DERIVATIVES AND HEDGING ACTIVITIES

6 Months Ended

Jan. 28, 2023

Derivative Instruments and Hedging Activities Disclosure [Abstract]

DERIVATIVES AND HEDGING ACTIVITIES

DERIVATIVES AND HEDGING ACTIVITIES

The Company is exposed to interest rate risk arising from fluctuations in SOFR related to the Company’s Credit Facility. The Company manages exposure to this risk and the variability of related cash flows primarily by the use of derivative financial instruments, specifically, interest rate swaps.

The Company’s objectives in using interest rate swaps are to add stability to interest expense and to manage its exposure to interest rate movements. Interest rate swaps designated as cash flow hedges involve the receipt of variable amounts from a counterparty in exchange for the Company making fixed-rate payments over the life of the agreements without exchange of the underlying notional amount.

As of January 28, 2023, the Company had five interest rate swaps with an aggregate initial notional value of $99,975 to hedge the variable cash flows associated with variable-rate loans under the Company's Credit Facility. The interest rate swaps were executed for risk management and are not held for trading purposes. The objective of the interest rate swaps is to hedge the variability of cash flows resulting from fluctuations in the reference rate. The swaps replaced the applicable reference rate with fixed interest rates and payments are settled monthly when payments are made on the variable-rate loans. The Company's derivatives qualify and have been designated as cash flow hedges of interest rate risk. The gain or loss on the derivative is recorded in Accumulated other comprehensive income and subsequently reclassified into interest expense in the same period during which the hedged transaction affects earnings. Amounts reported in Accumulated other comprehensive

income related to derivatives will be reclassified to interest expense as interest payments are made on the variable-rate loans. The Company reclassified $506 and $85 during the 13 weeks ended January 28, 2023 and January 29, 2022, respectively, and $748 and $173 during the 26 weeks ended January 28, 2023 and January 29, 2022, respectively, from Accumulated other comprehensive income to Interest expense.The notional value of the interest rate swaps were $81,558 as of January 28, 2023. The fair value of interest rate swaps recorded in Other assets in the consolidated balance sheets is $8,284 as of January 28, 2023.