UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Table of Contents For the quarterly period ended October 31, 2025 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: 001-39504 SNOWFLAKE INC. (Exact name of registrant as specified in its charter) (State or other jurisdiction of ...

Sales Performance - Signet's total sales increased by 3.1% in Q3 Fiscal 2026 compared to the same period in Fiscal 2025, with same-store sales growth of 3.0%[123] - Total sales for the third quarter of Fiscal 2026 increased by 3.1% year over year to $1.39 billion, with same store sales rising by 3.0%[131] - Year-to-date sales increased by 2.7% to $4.47 billion, with same store sales up by 2.5%[137] - North America sales for the year-to-date were $4.18 billion, an increase of 2.4%, with same store sales also up by 2.4%[140] - International sales for the year-to-date increased by 4.8% to $258.9 million, with a 1.2% increase at constant exchange rates[141] Average Unit Retail (AUR) - Average unit retail (AUR) increased by 7.7% in North America and 3.0% in the International segment compared to Q3 Fiscal 2025, driven by a focus on lab-grown diamond fashion and higher gold prices[123] - The average unit retail (AUR) increased by approximately 7% in the third quarter compared to the prior year, driven by improved assortments in bridal and fashion categories[131] Strategic Initiatives - The Grow Brand Love strategy launched in Fiscal 2026 focuses on sustainable growth, product innovation, and brand loyalty, with three strategic imperatives identified[122] - The Company is strategically managing marketing spend to increase efficiency and capitalize on consumer demand during the holiday season[126] - The Company plans to continue focusing on organic growth and market share expansion in core areas such as Bridal, while optimizing its real estate footprint[176] Financial Performance - Gross margin for the third quarter was $518.8 million, representing 37.3% of sales, up from 36.0% in the prior year quarter[142] - Selling, general and administrative expenses (SG&A) were $485.3 million, or 34.9% of sales, nearly flat compared to 34.8% in the prior year[144] - Operating income for the third quarter was $23.9 million, or 1.7% of sales, compared to $9.2 million, or 0.7% of sales, in the prior year[147] - Adjusted operating income for Q3 was $32.0 million with an adjusted operating margin of 2.3%, compared to $16.2 million (1.2% margin) in the prior year[169] - Fiscal 2026 adjusted diluted EPS was $0.63, compared to $0.24 in Fiscal 2025, reflecting a significant increase of 162.5%[172] - Net income for the 39 weeks ended November 1, 2025, was $44.4 million, a turnaround from a net loss of $39.4 million in the prior year, representing an increase of $83.8 million[186] Cash Flow and Debt Management - The Company had $234.7 million in cash and cash equivalents as of November 1, 2025, with no outstanding borrowings on its asset-based revolving credit facility (ABL) which has a borrowing capacity of $1.2 billion[174] - Free cash flow for the 39 weeks ended November 1, 2025, was $(151.1) million, an improvement from $(304.2) million in the prior year[163] - The net cash used in operating activities was $58.0 million for the 39 weeks ended November 1, 2025, an improvement from $189.8 million in the prior year[185] - The adjusted leverage ratio was maintained at 1.1x through the end of Fiscal 2025, reflecting the retirement of all funded debt[179] - As of November 1, 2025, the Company had no outstanding debt and an available borrowing capacity of $1.2 billion under the ABL, compared to $253.0 million of debt outstanding in the prior year[193] - Net cash was $234.7 million as of November 1, 2025, a significant improvement from net debt of $95.3 million as of November 2, 2024[194] Store Operations - As of November 1, 2025, Signet operated 2,607 retail locations, including 2,262 in the US and 91 in Canada, alongside a digital presence[120] - The Company closed 46 stores and opened 11 stores during the 39 weeks ended November 1, 2025, resulting in a net decrease in selling square footage of 0.6% in North America and 2.7% internationally[188] Market Risks and Economic Factors - The Company continues to monitor macroeconomic factors, including inflation and geopolitical conflicts, which may affect operations and cash flows[128] - The Company is monitoring macroeconomic uncertainties, including tariffs and inflation, which could negatively impact merchandise costs and consumer spending, potentially affecting fair value estimates[200] - The Company uses derivative financial instruments to manage market risks related to foreign currency exchange rates, interest rates, and precious metal prices[202] - As of November 1, 2025, the Company's market risk profile has not materially changed since February 1, 2025, as disclosed in its Annual Report[205] Impairments and Restructuring - Asset impairments for the 39 weeks ended November 1, 2025, totaled $84.9 million, down from $169.3 million in the prior year[145] - The Company recorded restructuring and related charges of $26.1 million in Fiscal 2026, primarily due to its Grow Brand Love strategy initiatives[173] - Impairment charges of approximately $54 million, $13 million, and $3 million were recognized for Digital brands, James Allen, and Diamonds Direct trade names, respectively, due to declining cash flow projections[199]

Financial Performance - Net sales decreased from $1.51 billion to $1.46 billion, representing a period-over-period decrease of 3.1% and a comparable sales decrease of 2.2%[81] - Operating income increased to $29.2 million, compared to $4.0 million in the prior year period[81] - Net income attributable to Class A and B-1 common stockholders was $9.3 million, compared to a net loss of $16.7 million in the prior year period[81] - Adjusted EBITDA increased from $81.2 million to $98.6 million[81] - Gross profit margin improved to 38.9% for the thirteen weeks ended November 1, 2025, compared to 38.1% for the same period in 2024[85] - Selling, General and Administrative (SG&A) expenses as a percentage of net sales decreased to 36.9% for the thirteen weeks ended November 1, 2025, compared to 37.8% for the same period in 2024[86] - Comparable sales change was a decrease of 2.2% for the thirteen weeks ended November 1, 2025[82] - Services and other sales increased by 2.6% to $254.8 million for the thirteen weeks ended November 1, 2025[83] Cash Flow and Liquidity - Free Cash Flow improved to $70.6 million for the thirty-nine weeks ended November 1, 2025, compared to a negative $9.4 million for the same period in 2024[98] - Net cash provided by operating activities was $160.5 million for the thirty-nine weeks ended November 1, 2025, up from $81.7 million for the same period in 2024[104] - Liquidity as of November 1, 2025, was $732.9 million, including cash and cash equivalents of $237.4 million and $495.5 million available on the ABL Revolving Credit Facility[100] Debt and Interest - Interest expense decreased by $3.0 million, or 8.3%, to $32.8 million for the thirteen weeks ended November 1, 2025, compared to $35.8 million for the same period in 2024[87] - The company has a secured term loan facility maturing on March 4, 2028, and an ABL Revolving Credit Facility with availability of up to $581.0 million[108] - As of November 1, 2025, the company had $1,595.3 million outstanding under the First Lien Term Loan with no amounts outstanding under the ABL Revolving Credit Facility[117] - A 100 basis points increase in variable rates on the First Lien Term Loan and ABL Revolving Credit Facility would increase annual cash interest by approximately $16.2 million[117] Tax and Accounting - The effective tax rate for the thirteen weeks ended November 1, 2025, was (205.4)%, resulting in an income tax benefit of $6.3 million, compared to an effective tax rate of 4.9% and a benefit of $0.9 million for the same period in 2024[89] - There have been no material changes to critical accounting policies and estimates compared to the 2024 Form 10-K[113] - The company reviews accounting policies, assumptions, estimates, and judgments to ensure financial statements are presented fairly in accordance with GAAP[112] Market Risks - The company is subject to market risks primarily associated with interest rate fluctuations and changes in credit standing[116] - The company has entered into cash flow hedges to limit maximum interest rates on a portion of its variable-rate debt[117] - The company does not enter into forward currency contracts to hedge foreign currency exposure, and a hypothetical 10% change in foreign currency exchange rates would not materially affect operating results[120] - Future results may differ materially from estimated results due to adverse changes in interest rates or debt availability[118] - The company’s expenses are generally denominated in the currencies of the jurisdictions where it operates[120] - Substantially all cash and cash equivalents were maintained at major financial institutions in the U.S., with current deposits likely exceeding insured limits[119] Operational Changes - The sales decrease was primarily due to lower transaction volume and a lower pet care center count, alongside a focus on profitability and margin management[83] - Total pet care centers in the U.S. and Puerto Rico decreased to 1,389 at the end of the period, down from 1,413[82] - Other non-operating income was $0 for the thirteen and thirty-nine weeks ended November 1, 2025, compared to $8.5 million and $5.8 million for the same periods in 2024[88] - The company anticipates that current resources and cash flows will be sufficient to finance operations and capital investments for at least the next 12 months[101]

Financial Performance - Walmart accounted for 15.6% of consolidated gross sales less returns and allowances during fiscal 2025, with the top five customers representing approximately 38%[29] - The company reported a revenue of $1.5 billion for Q3 2023, representing a 15% year-over-year increase[217] - The company provided guidance for Q4 2023, expecting revenue to be between $1.6 billion and $1.8 billion, indicating a potential growth of 7% to 20%[217] - The gross margin for Q3 2023 was reported at 45%, a slight increase from 43% in Q2 2023[217] Debt and Assets - The Company's long-term debt had a fair value of $2.6 billion as of October 26, 2025, compared to $2.5 billion as of October 27, 2024[213] - The Company's net asset position in foreign currencies was $0.8 billion as of October 26, 2025, down from $1.2 billion as of October 27, 2024[214] - The balance of corporate-owned life insurance policies classified as trading securities totaled $219.2 million as of October 26, 2025, compared to $209.7 million as of October 27, 2024[215] Employee and Safety Metrics - Approximately 20% of the Company's employees were covered by collective bargaining agreements as of October 26, 2025[20] - The Company completed approximately 1,200 safety assessments each month during fiscal 2025[26] - As of October 26, 2025, approximately 50% of the Company's team members had five or more years of service[23] Innovation and R&D - The Company has thirteen U.S.-granted and six foreign-granted patents as of October 26, 2025[32] - Investment in R&D increased by 25% year-over-year, totaling $300 million, focusing on innovative technologies[217] - New product launch scheduled for Q1 2024, anticipated to contribute an additional $200 million in revenue[217] Market and Customer Metrics - User base grew to 10 million active users, a 20% increase compared to the previous quarter[217] - Customer retention rate improved to 85%, up from 80% in the previous quarter[217] - Market expansion efforts led to a 30% increase in sales in the Asia-Pacific region[217] - The company plans to enter the European market by mid-2024, targeting a revenue contribution of $100 million in the first year[217] Acquisitions and Investments - The company completed an acquisition of a tech startup for $500 million, expected to enhance product offerings[217] Commodity and Risk Management - The fair value of the Company's cash flow commodity contracts was $5.5 million as of October 26, 2025, compared to $(5.9) million as of October 27, 2024[212] - The Company employs hedging programs to manage commodity price risk, utilizing futures, swaps, and options contracts[212]

Table of Contents 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 November 1, 2025 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 No. 001-31463 | Title of each class | Trading Symbol(s) | Name of Each Exchange on which Registered | | --- | --- | --- | | Comm ...

Revenue Performance - For the three months ended October 31, 2025, consolidated revenue decreased by $4.8 million, or 1%, compared to the prior year, with Adjusted Revenue of $421.8 million[150][151]. - Revenue for the six months ended October 31, 2025 decreased by $11.9 million, or 1%, compared to the prior year, with a constant currency decrease of 2%[196]. - Adjusted Revenue for the six months ended October 31, 2025 was $818.6 million, consistent with the prior year, while US GAAP Revenue was $818.6 million, a decrease of 1%[197][200]. - 48% of Adjusted Revenue for the year ended April 30, 2025, was recurring revenue, indicating a stable revenue stream[144]. Segment Performance - Research revenue increased by $16.6 million, or 6%, to $278,514 million for the three months ended October 31, 2025, driven by growth in Research Publishing[185]. - Learning revenue decreased by $18.3 million, or 11%, to $143,237 million for the three months ended October 31, 2025, due to market-related softness[189]. - Research revenue increased by $33.0 million, or 6%, for the six months ended October 31, 2025, compared to the prior year[227]. - Learning revenue decreased by $27.5 million, or 10%, for the six months ended October 31, 2025, compared to the prior year[231]. Income and Earnings - Operating income for the same period increased by $8.9 million, or 14%, to $73.0 million, driven by lower operating and administrative expenses[155][164]. - US GAAP Income Before Taxes for the six months ended October 31, 2025, was $75.7 million, an increase from $71.9 million in 2024, representing a growth of 2.4%[221]. - Non-GAAP Adjusted Income Before Taxes increased to $113.2 million for the six months ended October 31, 2025, compared to $103.1 million in 2024, reflecting a growth of 9.8%[221]. - Diluted earnings per share increased to $0.84 for the three months ended October 31, 2025, compared to $0.74 in 2024, marking a 14% rise[182]. - Diluted Earnings per Share rose to $1.05 for the six months ended October 31, 2025, up from $0.71 in 2024, marking an increase of 48.6%[224]. Expenses and Cost Management - Operating and administrative expenses decreased by $13.8 million, or 6%, to $225.1 million, primarily due to restructuring and cost savings initiatives[154]. - Operating and administrative expenses decreased by $22.3 million, or 5%, to $465.4 million for the six months ended October 31, 2025[201]. - Interest expense decreased to $11.7 million for the three months ended October 31, 2025, down from $14.5 million in the prior year[169]. - Interest expense decreased to $22.7 million for the six months ended October 31, 2025, down from $27.3 million in the prior year[213]. Cash Flow and Financial Position - As of October 31, 2025, the company had cash and cash equivalents of $67.4 million, with approximately 95% located outside the US[239]. - The company reported approximately $871.7 million of debt outstanding as of October 31, 2025, with $423.5 million of unused borrowing capacity[241]. - For the six months ended October 31, 2025, net cash used in operating activities was $(76.5) million, an improvement from $(94.0) million in the prior year[243]. - Net cash provided by investing activities for the six months ended October 31, 2025 was $72.4 million, compared to net cash used of $(44.5) million in the prior year[252]. - Net cash used in financing activities was $(13.0) million for the six months ended October 31, 2025, a decrease from net cash provided of $113.1 million in the prior year[253]. Taxation - The US GAAP Effective Tax Rate increased to 22.6% for the three months ended October 31, 2025, compared to 17.3% in 2024, primarily due to a change in jurisdictional mix of earnings[178]. - The US GAAP Effective Tax Rate decreased to 25.3% for the six months ended October 31, 2025, down from 45.8% in 2024, mainly due to a change in jurisdictional mix of earnings[222]. Shareholder Returns - The company increased its quarterly dividend to shareholders to $1.42 per share annualized, up from $1.41 per share in the prior year[254]. - The company repurchased $35.1 million of shares during the six months ended October 31, 2025, compared to $25.0 million in the prior year[255]. Restructuring and Cost Savings - The Global Restructuring Program is expected to yield annualized cost savings of approximately $115 million, with about $110 million realized in fiscal year 2026[159]. - Adjusted EBITDA for the three months ended October 31, 2025, was $115.1 million, reflecting an 8% increase compared to the prior year[155][166]. - Adjusted EBITDA for the six months ended October 31, 2025 was $185.5 million, an increase of 4% compared to the prior year[210]. - Adjusted EBITDA for the Research segment increased by 14% to $93,280 million on a constant currency basis[187]. - Adjusted EBITDA for the Learning segment decreased by 14% to $57,435 million on a constant currency basis, primarily due to lower revenue[190][233]. Foreign Currency Impact - The company recorded foreign currency translation losses of approximately $(10.0) million for the six months ended October 31, 2025, primarily due to fluctuations in the US dollar relative to the British pound sterling[263].

Revenue Performance - For the three months ended October 31, 2025, consolidated revenue decreased by $4.8 million, or 1%, compared to the prior year, with Adjusted Revenue of $421.8 million[150][151]. - Research revenue increased by $16.6 million, or 6%, to $278,514 million for the three months ended October 31, 2025, driven by growth in Research Publishing[185]. - Learning revenue decreased by $18.3 million, or 11%, to $143,237 million for the same period, attributed to market-related softness and a decline in print sales[189]. - Revenue for the six months ended October 31, 2025 decreased by $11.9 million, or 1%, compared to the prior year, with a constant currency decrease of 2%[196]. - Research revenue for the six months ended October 31, 2025, increased by $33 million, or 6%, compared to the prior year, with Research Solutions revenue growing by 18%[227]. - Learning revenue decreased by $27.5 million, or 10%, for the six months ended October 31, 2025, compared to the prior year, primarily due to declines in print sales and license revenue[231]. Income and Earnings - Operating income for the same period increased by $8.9 million, or 14%, to $73.0 million, driven by lower operating and administrative expenses[155][164]. - Adjusted EBITDA for the three months ended October 31, 2025, was $115.1 million, reflecting an 8% increase compared to the prior year[155][166]. - US GAAP Income Before Taxes was $58,010 million, an increase from $48,937 million in the same period of 2024, representing a growth of 20%[177]. - Non-GAAP Adjusted Income Before Taxes for the same period was $78,596 million, up from $69,141 million in 2024, reflecting a 14% increase[177]. - Diluted earnings per share increased to $0.84 for the three months ended October 31, 2025, compared to $0.74 in 2024, marking a 14% rise[182]. - Diluted Earnings per Share rose to $1.05 for the six months ended October 31, 2025, up from $0.71 in 2024, marking an increase of 48.6%[224]. Expenses and Cost Management - Operating and administrative expenses decreased by $13.8 million, or 6%, to $225.1 million, primarily due to restructuring and cost savings initiatives[154]. - Operating and administrative expenses decreased by $22.3 million, or 5%, to $465.4 million for the six months ended October 31, 2025[201]. - Interest expense decreased to $11.7 million for the three months ended October 31, 2025, down from $14.5 million in the prior year[169]. - Interest expense decreased to $22.7 million for the six months ended October 31, 2025, down from $27.3 million in the prior year[213]. - The company recorded restructuring and related charges of $6.0 million for the three months ended October 31, 2025, compared to $3.6 million in the prior year[156]. AI and Research Segment - Artificial intelligence (AI) license revenue increased to $6.0 million for the three months ended October 31, 2025, up from $4.0 million in the prior year[150]. - Research AI license revenue reached $4.8 million for the three months ended October 31, 2025, compared to none in the prior year[186]. - AI license revenue increased to $34.9 million for the six months ended October 31, 2025, up from $21 million in the prior year, including $15.7 million from licensed content[196]. - Research AI license revenue surged to $20.7 million for the six months ended October 31, 2025, compared to approximately $1 million in the prior year[228]. - Adjusted EBITDA for the Research segment increased by 14% to $93,280 million on a constant currency basis, driven by higher revenue[187]. - Adjusted Operating Income for the Research segment increased by 18% to $69,961 million for the three months ended October 31, 2025[184]. Tax and Financial Position - The US GAAP Effective Tax Rate increased to 22.6% for the three months ended October 31, 2025, compared to 17.3% in 2024, primarily due to a change in jurisdictional mix of earnings[178]. - The US GAAP Effective Tax Rate decreased to 25.3% for the six months ended October 31, 2025, down from 45.8% in 2024, mainly due to a change in jurisdictional mix of earnings[222]. - The company maintains a strong liquidity position, with operating cash flow and credit facilities expected to meet operational and investment needs over the next twelve months[238]. - As of October 31, 2025, the company had cash and cash equivalents of $67.4 million, with approximately 95% located outside the US[239]. - The company reported approximately $871.7 million of debt outstanding as of October 31, 2025, with $423.5 million of unused borrowing capacity under its Amended and Restated Credit Agreement[241]. Cash Flow and Dividends - For the six months ended October 31, 2025, net cash used in operating activities was $(76.5) million, an improvement from $(94.0) million in the same period of 2024[243]. - Free cash flow less product development spending for the six months ended October 31, 2025 was $(107.9) million, compared to $(130.1) million in the prior year[245]. - Net cash provided by investing activities for the six months ended October 31, 2025 was $72.4 million, a significant increase from net cash used of $(44.5) million in the prior year[252]. - Net cash used in financing activities was $(13.0) million for the six months ended October 31, 2025, compared to net cash provided of $113.1 million in the same period of 2024[253]. - The company increased its quarterly dividend to shareholders to $1.42 per share annualized, up from $1.41 per share in the prior year[254]. Foreign Exchange and Other - Net foreign exchange transaction gains were $1.0 million for the three months ended October 31, 2025, compared to losses of $(3.3) million in the prior year[170][171]. - The company recorded foreign currency translation losses of approximately $(10.0) million for the six months ended October 31, 2025, primarily due to fluctuations in the US dollar relative to the British pound sterling[263]. - Other expense, net was $(2.1) million for the six months ended October 31, 2025, compared to other income, net of $3.0 million in the prior year[220].

Revenue and Financial Performance - Revenue for the fiscal year ended September 30, 2025, increased to $513,024 from $490,739 in the fiscal year ended September 30, 2024, representing a 4.7% increase in RMS revenue and a 4.3% increase in DSA revenue[300] - DSA revenue for the twelve months ended September 30, 2025, was $187,943, an increase of $7,827 or 4.3% compared to the previous year[305] - RMS revenue increased to $325,081 for the fiscal year ended September 30, 2025, representing a growth of $14,458 or 4.7%[308] - The Company reported a consolidated net loss of $68,625 for the twelve months ended September 30, 2025, compared to a net loss of $108,885 for the same period in 2024, reflecting an improvement of 37%[319] - Net loss attributable to common shareholders decreased to $68,625 from $108,445, primarily due to the reduction in operating loss[302] - For the fiscal year ended September 30, 2025, the operating loss was $30,902, a decrease of $55,504 from the operating loss of $86,406 in the previous fiscal year[301] - Operating loss decreased to $30,902 for the fiscal year ended September 30, 2025, from $86,406 in fiscal 2024, representing a reduction of 64.2%[320] Cash Flow and Liquidity - As of September 30, 2025, the company had $21,741 in cash and cash equivalents, with total debt amounting to $402,123[303] - Cash and cash equivalents as of September 30, 2025, were $21,741, slightly up from $21,432 as of September 30, 2024[328] - Net cash used in operating activities was $10,455 for fiscal 2025, compared to $6,805 for fiscal 2024, indicating increased cash outflows[328] - Financing activities generated net cash of $23,701 in fiscal 2025, significantly higher than $9,675 in fiscal 2024, primarily due to proceeds from common share issuance[333] Debt and Financing - The company is exploring potential debt refinancing alternatives with the assistance of Perella Weinberg Partners[304] - The Company is exploring potential debt refinancing alternatives and is in discussions with lenders regarding current business conditions[326] - The Company issued $22,000 in Second Lien Notes and warrants to purchase 3,946,250 shares of common stock for $17,000 in cash and the cancellation of $8,333 of existing notes[341] - The Company issued $140,000 principal amount of Convertible Senior Notes, with an additional $15,000 option exercised by the initial purchaser[385] - The aggregate principal amount of Notes remaining outstanding after cancellations is $131,667[386] - The Company has incurred unamortized debt issuance costs of $2,093 and $3,031 related to the Notes as of September 30, 2025, and 2024, respectively[389] Operational Efficiency and Cost Management - The company achieved approximately $17,000 to $19,000 in net annual cost savings as a result of restructuring and site optimization plans[283] - Phase Two of the site optimization plan is expected to require a capital investment of approximately $6,500 and provide net annual savings of $6,000 to $7,000[284] - The Company plans to optimize capital allocation and improve operating results through increased revenue from NHP-related products and services in fiscal 2026[325] Market and Client Growth - The company anticipates continued growth in its NHP client base and has pre-sold NHP inventory to deliver a more consistent revenue stream[281] - The company is focused on expanding existing client relationships and acquiring new clients, particularly in the DSA segment to serve the emerging biopharmaceutical market[278] Legal and Compliance Matters - The company recorded an $11,000 liability and an insurance recovery receivable of $11,000 as of September 30, 2025, related to proposed settlements of securities class action and derivative lawsuits[293] - The company is in the process of providing notifications regarding a cybersecurity incident that occurred between August 5-8, 2025, with ongoing evaluations of its operational and financial impacts[294] Tax and Accounting - The effective income tax rate increased to 21.8% in fiscal 2025 from 16.7% in fiscal 2024, with income tax benefits recorded of $19,143 and $21,875, respectively[318] - The company uses the asset and liability approach for financial accounting and reporting of income taxes, with deferred income taxes reflecting temporary differences between financial reporting and tax purposes[414] - The company recognizes deferred tax assets only if it believes they are more likely than not to be realized, considering future taxable income and tax-planning strategies[415] Asset Management - Goodwill is reviewed for impairment annually, with an assessment date of September 30, and is not amortized[419] - The company amortizes definite-lived intangible assets over their estimated useful lives, with customer relationships ranging from 5 to 13 years[423] - Long-lived assets are reviewed for impairment whenever events indicate that the carrying amount may not be recoverable, based on future cash flow estimates[424]

Financial Performance - Net Income for Q3 2025 was $14.6 million, or $0.53 per diluted share, down from $19.2 million, or $0.70 per diluted share in Q3 2024[77]. - Net Sales declined 3.2% in Q3 2025, primarily due to a 5.2% decline at the Shoe Carnival banner, while Shoe Station achieved a 5.3% increase in Net Sales[78]. - Comparable stores Net Sales decreased by 2.7%, with Shoe Station growing mid-single digits and Shoe Carnival declining mid-single digits[79]. - Net Sales for third quarter 2025 were $297.2 million, a decrease of $9.7 million, or 3.2%, compared to third quarter 2024, primarily due to a 5.2% decline in Shoe Carnival sales[89]. - Year-to-date 2025 Net Sales were $881.3 million, a decrease of $58.7 million, or 6.2%, compared to year-to-date 2024, with an 8.5% decline in Shoe Carnival sales[94]. Profitability and Margins - Gross Profit margin improved to 37.6%, up 160 basis points from Q3 2024, with Gross Profit increasing to $111.8 million compared to $110.4 million in Q3 2024[80]. - Gross Profit for third quarter 2025 was $111.8 million, with a gross profit margin of 37.6%, an increase of 160 basis points compared to the same quarter in 2024[90]. - Selling, General and Administrative Expenses (SG&A) increased to $93.2 million in third quarter 2025, representing 31.3% of Net Sales, up from 28.0% in the same quarter of 2024[92]. - Operating Income was reduced by approximately $25 million in Fiscal 2025 due to rebannering costs, with an estimated impact of $8.1 million in third quarter 2025 alone[85]. Cash Flow and Capital Expenditures - Cash, Cash Equivalents, and Marketable Securities increased by $16.6 million, or 18.2%, to $107.7 million by the end of Q3 2025[81]. - Cash generated from operating activities was $37.3 million in year-to-date 2025, down from $58.1 million in year-to-date 2024, primarily due to increased inventory purchases[101]. - Capital expenditures for the rebanner initiative totaled approximately $31 million in year-to-date 2025, with expectations of $25 million to $35 million for further expansion by Back-to-School 2026[85][86]. - Capital expenditures for Fiscal 2025 are expected to be between $45 million and $55 million, including approximately $31 million for rebanner capital expenditures[114]. Store Operations and Strategy - The acquisition of Rogan's added 28 physical stores, enhancing market presence in Wisconsin and Minnesota[67]. - Shoe Station stores now account for approximately 34% of the current store fleet, up from 10% at the beginning of Fiscal 2025, with a total of 144 stores as of the end of third quarter 2025[84]. - The company expects to have 215 Shoe Station stores by Back-to-School 2026, representing approximately 51% of the current store base[86]. - The company currently operates 428 stores, with plans to increase to 215 Shoe Station stores by Back-to-School 2026, representing approximately 51% of the current store base[115][116]. - In Fiscal 2025, the company rebannered a total of 72 Shoe Carnival stores and closed 3, resulting in a net decrease to 285 Shoe Carnival stores[115]. - The company expects limited store openings and closures in the near term as it executes its One Banner Strategy and increases scale through acquisitions[115]. Shareholder Returns and Market Risks - The quarterly cash dividend was increased to $0.15 per share in Q3 2025, up from $0.135 per share in Q3 2024, returning $12.6 million to shareholders year-to-date 2025[117]. - A share repurchase program for up to $50 million was authorized, effective January 1, 2025, with no repurchases made to date in Fiscal 2025[118][119]. - The company is exposed to market risk due to variable interest rates under its Credit Agreement, with no borrowings outstanding during year-to-date 2025[123]. - The Credit Agreement permits the payment of dividends and share repurchases, subject to certain covenants and restrictions[120]. Taxation - The effective income tax rate for year-to-date 2025 was 26.2%, compared to 25.5% for year-to-date 2024, influenced by adjustments related to share-settled equity awards[98]. Seasonal Trends - The company has three distinct peak selling periods: Easter, back-to-school, and Christmas, which significantly impact operating results[121].

Financial Performance - Net sales in Q3 2025 increased by 9% to $1.472 billion compared to Q3 2024, with a 34% increase in international channel sales[106] - For the third quarter of 2025, net sales increased by $125 million, or 9%, to $1.472 billion compared to $1.347 billion in the third quarter of 2024[128] - Year-to-date 2025 net sales increased by $160 million, or 4%, to $4.284 billion compared to $4.124 billion in year-to-date 2024[144] - North America year-to-date net sales increased by $58 million, or 3%, to $2.325 billion, despite a decrease in traffic[145] - International year-to-date net sales rose by $124 million, or 22%, to $691 million, driven by increases in sales in China and franchise royalties[147] Operating Income and Expenses - Operating loss improved by $28 million to $19 million in Q3 2025, with the operating loss rate improving to (1.3%) from (3.5%) in Q3 2024[107] - Gross profit for the third quarter of 2025 increased by $68 million to $536 million, with a gross profit rate rising to 36.4% from 34.8%[132] - General, administrative, and store operating expenses increased by $40 million, or 8%, to $555 million, primarily due to higher marketing and store selling expenses[136] - For year-to-date 2025, general, administrative, and store operating expenses increased by $58 million, or 4%, to $1.487 billion compared to year-to-date 2024[152] Sales Performance - Sales per average selling square foot increased by 8% to $137 in Q3 2025 compared to Q3 2024[120] - Comparable sales in North America increased, driven by higher average transaction value and conversion rates[106] - North America store net sales rose by $40 million, or 5%, to $778 million, driven by an increase in average transaction value despite flat overall traffic[129] - International net sales surged by $67 million, or 34%, to $265 million, primarily due to increases in sales in China and sourcing sales to partners[131] Tax and Losses - Adjusted net loss per diluted share was $(0.27) in Q3 2025, compared to $(0.50) in Q3 2024[116] - The effective tax rate for the third quarter of 2025 was 16.0%, down from 21.3% in the third quarter of 2024[139] - The effective tax rate for year-to-date 2025 was (42.9%), a significant increase from (7.8%) in year-to-date 2024, primarily due to additional tax expenses related to share-based compensation[155] Cash Flow and Debt - Net cash used for operating activities in year-to-date 2025 was $174 million, a decrease of $75 million compared to year-to-date 2024, driven by lower net operating cash outflows associated with working capital changes[162] - Net cash used for investing activities year-to-date 2025 was $163 million, consisting solely of capital expenditures related to store capital programs and technology investments[164] - Net cash provided by financing activities year-to-date 2025 was $360 million, primarily from borrowings of $545 million under the ABL Facility[167] - As of November 1, 2025, total long-term debt was $1.347 billion, a decrease from $1.414 billion as of November 2, 2024[173] Capital Expenditures and Investments - The company expects capital expenditures to be approximately $200 million for fiscal year 2025, focusing on store capital programs and technology investments[166] - The company’s investment portfolio primarily consisted of money market funds and bank deposits, with no material risk to principal associated with interest rate changes[195] Compliance and Credit Ratings - The company was in compliance with all covenants under its long-term debt and borrowing facilities as of November 1, 2025[183] - The company's credit ratings as of November 1, 2025, were Ba3 from Moody's and BB from S&P for corporate ratings, with a stable outlook[184] Strategic Focus - The company continues to focus on its strategic plan, including enhancing its Bra Authority and fueling growth in beauty[110] Store Operations - The total number of company-operated stores decreased by 61 to 1,404 as of November 1, 2025, with 12 new stores opened and 26 closed in the U.S.[121] Security Incident - A security incident in May 2025 estimated to have negatively impacted Q2 2025 net sales by approximately $20 million[113] Working Capital and Liquidity - The company had a working capital of $454 million as of November 1, 2025, compared to $260 million as of November 2, 2024[159] - The availability under the ABL Facility was $358 million as of November 1, 2025, down from $533 million as of February 1, 2025[160] Long-term Debt Structure - The principal value of the company's outstanding long-term debt was $984 million as of November 1, 2025, with an estimated fair value of $960 million[197] - The company’s long-term debt includes $375 million under the ABL Facility and $384 million under the Term Loan Facility, both of which have variable interest rates based on Term SOFR[196] - The company amended its ABL Facility, extending the maturity date to May 2030 and reducing the applicable interest rates on borrowings to 1.50%-1.75% for Term SOFR loans and 0.50%-0.75% for alternate base rate loans[178] Accounting Standards - The company is evaluating the impact of recently issued accounting standards on its consolidated financial statements, with no material changes expected from the standards adopted in 2025[186][189]