Risk Factors Update Summary

• The company experienced significant delays in opening 109 new locations in California, resulting in increased costs. This might impact profitability and comparable store sales.
• The company is implementing and updating various information systems, including additional modules within their new ERP. This requires significant investment and may result in implementation issues.
• The company's ability to maintain adequate supply chain efficiency and capacity as they expand their market presence is crucial. Sub-optimal inventory levels or increased costs could occur.
• The company's success depends on the continued engagement, services, and experience of their workforce. Unusually low availability of workers in 2021 and 2022 due to COVID-19 has increased competition in labor markets.
• The retirement of the President and Chief Executive Officer at the end of the year may increase the risk of turnover in executive or key positions, negatively impacting recruitment, retention, and future performance.
• Cybersecurity risks, including unauthorized access, data breaches, and cyber attacks, could result in substantial costs, legal fees, reputational damage, and disruption to operational capabilities.
• Litigation, including class action lawsuits, could lead to substantial costs, diversion of attention and resources, and adverse effects on the business. A settlement agreement was fully paid in June 2022.
• Changes in operational results, cash flows, tax laws, and share repurchase regulations could impact the company's ability to return capital to shareholders and satisfy financial obligations. The Inflation Reduction Act of 2022 introduced a 1% excise tax on certain corporate share repurchases.
• The company's senior unsecured notes and credit facilities are governed by indentures and credit agreements, which may impact their ability to engage in capital activities.