0001766502-19-000017.txt : 20191209 0001766502-19-000017.hdr.sgml : 20191209 20191209163031 ACCESSION NUMBER: 0001766502-19-000017 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 53 CONFORMED PERIOD OF REPORT: 20191103 FILED AS OF DATE: 20191209 DATE AS OF CHANGE: 20191209 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Chewy, Inc. CENTRAL INDEX KEY: 0001766502 STANDARD INDUSTRIAL CLASSIFICATION: RETAIL-CATALOG & MAIL-ORDER HOUSES [5961] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 0202 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-38936 FILM NUMBER: 191275567 BUSINESS ADDRESS: STREET 1: 1855 GRIFFIN ROAD, SUITE B-42 CITY: DANIA BEACH STATE: FL ZIP: 33004 BUSINESS PHONE: 786-320-7111 MAIL ADDRESS: STREET 1: 1855 GRIFFIN ROAD, SUITE B-42 CITY: DANIA BEACH STATE: FL ZIP: 33004 10-Q 1 chewyq3201910-q.htm 10-Q Document
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended November 3, 2019
or
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____ to ____
Commission File Number: 001-38936
chewylogoapproved.jpg
CHEWY, INC.
(Exact name of registrant as specified in its charter)
Delaware
 
90-1020167
(State or other jurisdiction of incorporation or organization)
 
(I.R.S. Employer Identification No.)
1855 Griffin Road, Suite B-428
,
Dania Beach
,
Florida
 
33004
(Address of principal executive offices)
 
(Zip Code)
(786) 320-7111
(Registrant’s telephone number, including area code)
N/A
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
Class A Common Stock, par value $0.01 per share
CHWY
New York Stock Exchange
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and such files).    Yes No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act:
Large accelerated filer
Accelerated filer
Non-accelerated filer
Smaller reporting company
 
 
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No
Class
 
Outstanding as of December 2, 2019
Class A Common Stock, $0.01 par value per share
 
53,475,000
Class B Common Stock, $0.01 par value per share
 
345,125,000



CHEWY, INC.
FORM 10-Q
For the Quarterly Period Ended November 3, 2019

TABLE OF CONTENTS
 
 
Page
 
 
Item 1.
 
 
 
 
 
Item 2.
Item 3.
Item 4.
 
 
Item 1.
Item 1A.
Item 6.
 




CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains forward-looking statements about us and our industry that involve substantial risks and uncertainties. All statements other than statements of historical facts contained in this Quarterly Report on Form 10-Q, including statements regarding our future results of operations or financial condition, business strategy and plans and objectives of management for future operations, are forward-looking statements. In some cases, you can identify forward-looking statements because they contain words such as “anticipate,” “believe,” “contemplate,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “potential,” “predict,” “project,” “should,” “target,” “will” or “would” or the negative of these words or other similar terms or expressions. These forward-looking statements include, but are not limited to, statements concerning our ability to:
sustain our recent growth rates and manage our growth effectively;
acquire new customers in a cost-effective manner and increase our net sales per active customer;
accurately predict economic conditions and their impact on consumer spending patterns, particularly in the pet products market, and accurately forecast net sales and appropriately plan our expenses in the future;
introduce new products or offerings and improve existing products;
successfully compete in the pet products and services retail industry, especially in the e-commerce sector;
source additional, or strengthen our existing relationships with, suppliers;
negotiate acceptable pricing and other terms with third-party service providers, suppliers and outsourcing partners and maintain our relationships with such entities;
optimize, operate and manage the expansion of the capacity of our fulfillment centers;
provide our customers with a cost-effective platform that is able to respond and adapt to rapid changes in technology;
maintain adequate cybersecurity with respect to our systems and ensure that our third-party service providers do the same with respect to their systems;
successfully manufacture and sell our own private brand products;
maintain consumer confidence in the safety and quality of our vendor-supplied and private brand food products and hardgood products;
comply with existing or future laws and regulations in a cost-efficient manner;
attract, develop, motivate and retain well-qualified employees; and
adequately protect our intellectual property rights and successfully defend ourselves against any intellectual property infringement claims or other allegations that we may be subject to.

You should not rely on forward-looking statements as predictions of future events. We have based the forward-looking statements contained in this Quarterly Report on Form 10-Q primarily on our current expectations and projections about future events and trends that we believe may affect our business, financial condition, and results of operations. The outcome of the events described in these forward-looking statements is subject to risks, uncertainties and other factors described in the section titled “Risk Factors” and elsewhere in this Quarterly Report on Form 10-Q. Moreover, we operate in a very competitive and rapidly changing environment. New risks and uncertainties emerge from time to time, and it is not possible for us to predict all risks and uncertainties that could have an impact on the forward-looking statements contained in this Quarterly Report on Form 10-Q. The results, events and circumstances reflected in the forward-looking statements may not be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements.

In addition, statements that “we believe” and similar statements reflect our beliefs and opinions on the relevant subject. These statements are based on information available to us as of the date of this Quarterly Report on Form 10-Q. While we believe that information provides a reasonable basis for these statements, that information may be limited or incomplete. Our statements should not be read to indicate that we have conducted an exhaustive inquiry into, or review of, all relevant information. These statements are inherently uncertain, and investors are cautioned not to unduly rely on these statements.







The forward-looking statements made in this Quarterly Report on Form 10-Q relate only to events as of the date on which the statements are made. We undertake no obligation to update any forward-looking statements made in this Quarterly Report on Form 10-Q to reflect events or circumstances after the date of this Quarterly Report on Form 10-Q or to reflect new information or the occurrence of unanticipated events, except as required by law. We may not actually achieve the plans, intentions or expectations disclosed in our forward-looking statements, and you should not place undue reliance on our forward-looking statements. Our forward-looking statements do not reflect the potential impact of any future acquisitions, mergers, dispositions, joint ventures or investments.

Investors and others should note that we may announce material financial information to our investors using our investor relations website (https://investor.chewy.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on social media could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.




PART I. FINANCIAL INFORMATION

Item 1. Financial Statements (Unaudited)
CHEWY, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share data)

 
As of
 
November 3,
2019
 
February 3,
2019
Assets
(Unaudited)
 
 
Current assets:
 
 
 
Cash and cash equivalents
$
135,871

 
$
88,331

Accounts receivable
94,087

 
48,738

Inventories
289,935

 
220,855

Due from Parent, net
11,764

 
78,712

Prepaid expenses and other current assets
34,557

 
11,949

Total current assets
566,214

 
448,585

Property and equipment, net
107,703

 
91,691

Operating lease right-of-use assets
181,035

 

Other non-current assets
3,735

 
1,346

Total assets
$
858,687

 
$
541,622

Liabilities and stockholders’ deficit
 
 
 
Current liabilities:
 
 
 
Trade accounts payable
$
637,687

 
$
502,880

Accrued expenses and other current liabilities
373,744

 
311,150

Total current liabilities
1,011,431

 
814,030

Operating lease liabilities
202,621

 

Other long-term liabilities
34,092

 
63,534

Total liabilities
1,248,144

 
877,564

Commitments and contingencies (Note 4)

 

Stockholders’ deficit:
 
 
 
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019

 

Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 53,475,000 shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019
535

 

Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 345,125,000 shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019
3,451

 

Voting common stock, $0.01 par value per share, no shares authorized, issued or outstanding as of November 3, 2019; 1,000 shares authorized, 100 shares issued and outstanding as of February 3, 2019

 

Additional paid-in capital
1,390,089

 
1,256,160

Accumulated deficit
(1,783,532
)
 
(1,592,102
)
Total stockholders’ deficit
(389,457
)
 
(335,942
)
Total liabilities and stockholders’ deficit
$
858,687

 
$
541,622

See accompanying Notes to Condensed Consolidated Financial Statements.



1



CHEWY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
(Unaudited)

 
13 Weeks Ended
 
39 Weeks Ended
 
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
Net sales
$
1,229,801

 
$
875,630

 
$
3,492,218

 
$
2,444,679

Cost of goods sold
938,021

 
703,589

 
2,674,313

 
1,956,774

Gross profit
291,780

 
172,041

 
817,905

 
487,905

Operating expenses:
 
 
 
 
 
 
 
Selling, general and administrative
258,488

 
150,375

 
684,948

 
413,275

Advertising and marketing
112,071

 
100,163

 
325,086

 
276,087

Total operating expenses
370,559

 
250,538

 
1,010,034

 
689,362

Loss from operations
(78,779
)
 
(78,497
)
 
(192,129
)
 
(201,457
)
Interest (expense) income, net
(221
)
 
(121
)
 
699

 
(90
)
Loss before income tax provision
(79,000
)
 
(78,618
)
 
(191,430
)
 
(201,547
)
Income tax provision

 

 

 

Net loss
$
(79,000
)
 
$
(78,618
)
 
$
(191,430
)
 
$
(201,547
)
 
 
 
 
 
 
 
 
Net loss per share attributable to common Class A and Class B stockholders, basic and diluted
$
(0.20
)
 
$
(0.20
)
 
$
(0.48
)
 
$
(0.51
)
Weighted average common shares used in computing net loss per share attributable to common Class A and Class B stockholders, basic and diluted
401,317

 
393,000

 
397,235

 
393,000

See accompanying Notes to Condensed Consolidated Financial Statements.



2



CHEWY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(in thousands)
(Unaudited)

 
13 Weeks Ended November 3, 2019
 
Class A and Class B Common Stock
 
Additional Paid-in Capital
 
Accumulated Deficit
 
Total Stockholders’ Deficit
 
Shares
 
 Amount
 
 
 
Balance as of August 4, 2019
398,600

 
$
3,986

 
$
1,338,813

 
$
(1,704,532
)
 
$
(361,733
)
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs

 

 
(235
)
 

 
(235
)
Share-based compensation expense

 

 
39,348

 

 
39,348

Contribution from Parent

 

 
325

 

 
325

Tax sharing agreement with Parent

 

 
11,838

 

 
11,838

Net loss

 

 

 
(79,000
)
 
(79,000
)
Balance as of November 3, 2019
398,600

 
$
3,986

 
$
1,390,089

 
$
(1,783,532
)
 
$
(389,457
)
 
 
 
 
 
 
 
 
 
 
 
13 Weeks Ended October 28, 2018
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Deficit
 
Total Stockholders’ Deficit
 
Shares
 
 Amount
 
 
 
Balance as of July 29, 2018

 
$

 
$
1,248,477

 
$
(1,447,141
)
 
$
(198,664
)
Share-based compensation expense

 

 
3,229

 

 
3,229

Contribution from Parent

 

 
325

 

 
325

Net loss

 

 

 
(78,618
)
 
(78,618
)
Balance as of October 28, 2018

 
$

 
$
1,252,031

 
$
(1,525,759
)
 
$
(273,728
)
See accompanying Notes to Condensed Consolidated Financial Statements.


3



CHEWY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ DEFICIT
(in thousands)
(Unaudited)


 
39 Weeks Ended November 3, 2019
 
Class A and Class B Common Stock
 
Additional Paid-in Capital
 
Accumulated Deficit
 
Total Stockholders’ Deficit
 
Shares
 
 Amount
 
 
 
Balance as of February 3, 2019

 
$

 
$
1,256,160

 
$
(1,592,102
)
 
$
(335,942
)
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs
5,600

 
56

 
110,293

 

 
110,349

Change in capital structure
393,000

 
3,930

 
(3,930
)
 

 

Share-based compensation expense

 

 
90,361

 

 
90,361

Contribution from Parent

 

 
975

 

 
975

Tax sharing agreement with Parent

 

 
15,740

 

 
15,740

Termination of loan from Parent

 

 
(79,510
)
 

 
(79,510
)
Net loss

 

 

 
(191,430
)
 
(191,430
)
Balance as of November 3, 2019
398,600

 
$
3,986

 
$
1,390,089

 
$
(1,783,532
)
 
$
(389,457
)
 
 
 
 
 
 
 
 
 
 
 
39 Weeks Ended October 28, 2018
 
Common Stock
 
Additional Paid-in Capital
 
Accumulated Deficit
 
Total Stockholders’ Deficit
 
Shares
 
 Amount
 
 
 
Balance as of January 28, 2018

 
$

 
$
1,240,509

 
$
(1,324,212
)
 
$
(83,703
)
Share-based compensation expense

 

 
10,547

 

 
10,547

Contribution from Parent

 

 
975

 

 
975

Net loss

 

 

 
(201,547
)
 
(201,547
)
Balance as of October 28, 2018

 
$

 
$
1,252,031

 
$
(1,525,759
)
 
$
(273,728
)
See accompanying Notes to Condensed Consolidated Financial Statements.

4



CHEWY, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(Unaudited)

 
39 Weeks Ended
 
November 3,
2019
 
October 28,
2018
Cash flows from operating activities
 
 
 
Net loss
$
(191,430
)
 
$
(201,547
)
Adjustments to reconcile net loss to net cash used in operating activities:
 
 
 
Depreciation and amortization
22,716

 
16,385

Share-based compensation expense
90,361

 
10,547

Non-cash lease expense
13,571

 

Amortization of deferred rent

 
7,630

Other
2,075

 
506

Net change in operating assets and liabilities:
 
 
 
Accounts receivable
(45,348
)
 
(3,779
)
Inventories
(69,081
)
 
(52,454
)
Prepaid expenses and other current assets
(25,619
)
 
(4,237
)
Other non-current assets
(2,397
)
 
797

Trade accounts payable
134,807

 
90,034

Accrued expenses and other current liabilities
46,899

 
35,853

Operating lease liabilities
(6,006
)
 

Other long-term liabilities
1,699

 
7,888

Net cash used in operating activities
(27,753
)
 
(92,377
)
Cash flows from investing activities
 
 
 
Capital expenditures
(38,539
)
 
(36,330
)
Cash advances provided to Parent
(50,888
)
 
(115,602
)
Cash reimbursements of advances provided to Parent
39,568

 
175,745

Net cash (used in) provided by investing activities
(49,859
)
 
23,813

Cash flows from financing activities
 
 
 
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs
110,576

 

Proceeds from tax sharing agreement with Parent
14,500

 

Payment of debt issuance costs
(781
)
 

Contribution from Parent
975

 
975

Principal repayments of finance lease obligations
(118
)
 
(10
)
Net cash provided by financing activities
125,152

 
965

Net increase (decrease) in cash and cash equivalents
47,540

 
(67,599
)
Cash and cash equivalents, as of beginning of period
88,331

 
68,767

Cash and cash equivalents, as of end of period
$
135,871

 
$
1,168

 
 
 
 
Supplemental disclosures of non-cash investing and financing activities:
 
 
 
Assets acquired in exchange for new operating lease liabilities
$
29,429

 
$

See accompanying Notes to Condensed Consolidated Financial Statements.

5



CHEWY, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1.
Description of Business and Basis of Presentation

Description of Business

Chewy, Inc. and its wholly-owned subsidiaries (collectively “Chewy” or the “Company”) is a pure play e-commerce business geared toward pet products for dogs, cats, fish, birds, small pets, horses, and reptiles. Chewy serves its customers through its retail website, www.chewy.com, and its mobile applications and focuses on delivering exceptional customer service, a large selection of high-quality pet food, treats and supplies, and pet healthcare products; price, convenience (including Chewy’s Autoship subscription program), fast shipping, and hassle-free returns.

PetSmart Acquisition

On May 31, 2017, the Company was acquired by PetSmart, Inc. (“PetSmart” or the “Parent”), a leading specialty provider of products, services and solutions for the lifetime needs of pets. This change-in-control event is referred to as the “PetSmart Acquisition”. PetSmart is wholly-owned by a consortium including private investment funds advised by BC Partners, La Caisse de dépôt et placement du Québec, affiliates of GIC Special Investments Pte Ltd, affiliates of StepStone Group LP and funds advised by Longview Asset Management, LLC (collectively, the “Sponsors”), and controlled by affiliates of BC Partners.

Initial Public Offering

On June 18, 2019, the Company closed its initial public offering (“IPO”), in which it issued and sold 5.6 million shares of its Class A common stock. The price at IPO was $22.00 per share. The Company received net proceeds of approximately $110.3 million from the IPO after deducting underwriting discounts and commissions of $6.2 million and offering costs.

Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock. In connection with the IPO, 47,875,000 shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, 53,475,000 shares of the Company’s Class A common stock and 345,125,000 shares of Class B common stock were outstanding. The Class A common stock outstanding includes the shares issued in the IPO.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and related notes include the accounts of Chewy, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements and notes thereto of Chewy, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) accounting standards codification. In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the quarterly period ended November 3, 2019 are not necessarily indicative of the results for the entire fiscal year. The unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2019 (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 17, 2019 (the “Prospectus”).

Fiscal Year

The Company has a 52 or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Each fiscal year generally consists of four 13-week fiscal quarters, with each fiscal quarter ending on the Sunday that is closest to the last day of the last month of the quarter.


6



2.
Summary of Significant Accounting Policies

Other than policies noted within Recent Accounting Pronouncements below, there have been no significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Prospectus.

Use of Estimates

GAAP requires management to make certain estimates, judgments, and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates.

Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets, contingencies and the valuation and assumptions underlying share-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2016-02, Leases. In February 2016, the FASB issued this Accounting Standards Update (“ASU”) to provide a comprehensive lease accounting model that requires lessees to recognize lease liabilities and corresponding right-of-use assets for most leases. The new guidance also changes the definition of a lease and requires enhanced disclosures of pertinent quantitative and qualitative information about an entity’s leasing activities. The FASB subsequently issued ASU 2018-10 allowing entities to initially apply ASU 2016-02 at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These ASUs became effective at the beginning of the Company’s 2019 fiscal year. The Company adopted this ASU by applying the new guidance to new and existing leases effective February 4, 2019, with no restatement of comparative periods. The Company elected the package of practical expedients, which permitted the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also made an accounting policy election to not recognize right-of-use assets and lease liabilities arising from short-term leases on its condensed consolidated balance sheets. The adoption of this ASU did not result in a cumulative effect adjustment to accumulated deficit. Upon adoption, the Company recognized operating lease right-of-use assets of $162.8 million and operating lease liabilities of $193.6 million. The adoption of this new guidance did not have a material net impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.

The Company has operating and finance lease agreements for its fulfillment and customer service centers, corporate offices, and certain equipment. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating and finance lease right-of-use assets are recorded in the condensed consolidated balance sheets based on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. Lease payments are generally fixed but may include provisions for future rent increases based on a market index. The Company separately accounts for lease and non-lease components within lease agreements; the non-lease components primarily relate to common area maintenance for real estate leases. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.

Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the condensed consolidated balance sheets. Payments for short-term leases are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.




7



ASU 2018-07, Stock Compensation; Improvements to Nonemployee Share-Based Payment Accounting. In June 2018, the FASB issued this ASU to expand the scope of Topic 718, Compensation-Stock Compensation to include share-based payment awards to be issued to non-employees in exchange for acquiring goods and services. The ASU aligned the accounting for awards issued to non-employees to be similar to employee awards. This update became effective at the beginning of the Company’s 2019 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement. In August 2018, the FASB issued this ASU to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective at the beginning of the Company’s 2020 fiscal year. The Company does not believe the adoption of this new guidance will have a material impact on its consolidated financial statements and disclosures.

3.
Accrued Expenses and Other Current Liabilities

The following table presents the components of accrued expenses and other current liabilities (in thousands):

 
As of
 
November 3,
2019
 
February 3,
2019
Outbound fulfillment
$
163,057

 
$
147,610

Advertising and marketing
105,208

 
85,421

Accrued expenses and other
105,479

 
78,119

Total accrued expenses and other current liabilities
$
373,744

 
$
311,150



4.
Commitments and Contingencies

As of November 3, 2019, there were no material changes to the Company’s advertising and services purchase commitments and legal matters disclosed in Note 5 of the “Notes to Consolidated Financial Statements” included in the Prospectus.

5.
Debt

ABL Credit Facility

On June 18, 2019, the Company entered into a new five-year senior secured asset-backed credit facility (the “ABL Credit Facility”) which provides for non-amortizing revolving loans in an aggregate principal amount of up to $300 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities in an aggregate principal amount of up to $100 million, subject to customary conditions.

Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Company’s option, either a base rate or a LIBOR rate. The applicable margin is generally determined based on the average excess liquidity during the immediately preceding fiscal quarter as a percentage of the maximum borrowing amount under the ABL Credit Facility, and is between 0.25% and 0.75% for base rate loans and between 1.25% and 1.75% for LIBOR loans. The Company is also required to a pay commitment fee of between 0.25% and 0.375% with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility.

All obligations under the ABL Credit Facility are guaranteed on a senior secured first-lien basis by the Company’s wholly-owned domestic subsidiaries, subject to certain exceptions, and secured, subject to permitted liens and other exceptions, by a perfected first-priority security interest in substantially all of the Company’s and its wholly-owned domestic subsidiaries’ assets.

8




The ABL Credit Facility contains a number of covenants that, among other things, restrict the Company’s and its restricted subsidiaries’ ability to:

incur or guarantee additional debt and issue certain equity securities;
make certain investments and acquisitions;
make certain restricted payments and payments of certain indebtedness;
incur certain liens or permit them to exist;
enter into certain types of transactions with affiliates;
merge or consolidate with another company; and
transfer, sell or otherwise dispose of assets.

Each of these restrictions is subject to various exceptions.

In addition, the ABL Credit Facility requires the Company to maintain a minimum fixed charge coverage ratio of 1.0:1.0 if excess availability under the facility is less than the greater of 10% of the maximum borrowing amount and $30 million for a certain period of time. The ABL Credit Facility also contains certain customary affirmative covenants and events of default for facilities of this type, including an event of default upon a change in control. As of November 3, 2019, the Company had no outstanding borrowings under the ABL Credit Facility.

6.
Leases

The Company leases all of its fulfillment and customer service centers and corporate offices under non-cancelable operating lease agreements. The terms of the Company’s real estate leases generally range from 5 to 15 years and typically allow for the leases to be renewed for up to three additional five-year terms. Fulfillment and customer service centers and corporate office leases, including exercised renewal options, expire at various dates through 2031. The Company also leases certain equipment under operating and finance leases. The terms of equipment leases generally range from 3 to 5 years and do not contain renewal options. These leases expire at various dates through 2024.

The Company’s finance leases as of November 3, 2019 were not material. The table below presents the operating lease-related assets and liabilities recorded on the condensed consolidated balance sheets (in thousands):

Leases
 
Balance Sheet Classification
 
As of November 3, 2019
Assets
 
 
 
 
Operating
 
Operating lease right-of-use assets
 
$
181,035

Total operating lease assets
 
 
 
$
181,035

 
 
 
 
 
Liabilities
 
 
 
 
Current
 
 
 
 
Operating
 
Accrued expenses and other current liabilities
 
$
14,451

Non-current
 
 
 
 
Operating
 
Operating lease liabilities
 
202,621

Total operating lease liabilities
 
 
 
$
217,072



Lease expense primarily related to operating lease costs. Lease expense for the thirteen and thirty-nine weeks ended November 3, 2019 was $12.3 million and $35.2 million, respectively, of which short-term and variable lease payments were $2.1 million and $6.1 million, respectively, and were included within selling, general and administrative expenses in the condensed consolidated statements of operations.

As of November 3, 2019, the weighted-average remaining lease term and weighted-average discount rate for operating leases was 11.6 years and 11.3%, respectively.

Operating cash flows related to cash paid for operating leases were approximately $27.4 million for the thirty-nine weeks ended November 3, 2019.

9




The table below presents the maturity of lease liabilities as of November 3, 2019 (in thousands):
 
Operating Leases
Remainder of 2019
$
5,585

2020
38,753

2021
37,429

2022
35,137

2023
30,580

Thereafter
260,391

Total lease payments
407,875

Less: interest
190,803

Present value of lease liabilities
$
217,072


The table above includes all locations for which the Company had the right to control the use of the property. In addition, as of November 3, 2019 the Company had lease arrangements which had not yet commenced with total future lease payments of approximately $115 million. The lease terms for these lease arrangements are approximately 16 years.

7.
Capital Stock

Common Stock

Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock. In connection with the IPO, 47,875,000 shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, 53,475,000 shares of the Company’s Class A common stock and 345,125,000 shares of Class B common stock were outstanding.

Voting Rights

Holders of the Company’s Class A and Class B common stock are entitled to vote together as a single class on all matters submitted to a vote or for the consent of the stockholders of the Company, unless otherwise required by law or the Company’s amended and restated certificate of incorporation. Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share.

Dividends

Subject to the preferences applicable to any series of preferred stock, if any, outstanding, holders of Class A and Class B common stock are entitled to share equally, on a per share basis, in dividends and other distributions of cash, property or securities of the Company.

Liquidation

Subject to the preferences applicable to any series of preferred stock, if any, outstanding, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, all assets of the Company available for distribution to common stockholders would be divided among and paid ratably to holders of Class A and Class B common stock.

Conversion of Class B Common Stock

Voluntary Conversion

Each share of Class B common stock is convertible into one fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof with the prior written consent of the Company.



10




Automatic Conversion

All shares of Class B common stock shall automatically, without further action by any holder, be converted into an identical number of shares of fully paid and nonassessable Class A common stock (i) on the first trading day on or after the date on which the outstanding shares of Class B common stock constitute less than 7.5% of the aggregate number of shares of common stock then outstanding, or (ii) upon the occurrence of an event, specified by the affirmative vote (or written consent) of the holders of a majority of the then-outstanding shares Class B common stock, voting as a separate class.

In addition, each share of Class B common stock will convert automatically into one share of Class A common stock (i) upon the sale or transfer of such share of Class B common stock, except for certain transfers described in the Company’s amended and restated certificate of incorporation, including transfers to affiliates of the holder and another holder of Class B common stock, or (ii) if the holder is not an affiliate of any of the Sponsors.

Preferred Stock

Preferred stock may be issued from time to time by the Company for such consideration as may be fixed by the board of directors. Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled to only such voting rights, if any, as shall expressly be granted by the Company’s amended and restated certificate of incorporation.

8.
Share-Based Compensation

2019 Omnibus Incentive Plan

In June 2019, the Company’s board of directors adopted and approved the 2019 Omnibus Incentive Plan (the “2019 Plan”). The 2019 Plan became effective on June 13, 2019 and allows for the issuance of up to 31,864,865 shares of Class A common stock. No awards may be granted under the 2019 Plan after June 2029.

The 2019 Plan provides for the grant of stock options, including incentive stock options, non-qualified stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance shares, other incentive awards, stock appreciation rights, and cash awards (collectively “awards”). The awards may be granted to the Company’s employees, consultants, and directors, and the employees and consultants of the Company’s affiliates and subsidiaries.

RSUs

In connection with the consummation of the IPO, the Company granted RSUs under the 2019 Plan. Certain of these RSUs vest upon satisfaction of both a service-based vesting condition (the “Service Condition”) and a performance-based vesting condition (the “Share Price Condition”) as described below.

The Service Condition will be satisfied with respect to 25% of an employee’s RSUs on the first anniversary of the 2019 Plan’s registration date and then with respect to 12.5% of an employee’s RSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date.

The Share Price Condition shall be satisfied with respect to a percentage of an employee’s RSUs, as and when the price per share of Class A common stock specified (each, a “Share Price Hurdle”) is achieved, on a volume adjusted weighted-average basis, on every trading day during a consecutive 45-trading day period completed prior to the fifth anniversary of the 2019 Plan’s effective date subject to the employee’s continued employment with the Company through the applicable vesting date.


11



RSU Activity

The following table summarizes the activity related to the Company’s RSUs for the thirty-nine weeks ended November 3, 2019 (in thousands, except for weighted average grant date fair value):
 
Number of RSUs
 
Weighted Average Grant Date Fair Value
Outstanding as of February 3, 2019

 
$

Granted
25,892

 
36.58

Vested
(2,717
)
 
36.85

Forfeited
(2,266
)
 
36.73

Unvested and outstanding as of November 3, 2019
20,909

 
$
36.57



The total fair value of RSUs that vested during the thirty-nine weeks ended November 3, 2019 was $101.5 million. As of November 3, 2019, total unrecognized compensation expense related to unvested RSUs was $224.0 million and is expected to be recognized over a weighted-average expected performance period of 2.0 years.

The fair value of the RSUs with share price hurdles was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies with the following assumptions:

Performance period
5 years
Weighted-average risk-free interest rate
1.8%
Weighted-average volatility
49.7%
Weighted-average dividend yield
%


The risk-free interest rate utilized is based on a 5-year term-matched zero-coupon U.S. Treasury security yield at the time of grant. Expected volatility is based on historical volatility of the stock of the Company’s peer firms. 

As of November 3, 2019, there were 8.2 million additional shares of Class A common stock reserved for future issuance under the 2019 Plan.

Citrus Profits Interest Plan

Subsequent to the PetSmart Acquisition, the Company’s share-based compensation included profits interests units (“PIUs”) granted by Citrus Intermediate Holdings L.P. (the “Citrus Partnership”), a Delaware limited partnership (the “Citrus Profits Interest Plan”). The Citrus Partnership is a parent company of PetSmart and a wholly-owned subsidiary of the Sponsors. The Company recognizes share-based compensation as equity contributions from the Citrus Partnership in its condensed consolidated financial statements for awards granted under the Citrus Profits Interest Plan as it relates to grantees’ services as employees of the Company.

As of June 13, 2019, an aggregate of 768,785 profits interests units under the Citrus Profits Interest Plan were held by employees of Chewy, Inc. and were canceled.














12



Share-Based Compensation Expense

Share-based compensation expense is included within selling, general and administrative expenses in the condensed consolidated statements of operations. The Company recognized share-based compensation expense as follows (in thousands):

 
13 Weeks Ended
 
39 Weeks Ended
 
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
RSUs
$
39,348

 
$

 
$
80,196

 
$

PIUs

 
3,229

 
10,165

 
10,547

Total share-based compensation expense
$
39,348

 
$
3,229

 
$
90,361

 
$
10,547



9.
Income Taxes

Subsequent to the PetSmart Acquisition, the Company’s losses were included with PetSmart’s consolidated U.S. federal and state income tax returns. Income taxes as presented in the Company’s condensed consolidated financial statements have been prepared on the separate return method as if the Company were a taxpayer separate from PetSmart.

The Company did not have a net current or deferred provision for income taxes for any taxing jurisdiction during the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018.

Concurrent with the IPO, the Company and PetSmart entered into a tax sharing agreement which governs the respective rights, responsibilities, and obligations of the Company and PetSmart with respect to tax matters, including taxes attributable to PetSmart, entitlement to refunds, allocation of tax attributes, preparation of tax returns, certain tax elections, control of tax contests and other tax matters regarding U.S. federal, state, local, and foreign income taxes.

10.
Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders is presented using the two class method required for participating securities. Under the two class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common stock and participating securities. Undistributed earnings for the periods presented are calculated as net loss less distributed earnings.

Basic and diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average shares outstanding during the period. The weighted-average shares outstanding during the periods presented reflects the reclassification of the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock.

For the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018, the Company’s basic and diluted net loss per share attributable to common Class A and Class B stockholders are the same because the Company has generated a net loss to common stockholders and common stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact.

11.
Certain Relationships and Related Party Transactions

The Company’s condensed consolidated financial statements include management fee expenses of $0.3 million and $1.0 million allocated to the Company by the Sponsors and the Parent for organizational oversight and certain limited corporate functions for the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018, respectively. Allocated costs are included within selling, general and administrative expenses in the condensed consolidated statements of operations.

From time to time, prior to the completion of the IPO, the Company used funding from or provided funding to the Parent, as needed, in the normal course of business. The Company and PetSmart were parties to an intercompany loan agreement pursuant to which each party made loans from time to time to the other. In connection with the signing of an underwriting agreement pursuant to which the Company received substantially all of the net proceeds from the Company’s sale of shares of Class A common stock as part of the IPO, the loan agreement was terminated without cash repayment of the outstanding loan. The termination of the intercompany loan resulted in a $79.5 million reduction of the Company’s due from Parent balance during the thirty-nine weeks ended November 3, 2019.


13



Certain of the Company’s pharmacy operations are currently, and have been since launch on July 2, 2018, conducted through a wholly-owned subsidiary of PetSmart. The Company has entered into a services agreement with PetSmart that provides for the payment of a management fee due from PetSmart with respect to this arrangement. The Company recognized $9.9 million and $31.4 million within net sales in the condensed consolidated statement of operations for the services provided during the thirteen and thirty-nine weeks ended November 3, 2019. The services agreement will remain in place for so long as the Company conducts any pharmacy operations through a PetSmart subsidiary. 

In connection with the IPO, the Company was released from its obligations under the Parent’s asset-backed revolving credit facility in accordance with its terms.

PetSmart Guarantees

PetSmart currently provides a guarantee of payment with respect to certain equipment and other leases that the Company has entered into and serves as a guarantor in respect of the Company’s obligations under a credit insurance policy in favor of certain of the Company’s current or future suppliers.


14



Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the Unaudited Condensed Consolidated Financial Statements and related notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2019 (“10-Q Report”) and our final prospectus filed with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 17, 2019 (the “Prospectus”). This discussion contains forward-looking statements that involve risks and uncertainties. As a result of many factors, such as those set forth under the “Risk Factors” and “Cautionary Note Regarding Forward-Looking Statements” sections herein, our actual results may differ materially from those anticipated in these forward-looking statements. Unless the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Chewy,” “the Company,” “we,” “our,” or “us” refer to Chewy, Inc. and its consolidated subsidiaries. 

Investors and others should note that we may announce material financial information to our investors using our investor relations website (https://investor.chewy.com/), SEC filings, press releases, public conference calls and webcasts. We use these channels, as well as social media, to communicate with our investors and the public about our company, our business and other issues. It is possible that the information that we post on social media could be deemed to be material information. We therefore encourage investors to visit these websites from time to time. The information contained on such websites and social media posts is not incorporated by reference into this filing. Further, our references to website URLs in this filing are intended to be inactive textual references only.

Overview

We are the largest pure-play pet e-tailer in the United States, offering virtually every product a pet needs. We launched Chewy in 2011 to bring the best of the neighborhood pet store shopping experience to a larger audience, enhanced by the depth and wide selection of products and around-the-clock convenience that only e-commerce can offer. We believe that we are the preeminent online destination for pet parents as a result of our broad selection of high-quality products, which we offer at great prices and deliver with an exceptional level of care and a personal touch. We are the trusted source for pet parents and continually develop innovative ways for our customers to engage with us. We partner with more than 1,800 of the best and most trusted brands in the pet industry, and we create and offer our own outstanding private brands. Through our website and mobile applications, we offer our customers more than 55,000 products, compelling merchandising, an easy and enjoyable shopping experience, and exceptional customer service.

Fiscal Year End

We have a 52 or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that fiscal year. Each fiscal year generally consists of four 13-week fiscal quarters, with each fiscal quarter ending on the Sunday that is closest to the last day of the last month of the quarter.

Initial Public Offering

On June 13, 2019, our registration statement on Form S-1 to our initial public offering (“IPO”) was declared effective by the SEC, and our common stock began trading on the New York Stock Exchange (“NYSE”) on June 14, 2019. Our IPO closed on June 18, 2019. For additional information, see Note 1 to our condensed consolidated financial statements included in Part I, Item 1 included in this 10-Q Report.















15




Key Financial and Operating Data

We measure our business using both financial and operating data and use the following metrics and measures to assess the near-term and long-term performance of our overall business, including identifying trends, formulating financial projections, making strategic decisions, assessing operational efficiencies, and monitoring our business.
 
13 Weeks Ended
 
 
 
39 Weeks Ended
 
 
(in thousands, except net sales per active customer and percentages)
November 3,
2019
 
October 28,
2018
 
% Change
 
November 3,
2019
 
October 28,
2018
 
% Change
Financial and Operating Data
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
1,229,801

 
$
875,630

 
40.4
 %
 
$
3,492,218

 
$
2,444,679

 
42.8
%
Net loss
$
(79,000
)
 
$
(78,618
)
 
(0.5
)%
 
$
(191,430
)
 
$
(201,547
)
 
5.0
%
Adjusted EBITDA(1)
$
(30,228
)
 
$
(68,634
)
 
56.0
 %
 
$
(75,177
)
 
$
(173,550
)
 
56.7
%
Adjusted EBITDA margin(1)
(2.5
)%
 
(7.8
)%
 
 
 
(2.2
)%
 
(7.1
)%
 
 
Net cash provided by (used in) operating activities
$
1,581

 
$
(43,172
)
 
103.7
 %
 
$
(27,753
)
 
$
(92,377
)
 
70.0
%
Free cash flow(1)
$
(12,794
)
 
$
(51,306
)
 
75.1
 %
 
$
(66,292
)
 
$
(128,707
)
 
48.5
%
Active customers
12,723

 
9,578

 
32.8
 %
 
12,723

 
$
9,578

 
32.8
%
Net sales per active customer
$
360

 
$
323

 
11.4
 %
 
$
360

 
$
323

 
11.4
%
Autoship customer sales
$
865,190

 
$
579,949

 
49.2
 %
 
$
2,408,661

 
$
1,595,819

 
50.9
%
Autoship customer sales as a percentage of net sales
70.4
 %
 
66.2
 %
 
 
 
69.0
 %
 
65.3
 %
 
 
(1) Adjusted EBITDA, adjusted EBITDA margin and free cash flow are non-GAAP financial measures.

Non-GAAP Financial Measures

Adjusted EBITDA and Adjusted EBITDA Margin

To provide investors with additional information regarding our financial results, we have disclosed here and elsewhere in this
10-Q Report adjusted EBITDA, a non-GAAP financial measure that we calculate as net loss excluding depreciation and amortization; share-based compensation expense; income tax provision; interest income (expense), net; management fee expense; transaction and other costs. We have provided a reconciliation below of adjusted EBITDA to net loss, the most directly comparable GAAP financial measure.

We have included adjusted EBITDA in this 10-Q Report because it is a key measure used by our management and board of directors to evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, the exclusion of certain expenses in calculating adjusted EBITDA facilitates operating performance comparability across reporting periods by removing the effect of non-cash expenses and certain variable charges. Accordingly, we believe that adjusted EBITDA provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

We believe it is useful to exclude non-cash charges, such as depreciation and amortization, share-based compensation expense and management fee expense from our adjusted EBITDA because the amount of such expenses in any specific period may not directly correlate to the underlying performance of our business operations. We believe it is useful to exclude income tax provision; interest income (expense), net; and transaction and other costs as these items are not components of our core business operations. Adjusted EBITDA has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. Some of these limitations are:

although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future and adjusted EBITDA does not reflect capital expenditure requirements for such replacements or for new capital expenditures;
adjusted EBITDA does not reflect share-based compensation and related taxes. Share-based compensation has been, and will continue to be for the foreseeable future, a recurring expense in our business and an important part of our compensation strategy;
adjusted EBITDA does not reflect interest income (expense), net; or changes in, or cash requirements for, our working capital;

16



adjusted EBITDA does not reflect transaction and other costs which are generally incremental costs that result from an actual or planned transaction and include transaction costs (i.e. IPO costs), integration consulting fees, internal salaries and wages (to the extent the individuals are assigned full-time to integration and transformation activities) and certain costs related to integrating and converging IT systems; and
other companies, including companies in our industry, may calculate adjusted EBITDA differently, which reduces its usefulness as a comparative measure.

Because of these limitations, you should consider adjusted EBITDA alongside other financial performance measures, including various cash flow metrics, net loss and our other GAAP results.

The following table presents a reconciliation of net loss to adjusted EBITDA for each of the periods indicated.

($ in thousands, except percentages)
13 Weeks Ended
 
39 Weeks Ended
Reconciliation of Net Loss to Adjusted EBITDA
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
Net loss
$
(79,000
)
 
$
(78,618
)
 
$
(191,430
)
 
$
(201,547
)
Add (deduct):
 
 
 
 
 
 
 
Depreciation and amortization
8,137

 
6,309

 
22,716

 
16,385

Share-based compensation expense
39,348

 
3,229

 
90,361

 
10,547

Interest expense (income), net
221

 
121

 
(699
)
 
90

Management fee expense(1)
325

 
325

 
975

 
975

Transaction related costs

 

 
1,396

 

Other
741

 

 
1,504

 

Adjusted EBITDA
$
(30,228
)
 
$
(68,634
)
 
$
(75,177
)
 
$
(173,550
)
Net sales
$
1,229,801

 
$
875,630

 
$
3,492,218

 
$
2,444,679

Adjusted EBITDA margin
(2.5
)%
 
(7.8
)%
 
(2.2
)%
 
(7.1
)%
(1) Management fee expense allocated to us by PetSmart for organizational oversight and certain limited corporate functions. Although we are not a party to the agreement governing the management fee, this management fee is reflected as an expense in our condensed consolidated financial statements.

We define adjusted EBITDA margin as adjusted EBITDA divided by net sales.

Free Cash Flow

To provide investors with additional information regarding our financial results, we have also disclosed here and elsewhere in this 10-Q Report free cash flow, a non-GAAP financial measure that we calculate as net cash provided by (used in) operating activities less capital expenditures (which consist of purchases of property and equipment, including servers and networking equipment, capitalization of labor related to our website, mobile applications, and software development, and leasehold improvements). We have provided a reconciliation below of free cash flow to net cash provided by (used in) operating activities, the most directly comparable GAAP financial measure.

We have included free cash flow in this 10-Q Report because it is an important indicator of our liquidity as it measures the amount of cash we generate. Accordingly, we believe that free cash flow provides useful information to investors and others in understanding and evaluating our operating results in the same manner as our management and board of directors.

Free cash flow has limitations as a financial measure and you should not consider it in isolation or as a substitute for analysis of our results as reported under GAAP. There are limitations to using non-GAAP financial measures, including that other companies, including companies in our industry, may calculate free cash flow differently. Because of these limitations, you should consider free cash flow alongside other financial performance measures, including net cash provided by (used in) operating activities, capital expenditures and our other GAAP results.


17



The following table presents a reconciliation of net cash provided by (used in) operating activities to free cash flow for each of the periods indicated.

($ in thousands)
13 Weeks Ended
 
39 Weeks Ended
Reconciliation of Net Cash Provided by (Used in) Operating Activities to Free Cash Flow
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
Net cash provided by (used in) operating activities
$
1,581

 
$
(43,172
)
 
$
(27,753
)
 
$
(92,377
)
Deduct:
 
 
 
 
 
 
 
Capital expenditures
(14,375
)
 
(8,134
)
 
(38,539
)
 
(36,330
)
Free Cash Flow
$
(12,794
)
 
$
(51,306
)
 
$
(66,292
)
 
$
(128,707
)

Free cash flow may be affected in the near to medium term by the timing of capital investments (such as the launch of new fulfillment centers, customer service centers, and corporate offices and purchases of IT and other equipment), fluctuations in our growth and the effect of such fluctuations on working capital, and changes in our cash conversion cycle due to increases or decreases of vendor payment terms as well as inventory turnover.

Key Operating Metrics

Active Customers

As of the last date of each reporting period, we determine our number of active customers by counting the total number of individual customers who have ordered, and for whom an order has shipped, at least once during the preceding 364-day period. The change in active customers in a reporting period captures both the inflow of new customers as well as the outflow of customers who have not made a purchase in the last 364 days. We view the number of active customers as a key indicator of our growth—acquisition and retention of customers—as a result of our marketing efforts and the value we provide to our customers. The number of active customers has grown over time as we acquired new customers and retained previously acquired customers.

Net Sales Per Active Customer

We define net sales per active customer as the aggregate net sales for the preceding four fiscal quarters, divided by the total number of active customers at the end of that period. We view net sales per active customer as a key indicator of our customers’ purchasing patterns, including their initial and repeat purchase behavior.

Autoship and Autoship Customer Sales

We define Autoship customers as customers in a given fiscal quarter for whom an order has shipped through our Autoship subscription program during the preceding 364-day period. We define Autoship as our subscription program, which provides automatic ordering, payment, and delivery of products to our customers. We view our Autoship subscription program as a key driver of recurring net sales and customer retention. For a given fiscal quarter, Autoship customer sales consist of sales and shipping revenues from all Autoship subscription program purchases and purchases outside of the Autoship subscription program by Autoship customers, excluding taxes collected from customers, excluding any refund allowance, and net of any promotional offers (such as percentage discounts off current purchases and other similar offers), for that quarter. For a given fiscal year, Autoship customer sales equal the sum of the Autoship customer sales for each of the fiscal quarters in that fiscal year.

Autoship Customer Sales as a Percentage of Net Sales

We define Autoship customer sales as a percentage of net sales as the Autoship customer sales in a given reporting period divided by the net sales from all orders in that period. We view Autoship customer sales as a percentage of net sales as a key indicator of our recurring sales and customer retention.


18



Components of Results of Consolidated Operations

Net Sales

We derive net sales primarily from sales of both third-party brand and private brand pet food, pet products, pet medications and other pet health products, and related shipping fees. Sales of third-party brand and private brand pet food, pet products and shipping revenues are recorded when products are shipped, net of promotional discounts and refund allowances. Taxes collected from customers are excluded from net sales. Net sales is primarily driven by growth of new customers and active customers, and the frequency with which customers purchase and subscribe to our Autoship subscription program.

We also periodically provide promotional offers, including discount offers, such as percentage discounts off current purchases and other similar offers. These offers are treated as a reduction to the purchase price of the related transaction and are reflected as a net amount in net sales.

Cost of Goods Sold

Cost of goods sold consists of the cost of third-party brand and private brand products sold to customers, inventory freight, shipping supply costs, inventory shrinkage costs, and inventory valuation adjustments, offset by reductions for promotions and percentage or volume rebates offered by our vendors, which may depend on reaching minimum purchase thresholds. Generally, amounts received from vendors are considered a reduction of the carrying value of inventory and are ultimately reflected as a reduction of cost of goods sold.

Selling, General and Administrative

Selling, general and administrative expenses consist of payroll and related expenses for employees involved in general corporate functions, including accounting, finance, tax, legal and human resources; costs associated with use by these functions, such as depreciation expense and rent relating to facilities and equipment; professional fees and other general corporate costs; share-based compensation; and fulfillment costs.

Fulfillment costs represent costs incurred in operating and staffing fulfillment and customer service centers, including costs attributable to buying, receiving, inspecting and warehousing inventories, picking, packaging and preparing customer orders for shipment, payment processing and related transaction costs and responding to inquiries from customers. Included within fulfillment costs are merchant processing fees charged by third parties that provide merchant processing services for credit cards.

Advertising and Marketing

Advertising and marketing expenses consist of advertising and payroll related expenses for personnel engaged in marketing, business development and selling activities.

Interest Income (Expense), Net

Interest income (expense), net consists primarily of interest earned on cash and cash equivalents held by us. Additionally, we recognize interest expense related to commitment fees and may recognize interest expense in connection with future borrowings under the new five-year senior secured asset-backed credit facility (the “ABL Credit Facility”). See “Other Liquidity Measures-ABL Credit Facility.”

Income Tax Provision

Our income tax provision consists of an estimate of federal and state income taxes based on enacted federal and state tax rates, as adjusted for allowable credits, deductions and uncertain tax positions.










19



Results of Consolidated Operations

The following tables set forth our results of operations for the periods presented and express the relationship of certain line items as a percentage of net sales for those periods. The period-to-period comparison of financial results is not necessarily indicative of future results.
 
13 Weeks Ended
 
39 Weeks Ended
 
 
 
 
 
 
 
% of net sales
 
 
 
 
 
 
 
% of net sales
($ in thousands)
November 3,
2019
 
October 28,
2018
 
% Change
 
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
 
% Change
 
November 3,
2019
 
October 28,
2018
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net sales
$
1,229,801

 
$
875,630

 
40.4
 %
 
100.0
 %
 
100.0
 %
 
$
3,492,218

 
$
2,444,679

 
42.8
%
 
100.0
 %
 
100.0
 %
Cost of goods sold
938,021

 
703,589

 
33.3
 %
 
76.3
 %
 
80.4
 %
 
2,674,313

 
1,956,774

 
36.7
%
 
76.6
 %
 
80.0
 %
Gross profit
291,780

 
172,041

 
69.6
 %
 
23.7
 %
 
19.6
 %
 
817,905

 
487,905

 
67.6
%
 
23.4
 %
 
20.0
 %
Operating expenses:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Selling, general and administrative
258,488

 
150,375

 
71.9
 %
 
21.0
 %
 
17.2
 %
 
684,948

 
413,275

 
65.7
%
 
19.6
 %
 
16.9
 %
Advertising and marketing
112,071

 
100,163

 
11.9
 %
 
9.1
 %
 
11.4
 %
 
325,086

 
276,087

 
17.7
%
 
9.3
 %
 
11.3
 %
Total operating expenses
370,559

 
250,538

 
47.9
 %
 
30.1
 %
 
28.6
 %
 
1,010,034

 
689,362

 
46.5
%
 
28.9
 %
 
28.2
 %
Loss from operations
(78,779
)
 
(78,497
)
 
(0.4
)%
 
(6.4
)%
 
(9.0
)%
 
(192,129
)
 
(201,457
)
 
4.6
%
 
(5.5
)%
 
(8.2
)%
Interest (expense) income, net
(221
)
 
(121
)
 
(82.6
)%
 
 %
 
 %
 
699

 
(90
)
 
876.7
%
 
 %
 
 %
Loss before income tax provision
(79,000
)
 
(78,618
)
 
(0.5
)%
 
(6.4
)%
 
(9.0
)%
 
(191,430
)
 
(201,547
)
 
5.0
%
 
(5.5
)%
 
(8.2
)%
Income tax provision

 

 
 %
 
 %
 
 %
 

 

 
%
 
 %
 
 %
Net loss
$
(79,000
)
 
$
(78,618
)
 
(0.5
)%
 
(6.4
)%
 
(9.0
)%
 
$
(191,430
)
 
$
(201,547
)
 
5.0
%
 
(5.5
)%
 
(8.2
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Thirteen and Thirty-Nine Weeks Ended November 3, 2019 Compared to Thirteen and Thirty-Nine Weeks Ended October 28, 2018

Net Sales

 
13 Weeks Ended (1)
 
 
 
 
 
39 Weeks Ended (1)
 
 
 
 
($ in thousands)
November 3,
2019
 
October 28,
2018
 
$ Change
 
% Change
 
November 3,
2019
 
October 28,
2018
 
$ Change
 
% Change
Consumables
$
910,893

 
$
679,162

 
$
231,731

 
34.1
%
 
$
2,600,410

 
$
1,886,021

 
$
714,389

 
37.9
%
Hardgoods
172,022

 
133,584

 
38,438

 
28.8
%
 
512,769

 
385,717

 
127,052

 
32.9
%
Other
146,886

 
62,884

 
84,002

 
133.6
%
 
379,039

 
172,941

 
206,098

 
119.2
%
Net sales
$
1,229,801

 
$
875,630

 
$
354,171

 
40.4
%
 
$
3,492,218

 
$
2,444,679

 
$
1,047,539

 
42.8
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) Prior periods have been reclassified to conform with current presentation.

Net sales for the thirteen weeks ended November 3, 2019 increased by $354.2 million, or 40.4%, to $1.2 billion compared to $875.6 million for the thirteen weeks ended October 28, 2018. This increase was primarily due to growth in our customer base, with the number of active customers increasing by 3.1 million, or 32.8%, and increased spending among our active customers with net sales per active customer increasing $37, or 11.4%, in the thirteen weeks ended November 3, 2019 compared to the thirteen weeks ended October 28, 2018, driven by catalog expansion and growth in our healthcare and private brand businesses.

Net sales for the thirty-nine weeks ended November 3, 2019 increased by $1.0 billion, or 42.8%, to $3.5 billion compared to $2.4 billion for the thirty-nine weeks ended October 28, 2018. This increase was primarily due to growth in our customer base, with the number of active customers increasing by 3.1 million, or 32.8%, and increased spending among our active customers with net sales per active customer increasing $37, or 11.4%, in the thirty-nine weeks ended November 3, 2019 compared to the thirty-nine weeks ended October 28, 2018, driven by catalog expansion and growth in our healthcare and private brand businesses.


20



Cost of Goods Sold and Gross Profit

Cost of goods sold for the thirteen weeks ended November 3, 2019 increased by $234.4 million, or 33.3%, to $938.0 million compared to $703.6 million in the thirteen weeks ended October 28, 2018. This increase was primarily due to a 38.2% increase in orders shipped and associated product costs, outbound freight, and shipping supply costs. The increase in cost of goods sold was lower than the increase in orders on a percentage basis, primarily as a result of realized supply chain efficiencies and cost reduction initiatives.

Cost of goods sold for the thirty-nine weeks ended November 3, 2019 increased by $717.5 million, or 36.7%, to $2.7 billion compared to $2.0 billion in the thirty-nine weeks ended October 28, 2018. This increase was primarily due to a 40.6% increase in orders shipped and associated product costs, outbound freight, and shipping supply costs. The increase in cost of goods sold was lower than the increase in orders on a percentage basis, primarily as a result of realized supply chain efficiencies and cost reduction initiatives.

Gross profit for the thirteen weeks ended November 3, 2019 increased by $119.7 million, or 69.6%, to $291.8 million compared to $172.0 million in the thirteen weeks ended October 28, 2018. This increase was primarily due to the year-over-year increase in net sales as described above. Gross profit as a percentage of net sales for the thirteen weeks ended November 3, 2019 increased by 410 basis points compared to the thirteen weeks ended October 28, 2018, primarily due to margin expansion across all verticals, including improvements in margin profile of pharmacy and private brands.

Gross profit for the thirty-nine weeks ended November 3, 2019 increased by $330.0 million, or 67.6%, to $817.9 million compared to $487.9 million in the thirty-nine weeks ended October 28, 2018. This increase was primarily due to the year-over-year increase in net sales as described above. Gross profit as a percentage of net sales for the thirty-nine weeks ended November 3, 2019 increased by 340 basis points compared to the thirty-nine weeks ended October 28, 2018, primarily due to margin expansion across all verticals, including improvements in margin profile of pharmacy and private brands.

Selling, General and Administrative

Selling, general and administrative expenses for the thirteen weeks ended November 3, 2019 increased by $108.1 million, or 71.9%, to $258.5 million compared to $150.4 million in the thirteen weeks ended October 28, 2018. This increase was primarily due to an increase of $39.6 million in fulfillment costs largely attributable to increased investments to support overall growth of our business, including the opening of a new fulfillment center and growth of fulfillment and customer service headcount. We also expanded our corporate office and increased headcount as a result of business growth, resulting in an increase in compensation and facilities expense and other general and administrative items of $68.5 million, including investments in security and data protection software and an increase of $36.1 million in non-cash share-based compensation expense.

Selling, general and administrative expenses for the thirty-nine weeks ended November 3, 2019 increased by $271.7 million, or 65.7%, to $684.9 million compared to $413.3 million in the thirty-nine weeks ended October 28, 2018. This increase was primarily due to an increase of $106.4 million in fulfillment costs largely attributable to increased investments to support overall growth of our business, including the opening of a new fulfillment center and growth of fulfillment and customer service headcount. We also expanded our corporate office and increased headcount as a result of business growth and also in contemplation of becoming a public company, resulting in an increase in compensation and facilities expense and other general and administrative items of $165.3 million, including investments in security and data protection software and an increase of $79.8 million in non-cash share-based compensation expense.

Advertising and Marketing

Advertising and marketing expenses for the thirteen weeks ended November 3, 2019 increased by $11.9 million, or 11.9%, to $112.1 million compared to $100.2 million in the thirteen weeks ended October 28, 2018, but overall spend declined as a percentage of net sales to 9.1% from 11.4% in the thirteen weeks ended October 28, 2018. This increase in advertising and marketing spend through existing channels contributed to an increase in the number of active customers of 3.1 million.

Advertising and marketing expenses for the thirty-nine weeks ended November 3, 2019 increased by $49.0 million, or 17.7%, to $325.1 million compared to $276.1 million in the thirty-nine weeks ended October 28, 2018, but overall spend declined as a percentage of net sales to 9.3% from 11.3% in the thirty-nine weeks ended October 28, 2018. This increase in advertising and marketing spend through existing channels contributed to an increase in the number of active customers of 3.1 million.


21



Interest Income (Expense), Net
Interest expense, net for the thirteen weeks ended November 3, 2019 increased by $0.1 million compared to the thirteen weeks ended October 28, 2018 primarily due to interest expense related to commitment fees on our ABL Credit Facility
Interest income, net for the thirty-nine weeks ended November 3, 2019 increased by $0.8 million, compared to the thirty-nine weeks ended October 28, 2018 primarily due to intercompany interest income on net amounts due from Parent, partially offset by interest expense related to commitment fees on our ABL Credit Facility.

Income Tax Provision

Income tax provision was zero for the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018 as we maintained a full valuation allowance against our net deferred tax assets.

Liquidity and Capital Resources

Since our inception, we have financed our operations and capital expenditures primarily through sales of convertible redeemable preferred stock and cash flows generated by operations. Our principal sources of liquidity are expected to be our cash and cash equivalents and our new revolving credit facility. Cash and cash equivalents consist primarily of cash on deposit with banks and investments in money market funds. Cash and cash equivalents totaled $135.9 million as of November 3, 2019, an increase of $47.5 million from February 3, 2019.

We believe that our cash and cash equivalents and availability under our new revolving credit facility will be sufficient to fund our working capital and capital expenditure requirements for at least the next twelve months. In addition, we may choose to raise additional funds at any time through equity or debt financing arrangements, which may or may not be needed for additional working capital, capital expenditures or other strategic investments. Our opinions concerning liquidity are based on currently available information. To the extent this information proves to be inaccurate, or if circumstances change, future availability of trade credit or other sources of financing may be reduced and our liquidity could be adversely affected. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described in the section titled “Risk Factors” in our Prospectus. Depending on the severity and direct impact of these factors on us, we may be unable to secure additional financing to meet our operating requirements on terms favorable to us, or at all.

Cash Flows
 
39 Weeks Ended
 
November 3,
2019
 
October 28,
2018
Net cash used in operating activities
$
(27,753
)
 
$
(92,377
)
Net cash (used in) provided by investing activities
$
(49,859
)
 
$
23,813

Net cash provided by financing activities
$
125,152

 
$
965

Operating Activities
Cash provided by (used in) operating activities consisted of net loss adjusted for non-cash items, including depreciation and amortization, share-based compensation expense and certain other non-cash items, as well as the effect of changes in working capital and other activities.

Net cash used in operating activities was $27.8 million for the thirty-nine weeks ended November 3, 2019, primarily consisting of $191.4 million of net loss, adjusted for certain non-cash items, which primarily included depreciation and amortization expense of $22.7 million and $90.4 million of share-based compensation expense, partially offset by a $41.7 million decrease in cash consumed by working capital primarily driven by an increase in our current liabilities, partially offset by an increase in our current assets.

Net cash used in operating activities was $92.4 million for the thirty-nine weeks ended October 28, 2018, primarily consisting of $201.5 million of net loss, adjusted for certain non-cash items, which primarily included depreciation and amortization expense of $16.4 million and $10.5 million of share-based compensation expense, as well as a $65.4 million decrease in cash consumed by working capital primarily driven by an increase in our current liabilities, partially offset by an increase in our current assets.



22



Investing Activities

Our primary investing activities consisted of purchases of property and equipment, mainly for the launch and expansion of our fulfillment capabilities, as well as purchases of servers and networking equipment, and leasehold improvements.

Net cash used in investing activities was $49.9 million for the thirty-nine weeks ended November 3, 2019, primarily consisting of $38.5 million of capital expenditures related to the launch of a new fulfillment center, the expansion of corporate and customer services offices, and additional investments in IT hardware and software, and $11.3 million of cash advances, net of reimbursements from PetSmart. Net cash provided by investing activities was $23.8 million for the thirty-nine weeks ended October 28, 2018, primarily consisting of $60.1 million of cash reimbursements, net of advances from PetSmart, partially offset by $36.3 million of costs related to the launch of new fulfillment centers, the expansion of corporate and customer service offices, and additional investments in IT hardware and software.

Financing Activities

Net cash provided by financing activities was $125.2 million for the thirty-nine weeks ended November 3, 2019 primarily consisting of $110.6 million of proceeds from our IPO, net of underwriting discounts, commissions and offering costs and $14.5 million of proceeds from the tax sharing agreement with PetSmart. Net cash provided by financing activities was $1.0 million for the thirty-nine weeks ended October 28, 2018, primarily consisting of a management fee expense allocated to us by PetSmart for organizational oversight and certain limited corporate functions.

Other Liquidity Measures

ABL Credit Facility

On June 18, 2019, we entered into the ABL Credit Facility which provides for non-amortizing revolving loans in an aggregate principal amount of up to $300 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities in an aggregate principal amount of up to $100 million, subject to customary conditions.

Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at our option, either a base rate or a LIBOR rate. The applicable margin is generally determined based on the average excess liquidity during the immediately preceding fiscal quarter as a percentage of the maximum borrowing amount under the ABL Credit Facility, and is between 0.25% and 0.75% for base rate loans and between 1.25% and 1.75% for LIBOR loans. We are also required to a pay commitment fee of between 0.25% and 0.375% with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility.

All obligations under the ABL Credit Facility are guaranteed on a senior secured first-lien basis by the our wholly-owned domestic subsidiaries, subject to certain exceptions, and secured, subject to permitted liens and other exceptions, by a perfected first-priority security interest in substantially all of our and our wholly-owned domestic subsidiaries’ assets.

The ABL Credit Facility contains a number of covenants that, among other things, restrict our and our restricted subsidiaries’ ability to:

incur or guarantee additional debt and issue certain equity securities;
make certain investments and acquisitions;
make certain restricted payments and payments of certain indebtedness;
incur certain liens or permit them to exist;
enter into certain types of transactions with affiliates;
merge or consolidate with another company; and
transfer, sell or otherwise dispose of assets.

Each of these restrictions is subject to various exceptions.





23



In addition, the ABL Credit Facility requires us to maintain a minimum fixed charge coverage ratio of 1.0:1.0 if excess availability under the facility is less than the greater of 10% of the maximum borrowing amount and $30.0 million for a certain period of time. The ABL Credit Facility also contains certain customary affirmative covenants and events of default for facilities of this type, including an event of default upon a change in control. As of November 3, 2019, we had no outstanding borrowings under the ABL Credit Facility.

Contractual Obligations

There have been no material changes to our contractual obligations as compared to those described in Contractual Obligations included in Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Prospectus, except as disclosed in Note 4 in the “Notes to Condensed Consolidated Financial Statements” of this10-Q Report.

Off-Balance Sheet Arrangements

We do not engage in any off-balance sheet activities or have any arrangements or relationships with unconsolidated entities, such as variable interest, special purpose, and structured finance entities.

Recent Accounting Pronouncements

Information regarding recent accounting pronouncements is included in Note 2 in the “Notes to Condensed Consolidated Financial Statements” of this10-Q Report.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

For quantitative and qualitative disclosures about market risk, please refer to Management’s Discussion and Analysis of Financial Condition and Results of Operations, “Quantitative and Qualitative Disclosures About Market Risk” of our Prospectus. Our exposures to market risk have not changed materially since February 3, 2019.

Item 4. Controls and Procedures

Management’s Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in the reports that we file or submit under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required financial disclosure.

As of the end of the period covered by this 10-Q Report, our management, under the supervision and with the participation of our principal executive officer and principal financial officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Exchange Act Rule 13a-15(e) and 15d-15(e). Based upon this evaluation, our principal executive officer and principal financial officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of November 3, 2019.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting during the thirteen weeks ended November 3, 2019.

Limitations on the Effectiveness of Controls

Our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of achieving their objectives as specified above. Management does not expect, however, that our disclosure controls and procedures will prevent or detect all error and fraud. Any control system, no matter how well designed and operated, is based on certain assumptions and can provide only reasonable, not absolute, assurance that its objectives will be met. Further, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected.



24



PART II. OTHER INFORMATION

Item 1. Legal Proceedings

From time to time, we are involved in various legal proceedings arising from the normal course of business activities. We are not presently a party to any litigation the outcome of which, we believe, if determined adversely to us, would individually or taken together have a material adverse effect on our business, operating results, cash flows or financial condition.

Item 1A. Risk Factors

There have been no material changes to the risk factors disclosed in our prospectus, dated June 13, 2019 and filed with the SEC on June 17, 2019 pursuant to Rule 424(b)(4) under the Securities Act of 1933, as amended.

Item 6. Exhibits
 
 
Exhibit No.
Exhibit Description
31.1
31.2
32.1
101.INS
XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document
101.SCH
XBRL Taxonomy Extension Schema Document
101.CAL
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
XBRL Taxonomy Extension Presentation Linkbase Document
104
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101)


25



SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Quarterly Report on Form 10-Q to be signed on its behalf by the undersigned thereunto duly authorized.
 
 
 
CHEWY, INC.
 
 
 
 
Date:
December 9, 2019
By:
/s/ Sumit Singh
 
 
 
Sumit Singh
 
 
 
Chief Executive Officer
 
 
 
(Principal Executive Officer)
 
 
 
 
Date:
December 9, 2019
By:
/s/ Mario Marte
 
 
 
Mario Marte
 
 
 
Chief Financial Officer
 
 
 
(Principal Financial Officer)


26

EX-31.1 2 exhibit311certificateo.htm EXHIBIT 31.1 Exhibit


EXHIBIT 31.1

CERTIFICATION

I, Sumit Singh, certify that:

1.
I have reviewed this Quarterly Report on Form 10-Q of Chewy, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
December 9, 2019
 
/s/ Sumit Singh
 
 
 
Sumit Singh
 
 
 
Chief Executive Officer
 
 
 
(Principal Executive Officer)



EX-31.2 3 exhibit312certificateo.htm EXHIBIT 31.2 Exhibit


EXHIBIT 31.2

CERTIFICATION

I, Mario Marte, certify that:

1.
I have reviewed this quarterly report on Form 10-Q of Chewy, Inc.;
2.
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
3.
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
4.
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:
(a)
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
(b)
Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
(c)
Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
5.
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
(a)
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
(b)
Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
Date:
December 9, 2019
 
/s/ Mario Marte
 
 
 
Mario Marte
 
 
 
Chief Financial Officer
 
 
 
(Principal Financial Officer)



EX-32.1 4 exhibit321certificateo.htm EXHIBIT 32.1 Exhibit


EXHIBIT 32.1

CERTIFICATION

In connection with the Quarterly Report of Chewy, Inc. (the “Company”) on Form 10-Q for the period ended November 3, 2019, as filed with the Securities and Exchange Commission (the “Periodic Report”), we, Sumit Singh, Chief Executive Officer of the Company, and Mario Marte, Chief Financial Officer of the Company, each certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to the best of our knowledge:

1.
The Periodic Report fully complies with the requirements of Section 13(a) or Section 15(d) of the Exchange Act; and

2.
The information contained in the Periodic Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: December 9, 2019

 
/s/ Sumit Singh
 
Sumit Singh
 
Chief Executive Officer
 
(Principal Executive Officer)
 
 
 
/s/ Mario Marte
 
Mario Marte
 
Chief Financial Officer
 
(Principal Financial Officer)



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Increase (Decrease) From Tax Sharing Agreement Adjustments To Additional Paid In Capital, Increase (Decrease) From Tax Sharing Agreement Termination of loan from Parent Adjustments To Additional Paid In Capital, Termination Of Intercompany Loan Adjustments To Additional Paid In Capital, Termination Of Intercompany Loan Ending balance (in shares) Ending balance Schedule of Nonvested Restricted Stock Units Activity Schedule of Nonvested Restricted Stock Units Activity [Table Text Block] Valuation Assumptions Fair Value Measurement Inputs and Valuation Techniques [Table Text Block] Share-based Payment Arrangement, Cost By Plan Share-based Payment Arrangement, Cost by Plan [Table Text Block] Performance period Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Term Weighted-average risk-free interest rate Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Risk Free Interest Rate Weighted-average volatility Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Weighted Average Volatility Rate Weighted-average dividend yield Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions, Expected Dividend Rate Plan Name [Axis] Plan Name [Axis] Plan Name [Domain] Plan Name [Domain] 2019 Omnibus Incentive Plan 2019 Omnibus Incentive Plan [Member] 2019 Omnibus Incentive Plan [Member] Common Stock Vesting [Axis] Vesting [Axis] Vesting [Domain] Vesting [Domain] Tranche One Share-based Payment Arrangement, Tranche One [Member] Tranche Two Share-based Payment Arrangement, Tranche Two [Member] Tranche Three Share-based Payment Arrangement, Tranche Three [Member] Tranche Four Share-based Payment Arrangement, Tranche Four [Member] Share-based Payment Arrangement, Tranche Four [Member] Tranche Five Share-based Payment Arrangement, Tranche Five [Member] Share-based Payment Arrangement, Tranche Five [Member] Tranche Six Share-based Payment Arrangement, Tranche Six [Member] Share-based Payment Arrangement, Tranche Six [Member] Tranche Seven Share-based Payment Arrangement, Tranche Seven [Member] Share-based Payment Arrangement, Tranche Seven [Member] Shares allowed for issuance (in shares) Share-based Compensation Arrangement by Share-based Payment Award, Number of Shares Authorized Award vesting rights Share-based Compensation Arrangement by Share-based Payment Award, Award Vesting Rights, Percentage Share price hurdle period Share-based Compensation Arrangement by Share-based Payment Award, Share Price Hurdle Period Share-based Compensation Arrangement by Share-based Payment Award, Share Price Hurdle Period Fair value of vested awards Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Aggregate Intrinsic Value, Vested Cost not yet recognized Share-based Payment Arrangement, Nonvested Award, Excluding Option, Cost Not yet Recognized, Amount Weighted average performance period Share-based Payment Arrangement, Nonvested Award, Cost Not yet Recognized, Period for Recognition Common stock reserved for future issuance (in shares) Common Stock, Capital Shares Reserved for Future Issuance Cancelled (in shares) Equity [Abstract] Schedule of Stock by Class [Table] Schedule of Stock by Class [Table] Class of Stock [Line Items] Class of Stock [Line Items] Number of votes per share Common Stock, Number Of Votes Per Share Common Stock, Number Of Votes Per Share Percentage of outstanding stock Common Stock, Conversion, Percentage Of Outstanding Stock Common Stock, Conversion, Percentage Of Outstanding Stock Lessee, Lease, Description [Table] Lessee, Lease, Description [Table] Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Axis] Property, Plant and Equipment, Type [Domain] Property, Plant and Equipment, Type [Domain] Real Estate Land and Building [Member] Equipment Equipment [Member] Lessee, Lease, Description [Line Items] Lessee, Lease, Description [Line Items] Lease term Lessee, Operating Lease, Term of Contract Number of renewal options Lessee, Operating Lease, Number Of Renewal Options Lessee, Operating Lease, Number Of Renewal Options Renewal term Lessee, Operating Lease, Renewal Term Lease expense Lease, Cost Short-term and variable lease cost Short-Term And Variable Lease, Cost Short-term And Variable Lease, Cost Weighted average remaining lease term Operating Lease, Weighted Average Remaining Lease Term Weighted average discount rate Operating Lease, Weighted Average Discount Rate, Percent Operating lease payments Operating Lease, Payments Leases not yet commenced minimum lease payments Lessee, Operating Lease, Lease Not Yet Commenced, Liability Lessee, Operating Lease, Lease Not Yet Commenced, Liability Leases not yet commenced term Lessee, Operating Lease, Lease Not yet Commenced, Term of Contract Share-Based Compensation Share-based Payment Arrangement [Text Block] Assets Assets [Abstract] Current assets: Assets, Current [Abstract] Cash and cash equivalents Cash and Cash Equivalents, at Carrying Value Accounts receivable Accounts Receivable, after Allowance for Credit Loss, Current Inventories Inventory, Net Due from Parent, net Due from Related Parties, Current Prepaid expenses and other current assets Prepaid Expense and Other Assets, Current Total current assets Assets, Current Property and equipment, net Property, Plant and Equipment, Net Other non-current assets Other Assets, Noncurrent Total assets Assets Liabilities and stockholders’ deficit Liabilities and Equity [Abstract] Current liabilities: Liabilities, Current [Abstract] Trade accounts payable Accounts Payable, Trade, Current Accrued expenses and other current liabilities Total current liabilities Liabilities, Current Operating lease liabilities Other long-term liabilities Other Liabilities, Noncurrent Total liabilities Liabilities Commitments and contingencies (Note 4) Commitments and Contingencies Stockholders’ deficit: Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019 Preferred Stock, Value, Issued Common stock value Common Stock, Value, Issued Additional paid-in capital Additional Paid in Capital Accumulated deficit Retained Earnings (Accumulated Deficit) Total stockholders’ deficit Total liabilities and stockholders’ deficit Liabilities and Equity Capital Stock Stockholders' Equity Note Disclosure [Text Block] Schedule of Related Party Transactions, by Related Party [Table] Schedule of Related Party Transactions, by Related Party [Table] Related Party [Axis] Related Party [Axis] Related Party [Domain] Related Party [Domain] Sponsors and Parent Sponsors And Parent [Member] Sponsors And Parent [Member] Affiliated Entity Affiliated Entity [Member] Related Party Transaction [Axis] Related Party Transaction [Axis] 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Leases - Schedule of Lease Maturity (Details)
$ in Thousands
Nov. 03, 2019
USD ($)
Operating Leases  
Remainder of 2019 $ 5,585
2020 38,753
2021 37,429
2022 35,137
2023 30,580
Thereafter 260,391
Total lease payments 407,875
Less: interest 190,803
Present value of lease liabilities $ 217,072
XML 12 R24.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Accrued Expenses and Other Current Liabilities - Schedule of Accrued Liabilities (Details) - USD ($)
$ in Thousands
Nov. 03, 2019
Feb. 03, 2019
Payables and Accruals [Abstract]    
Outbound fulfillment $ 163,057 $ 147,610
Advertising and marketing 105,208 85,421
Accrued expenses and other 105,479 78,119
Total accrued expenses and other current liabilities $ 373,744 $ 311,150
XML 13 R20.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Leases - (Tables)
9 Months Ended
Nov. 03, 2019
Leases [Abstract]  
Assets and Liabilities, Lessee The table below presents the operating lease-related assets and liabilities recorded on the condensed consolidated balance sheets (in thousands):

Leases
 
Balance Sheet Classification
 
As of November 3, 2019
Assets
 
 
 
 
Operating
 
Operating lease right-of-use assets
 
$
181,035

Total operating lease assets
 
 
 
$
181,035

 
 
 
 
 
Liabilities
 
 
 
 
Current
 
 
 
 
Operating
 
Accrued expenses and other current liabilities
 
$
14,451

Non-current
 
 
 
 
Operating
 
Operating lease liabilities
 
202,621

Total operating lease liabilities
 
 
 
$
217,072


Lessee, Operating Lease, Liability, Maturity

The table below presents the maturity of lease liabilities as of November 3, 2019 (in thousands):
 
Operating Leases
Remainder of 2019
$
5,585

2020
38,753

2021
37,429

2022
35,137

2023
30,580

Thereafter
260,391

Total lease payments
407,875

Less: interest
190,803

Present value of lease liabilities
$
217,072


XML 14 R16.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Net Loss per Share
9 Months Ended
Nov. 03, 2019
Earnings Per Share [Abstract]  
Net Loss per Share
Net Loss per Share

Basic and diluted net loss per share attributable to common stockholders is presented using the two class method required for participating securities. Under the two class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common stock and participating securities. Undistributed earnings for the periods presented are calculated as net loss less distributed earnings.

Basic and diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average shares outstanding during the period. The weighted-average shares outstanding during the periods presented reflects the reclassification of the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock.

For the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018, the Company’s basic and diluted net loss per share attributable to common Class A and Class B stockholders are the same because the Company has generated a net loss to common stockholders and common stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact.
XML 15 R12.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Leases
9 Months Ended
Nov. 03, 2019
Leases [Abstract]  
Leases
Leases

The Company leases all of its fulfillment and customer service centers and corporate offices under non-cancelable operating lease agreements. The terms of the Company’s real estate leases generally range from 5 to 15 years and typically allow for the leases to be renewed for up to three additional five-year terms. Fulfillment and customer service centers and corporate office leases, including exercised renewal options, expire at various dates through 2031. The Company also leases certain equipment under operating and finance leases. The terms of equipment leases generally range from 3 to 5 years and do not contain renewal options. These leases expire at various dates through 2024.

The Company’s finance leases as of November 3, 2019 were not material. The table below presents the operating lease-related assets and liabilities recorded on the condensed consolidated balance sheets (in thousands):

Leases
 
Balance Sheet Classification
 
As of November 3, 2019
Assets
 
 
 
 
Operating
 
Operating lease right-of-use assets
 
$
181,035

Total operating lease assets
 
 
 
$
181,035

 
 
 
 
 
Liabilities
 
 
 
 
Current
 
 
 
 
Operating
 
Accrued expenses and other current liabilities
 
$
14,451

Non-current
 
 
 
 
Operating
 
Operating lease liabilities
 
202,621

Total operating lease liabilities
 
 
 
$
217,072



Lease expense primarily related to operating lease costs. Lease expense for the thirteen and thirty-nine weeks ended November 3, 2019 was $12.3 million and $35.2 million, respectively, of which short-term and variable lease payments were $2.1 million and $6.1 million, respectively, and were included within selling, general and administrative expenses in the condensed consolidated statements of operations.

As of November 3, 2019, the weighted-average remaining lease term and weighted-average discount rate for operating leases was 11.6 years and 11.3%, respectively.

Operating cash flows related to cash paid for operating leases were approximately $27.4 million for the thirty-nine weeks ended November 3, 2019.

The table below presents the maturity of lease liabilities as of November 3, 2019 (in thousands):
 
Operating Leases
Remainder of 2019
$
5,585

2020
38,753

2021
37,429

2022
35,137

2023
30,580

Thereafter
260,391

Total lease payments
407,875

Less: interest
190,803

Present value of lease liabilities
$
217,072


The table above includes all locations for which the Company had the right to control the use of the property. In addition, as of November 3, 2019 the Company had lease arrangements which had not yet commenced with total future lease payments of approximately $115 million. The lease terms for these lease arrangements are approximately 16 years.
XML 16 R7.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Description of Business and Basis of Presentation
9 Months Ended
Nov. 03, 2019
Organization, Consolidation and Presentation of Financial Statements [Abstract]  
Description of Business and Basis of Presentation
Description of Business and Basis of Presentation

Description of Business

Chewy, Inc. and its wholly-owned subsidiaries (collectively “Chewy” or the “Company”) is a pure play e-commerce business geared toward pet products for dogs, cats, fish, birds, small pets, horses, and reptiles. Chewy serves its customers through its retail website, www.chewy.com, and its mobile applications and focuses on delivering exceptional customer service, a large selection of high-quality pet food, treats and supplies, and pet healthcare products; price, convenience (including Chewy’s Autoship subscription program), fast shipping, and hassle-free returns.

PetSmart Acquisition

On May 31, 2017, the Company was acquired by PetSmart, Inc. (“PetSmart” or the “Parent”), a leading specialty provider of products, services and solutions for the lifetime needs of pets. This change-in-control event is referred to as the “PetSmart Acquisition”. PetSmart is wholly-owned by a consortium including private investment funds advised by BC Partners, La Caisse de dépôt et placement du Québec, affiliates of GIC Special Investments Pte Ltd, affiliates of StepStone Group LP and funds advised by Longview Asset Management, LLC (collectively, the “Sponsors”), and controlled by affiliates of BC Partners.

Initial Public Offering

On June 18, 2019, the Company closed its initial public offering (“IPO”), in which it issued and sold 5.6 million shares of its Class A common stock. The price at IPO was $22.00 per share. The Company received net proceeds of approximately $110.3 million from the IPO after deducting underwriting discounts and commissions of $6.2 million and offering costs.

Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock. In connection with the IPO, 47,875,000 shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, 53,475,000 shares of the Company’s Class A common stock and 345,125,000 shares of Class B common stock were outstanding. The Class A common stock outstanding includes the shares issued in the IPO.

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and related notes include the accounts of Chewy, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements and notes thereto of Chewy, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) accounting standards codification. In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the quarterly period ended November 3, 2019 are not necessarily indicative of the results for the entire fiscal year. The unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2019 (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 17, 2019 (the “Prospectus”).

Fiscal Year

The Company has a 52 or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Each fiscal year generally consists of four 13-week fiscal quarters, with each fiscal quarter ending on the Sunday that is closest to the last day of the last month of the quarter.
XML 17 R3.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares
Nov. 03, 2019
Feb. 03, 2019
Preferred stock par value (in dollars per share) $ 0.01 $ 0.01
Preferred stock authorized (in shares) 5,000,000 0
Preferred stock issued (in shares) 0 0
Preferred stock outstanding (in shares) 0 0
Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 53,475,000 shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019    
Common stock par value (in dollars per share) $ 0.01 $ 0.01
Common stock authorized (in shares) 1,500,000,000 0
Common stock issued (in shares) 53,475,000 0
Common stock outstanding (in shares) 53,475,000 0
Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 345,125,000 shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019    
Common stock par value (in dollars per share) $ 0.01 $ 0.01
Common stock authorized (in shares) 395,000,000 0
Common stock issued (in shares) 345,125,000 0
Common stock outstanding (in shares) 345,125,000 0
Voting common stock, $0.01 par value per share, no shares authorized, issued or outstanding as of November 3, 2019; 1,000 shares authorized, 100 shares issued and outstanding as of February 3, 2019    
Common stock par value (in dollars per share) $ 0.01 $ 0.01
Common stock authorized (in shares) 0 1,000
Common stock issued (in shares) 0 100
Common stock outstanding (in shares) 0 100
XML 18 R31.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Share-Based Compensation - Schedule of Restricted Stock Unit Activity (Details) - RSUs
shares in Thousands
9 Months Ended
Nov. 03, 2019
$ / shares
shares
Number of RSUs  
Beginning balance (in shares) | shares 0
Granted (in shares) | shares 25,892
Vested (in shares) | shares (2,717)
Forfeited (in shares) | shares (2,266)
Ending balance (in shares) | shares 20,909
Weighted Average Grant Date Fair Value  
Beginning balance (in dollars per share) | $ / shares $ 0
Granted (in dollars per share) | $ / shares 36.58
Vested (in dollars per share) | $ / shares 36.85
Forfeited (in dollars per share) | $ / shares 36.73
Ending balance (in dollars per share) | $ / shares $ 36.57
XML 19 R35.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Net Loss per Share - Narrative (Details) - shares
Jun. 18, 2019
Jun. 17, 2019
Nov. 03, 2019
Feb. 03, 2019
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Common stock outstanding (in shares)   100    
Class B Common Stock, $0.01 par value per share        
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]        
Common stock outstanding (in shares) 345,125,000   345,125,000 0
Conversion of stock (in shares) (47,875,000) 393,000,000    
XML 20 R6.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($)
$ in Thousands
9 Months Ended
Nov. 03, 2019
Oct. 28, 2018
Cash flows from operating activities    
Net loss $ (191,430) $ (201,547)
Adjustments to reconcile net loss to net cash used in operating activities:    
Depreciation and amortization 22,716 16,385
Share-based compensation expense 90,361 10,547
Non-cash lease expense 13,571  
Amortization of deferred rent   7,630
Other 2,075 506
Net change in operating assets and liabilities:    
Accounts receivable (45,348) (3,779)
Inventories (69,081) (52,454)
Prepaid expenses and other current assets (25,619) (4,237)
Other non-current assets (2,397) 797
Trade accounts payable 134,807 90,034
Accrued expenses and other current liabilities 46,899 35,853
Operating lease liabilities (6,006)  
Other long-term liabilities 1,699 7,888
Net cash used in operating activities (27,753) (92,377)
Cash flows from investing activities    
Capital expenditures (38,539) (36,330)
Cash advances provided to Parent (50,888) (115,602)
Cash reimbursements of advances provided to Parent 39,568 175,745
Net cash (used in) provided by investing activities (49,859) 23,813
Cash flows from financing activities    
Proceeds from initial public offering, net of underwriting discounts, commissions and offering costs 110,576 0
Proceeds from tax sharing agreement with Parent 14,500 0
Payment of debt issuance costs (781) 0
Contribution from Parent 975 975
Principal repayments of finance lease obligations (118)  
Principal repayments of finance lease obligations   (10)
Net cash provided by financing activities 125,152 965
Net increase (decrease) in cash and cash equivalents 47,540 (67,599)
Cash and cash equivalents, as of beginning of period 88,331 68,767
Cash and cash equivalents, as of end of period 135,871 1,168
Supplemental disclosures of non-cash investing and financing activities:    
Assets acquired in exchange for new operating lease liabilities $ 29,429 $ 0
XML 21 R2.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)
$ in Thousands
Nov. 03, 2019
Feb. 03, 2019
Current assets:    
Cash and cash equivalents $ 135,871 $ 88,331
Accounts receivable 94,087 48,738
Inventories 289,935 220,855
Due from Parent, net 11,764 78,712
Prepaid expenses and other current assets 34,557 11,949
Total current assets 566,214 448,585
Property and equipment, net 107,703 91,691
Operating lease right-of-use assets 181,035  
Other non-current assets 3,735 1,346
Total assets 858,687 541,622
Current liabilities:    
Trade accounts payable 637,687 502,880
Accrued expenses and other current liabilities 373,744 311,150
Total current liabilities 1,011,431 814,030
Operating lease liabilities 202,621  
Other long-term liabilities 34,092 63,534
Total liabilities 1,248,144 877,564
Commitments and contingencies (Note 4)
Stockholders’ deficit:    
Preferred stock, $0.01 par value per share, 5,000,000 shares authorized, no shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019 0 0
Additional paid-in capital 1,390,089 1,256,160
Accumulated deficit (1,783,532) (1,592,102)
Total stockholders’ deficit (389,457) (335,942)
Total liabilities and stockholders’ deficit 858,687 541,622
Class A common stock, $0.01 par value per share, 1,500,000,000 shares authorized, 53,475,000 shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019    
Stockholders’ deficit:    
Common stock value 535 0
Class B common stock, $0.01 par value per share, 395,000,000 shares authorized, 345,125,000 shares issued and outstanding as of November 3, 2019; no shares authorized, issued or outstanding as of February 3, 2019    
Stockholders’ deficit:    
Common stock value 3,451 0
Voting common stock, $0.01 par value per share, no shares authorized, issued or outstanding as of November 3, 2019; 1,000 shares authorized, 100 shares issued and outstanding as of February 3, 2019    
Stockholders’ deficit:    
Common stock value $ 0 $ 0
XML 22 R17.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Certain Relationships and Related Party Transactions
9 Months Ended
Nov. 03, 2019
Related Party Transactions [Abstract]  
Certain Relationships and Related Party Transactions
Certain Relationships and Related Party Transactions

The Company’s condensed consolidated financial statements include management fee expenses of $0.3 million and $1.0 million allocated to the Company by the Sponsors and the Parent for organizational oversight and certain limited corporate functions for the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018, respectively. Allocated costs are included within selling, general and administrative expenses in the condensed consolidated statements of operations.

From time to time, prior to the completion of the IPO, the Company used funding from or provided funding to the Parent, as needed, in the normal course of business. The Company and PetSmart were parties to an intercompany loan agreement pursuant to which each party made loans from time to time to the other. In connection with the signing of an underwriting agreement pursuant to which the Company received substantially all of the net proceeds from the Company’s sale of shares of Class A common stock as part of the IPO, the loan agreement was terminated without cash repayment of the outstanding loan. The termination of the intercompany loan resulted in a $79.5 million reduction of the Company’s due from Parent balance during the thirty-nine weeks ended November 3, 2019.

Certain of the Company’s pharmacy operations are currently, and have been since launch on July 2, 2018, conducted through a wholly-owned subsidiary of PetSmart. The Company has entered into a services agreement with PetSmart that provides for the payment of a management fee due from PetSmart with respect to this arrangement. The Company recognized $9.9 million and $31.4 million within net sales in the condensed consolidated statement of operations for the services provided during the thirteen and thirty-nine weeks ended November 3, 2019. The services agreement will remain in place for so long as the Company conducts any pharmacy operations through a PetSmart subsidiary. 

In connection with the IPO, the Company was released from its obligations under the Parent’s asset-backed revolving credit facility in accordance with its terms.

PetSmart Guarantees

PetSmart currently provides a guarantee of payment with respect to certain equipment and other leases that the Company has entered into and serves as a guarantor in respect of the Company’s obligations under a credit insurance policy in favor of certain of the Company’s current or future suppliers.
XML 23 R13.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Capital Stock
9 Months Ended
Nov. 03, 2019
Equity [Abstract]  
Capital Stock
Capital Stock

Common Stock

Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the 100 outstanding shares of common stock into 393,000,000 shares of Class B common stock. In connection with the IPO, 47,875,000 shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, 53,475,000 shares of the Company’s Class A common stock and 345,125,000 shares of Class B common stock were outstanding.

Voting Rights

Holders of the Company’s Class A and Class B common stock are entitled to vote together as a single class on all matters submitted to a vote or for the consent of the stockholders of the Company, unless otherwise required by law or the Company’s amended and restated certificate of incorporation. Holders of Class A common stock are entitled to one vote per share and holders of Class B common stock are entitled to ten votes per share.

Dividends

Subject to the preferences applicable to any series of preferred stock, if any, outstanding, holders of Class A and Class B common stock are entitled to share equally, on a per share basis, in dividends and other distributions of cash, property or securities of the Company.

Liquidation

Subject to the preferences applicable to any series of preferred stock, if any, outstanding, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, all assets of the Company available for distribution to common stockholders would be divided among and paid ratably to holders of Class A and Class B common stock.

Conversion of Class B Common Stock

Voluntary Conversion

Each share of Class B common stock is convertible into one fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof with the prior written consent of the Company.



Automatic Conversion

All shares of Class B common stock shall automatically, without further action by any holder, be converted into an identical number of shares of fully paid and nonassessable Class A common stock (i) on the first trading day on or after the date on which the outstanding shares of Class B common stock constitute less than 7.5% of the aggregate number of shares of common stock then outstanding, or (ii) upon the occurrence of an event, specified by the affirmative vote (or written consent) of the holders of a majority of the then-outstanding shares Class B common stock, voting as a separate class.

In addition, each share of Class B common stock will convert automatically into one share of Class A common stock (i) upon the sale or transfer of such share of Class B common stock, except for certain transfers described in the Company’s amended and restated certificate of incorporation, including transfers to affiliates of the holder and another holder of Class B common stock, or (ii) if the holder is not an affiliate of any of the Sponsors.

Preferred Stock

Preferred stock may be issued from time to time by the Company for such consideration as may be fixed by the board of directors. Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled to only such voting rights, if any, as shall expressly be granted by the Company’s amended and restated certificate of incorporation.
XML 25 R30.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Share-Based Compensation - Narrative (Details)
$ in Millions
9 Months Ended
Jun. 13, 2019
shares
Nov. 03, 2019
USD ($)
day
shares
RSUs    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Share price hurdle period | day   45
Fair value of vested awards | $   $ 101.5
Cost not yet recognized | $   $ 224.0
Weighted average performance period   2 years
Cancelled (in shares)   2,266,000
RSUs | Tranche One    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   25.00%
RSUs | Tranche Two    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   12.50%
RSUs | Tranche Three    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   12.50%
RSUs | Tranche Four    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   12.50%
RSUs | Tranche Five    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   12.50%
RSUs | Tranche Six    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   12.50%
RSUs | Tranche Seven    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Award vesting rights   12.50%
PIUs    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Cancelled (in shares) 768,785  
Class A Common Stock, $0.01 par value per share    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Common stock reserved for future issuance (in shares)   8,200,000
2019 Omnibus Incentive Plan | Class A Common Stock, $0.01 par value per share | Common Stock    
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]    
Shares allowed for issuance (in shares) 31,864,865  
XML 26 R34.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Income Taxes - Narrative (Details) - USD ($)
3 Months Ended 9 Months Ended
Nov. 03, 2019
Oct. 28, 2018
Nov. 03, 2019
Oct. 28, 2018
Income Tax Disclosure [Abstract]        
Current income tax provision $ 0 $ 0 $ 0 $ 0
Deferred income tax provision $ 0 $ 0 $ 0 $ 0
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Debt - Narrative (Details) - Line of Credit - Revolving Credit Facility
Jun. 18, 2019
USD ($)
Nov. 03, 2019
USD ($)
Line of Credit Facility [Line Items]    
Debt instrument term 5 years  
Line of credit facility principal $ 300,000,000  
Line of credit facility additional aggregate principal increase limit $ 100,000,000  
Minimum fixed charge coverage ratio 1.0  
Excess availability as percent of maximum borrowing amount 10.00%  
Excess availability maximum borrowing amount $ 30,000,000  
Outstanding borrowings   $ 0
Minimum    
Line of Credit Facility [Line Items]    
Commitment fee percentage 0.25%  
Maximum    
Line of Credit Facility [Line Items]    
Commitment fee percentage 0.375%  
Base Rate | Minimum    
Line of Credit Facility [Line Items]    
Basis spread on variable rate 0.25%  
Base Rate | Maximum    
Line of Credit Facility [Line Items]    
Basis spread on variable rate 0.75%  
London Interbank Offered Rate (LIBOR) | Minimum    
Line of Credit Facility [Line Items]    
Basis spread on variable rate 1.25%  
London Interbank Offered Rate (LIBOR) | Maximum    
Line of Credit Facility [Line Items]    
Basis spread on variable rate 1.75%  

XML 31 R21.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Share-Based Compensation - (Tables)
9 Months Ended
Nov. 03, 2019
Share-based Payment Arrangement [Abstract]  
Schedule of Nonvested Restricted Stock Units Activity
The following table summarizes the activity related to the Company’s RSUs for the thirty-nine weeks ended November 3, 2019 (in thousands, except for weighted average grant date fair value):
 
Number of RSUs
 
Weighted Average Grant Date Fair Value
Outstanding as of February 3, 2019

 
$

Granted
25,892

 
36.58

Vested
(2,717
)
 
36.85

Forfeited
(2,266
)
 
36.73

Unvested and outstanding as of November 3, 2019
20,909

 
$
36.57


Valuation Assumptions
The fair value of the RSUs with share price hurdles was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies with the following assumptions:

Performance period
5 years
Weighted-average risk-free interest rate
1.8%
Weighted-average volatility
49.7%
Weighted-average dividend yield
—%

Share-based Payment Arrangement, Cost By Plan
Share-based compensation expense is included within selling, general and administrative expenses in the condensed consolidated statements of operations. The Company recognized share-based compensation expense as follows (in thousands):

 
13 Weeks Ended
 
39 Weeks Ended
 
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
RSUs
$
39,348

 
$

 
$
80,196

 
$

PIUs

 
3,229

 
10,165

 
10,547

Total share-based compensation expense
$
39,348

 
$
3,229

 
$
90,361

 
$
10,547


XML 32 R29.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Capital Stock - Narrative (Details)
9 Months Ended
Jun. 18, 2019
shares
Jun. 17, 2019
shares
Nov. 03, 2019
vote
shares
Feb. 03, 2019
shares
Class of Stock [Line Items]        
Common stock outstanding (in shares)   100    
Class B Common Stock, $0.01 par value per share        
Class of Stock [Line Items]        
Common stock outstanding (in shares) 345,125,000   345,125,000 0
Conversion of stock (in shares) (47,875,000) 393,000,000    
Number of votes per share | vote     10  
Percentage of outstanding stock     7.50%  
Class A Common Stock, $0.01 par value per share        
Class of Stock [Line Items]        
Common stock outstanding (in shares) 53,475,000   53,475,000 0
Conversion of stock (in shares) 47,875,000      
Number of votes per share | vote     1  
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Share-Based Compensation - Schedule of Fair Value Assumptions (Details) - RSUs
9 Months Ended
Nov. 03, 2019
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]  
Performance period 5 years
Weighted-average risk-free interest rate 1.80%
Weighted-average volatility 49.70%
Weighted-average dividend yield 0.00%
XML 34 R36.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Certain Relationships and Related Party Transactions - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
Nov. 03, 2019
Oct. 28, 2018
Nov. 03, 2019
Oct. 28, 2018
Intercompany Loan        
Related Party Transaction [Line Items]        
Reduction in intercompany loan     $ 79.5  
Sponsors and Parent | Management Fee        
Related Party Transaction [Line Items]        
Management fee $ 0.3 $ 0.3 1.0 $ 1.0
Affiliated Entity        
Related Party Transaction [Line Items]        
Net sales $ 9.9   $ 31.4  
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Accrued Expenses and Other Current Liabilities - (Tables)
9 Months Ended
Nov. 03, 2019
Payables and Accruals [Abstract]  
Schedule of Accrued Liabilities

The following table presents the components of accrued expenses and other current liabilities (in thousands):

 
As of
 
November 3,
2019
 
February 3,
2019
Outbound fulfillment
$
163,057

 
$
147,610

Advertising and marketing
105,208

 
85,421

Accrued expenses and other
105,479

 
78,119

Total accrued expenses and other current liabilities
$
373,744

 
$
311,150


XML 36 R4.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($)
shares in Thousands, $ in Thousands
3 Months Ended 9 Months Ended
Nov. 03, 2019
Oct. 28, 2018
Nov. 03, 2019
Oct. 28, 2018
Income Statement [Abstract]        
Net sales $ 1,229,801 $ 875,630 $ 3,492,218 $ 2,444,679
Cost of goods sold 938,021 703,589 2,674,313 1,956,774
Gross profit 291,780 172,041 817,905 487,905
Operating expenses:        
Selling, general and administrative 258,488 150,375 684,948 413,275
Advertising and marketing 112,071 100,163 325,086 276,087
Total operating expenses 370,559 250,538 1,010,034 689,362
Loss from operations (78,779) (78,497) (192,129) (201,457)
Interest (expense) income, net (221) (121) 699 (90)
Loss before income tax provision (79,000) (78,618) (191,430) (201,547)
Income tax provision 0 0 0 0
Net loss $ (79,000) $ (78,618) $ (191,430) $ (201,547)
Net loss per share attributable to common Class A and Class B stockholders, basic and diluted (in dollars per share) $ (0.20) $ (0.20) $ (0.48) $ (0.51)
Weighted average common shares used in computing net loss per share attributable to common Class A and Class B stockholders, basic and diluted (in shares) 401,317 393,000 397,235 393,000
XML 37 R8.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Summary of Significant Accounting Policies
9 Months Ended
Nov. 03, 2019
Accounting Policies [Abstract]  
Summary of Significant Accounting Policies
Summary of Significant Accounting Policies

Other than policies noted within Recent Accounting Pronouncements below, there have been no significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Prospectus.

Use of Estimates

GAAP requires management to make certain estimates, judgments, and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates.

Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets, contingencies and the valuation and assumptions underlying share-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2016-02, Leases. In February 2016, the FASB issued this Accounting Standards Update (“ASU”) to provide a comprehensive lease accounting model that requires lessees to recognize lease liabilities and corresponding right-of-use assets for most leases. The new guidance also changes the definition of a lease and requires enhanced disclosures of pertinent quantitative and qualitative information about an entity’s leasing activities. The FASB subsequently issued ASU 2018-10 allowing entities to initially apply ASU 2016-02 at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These ASUs became effective at the beginning of the Company’s 2019 fiscal year. The Company adopted this ASU by applying the new guidance to new and existing leases effective February 4, 2019, with no restatement of comparative periods. The Company elected the package of practical expedients, which permitted the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also made an accounting policy election to not recognize right-of-use assets and lease liabilities arising from short-term leases on its condensed consolidated balance sheets. The adoption of this ASU did not result in a cumulative effect adjustment to accumulated deficit. Upon adoption, the Company recognized operating lease right-of-use assets of $162.8 million and operating lease liabilities of $193.6 million. The adoption of this new guidance did not have a material net impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.

The Company has operating and finance lease agreements for its fulfillment and customer service centers, corporate offices, and certain equipment. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating and finance lease right-of-use assets are recorded in the condensed consolidated balance sheets based on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. Lease payments are generally fixed but may include provisions for future rent increases based on a market index. The Company separately accounts for lease and non-lease components within lease agreements; the non-lease components primarily relate to common area maintenance for real estate leases. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.

Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the condensed consolidated balance sheets. Payments for short-term leases are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.



ASU 2018-07, Stock Compensation; Improvements to Nonemployee Share-Based Payment Accounting. In June 2018, the FASB issued this ASU to expand the scope of Topic 718, Compensation-Stock Compensation to include share-based payment awards to be issued to non-employees in exchange for acquiring goods and services. The ASU aligned the accounting for awards issued to non-employees to be similar to employee awards. This update became effective at the beginning of the Company’s 2019 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement. In August 2018, the FASB issued this ASU to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective at the beginning of the Company’s 2020 fiscal year. The Company does not believe the adoption of this new guidance will have a material impact on its consolidated financial statements and disclosures.
XML 38 R15.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Income Taxes
9 Months Ended
Nov. 03, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

Subsequent to the PetSmart Acquisition, the Company’s losses were included with PetSmart’s consolidated U.S. federal and state income tax returns. Income taxes as presented in the Company’s condensed consolidated financial statements have been prepared on the separate return method as if the Company were a taxpayer separate from PetSmart.

The Company did not have a net current or deferred provision for income taxes for any taxing jurisdiction during the thirteen and thirty-nine weeks ended November 3, 2019 and October 28, 2018.

Concurrent with the IPO, the Company and PetSmart entered into a tax sharing agreement which governs the respective rights, responsibilities, and obligations of the Company and PetSmart with respect to tax matters, including taxes attributable to PetSmart, entitlement to refunds, allocation of tax attributes, preparation of tax returns, certain tax elections, control of tax contests and other tax matters regarding U.S. federal, state, local, and foreign income taxes.
XML 39 R11.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Debt
9 Months Ended
Nov. 03, 2019
Debt Disclosure [Abstract]  
Debt
Debt

ABL Credit Facility

On June 18, 2019, the Company entered into a new five-year senior secured asset-backed credit facility (the “ABL Credit Facility”) which provides for non-amortizing revolving loans in an aggregate principal amount of up to $300 million, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities in an aggregate principal amount of up to $100 million, subject to customary conditions.

Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Company’s option, either a base rate or a LIBOR rate. The applicable margin is generally determined based on the average excess liquidity during the immediately preceding fiscal quarter as a percentage of the maximum borrowing amount under the ABL Credit Facility, and is between 0.25% and 0.75% for base rate loans and between 1.25% and 1.75% for LIBOR loans. The Company is also required to a pay commitment fee of between 0.25% and 0.375% with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility.

All obligations under the ABL Credit Facility are guaranteed on a senior secured first-lien basis by the Company’s wholly-owned domestic subsidiaries, subject to certain exceptions, and secured, subject to permitted liens and other exceptions, by a perfected first-priority security interest in substantially all of the Company’s and its wholly-owned domestic subsidiaries’ assets.

The ABL Credit Facility contains a number of covenants that, among other things, restrict the Company’s and its restricted subsidiaries’ ability to:

incur or guarantee additional debt and issue certain equity securities;
make certain investments and acquisitions;
make certain restricted payments and payments of certain indebtedness;
incur certain liens or permit them to exist;
enter into certain types of transactions with affiliates;
merge or consolidate with another company; and
transfer, sell or otherwise dispose of assets.

Each of these restrictions is subject to various exceptions.

In addition, the ABL Credit Facility requires the Company to maintain a minimum fixed charge coverage ratio of 1.0:1.0 if excess availability under the facility is less than the greater of 10% of the maximum borrowing amount and $30 million for a certain period of time. The ABL Credit Facility also contains certain customary affirmative covenants and events of default for facilities of this type, including an event of default upon a change in control. As of November 3, 2019, the Company had no outstanding borrowings under the ABL Credit Facility.
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Leases - Schedule of Lease Assets and Liabilities (Details)
$ in Thousands
Nov. 03, 2019
USD ($)
Assets  
Operating $ 181,035
Current  
Operating 14,451
Non-current  
Operating 202,621
Total operating lease liabilities $ 217,072
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Summary of Significant Accounting Policies - Narrative (Details) - USD ($)
$ in Thousands
Nov. 03, 2019
Feb. 04, 2019
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Operating lease right-of-use assets $ 181,035  
Operating lease liabilities $ 217,072  
Accounting Standards Update 2016-02    
New Accounting Pronouncements or Change in Accounting Principle [Line Items]    
Operating lease right-of-use assets   $ 162,800
Operating lease liabilities   $ 193,600
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Leases - Narrative (Details)
$ in Millions
3 Months Ended 9 Months Ended
Nov. 03, 2019
USD ($)
renewal_option
Nov. 03, 2019
USD ($)
renewal_option
Lessee, Lease, Description [Line Items]    
Lease expense $ 12.3 $ 35.2
Short-term and variable lease cost $ 2.1 $ 6.1
Weighted average remaining lease term 11 years 7 months 6 days 11 years 7 months 6 days
Weighted average discount rate 11.30% 11.30%
Operating lease payments   $ 27.4
Leases not yet commenced minimum lease payments $ 115.0 $ 115.0
Leases not yet commenced term 16 years 16 years
Real Estate    
Lessee, Lease, Description [Line Items]    
Number of renewal options | renewal_option 3 3
Renewal term 5 years 5 years
Minimum | Real Estate    
Lessee, Lease, Description [Line Items]    
Lease term 5 years 5 years
Minimum | Equipment    
Lessee, Lease, Description [Line Items]    
Lease term 3 years 3 years
Maximum | Real Estate    
Lessee, Lease, Description [Line Items]    
Lease term 15 years 15 years
Maximum | Equipment    
Lessee, Lease, Description [Line Items]    
Lease term 5 years 5 years
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Description of Business and Basis of Presentation - Narrative (Details) - USD ($)
$ / shares in Units, $ in Millions
Jun. 18, 2019
Jun. 17, 2019
Nov. 03, 2019
Feb. 03, 2019
Subsidiary, Sale of Stock [Line Items]        
Underwriting discounts and commissions $ 6.2      
Common stock outstanding (in shares)   100    
IPO        
Subsidiary, Sale of Stock [Line Items]        
Sale of stock (in dollars per share) $ 22.00      
Sale of stock $ 110.3      
Class A Common Stock, $0.01 par value per share        
Subsidiary, Sale of Stock [Line Items]        
Common stock outstanding (in shares) 53,475,000   53,475,000 0
Conversion of stock (in shares) 47,875,000      
Class A Common Stock, $0.01 par value per share | IPO        
Subsidiary, Sale of Stock [Line Items]        
Sale of stock (in shares) 5,600,000      
Class B Common Stock, $0.01 par value per share        
Subsidiary, Sale of Stock [Line Items]        
Common stock outstanding (in shares) 345,125,000   345,125,000 0
Conversion of stock (in shares) (47,875,000) 393,000,000    
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Share-Based Compensation - Schedule of Compensation Expense (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Nov. 03, 2019
Oct. 28, 2018
Nov. 03, 2019
Oct. 28, 2018
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total share-based compensation expense $ 39,348 $ 3,229 $ 90,361 $ 10,547
RSUs        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total share-based compensation expense 39,348 0 80,196 0
PIUs        
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]        
Total share-based compensation expense $ 0 $ 3,229 $ 10,165 $ 10,547
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Accrued Expenses and Other Current Liabilities
9 Months Ended
Nov. 03, 2019
Payables and Accruals [Abstract]  
Accrued Expenses and Other Current Liabilities
Accrued Expenses and Other Current Liabilities

The following table presents the components of accrued expenses and other current liabilities (in thousands):

 
As of
 
November 3,
2019
 
February 3,
2019
Outbound fulfillment
$
163,057

 
$
147,610

Advertising and marketing
105,208

 
85,421

Accrued expenses and other
105,479

 
78,119

Total accrued expenses and other current liabilities
$
373,744

 
$
311,150


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Share-Based Compensation
9 Months Ended
Nov. 03, 2019
Share-based Payment Arrangement [Abstract]  
Share-Based Compensation
Share-Based Compensation

2019 Omnibus Incentive Plan

In June 2019, the Company’s board of directors adopted and approved the 2019 Omnibus Incentive Plan (the “2019 Plan”). The 2019 Plan became effective on June 13, 2019 and allows for the issuance of up to 31,864,865 shares of Class A common stock. No awards may be granted under the 2019 Plan after June 2029.

The 2019 Plan provides for the grant of stock options, including incentive stock options, non-qualified stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance shares, other incentive awards, stock appreciation rights, and cash awards (collectively “awards”). The awards may be granted to the Company’s employees, consultants, and directors, and the employees and consultants of the Company’s affiliates and subsidiaries.

RSUs

In connection with the consummation of the IPO, the Company granted RSUs under the 2019 Plan. Certain of these RSUs vest upon satisfaction of both a service-based vesting condition (the “Service Condition”) and a performance-based vesting condition (the “Share Price Condition”) as described below.

The Service Condition will be satisfied with respect to 25% of an employee’s RSUs on the first anniversary of the 2019 Plan’s registration date and then with respect to 12.5% of an employee’s RSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date.

The Share Price Condition shall be satisfied with respect to a percentage of an employee’s RSUs, as and when the price per share of Class A common stock specified (each, a “Share Price Hurdle”) is achieved, on a volume adjusted weighted-average basis, on every trading day during a consecutive 45-trading day period completed prior to the fifth anniversary of the 2019 Plan’s effective date subject to the employee’s continued employment with the Company through the applicable vesting date.

RSU Activity

The following table summarizes the activity related to the Company’s RSUs for the thirty-nine weeks ended November 3, 2019 (in thousands, except for weighted average grant date fair value):
 
Number of RSUs
 
Weighted Average Grant Date Fair Value
Outstanding as of February 3, 2019

 
$

Granted
25,892

 
36.58

Vested
(2,717
)
 
36.85

Forfeited
(2,266
)
 
36.73

Unvested and outstanding as of November 3, 2019
20,909

 
$
36.57



The total fair value of RSUs that vested during the thirty-nine weeks ended November 3, 2019 was $101.5 million. As of November 3, 2019, total unrecognized compensation expense related to unvested RSUs was $224.0 million and is expected to be recognized over a weighted-average expected performance period of 2.0 years.

The fair value of the RSUs with share price hurdles was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies with the following assumptions:

Performance period
5 years
Weighted-average risk-free interest rate
1.8%
Weighted-average volatility
49.7%
Weighted-average dividend yield
—%


The risk-free interest rate utilized is based on a 5-year term-matched zero-coupon U.S. Treasury security yield at the time of grant. Expected volatility is based on historical volatility of the stock of the Company’s peer firms. 

As of November 3, 2019, there were 8.2 million additional shares of Class A common stock reserved for future issuance under the 2019 Plan.

Citrus Profits Interest Plan

Subsequent to the PetSmart Acquisition, the Company’s share-based compensation included profits interests units (“PIUs”) granted by Citrus Intermediate Holdings L.P. (the “Citrus Partnership”), a Delaware limited partnership (the “Citrus Profits Interest Plan”). The Citrus Partnership is a parent company of PetSmart and a wholly-owned subsidiary of the Sponsors. The Company recognizes share-based compensation as equity contributions from the Citrus Partnership in its condensed consolidated financial statements for awards granted under the Citrus Profits Interest Plan as it relates to grantees’ services as employees of the Company.

As of June 13, 2019, an aggregate of 768,785 profits interests units under the Citrus Profits Interest Plan were held by employees of Chewy, Inc. and were canceled.













Share-Based Compensation Expense

Share-based compensation expense is included within selling, general and administrative expenses in the condensed consolidated statements of operations. The Company recognized share-based compensation expense as follows (in thousands):

 
13 Weeks Ended
 
39 Weeks Ended
 
November 3,
2019
 
October 28,
2018
 
November 3,
2019
 
October 28,
2018
RSUs
$
39,348

 
$

 
$
80,196

 
$

PIUs

 
3,229

 
10,165

 
10,547

Total share-based compensation expense
$
39,348

 
$
3,229

 
$
90,361

 
$
10,547


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DE 90-1020167 1855 Griffin Road, Suite B-428 Dania Beach FL 33004 786 320-7111 Class A Common Stock, par value $0.01 per share CHWY NYSE Yes Yes Non-accelerated Filer false false false 53475000 345125000 135871000 88331000 94087000 48738000 289935000 220855000 11764000 78712000 34557000 11949000 566214000 448585000 107703000 91691000 181035000 3735000 1346000 858687000 541622000 637687000 502880000 373744000 311150000 1011431000 814030000 202621000 34092000 63534000 1248144000 877564000 0 0 535000 0 3451000 0 0 0 1390089000 1256160000 -1783532000 -1592102000 -389457000 -335942000 858687000 541622000 1229801000 875630000 3492218000 2444679000 938021000 703589000 2674313000 1956774000 291780000 172041000 817905000 487905000 258488000 150375000 684948000 413275000 112071000 100163000 325086000 276087000 370559000 250538000 1010034000 689362000 -78779000 -78497000 -192129000 -201457000 -221000 -121000 699000 -90000 -79000000 -78618000 -191430000 -201547000 0 0 0 0 -79000000 -78618000 -191430000 -201547000 -0.20 -0.20 -0.48 -0.51 401317000 393000000 397235000 393000000 398600000 3986000 1338813000 -1704532000 -361733000 235000 235000 39348000 39348000 325000 325000 11838000 11838000 -79000000 -79000000 398600000 3986000 1390089000 -1783532000 -389457000 0 0 1248477000 -1447141000 -198664000 3229000 3229000 325000 325000 -78618000 -78618000 0 0 1252031000 -1525759000 -273728000 0 0 1256160000 -1592102000 -335942000 5600000 56000 110293000 110349000 393000000 3930000 -3930000 0 90361000 90361000 975000 975000 15740000 15740000 79510000 79510000 -191430000 -191430000 398600000 3986000 1390089000 -1783532000 -389457000 0 0 1240509000 -1324212000 -83703000 10547000 10547000 975000 975000 -201547000 -201547000 0 0 1252031000 -1525759000 -273728000 -191430000 -201547000 22716000 16385000 90361000 10547000 13571000 7630000 -2075000 -506000 45348000 3779000 69081000 52454000 25619000 4237000 2397000 -797000 134807000 90034000 46899000 35853000 -6006000 1699000 7888000 -27753000 -92377000 38539000 36330000 50888000 115602000 39568000 175745000 -49859000 23813000 110576000 0 14500000 0 781000 0 975000 975000 118000 10000 125152000 965000 47540000 -67599000 88331000 68767000 135871000 1168000 29429000 0 <div style="line-height:120%;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;font-style:normal;font-weight:bold;text-decoration:none;">Description of Business and Basis of Presentation</span></div><div style="line-height:120%;padding-left:24px;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Description of Business</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Chewy, Inc. and its wholly-owned subsidiaries (collectively “Chewy” or the “Company”) is a pure play e-commerce business geared toward pet products for dogs, cats, fish, birds, small pets, horses, and reptiles. Chewy serves its customers through its retail website, www.chewy.com, and its mobile applications and focuses on delivering exceptional customer service, a large selection of high-quality pet food, treats and supplies, and pet healthcare products; price, convenience (including Chewy’s Autoship subscription program), fast shipping, and hassle-free returns. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">PetSmart Acquisition</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">On May 31, 2017, the Company was acquired by PetSmart, Inc. (“PetSmart” or the “Parent”), a leading specialty provider of products, services and solutions for the lifetime needs of pets. This change-in-control event is referred to as the “PetSmart Acquisition”. PetSmart is wholly-owned by a consortium including private investment funds advised by BC Partners, La Caisse de dépôt et placement du Québec, affiliates of GIC Special Investments Pte Ltd, affiliates of StepStone Group LP and funds advised by Longview Asset Management, LLC (collectively, the “Sponsors”), and controlled by affiliates of BC Partners.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Initial Public Offering</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">On </span><span style="font-family:inherit;font-size:10pt;">June 18, 2019</span><span style="font-family:inherit;font-size:10pt;">, the Company closed its initial public offering (“IPO”), in which it issued and sold </span><span style="font-family:inherit;font-size:10pt;"><span>5.6 million</span></span><span style="font-family:inherit;font-size:10pt;"> shares of its Class A common stock. The price at IPO was </span><span style="font-family:inherit;font-size:10pt;"><span>$22.00</span></span><span style="font-family:inherit;font-size:10pt;"> per share. The Company received net proceeds of approximately </span><span style="font-family:inherit;font-size:10pt;"><span>$110.3 million</span></span><span style="font-family:inherit;font-size:10pt;"> from the IPO after deducting underwriting discounts and commissions of </span><span style="font-family:inherit;font-size:10pt;"><span>$6.2 million</span></span><span style="font-family:inherit;font-size:10pt;"> and offering costs.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the </span><span style="font-family:inherit;font-size:10pt;"><span>100</span></span><span style="font-family:inherit;font-size:10pt;"> outstanding shares of common stock into </span><span style="font-family:inherit;font-size:10pt;"><span>393,000,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of Class B common stock. In connection with the IPO, </span><span style="font-family:inherit;font-size:10pt;"><span>47,875,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, </span><span style="font-family:inherit;font-size:10pt;"><span>53,475,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of the Company’s Class A common stock and </span><span style="font-family:inherit;font-size:10pt;"><span>345,125,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of Class B common stock were outstanding. The Class A common stock outstanding includes the shares issued in the IPO.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Basis of Presentation</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The accompanying unaudited condensed consolidated financial statements and related notes include the accounts of Chewy, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements and notes thereto of Chewy, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) accounting standards codification. In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the quarterly period ended </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> are not necessarily indicative of the results for the entire fiscal year. The unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 17, 2019 (the “Prospectus”).</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Fiscal Year </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company has a 52 or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Each fiscal year generally consists of four 13-week fiscal quarters, with each fiscal quarter ending on the Sunday that is closest to the last day of the last month of the quarter.</span></div> 5600000 22.00 110300000 6200000 100 393000000 47875000 53475000 345125000 <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Basis of Presentation</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The accompanying unaudited condensed consolidated financial statements and related notes include the accounts of Chewy, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements and notes thereto of Chewy, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) accounting standards codification. In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the quarterly period ended </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> are not necessarily indicative of the results for the entire fiscal year. The unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 17, 2019 (the “Prospectus”).</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Fiscal Year </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company has a 52 or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Each fiscal year generally consists of four 13-week fiscal quarters, with each fiscal quarter ending on the Sunday that is closest to the last day of the last month of the quarter.</span></div><div style="line-height:120%;padding-bottom:12px;padding-top:8px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div> <div style="line-height:120%;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;font-style:normal;font-weight:bold;text-decoration:none;">Summary of Significant Accounting Policies</span></div><div style="line-height:120%;padding-left:24px;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Other than policies noted within Recent Accounting Pronouncements below, there have been no significant changes from the significant accounting policies disclosed in Note 2 of the “Notes to Consolidated Financial Statements” included in the Prospectus.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">GAAP requires management to make certain estimates, judgments, and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets, contingencies and the valuation and assumptions underlying share-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Recent Accounting Pronouncements </span></div><div style="line-height:120%;padding-left:24px;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Recently Adopted Accounting Pronouncements </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ASU 2016-02, Leases. </span><span style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued this Accounting Standards Update (“ASU”) to provide a comprehensive lease accounting model that requires lessees to recognize lease liabilities and corresponding right-of-use assets for most leases. The new guidance also changes the definition of a lease and requires enhanced disclosures of pertinent quantitative and qualitative information about an entity’s leasing activities. The FASB subsequently issued ASU 2018-10 allowing entities to initially apply ASU 2016-02 at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These ASUs became effective at the beginning of the Company’s 2019 fiscal year. The Company adopted this ASU by applying the new guidance to new and existing leases effective February 4, 2019, with no restatement of comparative periods. The Company elected the package of practical expedients, which permitted the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also made an accounting policy election to not recognize right-of-use assets and lease liabilities arising from short-term leases on its condensed consolidated balance sheets. The adoption of this ASU did not result in a cumulative effect adjustment to accumulated deficit. Upon adoption, the Company recognized operating lease right-of-use assets of </span><span style="font-family:inherit;font-size:10pt;"><span>$162.8 million</span></span><span style="font-family:inherit;font-size:10pt;"> and operating lease liabilities of </span><span style="font-family:inherit;font-size:10pt;"><span>$193.6 million</span></span><span style="font-family:inherit;font-size:10pt;">. The adoption of this new guidance did not have a material net impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company has operating and finance lease agreements for its fulfillment and customer service centers, corporate offices, and certain equipment. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating and finance lease right-of-use assets are recorded in the condensed consolidated balance sheets based on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. Lease payments are generally fixed but may include provisions for future rent increases based on a market index. The Company separately accounts for lease and non-lease components within lease agreements; the non-lease components primarily relate to common area maintenance for real estate leases. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the condensed consolidated balance sheets. Payments for short-term leases are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ASU 2018-07, Stock Compensation; Improvements to Nonemployee Share-Based Payment Accounting</span><span style="font-family:inherit;font-size:10pt;">. In June 2018, the FASB issued this ASU to expand the scope of Topic 718, Compensation-Stock Compensation to include share-based payment awards to be issued to non-employees in exchange for acquiring goods and services. The ASU aligned the accounting for awards issued to non-employees to be similar to employee awards. This update became effective at the beginning of the Company’s 2019 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Recently Issued Accounting Pronouncements </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement.</span><span style="font-family:inherit;font-size:10pt;"> In August 2018, the FASB issued this ASU to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective at the beginning of the Company’s 2020 fiscal year. The Company does not believe the adoption of this new guidance will have a material impact on its consolidated financial statements and disclosures.</span></div> <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Use of Estimates</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">GAAP requires management to make certain estimates, judgments, and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets, contingencies and the valuation and assumptions underlying share-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.</span></div> <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Recent Accounting Pronouncements </span></div><div style="line-height:120%;padding-left:24px;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Recently Adopted Accounting Pronouncements </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ASU 2016-02, Leases. </span><span style="font-family:inherit;font-size:10pt;">In February 2016, the FASB issued this Accounting Standards Update (“ASU”) to provide a comprehensive lease accounting model that requires lessees to recognize lease liabilities and corresponding right-of-use assets for most leases. The new guidance also changes the definition of a lease and requires enhanced disclosures of pertinent quantitative and qualitative information about an entity’s leasing activities. The FASB subsequently issued ASU 2018-10 allowing entities to initially apply ASU 2016-02 at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These ASUs became effective at the beginning of the Company’s 2019 fiscal year. The Company adopted this ASU by applying the new guidance to new and existing leases effective February 4, 2019, with no restatement of comparative periods. The Company elected the package of practical expedients, which permitted the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also made an accounting policy election to not recognize right-of-use assets and lease liabilities arising from short-term leases on its condensed consolidated balance sheets. The adoption of this ASU did not result in a cumulative effect adjustment to accumulated deficit. Upon adoption, the Company recognized operating lease right-of-use assets of </span><span style="font-family:inherit;font-size:10pt;"><span>$162.8 million</span></span><span style="font-family:inherit;font-size:10pt;"> and operating lease liabilities of </span><span style="font-family:inherit;font-size:10pt;"><span>$193.6 million</span></span><span style="font-family:inherit;font-size:10pt;">. The adoption of this new guidance did not have a material net impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company has operating and finance lease agreements for its fulfillment and customer service centers, corporate offices, and certain equipment. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating and finance lease right-of-use assets are recorded in the condensed consolidated balance sheets based on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. Lease payments are generally fixed but may include provisions for future rent increases based on a market index. The Company separately accounts for lease and non-lease components within lease agreements; the non-lease components primarily relate to common area maintenance for real estate leases. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the condensed consolidated balance sheets. Payments for short-term leases are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ASU 2018-07, Stock Compensation; Improvements to Nonemployee Share-Based Payment Accounting</span><span style="font-family:inherit;font-size:10pt;">. In June 2018, the FASB issued this ASU to expand the scope of Topic 718, Compensation-Stock Compensation to include share-based payment awards to be issued to non-employees in exchange for acquiring goods and services. The ASU aligned the accounting for awards issued to non-employees to be similar to employee awards. This update became effective at the beginning of the Company’s 2019 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Recently Issued Accounting Pronouncements </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement.</span><span style="font-family:inherit;font-size:10pt;"> In August 2018, the FASB issued this ASU to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective at the beginning of the Company’s 2020 fiscal year. The Company does not believe the adoption of this new guidance will have a material impact on its consolidated financial statements and disclosures.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 162800000 193600000 <div style="line-height:120%;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;font-style:normal;font-weight:bold;text-decoration:none;">Accrued Expenses and Other Current Liabilities</span></div><div style="line-height:120%;padding-left:24px;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The following table presents the components of accrued expenses and other current liabilities (in thousands):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.484375%;border-collapse:collapse;text-align:left;"><tr><td colspan="8"/></tr><tr><td style="width:65%;"/><td style="width:1%;"/><td style="width:15%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:15%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="7" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">As of</span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">November 3, <br/>2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">February 3, <br/>2019</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Outbound fulfillment</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>163,057</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>147,610</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Advertising and marketing</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>105,208</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>85,421</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Accrued expenses and other</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>105,479</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>78,119</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total accrued expenses and other current liabilities</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>373,744</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>311,150</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> <div style="line-height:120%;padding-left:24px;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The following table presents the components of accrued expenses and other current liabilities (in thousands):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.484375%;border-collapse:collapse;text-align:left;"><tr><td colspan="8"/></tr><tr><td style="width:65%;"/><td style="width:1%;"/><td style="width:15%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:15%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="7" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">As of</span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">November 3, <br/>2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">February 3, <br/>2019</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Outbound fulfillment</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>163,057</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>147,610</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Advertising and marketing</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>105,208</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>85,421</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Accrued expenses and other</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>105,479</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>78,119</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total accrued expenses and other current liabilities</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>373,744</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>311,150</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 163057000 147610000 105208000 85421000 105479000 78119000 373744000 311150000 <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:Times New Roman;font-size:10pt;font-style:normal;font-weight:bold;text-decoration:none;">Commitments</span><span style="font-family:inherit;font-size:10pt;font-weight:bold;"> and Contingencies</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">As of November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">, there were no material changes to the Company’s advertising and services purchase commitments and legal matters disclosed in Note 5 of the “Notes to Consolidated Financial Statements” included in the Prospectus.</span></div> <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Debt</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">ABL Credit Facility</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">On </span><span style="font-family:inherit;font-size:10pt;">June 18, 2019</span><span style="font-family:inherit;font-size:10pt;">, the Company entered into a new </span><span style="font-family:inherit;font-size:10pt;">five</span><span style="font-family:inherit;font-size:10pt;">-year senior secured asset-backed credit facility (the “ABL Credit Facility”) which provides for non-amortizing revolving loans in an aggregate principal amount of up to </span><span style="font-family:inherit;font-size:10pt;"><span>$300 million</span></span><span style="font-family:inherit;font-size:10pt;">, subject to a borrowing base comprised of, among other things, inventory and sales receivables (subject to certain reserves). The ABL Credit Facility provides the right to request incremental commitments and add incremental asset-based revolving loan facilities in an aggregate principal amount of up to </span><span style="font-family:inherit;font-size:10pt;color:#000000;"><span>$100 million</span></span><span style="font-family:inherit;font-size:10pt;">, subject to customary conditions.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Borrowings under the ABL Credit Facility bear interest at a rate per annum equal to an applicable margin, plus, at the Company’s option, either a base rate or a LIBOR rate. The applicable margin is generally determined based on the average excess liquidity during the immediately preceding fiscal quarter as a percentage of the maximum borrowing amount under the ABL Credit Facility, and is between </span><span style="font-family:inherit;font-size:10pt;"><span>0.25%</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>0.75%</span></span><span style="font-family:inherit;font-size:10pt;"> for base rate loans and between </span><span style="font-family:inherit;font-size:10pt;"><span>1.25%</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>1.75%</span></span><span style="font-family:inherit;font-size:10pt;"> for LIBOR loans. The Company is also required to a pay commitment fee of between </span><span style="font-family:inherit;font-size:10pt;"><span>0.25%</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>0.375%</span></span><span style="font-family:inherit;font-size:10pt;"> with respect to the undrawn portion of the commitments, which is generally based on average daily usage of the facility.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">All obligations under the ABL Credit Facility are guaranteed on a senior secured first-lien basis by the Company’s wholly-owned domestic subsidiaries, subject to certain exceptions, and secured, subject to permitted liens and other exceptions, by a perfected first-priority security interest in substantially all of the Company’s and its wholly-owned domestic subsidiaries’ assets.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The ABL Credit Facility contains a number of covenants that, among other things, restrict the Company’s and its restricted subsidiaries’ ability to:</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">incur or guarantee additional debt and issue certain equity securities;</span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">make certain investments and acquisitions;</span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">make certain restricted payments and payments of certain indebtedness;</span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">incur certain liens or permit them to exist;</span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">enter into certain types of transactions with affiliates;</span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">merge or consolidate with another company; and</span></div><div style="line-height:120%;padding-left:48px;padding-bottom:0px;padding-top:0px;text-align:justify;text-indent:0px;"><span style="padding-bottom:0px;padding-top:0px;text-align:justify;font-family:inherit;font-size:10pt;padding-right:48px;">•</span><span style="font-family:inherit;font-size:10pt;">transfer, sell or otherwise dispose of assets.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:center;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Each of these restrictions is subject to various exceptions.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:48px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><span style="font-family:inherit;font-size:10pt;">In addition, the ABL Credit Facility requires the Company to maintain a minimum fixed charge coverage ratio of </span><span style="font-family:inherit;font-size:10pt;"><span>1.0</span></span><span style="font-family:inherit;font-size:10pt;">:</span><span style="font-family:inherit;font-size:10pt;">1.0</span><span style="font-family:inherit;font-size:10pt;"> if excess availability under the facility is less than the greater of </span><span style="font-family:inherit;font-size:10pt;"><span>10%</span></span><span style="font-family:inherit;font-size:10pt;"> of the maximum borrowing amount and </span><span style="font-family:inherit;font-size:10pt;"><span>$30 million</span></span><span style="font-family:inherit;font-size:10pt;"> for a certain period of time. The ABL Credit Facility also contains certain customary affirmative covenants and events of default for facilities of this type, including an event of default upon a change in control. As of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">, the Company had </span><span style="font-family:inherit;font-size:10pt;"><span>no</span></span> outstanding borrowings under the ABL Credit Facility. 300000000 100000000 0.0025 0.0075 0.0125 0.0175 0.0025 0.00375 1.0 0.10 30000000 0 <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Leases</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company leases all of its fulfillment and customer service centers and corporate offices under non-cancelable operating lease agreements. The terms of the Company’s real estate leases generally range from </span><span style="font-family:inherit;font-size:10pt;"><span>5</span></span><span style="font-family:inherit;font-size:10pt;"> to </span><span style="font-family:inherit;font-size:10pt;"><span>15 years</span></span><span style="font-family:inherit;font-size:10pt;"> and typically allow for the leases to be renewed for up to </span><span style="font-family:inherit;font-size:10pt;"><span>three</span></span><span style="font-family:inherit;font-size:10pt;"> additional </span><span style="font-family:inherit;font-size:10pt;">five</span><span style="font-family:inherit;font-size:10pt;">-year terms. Fulfillment and customer service centers and corporate office leases, including exercised renewal options, expire at various dates through 2031. The Company also leases certain equipment under operating and finance leases. The terms of equipment leases generally range from </span><span style="font-family:inherit;font-size:10pt;"><span>3</span></span><span style="font-family:inherit;font-size:10pt;"> to </span><span style="font-family:inherit;font-size:10pt;"><span>5 years</span></span><span style="font-family:inherit;font-size:10pt;"> and do not contain renewal options. These leases expire at various dates through 2024.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company’s finance leases as of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> were not material. The table below presents the operating lease-related assets and liabilities recorded on the condensed consolidated balance sheets (in thousands):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.484375%;border-collapse:collapse;text-align:left;"><tr><td colspan="7"/></tr><tr><td style="width:38%;"/><td style="width:1%;"/><td style="width:42%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:16%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Leases</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Balance Sheet Classification</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">As of November 3, 2019</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Assets</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating lease right-of-use assets</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>181,035</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total operating lease assets</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>181,035</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Liabilities</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Current</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Accrued expenses and other current liabilities</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>14,451</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Non-current</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating lease liabilities</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>202,621</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total operating lease liabilities</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>217,072</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Lease expense primarily related to operating lease costs. Lease expense for the </span><span style="font-family:inherit;font-size:10pt;">thirteen and thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> was </span><span style="font-family:inherit;font-size:10pt;"><span>$12.3 million</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>$35.2 million</span></span><span style="font-family:inherit;font-size:10pt;">, respectively, of which short-term and variable lease payments were </span><span style="font-family:inherit;font-size:10pt;"><span>$2.1 million</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>$6.1 million</span></span><span style="font-family:inherit;font-size:10pt;">, respectively, and were included within selling, general and administrative expenses in the condensed consolidated statements of operations.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">As of November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">, the weighted-average remaining lease term and weighted-average discount rate for operating leases was </span><span style="font-family:inherit;font-size:10pt;"><span>11.6</span></span><span style="font-family:inherit;font-size:10pt;"> years and </span><span style="font-family:inherit;font-size:10pt;"><span>11.3%</span></span><span style="font-family:inherit;font-size:10pt;">, respectively.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating cash flows related to cash paid for operating leases were approximately </span><span style="font-family:inherit;font-size:10pt;"><span>$27.4 million</span></span><span style="font-family:inherit;font-size:10pt;"> for the </span><span style="font-family:inherit;font-size:10pt;">thirty-nine weeks ended November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The table below presents the maturity of lease liabilities as of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> (in thousands):</span></div><div style="line-height:120%;padding-bottom:12px;padding-top:8px;text-align:left;padding-left:24px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.484375%;border-collapse:collapse;text-align:left;"><tr><td colspan="4"/></tr><tr><td style="width:83%;"/><td style="width:1%;"/><td style="width:15%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Operating Leases</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Remainder of 2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>5,585</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2020</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>38,753</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2021</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>37,429</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2022</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>35,137</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2023</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>30,580</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Thereafter</span></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>260,391</span></span></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total lease payments</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>407,875</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Less: interest</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>190,803</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:20px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Present value of lease liabilities</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>217,072</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div><span style="font-family:inherit;font-size:10pt;">The table above includes all locations for which the Company had the right to control the use of the property. In addition, as of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> the Company had lease arrangements which had not yet commenced with total future lease payments of approximately </span><span style="font-family:inherit;font-size:10pt;"><span>$115 million</span></span><span style="font-family:inherit;font-size:10pt;">. The lease terms for these lease arrangements are approximately </span><span style="font-family:inherit;font-size:10pt;"><span>16 years</span></span>. P5Y P15Y 3 P3Y P5Y The table below presents the operating lease-related assets and liabilities recorded on the condensed consolidated balance sheets (in thousands):<div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:24px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.484375%;border-collapse:collapse;text-align:left;"><tr><td colspan="7"/></tr><tr><td style="width:38%;"/><td style="width:1%;"/><td style="width:42%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:16%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Leases</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Balance Sheet Classification</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">As of November 3, 2019</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Assets</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating lease right-of-use assets</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>181,035</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total operating lease assets</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>181,035</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;height:20px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Liabilities</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Current</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Accrued expenses and other current liabilities</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>14,451</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Non-current</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Operating lease liabilities</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>202,621</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total operating lease liabilities</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>217,072</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 181035000 181035000 14451000 202621000 217072000 12300000 35200000 2100000 6100000 P11Y7M6D 0.113 27400000 <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The table below presents the maturity of lease liabilities as of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> (in thousands):</span></div><div style="line-height:120%;padding-bottom:12px;padding-top:8px;text-align:left;padding-left:24px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:96.484375%;border-collapse:collapse;text-align:left;"><tr><td colspan="4"/></tr><tr><td style="width:83%;"/><td style="width:1%;"/><td style="width:15%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Operating Leases</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Remainder of 2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>5,585</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2020</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>38,753</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2021</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>37,429</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2022</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>35,137</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">2023</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>30,580</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Thereafter</span></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>260,391</span></span></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total lease payments</span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>407,875</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Less: interest</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>190,803</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:20px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Present value of lease liabilities</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>217,072</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 5585000 38753000 37429000 35137000 30580000 260391000 407875000 190803000 217072000 115000000 P16Y <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Capital Stock</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:24px;text-indent:-18px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Common Stock</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Prior to the completion of the IPO, the Company amended and restated its certificate of incorporation to authorize Class A and Class B common stock and reclassify the </span><span style="font-family:inherit;font-size:10pt;"><span>100</span></span><span style="font-family:inherit;font-size:10pt;"> outstanding shares of common stock into </span><span style="font-family:inherit;font-size:10pt;"><span>393,000,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of Class B common stock. In connection with the IPO, </span><span style="font-family:inherit;font-size:10pt;"><span>47,875,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of the Company’s Class B common stock were reclassified into shares of Class A common stock on a one-to-one basis. Upon completion of the IPO, </span><span style="font-family:inherit;font-size:10pt;"><span>53,475,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of the Company’s Class A common stock and </span><span style="font-family:inherit;font-size:10pt;"><span>345,125,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of Class B common stock were outstanding. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Voting Rights</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Holders of the Company’s Class A and Class B common stock are entitled to vote together as a single class on all matters submitted to a vote or for the consent of the stockholders of the Company, unless otherwise required by law or the Company’s amended and restated certificate of incorporation. Holders of Class A common stock are entitled to </span><span style="font-family:inherit;font-size:10pt;"><span>one</span></span><span style="font-family:inherit;font-size:10pt;"> vote per share and holders of Class B common stock are entitled to </span><span style="font-family:inherit;font-size:10pt;"><span>ten</span></span><span style="font-family:inherit;font-size:10pt;"> votes per share.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Dividends</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Subject to the preferences applicable to any series of preferred stock, if any, outstanding, holders of Class A and Class B common stock are entitled to share equally, on a per share basis, in dividends and other distributions of cash, property or securities of the Company. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Liquidation</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Subject to the preferences applicable to any series of preferred stock, if any, outstanding, in the event of the voluntary or involuntary liquidation, dissolution, distribution of assets or winding up of the Company, all assets of the Company available for distribution to common stockholders would be divided among and paid ratably to holders of Class A and Class B common stock.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Conversion of Class B Common Stock</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Voluntary Conversion</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Each share of Class B common stock is convertible into one fully paid and nonassessable share of Class A Common Stock at the option of the holder thereof with the prior written consent of the Company. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">Automatic Conversion</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">All shares of Class B common stock shall automatically, without further action by any holder, be converted into an identical number of shares of fully paid and nonassessable Class A common stock (i) on the first trading day on or after the date on which the outstanding shares of Class B common stock constitute less than </span><span style="font-family:inherit;font-size:10pt;"><span>7.5%</span></span><span style="font-family:inherit;font-size:10pt;"> of the aggregate number of shares of common stock then outstanding, or (ii) upon the occurrence of an event, specified by the affirmative vote (or written consent) of the holders of a majority of the then-outstanding shares Class B common stock, voting as a separate class.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">In addition, each share of Class B common stock will convert automatically into one share of Class A common stock (i) upon the sale or transfer of such share of Class B common stock, except for certain transfers described in the Company’s amended and restated certificate of incorporation, including transfers to affiliates of the holder and another holder of Class B common stock, or (ii) if the holder is not an affiliate of any of the Sponsors.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Preferred Stock</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Preferred stock may be issued from time to time by the Company for such consideration as may be fixed by the board of directors. Except as otherwise required by law, holders of any series of Preferred Stock shall be entitled to only such voting rights, if any, as shall expressly be granted by the Company’s amended and restated certificate of incorporation.</span></div> 100 393000000 47875000 53475000 345125000 1 10 0.075 <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Share-Based Compensation </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">2019 Omnibus Incentive Plan</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">In June 2019, the Company’s board of directors adopted and approved the 2019 Omnibus Incentive Plan (the “2019 Plan”). The 2019 Plan became effective on June 13, 2019 and allows for the issuance of up to </span><span style="font-family:inherit;font-size:10pt;"><span>31,864,865</span></span><span style="font-family:inherit;font-size:10pt;"> shares of Class A common stock. No awards may be granted under the 2019 Plan after June 2029.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The 2019 Plan provides for the grant of stock options, including incentive stock options, non-qualified stock options, restricted stock, dividend equivalents, stock payments, restricted stock units (“RSUs”), performance shares, other incentive awards, stock appreciation rights, and cash awards (collectively “awards”). The awards may be granted to the Company’s employees, consultants, and directors, and the employees and consultants of the Company’s affiliates and subsidiaries.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">RSUs</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">In connection with the consummation of the IPO, the Company granted RSUs under the 2019 Plan. Certain of these RSUs vest upon satisfaction of both a service-based vesting condition (the “Service Condition”) and a performance-based vesting condition (the “Share Price Condition”) as described below. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Service Condition will be satisfied with respect to </span><span style="font-family:inherit;font-size:10pt;"><span>25%</span></span><span style="font-family:inherit;font-size:10pt;"> of an employee’s RSUs on the first anniversary of the 2019 Plan’s registration date and then with respect to </span><span style="font-family:inherit;font-size:10pt;"><span>12.5%</span></span><span style="font-family:inherit;font-size:10pt;"> of an employee’s RSUs at the end of each six month period thereafter, subject to the employee’s continued employment with the Company through the applicable vesting date.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Share Price Condition shall be satisfied with respect to a percentage of an employee’s RSUs, as and when the price per share of Class A common stock specified (each, a “Share Price Hurdle”) is achieved, on a volume adjusted weighted-average basis, on every trading day during a consecutive </span><span style="font-family:inherit;font-size:10pt;"><span>45</span></span><span style="font-family:inherit;font-size:10pt;">-trading day period completed prior to the fifth anniversary of the 2019 Plan’s effective date subject to the employee’s continued employment with the Company through the applicable vesting date.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;">RSU Activity</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The following table summarizes the activity related to the Company’s RSUs for the </span><span style="font-family:inherit;font-size:10pt;">thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> (in thousands, except for weighted average grant date fair value):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:18px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:97.265625%;border-collapse:collapse;text-align:left;"><tr><td colspan="7"/></tr><tr><td style="width:59%;"/><td style="width:19%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:18%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Number of RSUs</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Weighted Average Grant Date Fair Value</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Outstanding as of February 3, 2019</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Granted</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>25,892</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.58</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Vested</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>(2,717</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-right:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">)</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.85</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Forfeited</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>(2,266</span></span></div></td><td style="vertical-align:bottom;padding-right:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">)</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.73</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Unvested and outstanding as of November 3, 2019</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>20,909</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.57</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The total fair value of RSUs that vested during the </span><span style="font-family:inherit;font-size:10pt;">thirty-nine weeks ended November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> was </span><span style="font-family:inherit;font-size:10pt;"><span>$101.5 million</span></span><span style="font-family:inherit;font-size:10pt;">. As of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">, total unrecognized compensation expense related to unvested RSUs was </span><span style="font-family:inherit;font-size:10pt;"><span>$224.0 million</span></span><span style="font-family:inherit;font-size:10pt;"> and is expected to be recognized over a weighted-average expected performance period of </span><span style="font-family:inherit;font-size:10pt;"><span>2.0 years</span></span><span style="font-family:inherit;font-size:10pt;">.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The fair value of the RSUs with share price hurdles was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies with the following assumptions:</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:97.4609375%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"/></tr><tr><td style="width:80%;"/><td style="width:20%;"/></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Performance period</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>5 years</span></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Weighted-average risk-free interest rate</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>1.8%</span></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Weighted-average volatility</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>49.7%</span></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Weighted-average dividend yield</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—%</span></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The risk-free interest rate utilized is based on a 5-year term-matched zero-coupon U.S. Treasury security yield at the time of grant. Expected volatility is based on historical volatility of the stock of the Company’s peer firms. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">As of </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">, there were </span><span style="font-family:inherit;font-size:10pt;"><span>8.2 million</span></span><span style="font-family:inherit;font-size:10pt;"> additional shares of Class A common stock reserved for future issuance under the 2019 Plan.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Citrus Profits Interest Plan</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Subsequent to the PetSmart Acquisition, the Company’s share-based compensation included profits interests units (“PIUs”) granted by Citrus Intermediate Holdings L.P. (the “Citrus Partnership”), a Delaware limited partnership (the “Citrus Profits Interest Plan”). The Citrus Partnership is a parent company of PetSmart and a wholly-owned subsidiary of the Sponsors. The Company recognizes share-based compensation as equity contributions from the Citrus Partnership in its condensed consolidated financial statements for awards granted under the Citrus Profits Interest Plan as it relates to grantees’ services as employees of the Company.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">As of June 13, 2019, an aggregate of </span><span style="font-family:inherit;font-size:10pt;"><span>768,785</span></span><span style="font-family:inherit;font-size:10pt;"> profits interests units under the Citrus Profits Interest Plan were held by employees of Chewy, Inc. and were canceled.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Share-Based Compensation Expense</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Share-based compensation expense is included within selling, general and administrative expenses in the condensed consolidated statements of operations. The Company recognized share-based compensation expense as follows (in thousands):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:center;padding-left:18px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:97.4609375%;border-collapse:collapse;text-align:left;"><tr><td colspan="16"/></tr><tr><td style="width:49%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="7" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">13 Weeks Ended</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="7" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">39 Weeks Ended</span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">November 3, <br/>2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">October 28, <br/>2018</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">November 3, <br/>2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">October 28, <br/>2018</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">RSUs</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>39,348</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>80,196</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">PIUs</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>3,229</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>10,165</span></span></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>10,547</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total share-based compensation expense</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>39,348</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>3,229</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>90,361</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>10,547</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 31864865 0.25 0.125 45 <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The following table summarizes the activity related to the Company’s RSUs for the </span><span style="font-family:inherit;font-size:10pt;">thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> (in thousands, except for weighted average grant date fair value):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:left;padding-left:18px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:97.265625%;border-collapse:collapse;text-align:left;"><tr><td colspan="7"/></tr><tr><td style="width:59%;"/><td style="width:19%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:18%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Number of RSUs</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Weighted Average Grant Date Fair Value</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Outstanding as of February 3, 2019</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Granted</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>25,892</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.58</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Vested</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>(2,717</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-right:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">)</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.85</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Forfeited</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>(2,266</span></span></div></td><td style="vertical-align:bottom;padding-right:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">)</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.73</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Unvested and outstanding as of November 3, 2019</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>20,909</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>36.57</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 0 0 25892000 36.58 2717000 36.85 2266000 36.73 20909000 36.57 101500000 224000000.0 P2Y <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The fair value of the RSUs with share price hurdles was determined on the date of grant using a Monte Carlo model to simulate total stockholder return for the Company and peer companies with the following assumptions:</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:17px;text-indent:0px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;width:97.4609375%;border-collapse:collapse;text-align:left;"><tr><td colspan="2"/></tr><tr><td style="width:80%;"/><td style="width:20%;"/></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Performance period</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>5 years</span></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Weighted-average risk-free interest rate</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>1.8%</span></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Weighted-average volatility</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>49.7%</span></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Weighted-average dividend yield</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—%</span></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> P5Y 0.018 0.497 0 8200000 768785 <div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Share-based compensation expense is included within selling, general and administrative expenses in the condensed consolidated statements of operations. The Company recognized share-based compensation expense as follows (in thousands):</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:18px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:center;padding-left:18px;font-size:10pt;"><div style="padding-left:0px;text-indent:0px;line-height:normal;padding-top:10px;"><table cellpadding="0" cellspacing="0" style="font-family:Times New Roman;font-size:10pt;margin-left:auto;margin-right:auto;width:97.4609375%;border-collapse:collapse;text-align:left;"><tr><td colspan="16"/></tr><tr><td style="width:49%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:1%;"/><td style="width:10%;"/><td style="width:1%;"/></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="7" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">13 Weeks Ended</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="7" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">39 Weeks Ended</span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">November 3, <br/>2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">October 28, <br/>2018</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">November 3, <br/>2019</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="3" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:center;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">October 28, <br/>2018</span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">RSUs</span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>39,348</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>80,196</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">PIUs</span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>—</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>3,229</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;border-bottom:1px solid #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>10,165</span></span></div></td><td style="vertical-align:bottom;border-bottom:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td colspan="2" style="vertical-align:bottom;padding-left:2px;padding-top:2px;padding-bottom:2px;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>10,547</span></span></div></td><td style="vertical-align:bottom;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr><tr><td style="vertical-align:bottom;background-color:#cceeff;padding-left:12px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Total share-based compensation expense</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>39,348</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>3,229</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>90,361</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td><td style="vertical-align:bottom;background-color:#cceeff;padding-left:2px;padding-top:2px;padding-bottom:2px;padding-right:2px;"><div style="overflow:hidden;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"> </span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;padding-left:2px;padding-top:2px;padding-bottom:2px;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">$</span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;padding-top:2px;padding-bottom:2px;border-top:1px solid #000000;"><div style="text-align:right;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><span>10,547</span></span></div></td><td style="vertical-align:bottom;border-bottom:3px double #000000;background-color:#cceeff;border-top:1px solid #000000;"><div style="text-align:left;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div></td></tr></table></div><span style="font-family:inherit;font-size:10pt;"><br/></span></div> 39348000 0 80196000 0 0 3229000 10165000 10547000 39348000 3229000 90361000 10547000 <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Income Taxes </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Subsequent to the PetSmart Acquisition, the Company’s losses were included with PetSmart’s consolidated U.S. federal and state income tax returns. Income taxes as presented in the Company’s condensed consolidated financial statements have been prepared on the separate return method as if the Company were a taxpayer separate from PetSmart.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company did not have a net current or deferred provision for income taxes for any taxing jurisdiction</span><span style="font-family:inherit;font-size:10pt;font-weight:bold;"> </span><span style="font-family:inherit;font-size:10pt;">during the </span><span style="font-family:inherit;font-size:10pt;">thirteen and thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;font-weight:normal;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;font-weight:normal;">October 28, 2018</span><span style="font-family:inherit;font-size:10pt;">. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Concurrent with the IPO, the Company and PetSmart entered into a tax sharing agreement which governs the respective rights, responsibilities, and obligations of the Company and PetSmart with respect to tax matters, including taxes attributable to PetSmart, entitlement to refunds, allocation of tax attributes, preparation of tax returns, certain tax elections, control of tax contests and other tax matters regarding U.S. federal, state, local, and foreign income taxes.</span></div> <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Net Loss per Share</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Basic and diluted net loss per share attributable to common stockholders is presented using the two class method required for participating securities. Under the two class method, net loss attributable to common stockholders is determined by allocating undistributed earnings between common stock and participating securities. Undistributed earnings for the periods presented are calculated as net loss less distributed earnings.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Basic and diluted net loss per share is calculated by dividing net loss attributable to common stockholders by the weighted-average shares outstanding during the period. The weighted-average shares outstanding during the periods presented reflects the reclassification of the </span><span style="font-family:inherit;font-size:10pt;"><span>100</span></span><span style="font-family:inherit;font-size:10pt;"> outstanding shares of common stock into </span><span style="font-family:inherit;font-size:10pt;"><span>393,000,000</span></span><span style="font-family:inherit;font-size:10pt;"> shares of Class B common stock. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><span style="font-family:inherit;font-size:10pt;">For the </span><span style="font-family:inherit;font-size:10pt;">thirteen and thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;">October 28, 2018</span>, the Company’s basic and diluted net loss per share attributable to common Class A and Class B stockholders are the same because the Company has generated a net loss to common stockholders and common stock equivalents are excluded from diluted net loss per share as they have an antidilutive impact. 100 393000000 <div style="line-height:120%;text-align:start;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">Certain Relationships and Related Party Transactions</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:start;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">The Company’s condensed consolidated financial statements include management fee expenses of </span><span style="font-family:inherit;font-size:10pt;"><span>$0.3 million</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>$1.0 million</span></span><span style="font-family:inherit;font-size:10pt;"> allocated to the Company by the Sponsors and the Parent for organizational oversight and certain limited corporate functions for the </span><span style="font-family:inherit;font-size:10pt;">thirteen and thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;">October 28, 2018</span><span style="font-family:inherit;font-size:10pt;">, respectively. Allocated costs are included within selling, general and administrative expenses in the condensed consolidated statements of operations. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">From time to time, prior to the completion of the IPO, the Company used funding from or provided funding to the Parent, as needed, in the normal course of business. The Company and PetSmart were parties to an intercompany loan agreement pursuant to which each party made loans from time to time to the other. In connection with the signing of an underwriting agreement pursuant to which the Company received substantially all of the net proceeds from the Company’s sale of shares of Class A common stock as part of the IPO, the loan agreement was terminated without cash repayment of the outstanding loan. The termination of the intercompany loan resulted in a </span><span style="font-family:inherit;font-size:10pt;"><span>$79.5 million</span></span><span style="font-family:inherit;font-size:10pt;"> reduction of the Company’s due from Parent balance during the </span><span style="font-family:inherit;font-size:10pt;">thirty-nine weeks ended November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">.</span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">Certain of the Company’s pharmacy operations are currently, and have been since launch on July 2, 2018, conducted through a wholly-owned subsidiary of PetSmart. The Company has entered into a services agreement with PetSmart that provides for the payment of a management fee due from PetSmart with respect to this arrangement. The Company recognized </span><span style="font-family:inherit;font-size:10pt;"><span>$9.9 million</span></span><span style="font-family:inherit;font-size:10pt;"> and </span><span style="font-family:inherit;font-size:10pt;"><span>$31.4 million</span></span><span style="font-family:inherit;font-size:10pt;"> within net sales in the condensed consolidated statement of operations for the services provided during the </span><span style="font-family:inherit;font-size:10pt;">thirteen and thirty-nine weeks ended</span><span style="font-family:inherit;font-size:10pt;"> </span><span style="font-family:inherit;font-size:10pt;">November 3, 2019</span><span style="font-family:inherit;font-size:10pt;">. The services agreement will remain in place for so long as the Company conducts any pharmacy operations through a PetSmart subsidiary. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">In connection with the IPO, the Company was released from its obligations under the Parent’s asset-backed revolving credit facility in accordance with its terms. </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;font-weight:bold;">PetSmart Guarantees </span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;"><br/></span></div><div style="line-height:120%;padding-bottom:0px;padding-top:0px;text-align:justify;padding-left:24px;text-indent:0px;font-size:10pt;"><span style="font-family:inherit;font-size:10pt;">PetSmart currently provides a guarantee of payment with respect to certain equipment and other leases that the Company has entered into and serves as a guarantor in respect of the Company’s obligations under a credit insurance policy in favor of certain of the Company’s current or future suppliers.</span></div> 300000 1000000.0 -79500000 9900000 31400000 XML 51 R10.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Commitments and Contingencies
9 Months Ended
Nov. 03, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies
Commitments and Contingencies

As of November 3, 2019, there were no material changes to the Company’s advertising and services purchase commitments and legal matters disclosed in Note 5 of the “Notes to Consolidated Financial Statements” included in the Prospectus.
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Summary of Significant Accounting Policies - (Policies)
9 Months Ended
Nov. 03, 2019
Accounting Policies [Abstract]  
Basis of Presentation
Basis of Presentation

The accompanying unaudited condensed consolidated financial statements and related notes include the accounts of Chewy, Inc. and its wholly-owned subsidiaries. All intercompany balances and transactions have been eliminated. The unaudited condensed consolidated financial statements and notes thereto of Chewy, Inc. have been prepared in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”) for interim financial reporting and, therefore, omit or condense certain footnotes and other information normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as set forth in the Financial Accounting Standards Board’s (“FASB”) accounting standards codification. In the opinion of management, all adjustments necessary for a fair statement of the financial information, which are of a normal and recurring nature, have been made for the interim periods reported. Results of operations for the quarterly period ended November 3, 2019 are not necessarily indicative of the results for the entire fiscal year. The unaudited condensed consolidated financial statements and notes thereto included in this Quarterly Report on Form 10-Q for the quarterly period ended November 3, 2019 (“10-Q Report”) should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s final prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on June 17, 2019 (the “Prospectus”).

Fiscal Year

The Company has a 52 or 53-week fiscal year ending each year on the Sunday that is closest to January 31 of that year. Each fiscal year generally consists of four 13-week fiscal quarters, with each fiscal quarter ending on the Sunday that is closest to the last day of the last month of the quarter.

Use of Estimates
Use of Estimates

GAAP requires management to make certain estimates, judgments, and assumptions that affect reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates these estimates and judgments. Actual results could differ from those estimates.

Key estimates relate primarily to determining the net realizable value and demand for inventory, useful lives associated with property and equipment, valuation allowances with respect to deferred tax assets, contingencies and the valuation and assumptions underlying share-based compensation. On an ongoing basis, management evaluates its estimates compared to historical experience and trends, which form the basis for making judgments about the carrying value of assets and liabilities.
Recent Accounting Pronouncements
Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

ASU 2016-02, Leases. In February 2016, the FASB issued this Accounting Standards Update (“ASU”) to provide a comprehensive lease accounting model that requires lessees to recognize lease liabilities and corresponding right-of-use assets for most leases. The new guidance also changes the definition of a lease and requires enhanced disclosures of pertinent quantitative and qualitative information about an entity’s leasing activities. The FASB subsequently issued ASU 2018-10 allowing entities to initially apply ASU 2016-02 at the adoption date and recognize a cumulative effect adjustment to the opening balance of retained earnings in the period of adoption. These ASUs became effective at the beginning of the Company’s 2019 fiscal year. The Company adopted this ASU by applying the new guidance to new and existing leases effective February 4, 2019, with no restatement of comparative periods. The Company elected the package of practical expedients, which permitted the Company to not reassess under the new standard its prior conclusions about lease identification, lease classification and initial direct costs. The Company also made an accounting policy election to not recognize right-of-use assets and lease liabilities arising from short-term leases on its condensed consolidated balance sheets. The adoption of this ASU did not result in a cumulative effect adjustment to accumulated deficit. Upon adoption, the Company recognized operating lease right-of-use assets of $162.8 million and operating lease liabilities of $193.6 million. The adoption of this new guidance did not have a material net impact on the Company’s condensed consolidated statements of operations or condensed consolidated statements of cash flows.

The Company has operating and finance lease agreements for its fulfillment and customer service centers, corporate offices, and certain equipment. The Company determines if an arrangement contains a lease at inception based on the ability to control a physically distinct asset. Operating and finance lease right-of-use assets are recorded in the condensed consolidated balance sheets based on the initial measurement of the lease liability as adjusted to include prepaid rent and initial direct costs less any lease incentives received. Lease liabilities are measured at the commencement date based on the present value of the lease payments over the lease term. Lease payments are generally fixed but may include provisions for future rent increases based on a market index. The Company separately accounts for lease and non-lease components within lease agreements; the non-lease components primarily relate to common area maintenance for real estate leases. The Company uses its incremental borrowing rate to present value the lease liability as key inputs to determine the interest rate implicit in the lease are not shared by lessors.

Operating lease expense is recorded on a straight-line basis over the lease term. Right-of-use assets and lease liabilities for short-term leases are not recognized in the condensed consolidated balance sheets. Payments for short-term leases are recognized in the condensed consolidated statements of operations on a straight-line basis over the lease term.



ASU 2018-07, Stock Compensation; Improvements to Nonemployee Share-Based Payment Accounting. In June 2018, the FASB issued this ASU to expand the scope of Topic 718, Compensation-Stock Compensation to include share-based payment awards to be issued to non-employees in exchange for acquiring goods and services. The ASU aligned the accounting for awards issued to non-employees to be similar to employee awards. This update became effective at the beginning of the Company’s 2019 fiscal year. The adoption of this ASU did not have a material impact on the Company’s condensed consolidated financial statements and disclosures.

Recently Issued Accounting Pronouncements

ASU 2018-15, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement. In August 2018, the FASB issued this ASU to align the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. This update is effective at the beginning of the Company’s 2020 fiscal year. The Company does not believe the adoption of this new guidance will have a material impact on its consolidated financial statements and disclosures.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT - USD ($)
$ in Thousands
Total
Class A and Class B Common Stock
Additional Paid-in Capital
Accumulated Deficit
Beginning balance (in shares) at Jan. 28, 2018   0    
Beginning balance at Jan. 28, 2018 $ (83,703) $ 0 $ 1,240,509 $ (1,324,212)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Share-based compensation expense 10,547   10,547  
Contribution from Parent 975   975  
Net loss (201,547)     (201,547)
Ending balance (in shares) at Oct. 28, 2018   0    
Ending balance at Oct. 28, 2018 (273,728) $ 0 1,252,031 (1,525,759)
Beginning balance (in shares) at Jul. 29, 2018   0    
Beginning balance at Jul. 29, 2018 (198,664) $ 0 1,248,477 (1,447,141)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Share-based compensation expense 3,229   3,229  
Contribution from Parent 325   325  
Net loss (78,618)     (78,618)
Ending balance (in shares) at Oct. 28, 2018   0    
Ending balance at Oct. 28, 2018 (273,728) $ 0 1,252,031 (1,525,759)
Beginning balance (in shares) at Feb. 03, 2019   0    
Beginning balance at Feb. 03, 2019 (335,942) $ 0 1,256,160 (1,592,102)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs (in shares)   5,600,000    
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs 110,349 $ 56 110,293  
Change in capital structure (in shares)   393,000,000    
Change in capital structure 0 $ 3,930 (3,930)  
Share-based compensation expense 90,361   90,361  
Contribution from Parent 975   975  
Tax sharing agreement with Parent 15,740   15,740  
Termination of loan from Parent (79,510)   (79,510)  
Net loss (191,430)     (191,430)
Ending balance (in shares) at Nov. 03, 2019   398,600,000    
Ending balance at Nov. 03, 2019 $ (389,457) $ 3,986 1,390,089 (1,783,532)
Beginning balance (in shares) at Jun. 17, 2019 100      
Beginning balance (in shares) at Aug. 04, 2019   398,600,000    
Beginning balance at Aug. 04, 2019 $ (361,733) $ 3,986 1,338,813 (1,704,532)
Increase (Decrease) in Stockholders' Equity [Roll Forward]        
Issuance of common stock upon initial public offering, net of underwriting discounts, commissions and offering costs (235)   (235)  
Share-based compensation expense 39,348   39,348  
Contribution from Parent 325   325  
Tax sharing agreement with Parent 11,838   11,838  
Net loss (79,000)     (79,000)
Ending balance (in shares) at Nov. 03, 2019   398,600,000    
Ending balance at Nov. 03, 2019 $ (389,457) $ 3,986 $ 1,390,089 $ (1,783,532)
XML 54 R1.htm IDEA: XBRL DOCUMENT v3.19.3.a.u2
Cover Page - shares
9 Months Ended
Nov. 03, 2019
Dec. 02, 2019
Entity Information [Line Items]    
Document Type 10-Q  
Document Quarterly Report true  
Period End Date Nov. 03, 2019  
Document Transition Report false  
Entity File Number 001-38936  
Entity Registrant Name CHEWY, INC.  
Entity Incorporation, State or Country Code DE  
Entity Tax Identification Number 90-1020167  
Entity Address, Address Line One 1855 Griffin Road, Suite B-428  
Entity Address, City or Town Dania Beach  
Entity Address, State or Province FL  
Entity Address, Postal Zip Code 33004  
City Area Code 786  
Local Phone Number 320-7111  
Title of 12(b) Security Class A Common Stock, par value $0.01 per share  
Trading Symbol CHWY  
Security Exchange Name NYSE  
Entity Current Reporting Status Yes  
Entity Interactive Data Current Yes  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Emerging Growth Company false  
Entity Shell Company false  
Amendment Flag false  
Fiscal Period Focus Q3  
Fiscal Year Focus 2019  
Entity Central Index Key 0001766502  
Current Fiscal Year End Date --02-02  
Class A Common Stock, $0.01 par value per share    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   53,475,000
Class B Common Stock, $0.01 par value per share    
Entity Information [Line Items]    
Entity Common Stock, Shares Outstanding   345,125,000
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