NASHVILLE, Tenn., Jan. 26, 2024 /PRNewswire/ -- Kirkland's, Inc. (Nasdaq: KIRK) ("Kirkland's Home" or the "Company"), a specialty retailer of home décor and furnishings, entered into a supplemental credit facility on January 25, 2024, which will increase its available credit by up to $12 million. To support its strategic repositioning efforts, Kirkland's Home secured additional debt financing through a new first-in last-out, asset-based, delayed-draw term loan facility. The new facility is in addition to th ...

Sullivan to Also Join the Company's Board of Directors NASHVILLE, Tenn., Jan. 19, 2024 /PRNewswire/ -- Kirkland's, Inc. (Nasdaq: KIRK) ("Kirkland's Home" or the "Company"), a specialty retailer of home décor and furnishings, has promoted Amy Sullivan to Chief Executive Officer ("CEO"), effective February 4, 2024, and she will also join the Company's board of directors. She succeeds interim CEO Ann Joyce, who will remain on the Company's board of directors. Sullivan, who has been with the Company for more th ...

Financial Data and Key Metrics Changes - For Q3 2023, net sales were $116.4 million, down from $131 million in the prior year quarter, reflecting a 9.2% decline in comparable sales [100][72] - Gross profit margin increased by 130 basis points to 26.3% compared to 25% in the prior year quarter, driven by a 110 basis point increase in merchandise margin to 54% [101][55] - Adjusted EBITDA was negative $3.2 million, compared to negative $1.7 million in the prior year quarter, primarily due to weaker operating performance in August and September [20][72] Business Line Data and Key Metrics Changes - The largest sales declines were in furniture, wall décor, and harvest, partially offset by gains in Decorative Accessories, which saw an 8% increase in sales [17][60] - E-commerce sales accounted for 27% of total sales, with e-commerce comparable sales down 8.5% and store comps down 9.5% [72][100] - Operating expenses decreased by $2.1 million to $37 million, or 31.7% of sales, compared to $39.1 million or 29.9% of sales in the prior year quarter [103][72] Market Data and Key Metrics Changes - Comparable sales improved sequentially from down 13% in August to down 6% in October, with a low single-digit positive sales comp recorded in November [4][105] - Traffic to stores improved from a decline of 11% in the first half of the fiscal year to down 4% in October, with positive traffic in November for the first time in 2023 [10][4] - The company experienced unprecedented early selling of holiday products during Q3, indicating a shift in consumer behavior towards seasonal items [5][60] Company Strategy and Development Direction - The company is focused on five near-term strategic initiatives aimed at returning to profitable growth, including rebalancing category mix and enhancing the omnichannel experience [9][12] - There is a renewed emphasis on seasonally relevant value home décor, with a commitment to improving operational effectiveness and cost containment [60][69] - The company plans to evaluate its entire store portfolio to enhance customer experience and localization in product and marketing strategies [68][70] Management's Comments on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic challenges, particularly inflation affecting high-ticket categories, but expressed optimism about improvements in traffic and demand for lower-ticket items [59][3] - The company is encouraged by the sequential improvements in sales and profitability trends, with a focus on sustainable cost efficiencies [90][88] - Management remains committed to returning the company to profitability and delivering value to shareholders, with expectations for improved adjusted EBITDA in Q4 [63][107] Other Important Information - The company reduced operating expenses by approximately $10 million year-to-date compared to the same period in 2022, with expectations for further reductions in Q4 [127][72] - Inventory levels decreased by 17% year-over-year, ending the quarter with $105.2 million in inventory [76][89] - The company has reduced borrowings from $62 million at the end of Q3 to $35 million, aiming to improve liquidity and support turnaround efforts [129][72] Q&A Session Summary Question: What are the expectations for Q4 gross margin? - Management indicated that they expect gross margin to improve, entering Q4 with a stronger position due to higher initial markup and lower freight rates [133][134] Question: How is the inventory situation with larger-ticket items? - Management noted that higher-ticket items in furniture and wall décor are still present but are being managed as they transition to a more balanced assortment [116][115] Question: What changes are anticipated in the marketing budget for 2024? - The marketing budget is expected to remain flat, with a focus on reallocating funds to more successful initiatives, including the new SMS program [25][118] Question: Are there plans for additional store closures in 2024? - Management confirmed that there will be typical housekeeping closures in January, with a few planned, but no significant acceleration in closures beyond that [139][138] Question: What is the outlook for the gifting category? - The reintroduced gifting category is performing well and is expected to drive incremental sales, with plans for it to be a year-round business in 2024 [67][124]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended October 28, 2023 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______to ______. Commission file number: 000-49885 Kirkland's, Inc. (Exact name of registrant as specified in its charter) Tennessee 62-1287151 (State or other jurisdi ...

Kirkland's, Inc. (NASDAQ:KIRK) Q2 2023 Earnings Conference Call September 6, 2023 9:00 AM ET Company Participants Cody Cree - Director, IR Ann Joyce - Interim CEO Amy Sullivan - President and COO Mike Madden - EVP and CFO Conference Call Participants Jeremy Hamblin - Craig-Hallum Capital Group John Lawrence - Benchmark Operator Good morning everyone and thank you for participating in today's conference call to discuss Kirkland's Financial Results for the Second Quarter ended July 29th, 2023. Joining us toda ...

Financial Performance - Net sales decreased by 12.3% to $89.5 million for the 13-week period ended July 29, 2023, compared to $102.1 million for the same period in 2022[59]. - Comparable sales, including e-commerce, decreased by 9.7%, or $9.6 million, for the second 13 weeks of fiscal 2023[60]. - Net sales decreased by 9.3% to $186.4 million for the first 26 weeks of fiscal 2023 compared to $205.4 million for the prior year period, with a 4.5% decline in store count[67]. - E-commerce comparable sales decreased by 16.6% compared to the prior year period, driven by lower traffic[60]. - E-commerce comparable sales decreased by 11.6% in the first 26 weeks of fiscal 2023, contributing to the overall decline in comparable sales[67]. Profitability Metrics - Gross profit as a percentage of net sales increased by 140 basis points to 19.5% in the second 13 weeks of fiscal 2023, up from 18.1% in the prior year[61]. - Merchandise margin increased approximately 320 basis points to 51.2% in the second 13 weeks of fiscal 2023, primarily due to lower inbound freight rates[61]. - Gross profit margin increased by 40 basis points to 23.2% in the first 26 weeks of fiscal 2023, driven by a merchandise margin increase of approximately 250 basis points to 54.1%[68]. - Operating loss for the first 26 weeks of fiscal 2023 was $28.4 million, a 13.6% improvement compared to a loss of $32.9 million in the prior year[67]. - Net loss for the second 13 weeks of fiscal 2023 was $19.4 million, or a loss of $1.51 per diluted share, compared to a net loss of $25.7 million, or a loss of $2.02 per diluted share, in the prior year[65]. - Net loss was $31.5 million, or a loss of $2.46 per diluted share, compared to a net loss of $33.6 million, or a loss of $2.65 per diluted share, for the same period last year[73]. Operating Expenses - Total operating expenses decreased by 11.9% to $35.5 million in the second 13 weeks of fiscal 2023 compared to $40.3 million in the prior year[59]. - Compensation and benefits as a percentage of net sales increased to 21.5% in the second 13 weeks of fiscal 2023 from 21.1% in the prior year[62]. Cash Flow and Financing - Cash used in operating activities decreased to approximately $28.5 million in the first 26 weeks of fiscal 2023 from $56.1 million in the prior year, attributed to changes in working capital[80]. - Capital expenditures for the first 26 weeks of fiscal 2023 were $2.3 million, down from $5.0 million in the prior year, primarily focused on technology and omni-channel projects[82]. - Net cash provided by financing activities was $30.5 million, with $36.0 million borrowed under the revolving credit facility, partially offset by $5.0 million in repayments[83]. - The 2023 Credit Agreement increased the senior secured revolving credit facility from $75.0 million to $90.0 million, with a maturity date extended to March 2028[84]. - As of July 29, 2023, the company had approximately $46.0 million in outstanding borrowings under the 2023 Credit Agreement, with an additional $9.0 million borrowed subsequently[87][93]. - The company reported a cash and cash equivalents balance of approximately $4.9 million as of July 29, 2023, which is expected to be sufficient to fund planned capital expenditures and working capital for at least the next twelve months[88]. Shareholder Actions - The share repurchase plan authorized by the Board of Directors allows for the purchase of up to $30.0 million of common stock, with approximately $26.3 million remaining under the current plan as of July 29, 2023[89]. - No shares were repurchased during the 13-week period ended July 29, 2023, while 479,966 shares were repurchased at a cost of $6.253 million during the 26-week period ended July 30, 2022[90]. Debt and Risk Management - The company had $55.0 million in outstanding borrowings under the 2019 Credit Agreement as of July 30, 2022, indicating a reduction in borrowings over the year[93]. - The company is exposed to interest rate changes due to borrowings under its Credit Agreements, but a one percent change in interest rates would not materially impact operations[93]. - The company manages cash and cash equivalents beyond federally insured limits, which poses a risk of not recovering the full principal of investments[94]. Store Operations - The company operated a total of 340 stores as of July 29, 2023, down from 356 stores a year earlier, reflecting a 4.5% decline in store count[58].

Financial Data and Key Metrics Changes - For the first quarter, net sales were $96.9 million compared to $103.3 million in the prior year quarter, reflecting a 4% decline in average store count and a comparable store sales decline of 4.4% [37] - Gross profit margin declined 70 basis points to 26.7% of sales compared to 27.4% in the prior year quarter [38] - Adjusted EBITDA, excluding impairment and other minor expenses, was negative $5.8 million for the current quarter, with operating loss improving to $10.3 million versus $11.1 million in the prior year quarter [85] Business Line Data and Key Metrics Changes - E-commerce represented 27% of total sales in the quarter, down from 28% in the prior year quarter, indicating a slight channel shift with stores performing slightly better [69] - Merchandise margin increased 160 basis points to 56.8% versus 55.2% in the prior year quarter, driven by lower freight rates and product costs [70] Market Data and Key Metrics Changes - Comparable store sales were down 9% in February, followed by a decrease of 8% in March, and an increase of 6% in April, attributed to a successful promotional event [15] - Store sales results were consistent across geographic regions, with better performance in the Southeast and Florida, while the Upper Midwest and Northeast showed weaker results [15] Company Strategy and Development Direction - The company is focusing on recapturing sales and product margin by adjusting merchandise assortment to emphasize value decor under $20 and enhancing promotional strategies [6][21] - A strategic promotional calendar is being created to engage customers with seasonally relevant items at lower price points [5] - The company plans to refine its long-term vision and strategic plans to capitalize on brand potential, emphasizing value-oriented and stylish home decor [13] Management's Comments on Operating Environment and Future Outlook - Management acknowledged challenges in customer engagement and traffic trends, indicating that Q2 is viewed as a transition quarter with expectations for improvement in the back half of the year [23][45] - The company is optimistic about returning to positive adjusted EBITDA generation and creating sales momentum that can carry into 2024 [20] Other Important Information - Central distribution costs increased 100 basis points to 5.6% of sales from 4.6% in the prior year quarter due to sales deleverage [16] - The company plans to introduce more products that promote gifting and entertaining during the holiday season, addressing missed opportunities from the previous year [38] Q&A Session Summary Question: What are the traffic trends and expectations for the remainder of the year? - Management indicated that Q2 is a transition quarter with expectations for improvement in the back half of the year, driven by upcoming promotional events and changes in merchandise assortment [22][23] Question: How do you expect gross margin to play out in Q2? - Management expects gross margin to improve year-over-year, although it may be sequentially down from Q1 due to typical seasonal trends [93] Question: What changes are being made to the store portfolio? - The company is in maintenance mode regarding its store portfolio, aiming to hold store count steady while evaluating underperforming locations for potential closures [48]

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM 10-Q ☒ Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended April 29, 2023 or ☐ Transition report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from ______to ______. Commission file number: 000-49885 Kirkland's, Inc. (Exact name of registrant as specified in its charter) Tennessee 62-1287151 (State or other jurisdict ...

Financial Data and Key Metrics Changes - For the fourth quarter, net sales were $162.5 million compared to $176.2 million in the prior year quarter, reflecting a 4% decline in store count and a comparable store sales decline of 6.1% [112] - Gross profit margin declined 850 basis points to 24.8% of sales, compared to 33.3% in the prior year quarter, with merchandise margin declining 420 basis points to 49.9% [113] - Adjusted loss per share was $0.09 compared to adjusted earnings per share of $0.84 in the prior year quarter [15] Business Line Data and Key Metrics Changes - Comparable store sales results were largely driven by a year-over-year traffic decline, partially offset by an increase in the average ticket [81] - E-commerce accounted for 25% of total sales in the quarter, similar to the prior year [81] - Central distribution costs increased 170 basis points to 6.3% of sales from 4.6% in the prior year quarter due to operational inefficiencies [13] Market Data and Key Metrics Changes - Sales trends in early fiscal 2023 remained challenging, with comp sales trends down in the high single-digit range [16] - The company experienced a decline in traffic trends both in-store and online [16] - The company noted that geographic areas showed no significant differences in performance during the fourth quarter [27] Company Strategy and Development Direction - The company is focusing on rebalancing its merchandise assortment with an emphasis on opening price points starting in the $20 range [108] - A strong selling culture is being promoted among store employees to drive improved conversion with the updated merchandise mix [77] - The company aims to reduce borrowings and re-establish liquidity before focusing on growth and ROI opportunities [88] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced in the macroeconomic environment but expressed confidence in the company's ability to navigate these issues and achieve long-term success [76] - The company expects to see material margin improvements starting in the first quarter of fiscal 2023 due to lower inbound freight costs [78] - Management emphasized the importance of customer data insights to drive merchandise and promotional strategies [109] Other Important Information - The company announced an extension of its existing credit agreement, increasing the line of credit to $90 million from $75 million [116] - The company generated over $40 million in operating cash flow, allowing it to repay $45 million in debt [75] - The CEO announced plans to retire at the end of May, with an interim CEO appointed to ensure a smooth transition [4] Q&A Session Summary Question: What is the expected impact of rebalancing the merchandise assortment on overall average ticket and comps? - Management indicated that they expect to see a traditional ramp-up in sales as they adjust the merchandise assortment, aiming to return comps from down high single-digits to flat or positive [20][24] Question: Were there any regional differences in same-store sales? - Management noted that there were no significant geographic differences in performance during the fourth quarter [27] Question: How is the company addressing the higher cost inventory? - Management stated that they are working to flush out higher cost inventory and expect to see improvements in merchandise margins as they move forward [131][147] Question: What strategies are being implemented to drive traffic to stores? - Management is focusing on a promotional strategy that emphasizes lower price points and effective marketing to attract customers [148][150]

[Part I](index=4&type=section&id=PART%20I) [Business](index=4&type=section&id=Item%201.%20Business) Kirkland's, Inc. operates as a U.S. specialty retailer of home décor and furnishings, focusing on omni-channel growth and infrastructure optimization, with significant seasonal sales in Q4 and merchandise sourced from Asia - As of January 28, 2023, the company operated **346 stores** across 35 states and the e-commerce site www.kirklands.com[16](index=16&type=chunk) - The business strategy centers on four key components: offering value-priced merchandise, acquiring and retaining customers, improving the omni-channel experience, and making infrastructure improvements like optimizing the store footprint[17](index=17&type=chunk) Merchandise Mix as a Percentage of Net Sales | Merchandise Category | Fiscal 2022 | Fiscal 2021 | Fiscal 2020 | | :--- | :--- | :--- | :--- | | Holiday Décor | 19% | 19% | 22% | | Furniture | 18% | 15% | 15% | | Textiles | 11% | 10% | 10% | | Ornamental Wall Décor | 8% | 10% | 10% | | Art | 8% | 8% | 7% | | Decorative Accessories | 7% | 8% | 8% | | Mirrors | 6% | 6% | 6% | | Home Fragrance | 6% | 6% | 6% | | Housewares | 5% | 5% | 5% | | Lighting | 4% | 5% | 4% | | Floral | 4% | 4% | 4% | | Outdoor | 3% | 3% | 2% | | Gift | 1% | 1% | 1% | | **Total** | **100%** | **100%** | **100%** | - In fiscal 2022, approximately **49% of merchandise** was directly sourced from foreign countries, with China accounting for **67% of total merchandise receipts**[28](index=28&type=chunk) Store Count History (Last 5 Fiscal Years) | | Fiscal 2022 | Fiscal 2021 | Fiscal 2020 | Fiscal 2019 | Fiscal 2018 | | :--- | :--- | :--- | :--- | :--- | :--- | | Stores open at beginning of period | 361 | 373 | 432 | 428 | 418 | | New store openings | 1 | 4 | — | 5 | 25 | | Permanent store closings | (16) | (16) | (59) | (1) | (15) | | **Stores open at end of period** | **346** | **361** | **373** | **432** | **428** | - The business is highly seasonal, with the fourth quarter (including Thanksgiving and Christmas) historically contributing a disproportionate amount of net sales, net income, and cash flow[65](index=65&type=chunk) [Risk Factors](index=11&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including strategic execution failures, intense competition, supply chain vulnerabilities from foreign imports, IT security threats, liquidity constraints, macroeconomic pressures, and business seasonality - **Strategic Risks:** Failure to successfully implement strategic initiatives, such as upgrading merchandise quality, acquiring new customers, and improving the omni-channel experience, could negatively impact financial performance[74](index=74&type=chunk) - **Liquidity Risks:** Insufficient cash flow from operations could hinder strategic initiatives and the ability to fund obligations, potentially leading to increased reliance on the secured revolving credit facility and its associated restrictions[90](index=90&type=chunk)[91](index=91&type=chunk) - **Competitive Risks:** The company operates in a highly competitive retail market against larger retailers with greater resources, such as HomeGoods, Target, Amazon, and Wayfair, which could lead to price reductions and loss of market share[93](index=93&type=chunk)[94](index=94&type=chunk) - **Supply Chain Risks:** A significant portion of merchandise is imported, with **67% of fiscal 2022 purchases** manufactured in China, exposing the company to trade relations, tariffs, shipping delays, and cost increases[114](index=114&type=chunk)[119](index=119&type=chunk) - **Technology & Data Security Risks:** The business is vulnerable to IT system failures and security breaches, with potential for litigation, reputational damage, and operational disruptions from data protection failures[130](index=130&type=chunk)[133](index=133&type=chunk) - **Macroeconomic Risks:** Performance is subject to general economic conditions impacting discretionary consumer spending, with inflation, cost increases, and a weak retail environment adversely affecting sales and profitability[152](index=152&type=chunk)[154](index=154&type=chunk)[157](index=157&type=chunk) - **Seasonal Risks:** The business is highly seasonal, with the fourth quarter contributing a disproportionate amount of net sales and income, making negative factors during this period materially adverse to financial results[160](index=160&type=chunk) [Unresolved Staff Comments](index=24&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[166](index=166&type=chunk) [Properties](index=24&type=section&id=Item%202.%20Properties) Kirkland's leases all of its 346 store locations, its corporate office, and its distribution facilities, with typical initial lease terms of five to 10 years and Texas having the largest store concentration - The company leases all of its store locations, with typical initial terms of **five to 10 years**[167](index=167&type=chunk) Store Count by State (Top 5) | State | Number of Stores | | :--- | :--- | | Texas | 52 | | Florida | 29 | | Georgia | 22 | | North Carolina | 20 | | Tennessee | 20 | Distribution Facility Locations (as of Jan 28, 2023) | Location | Type | Approx. Square Footage | | :--- | :--- | :--- | | Jackson, Tennessee | store and e-commerce fulfillment | 771,000 | | Lancaster, Texas | third-party operated store fulfillment | 200,000 | | Winchester, Virginia | e-commerce fulfillment | 63,000 | | North Las Vegas, Nevada | e-commerce fulfillment | 33,000 | [Legal Proceedings](index=25&type=section&id=Item%203.%20Legal%20Proceedings) The company is involved in various legal proceedings arising in the normal course of business, with specific details provided in Note 8 of the Financial Statements - For details on legal proceedings, refer to "Item 8. Financial Statements and Supplementary Data – Note 8 — Commitments and Contingencies"[170](index=170&type=chunk) [Mine Safety Disclosures](index=25&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[171](index=171&type=chunk) [Part II](index=25&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=25&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "KIRK", with no dividends declared since fiscal 2015 due to credit facility restrictions, and **$6.3 million** in share repurchases in fiscal 2022 - The company's common stock is listed on Nasdaq under the symbol **"KIRK"**[173](index=173&type=chunk) - No dividends have been declared since fiscal 2015, and the senior credit facility restricts the ability to pay cash dividends[174](index=174&type=chunk) Fiscal 2022 Share Repurchases | Period | Total Number of Shares Repurchased | Average Price Paid per Share | Maximum Dollar Value Remaining (in thousands) | | :--- | :--- | :--- | :--- | | First Quarter | 479,966 | $13.03 | $26,304 | | Second Quarter | — | $— | $— | | Third Quarter | — | $— | $— | | Fourth Quarter | — | $— | $— | | **Total** | **479,966** | **$13.03** | **$26,304** | [Reserved](index=26&type=section&id=Item%206.%20%5BReserved%5D) This item is reserved [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=26&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In fiscal 2022, Kirkland's experienced a significant downturn, with net sales decreasing **10.6%** to **$498.8 million**, gross profit falling **36.4%** to **$119.8 million**, and an operating loss of **$42.8 million**, ending the year with **$5.2 million** cash and **$15.0 million** debt Fiscal 2022 vs. Fiscal 2021 Key Financial Results (in millions, except per share data) | Metric | Fiscal 2022 | Fiscal 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Net Sales | $498.8 | $558.2 | (10.6)% | | Gross Profit | $119.8 | $188.4 | (36.4)% | | Gross Margin | 24.0% | 33.8% | (980 bps) | | Operating (Loss) Income | ($42.8) | $25.3 | (268.7)% | | Net (Loss) Income | ($44.7) | $22.0 | (302.9)% | | Diluted (Loss) Earnings Per Share | ($3.52) | $1.51 | (333.1)% | - The decrease in net sales was primarily due to a consolidated comparable sales decrease of **$48.9 million**, resulting from lower traffic and conversion in stores and online, though partially offset by a higher average ticket[181](index=181&type=chunk) - Gross profit margin decreased by **980 basis points**, with approximately **550 basis points** of the decline attributed to lower merchandise margin from increased discounting and higher inbound freight costs[191](index=191&type=chunk) - Net cash used in operating activities was **$18.2 million** in fiscal 2022, an improvement from **$30.8 million** used in fiscal 2021, primarily due to working capital changes related to selling through excess inventory[204](index=204&type=chunk) - The company ended fiscal 2022 with **$5.2 million** in cash and cash equivalents and **$15.0 million** in outstanding debt under its revolving credit facility[182](index=182&type=chunk) [Quantitative and Qualitative Disclosure About Market Risk](index=35&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosure%20About%20Market%20Risk) The company faces interest rate risk from **$15.0 million** in variable-rate borrowings and market risk from price volatility in merchandise, duties, tariffs, and transportation costs - The company is exposed to interest rate risk from its variable-rate Credit Agreement, with **$15.0 million** outstanding as of January 28, 2023[232](index=232&type=chunk) - The company is subject to market risk from price volatility in merchandise, duties, tariffs, and transportation costs, which can create inflationary or deflationary pressure on product costs and affect gross margin[234](index=234&type=chunk) [Financial Statements and Supplementary Data](index=36&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for fiscal year ended January 28, 2023, including balance sheets, statements of operations, cash flows, and accompanying notes, along with the independent auditor's report [Consolidated Financial Statements](index=39&type=section&id=Consolidated%20Financial%20Statements) The consolidated financial statements show a significant decline in financial health for fiscal 2022, with total assets decreasing to **$274.2 million**, a net loss of **$44.7 million**, and total shareholders' equity falling to **$29.8 million**, alongside reduced cash and increased debt Consolidated Balance Sheet Data (in thousands) | | Jan 28, 2023 | Jan 29, 2022 | | :--- | :--- | :--- | | Total Current Assets | $94,331 | $149,569 | | Total Assets | $274,246 | $331,189 | | Total Current Liabilities | $111,307 | $134,614 | | Total Liabilities | $244,473 | $250,063 | | Total Shareholders' Equity | $29,773 | $81,126 | Consolidated Statement of Operations Data (in thousands) | | 52 Weeks Ended Jan 28, 2023 | 52 Weeks Ended Jan 29, 2022 | | :--- | :--- | :--- | | Net Sales | $498,825 | $558,180 | | Gross Profit | $119,789 | $188,428 | | Operating (Loss) Income | ($42,751) | $25,345 | | Net (Loss) Income | ($44,694) | $22,026 | Consolidated Statement of Cash Flows Data (in thousands) | | 52 Weeks Ended Jan 28, 2023 | 52 Weeks Ended Jan 29, 2022 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($18,151) | ($30,785) | | Net cash used in investing activities | ($8,061) | ($7,060) | | Net cash provided by (used in) financing activities | $6,380 | ($37,489) | | Net (decrease) in cash | ($19,832) | ($75,334) | | Cash at end of year | $5,171 | $25,003 | [Notes to Consolidated Financial Statements](index=43&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) The notes detail accounting policies and financial components, highlighting a **$2.1 million** asset impairment charge and a **$14.7 million** deferred tax asset valuation allowance due to continued losses, alongside details of the credit facility and legal contingencies - The company's inventory shrinkage reserve was **$1.6 million** as of January 28, 2023, up from **$1.4 million** the prior year[266](index=266&type=chunk) - Asset impairment charges totaled **$2.1 million** in fiscal 2022, compared to **$0.8 million** in fiscal 2021, primarily related to underperforming stores[225](index=225&type=chunk)[339](index=339&type=chunk) - As of January 28, 2023, the company had a deferred tax asset valuation allowance of **$14.7 million**, up from **$3.6 million** in the prior year, due to uncertainty regarding the realization of these assets given a three-year cumulative loss[306](index=306&type=chunk) - As of January 28, 2023, the company had **$15.0 million** in outstanding borrowings under its credit facility with **$41.0 million** available, which was subsequently amended and upsized to **$90.0 million** extending maturity to March 2028[312](index=312&type=chunk)[342](index=342&type=chunk) - The company is a defendant in several putative class action lawsuits alleging wage and hour violations and improper printing of credit card information on receipts[332](index=332&type=chunk)[333](index=333&type=chunk)[335](index=335&type=chunk) [Changes in and Disagreements with Accountants on Accounting and Financial Disclosure](index=57&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20with%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants on accounting and financial disclosure - None[343](index=343&type=chunk) [Controls and Procedures](index=57&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that the company's disclosure controls and internal control over financial reporting were effective as of January 28, 2023, with no material changes reported - Based on an evaluation as of January 28, 2023, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[344](index=344&type=chunk) - Management concluded that the company's internal control over financial reporting was effective as of January 28, 2023, based on the COSO framework[346](index=346&type=chunk) [Other Information](index=58&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[348](index=348&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=58&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[349](index=349&type=chunk) [Part III](index=58&type=section&id=PART%20III) [Directors, Executive Officers and Corporate Governance](index=58&type=section&id=Item%2010.%20Directors%2C%20Executive%20Officers%20and%20Corporate%20Governance) Information regarding directors, executive officers, and corporate governance is incorporated by reference from the company's definitive Proxy Statement for the June 21, 2023 Annual Meeting - Information required for this item is incorporated by reference from the company's Proxy Statement for the upcoming Annual Meeting of Shareholders[351](index=351&type=chunk) [Executive Compensation](index=58&type=section&id=Item%2011.%20Executive%20Compensation) Information regarding executive and director compensation is incorporated by reference from the company's definitive Proxy Statement for the June 21, 2023 Annual Meeting - Information required for this item is incorporated by reference from the "Executive Compensation" and "Board of Directors Compensation" sections of the company's Proxy Statement[353](index=353&type=chunk) [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters](index=58&type=section&id=Item%2012.%20Security%20Ownership%20of%20Certain%20Beneficial%20Owners%20and%20Management%20and%20Related%20Stockholder%20Matters) Security ownership information is incorporated by reference from the Proxy Statement, with **497,628** securities issuable upon exercise and **1,374,483** available for future issuance under equity plans as of January 28, 2023 - Information on security ownership is incorporated by reference from the company's Proxy Statement[354](index=354&type=chunk) Equity Compensation Plan Information (as of Jan 28, 2023) | Plan Category | Number of securities to be issued upon exercise (a) | Weighted-average exercise price (b) | Number of securities remaining available for future issuance (c) | | :--- | :--- | :--- | :--- | | Equity compensation plans approved by security holders | 497,628 | $11.00 | 1,374,483 | [Certain Relationships and Related Transactions, and Director Independence](index=59&type=section&id=Item%2013.%20Certain%20Relationships%20and%20Related%20Transactions%2C%20and%20Director%20Independence) Information regarding related party transactions and director independence is incorporated by reference from the company's definitive Proxy Statement for the June 21, 2023 Annual Meeting - Information required for this item is incorporated by reference from the "Related Party Transactions" and "Board Independence" sections of the company's Proxy Statement[357](index=357&type=chunk) [Principal Accounting Fees and Services](index=59&type=section&id=Item%2014.%20Principal%20Accounting%20Fees%20and%20Services) Information regarding principal accounting fees and services is incorporated by reference from the company's definitive Proxy Statement for the June 21, 2023 Annual Meeting - Information required for this item is incorporated by reference from the "Audit and Non-Audit Fees" section of the company's Proxy Statement[358](index=358&type=chunk) [Part IV](index=60&type=section&id=PART%20IV) [Exhibits and Financial Statement Schedules](index=60&type=section&id=Item%2015.%20Exhibits%20and%20Financial%20Statement%20Schedules) This section lists the financial statements, financial statement schedules, and exhibits filed as part of the Form 10-K report, noting schedules are inapplicable or included elsewhere - This section contains the list of financial statements and exhibits filed with the annual report[360](index=360&type=chunk)[362](index=362&type=chunk) [Form 10-K Summary](index=62&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company provides no summary for this item - None[367](index=367&type=chunk)