5. Commitments and Contingencies

Purchase Commitments—At May 2, 2026, we had outstanding purchase orders to acquire merchandise from vendors of $225.4 million. We have an option to cancel these commitments with no notice prior to shipment, except for certain private label, packaging supplies and international purchase orders in which we are obligated to repay contractual amounts upon cancellation.

Litigation—We are involved from time to time in claims, proceedings and litigation arising in the ordinary course of business.
We have made accruals with respect to these matters, where appropriate, which are reflected in our condensed consolidated financial statements. For some matters, the amount of liability is not probable, or the amount cannot be reasonably estimated and therefore accruals have not been made. We may enter into discussions regarding settlement of these matters, and may enter into settlement agreements, if we believe settlement is in the best interest of our shareholders.

On October 14, 2022, former employee Seana Neihart filed a representative action under California’s Private Attorneys General Act, California Labor Code section 2698 et seq (“PAGA”), against us. An answer to the complaint was filed on December 8, 2022. A first amended complaint was filed on February 8, 2023 adding Jessica King as a plaintiff. The lawsuit alleges a series of wage and hour violations under California’s Labor Code. After mediation on April 18, 2025, the parties have entered into a Memorandum of Understanding and reached a settlement in the amount of $2,890,000 that is subject to preliminary and final court approval. The parties anticipate that a motion seeking preliminary approval of the settlement will be filed in the next 30 days.

Insurance Reserves—We use a combination of third-party insurance and self-insurance for a number of risk management activities including workers’ compensation, general liability and employee-related health care benefits. We maintain reserves for our self-insured losses, which are estimated based on actuarial based analysis of historical claims experience. The self-insurance reserve, which is recorded under accrued payroll and payroll taxes in the consolidated balance sheets at May 2, 2026 and January 31, 2026 was $2.6 million and $2.5 million, respectively.