2. Interim Financial Presentation and Other Information

All intercompany accounts and transactions have been eliminated in the condensed consolidated financial statements. The results of operations for the three months ended February 28, 2026 are not necessarily indicative of results for the full fiscal year. These interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in our Annual Report on Form 10-K for the year ended November 29, 2025. Certain prior period amounts have been reclassified to conform to current period presentation.

Income Taxes

We calculate an anticipated effective tax rate for the year based on our annual estimates of pretax income or loss and use that effective tax rate to record our year-to-date income tax provision.  Any change in annual projections of pretax income or loss could have a significant impact on our effective tax rate for the respective quarter.

Our effective tax rate was 26.5% for the three months ended February 28, 2026. The effective rate differs from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences.

Our effective tax rate was 27.4% for the three months ended March 1, 2025. The effective rate differs from the federal statutory rate of 21% primarily due to the effects of state income taxes and various permanent differences.

Supplemental Cash Flow Information

During the three months ended February 28, 2026 and March 1, 2025, $2,787 and $0, respectively, of lease right-of-use assets were added through the recognition of the corresponding lease obligations.

Income tax refunds received, net of taxes paid, during the three months ended February 28, 2026 and March 1, 2025 were as follows:

Interest paid during the three months ended February 28, 2026 and March 1, 2025 was $15 and $4, respectively.

Lessor Income

We receive lease income as the lessor on a small number of leased premises which we have subleased to other tenants. Sublease income for closed stores and warehouses is included in selling, general and administrative expense in the accompanying condensed consolidated statements of income and was $155 and $103 for the three months ended February 28, 2026 and March 1, 2025, respectively. We also sublease one location to a licensee. This sublease income is included in other loss, net in the accompanying condensed consolidated statements of income and was $118 and $114 for the three months ended February 28, 2026 and March 1, 2026, respectively.