Dollar Tree 10-Q 2025-11-01

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

For the quarterly period ended November 1, 2025

or

For the transition period from to

Commission File Number: 0-25464

DOLLAR TREE, INC.

(Exact name of registrant as specified in its charter)

(757) 321-5000

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

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.

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 such files).

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.

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).

As of December 1, 2025, there were 198,853,187 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS

PART I—FINANCIAL INFORMATION

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED INCOME STATEMENTS

(Unaudited)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)

See accompanying Notes to Unaudited Condensed Consolidated Financial Statements.

DOLLAR TREE, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

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Cautionary Note Regarding Forward-Looking Statements

This document contains “forward-looking statements” as that term is used in the Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by the fact that they address future events, developments and results and do not relate strictly to historical facts. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. Forward-looking statements include, without limitation, statements preceded by, followed by or including words such as “believe,” “anticipate,” “expect,” “intend,” “plan,” “view,” “target” or “estimate,” “may,” “will,” “should,” “predict,” “possible,” “potential,” “continue,” “strategy,” and similar expressions. For example, our forward-looking statements include, without limitation, statements regarding:

• Our plans and expectations regarding our current and future strategic initiatives, including our operational strategy for Dollar Tree as a standalone business following the sale of Family Dollar;

• Our merchandising plans and initiatives and related impacts, including those regarding our multi-price offerings and product assortment;

• Our cost management initiatives, including our mitigation strategies to offset the impact of cost pressures and inflation, and the financial and business impacts of those strategies;

• Our long-term approach to managing selling, general and administrative expenses;

• Our plans to add, refresh and renovate stores, improve store standards and operations, and optimize and modernize stores and shelf space;

• Our customer connection and customer’s response to our product offerings, value and shopping experience;

• Our expectations regarding the implementation and impact of investments in supply chain, distribution facilities, warehouse, inventory, transportation and human capital management systems, including new distribution centers, the expansion or conversion of existing distribution centers, and the capabilities of our distribution center network;

• Our expectations regarding the implementation and impact of investments in our technology infrastructure;

• The design and implementation of key control activities around updated systems and various investments and initiatives;

• Our plans and expectations regarding the sale of the Family Dollar business, including those regarding the estimated proceeds and tax benefits therefrom and the transition services agreement;

• The potential effect of general business or economic conditions on our business and our customers, including the direct and indirect effects of inflation and interest rates on our business;

• The direct and indirect impacts of and challenges associated with the current and potential tariff environment;

• Our plans to mitigate the impact of current and potential tariffs and related implementation costs;

• The expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations, other legal proceedings or governmental investigations, our plans regarding these matters, and the availability of indemnification or insurance with respect to such matters;

• The impacts of recent legislation, including those affecting various tax regulations, and accounting principles; and

• Our capital allocation priorities, liquidity and cash needs, including our ability to fund our future capital expenditures and working capital requirements.

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances. You should not place undue reliance on forward-looking statements, which speak only as of the date of this Quarterly Report on Form 10-Q. Our forward-looking statements are all based on currently available operating, financial and business information. The outcome of the events described in these forward-looking statements is subject to a variety of factors, including, but not limited to, the risks and uncertainties summarized below and the more detailed discussions in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in our Annual Report on Form 10-K for the fiscal year ended February 1, 2025 and in this Quarterly Report on Form 10-Q. The following risks could have a material adverse impact on our sales, costs, profitability, financial performance or implementation of strategic initiatives:

• Our profitability is vulnerable to cost pressures from increases in merchandise, shipping, freight and fuel costs, wage and benefit and other operating costs.

• Risks associated with merchandise supply, including tariffs and other trade-related measures, restrictions and policies and any retaliatory counter measures, could adversely affect our financial performance.

• Our tariff mitigation strategies could subject us to increased costs and other risks.

• Higher costs and disruptions in our distribution network could have an adverse impact on our sales and profitability.

• We may stop selling or recall certain products for safety-related or other issues.

• We could experience a decline in consumer confidence and spending because of concerns about the quality and safety of our products or our brand standards.

• Inflation, other changes in economic conditions or consumer spending habits could impact our sales or profitability.

• Our growth is dependent on our ability to increase sales in existing stores and to expand our square footage profitably.

• Our profitability is affected by the mix of products we sell.

• Our business is seasonal, and adverse events during the fourth quarter could materially affect our full-year financial results.

• Failure to protect our inventory or other assets from loss and theft may impact our financial results.

• We have risks related to the security of our facilities including risks of personal injury to customers or associates.

• We face significant pressure from competitors which may reduce our sales and profits.

• Our business could be adversely affected if we fail to manage our organizational talent and capacity, including attracting and retaining qualified associates and key personnel.

• We rely on third parties in many aspects of our business, which creates additional risk.

• We may not be successful in anticipating the impacts of implementing, achieving or realizing the benefits of our strategies, initiatives and long-term goals, which may have an adverse impact on our business and financial results.

• Our growth and profitability is dependent on our customer’s response to our initiatives, including multi-price assortments, pricing initiatives, and store standards.

• The completion of the sale of the Family Dollar business is subject to various risks and uncertainties, including those related to the estimated proceeds therefrom and transition services agreement income, and may be disruptive to our business operations and adversely affect our profitability.

• We may not achieve the anticipated benefits of the sale of the Family Dollar business, and the transaction may expose us to new risks.

• We have incurred and may in the future incur losses due to impairment of goodwill and other long-lived assets.

• We make estimates and assumptions in connection with the preparation of our consolidated financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations.

• We rely on computer and technology systems in our operations, and any material failure, inadequacy, interruption or security failure of those systems, including because of a cyberattack, could harm our ability to effectively operate and grow our business and could adversely affect our financial results.

• The potential unauthorized access to our systems could disrupt operations or lead to the theft of data which may violate privacy laws and could damage our business reputation, subject us to negative publicity, litigation and costs, and adversely affect our results of operations or financial condition.

• Legal proceedings may adversely affect our reputation, business, results of operations or financial condition.

• Our failure to comply with applicable law, or to adequately respond to changes to such laws, could increase our expenses, expose us to legal risks or otherwise adversely affect us.

• Our business is subject to evolving disclosure requirements and expectations with respect to environmental, social and governance matters that could expose us to numerous risks.

• Our inability to access credit or capital markets, a downgrade of our credit ratings and/or increases in interest rates could negatively affect our financing costs, results of operations and financial condition.

• Our business or the value of our common stock could be negatively affected as a result of actions by shareholders.

• The price of our common stock is subject to market and other conditions and may be volatile.

• Certain provisions in our Articles of Incorporation and By-Laws could delay or discourage a change of control transaction that may be in a shareholder’s best interest.

We cannot assure you that the results, events and circumstances reflected in the forward-looking statements will be achieved or occur, and actual results, events or circumstances could differ materially from those described in the forward-looking statements. Moreover, 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 our forward-looking statements.

We do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, or otherwise.

Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against our policy to disclose to them any material, nonpublic information or other confidential commercial information. Accordingly, shareholders should not assume that we agree with any statement or report issued by any securities analyst regardless of the content of the statement or report. Furthermore, we have a policy against confirming projections, forecasts or opinions issued by others. Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

Overview

We are a leading operator of more than 9,200 retail discount stores, as of November 1, 2025, offering merchandise predominantly at the opening price point of $1.25, with additional offerings at higher price points.

Our net sales are derived from the sale of merchandise. Two major factors tend to affect our net sales trends. First is our success at opening new stores. Second is the performance of stores once they are open which can be impacted by a number of factors including operational performance, competition, inflation, consumer buying preference and changes in the product assortment, pricing, or quality. Sales vary at our existing stores from one year to the next. We refer to this as a change in comparable store net sales, because we include only those stores that are open throughout both of the periods being compared, beginning after the first fifteen months of operation. We include sales from stores expanded, relocated or remodeled during the period in the calculation of comparable store net sales, which has the effect of increasing our comparable store net sales. Stores that were converted from Family Dollar stores to Dollar Tree stores are considered to be new stores and are not included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the Dollar Tree brand. Additionally, sales that are excluded from the calculation of comparable store net sales are referred to as non-comparable store sales and consist of sales from new stores open fifteen months or less and stores that are closed permanently or expected to be closed for more than 90 days.

On July 5, 2025, the Company completed its previously announced sale of the Family Dollar business to 1959 Holdings, LLC, for a purchase consideration of $1,007.5 million, subject to certain adjustments, including with respect to working capital and net indebtedness. Net proceeds from the sale consisted of $665 million paid at closing and $22 million to be received post-closing, subject to final adjustment under the terms of the purchase agreement, dated as of March 25, 2025. In addition, the Company monetized approximately $113 million of cash from Family Dollar prior to the closing date primarily through a reduction of net working capital. Together, the total cash monetized from the sale of the Family Dollar business approximates $800 million. As of November 1, 2025, the remaining receivable for estimated net proceeds to be received totaled $14.7 million. The results of Family Dollar are presented as discontinued operations in the accompanying unaudited Condensed Consolidated Income Statements for all periods presented. The assets and liabilities of Family Dollar have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited Condensed Consolidated Balance Sheets for all prior periods presented. Unless otherwise noted, all amounts, percentages and discussions below reflect only the results of operations and financial condition of our continuing operations. Refer to “Strategic Initiatives and Recent Developments” below and Note 10 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for more information on discontinued operations.

Quarterly Results

Financial highlights for the 13 weeks ended November 1, 2025, as compared to the 13 weeks ended November 2, 2024, include:

• Net sales increased 9.4% to $4,746.3 million due to a 4.2% comparable store net sales increase and net sales of $351.7 million at non-comparable stores.

• Gross profit increased 10.8% to $1,700.5 million primarily due to our net store growth. Gross profit, as a percentage of net sales, increased 40 basis points to 35.8%.

• Selling, general and administrative expenses, as a percentage of total revenues, increased 140 basis points to 29.2%.

• Transition services agreement income, net was $23.8 million resulting from services provided to Family Dollar following the sale.

• Operating income, as a percentage of total revenues, decreased 40 basis points to 7.2%.

• The effective tax rate was 23.9%, an increase of 70 basis points as compared to the prior year quarter.

• Income from continuing operations was $244.6 million, or $1.20 per diluted share, compared to $232.3 million, or $1.08 per diluted share in the prior year quarter.

Store Activity & Selected Sales Data

At November 1, 2025, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces. The average size of stores opened during the 39 weeks ended November 1, 2025 was approximately 9,230 selling square feet. A breakdown of the changes in store count and square footage is as follows:

The store counts above do not include new stores until they are opened for sales. Similarly, stores converted from a Family Dollar store to a Dollar Tree store are reflected in the table above when they re-opened as a Dollar Tree store.

The percentage change in comparable store net sales, as compared with the preceding year, is as follows:

Comparable store net sales are positively affected by our expanded, relocated and remodeled stores, which we include in the calculation, and are negatively affected when we open new stores or expand stores near existing stores.

Net sales per selling square foot is calculated based on total net sales for the preceding 12 months as of the end of the reporting period divided by the average selling square footage during the period. Selling square footage excludes the storage, receiving and office space that generally occupies approximately 20% of the total square footage of our stores. We believe that net sales per selling square foot more accurately depicts the productivity and operating performance of our stores as it reflects the portion of our footprint that is dedicated to selling merchandise. Net sales per selling square foot for the 52 weeks ended November 1, 2025 and November 2, 2024 is as follows:

See our “Strategic Initiatives and Recent Developments” below for more information on the initiatives that are driving our comparable store net sales growth and net sales per selling square foot growth.

Strategic Initiatives and Recent Developments

We continue to execute on a number of strategic initiatives across our business to drive profitable growth for Dollar Tree as a standalone banner following the sale of Family Dollar. During our Investor Day on October 15, 2025, we outlined our operational strategy for the years ahead, including an expanded, more relevant assortment, agile cost management, a more connected customer experience in stores, new store growth, and improved store conditions and operations, supported by an evolving supply chain and disciplined financial management. Some of these initiatives and other recent developments, in no particular order, include the following.

Merchandising. In addition to our $1.25 price point, we continue to expand our multi-price offerings to provide a broader, more relevant assortment and differentiated value to our customers. As of November 1, 2025, we carried this multi-price assortment in more than 5,000 of our stores. In August 2025, we announced a new nationwide partnership with Uber to bring the Uber Eats platform to nearly 9,000 Dollar Tree stores, offering customers on-demand access to and delivery of value-driven essentials, snacks, party supplies and seasonal surprises.

Cost Management. We are actively implementing mitigation strategies to offset the impact of cost pressures and inflation, including tariffs, by re-negotiating supplier terms, re-engineering products for efficiency, shifting country of origin where it adds advantage, discontinuing lower-margin or underperforming items and executing targeted retail price changes. We believe our mitigation strategies will allow us to protect our margins and maintain our competitiveness over the long term and, most importantly, keep providing our customers with the value, convenience, and discovery they expect for the products they need to help live and celebrate their lives. In addition, our long-term strategy includes a disciplined approach to managing our selling, general and administrative expenses to drive operating leverage and profitability.

During fiscal 2025, we have experienced increased costs associated with the tariff environment and implementation of our mitigation strategies, including discrete price-change costs. We expect our results to continue to be impacted by near-term challenges, including higher costs due to the volatility in the tariff environment, in the fourth quarter of fiscal 2025. Additionally, implementation costs associated with our mitigation strategies may continue to be experienced before the benefits from those efforts are expected to materialize. The ultimate impact of cost inflation, including tariffs and other related measures, remains uncertain and will depend on several factors, including whether additional or incremental tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, the overall magnitude and duration of these measures, and the costs and effectiveness of, and consumer response to, our mitigation efforts.

Our Workforce. We are investing in our talent, including initiatives to provide competitive pay and benefits, enhanced training, and attractive career opportunities to deliver an enhanced associate experience, reduce turnover, and improve our store standards and efficiencies and ultimately the customer experience.

Store Growth and Improved Conditions. Our strategy includes continued new store growth, as well as improved store conditions and operations to deliver a consistent experience for our associates and customers, provide a stronger customer connection and drive profitable growth. These initiatives include projects to optimize and modernize our stores, with a focus on increasing shelf space productivity, improving the in-store experience through refresh and renovation programs and customer service enhancements.

Supply Chain Optimization. Our supply chain initiatives include expanding and enhancing our distribution network, improving our transportation and inventory management capabilities and upgrading our warehouse management systems. Investments are also

underway for enhancements in automation in existing buildings to improve efficiency. These investments are expected to negatively impact gross margin in the near-to-mid term.

In April 2025, we announced that we will be returning to Marietta, Oklahoma with a new, enhanced distribution center that is expected to be fully operational by spring 2027 with the capacity to serve 700 stores across the West and Southwest regions of the country. We broke ground on the new Marietta distribution center in September 2025. In October 2025, we announced that we purchased a 1.25 million square foot distribution center outside of Phoenix, Arizona, which we expect to open in spring 2026. This new distribution center will strengthen our supply chain in the Southwest, servicing stores in Arizona, Colorado, Nevada, New Mexico and Utah.

Technology Investment. We continue our multi-year plan for significant investment in our technology across our business, including our mobile app, human capital management system and supply chain system. We believe these improvements can promote operational efficiencies and deliver an elevated customer experience.

Family Dollar Strategic Alternatives Review. On March 25, 2025, we entered into a definitive agreement to sell the Family Dollar business to 1959 Holdings, LLC, and on July 5, 2025, we completed the sale for a purchase consideration of $1,007.5 million, subject to certain adjustments, including with respect to working capital and net indebtedness. Net proceeds from the sale consisted of $665 million paid at closing and $22 million to be received post-closing, subject to final adjustment under the terms of the purchase agreement. In addition, the Company monetized approximately $113 million of cash from Family Dollar prior to the closing date primarily through a reduction of net working capital. Together, the total cash monetized from the sale of the Family Dollar business approximates $800 million. As of November 1, 2025, the remaining receivable for estimated net proceeds to be received totaled $14.7 million. The Company has continuing involvement with Family Dollar under a transition services agreement, through which the Company and Family Dollar continue to provide certain services to each other for a period of 18 months following the date of sale. For information on discontinued operations, refer to Note 10 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Results of Operations

Our results of operations and period-over-period changes are discussed in the following section. Note that the cost of sales rate is calculated by dividing cost of sales by net sales. Gross profit margin is calculated as gross profit (i.e., net sales less cost of sales) divided by net sales. The selling, general and administrative expense rate and operating income margin are calculated by dividing the applicable amount by total revenue. Basis points, as referred to below, are a percentage of net sales for expense categories within gross profit and cost of sales, and are a percentage of total revenue for all other expense categories. A 100 basis point increase equals 1.00% and a 1 basis point increase equals 0.01%.

The following table contains results of operations data for the 13 and 39 weeks ended November 1, 2025 and November 2, 2024:

Net Sales

The increase in net sales in the 13 weeks ended November 1, 2025 was a result of the comparable store net sales increase and net sales of $351.7 million at non-comparable stores. Comparable store net sales increased 4.2% in the 13 weeks ended November 1, 2025, as a result of a 4.5% increase in average ticket, partially offset by a 0.3% decrease in customer traffic.

The increase in net sales in the 39 weeks ended November 1, 2025 was a result of the comparable store net sales increase and net sales of $1,037.7 million at non-comparable stores. Comparable store net sales increased 5.4% in the 39 weeks ended November 1, 2025, as a result of a 3.6% increase in average ticket and a 1.8% increase in customer traffic.

Gross Profit

Gross profit margin increased during the 13 weeks ended November 1, 2025 due to a 40 basis point decrease in cost of sales. The cost of sales rate decreased to 64.2% during the 13 weeks ended November 1, 2025 from 64.6% during the same period last year

primarily due to improved mark-on from pricing initiatives, lower domestic and import freight costs, and favorable sales mix resulting from increased sales of higher margin discretionary merchandise as a percentage of net sales, partially offset by higher tariff costs, higher markdowns, and higher shrink costs resulting from unfavorable inventory results.

Gross profit margin increased during the 39 weeks ended November 1, 2025 due to a 30 basis point decrease in cost of sales. The cost of sales rate decreased to 64.7% during the 39 weeks ended November 1, 2025 from 65.0% during the same period last year primarily due to improved mark-on from pricing initiatives, lower domestic and import freight costs, favorable sales mix resulting from increased sales of higher margin discretionary merchandise as a percentage of net sales, and lower occupancy costs due to leverage from the comparable store net sales increase, partially offset by higher tariff costs, higher markdowns, higher shrink costs resulting from unfavorable inventory results, and increased distribution costs expense.

The higher markdowns for both the 13 weeks and 39 weeks ended November 1, 2025 included a $56.0 million write-off of various slow-turning SKUs recorded during the third quarter of fiscal 2025. This reflects actions taken related to our ongoing strategic initiative to increase shelf space productivity, as described above.

Selling, General and Administrative Expenses

The selling, general and administrative expense rate increased 140 basis points during the 13 weeks ended November 1, 2025 primarily due to higher store payroll in support of our pricing initiatives and from wage increases, higher general liability claims costs, and higher depreciation expense from store investments, partially offset by lower stock compensation, lower corporate payroll, and leverage from the comparable store net sales increase.

The selling, general and administrative expense rate increased 100 basis points during the 39 weeks ended November 1, 2025 primarily due to higher store payroll in support of our pricing initiatives and from wage increases, higher depreciation expense from store investments, higher incentive compensation and higher store-related repairs and maintenance expenses, partially offset by lower stock compensation, lower corporate payroll, and leverage from the comparable store net sales increase.

Operating Income

Operating income margin decreased to 7.2% for the 13 weeks ended November 1, 2025 compared to 7.6% for the same period last year, resulting from the increase in the selling, general and administrative expense rate, partially offset by the increase in gross profit margin as described above, and income from the transition services agreement with Family Dollar.

Operating income margin decreased to 6.9% for the 39 weeks ended November 1, 2025 compared to 7.4% for the same period last year, resulting from the increase in the selling, general and administrative expense rate, partially offset by the increase in gross profit margin as described above, and income from the transition services agreement with Family Dollar.

Interest Expense, Net

Interest expense, net decreased $6.4 million in the 13 weeks ended November 1, 2025 compared to the same period last year, primarily due to the repayment of our $1.0 billion principal amount of 4.00% Senior Notes in the second quarter of fiscal 2025, and higher interest income on investments, partially offset by higher borrowings of commercial paper.

Interest expense, net decreased $17.5 million in the 39 weeks ended November 1, 2025 compared to the same period last year, primarily due to the repayment of our $1.0 billion principal amount of 4.00% Senior Notes in the second quarter of fiscal 2025, and higher interest income on investments, partially offset by higher borrowings of commercial paper.

Other (Income) Expense, Net

Other income, net was $62.0 million in the 39 weeks ended November 1, 2025 compared to expense of $0.2 million in the same period last year, primarily due to an insurance gain of approximately $62.0 million recognized in the first quarter of fiscal 2025 for the excess of the insurance proceeds received over the losses incurred for damaged property and equipment and damaged inventory associated with the tornado that destroyed our Marietta, Oklahoma Dollar Tree distribution center.

Provision for Income Taxes

The effective tax rate increased to 23.9% for the 13 weeks ended November 1, 2025 compared to 23.2% for the comparable prior year period, primarily due to an increase in expected state taxes, partially offset by a decrease in non-deductible compensation.

The effective tax rate increased to 25.1% for the 39 weeks ended November 1, 2025 compared to 23.8% for the comparable prior year period, primarily due to an increase in expected state taxes and reduced benefits from the vesting of share-based payment awards, partially offset by a decrease in non-deductible compensation.

Liquidity and Capital Resources

We invest capital to build and open new stores, expand and renovate existing stores, enhance and grow our distribution network, operate our existing stores, maintain and upgrade our technology, and support our other strategic initiatives. Our working capital requirements for existing stores are seasonal in nature and typically reach their peak in the months of September and October. We have satisfied our seasonal working capital requirements for existing and new stores and have funded our distribution network programs and other capital projects from internally generated funds and borrowings under our credit facilities and commercial paper program.

The following table compares our cash flows for the 39 weeks ended November 1, 2025 and November 2, 2024:

Net cash provided by operating activities decreased $377.3 million primarily due to a decrease in accounts payable in the current year compared to an increase in the prior year, partially offset by inventory levels increasing at a lower rate compared to the prior year, and higher income from continuing operations.

Net cash used in investing activities decreased $568.5 primarily due to $672.0 million of net proceeds received for the sale of Family Dollar, and lower capital expenditures, partially offset by $246.0 million of cash divested from the sale of Family Dollar.

Net cash used in financing activities increased $1,290.6 million primarily due to the repayment of our $1.0 billion principal amount of 4.00% Senior Notes due May 15, 2025, and higher stock repurchases, partially offset by increased borrowings under our commercial paper program.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The most significant impacts to the Company of the OBBBA are the immediate expensing of domestic research and development expenditures and the permanent reinstatement of bonus depreciation for qualifying properties. The Company expects the impact will defer the payment of approximately $100.0 million of current federal income taxes.

In connection with the sale of Family Dollar, completed on July 5, 2025, the Company expects to realize cash tax benefits from losses on the sale totaling approximately $425.0 million, subject to final adjustment under the terms of the purchase agreement.

At November 1, 2025, our long-term borrowings were $2.45 billion. Additionally, we had $1.5 billion available under our new Five-Year Credit Facility and $1.0 billion available under our 364-Day Revolving Credit Facility. Refer to Note 4 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion of the new Five-Year Credit Facility and 364-Day Revolving Credit Facility. We have a commercial paper program which as of November 1, 2025 allowed us to issue unsecured commercial paper notes up to an aggregate amount outstanding at any time of $1.5 billion. On May 15, 2025, we leveraged our commercial paper program, in addition to utilizing available cash, to redeem our $1.0 billion principal amount of 4.00% Senior Notes. As of November 1, 2025, $620.0 million principal amount of notes were outstanding under the commercial paper program. Additionally, we have $85.0 million in trade letters of credit with various financial institutions, under which $3.1 million was committed to letters of credit issued for routine purchases of imported merchandise as of November 1, 2025.

Our credit facilities serve as a liquidity backstop for the repayment of notes outstanding under the commercial paper program. On November 10, 2025, we increased the size of our commercial paper program to permit the issuance of commercial paper notes up to a maximum aggregate amount outstanding at any time of $2.5 billion, compared to the previous maximum permitted of $1.5 billion. The $2.5 billion maximum is authorized through the maturity date of our 364-Day Revolving Credit Facility on March 20, 2026 or such later date to which the maturity of the 364-Day Facility or a similar replacement financing arrangement is extended, and will return to $1.5 billion thereafter.

We repurchased 15,007,491 and 3,283,837 shares of common stock on the open market at a cost of $1.3 billion and $403.6 million, including applicable excise tax, during the 39 weeks ended November 1, 2025 and November 2, 2024, respectively. Of the shares repurchased during the 39 weeks ended November 1, 2025, $12.8 million settled subsequent to November 1, 2025 and these amounts were accrued in the accompanying unaudited Condensed Consolidated Balance Sheets. In July 2025, our Board of Directors replenished the Company’s share repurchase authorization to an aggregate amount of $2.5 billion, reflecting the limit previously approved by the Board in September 2021. At November 1, 2025, we had $2.0 billion remaining under the $2.5 billion Board repurchase authorization.

Subsequent to November 1, 2025, we purchased an additional 1,711,878 shares of common stock on the open market at a cost of $176.0 million, as of December 1, 2025.

Critical Accounting Estimates and Assumptions

Our condensed consolidated financial statements have been prepared in accordance with U.S. GAAP. To prepare these financial statements, we must make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses, as well as the disclosures of contingent assets and liabilities. Our estimates are often based on complex judgments, probabilities and assumptions that management believes to be reasonable, but that are inherently uncertain and unpredictable. It is also possible that other professionals, applying reasonable judgment to the same facts and circumstances, could develop and support a range of alternative estimated amounts. Actual results could be significantly different from these estimates.

For a summary of our significant accounting policies and critical accounting estimates, refer to Note 2 of our Consolidated Financial Statements and Critical Accounting Estimates and Assumptions within Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025.

We are exposed to various types of market risk in the normal course of our business, including the impact of interest rate changes, diesel fuel cost changes and inflation. We may enter into interest rate or diesel fuel swaps to manage exposure to interest rate and diesel fuel price changes. We do not enter into derivative instruments for any purpose other than cash flow hedging and we do not hold derivative instruments for trading purposes.

Interest Rate Risk

Our exposure to interest rate risk relates to our Five-Year Credit Facility, our 364-Day Revolving Credit Facility, borrowings under our commercial paper program, and any future registered offerings of senior notes to raise capital or replace existing maturities. At November 1, 2025, there were no borrowings outstanding under the credit facilities and $620.0 million principal amount of notes were outstanding under the commercial paper program. A hypothetical increase of one percentage point on such borrowings would not materially affect our results of operations or cash flows.

Inflation Risk

The primary inflationary factors impacting our business include changes to the costs of merchandise, transportation (including the cost of diesel fuel), store construction-related costs, and labor. If these inflationary pressures become significant, we may not be able to fully offset such higher costs through adjustments to our product assortment, improvements in operational efficiencies or increases in our comparable store net sales. Our inability or failure to do so could harm our business, financial condition and results of operations.

Our management has carried out, with the participation of our Chief Executive Officer and Chief Financial Officer, an evaluation of the effectiveness of our disclosure controls and procedures, as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (“Exchange Act”) as of the end of the period covered by this report. Based upon this evaluation, our Chief Executive Officer and our Chief Financial Officer concluded that, as of November 1, 2025, our disclosure controls and procedures were designed and functioning effectively to provide reasonable assurance that information required to be disclosed by us in reports that we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported within the time periods specified in Securities and Exchange Commission rules and forms, and (ii) accumulated and communicated to our management, including the Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding disclosure.

In fiscal 2024, we implemented a new warehouse management system in two of our distribution centers and expect to complete a phased implementation of the system to our remaining distribution centers over the next several years. In the second quarter of fiscal 2025, we converted an additional two distribution centers to the new system. No distribution centers were converted during the third quarter of fiscal 2025. In the third quarter of fiscal 2025, we implemented a new human capital management and payroll system. We have made changes to our internal control over financial reporting to align with the functionality and updated processes associated with the new system.

We will continue to monitor and modify, as needed, the design and operating effectiveness of key control activities to align with the updated business processes and capabilities of the new systems.

There were no other changes in our internal control over financial reporting during the fiscal quarter ended November 1, 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II—OTHER INFORMATION

Item 1. Legal Proceedings.

For information regarding legal proceedings in which we are involved, please see Note 3 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

There have been no material changes to the risk factors described in “Item 1A. Risk Factors” of our Annual Report on Form 10-K for the fiscal year ended February 1, 2025, other than as set forth in the discussion of certain items that have impacted or could impact our business or results of operations during 2025 or in the future as disclosed in “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of this Quarterly Report on Form 10-Q.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

The following table presents our share repurchase activity during the third quarter of 2025:

In July 2025, our Board of Directors replenished the Company’s share repurchase authorization to an aggregate amount of $2.5 billion, reflecting the limit previously approved by the Board in September 2021. At November 1, 2025, we had $2.0 billion remaining under the $2.5 billion Board repurchase authorization.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

During the fiscal quarter ended November 1, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Securities Exchange Act of 1934) adopted or terminated a Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement (as such terms are defined in Item 408(a) of Regulation S-K).

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.