Earnings Per Common Share

3 Months Ended

Apr. 30, 2022

Basic earnings per common share is computed based on the weighted average number of shares of common stock outstanding during the period. Diluted earnings per common share is computed based on the weighted average number of shares of common stock outstanding, plus the effect of dilutive potential common shares, which include shares the Company could be obligated to issue from its Convertible Senior Notes and warrants, and stock-based awards, such as stock options and restricted stock. Dilutive potential common shares are excluded from the computation of earnings per share if their effect is anti-dilutive.

For both periods presented, dilutive potential common shares for the Company’s stock-based awards and warrants were determined using the treasury stock method. For the period ended May 1, 2021, the dilutive effect of the Convertible Senior Notes was calculated using the treasury stock method; however, upon the adoption of ASU 2020-06, the Company was required to calculate diluted earnings per diluted share using the if-converted method, which was applied to the period ended April 30, 2022. See Note 1–Description of Business and Basis of Presentation for further discussion.

The computations for basic and diluted earnings per common share were as follows for the periods presented (in thousands, except per share data):


	13 Weeks Ended
	April 30, 2022		May 1, 2021
Numerator:
Numerator for basic earnings per common share - Net income	$	260,559	$	361,756
Effect of dilutive securities
Interest expense associated with Convertible Senior Notes, net of tax	8,209		—
Numerator for diluted earnings per common share - Net income after the effect of dilutive securities	$	268,768	$	361,756

Denominator:
Weighted average common shares outstanding - basic	76,181		84,750
Dilutive effect of stock-based awards	6,030		6,407
Dilutive effect of Convertible Senior Notes	17,080		9,214
Dilutive effect of warrants	9,338		5,639
Weighted average common shares outstanding - diluted	108,629		106,010

Earnings per common share:
Basic	$	3.42	$	4.27
Diluted	$	2.47	$	3.41

Stock-based awards excluded from diluted shares	13		162

For the 13 weeks ended April 30, 2022 and May 1, 2021, the dilutive effect of the Convertible Senior Notes included approximately 11.9 million and 9.2 million shares, respectively, that are designed to be offset at settlement by shares delivered from the bond hedge purchased by the Company. The shares provided by the bond hedge are anti-dilutive; accordingly, they are not treated as a reduction to diluted weighted average shares outstanding for any periods presented. In addition, the dilutive effect of the Convertible Senior Notes for the 13 weeks ended April 30, 2022 included approximately 5.2 million shares related to the principal amount of the Convertible Senior Notes, which the Company intends to settle in cash.