net Sales.* Net sales decreased $1.5 million, or 0.9%, to $175.4 million in the thirteen weeks ended November 3, 2018 from $176.9 million in the thirteen weeks ended October 28, 2017. Sales comparisons to the prior year for each quarter of fiscal 2018 are affected by the calendar shift caused by last year having 53 weeks. The decrease in sales was due to a 2.3% decrease in comparable store sales (increased 0.6% on a comparable weeks basis) and the impact of closing six stores since last year’s third quarter, partially offset by the opening of 14 new stores since the third quarter of 2017. The increase in comparable store sales on a comparable weeks basis was reflected in a 3% increase in the average unit sale, partially offset by a 2% decrease in the number of customer transactions and a decrease in the average number of items per transaction of less than 1%. Comparable store sales changes by major merchandise class were as follows in the third quarter of 2018: Home +13%; Accessories +4%; Children’s less than +1%; Men’s +0%; and Ladies’ -7%.

The aforementioned calendar shift resulted in a $5.0 million sales decrease, while store opening and closing activity resulted in a net increase of $2.4 million in sales, and the 0.6% comparable store sales increase on a comparable weeks basis contributed $1.1 million.

*Cost of sales (exclusive of depreciation).* Cost of sales (exclusive of depreciation) increased $0.3 million, or 0.3%, to $110.4 million in the third quarter of 2018 from $110.1 million in last year’s third quarter. Cost of sales as a percentage of sales increased to 63.0% in the third quarter of 2018 from 62.2% in last year’s third quarter due primarily to a 70 basis points increase in freight costs, resulting from the deleveraging of freight as a percentage of sales associated with the calendar shift which moved $5.0 million in sales out of the third quarter into the second quarter this year, together with pressures on the trucking industry and higher fuel costs. In addition, the core merchandise margin (initial mark-up, net of markdowns) declined 30 basis points due to higher markdowns. Partially offsetting these margin declines was a 20 basis points reduction in shrinkage in the third quarter this year versus last year.

*Selling, General and Administrative Expenses.* Selling, general and administrative expenses increased $0.1 million, or 0.1%, to $61.2 million in the third quarter of 2018 from $61.1 million in last year’s third quarter due primarily to the impact on expenses of opening 14 new stores since last year’s third quarter, together with normal inflationary pressure on expenses such as rent and payroll, partially offset by a $1.4 million decrease in incentive compensation expense resulting from less favorable earnings results in relation to target. As a percentage of sales, selling, general and administrative expenses increased to 34.9% in the third quarter of 2018 from 34.5% in the third quarter of 2017 due primarily to the deleveraging effect resulting from negative comparable store sales which includes the impact of the calendar shift on the third quarter.

*Depreciation.* Depreciation expense decreased $0.4 million, or 7.6%, to $4.6 million in the third quarter of 2018 from $5.0 million in the third quarter of 2017.

*Asset Impairment.* Impairment charges related to property and equipment at an underperforming store totaled $0.2 million in the third quarter of 2018, and $0.0 million in the third quarter of 2017.

*Income Tax Benefit (Expense).* Income tax benefit was $0.2 million in the third quarter of 2018 as compared to an expense of $0.3 million in the third quarter of 2017, with the change due primarily to having a pretax loss of $0.7 million this year compared with pretax income of $0.9 million last year.

*Net (Loss) Income.* Net income decreased to a loss of $0.5 million in the third quarter of 2018 from $0.6 million of income in the third quarter of 2017 due to the factors discussed above.

### Liquidity and Capital Resources

Our cash requirements are primarily for working capital and capital expenditures for new and existing stores, distribution infrastructure and information systems. In addition, in the first thirty-nine weeks of 2018, we initiated and completed a share repurchase program of $25.0 million of our common stock and paid dividends of $3.2 million. In recent years, we have met these cash requirements using cash flow from operations and short-term trade credit. We expect to be able to meet future cash requirements with cash flow from operations, short-term trade credit, existing balances of cash and investment securities and, if necessary, borrowings under our revolving credit facility described in Note 7 to the condensed consolidated financial statements included in Part I, Item 1 of this report.

*Current Financial Condition.* As of November 3, 2018, we had total cash and cash equivalents of $28.4 million compared to $48.5 million as of February 3, 2018. Additionally, we had $42.9 million and $10.3 million of short-term and long-term investment securities, respectively, as of November 3, 2018, compared with $31.5 million and $25.5 million, respectively, as of February 3, 2018. These securities are comprised of bank certificates of deposit and obligations of the U.S. Treasury, states and municipalities. Inventory represented 46.5% of our total assets as of November 3, 2018, compared to 42.1% as of February 3, 2018. Management’s ability to manage our inventory can have a significant impact on our cash flows from operations during a given interim period or fiscal year. In addition, inventory purchases can be seasonal in nature, such as the purchase of warm-weather or Christmas-related merchandise.

*Cash Flows From Operating Activities*. Net cash provided by operating activities was $14.3 million in the thirty-nine weeks ended November 3, 2018 compared to $24.4 million in the thirty-nine weeks ended October 28, 2017. Sources of cash provided during the first thirty-nine weeks of 2018 included net income adjusted for noncash expenses such as depreciation, asset impairment, loss on disposal of property and equipment, insurance proceeds from operating activities, deferred income taxes and stock-based compensation expense, totaling $30.2 million (compared to $26.7 million in the first thirty-nine weeks of 2017). Another significant source of cash in the the thirty-nine weeks ended November 3, 2018 was a $1.6 million increase in layaway deposits (compared to a $1.4 million increase in the first thirty-nine weeks of 2017) due to the seasonality of layaway transactions, which are low at the end of our fiscal year because all balances have to be redeemed by customers or they are cancelled by the middle of December each year.

Significant uses of cash from operating activities in the first thirty-nine weeks of 2018 were (1) a $7.6 million decrease in accounts payable (compared to a $7.4 million decrease in the first thirty-nine weeks of 2017) due to apparel retail seasonality, which has an effect on the timing of merchandise receipts during the two months leading up to fiscal year end versus the end of the third quarter; since this higher level of purchases occurred in the last two months of fiscal 2017, nearly all of such purchases would have still been in accounts payable as of February 3, 2018; (2) a $5.9 million decrease in accrued compensation (compared with a $5.2 million increase in the first thirty-nine weeks of 2017) primarily as a result of lower incentive compensation accruals this year due to diminished financial performance relative to target in 2018, and our balance sheet as of the end of the third quarter of fiscal 2018 including accrued payroll for one week, while our 2017 year-end balance sheet included accrued payroll for two weeks due to the timing of our bi-weekly payroll; (3) a $2.2 million increase in inventory (compared to a $0.5 million decrease in the first thirty-nine weeks of fiscal 2017) due to the effect of the calendar shift caused by last year having 53 weeks, therefore, the third quarter of 2018 ended one week closer to the holiday shopping season; and (4) a $1.9 million change in the income tax payable/receivable (compared to a $0.5 million change in the first thirty-nine weeks of 2017) due to estimated tax payments made during the year.

*Cash Flows From Investing Activities.* Cash used in investing activities was $5.1 million in the thirty-nine weeks ended November 3, 2018 compared to $9.6 million in the thirty-nine weeks ended October 28, 2017. Cash used for purchases of property and equipment totaled $9.0 million and $18.4 million in the first thirty-nine weeks of 2018 and 2017, respectively. Sales/redemptions of investment securities, net of purchases, provided cash of $3.7 million and $8.3 million in the first thirty-nine weeks of 2018 and 2017, respectively.

*Cash Flows From Financing Activities.* Cash used in financing activities was $29.3 million in the thirty-nine weeks ended November 3, 2018 compared to $29.1 million in the thirty-nine weeks ended October 28, 2017. Cash was used for the repurchase of common stock for an aggregate purchase price of $25.0 million during the first thirty-nine weeks of both 2018 and 2017. Dividends paid to stockholders used cash of $3.2 million and $3.1 million in the first thirty-nine weeks of 2018 and 2017, respectively.

### Cash Requirements

Our principal sources of liquidity consist of: (i) cash and cash equivalents (which equaled $28.4 million as of November 3, 2018); (ii) short-term and long-term investment securities (which equaled $42.9 million and $10.3 million, respectively, as of November 3, 2018); (iii) short-term trade credit; (iv) cash generated from operations on an ongoing basis as we sell our merchandise inventory; and (v) a $50 million revolving credit facility (under which we have no borrowings outstanding). Trade credit represents a significant source of financing for inventory purchases and arises from customary payment terms and trade practices with our vendors. Historically, our principal liquidity requirements have been for working capital and capital expenditure needs.

We believe that our existing sources of liquidity will be sufficient to fund our operations and anticipated capital expenditures for at least the next 12 months.

### Recent Accounting Pronouncements

See discussion of Recent Accounting Pronouncements in Note 12 to the condensed consolidated financial statements included in Part I, Item 1 of this report.

### Critical Accounting Policies

The preparation of our condensed consolidated financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. There have been no material changes to the Critical Accounting Policies outlined in the Company’s Annual Report on Form 10-K for the year ended February 3, 2018.

## Market risk

As filed, 225 characters.

There have been no material changes in our market risk during the thirty-nine weeks ended November 3, 2018 compared to the disclosures in Part II, Item 7A of our Annual Report on Form 10-K for the year ended February 3, 2018.

## Controls and procedures

As filed, 1,540 characters.

We have carried out an evaluation under the supervision and with the participation of management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of November 3, 2018 pursuant to Rules 13a-15 and 15d-15 of the Exchange Act. Based on that evaluation, the Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures are effective to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that such information has been accumulated and communicated to our management, including the officers who certify our financial reports, as appropriate, to allow timely decisions regarding the required disclosures.

Our disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives. Management recognizes that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives.

There were no changes in our internal control over financial reporting that occurred during the fiscal quarter ended November 3, 2018 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

## Risk factors

As filed, 192 characters.

There have been no material changes to the Risk Factors described under the section titled “Item 1A. Risk Factors” in our Annual Report on Form 10-K for the fiscal year ended February 3, 2018.

Filed Dec 10, 2018.
Source: SEC EDGAR, the filing index for accession 0001558370-18-009650. Last ingested by Listed: Oct 27, 2026, 17:26 ET. No prices; not investment advice.