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DEBT | 3 Months Ended
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May 03, 2025
Debt Disclosure [Abstract] |
DEBT | DEBT ABL Credit Facility The Company and certain subsidiaries maintain the $433.0 million asset-based revolving credit facility (the “ABL Credit Facility”) under its Amended and Restated Credit Agreement dated May 9, 2019 (as amended from time to time, the “Credit Agreement”), with Wells Fargo Bank, National Association (“Wells Fargo”), Bank of America, N.A., JPMorgan Chase Bank, N.A., Truist Bank, HSBC Bank (USA), N.A., and PNC Bank, National Association, as the lenders party thereto and Wells Fargo, as Administrative Agent, Collateral Agent, and Swing Line Lender. The ABL Credit Facility will mature in November 2026. As of April 18, 2024, which is the effective date of the seventh amendment to the Credit Agreement (the “Seventh Amendment”), the ABL Credit Facility includes a $25.0 million Canadian sublimit and a $25.0 million sublimit for standby and documentary letters of credit. Under the ABL Credit Facility, prior to February 4, 2025, borrowings outstanding bore interest, at the Company’s option, at: (i)the prime rate per annum, plus a margin of 2.000%; or (ii)the Secured Overnight Financing Rate (“SOFR”) per annum, plus 0.100%, plus a margin of 3.000%. From and after February 4, 2025 and on the first day of each fiscal quarter thereafter, based on the amount of the Company’s average daily excess availability under the facility, borrowings outstanding under the ABL Credit Facility bear interest, at the Company’s option, at: (i)the prime rate per annum, plus a margin of 1.750% or 2.000%; or (ii)the SOFR per annum, plus 0.100%, plus a margin of 2.750% or 3.000%. As of April 18, 2024, based on the size of the unused portion of the commitments, the Company is charged a fee ranging from 0.250% to 0.375%. Prior to February 4, 2025, letter of credit fees were at 1.125% for commercial letters of credit and 1.750% for standby letters of credit. As of February 4, 2025, letter of credit fees range from 1.000% to 1.125% for commercial letters of credit and range from 1.500% to 1.750% for standby letters of credit. These fees are determined based on the amount of the Company’s average daily excess availability under the facility. The amount available for loans and letters of credit under the ABL Credit Facility is determined by a borrowing base consisting of certain credit card receivables, certain trade receivables, certain inventory, and the fair market value of certain real estate, subject to certain reserves and an availability block. For the First Quarter 2025 and First Quarter 2024, the Company recognized $4.8 million and $5.7 million, respectively, in interest expense related to the ABL Credit Facility. As of April 18, 2024, credit extended under the ABL Credit Facility is secured by a first priority security interest in substantially all of the Company’s U.S. and Canadian assets, including the Company’s intellectual property, certain furniture, fixtures, equipment, and pledges of subsidiary capital stock. The outstanding obligations under the ABL Credit Facility may be accelerated upon the occurrence of certain customary events of default, as described below. The Company is not subject to any early termination fees. The ABL Credit Facility contains covenants, which include conditions on stock buybacks and the payment of cash dividends or similar payments. These covenants also limit the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, or dispositions or to change the nature of its business. Pursuant to the Seventh Amendment, the requisite payment condition thresholds for some of these covenants have been heightened, resulting in certain actions such as the repurchase of shares and payment of cash dividends becoming more difficult to perform. Additionally, if the Company is unable to maintain a certain amount of excess availability for borrowings (the “excess availability threshold”), the Company may be subject to cash dominion. The ABL Credit Facility contains customary events of default, which include (subject in certain cases to customary grace and cure periods) nonpayment of principal or interest, breach of covenants, failure to pay certain other indebtedness, and certain events of bankruptcy, insolvency or reorganization, such as a change of control. As of May 3, 2025, February 1, 2025, and May 4, 2024, unamortized deferred financing costs amounted to $3.3 million, $3.8 million, and $2.9 million, related to the Company’s ABL Credit Facility. The tables below present the components of the Company’s ABL Credit Facility:
| May 3, 2025 |  | February 1, 2025 |  | May 4, 2024
| (in millions)
Total borrowing base availability | $ | 315.5 |  | $ | 301.9 |  | $ | 286.0
Credit facility availability | 433.0 |  | 433.0 |  | 433.0
Maximum borrowing availability (1) | 315.5 |  | 301.9 |  | 286.0
Outstanding borrowings | 258.6 |  | 245.7 |  | 226.1
Letters of credit outstanding—standby | 18.2 |  | 16.0 |  | 12.2
Utilization of credit facility at end of period | 276.8 |  | 261.7 |  | 238.3
Availability (2) | $ | 38.7 |  | $ | 40.2 |  | $ | 47.7
Interest rate at end of period | 7.7% |  | 7.6% |  | 9.9%
Average end-of-day loan balance during the period | $ | 247.2 |  | $ | 284.5 |  | $ | 228.2
Highest end-of-day loan balance during the period | $ | 262.3 |  | $ | 366.9 |  | $ | 251.6
Average interest rate | 7.7% |  | 8.7% |  | 9.6%
____________________________________________ (1)The lower of the credit facility availability and the total borrowing base availability. (2)The sub-limit availability for letters of credit was $6.8 million as of May 3, 2025, $9.0 million at February 1, 2025, and $12.8 million as of May 4, 2024. Mithaq Term Loans Mithaq Capital SPC, a Cayman segregated portfolio company (“Mithaq”), is a controlling stockholder of the Company. The Company and certain subsidiaries maintain an interest-free, unsecured and subordinated promissory note with Mithaq for a $78.6 million term loan (the “Initial Mithaq Term Loan”), dated February 29, 2024, by and among the Company, certain of its subsidiaries, and Mithaq. During the First Quarter 2025, $60.2 million under the Initial Mithaq Term Loan was repaid pursuant to the completion of the Company’s rights offering on February 6, 2025 (“Rights Offering”), leaving $18.4 million outstanding under the Initial Mithaq Term Loan as of May 3, 2025. The Company recorded a loss on extinguishment of debt of $1.0 million during the First Quarter 2025, due to this partial prepayment of the Initial Mithaq Term Loan, which is recorded within Other interest expense. For more information about the Rights Offering, see “Note 8. Stockholders’ Equity (Deficit)” below. The Initial Mithaq Term Loan matures on February 15, 2027 and is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility. The Company and certain subsidiaries also maintain an unsecured and subordinated promissory note with Mithaq for a $90.0 million term loan (the “New Mithaq Term Loan”; and together with the Initial Mithaq Term Loan, collectively, the “Mithaq Term Loans”), dated April 16, 2024, by and among the Company, certain of its subsidiaries, and Mithaq. The New Mithaq Term Loan matures on April 16, 2027, and requires monthly payments equivalent to interest charged at the SOFR plus 4.000% per annum, with the first year’s monthly payments to Mithaq deferred until April 30, 2025. On April 28, 2025, the Company and Mithaq entered into Amendment No. 1 to the New Mithaq Term Loan promissory note, which subjected these deferred monthly payments due as of April 30, 2025 to a payment plan, payable in installments prior to the end of Fiscal 2025. The New Mithaq Term Loan is guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility. For the First Quarter 2025 and First Quarter 2024, the Company recognized $1.9 million and $0.4 million, respectively, in interest-equivalent expense related to the New Mithaq Term Loan. As of May 3, 2025 and May 4, 2024, interest-equivalent expense payable to Mithaq was $8.4 million and $0.4 million, respectively, which is recorded within Accrued expenses and other current liabilities. The Mithaq Term Loans are subject to an amended and restated subordination agreement (as amended from time to time, the “Subordination Agreement”), dated as of April 16, 2024, by and among the Company and certain subsidiaries, Wells Fargo and Mithaq, pursuant to which the Mithaq Term Loans are subordinated in payment priority to the obligations of the Company and its subsidiaries under the Credit Agreement. Subject to such subordination terms, the Mithaq Term Loans are prepayable at any time and from time to time without penalty and do not require any mandatory prepayments. The Mithaq Term Loans contain customary affirmative and negative covenants substantially similar to a subset of the covenants set forth in the Credit Agreement, including limits on the ability of the Company and its subsidiaries to incur certain liens, to incur certain indebtedness, to make certain investments, acquisitions, dispositions or restricted payments, or to change the nature of its business. The Mithaq Term Loans, however, do not provide for any closing, prepayment or exit fees, or other fees typical for transactions of this nature, do not impose additional reserves on borrowings under the Credit Agreement, and do not contain certain other restrictive covenants. The Mithaq Term Loans contain certain customary events of default, which include (subject in certain cases to customary grace periods), nonpayment of principal, breach of other covenants of the Mithaq Term Loans, inaccuracy in representations or warranties, acceleration of certain other indebtedness (including under the Credit Agreement), certain events of bankruptcy, insolvency or reorganization, such as a change of control, and invalidity of any part of the Mithaq Term Loans. As of May 3, 2025, February 1, 2025, and May 4, 2024, unamortized deferred financing costs amounted to $1.4 million, $2.6 million, and $2.0 million, respectively, related to the Mithaq Term Loans. Maturities of the Company’s principal debt payments on the Mithaq Term Loans as of May 3, 2025 are as follows:
| May 3, 2025
| (in thousands)
Remainder of 2025 | $ | — |
2026 | — |
2027 | 108,400 |
Thereafter | — |
Total related party debt | $ | 108,400 |
Mithaq Commitment Letter On May 2, 2024, the Company entered into a commitment letter (the “Commitment Letter”) with Mithaq for a senior unsecured $40.0 million credit facility (the “Mithaq Credit Facility”). Under the Mithaq Credit Facility, the Company had the ability to request for advances at any time prior to July 1, 2025. On September 10, 2024, the Company and Mithaq entered into an Amendment No. 1 to the Commitment Letter, that extended the deadline for requesting advances until July 1, 2026. If any debt is incurred under the Mithaq Credit Facility, it shall require monthly payments equivalent to interest charged at the SOFR plus 5.000% per annum. Such debt shall be unsecured and shall be guaranteed by each of the Company’s subsidiaries that guarantee the Company’s ABL Credit Facility. Similar to the Mithaq Term Loans, such debt shall also be subject to the Subordination Agreement, contain customary affirmative and negative covenants substantially similar to a subset of the covenants set forth in the Credit Agreement, and contain certain customary events of default. Additionally, such debt shall require no mandatory prepayments and shall mature no earlier than July 1, 2026. As of May 3, 2025, no debt had been incurred under the Mithaq Credit Facility.

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- Definition The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 470 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 6 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147481544/470-10-50-6 Reference 2: 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