0001193125-23-097982 | S-1 | XBRL Viewer

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Cover	9 Months Ended
Cover	Nov. 26, 2022
Cover [Abstract]
Document Type	S-1
Entity Registrant Name	BED BATH & BEYOND INC.
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Central Index Key	0000886158
Amendment Flag	false

Consolidated Balance Sheets - USD ($) $ in Thousands	Nov. 26, 2022	Feb. 26, 2022	Feb. 27, 2021
Current assets:
Cash and cash equivalents	$ 153,521	$ 439,496	$ 1,352,984
Merchandise inventories	1,436,150	1,725,410	1,671,909
Prepaid expenses and other current assets	288,503	198,248	595,152
Total current assets	1,878,174	2,363,154	3,620,045
Long term investment securities	21,451	19,212	19,545
Property and equipment, net	1,050,526	1,027,387	918,418
Operating lease assets	1,321,665	1,562,857	1,587,101
Other assets	129,610	157,962	311,821
Total assets	4,401,426	5,130,572	6,456,930
Current liabilities:
Current portion of long-term debt	909,303	0
Accounts payable	697,889	872,445	986,045
Accrued expenses and other current liabilities	356,482	529,371	636,329
Merchandise credit and gift card liabilities	295,197	326,465	312,486
Current operating lease liabilities	313,368	346,506	360,061
Total current liabilities	2,572,239	2,074,787	2,294,921
Other liabilities	119,907	102,438	82,279
Operating lease liabilities	1,388,484	1,508,002	1,509,767
Income taxes payable	93,386	91,424	102,664
Long-term debt	1,026,053	1,179,776	1,190,363
Total liabilities	5,200,069	4,956,427	5,179,994
Shareholders' (deficit) equity:
Preferred stock - $0.01 par value; authorized - 1,000 shares; no shares issued or outstanding	0	0	0
Common stock - $0.01 par value; authorized - 900,000 shares; issued 382,339 and 344,146, respectively; outstanding 117,322 and 81,979 shares, respectively	3,823	3,441	3,432
Additional paid-in capital	2,427,739	2,235,894	2,152,135
Retained earnings	8,549,536	9,666,091	10,225,253
Treasury stock, at cost; 265,017 and 262,167 shares, respectively	(11,731,194)	(11,685,267)	(11,048,284)
Accumulated other comprehensive loss	(48,547)	(46,014)	(55,600)
Total shareholders' (deficit) equity	(798,643)	174,145	1,276,936
Total liabilities and shareholders' (deficit) equity	$ 4,401,426	$ 5,130,572	$ 6,456,930

Consolidated Balance Sheets (Parenthetical) - $ / shares	Nov. 26, 2022	Feb. 26, 2022	Feb. 27, 2021
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Preferred stock, shares authorized (in shares)	1,000,000	1,000,000	1,000,000
Preferred stock, shares issued (in shares)	0	0	0
Preferred stock, shares outstanding (in shares)	0	0	0
Common stock, par value (in dollars per share)	$ 0.01	$ 0.01	$ 0.01
Common stock, shares authorized (in shares)	900,000,000	900,000,000	900,000,000
Common stock, shares issued (in shares)	382,339,000	344,146,000	343,241,000
Common stock, shares outstanding (in shares)	117,322,000	81,979,000	109,621,000
Treasury stock (in shares)	265,017,000	262,167,000	233,620,000

Consolidated Statements of Operations - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Nov. 26, 2022	Nov. 27, 2021	Nov. 26, 2022	Nov. 27, 2021	Feb. 26, 2022	Feb. 27, 2021	Feb. 29, 2020
Income Statement [Abstract]
Net sales	$ 1,259,112	$ 1,877,874	$ 4,159,548	$ 5,816,382	$ 7,867,778	$ 9,233,028	$ 11,158,580
Cost of sales	980,249	1,208,954	3,133,111	3,912,699	5,384,287	6,114,947	7,616,920
Gross profit	278,863	668,920	1,026,437	1,903,683	2,483,491	3,118,081	3,541,660
Selling, general and administrative expenses	583,588	697,953	1,855,973	2,009,687	2,692,292	3,224,363	3,732,498
Impairments, including on assets held for sale					36,531	127,341	509,226
Impairments	100,724	1,759	182,941	18,472
Restructuring and transformation initiative expenses	45,484	41,219	123,816	99,400	144,025	102,202	0
Loss on sale of businesses	0	14,100	0	18,221	18,221	1,062	0
Operating loss	(450,933)	(86,111)	(1,136,293)	(242,097)	(407,578)	(336,887)	(700,064)
Interest expense, net	33,527	15,772	68,578	47,893	64,702	76,913	64,789
(Gain) loss on extinguishment of debt	(94,380)	0	(94,380)	376	376	(77,038)	0
Loss before provision for income taxes	(390,080)	(101,883)	(1,110,491)	(290,366)	(472,656)	(336,762)	(764,853)
Provision for income taxes	2,886	174,546	6,300	110,152	86,967	(185,989)	(151,037)
Net loss	$ (392,966)	$ (276,429)	$ (1,116,791)	$ (400,518)	$ (559,623)	$ (150,773)	$ (613,816)
Net loss per share - Basic (in dollars per share)	$ (4.33)	$ (2.78)	$ (13.4)	$ (3.9)	$ (5.64)	$ (1.24)	$ (4.94)
Net loss per share - Diluted (in dollars per share)	$ (4.33)	$ (2.78)	$ (13.4)	$ (3.9)	$ (5.64)	$ (1.24)	$ (4.94)
Weighted average shares outstanding - Basic (in shares)	90,708	99,591	83,342	102,772	99,249	121,446	124,352
Weighted average shares outstanding - Diluted (in shares)	90,708	99,591	83,342	102,772	99,249	121,446	124,352
Dividends declared per share (in dollars per share)					$ 0	$ 0	$ 0.68

Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended		12 Months Ended
	Nov. 26, 2022	Nov. 27, 2021	Nov. 26, 2022	Nov. 27, 2021	Feb. 26, 2022	Feb. 27, 2021	Feb. 29, 2020
Statement of Comprehensive Income [Abstract]
Net loss	$ (392,966)	$ (276,429)	$ (1,116,791)	$ (400,518)	$ (559,623)	$ (150,773)	$ (613,816)
Other comprehensive (loss) income:
Change in temporary impairment of auction rate securities, net of tax	1,092	(186)	1,659	(226)	(251)	(617)	276
Pension adjustment, net of tax	0	(1,786)	0	(1,562)	(1,562)	(1,396)	(4,791)
Reclassification adjustment on settlement of pension plan, net of tax	0	9,938	0	9,938	9,938	1,522	0
Currency translation adjustment	(1,642)	(2,383)	(4,192)	(246)	1,461	9,800	(1,784)
Other comprehensive (loss) income	(550)	5,583	(2,533)	7,904	9,586	9,309	(6,299)
Comprehensive loss	$ (393,516)	$ (270,846)	$ (1,119,324)	$ (392,614)	$ (550,037)	$ (141,464)	$ (620,115)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

Consolidated Statements of Shareholders' (Deficit) Equity - USD ($) $ in Thousands	Total	Cumulative Effect, Period of Adoption, Adjustment	Performance Stock Units	Common Stock	Common Stock Restricted Stock Units (RSUs)	Common Stock Performance Stock Units	Additional Paid- in Capital	Additional Paid- in Capital Restricted Stock Units (RSUs)	Additional Paid- in Capital Performance Stock Units	Retained Earnings	Retained Earnings Cumulative Effect, Period of Adoption, Adjustment	Treasury Stock	Accumulated Other Comprehensive Loss
Balance (in shares) at Mar. 02, 2019				342,582,000
Balance (in shares) at Mar. 02, 2019												(210,349,000)
Balance at Mar. 02, 2019	$ 2,560,331	$ (40,700)		$ 3,426			$ 2,118,673			$ 11,112,887	$ (40,700)	$ (10,616,045)	$ (58,610)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(613,816)									(613,816)
Other comprehensive (loss) income, net of tax	(6,299)												(6,299)
Issuance of restricted shares, net (in shares)				370,000
Issuance of restricted shares, net				$ 4			(4)
Vesting of stock units (in shares)				580,000
Vesting of stock units				$ 5			(5)
Stock-based compensation expense, net	46,159						46,159
Director fees paid in stock (in shares)				12,000
Director fees paid in stock	169						169
Repurchase of common stock, including fees (in shares)												(6,806,000)
Repurchase of common stock, including fees	(99,710)											$ (99,710)
Dividends declared	(83,545)									(83,545)
Shares sold under employee stock option plans, net of tax (in shares)				139,000
Shares sold under employee stock option plans, net of tax	2,346			$ 1			2,345
Balance (in shares) at Feb. 29, 2020				343,683,000
Balance (in shares) at Feb. 29, 2020												(217,155,000)
Balance at Feb. 29, 2020	1,764,935			$ 3,436			2,167,337			10,374,826		$ (10,715,755)	(64,909)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(150,773)									(150,773)
Other comprehensive (loss) income, net of tax	9,309												9,309
Dividends forfeited	1,200									1,200
Vesting of stock units (in shares)				344,000
Vesting of stock units				$ 4			(4)
Stock-based compensation expense, net	32,344						32,344
Accelerated share repurchase program (in shares)												(15,833,000)
Accelerated share repurchase program	(375,000)						(47,550)					$ (327,450)
Repurchase of common stock, including fees (in shares)												(632,000)
Repurchase of common stock, including fees	$ (5,079)											$ (5,079)
Forfeiture of restricted shares, net (in shares)				(786,000)
Forfeiture of restricted shares, net				$ (8)			8
Balance (in shares) at Feb. 27, 2021	109,621,000			343,241,000
Balance (in shares) at Feb. 27, 2021												(233,620,000)
Balance at Feb. 27, 2021	$ 1,276,936			$ 3,432			2,152,135			10,225,253		$ (11,048,284)	(55,600)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(400,518)									(400,518)
Other comprehensive (loss) income, net of tax	7,904												7,904
Dividends forfeited	421									421
Issuance of restricted shares, net (in shares)				618,000
Issuance of restricted shares, net				$ 6			(6)
Vesting of stock units (in shares)						274
Vesting of stock units						$ 3			$ (3)
Stock-based compensation expense, net	27,655						27,655
Accelerated share repurchase program (in shares)												(200,000)
Accelerated share repurchase program							47,550					$ (47,550)
Director fees paid in stock (in shares)				7,000
Director fees paid in stock	138						138
Repurchase of common stock, including fees (in shares)												(13,982,000)
Repurchase of common stock, including fees	(358,923)											$ (358,923)
Balance (in shares) at Nov. 27, 2021				344,140,000
Balance (in shares) at Nov. 27, 2021												(247,802,000)
Balance at Nov. 27, 2021	$ 553,613			$ 3,441			2,227,469			9,825,156		$ (11,454,757)	(47,696)
Balance (in shares) at Feb. 27, 2021	109,621,000			343,241,000
Balance (in shares) at Feb. 27, 2021												(233,620,000)
Balance at Feb. 27, 2021	$ 1,276,936			$ 3,432			2,152,135			10,225,253		$ (11,048,284)	(55,600)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(559,623)									(559,623)
Other comprehensive (loss) income, net of tax	9,586												9,586
Dividends forfeited	461									461
Issuance of restricted shares, net (in shares)				624,000
Issuance of restricted shares, net				$ 6			(6)
Vesting of stock units (in shares)				274,000
Vesting of stock units				$ 3			(3)
Stock-based compensation expense, net	36,080						36,080
Accelerated share repurchase program (in shares)												(200,000)
Accelerated share repurchase program							47,550					$ (47,550)
Director fees paid in stock (in shares)				7,000
Director fees paid in stock	138						138
Repurchase of common stock, including fees (in shares)												(28,347,000)
Repurchase of common stock, including fees	$ (589,433)											$ (589,433)
Balance (in shares) at Feb. 26, 2022	81,979,000			344,146,000
Balance (in shares) at Feb. 26, 2022												(262,167,000)
Balance at Feb. 26, 2022	$ 174,145			$ 3,441			2,235,894			9,666,091		$ (11,685,267)	(46,014)
Balance (in shares) at Aug. 28, 2021				343,596,000
Balance (in shares) at Aug. 28, 2021												(242,536,000)
Balance at Aug. 28, 2021	934,234			$ 3,436			2,218,400			10,101,522		$ (11,335,845)	(53,279)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(276,429)									(276,429)
Other comprehensive (loss) income, net of tax	5,583												5,583
Dividends forfeited	63									63
Issuance of restricted shares, net (in shares)				270,000
Issuance of restricted shares, net				$ 2			(2)
Vesting of stock units (in shares)						274,000
Vesting of stock units						$ 3			(3)
Stock-based compensation expense, net	9,074						9,074
Repurchase of common stock, including fees (in shares)												(5,266,000)
Repurchase of common stock, including fees	(118,912)											$ (118,912)
Balance (in shares) at Nov. 27, 2021				344,140,000
Balance (in shares) at Nov. 27, 2021												(247,802,000)
Balance at Nov. 27, 2021	$ 553,613			$ 3,441			2,227,469			9,825,156		$ (11,454,757)	(47,696)
Balance (in shares) at Feb. 26, 2022	81,979,000			344,146,000
Balance (in shares) at Feb. 26, 2022												(262,167,000)
Balance at Feb. 26, 2022	$ 174,145			$ 3,441			2,235,894			9,666,091		$ (11,685,267)	(46,014)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(1,116,791)									(1,116,791)
Other comprehensive (loss) income, net of tax	(2,533)												(2,533)
Dividends forfeited	236									236
Issuance of restricted shares, net (in shares)				264,000
Issuance of restricted shares, net				$ 2			(2)
Vesting of stock units (in shares)			640,000		1,063,000	177,000
Vesting of stock units					$ 11	$ 2		$ (11)	(2)
Stock-based compensation expense, net	19,511						19,511
Director fees paid in stock (in shares)				11,000
Director fees paid in stock	145						145
Issuance of common stock and At-the-Market offering, net of offering costs (in shares)				36,678,000
Issuance of common stock and At-the-Market offering, net of offering costs	172,571			$ 367			172,204
Repurchase of common stock, including fees (in shares)												(2,850,000)
Repurchase of common stock, including fees	$ (45,927)											$ (45,927)
Balance (in shares) at Nov. 26, 2022	117,322,000			382,339,000
Balance (in shares) at Nov. 26, 2022												(265,017,000)
Balance at Nov. 26, 2022	$ (798,643)			$ 3,823			2,427,739			8,549,536		$ (11,731,194)	(48,547)
Balance (in shares) at Aug. 27, 2022				345,053,000
Balance (in shares) at Aug. 27, 2022												(264,691,000)
Balance at Aug. 27, 2022	(577,654)			$ 3,450			2,253,039			8,942,368		$ (11,728,514)	(47,997)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Net loss	(392,966)									(392,966)
Other comprehensive (loss) income, net of tax	(550)												(550)
Dividends forfeited	134									134
Issuance of restricted shares, net (in shares)				(65,000)
Issuance of restricted shares, net				$ (1)			1
Vesting of stock units (in shares)					496,000	177,000
Vesting of stock units					$ 5	$ 2		$ (5)	$ (2)
Stock-based compensation expense, net	2,502						2,502
Issuance of common stock and At-the-Market offering, net of offering costs (in shares)				36,678,000
Issuance of common stock and At-the-Market offering, net of offering costs	172,571			$ 367			172,204
Repurchase of common stock, including fees (in shares)												(326,000)
Repurchase of common stock, including fees	$ (2,680)											$ (2,680)
Balance (in shares) at Nov. 26, 2022	117,322,000			382,339,000
Balance (in shares) at Nov. 26, 2022												(265,017,000)
Balance at Nov. 26, 2022	$ (798,643)			$ 3,823			$ 2,427,739			$ 8,549,536		$ (11,731,194)	$ (48,547)

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended		12 Months Ended
	Nov. 26, 2022	Nov. 27, 2021	Feb. 26, 2022	Feb. 27, 2021	Feb. 29, 2020
Cash Flows from Operating Activities:
Net loss	$ (1,116,791)	$ (400,518)	$ (559,623)	$ (150,773)	$ (613,816)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	231,019	214,742	293,626	340,912	342,511
Impairments	182,941	18,472
Impairments, including on assets held for sale			36,531	127,341	509,226
Stock-based compensation	18,746	26,875	35,061	31,594	45,676
Deferred income taxes	0	126,437	125,711	148,741	(145,543)
Loss on sale of businesses	0	18,221	18,221	1,062	0
(Gain) loss on debt extinguishment	(94,380)	376	376	(77,038)	0
Loss on sale leaseback transaction			0	0	27,357
Other	3,511	(7,516)	(8,298)	(396)	(3,446)
Decrease (increase) in assets:
Merchandise inventories	284,984	(240,522)	(53,339)	64,947	506,334
Other current assets	(34,512)	60,582	387,746	(387,172)	(4,781)
Other assets	6,059	(82)	607	1,519	239
(Decrease) increase in liabilities:
Accounts payable	(128,792)	(72,408)	(132,785)	168,556	(124,206)
Accrued expenses and other current liabilities	(156,075)	20,385	(100,356)	15,538	61,864
Merchandise credit and gift card liabilities	(30,724)	1,551	13,981	(12,110)	1,154
Income taxes payable	2,300	(1,160)	(11,257)	54,958	(22,783)
Operating lease assets and liabilities, net	(52,657)	(16,707)	(14,162)	(32,813)	(2,899)
Other liabilities	(5,642)	(13,468)	(14,186)	(26,758)	14,054
Net cash used in operating activities	(890,013)	(264,740)	17,854	268,108	590,941
Cash Flows from Investing Activities:
Purchases of held-to-maturity investment securities	0	(29,997)	(29,997)	0	(443,500)
Redemption of held-to-maturity investment securities	0	30,000	30,000	386,500	545,000
Net proceeds from sales of businesses			0	534,457	0
Net proceeds from sale of property	0	5,000	5,000	0	0
Proceeds from sale-leaseback transaction			0	0	267,277
Capital expenditures	(322,094)	(232,470)	(354,185)	(183,077)	(277,401)
Net cash used in investing activities	(322,094)	(227,467)	(349,182)	737,880	91,376
Cash Flows from Financing Activities:
Borrowings of long-term debt	1,225,000	0	0	236,400	0
Repayments of long-term debt	(300,000)	(11,355)	(11,360)	(457,827)	0
Repayments of finance leases	(1,849)	0	(1,033)	0	0
Repurchase of common stock, including fees	(45,927)	(358,923)	(589,433)	(332,529)	(99,710)
Prepayment under share repurchase agreement			0	(47,550)	0
Issuance of common stock and At-the-Market offering, net of offering costs	118,975	0
Payment of dividends	(329)	(767)	(749)	(23,108)	(85,482)
Payment of Exchange Offer costs	(7,992)	0
Payment of deferred financing fees	(19,479)	(3,443)	(3,443)	(7,690)	0
Proceeds from exercise of stock options			0	0	2,346
Net cash provided by (used in) financing activities	968,399	(374,488)	(606,018)	(632,304)	(182,846)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(1,517)	(88)	1,006	5,075	(977)
Net decrease in cash, cash equivalents and restricted cash	(245,225)	(866,783)	(936,340)	383,574	493,679
Change in cash balances classified as held-for-sale			0	4,815	(4,815)
Net (decrease) increase in cash, cash equivalents and restricted cash			(936,340)	378,759	498,494
Cash, cash equivalents and restricted cash:
Beginning of period	470,884	1,407,224	1,407,224	1,023,650	529,971
End of period	$ 225,659	$ 540,441	$ 470,884	$ 1,407,224	$ 1,023,650

Basis of Presentation

9 Months Ended

Nov. 26, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Basis of Presentation

1)	BASIS OF PRESENTATION

The accompanying consolidated financial statements have been prepared without audit. In the opinion of management, the accompanying consolidated financial statements contain all adjustments (consisting of only normal recurring accruals and elimination of intercompany balances and transactions) necessary to present fairly the financial position of Bed Bath & Beyond Inc. and subsidiaries (the “Company”) as of November 26, 2022 and February 26, 2022 (audited) and the results of its operations, shareholders’ (deficit) equity, and comprehensive loss for the three and nine months ended November 26, 2022 and November 27, 2021 and its cash flows for the nine months ended November 26, 2022 and November 27, 2021.

The accompanying unaudited consolidated financial statements are presented in accordance with the requirements for Form

10-Q

and consequently do not include all the disclosures normally required by U.S. generally accepted accounting principles (“GAAP”). Reference should be made to the Company’s Annual Report on Form

10-K

for the fiscal year ended February 26, 2022 for additional disclosures, including a summary of the Company’s significant accounting policies, and to subsequently filed Form

8-Ks.

We account for our operations as one North American Retail reporting segment. Net sales outside of the U.S. for the Company were not material for the three and nine months ended November 26, 2022 and November 27, 2021. As the Company operates in the retail industry, its results of operations are affected by general economic conditions and consumer spending habits.

Summary of Significant Accounting Policies and Related Matters

12 Months Ended

Feb. 26, 2022

Accounting Policies [Abstract]

Summary of Significant Accounting Policies and Related Matters

1.	SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES AND RELATED MATTERS

A.	Nature of Operations

Bed Bath & Beyond Inc. and subsidiaries (the “Company”) is an omni-channel retailer that makes it easy for its customers to feel at home. The Company sells a wide assortment of merchandise in the Home, Baby, Beauty & Wellness markets and operates under the names Bed Bath & Beyond (“BBB”), buybuy BABY (“BABY”), and Harmon, Harmon Face Values, or Face Values (collectively, “Harmon”). Customers can purchase products either

in-store,

online, with a mobile device or through a customer contact center. The Company generally has the ability to have customer purchases picked up

in-store,

curbside or shipped direct to the customer from the Company’s distribution facilities, stores or vendors. The Company also operates Decorist (“Decorist”), an online interior design platform that provides personalized home design services. In addition, the Company is a partner in a joint venture which operates retail stores in Mexico under the name Bed Bath & Beyond.

We offer a broad assortment of national brands and a growing assortment of proprietary Owned Brand merchandise—including

eight

new Owned Brands launched in Fiscal 2021—in key destination categories including bedding, bath, kitchen food prep, home organization, indoor décor, baby and personal care.

We account for o

operations as one North American Retail reporting segment. In Fiscal 2020 and 2019, we accounted for our operations as

two

operating segments: North American Retail and Institutional Sales, the latter of which was divested in October 2020, did not meet the quantitative thresholds under GAAP and, therefore, was not a reportable segment. Net sales outside of the U.S. for the Company were not material for Fiscal 2021, 2020, and 2019. As the Company operates in the retail industry, its results of operations are affected by general economic conditions and consumer spending habits.

B.	Fiscal Year

The Company’s Fiscal year is comprised of the 52 or

53-week

period ending on the Saturday nearest February 28th. Accordingly, Fiscal 2021, Fiscal 2020, and Fiscal 2019 represented 52 weeks and ended on February 26, 2022, February 27, 2021, and February 29, 2020, respectively.

C.	Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries. The Company accounts for its investment in the joint venture referred to above under the equity method.

All significant intercompany balances and transactions have been eliminated in consolidation.

D.	Recent Accounting Pronouncements

In March 2020, the Financial Accounting Standards Board (“FASB”) issued ASU

2020-04

Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. The amendment provides optional guidance for a limited period of time to ease the potential burden in accounting for (or recognizing the effects of) reference rate reform on contracts, hedging relationships and other transactions that reference LIBOR. These updates are effective immediately and may be applied prospectively to contract modifications made and hedging relationships entered into or evaluated on or before December 31, 2022. The Company is currently evaluating its contracts and the optional expedients provided by this update, but does not expect the adoption of this guidance to have a material impact to the financial statements.

In December 2019, the FASB issued ASU

No. 2019-12,

Income Taxes, to simplify the accounting for income taxes. The guidance eliminates certain exceptions related to the approach for intraperiod tax allocations, the

methodology for calculating income taxes in an interim period, and the recognition of deferred tax liabilities for outside basis differences related to changes in ownership of equity method investments and foreign subsidiaries. The guidance also simplifies aspects of accounting for franchise taxes, enacted changes in tax laws or rates and clarifies the accounting for transactions that result in a

step-up

in the tax basis of goodwill. The standard is effective for fiscal years beginning after December 15, 2020 and interim periods within those fiscal years with early adoption permitted. The Company adopted this standard in Fiscal 2021; upon adoption, this guidance did not have a material impact on its consolidated financial statements.

E.	Use of Estimates

The preparation of consolidated financial statements in conformity with U.S. generally accepted accounting principles requires the Company to establish accounting policies and to make estimates and judgments that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates on historical experience and on other assumptions that it believes to be relevant under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. In particular, judgment is used in areas such as inventory valuation, impairment of long-lived assets, impairment of auction rate securities, goodwill and other indefinite lived intangible assets, accruals for self-insurance, litigation, store opening, expansion, relocation and closing costs, the provision for sales returns, vendor allowances, stock-based compensation and income and certain other taxes. Actual results could differ from these estimates.

F.	Cash and Cash Equivalents

The Company considers all highly liquid instruments purchased with original maturities of three months or less to be cash equivalents. Included in cash and cash equivalents are credit and debit card receivables from banks, which typically settle within five business days, of $

47.9

million and $

64.0

million as of February 26, 2022 and February 27, 2021, respectively.

Short-term restricted cash was

zero

and $5.0 million as of February 26, 2022 and February 27, 2021, respectively, and is included in prepaid expenses and other current assets on the consolidated balance sheet. Long-term restricted cash of $

31.4

million and $

49.2

million as of February 26, 2022 and February 27, 2021, respectively, is included in other long-term assets on the consolidated balance sheet.

G.	Investment Securities

Investment securities consist primarily of auction rate securities, which are securities with interest rates that reset periodically through an auction process, and U.S. Treasury Bills, when outstanding. The U.S. Treasury Bills with original maturities of greater than three months were classified as short term

held-to-maturity

securities and stated at their amortized cost which approximated fair value. Auction rate securities are classified as

available-for-sale

and are stated at fair value, which had historically been consistent with cost or par value due to interest rates which reset periodically, typically every 7, 28 or 35 days. As a result, there generally were no cumulative gross unrealized holding gains or losses relating to these auction rate securities. However, during the global financial crisis of 2008 the auction process for the Company’s auction rate securities failed and continues to fail. These failed auctions result in a lack of liquidity in the securities and affect their estimated fair values at February 26, 2022 and February 27, 2021, but do not affect the underlying collateral of the securities (see “Fair Value Measurements,” Note 4 and “Investment Securities,” Note 5). All income from these investments is recorded as interest income.

Those investment securities which the Company has the ability and intent to hold until maturity are classified as

held-to-maturity

investments and are stated at amortized cost.

Premiums are amortized and discounts are accreted over the life of the security as adjustments to interest income using the effective interest method. Dividend and interest income are recognized when earned.

H.	Inventory Valuation

Merchandise inventories are stated at the lower of cost or market. Inventory costs are primarily calculated using the weighted average retail inventory method.

Under the retail inventory method, the valuation of inventories at cost and the resulting gross margins are calculated by applying a

cost-to-retail

ratio to the retail values of inventories. The inputs associated with determining the

cost-to-retail

ratio include: merchandise purchases, net of returns to vendors, discounts and volume and incentive rebates; inbound freight expenses; and import charges, including duties, insurance and commissions.

The retail inventory method contains certain management judgments that may affect inventory valuation. At any one time, inventories include items that have been written down to the Company’s best estimate of their realizable value. Judgment is required in estimating realizable value and factors considered are the age of merchandise, anticipated demand based on factors such as customer preferences and fashion trends, and anticipated changes in product assortment (including related to the launch of Owned Brands) as well as anticipated markdowns to reduce the price of merchandise from its recorded retail price to a retail price at which it is expected to be sold in the future. These estimates are based on historical experience and current information about future events which are inherently uncertain. Actual realizable value could differ materially from this estimate based upon future customer demand or economic conditions, including uncertainty related to the ongoing

COVID-19

pandemic (see “Impact of the

COVID-19

Pandemic,” Note 2).

The Company estimates its reserve for inventory shrinkage throughout the year based on historical shrinkage and any current trends, if applicable. Actual shrinkage is recorded at fiscal year end based upon the results of the Company’s physical inventory counts for locations at which counts were conducted. For locations where physical inventory counts were not conducted in the fiscal year, an estimated shrink reserve is recorded based on historical shrinkage and any current trends, if applicable. Historically, the Company’s shrinkage has not been volatile.

The Company accrues for merchandise in transit once it takes legal ownership and title to the merchandise; as such, an estimate for merchandise in transit is included in the Company’s merchandise inventories.

I.	Property and Equipment

Property and equipment are stated at cost and are depreciated primarily using the straight-line method over the estimated useful lives of the assets (40 years for buildings; 5 to 20 years for furniture, fixtures and equipment; and 3 to 10 years for computer equipment and software). Leasehold improvements are amortized using the straight-line method over the lesser of their estimated useful life or the life of the lease. Depreciation expense is primarily included within selling, general and administrative expenses. (see “Property and Equipment,” Note 6).

The cost of maintenance and repairs is charged to earnings as incurred; significant renewals and betterments are capitalized. Maintenance and repairs amounted to $80.0 million, $117.7 million, and $133.9 million for Fiscal 2021, 2020, and 2019, respectively.

J.	Impairment of Long-Lived Assets

an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. Assets to be disposed of would be separately presented in the balance sheet and reported at the lower of the carrying amount or fair value less costs to sell, and are no longer depreciated. The assets and liabilities of a disposal group classified as held for sale are separately presented in the appropriate asset and liability sections of the balance sheet (see “Assets Held for Sale and Divestitures,” Note 16). In Fiscal 2021 and Fiscal 2020, the Company recorded

non-cash

pre-tax

impairment charges of $30.8 million and $92.9 million, respectively, for certain store-level assets, including leasehold improvements and operating lease assets. In the future, if events or market conditions affect the estimated fair value to the extent that a long-lived asset is impaired, the Company will adjust the carrying value of these long-lived assets in the period in which the impairment occurs.

K	Goodwill and Other Indefinite Lived Intangible Assets

Included within other assets in the accompanying consolidated balance sheets as of February 26, 2022 and February 27, 2021, respectively, are $16.3 million and $22.0 million for indefinite lived tradenames and trademarks.

The Company reviews its intangible assets that have indefinite lives for impairment annually as of the end of the fiscal year or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions

marketplace

participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates and terminal growth rates, and other assumptions, to estimate the fair value of goodwill and indefinite lived intangible assets. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

Other indefinite lived intangible assets were recorded as a result of acquisitions and primarily consist of tradenames. The Company values its tradenames using a relief-from-royalty approach, which assumes the value of the tradename is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the tradename and instead licensed the tradename from another company. For the fiscal years ended February 26, 2022, February 27, 2021, and February 29, 2020, the Company completed a quantitative impairment analysis for certain other indefinite lived intangible assets, by comparing the fair value of the tradenames to their carrying value and recognized

non-cash

pre-tax

tradename impairment charges of $5.7 million, $35.1 million, and $41.8 million, respectively, within

goodwill

and other impairments in the consolidated statement of operations. As of February 26, 2022, for the remaining other indefinite lived intangible assets, the Company assessed qualitative factors in order to determine whether any events and circumstances existed which indicated that it was more likely than not that the fair value of these other indefinite lived assets did not exceed their carrying values and concluded no such events or circumstances existed which would require an impairment test be performed. In the future, if events or market conditions affect the estimated fair value to the extent that an asset is impaired, the Company will adjust the carrying value of these assets in the period in which the impairment occurs.

As of June 1, 2019, the Company completed a quantitative impairment analysis of goodwill related to its reporting units by comparing the fair value of a reporting unit with its carrying amount. The Company performed a discounted cash flow analysis and market multiple analysis for each reporting unit. Based upon the analysis performed, the Company recognized

non-cash

pre-tax

goodwill impairment charges of $391.1 million for the North American Retail reporting unit. Cumulatively, the Company has recognized

non-cash

pre-tax

goodwill impairment charges of $676.2 million and $40.1 million for the North American Retail and Institutional Sales reporting units, respectively. The Institutional Sales unit was divested in October 2020. As of February 26, 2022 and February 27, 2021, the Company did not have any goodwill recorded on its consolidated balance sheet.

L.	Self-Insurance

The Company utilizes a combination of insurance and self-insurance for a number of risks including workers’ compensation, general liability, cyber liability, property liability, automobile liability and employee related health care benefits (a portion of which is paid by its employees). Liabilities associated with the risks that the Company retains are not discounted and are estimated by considering historical claims experience, demographic factors, severity factors and other actuarial assumptions. Although the Company’s claims experience has not displayed substantial volatility in the past, actual experience could materially vary from its historical experience in the future. Factors that affect these estimates include but are not limited to: inflation, the number and severity of claims and regulatory changes. In the future, if the Company concludes an adjustment to self-insurance accruals is required, the liability will be adjusted accordingly.

Beginning in the fourth quarter of Fiscal 2020, the Company began insuring portions of its workers’ compensation and medical insurance through a wholly owned captive insurance subsidiary (the “Captive”) to enhance its risk financing strategies. The Captive is subject to regulations in Vermont, including those relating to its levels of liquidity and other requirements. The Captive was in compliance with all regulations as of February 26, 2022.

M.	Shareholders’ Equity

The Company has authorization to make repurchases of its common shares from time to time in the open market or through other programs approved by the Board of Directors pursuant to existing rules and regulations (see “Shareholders’ Equity,” Note 14).

N.	Fair Value of Financial Instruments

The Company’s financial instruments include cash and cash equivalents, investment securities, accounts payable, long term debt and certain other liabilities. The Company’s investment securities consist primarily of U.S. Treasury securities, which are stated at amortized cost, and auction rate securities consisting of preferred shares of closed end municipal bond funds, which are stated at their approximate fair value. The book value of the financial instruments, excluding the Company’s long term debt, is representative of their fair values (see “Fair Value Measurements,” Note 4).

Leases

The Company determines if an arrangement is a lease or contains a lease at the inception of the contract. The Company’s leases generally contain fixed and variable components. Variable components are primarily contingent rents based upon store sales exceeding stipulated amounts. Lease agreements may also include

non-lease

components, such as certain taxes, insurance and common area maintenance, which the Company combines with the lease component to account for both as a single lease component. Lease liabilities, which represent the Company’s obligation to make lease payments arising from the lease, and corresponding

right-of-use

assets, which represent the Company’s right to use an underlying asset for the lease term, are recognized at the commencement date of the lease, which is typically the date the Company obtains possession of the leased premises, based on the present value of fixed future payments over the lease term. The Company utilizes the lease term for which it is reasonably certain to use the underlying asset, including consideration of options to extend or terminate the lease. Incentives received from landlords are recorded as a reduction to the lease

right-of-use

assets. The Company does not recognize lease

right-of-use

assets and corresponding lease liabilities for leases with initial terms of 12 months or less.

The Company calculates the present value of future payments using the discount rate implicit in the lease, if available, or its incremental borrowing rate. The incremental borrowing rate is the rate of interest that a lessee would have to pay to borrow on a collateralized basis over a similar term at an amount equal to the lease

payments in a similar economic environment. The Company determined discount rates based on the rates of its unsecured borrowings, which are then adjusted for the appropriate lease term and effects of full collateralization. In determining the Company’s operating lease assets and operating lease liabilities, the Company applied these incremental borrowing rates to the minimum lease payments within each lease agreement.

For operating leases, lease expense relating to fixed payments is recognized on a straight-line basis over the lease term and lease expense relating to variable payments is expensed as incurred. For finance leases, the amortization of the asset is recognized over the shorter of the lease term or useful life of the underlying asset (see “Leases,” Note 10).

P.	Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets in the accompanying consolidated balance sheets as of February 26, 2022 and February 27, 2021, respectively, are $198.2 million and $595.2 million, which includes income tax receivables as of February 26, 2022 and February 27, 2021 of $26.5 million and $318.1 million, respectively (see “Provision for Income Taxes,” Note 8).

Q.	Revenue Recognition

Sales are recognized upon purchase by customers at the Company’s retail stores or upon

delivery

for products purchased from its websites. The value of

point-of-sale

coupons and

point-of-sale

rebates that result in a reduction of the price paid by the customer are recorded as a reduction of sales. Shipping and handling fees that are billed to a customer in a sale transaction are recorded in sales. Taxes, such as sales tax, use tax and value added tax, are not included in sales.

Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards have no provisions for reduction in the value of unused card balances over defined time periods and have no expiration dates. In Fiscal 2021 and Fiscal 2020, the Company recognized net sales for gift card and merchandise credit redemptions of approximately $72.3 million and $98.0 million, which were included in merchandise credit and gift card liabilities on the consolidated balance sheet as of February 27, 2021 and February 29, 2020, respectively.

required

due to material changes in the returns activity, the liability for estimated returns and the corresponding right of return asset will be adjusted accordingly. As of February 26, 2022 and February 27, 2021, the liability for estimated returns of $23.6 million and $36.2 million is included in accrued expenses and other current liabilities and the corresponding right of return asset for merchandise of $14.6 million and $23.4 million, respectively, is included in

prepaid

expenses and other current assets, respectively.

The Company sells a wide assortment of domestics merchandise and home furnishings. Domestics merchandise includes categories such as bed linens and related items, bath items and kitchen textiles. Home furnishings include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings (including furniture and wall décor), consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for approximately 37.4% and 62.6% of net sales, respectively, for Fiscal 2021, 34.7% and 65.3% of net sales, respectively, for Fiscal 2020 and 35.2% and 64.8% of net sales, respectively, for

Fiscal

2019.

R.	Cost of Sales

Cost of sales includes the cost of merchandise, buying costs and costs of the Company’s distribution network including inbound freight charges, import charges (including duties), distribution facility costs, receiving costs, internal transfer costs and shipping and handling costs.

S.	Vendor Allowances

The Company receives allowances from vendors in the normal course of business for various reasons including direct cooperative advertising, purchase volume and reimbursement for other expenses. Annual terms for each allowance include the basis for earning the allowance and payment terms, which vary by agreement. All vendor allowances are recorded as a reduction of inventory cost, except for direct cooperative advertising allowances which are specific, incremental and identifiable. The Company recognizes purchase volume allowances as a reduction of the cost of inventory in the quarter in which milestones are achieved. Advertising costs were reduced

direct cooperative allowances of $35.8 million, $28.9 million, and $30.9 million for Fiscal 2021, 2020, and 2019, respectively.

T.	Store Opening, Expansion, Relocation and Closing Costs

Store opening, expansion, relocation and closing costs, including markdowns, asset residual values and projected occupancy costs, are charged to earnings as incurred.

U.	Advertising Costs

Advertising expenses related to direct response advertising are expensed on the first day of the direct response advertising event. All other advertising expenses associated with store advertising are charged to earnings as incurred. Net advertising costs amounted to $407.1 million, $347.8 million, and $478.5 million for Fiscal 2021, 2020, and 2019, respectively.

V.	Stock-Based Compensation

The Company measures all employee stock-based compensation awards using a fair value method and

records

such expense, net of estimated forfeitures, in its consolidated financial statements. The Company’s stock-based compensation relates to restricted stock awards, stock options, restricted stock units and performance stock units. The Company’s restricted stock awards are considered nonvested share awards (see “Stock-Based Compensation,” Note 15).

W.	Income Taxes

The Company files a consolidated federal income tax return. Income tax returns are also filed with each taxable jurisdiction in which the Company conducts business.

The Company accounts for its income taxes using the asset and liability method. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to the differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating loss and tax credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the year in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in earnings in the period that includes the enactment date.

In assessing the recoverability of its deferred tax assets, the Company evaluates the available objective positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit use of existing deferred tax assets in each taxpaying jurisdiction. For any deferred tax asset in excess of the amount for which it is more likely than not that the Company will realize a benefit, a valuation

allowance is established. A valuation allowance is a

non-cash

charge, and does not limit the Company’s ability to utilize its deferred tax assets, including its ability to utilize tax loss and credit carryforward amounts against future taxable income.

On December 22, 2017, the U.S. government enacted comprehensive tax legislation commonly referred to as the Tax Act. The Tax Act included a mandatory

one-time

tax on accumulated earnings of foreign subsidiaries, and as a result, all previously unremitted earnings for which no U.S. deferred tax liability had been previously accrued has now been subject to U.S. tax. Notwithstanding the U.S. taxation of these amounts, the Company intends to continue to reinvest the unremitted earnings of its Canadian subsidiary. Accordingly, no additional provision has been made for U.S. or additional

non-U.S.

taxes with respect to these earnings, except for the transition tax resulting from the Tax Act. In the event of repatriation to the U.S., it is expected that such earnings would be subject to

non-U.S.

withholding taxes offset, in whole or in part, by U.S. foreign tax credits.

The Company recognizes the tax benefit from an uncertain tax position only if it is at least more likely than not that the tax position will be sustained on examination by the taxing authorities based on the technical merits of the position. The tax benefits recognized in the financial statements from such a position are measured based on the largest benefit that has a greater than fifty percent likelihood of being realized upon settlement with the taxing authorities.

Judgment is required in determining the provision for income and other taxes and related accruals, and deferred tax assets and liabilities. In the ordinary course of business, there are transactions and calculations where the ultimate tax outcome is uncertain. Additionally, the Company’s various tax returns are subject to audit by various tax authorities. Although the Company believes that its estimates are reasonable, actual results could differ from these estimates (see “Provision for Income Taxes”, Note 8).

X.	Earnings per Share

The Company presents earnings per share on a basic and diluted basis. Basic earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding. Diluted earnings per share is computed by dividing net earnings by the weighted average number of shares outstanding, including the dilutive effect of stock-based awards as calculated under the treasury stock method.

Stock-based awards of approximately 2.9 million, 2.4 million, and 5.4 million shares were excluded from the computation of diluted earnings per share as the effect would be anti-dilutive for Fiscal 2021, 2020, and 2019, respectively.

Liquidity and Going Concern

9 Months Ended

Nov. 26, 2022

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Liquidity and Going Concern

2)	LIQUIDITY AND GOING CONCERN

The Company’s net cash used in operating activities was $307.6 million and $890.0 million for the three and nine months ended November 26, 2022. Cash, cash equivalents and restricted cash were $225.7 million as of November 26, 2022. On or around January 13, 2023, certain events of default were triggered under the Company’s Credit Facilities (as defined below) as a result of the Company’s failure to prepay an overadvance and satisfy a financial covenant, among other things. As a result of the continuance of such events of default, on January 25, 2023, the administrative agent under the Amended Credit Agreement notified the Company that (i) the principal amount of all outstanding loans under the Credit Facilities, together with accrued interest thereon, the FILO Applicable Premium (as defined in the Amended Credit Agreement) and all fees (including, for the avoidance of doubt, any break funding payments) and other obligations of the Company accrued under the Amended Credit Agreement, are due and payable immediately, (ii) the Company is required, effective immediately, to cash collateralize letter of credit obligations under the Credit Facilities, and (iii) effective as of January 25, 2023, all outstanding loans and obligations under the Credit Facilities shall bear interest at an additional default rate of 2% per annum. As a result of these events of default, the Company classified its outstanding borrowings under its asset-based revolving credit facility (the “ABL Facility) and its FILO Facility as current in the consolidated balance sheet as of November 26, 2022. The Company’s outstanding borrowings under its ABL Facility and FILO Facility were $550.0 million and $375.0 million, respectively, as of November 26, 2022. In addition, the Company had $186.2 million in letters of credit outstanding under its ABL Facility as of November 26, 2022. The Company also had $1.030 billion in senior notes (excluding deferred financing costs) outstanding as of November 26, 2022. For information regarding the Company’s borrowings, see Note 12.

At this time, the Company does not have sufficient resources to repay the amounts under the Credit Facilities and this will lead the Company to consider all strategic alternatives, including restructuring its debt under the U.S. Bankruptcy Code. The Company is undertaking a number of actions in order to improve its financial position and stabilize its results of operations including but not limited to, cost cutting, lowering capital expenditures, and

reducing its store footprint including related distribution centers. In addition, the Company will continue to seek reductions in rental obligations with landlords in its determination of the appropriate footprint, seek additional debt or equity capital, reduce or delay the Company’s business activities and strategic initiatives, or sell assets. These measures may not be successful.

The Company’s key drivers of cash flows are sales, management of inventory levels, vendor payment terms, and capital expenditures. Macro and micro economic challenges increased since the end of the second quarter of fiscal 2022 causing an acceleration of vendor payment terms and credit line constraints. This led to lower inventory receipts than anticipated in the third quarter of fiscal 2022, resulting in lower than required stock levels ahead of the holiday selling season. Additionally, certain service providers and vendors required prepayments.

Based on recurring losses from operations and negative cash flows from operations for the nine months ended November 26, 2022 as well as current cash and liquidity projections, the Company has concluded that there is substantial doubt about the Company’s ability to continue as a going concern for the next 12 months. The consolidated financial statements do not include any adjustments that may result from the outcome of this going concern uncertainty.

Impact of COVID-19 Pandemic

12 Months Ended

Feb. 26, 2022

Impact of COVID-19 Pandemic [Abstract]

Impact of COVID-19 Pandemic

2.	IMPACT OF THE COVID-19 PANDEMIC

In March 2020, the World Health Organization declared the

COVID-19

outbreak a global pandemic. That same month, as a result of the

COVID-19

pandemic, the Company began to temporarily close certain store locations that did not have a health and personal care department, and as of March 23, 2020, all of the Company’s retail stores across the U.S. and Canada were temporarily closed except for most stand-alone buybuy BABY and Harmon stores, subject to state and local regulations. In May 2020, the Company announced a phased approach to

re-open

its stores in compliance with relevant government directives, and as of the end of July 2020, nearly all of its stores

re-opened.

During portions of Fiscal 2021, a limited number of stores in Canada either closed temporarily or continued to operate under restrictions in compliance with local governmental orders. As of February 26, 2022, all of the Company’s stores were operating without restriction subject to compliance with applicable mask and vaccine requirements.

In the first half of Fiscal 2020, the Company had also suspended its plans for debt reduction and postponed share repurchases, but lifted the debt repurchase suspension in August 2020 and the postponement of share repurchases in October 2020.

Similar to other retailers, the Company also withheld portions of and/or delayed payments to certain of its business partners as the Company negotiated revisions to its payment terms, in order to further maintain liquidity given the temporary store closures (see “Leases,” Note 10).

Further, on March 27, 2020, the Coronavirus Aid, Relief, and Economic Security Act (the “CARES Act”) was enacted in the United States. The CARES Act is an emergency economic aid package to help mitigate the impact of the

COVID-19

pandemic. Among other things, the CARES Act provides certain changes to tax laws, which may impact the Company’s results of operations, financial position and cash flows. The Company is currently implementing certain provisions of the CARES Act such as deferring employer payroll taxes. As of February 27, 2021, the Company had deferred $3.1 million of employer payroll taxes, which were deposited by December 2021. In addition, during Fiscal 2021 and 2020, the Company recorded credits of approximately $7.8 million and $33.3 million, respectively, as an offset to selling, general and administrative expenses as a result of the employee retention credits and rent and property expense support made available under the CARES Act for U.S. employees and under the Canada Emergency Wage Subsidy for Canadian employees and the Canada Emergency Rent Subsidy.

During the Fiscal years ended February 26, 2022 and February 27, 2021, under the CARES Act, the Company recorded income tax benefits of $18.7 million and $152.0 million, respectively, as a result of the Fiscal 2020 and Fiscal 2019 net operating losses that were carried back to prior years during which the federal tax rate was 35%.

The

COVID-19

pandemic materially adversely impacted the Company’s results of operations and cash flows for the fiscal year ended February 27, 2021. Numerous uncertainties continue to surround the pandemic and its ultimate impact on the Company. Further discussion of the risks and uncertainties posed by the

COVID-19

pandemic is disclosed in “Risk Factors” under Part I, Item 1A of this Form

10-K.

Revenue Recognition

9 Months Ended

Nov. 26, 2022

Revenue Recognition and Deferred Revenue [Abstract]

Revenue Recognition

3)	REVENUE RECOGNITION

Sales are recognized upon purchase by customers at the Company’s retail stores or upon delivery for products purchased from its websites. The value of

point-of-sale

coupons and

point-of-sale

Revenues from gift cards, gift certificates and merchandise credits are recognized when redeemed. Gift cards have no provisions for reduction in the value of unused card balances over defined time periods and have no expiration dates. For the nine months ended November 26, 2022 and November 27, 2021, the Company recognized net sales for gift card and merchandise credit redemptions of approximately $60.7 million and $60.5 million, respectively, which were included in merchandise credit and gift card liabilities on the consolidated balance sheet as of February 26, 2022 and February 27, 2021, respectively.

During the second quarter of fiscal 2022, the Company launched its cross-banner customer loyalty program, Welcome Rewards

™

, which allows members to earn points for each qualifying purchase at its retail banners either online or in its stores. Points earned are then converted to rewards upon reaching certain thresholds. These rewards may then be redeemed on future merchandise purchases at its retail banners. The Company defers a portion of the revenue related to the points earned at the time of the original transaction and revenue is recognized for these performance obligations upon redemption or expiration of points or rewards earned by the customer. As of November 26, 2022, the Company recorded $5.2 million of loyalty program liabilities in accrued expenses and other current liabilities on the consolidated balance sheet.

Sales returns are provided for in the period that the related sales are recorded based on historical experience. Although the estimate for sales returns has not varied materially from historical provisions, actual experience could vary from historical experience in the future if the level of sales return activity changes materially. In the future, if the Company concludes that an adjustment is required due to material changes in the returns activity, the liability for estimated returns and the corresponding right of return asset will be adjusted accordingly. As of November 26, 2022 and February 26, 2022, the Company recorded a liability for estimated returns of $15.2 million and $23.6 million, respectively, in accrued expenses and other current liabilities, and the corresponding right of return asset for merchandise of $12.1 million and $14.6 million, respectively, in prepaid expenses and other current assets.

include categories such as kitchen and tabletop items, fine tabletop, basic housewares, general home furnishings (including furniture and wall décor), consumables and certain juvenile products. Sales of domestics merchandise and home furnishings accounted for approximately 36.0% and 64.0% of net sales, respectively, for the three months ended November 26, 2022, and approximately 37.6% and 62.4% of net sales, respectively, for the three months ended November 27, 2021. Sales of domestics merchandise and home furnishings accounted for approximately 36.4% and 63.6% of net sales, respectively, for the nine months ended November 26, 2022, and approximately 38.4% and 61.6% of net sales, respectively, for the nine months ended November 27, 2021.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI https://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI https://asc.fasb.org/extlink&oid=126920106&loc=SL49130554-203045

+ Details

Fair Value Measurements

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Fair Value Disclosures [Abstract]

Fair Value Measurements

4)	FAIR VALUE MEASUREMENTS

Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (i.e., “the exit price”) in an orderly transaction between market participants at the measurement date. In determining fair value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability must be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

•

Level 1—Valuations based on quoted prices in active markets for identical instruments that the Company is able to access. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these products does not entail a significant degree of judgment.

•

Level 2—Valuations based on quoted prices in active markets for instruments that are similar, or quoted prices in markets that are not active for identical or similar instruments, and model-derived valuations in which all significant inputs and significant value drivers are observable in active markets.

•

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Company’s financial instruments include cash and cash equivalents, investment securities, accounts payable, short-term and long-term debt and certain other liabilities. The book value of the Company’s financial instruments, excluding long-term debt, is representative of their fair values. As of November 26, 2022 and February 26, 2022, the fair value of the Company’s senior unsecured notes was approximately $205.3 million and $956.0 million, respectively, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation), compared with the carrying value of approximately $1.030 billion and $1.184 billion for November 26, 2022 and February 26, 2022, respectively. Financial assets utilizing Level 2 inputs included the ABL Facility and FILO Facility. As of November 26, 2022, the carrying amount of the ABL Facility and FILO Facility approximates fair value as interest charged is based on the current market rate and are secured on a first priority basis (subject to customary exceptions) on substantially all assets of the Company and its subsidiaries that are borrowers or guarantors under the ABL Facility and FILO Facility.

Financial assets utilizing Level 3 inputs included long-term investments in auction rate securities consisting of preferred shares of closed end municipal bond funds (see “Investment Securities,” Note 6).

4.	FAIR VALUE MEASUREMENTS

value, the Company uses various valuation approaches, including quoted market prices and discounted cash flows. The hierarchy for inputs used in measuring fair value maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are inputs that market participants would use in pricing the asset or liability developed based on market data obtained from independent sources. Unobservable inputs are inputs that reflect a company’s judgment concerning the assumptions that market participants would use in pricing the asset or liability developed based on the best information available under the circumstances. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, an asset or liability must be classified in its entirety based on the lowest level of input that is significant to the measurement of fair value. The fair value hierarchy is broken down into three levels based on the reliability of inputs as follows:

•

Level 3—Valuations based on inputs that are unobservable and significant to the overall fair value measurement.

The Company’s financial instruments include cash and cash equivalents, investment securities, accounts payable, long term debt and certain other liabilities. The book value of the Company’s financial instruments, excluding long term debt, is representative of their fair values. The Company’s investment securities at February 26, 2022 consisted primarily of U.S. Treasury securities, which are stated at amortized cost and are based on quoted prices in active markets for identical instruments (Level 1 valuation). As of February 26, 2022 and February 27, 2021, the fair value of the Company’s long term debt was approximately $956.0 million and $1.118 billion, respectively, which is based on quoted prices in active markets for identical instruments (i.e., Level 1 valuation), compared to the carrying value of approximately $1.184 billion and $1.195 billion, respectively.

The Company did not have any financial assets utilizing Level 2 inputs. Financial assets utilizing Level 3 inputs included long term investments in auction rate securities consisting of preferred shares of closed end municipal bond funds (see “Investment Securities,” Note 5).

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

Cash and Cash Equivalents

9 Months Ended

Nov. 26, 2022

Cash and Cash Equivalents [Abstract]

Cash and Cash Equivalents

5)	CASH AND CASH EQUIVALENTS

which typically settle within five business days, of $86.3 million and $47.9 million as of November 26, 2022 and February 26, 2022, respectively.

Short-term restricted cash was $57.1 million as of November 26, 2022 and is included in prepaid expenses and other current assets on the consolidated balance sheet. The Company did not have any short-term restricted cash as of February 26, 2022. Long-term restricted cash of $15.1 million and $31.4 million as of November 26, 2022 and February 26, 2022, respectively, is included in other long-term assets on the consolidated balance sheet.

Investment Securities

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Investments, Debt and Equity Securities [Abstract]

Investment Securities

6)	INVESTMENT SECURITIES

As of both November 26, 2022 and February 26, 2022, the Company’s long-term

available-for-sale

investment securities represented approximately $20.3 million par value of auction rate securities, less temporary valuation adjustments of approximately $1.1 million as of both November 26, 2022 and February 26, 2022. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Company’s net earnings. The Company had no short-term

available-for-sale

investment securities as of both November 26, 2022 and February 26, 2022.

5.	INVESTMENT SECURITIES

As of both February 26, 2022 and February 27, 2021, the Company’s long term

available-for-sale

investment securities represented approximately $20.3 million par value of auction rate securities, less temporary valuation adjustments of approximately $1.1 million and $0.8 million, respectively. Since these valuation adjustments are deemed to be temporary, they are recorded in accumulated other comprehensive loss, net of a related tax benefit, and did not affect the Company’s net earnings. The Company had no short-term

available-for-sale

investment securities as of February 26, 2022 or February 27, 2021.

Impairment of Long-Lived Assets

9 Months Ended

Nov. 26, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Impairment of Long-Lived Assets

7)	IMPAIRMENT OF LONG-LIVED ASSETS

The Company reviews long-lived assets for impairment when events or changes in circumstances indicate the carrying value of these assets may exceed their current fair values. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, an impairment charge is recognized for the amount by which the carrying amount of the asset exceeds the fair value of the asset. For the three and nine months ended November 26, 2022, the Company recorded $100.7 million and $180.0 million, respectively, of

non-cash

pre-tax

non-cash

pre-tax

impairment charges in impairments in its consolidated statement of operations for certain store-level assets, including leasehold improvements and operating lease assets. Future events or market conditions may further reduce the estimated fair value of these long-lived assets and as a result, the Company may need to adjust the carrying value of these long-lived assets in the period in which the reduction in the estimated fair value occurs and record further impairment charges.

Property and Equipment

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Property, Plant and Equipment [Abstract]

Property and Equipment

8)	PROPERTY AND EQUIPMENT

As of November 26, 2022 and February 26, 2022, included in property and equipment, net is accumulated depreciation of approximately $2.0 billion and $1.8 billion, respectively, of which $1.2 million and $0.2 million, respectively, in accumulated depreciation related to assets held under finance leases.

6.	PROPERTY AND E QU IPMENT

Property and equipment consist of the following:


(in thousands)	February 26, 2022			February 27, 2021
Land and buildings	$	21,597		$	24,840
Furniture, fixtures and equipment (1)		594,443			502,869
Leasehold improvements		746,365			721,039
Computer equipment and software		1,494,457			1,355,758

Total		2,856,862			2,604,506
Less: Accumulated depreciation (1)		(1,829,475	)		(1,686,088	)

Property and equipment, net	$	1,027,387		$	918,418

(1)	Furniture, fixtures and equipment includes $39.0 million in assets held under finance leases as of February 26, 2022. Accumulated depreciation includes $0.2 million in accumulated depreciation for assets held under finance leases as of February 26, 2022.

Depreciation expense was $292.3 million, $338.7 million, $339.0 million in Fiscal 2021, 2020, and 2019, respectively.

Transactions and Balances With Related Parties

12 Months Ended

Feb. 26, 2022

Transactions and Balances With Related Parties

9.	TRANSACTIONS AND BALANCES WITH RELATED PARTIES

On April 21, 2019, Warren Eisenberg and Leonard Feinstein transitioned to the role of

Co-Founders

and

Co-Chairmen

Emeriti of the Board of Directors of the Company. As a result of this transition, Messrs. Eisenberg and Feinstein ceased to be officers of the Company effective as of April 21, 2019, and became entitled to the payments and benefits provided under their employment agreements that apply in the case of termination without cause, which generally include continued senior status payments until May 2027 and continued participation for

Co-Founders

(and their spouses, if applicable) at the Company’s expense in employee plans and programs. In addition, the

Co-Founders

remain entitled to supplemental pension payments specified in their employment agreements of $200,000 per year (as adjusted for a cost of living increase), until the death of the survivor of the applicable

Co-Founder

and his spouse, reduced by the continued senior status payments referenced above.

Pursuant to their respective restricted stock and performance stock unit agreements, shares of restricted stock and performance-based stock units granted to Messrs. Eisenberg and Feinstein vested upon their resignation as members of the Board of Directors effective May 1, 2019, subject, however, to attainment of any applicable performance goals and the certification of the applicable performance-based tests by the Compensation Committee, as provided under their award agreements.

Leases

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Leases [Abstract]

Leases

LEASES

The Company leases retail stores, distribution facilities, offices and equipment under agreements expiring at various dates through 2041. The leases provide for original lease terms that generally range from 10 to 15 years and most leases provide for a series of five-year renewal options, often at increased rents, the exercise of which is at the Company’s sole discretion. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated amounts and are immaterial for the three and nine months ended November 26, 2022 and November 27, 2021), scheduled rent increases and renewal options. The Company is obligated under a majority of the leases to pay for taxes, insurance and common area maintenance charges.

The Company subleases certain real estate to unrelated third parties, which have all been classified as operating leases. The Company recognizes sublease income on a straight-line basis over the sublease term, which generally ranges from 5 to 10 years. Most sublease arrangements provide for a series of five-year renewal options, the exercise of which are at the Company’s sole discretion.

The components of total lease cost for the three and nine months ended November 26, 2022 and November 27, 2021, were as follows:


(in thousands)	Statement of Operations Location	Three Months Ended						Nine Months Ended
(in thousands)	Statement of Operations Location	November 26, 2022			November 27, 2021			November 26, 2022			November 27, 2021
Operating lease cost	Cost of sales and SG&A	$	94,606		$	105,230		$	299,735		$	332,952
Finance lease cost:
Depreciation of property	SG&A		639			—			1,022			—
Interest on lease liabilities	Interest expense, net		1,636			—			3,742			—
Variable lease cost	Cost of sales and SG&A		33,378			40,753			107,135			112,270
Sublease income	SG&A		(15,744	)		(9,929	)		(42,554	)		(34,735	)

Total lease cost		$	114,515		$	136,054		$	369,080		$	410,487

As of November 26, 2022 and February 26, 2022, assets and liabilities related to the Company’s leases were as follows:


(in thousands)	Consolidated Balance Sheet Location	November 26, 2022		February 26, 2022
Assets
Operating leases	Operating lease assets	$	1,321,665	$	1,562,857
Finance leases	Property and equipment, net		63,639		38,790

Total lease assets		$	1,385,304	$	1,601,647

Liabilities
Current:
Operating leases	Current operating lease liabilities	$	313,368	$	346,506
Finance leases	Accrued expenses and other current liabilities		7,048		2,494
Noncurrent:
Operating leases	Operating lease liabilities		1,388,484		1,508,002
Finance leases	Other liabilities		54,452		35,447

Total lease liabilities		$	1,763,352	$	1,892,449

As of November 26, 2022, the Company’s lease liabilities mature as follows:


(in thousands)	Operating Leases			Finance Leases
Fiscal Year:
Remainder of 2022	$	72,296		$	2,881
2023		413,473			11,525
2024		364,233			11,525
2025		301,520			11,525
2026		232,768			11,525
2027		184,826			11,525
Thereafter		564,831			48,713

Total lease payments	$	2,133,947		$	109,219
Less imputed interest		(432,095	)		(47,719	)

Present value of lease liabilities	$	1,701,852		$	61,500

The Company’s lease terms and discount rates were as follows:


	November 26, 2022			February 26, 2022
Weighted-average remaining lease term (in years)
Operating leases		6.8 years			7.0 years
Finance leases		9.4 years			10.0 years
Weighted-average discount rate
Operating leases		7.4	%		6.0	%
Finance leases		8.3	%		8.4	%

Other information with respect to the Company’s leases is as follows:


(in thousands)	Nine Months Ended
(in thousands)	November 26, 2022		November 27, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	316,410	$	340,314
Operating cash flows from finance leases		3,223		—
Financing cash flows from finance leases		1,849		—
Operating lease assets obtained in exchange for new operating lease liabilities		358,997		293,824
Financing lease assets obtained in exchange for new financing lease liabilities		25,871		—

10.

LEASES

The Company leases retail stores, as well as distribution facilities, offices and equipment, under agreements expiring at various dates through 2041. The leases provide for original lease terms that generally range from 10 to 15 years and most leases provide for a series of five year renewal options, often at increased rents, the exercise of which is at the Company’s sole discretion. Certain leases provide for contingent rents (which are based upon store sales exceeding stipulated amounts and are immaterial in Fiscal 2021, 2020, and 2019), scheduled rent increases and renewal options. The Company is obligated under a majority of the leases to pay for taxes, insurance and common area maintenance charges.

The Company subleases certain real estate to unrelated third parties, all of which have been classified as operating leases. The Company recognizes sublease income on a straight-line basis over the sublease term, which generally ranges from 5 to 10 years. Most sublease arrangements provide for a series of five year renewal options, the exercise of which are at the Company’s sole discretion.

The Company regularly negotiates lease terms with landlords, including in connection with its transformation initiatives. Beginning in the first quarter of Fiscal 2020, in order to maintain liquidity given temporary store closures as a result of the

COVID-19

pandemic (see “Impact of the

COVID-19

Pandemic,” Note 2), the Company withheld portions of and/or delayed or deferred payments to certain landlords, including in connection with renegotiations of lease terms. In some instances, the renegotiations led to agreements with landlords for rent abatements or rental deferrals. In Fiscal 2021, the Company has continued to withhold payments to certain landlords in connection with certain negotiations of payment terms. Total payments withheld and/or delayed or deferred as of February 26, 2022 and February 27, 2021 were approximately $1.9 million and $9.6 million, respectively, and are included in current liabilities.

In accordance with the FASB’s Staff Q&A regarding rent concessions related to the effects of the

COVID-19

pandemic, the Company has elected to account for the concessions agreed to by landlords that do not result in a substantial increase in the rights of the lessor or the obligations of the lessee as though enforceable rights and obligations for those concessions existed in the original lease agreements and the Company has elected to not remeasure the related lease liabilities and

right-of-use

assets. For qualifying rent abatement concessions, the Company has recorded negative lease expense for the amount of the concession during the period of relief, and for qualifying deferrals of rental payments, the Company has recognized a

non-interest

bearing payable in lieu of recognizing a decrease in cash for the lease payment that would have been made based on the original terms of the lease agreement, which will be reduced when the deferred payment is made in the future. During the fiscal year ended February 26, 2022 and February 27, 2021, the Company recognized reduced rent expense of $2.7 million and $10.3 million, respectively, related to rent abatement concessions.

The components of total lease cost for the fiscal year ended February 26, 2022 and February 27, 2021 were as follows:


(in thousands)	Statement of Operations Location	February 26, 2022			February 27, 2021
Operating lease cost	Cost of sales and SG&A	$	449,394		$	582,168
Finance lease cost:
Depreciation of property	SG&A		184			2,500
Interest on lease liabilities	Interest expense, net		1,886			7,755
Variable lease cost	Cost of sales and SG&A		152,259			189,485
Sublease income	SG&A		(43,922	)		(12,574	)

Total lease cost		$	559,801		$	769,334

As of February 26, 2022 and February 27, 2021, assets and liabilities related to the Company’s operating and finance leases were as follows:


(in thousands)	Consolidated Balance Sheet Location	February 26, 2022		February 27, 2021
Assets
Operating leases	Operating lease assets	$	1,562,857	$	1,587,101
Finance leases	Property and equipment, net		38,790		—

Total Lease assets		$	1,601,647	$	1,587,101

Liabilities
Current:
Operating leases	Current operating lease liabilities	$	346,506	$	360,061
Finance leases	Accrued expenses and other current liabilities		2,494		—
Noncurrent:
Operating leases	Operating lease liabilities		1,508,002		1,509,767
Finance leases	Other liabilities		35,447		—

Total lease liabilities		$	1,892,449	$	1,869,828

At February 26, 2022, the Company has entered into two operating leases, which have not yet commenced, for a regional distribution center and a store, both expected to open in Fiscal 2022. The aggregate minimum rental payments over the term of the lease of approximately $107.2 million and $4.1 million, respectively, are not included in the above table.

As of February 26, 2022, the Company’s lease liabilities mature as follows:


(in thousands)	Operating Leases			Finance Leases
Fiscal Year:
2022	$	444,562		$	7,369
2023		388,183			11,636
2024		334,178			11,636
2025		272,790			11,636
2026		202,690			11,636
Thereafter		643,824			59,531

Total lease payments	$	2,286,227		$	113,444
Less imputed interest		(431,719	)		(75,503	)

Present value of lease liabilities	$	1,854,508		$	37,941

The Company’s lease terms and discount rates were as follows:


	February 26, 2022			February 27, 2021
Weighted-average remaining lease term (in years)
Operating leases		7.0 years			6.8 years
Finance leases		10.0 years			—
Weighted-average discount rate
Operating leases		6.0	%		6.4	%
Finance leases		8.4	%		—	%

Other information with respect to the Company’s leases is as follows:


( in thousands )	February 26, 2022		February 27, 2021
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	450,082	$	646,981
Operating cash flows from finance leases		1,886		9,295
Financing cash flows from finance leases		1,033		—
Operating lease assets obtained in exchange for new operating lease liabilities		359,933		305,614
Financing lease assets obtained in exchange for new financing lease liabilities		38,974		—

In Fiscal 2019, the Company completed a sale-leaseback transaction on approximately 2.1 million square feet of owned real estate, which generated approximately $267.3 million in proceeds. As a result of the transaction, the Company recorded a loss, including transaction costs of approximately $5.7 million, of approximately $33.1 million which is included in selling, general and administrative expenses in the consolidated statement of operations for the fiscal year ended February 29, 2020. All leases entered into as a result of the sale-leaseback transaction were classified as operating leases. For certain assets included in the transaction, the Company determined that the fair value of the assets was less than the consideration received. As a result, the Company recognized a financing obligation in the amount of $14.5 million, for the additional financing obtained from the buyer. As of February 26, 2022 and February 27, 2021, the financing obligation amounted to approximately $13.0 million and $13.8 million, respectively, of which approximately $0.7 million and $0.7 million, respectively, is included in accrued expenses and other current liabilities, and approximately $12.3 million and $13.1 million, respectively, is included in other liabilities, in the consolidated balance sheets.

Provision for Income Taxes

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Income Tax Disclosure [Abstract]

Provision for Income Taxes

10)	INCOME TAXES

The effective tax rate for the three and nine months ended November 26, 2022 was (0.7)% and (0.6)%, respectively, compared with (171.3)% and (37.9)%, respectively, for the three and nine months ended November 27, 2021. The effective tax rate for the three and nine months ended November 26, 2022 reflects the impact of a valuation allowance initially recorded in the third quarter of fiscal 2021, discussed below. For the three and nine months ended November 27, 2021, the effective tax rate included the impact of a charge to record a valuation allowance in the fiscal third quarter of $181.5 million, discussed below, as well as a benefit of $2.4 million and $18.6 million, respectively, resulting from an adjustment to the estimated net operating loss incurred in fiscal 2020 which was carried back, under the provisions of the CARES Act, to a year in which the tax rate was 35%.

In assessing the recoverability of its deferred tax assets, the Company evaluates the available objective positive and negative evidence to estimate whether it is more likely than not that sufficient future taxable income will be generated to permit the use of existing deferred tax assets in each taxpaying jurisdiction. For any deferred tax asset in excess of the amount for which it is more likely than not that the Company will realize a benefit, the Company establishes a valuation allowance. A valuation allowance is a

non-cash

charge, and does not limit the Company’s ability to utilize its deferred tax assets, including its ability to utilize tax loss and credit carryforward amounts, against future taxable income.

During the third quarter of fiscal 2021, the Company concluded that, based on its evaluation of available objective positive and negative evidence, it was no longer more likely than not that its net U.S. federal and state deferred tax assets were recoverable. During the nine months ended November 26, 2022, the Company determined that this conclusion continued to be appropriate. In assessing the realizability of deferred tax assets, the key assumptions used to determine positive and negative evidence included the Company’s cumulative loss before income taxes for the past three years, current trends related to actual taxable earnings or losses, and expected future reversals of existing taxable temporary differences, as well as, timing and the cost of the Company’s transformation initiatives and their expected associated benefits. As of February 26, 2022, the total valuation allowance relative to U.S. federal and state deferred tax assets was $224.3 million, and the Company’s assertion for the need of a full valuation allowance remains as of November 26, 2022.

As of February 26, 2022, the Company recorded a valuation allowance of $25.2 million relative to the Company’s Canadian net deferred tax asset as the Company did not believe the deferred tax assets in that jurisdiction were more likely than not to be realized, and the Company’s assertion for the need of a full valuation allowance remains as of November 26, 2022.

The amount of the deferred tax assets considered realizable, and the associated valuation allowance, could be adjusted in a future period if estimates of future taxable income change or if objective negative evidence in the form of cumulative losses is no longer present and additional weight is given to subjective evidence, such as projections for future growth.

During the three and nine months ended November 26, 2022, the change in the gross amount of unrecognized tax benefits and accrued interest and penalties was not significant.

As of November 26, 2022, the Company operated in all 50 states, the District of Columbia, Puerto Rico, Canada and Mexico and files income tax returns in the United States and various state, local and international jurisdictions. The Company is currently under examination by the Internal Revenue Service for the tax year 2017. The Company is open to examination for state, foreign and local jurisdictions with varying statutes of limitations, generally ranging from 3 to 5 years.

8.	PROVISION FOR INCOME TAXES

The components of the (benefit) provision for income taxes are as follows:


	Fiscal Year Ended
(in thousands)	February 26, 2022			February 27, 2021			February 29, 2020
Current:
Federal	$	(43,740	)	$	(336,506	)	$	2,455
State and local		3,397			1,211			(7,973	)

		(40,343	)		(335,295	)		(5,518	)

Deferred:
Federal		73,006			150,861			(124,578	)
State and local		54,304			(1,555	)		(20,941	)

		127,310			149,306			(145,519	)

	$	86,967		$	(185,989	)	$	(151,037	)

At February 26, 2022 and February 27, 2021, included in other assets are net deferred income tax assets of $(0.1) million and $130.0 million, respectively. These amounts represent the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The significant components of the Company’s deferred tax assets and liabilities consist of the following:


(in thousands)	February 26, 2022			February 27, 2021
Deferred tax assets:
Inventories	$	4,077		$	13,040
Operating lease liabilities		473,397			484,290
Insurance		6,416			9,086
Stock-based compensation		1,592			1,014
Merchandise credits and gift card liabilities		56,690			52,584
Accrued expenses		23,412			31,914
Intangibles		1,685			1,008
Goodwill		90			1,596
Carryforwards and other tax credits		189,746			86,914
Other		34,991			34,104
Valuation allowance:		(249,529	)		(26,011	)

Deferred tax liabilities:
Depreciation		(146,970	)		(105,649	)
Prepaid expenses		(1,155	)		(26,356	)
Operating lease assets		(376,079	)		(409,535	)
Other		(18,499	)		(17,977	)

	$	(136	)	$	130,022

At February 26, 2022, the Company has federal net operating loss carryforwards of $67.2 million (tax effected), of which $4.6 million will expire between 2025 and 2039, state net operating loss carryforwards of $87.1 million (tax effected), which will expire between 2021 and 2041, California state enterprise zone credit carryforwards of $2.1 million (tax effected), which will expire in 2023, but require taxable income in the enterprise zone to be realizable.

non-cash

charge, and does not limit the Company’s ability to utilize its deferred tax assets, including its ability to utilize tax loss and credit carryforward amounts, against future taxable income.

The Company assessed all available positive and negative evidence to estimate whether sufficient future taxable income will be generated to permit use of existing deferred tax assets in each taxpaying jurisdiction. On the basis of this evaluation, as of February 26, 2022, a valuation allowance of $224.3 million was recorded against the Company’s net federal and state deferred tax assets as it is not more likely than not that these assets would be realized.

As of February 26, 2022 and February 27, 2021, the Company had also recorded a valuation allowance of $25.2 million and $15.5 million, respectively, relative to the Company’s Canadian net deferred tax asset, as the Company did not believe the deferred tax assets in that jurisdiction were more likely than not to be realized.

The following table summarizes the activity related to the gross unrecognized tax benefits from uncertain tax positions:


(in thousands)	February 26, 2022			February 27, 2021
Balance at beginning of year	$	105,749		$	51,781
Increase related to current year positions		1,125			69,106
Decrease related to prior year positions		(1,902	)		(2,797	)
Settlements		(2,340	)		(4,981	)
Lapse of statute of limitations		(7,114	)		(7,360	)

Balance at end of year	$	95,518		$	105,749

Gross unrecognized tax benefits are classified in

non-current

income taxes payable (or a contra deferred tax asset) on the consolidated balance sheet for uncertain tax positions taken (or expected to be taken) on a tax return. As of February 26, 2022 and February 27, 2021, approximately $95.5 million and $105.7 million, respectively, of gross unrecognized tax benefits would impact the Company’s effective tax rate. As of February 26, 2022 and February 27, 2021, the liability for gross unrecognized tax benefits included approximately $8.6 million and $8.1 million, respectively, of accrued interest. The Company recognizes interest and penalties for unrecognized tax benefits, as applicable, in income tax expense. The Company recorded an increase to accrued interest of approximately $0.5 million for the fiscal year ended February 26, 2022 and a decrease of approximately $1.5 million for the fiscal year ended February 27, 2021 for gross unrecognized tax benefits in the consolidated statement of earnings.

The Company anticipates that any adjustments to gross unrecognized tax benefits which will impact income tax expense, due to the expiration of statutes of limitations, could be approximately $5.8 million in the next twelve months. However, actual results could differ from those currently anticipated.

As of February 26, 2022, the Company operated in all 50 states, the District of Columbia, Puerto Rico, Canada, and Mexico and files income tax returns in the United States and various state, local and international jurisdictions. The Company is currently under examination by the Internal Revenue Service for the tax year 2017. The Company is open to examination for state, foreign and local jurisdictions with varying statutes of limitations, generally ranging from 3 to 5 years.

The following table summarizes the reconciliation between the effective income tax rate and the federal statutory rate:


	Fiscal Year Ended
	February 26, 2022			February 27, 2021			February 29, 2020
Federal statutory rate		21.00	%		21.00	%		21.00	%
State income tax rate, net of federal impact		3.87			3.94			4.28
Uncertain tax positions		2.16			1.63			1.33
Goodwill non-deductible impairment charges		—			—			(4.84	)
Tax deficiencies related to stock-based compensation		(0.81	)		(3.18	)		(3.07	)
Tax credits		0.38			0.41			0.49
CARES Act		0.94			35.98			—
Valuation Allowance		(48.01	)		(7.74	)		—
Canadian Branch Earnings		1.60			0.78			0.90
Other		0.47			2.35			(0.34	)

		(18.40	)%		55.17	%		19.75	%

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

+ Details

Indefinite-Lived Intangible Assets

9 Months Ended

Nov. 26, 2022

Goodwill and Intangible Assets Disclosure [Abstract]

Indefinite-Lived Intangible Assets

11)	INDEFINITE-LIVED INTANGIBLE ASSETS

Included in other assets in the accompanying consolidated balance sheets as of November 26, 2022 and February 26, 2022, respectively, are $13.4 million and $16.3 million for indefinite-lived tradenames and trademarks.

The Company reviews intangibles that have indefinite lives for impairment annually as of the end of the fiscal year or when events or changes in circumstances indicate the carrying value of these assets might exceed their current fair values. Impairment testing is based upon the best information available including estimates of fair value which incorporate assumptions marketplace participants would use in making their estimates of fair value. Significant assumptions and estimates are required, including, but not limited to, projecting future cash flows, determining appropriate discount rates and terminal growth rates, and other assumptions, to estimate the fair value of indefinite-lived intangible assets. Although the Company believes the assumptions and estimates made are reasonable and appropriate, different assumptions and estimates could materially impact its reported financial results.

Indefinite-lived intangible assets were recorded as a result of acquisitions and primarily consist of tradenames. The Company values its tradenames using a relief-from-royalty approach, which assumes the value of the tradename is the discounted cash flows of the amount that would be paid by a hypothetical market participant had they not owned the tradename and instead licensed the tradename from another company. During the three and nine months ended November 26, 2022, the Company completed a quantitative impairment analysis for certain of its indefinite lived intangible assets, by comparing the fair value of the tradenames to their carrying value. There were no tradename impairment charges recognized during the three months ended November 26, 2022. During the nine months ended November 26, 2022, the Company recognized a

non-cash

pre-tax

tradename impairment charge of $2.9 million in impairments in its consolidated statements of operations. During the three and nine months ended November 27, 2021, the Company recognized

non-cash

pre-tax

tradename impairment charges of $0.2 million and $2.9 million, respectively, in impairments in its consolidated statements of operations. As of November 26, 2022, for the remaining indefinite-lived intangible assets, the Company assessed qualitative factors in order to determine whether any events and circumstances existed which indicated that it was more likely than not that the fair value of these indefinite-lived assets did not exceed their carrying values and concluded no such events or circumstances existed which would require an impairment test be performed. Future events or market conditions may further reduce the estimated fair value of these long-lived assets and as a result,

the Company may need to adjust the carrying value of these long-lived assets in the period in which the reduction in the estimated fair value occurs and record further impairment charges.

Long Term Debt

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Debt Disclosure [Abstract]

Long Term Debt

12)	LONG-TERM DEBT

Senior Unsecured Notes

On July 17, 2014, the Company issued $300.0 million aggregate principal amount of 3.749% senior unsecured notes due August 1, 2024 (the “2024 Notes”), $300.0 million aggregate principal amount of 4.915% senior unsecured notes due August 1, 2034 (the “2034 Notes”) and $900.0 million aggregate principal amount of 5.165% senior unsecured notes due August 1, 2044 (the “2044 Notes” and, collectively with the 2024 Notes and the 2034 Notes, the “Existing Notes”). Interest on the Existing Notes is payable semi-annually on February 1 and August 1 of each year.

The Existing Notes were issued under an indenture (the “Base Indenture”), as supplemented by a first supplemental indenture (together, with the Base Indenture, the “Indenture”), which contains various restrictive covenants, which are subject to important limitations and exceptions that are described in the Indenture. The Company was in compliance with all covenants related to the Existing Notes as of November 26, 2022.

Exchange Offers

During the third fiscal quarter of 2022, the Company commenced exchange offers (the “Exchange Offers”) with eligible holders for each series of Existing Notes as follows: (i) 2024 Notes for new 3.693% Senior Second Lien Secured

Non-Convertible

Notes due November 30, 2027 (the “New Second Lien

Non-Convertible

Notes”) and/or new 8.821% Senior Second Lien Secured Convertible Notes due November 30, 2027 (the “New Second Lien Convertible Notes”); (ii) 2034 Notes for new 12.000% Senior Third Lien Secured Convertible Notes due November 30, 2029 (the “New Third Lien Convertible Notes” and, together with the New Second Lien

Non-Convertible

Notes and the New Second Lien Convertible Notes, the “New Notes”); and (iii) 2044 Notes for New Third Lien Convertible Notes.

In conjunction with the Exchange Offers, the Company solicited consents from holders of each series of Existing Notes (“Consents”) to certain proposed amendments to the indenture governing the Existing Notes to, among other things, (i) eliminate the restrictive covenants in the Existing Notes Indenture concerning (a) the repurchase of Existing Notes in the event of a change in control of the Company, (b) limitations on liens and (c) limitations on sale and leaseback transactions and (ii) increase the percentage of outstanding notes necessary to accelerate payment upon an event of default (the “Proposed Amendments”).

In November 2022, the Company completed privately negotiated exchange offers with existing holders of approximately $69.0 million, $15.3 million, and $70.2 million aggregate principal amount of 2024 Notes, 2034 Notes, and 2044 Notes, respectively, under which the Company issued an aggregate of approximately 13.6 million shares of common stock to the existing holders in exchange for the exchange notes, including accrued and unpaid interest, and 0.9 million shares in exchange for a cash payment from an existing holder of $3.5 million. The exchange notes were cancelled and no longer outstanding upon completion of the exchange. In accordance with ASC subtopic

470-60,

“

Troubled Debt Restructuring by Debtors

,” the private exchange was accounted for as a troubled debt restructuring and the Company recorded a net gain on extinguishment of debt of $94.4 million in its consolidated statement of operations for the three months ended November 26, 2022, which included $8.0 million of third-party fees incurred and the write off of unamortized debt financing costs of $0.4 million related to the extinguished notes exchanged for common stock.

On January 5, 2023, upon the expiration of the Exchange Offers, the Company announced the termination of the offer and consent solicitations with respect to its Existing Notes, as a result of the conditions applicable thereto not being satisfied. As a result of the termination of the Exchange Offers, none of the Existing Notes that had been tendered in the Exchange Offers were accepted for purchase and no consideration will be paid or become payable to holders of the Existing Notes who have tendered their Existing Notes in the Exchange Offers.

During the three and nine months ended November 26, 2022, the Company did not purchase any of its outstanding unsecured notes, excluding the aforementioned private exchanges completed in November 2022. During the nine months ended November 27, 2021, the Company purchased approximately $11.0 million aggregate principal amount of its outstanding 3.749% senior unsecured notes due August 1, 2024. The total consideration paid for the notes accepted for purchase of $11.4 million during the nine months ended November 27, 2021, included accrued and unpaid interest up to, but not including, the early settlement date. The Company recorded a loss on extinguishment of debt of $0.4 million in its consolidated statement of operations for the nine months ended November 27, 2021, including the write off of unamortized debt financing costs related to the extinguished portion of the notes accepted for purchase and reacquisition costs. The Company did not purchase any of its outstanding unsecured notes during the three months ended November 27, 2021.

As of November 26, 2022 and February 26, 2022, unamortized deferred financing costs associated with the Company’s Existing Notes were $3.9 million and $4.6 million, respectively, and are included in long-term debt in the Company’s consolidated balance sheets.

Asset-Based Credit Agreement

In the second quarter of fiscal 2021, the Company amended its asset-based credit agreement (the “Credit Agreement”) among the Company, certain of the Company’s U.S. and Canadian subsidiaries party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (in such capacity, the “Agent”), and the lenders party thereto. The Credit Agreement provides for an asset-based revolving credit facility (the “ABL Facility”) with aggregate revolving commitments established at closing of $1.0 billion, including a swingline subfacility and a letter of credit subfacility. The Credit Agreement has an uncommitted expansion feature which allows the borrowers to request, at any time following the delivery of an initial field exam and appraisal, an increase in aggregate revolving commitments under the ABL Facility or elect to enter into a

first-in-last-out

loan facility (“FILO Facility”), collectively, in an aggregate amount of up to $375.0 million, subject to certain customary conditions.

On August 31, 2022, the Company entered into an amendment (the “Amendment”) to the Credit Agreement, dated as of August 9, 2021 (as amended by the Amendment, the “Amended Credit Agreement”), for more than $500.0 million of new additional financing commitments, including its newly expanded $1.130 billion ABL Facility, which provides for an increase of $130.0 million in aggregate revolving commitments for the time periods set forth in the Amendment, and a new $375.0 million FILO Facility (together with the ABL Facility, the “Credit Facilities”), with JPMorgan Chase Bank, N.A., as administrative agent and Sixth Street Specialty Lending, Inc., as agent and lender for the FILO Facility. The ABL Facility and FILO Facility mature on August 9, 2026 and August 31, 2027, respectively, unless required to mature earlier pursuant to the terms of the Amendment.

The Credit Facilities are secured on a first priority basis (subject to customary exceptions) on substantially all assets of the Company and its subsidiaries that are borrowers or guarantors under the Credit Facilities. Amounts available to be drawn from time to time under the ABL Facility (including, in part, in the form of letters of credit) are equal to the lesser of (i) outstanding revolving commitments under the Amended Credit Agreement and (ii) a borrowing base equal to the sum of (a) 90% of eligible credit card receivables plus (b) 90% of eligible inventory (excluding eligible foreign

in-transit

inventory), valued at the lower of cost or market value, determined on a weighted average cost basis, minus (c) customary reserves, minus (d) FILO deficiency reserves. The term loans under the FILO Facility are subject to a borrowing base equal to the sum of (a) 15% of eligible credit card receivables, plus (b)(i) 15% of eligible inventory, plus (ii) 100% of eligible foreign

in-transit

inventory, plus (iii) 15% of eligible domestic

in-transit

inventory, in each case, valued at the lower of cost or market value, determined on a weighted average cost basis, plus (c) the lesser of (i) 68% of eligible intellectual property, which shall be reduced by 2.5% each fiscal quarter commencing with the fiscal quarter ending on or about February 25, 2023 and (ii) $115.0 million which shall be reduced by (A) approximately $4.7 million each fiscal quarter commencing with the fiscal quarter ending on or about February 25, 2023 and (B) $75.0 million upon the consummation of certain dispositions.

Subject to customary exceptions and restrictions, the Company may voluntarily repay outstanding amounts under the ABL Facility at any time without premium or penalty, and may voluntarily repay outstanding amounts under the FILO Facility after the ABL Facility is paid in full. Any voluntary prepayments made will not reduce commitments under the ABL Facility. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base under the ABL Facility, the Company will be required to prepay outstanding amounts or cash collateralize letter of credit obligations under the ABL Facility.

The term loans under the FILO Facility are

non-callable

for a period of 18 months following the funding date, subject to a customary make-whole premium (using a discount rate set at the treasury rate plus $0.50% per annum). Following such date, prepayments of the FILO Facility are subject to a prepayment premium equal to (i) $2.00% of the principal amount of such prepayment if made between 18 months and 30 months following the funding date, (ii) $1.00% of the principal amount of such prepayment if made between 30 months and 36 months following the funding date, and (iii) $0% after such date. Further, certain dispositions of assets, are subject to modified prepayment premiums and/or mandatory paydown requirements. If at any time the outstanding amount under the FILO Facility exceeds the borrowing base under the FILO Facility, the Company will be required to prepay term loans in an amount equal to such excess under the FILO Facility.

The Amendment replaced the London Inter-Bank Offered (“LIBO”) Rate as the interest rate benchmark under the Credit Agreement with the forward-looking term rate based on the Secured Overnight Financing Rate (“SOFR”). Outstanding amounts under the Amended Credit Agreement bear interest at a rate per annum equal to, at the applicable borrower’s election: (i) in the case of loans denominated in U.S. dollars, SOFR and an alternate base rate and (ii) in the case of loans denominated in Canadian dollars, the Canadian Prime Rate and Canadian Dollar Offered Rate (“CDOR”), in each case as set forth in the Amended Credit Agreement, plus (A) with respect to the ABL Facility, an interest rate margin based on average quarterly availability ranging from (x) in the case of SOFR loans and CDOR loans, 1.25% to 1.75%; provided that if SOFR or the CDOR is less than 0.00%, such rate shall be deemed to be 0.00%, as applicable, and (y) in the case of alternate base rate loans and Canadian Prime Ra

te Lo

ans, 0.25% to 0.75%; provided that if the alternate base rate or Canadian Prime Rate is less than 1.00%, such rate shall be deemed to be 1.00%, as appli

cable, and (B) with respect to the FILO Facility, an interest rate margin equal to (x) in the case of SOFR

loans, 7.75%; provided that if SOFR is less than 1.00%, such rate shall be deemed to be 1.00%, and (y) in the case of alternate base rate loans, 6.75%

; provided that if the alternate base r

ate is less than 2.00%, such rate shall be deemed to be 2.00%. The revolving loans under the ABL Facility may be borrowed, prepaid and reborrowed until the maturity date under the ABL Facility. The term loans under the FILO Facility amortize at 5.00% per annum payable in equal quarterly installments of 1.25% per annum, commencing with the fiscal quarter ending on or about February 25, 2023.

As of November 26, 2022, the Company had $550.0 million of borrowings outstanding under the ABL Facility, at a weighted average interest rate of 5.66%, and $186.2 million of outstanding letters of credit had been issued under the ABL Facility. As of November 26, 2022, the Company had $375.0 million of outstanding borrowings under the FILO Facility at an interest rate of 10.87%. The Company’s borrowing under the Credit Facilities have been and may be used for working capital, including inventory purposes, and other general corporate purposes.

The Amended Credit Agreement contains customary representations and warranties, events of default and financial, affirmative and negative covenants for facilities of this type, including but not limited to a springing financial covenant relating to a fixed charge coverage ratio, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, restricted payments and prepayment of certain indebtedness. The Company was in compliance with all covenants related to the Amended Credit Agreement as of November 26, 2022. On or around January 13, 2023, certain events of default were triggered under the Company’s Credit Facilities as a result of the Company’s failure to prepay an overadvance and satisfy a financial covenant, among other things. As a result of the continuance of such events of default, on January 25, 2023, the administrative agent under the Amended Credit Agreement notified the Company that (i) the principal amount of all outstanding loans under the Credit Facilities, together with accrued interest thereon, the FILO Applicable Premium and all fees (including,

for the avoidance of doubt, any break funding payments) and other obligations of the Company accrued under the Amended Credit Agreement, are due and payable immediately, (ii) the Company is required, effective immediately, to cash collateralize letter of credit obligations under the Credit Facilities, and (iii) effective as of January 25, 2023, all outstanding loans and obligations under the Credit Facilities shall bear interest at an additional default rate of 2% per annum. As a result of the foregoing, the Company has reflected the amounts outstanding on the Credit Facilities as current on the consolidated balance sheet as of November 26, 2022.

As of November 26, 2022 and February 26, 2022, deferred financing costs associated with the Company’s ABL Facility were $7.8 million and $7.4 million, respectively, and were recorded in other assets in the Company’s consolidated balance sheets. As of November 26, 2022, deferred financing costs associated with the Company’s FILO Facility were $15.7 million and are included in current portion of long-term debt in the Company’s consolidated balance sheets.

The Company amortizes deferred financing costs for the Existing Notes and the Credit Facilities over their respective terms and such amortization is included in interest expense, net in the consolidated statements of operations. Interest expense related to the Existing Notes and the Credit Facilities, including the commitment fee and the amortization of deferred financing costs, was approximately $32.9 million and $16.1 million for the three months ended November 26, 2022 and November 27, 2021, respectively and $66.9 million and $49.0 million for the nine months ended November 26, 2022 and November 27, 2021, respectively.

7.	LONG TERM DEBT

Senior Unsecured Notes

On July 17, 2014, the Company issued $300.0 million aggregate principal amount of 3.749% senior unsecured notes due August 1, 2024, $300.0 million aggregate principal amount of 4.915% senior unsecured notes due August 1, 2034 and $900.0 million aggregate principal amount of 5.165% senior unsecured notes due August 1, 2044 (collectively, the “Notes”). Interest on the Notes is payable semi-annually on February 1 and August 1 of each year.

The Notes were issued under an indenture (the “Base Indenture”), as supplemented by a first supplemental indenture (together, with the Base Indenture, the “Indenture”), which contains various restrictive covenants, which are subject to important limitations and exceptions that are described in the Indenture. The Company was in compliance with all covenants related to the Notes as of February 26, 2022.

During Fiscal 2021, the Company purchased approximately $11.0 million aggregate principal amount of its outstanding 3.749% senior unsecured notes due August 1, 2024. The total consideration paid for the notes accepted for purchase of $11.4 million during the fiscal year ended February 26, 2022 included accrued and unpaid interest up to, but not including, the early settlement date. The Company recorded a loss on extinguishment of debt of $0.4 million in its consolidated statement of operations for the fiscal year ended February 26, 2022, including the write off of unamortized debt financing costs related to the extinguished portion of the notes accepted for purchase and reacquisition costs.

During Fiscal 2020, the Company purchased $75.0 million aggregate principal amount of its outstanding 4.915% senior unsecured notes due 2034 and approximately $225.0 million aggregate principal amount of its outstanding 5.165% senior unsecured notes due 2044. The total consideration paid for the notes accepted for purchase of $220.9 million included an early tender premium of $50 per $1,000 principal amount of the notes accepted for purchase, plus accrued and unpaid interest up to, but not including, the early settlement date. The Company recorded a gain on extinguishment of debt of $77.0 million in its consolidated statement of operations for the fiscal year ended February 27, 2021, including the write off of unamortized debt financing costs related to the extinguished portion of the notes accepted for purchase and reacquisition costs. The Company did not purchase any of its outstanding unsecured notes during Fiscal 2019.

As of February 26, 2022 and February 27, 2021, unamortized deferred financing costs associated with the Company’s 3.749% senior unsecured notes due 2024, 4.915% senior unsecured notes due 2034 and 5.165% senior unsecured notes due 2044 were $4.6 million and $5.0 million, respectively, and are included in long-term debt in the Company’s consolidated balance sheets.

Asset-Based Credit Agreement

On August 9, 2021, the Company amended its asset-based credit agreement (the “Amended Credit Agreement”) among the Company, certain of the Company’s U.S. and Canadian subsidiaries party thereto, JPMorgan Chase Bank, N.A., as administrative agent and collateral agent (in such capacity, the “Agent”), and the lenders party thereto, which replaced the Company’s previous $850.0 million Credit Agreement which was due to mature on June 19, 2023.

The Amended Credit Agreement provides for an asset-based revolving credit facility (the “ABL Facility”) with aggregate revolving commitments established at closing of $1.0 billion, including a swingline subfacility and a letter of credit subfacility. The Amended Credit Agreement has an uncommitted expansion feature which allows the borrowers to request, at any time following the delivery of an initial field exam and appraisal, an increase in aggregate revolving commitments under the ABL Facility or elect to enter into a

first-in-last-out

loan facility, collectively, in an aggregate amount of up to $375.0 million, subject to certain customary conditions. The Amended Credit Agreement matures on August 9, 2026.

As of February 26, 2022, the Company had no loans outstanding under the ABL Facility, but had outstanding letters of credit of $96.4 million.

The ABL Facility is secured on a first priority basis (subject to customary exceptions) on all accounts receivable (including credit card receivables), inventory, certain deposit accounts and securities accounts, and certain related assets, of the Company and its subsidiaries that are borrowers or guarantors under the ABL Facility. Amounts available to be drawn from time to time under the ABL Facility (including, in part, in the form of letters of credit) are equal to the lesser of (i) outstanding revolving commitments under the Amended Credit Agreement and (ii) a borrowing base equal to the sum of (a) 90% of eligible credit card receivables plus (b) 90% of eligible inventory, valued at the lower of cost or market value, determined on a weighted average cost basis, minus (c) customary reserves.

Subject to customary exceptions and restrictions, the Company may voluntarily repay outstanding amounts under the ABL Facility at any time without premium or penalty. Any voluntary prepayments made will not reduce commitments under the ABL Facility. If at any time the outstanding amount under the ABL Facility exceeds the lesser of (i) the aggregate revolving commitments and (ii) the borrowing base, the Company will be required to prepay outstanding amounts or cash collateralize letter of credit obligations under the ABL Facility.

Outstanding amounts under the Amended Credit Agreement bear interest at a rate per annum equal to, at the applicable borrower’s election: (i) in the case of loans denominated in U.S. dollars, such loans shall be comprised entirely of Alternate Base Rate (“ABR”) loans and London Inter-Bank Offered (“LIBO”) Rate loans and (ii) in the case of loans denominated in Canadian dollars, such loans shall be comprised entirely of Canadian Prime Rate loans and Canadian Dollar Offered Rate (“CDOR”) loans, in each case as set forth in the Amended Credit Agreement, plus an interest rate margin based on average quarterly availability ranging from (i) in the case of ABR loans and Canadian Prime Rate loans, 0.25% to 0.75%; provided that if ABR or the Canadian Prime Rate is less than 1.00%, such rate shall be deemed to be 1.00%, as applicable, and (ii) in the case of LIBO Rate loans and CDOR Loans, 1.25% to 1.75%; provided that if the CDOR or LIBO Rate is less than 0.00%, such rate shall be deemed to be 0.00%, as applicable.

financial covenant relating to a fixed charge coverage ratio, and restrictions on indebtedness, liens, investments and acquisitions, asset dispositions, restricted payments and prepayment of certain indebtedness. The Company was in compliance with all covenants related to the Amended Credit Agreement as of February 26, 2022.

As of February 26, 2022 and February 27, 2021, unamortized deferred financing costs associated with the Company’s revolving credit facilities were $7.4 million and $6.1 million, respectively, and were recorded in other assets in the Company’s consolidated balance sheets.

The Company amortizes deferred financing costs for the Notes and the ABL Facility over their respective terms and such amortization is included in interest expense, net in the consolidated statements of operations. Interest expense related to the Notes and the revolving credit facilities, including the commitment fee and the amortization of deferred financing costs, was approximately $64.1 million, $73.6 million, and $73.0 million for the fiscal years ended February 26, 2022, February 27, 2021, and February 29, 2020, respectively.

Shareholders' (Deficit) Equity

9 Months Ended

12 Months Ended

Nov. 26, 2022

Feb. 26, 2022

Stockholders' Equity Note [Abstract]

Shareholders' (Deficit) Equity

13)	SHAREHOLDERS’ (DEFICIT) EQUITY

The Company has authorization to make repurchases of shares of the Company’s common stock from time to time in the open market or through other parameters approved by the Board of Directors pursuant to existing rules and regulations.

Between December 2004 and April 2021, the Company’s Board of Directors authorized, through several share repurchase programs, the repurchase of up to $12.950 billion of the Company’s shares of common stock. The Company also acquires shares of its common stock to cover employee related taxes withheld on vested restricted stock, restricted stock units and performance stock unit awards. Since the initial authorization in December 2004, the aggregate total of common stock repurchased is approximately 265.0 million shares for a total cost of approximately $11.731 billion. The Company had approximately $1.221 billion remaining of authorized share repurchases as of November 26, 2022.

Decisions regarding share repurchases are within the discretion of the Board of Directors, and are influenced by a number of factors, including the price of the Company’s common stock, general business and economic conditions, the Company’s financial condition and operating results, the emergence of alternative investment or acquisition opportunities, changes in business strategy and other factors. The Company’s share repurchase program could change, and could be influenced by several factors, including business and market conditions, such as the impact of the

COVID-19

pandemic. The Company reviews its alternatives with respect to its capital structure on an ongoing basis. Any future share repurchases will be subject to the determination of the Board of Directors, based on an evaluation of the Company’s earnings, financial condition and requirements, business conditions and other factors, including the restrictions on share repurchases under the ABL Facility (see “Long-Term Debt,” Note 12).

In connection with its share repurchase program, during the nine months ended November 26, 2022, the Company repurchased approximately 2.3 million shares of its common stock at a total cost of approximately $40.4 million, including fees. There were no share repurchases during the three months ended November 26, 2022 as the share repurchase program was completed in the first quarter of fiscal 2022. During the three and nine months ended November 27, 2021, the Company repurchased approximately 5.1 million and 13.4 million shares, respectively, of its common stock, at a total cost of approximately $113.4 million and $344.6 million, respectively, including fees. Additionally, during the nine months ended November 26, 2022, the Company

repurchased approximately 0.6 million shares of its common stock, with 0.3 million shares repurchased during the three months ended November 26, 2022, to cover employee related taxes withheld on vested restricted stock, restricted stock unit awards and performance stock unit awards, at a total cost of approximately $2.7 million and $5.5 million, respectively, for the three and nine months ended November 26, 2022. During the three and nine months ended November 27, 2021, the Company repurchased approximately 0.2 million and 0.6 million shares, respectively, of its common stock, to cover employee related taxes withheld on vested restricted stock, restricted stock unit awards and performance stock unit awards, at a total cost of approximately $5.5 million and $14.3 million, respectively.

In January 2021, the Company entered into an accelerated share repurchase agreement to repurchase an aggregate $150.0 million of its common stock, subject to market conditions. This resulted in the repurchase of 5.0 million shares in the fourth quarter of fiscal 2020, and an additional 0.2 million shares received upon final settlement in the first quarter of fiscal 2021.

On August 31, 2022, the Company established an at the market equity distribution program (the “ATM Program”) by entering into an Open Market Sale AgreementSM with Jefferies LLC, acting as sales agent for the Company, pursuant to which the Company may issue and sell, from time to time, shares of its common stock, par value $0.01 per share, in any method permitted by law deemed to be an “at the market offering” as defined in Rule 415(a)(4) under the Securities Act of 1933, as amended. Pursuant to the prospectus supplement dated August 31,2022, the Company offered and sold 12 million shares of common stock for net proceeds of $72.2 million. On October 28, 2022, the Company filed a prospectus supplement to register additional shares of its common stock, par value $0.01 per share, to offer and sell under its ATM Program at an aggregate sales price of up to $150.0 million. The potential net proceeds, after commissions and offering costs, from the ATM Program were expected to be used for a number of general corporate purposes, which included immediate strategic priorities such as rebalancing the Company’s assortment and inventory, and the repayment, refinancing, redemption or repurchase of existing indebtedness. During both the three and nine months ended November 26, 2022, the Company has sold approximately 22.2 million shares for approximately $115.4 million of net proceeds under the ATM Program. Shares having an aggregate offering price of $105.6 million remained unsold under the ATM program as of the end of fiscal December 2022.

During fiscal 2016, the Company’s Board of Directors authorized a quarterly dividend program. In March 2020, the Company suspended its future quarterly declarations of cash dividends as a result of the

COVID-19

pandemic. During the three and nine months ended November 26, 2022 total cash dividends of less than $0.1 million and $0.3 million (consisting of dividends paid on unvested shares), respectively, were paid. During the three and nine months ended November 27, 2021, total cash dividends of $0.1 million and $0.8 million (consisting of dividends paid on restricted shares that vested in fiscal 2021), respectively, were paid. Any future quarterly cash dividend payments on its common stock will be subject to the determination by the Board of Directors, based on evaluation of the Company’s earnings, financial condition and requirements, business conditions and other factors, including the restrictions on the payment of dividends contained in the Amended Credit Agreement (see “Long-Term Debt,” Note 12).

Cash dividends, if any, are accrued as a liability on the Company’s consolidated balance sheets and recorded as a decrease to retained earnings when declared.

14.	SHAREHOLDERS’ EQUITY

Between December 2004 and April 2021, the Company’s Board of Directors authorized, through several share repurchase programs, the repurchase of $12.950 billion of its shares of common stock. The Company also acquires shares of its common stock to cover employee related taxes withheld on vested restricted stock, restricted stock units and performance stock unit awards. Since the initial authorization in December 2004, the aggregate total of common stock repurchased is approximately 262.2 million shares for a total cost of approximately $11.685 billion. The Company had approximately $1.267 billion remaining of authorized share repurchases as of February 26, 2022.

COVID-19

In connection with its share repurchase program, during the twelve months ended February 26, 2022, the Company repurchased approximately 27.7 million shares of its common stock, at a total cost of approximately $574.9 million, including fees. Additionally, during the twelve months ended February 26, 2022, the Company repurchased approximately 0.6 million shares of its common stock, at a total cost of approximately $14.5 million, to cover employee related taxes withheld on vested restricted stock, restricted stock unit awards and performance stock unit awards.

In the first quarter of Fiscal 2020, the Company had postponed share repurchases, but lifted this postponement in October 2020. In October 2020, the Company entered into an accelerated share repurchase agreement with JPMorgan Chase Bank, National Association to repurchase $225.0 million of its common stock, subject to market conditions, which settled in the fourth quarter of Fiscal 2020, resulting in the repurchase of a total of 10.8 million shares. In January 2021, the Company entered into a second accelerated share repurchase agreement to repurchase an aggregate $150.0 million of its common stock, subject to market conditions. This

resulted in the repurchase of 5.0 million shares in the fourth quarter of Fiscal 2020, and an additional 0.2 million shares received upon final settlement in the first quarter of Fiscal 2021.

During Fiscal 2016, the Company’s Board of Directors authorized a quarterly dividend program. In March 2020, the Company suspended its future quarterly declarations of cash dividends as a result of the

COVID-19

pandemic. During Fiscal 2021, 2020, and 2019, total cash dividends of $0.7 million, $23.1 million, and $85.5 million, respectively, were paid. Any future quarterly cash dividend payments on its common stock will be subject to the determination by the Board of Directors, based on an evaluation of the Company’s earnings, financial condition and requirements, business conditions and other factors, including the restrictions on the payment of dividends contained in the Amended Credit Agreement (see “Long Term Debt,” Note 7).

Cash dividends, if any, are accrued as a liability on the Company’s consolidated balance sheets and recorded as a decrease to retained earnings when declared.

- Definition

The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.

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+ Details