Item 8. Financial Statements and Supplementary Data.

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Report of Independent Registered Public Accounting Firm						37
Consolidated Balance Sheets						39
Consolidated Statements of Earnings						40
Consolidated Statements of Comprehensive Income						41
Consolidated Statements of Stockholders' Equity						42
Consolidated Statements of Cash Flows						43
Notes to Consolidated Financial Statements						44
Note 1. Summary of Significant Accounting Policies						44
Note 2. Segment Reporting and Net Sales						51
Note 3. Property and Leases						54
Note 4. Goodwill and Intangible Assets						56
Note 5. Debt and Derivative Instruments						57
Note 6. Income Taxes						60
Note 7. Stockholders' Equity						64
Note 8. Fair Value Measurements						64
Note 9. Stock-Based Compensation						65
Note 10. Employee Benefit Plans						69
Note 11. Weighted Average Common Shares						69
Note 12. Commitments and Contingencies						69
Note 13. Acquisitions						69

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and the Board of Directors

The Home Depot, Inc.:

Opinion on the Consolidated Financial Statements

We have audited the accompanying consolidated balance sheets of The Home Depot, Inc. and its subsidiaries (the Company) as of February 1, 2026 and February 2, 2025, the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for each of the fiscal years in the three-year period ended February 1, 2026, and the related notes (collectively, the consolidated financial statements). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of February 1, 2026 and February 2, 2025, and the results of its operations and its cash flows for each of the fiscal years in the three-year period ended February 1, 2026, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of February 1, 2026, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated March 18, 2026 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Sufficiency of audit evidence over certain merchandise inventories

As discussed in Note 1 to the consolidated financial statements, the majority of merchandise inventories are stated at the lower of cost or market, as determined by the retail inventory method, which is based on a number of factors such as markups, markdowns, and inventory losses (or shrink). As the inventory retail value is adjusted regularly to reflect market conditions, inventory valued using the retail method approximates the lower of cost or market. The remaining merchandise inventories, including those within the retail operations in Canada and Mexico, distribution centers, and SRS distribution operations, are recorded at the lower of cost or net realizable value, as determined by a cost method, primarily the moving average cost and first-in, first-out methods. The Company's merchandise inventories were $25.8 billion as of February 1, 2026.

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We identified the sufficiency of audit evidence over merchandise inventories recorded using the retail inventory method as a critical audit matter. Subjective auditor judgment was required to evaluate the sufficiency of audit evidence obtained primarily due to the highly automated nature of the process to record these merchandise inventories, which involves interfacing significant volumes of data across multiple information technology (IT) systems. IT professionals with specialized skills and knowledge were required to assess the Company's IT systems used in the process to record merchandise inventories under the retail inventory method.

The following are the primary procedures we performed to address this critical audit matter. We applied auditor judgment to determine the nature and extent of procedures to be performed over the recording of merchandise inventory recorded using the retail inventory method, including the IT systems, by:

• evaluating the design and testing the operating effectiveness of certain internal controls related to the recording of these merchandise inventories

• involving IT professionals with specialized skills and knowledge who assisted in testing the design and operating effectiveness of certain general IT and application controls used for processing and recording these merchandise inventories

• developing an expectation of certain inputs into the retail inventory method, including retail markups and markdowns, purchases at retail, and purchase discounts, and comparing them to the Company’s inputs

• selecting a sample of inventory transactions and comparing them to supporting documentation, such as vendor invoices, cash payments or vendor agreements

• performing inventory count observation procedures at a selection of locations.

We evaluated the sufficiency of audit evidence obtained by assessing the cumulative results of procedures performed, including the appropriateness of the nature and extent of such evidence.

/s/ KPMG LLP

We have served as the Company’s auditor since 1979.

Atlanta, Georgia

March 18, 2026

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THE HOME DEPOT, INC.

CONSOLIDATED BALANCE SHEETS

in millions, except per share data			February 1, 2026						February 2, 2025
Assets
Current assets:
Cash and cash equivalents			$	1,389					$	1,659
Receivables, net			5,597						4,903
Merchandise inventories			25,817						23,451
Other current assets			1,588						1,670
Total current assets			34,391						31,683
Net property and equipment			28,021						26,702
Operating lease right-of-use assets			9,204						8,592
Goodwill			22,344						19,475
Intangible assets, net			10,329						8,983
Other assets			806						684
Total assets			$	105,095					$	96,119
Liabilities and Stockholders’ Equity
Current liabilities:
Short-term debt			$	4,464					$	316
Accounts payable			11,491						11,938
Accrued salaries and related expenses			2,529						2,315
Sales taxes payable			508						628
Deferred revenue			2,575						2,610
Income taxes payable			114						832
Current installments of long-term debt			4,967						4,582
Current operating lease liabilities			1,418						1,274
Other accrued expenses			4,358						4,166
Total current liabilities			32,424						28,661
Long-term debt, excluding current installments			46,341						48,485
Long-term operating lease liabilities			8,160						7,633
Deferred income taxes			2,845						1,962
Other long-term liabilities			2,512						2,738
Total liabilities			92,282						89,479
Commitments and contingencies (Note 12)
Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,802 shares at February 1, 2026 and 1,800 shares at February 2, 2025; outstanding: 996 shares at February 1, 2026 and 994 shares at February 2, 2025			90						90
Paid-in capital			14,809						14,117
Retained earnings			94,537						89,533
Accumulated other comprehensive loss			(652)						(1,129)
Treasury stock, at cost, 806 shares at February 1, 2026 and February 2, 2025			(95,971)						(95,971)
Total stockholders’ equity			12,813						6,640
Total liabilities and stockholders’ equity			$	105,095					$	96,119

—————

See accompanying notes to consolidated financial statements.

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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF EARNINGS

in millions, except per share data			Fiscal						Fiscal						Fiscal
2025						2024						2023
Net sales			$	164,683					$	159,514					$	152,669
Cost of sales			109,818						106,206						101,709
Gross profit			54,865						53,308						50,960
Operating expenses:
Selling, general and administrative			30,702						28,748						26,598
Depreciation and amortization			3,273						3,034						2,673
Total operating expenses			33,975						31,782						29,271
Operating income			20,890						21,526						21,689
Interest and other (income) expense:
Interest income and other, net			(124)						(201)						(178)
Interest expense			2,412						2,321						1,943
Interest and other, net			2,288						2,120						1,765
Earnings before provision for income taxes			18,602						19,406						19,924
Provision for income taxes			4,446						4,600						4,781
Net earnings			$	14,156					$	14,806					$	15,143
Basic weighted average common shares			993						990						999
Basic earnings per share			$	14.26					$	14.96					$	15.16
Diluted weighted average common shares			995						993						1,002
Diluted earnings per share			$	14.23					$	14.91					$	15.11

—————

Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks.

See accompanying notes to consolidated financial statements.

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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Net earnings			$	14,156					$	14,806					$	15,143
Other comprehensive income (loss), net of tax:
Foreign currency translation adjustments			469						(605)						232
Cash flow hedges			11						(45)						8
Other			(3)						(2)						1
Total other comprehensive income (loss), net of tax			477						(652)						241
Comprehensive income			$	14,633					$	14,154					$	15,384

—————

Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks.

See accompanying notes to consolidated financial statements.

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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Common Stock:
Balance at beginning of year			$	90					$	90					$	90
Shares issued under employee stock plans, net			—						—						—
Balance at end of year			90						90						90
Paid-in Capital:
Balance at beginning of year			14,117						13,147						12,592
Shares issued under employee stock plans, net			170						530						175
Stock-based compensation expense			522						440						380
Balance at end of year			14,809						14,117						13,147
Retained Earnings:
Balance at beginning of year			89,533						83,656						76,896
Net earnings			14,156						14,806						15,143
Cash dividends			(9,152)						(8,929)						(8,383)
Balance at end of year			94,537						89,533						83,656
Accumulated Other Comprehensive Loss:
Balance at beginning of year			(1,129)						(477)						(718)
Foreign currency translation adjustments, net of tax			469						(605)						232
Cash flow hedges, net of tax			11						(45)						8
Other, net of tax			(3)						(2)						1
Balance at end of year			(652)						(1,129)						(477)
Treasury Stock:
Balance at beginning of year			(95,971)						(95,372)						(87,298)
Repurchases of common stock			—						(599)						(8,074)
Balance at end of year			(95,971)						(95,971)						(95,372)
Total stockholders’ equity			$	12,813					$	6,640					$	1,044

—————

Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks.

See accompanying notes to consolidated financial statements.

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THE HOME DEPOT, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Cash Flows from Operating Activities:
Net earnings			$	14,156					$	14,806					$	15,143
Reconciliation of net earnings to net cash provided by operating activities:
Depreciation and amortization, excluding amortization of intangible assets			3,514						3,336						3,061
Intangible asset amortization			607						425						186
Stock-based compensation expense			522						442						380
Changes in receivables, net			107						174						134
Changes in merchandise inventories			(1,498)						(743)						4,137
Changes in other current assets			124						86						(184)
Changes in accounts payable and accrued expenses			(1,058)						518						(1,411)
Changes in deferred revenue			(61)						(165)						(318)
Changes in income taxes payable			(698)						809						(25)
Changes in deferred income taxes			418						15						(245)
Other operating activities			192						107						314
Net cash provided by operating activities			16,325						19,810						21,172
Cash Flows from Investing Activities:
Capital expenditures			(3,679)						(3,485)						(3,226)
Payments for businesses acquired, net			(5,410)						(17,644)						(1,514)
Other investing activities			109						98						11
Net cash used in investing activities			(8,980)						(21,031)						(4,729)
Cash Flows from Financing Activities:
Proceeds from short-term debt, net			4,148						316						—
Proceeds from long-term debt, net of discounts			2,161						10,010						1,995
Repayments of long-term debt			(5,040)						(1,536)						(1,271)
Repurchases of common stock			—						(649)						(7,951)
Proceeds from sales of common stock			314						395						323
Cash dividends			(9,152)						(8,929)						(8,383)
Other financing activities			(145)						(301)						(156)
Net cash used in financing activities			(7,714)						(694)						(15,443)
Change in cash and cash equivalents			(369)						(1,915)						1,000
Effect of exchange rate changes on cash and cash equivalents			99						(186)						3
Cash and cash equivalents at beginning of year			1,659						3,760						2,757
Cash and cash equivalents at end of year			$	1,389					$	1,659					$	3,760
Supplemental Disclosures:
Cash paid for interest, net of interest capitalized			2,405						2,199						1,809
Non-cash capital expenditures			272						250						364
Non-cash acquisition purchase consideration (Note 13)			—						321						—

—————

Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks.

See accompanying notes to consolidated financial statements.

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THE HOME DEPOT, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

**1.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Business

The Home Depot, Inc., together with its subsidiaries (the “Company,” “The Home Depot,” “Home Depot,” “we,” “our” or “us”), is a home improvement retailer that sells a wide assortment of home improvement products, building materials, lawn and garden products, décor products, and facilities MRO products in stores and online. We also provide a number of services, including home improvement installation services, and tool and equipment rental. Additionally, through our subsidiary, SRS, we are a leading specialty trade distributor of roofing and building products, interior and construction products, landscape supplies, and pool supplies. The Company's operations comprise one reportable segment, along with certain other non-reportable operating segments. See Note 2 for further information.

Consolidation and Presentation

Our consolidated financial statements include our accounts and those of our subsidiaries. Intercompany balances and transactions are eliminated in consolidation. Our fiscal year is a 52- or 53-week period ending on the Sunday nearest to January 31. Fiscal 2025 and fiscal 2023 include 52 weeks, while fiscal 2024 includes 53 weeks.

Use of Estimates

We have made a number of estimates and assumptions relating to the reporting of assets and liabilities, the disclosure of contingent assets and liabilities, and reported amounts of revenues and expenses in preparing these financial statements in conformity with GAAP. While we believe these estimates and assumptions are reasonable, actual results could differ from these estimates.

Cash and Cash Equivalents

Cash and cash equivalents consist of cash on hand and highly liquid investments purchased with original maturities of three months or less.

Receivables, net

The following table presents components of receivables, net:

in millions			February 1, 2026						February 2, 2025
Card receivables			$	1,021					$	1,019
Rebate receivables			1,421						1,404
Customer receivables			2,588						1,896
Other receivables			567						584
Receivables, net			$	5,597					$	4,903

Card receivables consist of payments due from financial institutions for the settlement of credit card and debit card transactions. Rebate receivables represent amounts due from vendors for volume and co-op advertising rebates. Customer receivables relate to credit extended directly to certain customers in the ordinary course of business. The valuation allowance related to these receivables was not material to our consolidated financial statements at the end of fiscal 2025 or fiscal 2024.

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Merchandise Inventories

Inventory cost includes the amount we pay to acquire inventory, including freight and import costs, as well as operating costs and depreciation associated with our sourcing and distribution network, and is net of certain vendor allowances. The majority of our merchandise inventories are stated at the lower of cost or market, as determined by the retail inventory method, which is based on a number of factors such as markups, markdowns, and inventory losses (or shrink). As the inventory retail value is adjusted regularly to reflect market conditions, inventory valued using the retail method approximates the lower of cost or market. Our remaining merchandise inventories, including those within our retail operations in Canada and Mexico, distribution centers, and our SRS distribution operations, are recorded at the lower of cost or net realizable value, as determined by a cost method, primarily the moving average cost and first-in, first-out methods. We evaluate the inventory valued using a cost method at the end of each quarter to ensure that it is carried at the lower of cost or net realizable value, and the adjustments recorded to merchandise inventories valued under a cost method were not material to our consolidated financial statements at the end of fiscal 2025 or fiscal 2024.

Physical inventory counts or cycle counts are taken on a regular basis in our stores, distribution centers and branches to ensure that amounts reflected in merchandise inventories are properly stated. Shrink (or in the case of excess inventory, swell) is the difference between the recorded amount of inventory and the physical inventory count. We calculate shrink based on actual inventory losses identified as a result of physical inventory counts during each fiscal period and estimated inventory losses occurring between physical inventory counts. The estimate for shrink occurring in the interim period between physical inventory counts is calculated on a store-specific basis and is primarily based on recent shrink results. Historically, the difference between estimated shrink and actual inventory losses has not been material to our annual financial results.

Property and Equipment

Buildings and related improvements, furniture, fixtures, and equipment are recorded at cost and depreciated using the straight-line method over their estimated useful lives. Leasehold improvements and assets held under finance leases are amortized using the straight-line method over the original term of the lease or the useful life of the asset, whichever is shorter.

The following table presents the estimated useful lives of our property and equipment:

			Life
Buildings and improvements			5 – 45 years
Furniture, fixtures and equipment			2 – 20 years
Leasehold improvements			5 – 45 years

We capitalize certain costs, including interest, related to construction in progress and the acquisition and development of software. Costs associated with the acquisition and development of software are amortized using the straight-line method over the estimated useful life of the software, which ranges from three to seven years. Certain development costs not meeting the criteria for capitalization are expensed as incurred.

We evaluate our long-lived assets each quarter for indicators of potential impairment. Indicators of impairment include current period losses combined with a history of losses, our decision to relocate or close a store or other location before the end of its previously estimated useful life, or when changes in other circumstances indicate the carrying amount of an asset group may not be recoverable. The evaluation for long-lived assets is performed at the lowest level of identifiable cash flows, which is generally the individual store level. Long-lived assets with indicators of impairment are evaluated for recoverability by comparing their undiscounted future cash flows with their carrying amount. If the carrying amount is greater than the undiscounted future cash flows, we then measure the asset group’s fair value to determine whether an impairment loss should be recognized. If the resulting fair value is less than the carrying amount, an impairment loss is recognized for the difference between the carrying amount and the estimated fair value. Impairment losses on property and equipment are generally recorded as a component of SG&A. Impairment charges for long-lived assets were not material to our consolidated financial statements in fiscal 2025, fiscal 2024, or fiscal 2023.

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Leases

We enter into contractual arrangements for the utilization of certain non-owned assets which are evaluated as finance or operating leases upon commencement, and are accounted for accordingly. Specifically, a contract is or contains a lease when (1) the contract contains an explicitly or implicitly identified asset and (2) we obtain substantially all of the economic benefits from the use of that underlying asset and direct how and for what purpose the asset is used during the term of the contract in exchange for consideration. We assess whether an arrangement is or contains a lease at inception of the contract.

Our leases include certain retail locations, warehouse and distribution space, branches, office space, equipment, and vehicles. A substantial majority of our leases have remaining lease terms of one to 20 years. Our real estate leases typically provide the option to extend the lease for five-year terms, and some of our leases include early termination options. The lease term used to calculate the right-of-use asset and lease liability at commencement includes the impacts of options to extend or terminate the lease when it is reasonably certain that we will exercise that option. When determining whether it is reasonably certain that we will exercise an option at commencement, we consider various existing economic factors, including market conditions, real estate strategies, the nature, length, and terms of the agreement, as well as the uncertainty of the condition of leased equipment at the end of the lease term. Based on these determinations, we generally conclude that the exercise of renewal options would not be reasonably certain in determining the lease term at commencement.

The discount rate used to calculate the present value of lease payments is the rate implicit in the lease, when readily determinable. As the rate implicit in the lease is rarely readily determinable, we use a secured incremental borrowing rate, which is updated on a quarterly basis, as the discount rate to calculate the present value of lease payments.

Real estate taxes, insurance, maintenance, and operating expenses applicable to the leased asset are generally our obligations under our lease agreements. In instances where these payments are fixed, they are included in the measurement of our lease liabilities, and when variable, they are excluded and recognized in the period in which the obligation for those payments is incurred. Certain of our lease agreements also include rental payments based on an index or rate, and others include rental payments based on a percentage of sales. For variable payments dependent upon an index or rate, we apply the active index or rate as of the lease commencement date. Variable lease payments not based on an index or rate are not included in the measurement of our lease liabilities, as they cannot be reasonably estimated, and are recognized in the period in which the obligation for those payments is incurred.

Leases that have a term of twelve months or less upon commencement are considered short-term in nature. Short-term leases are not included on the consolidated balance sheets and are expensed on a straight-line basis over the lease term. We have also elected not to separate lease and non-lease components for certain classes of assets including real estate and certain equipment.

Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

Business Combinations

The assets and liabilities of acquired businesses are recorded at their fair values at the date of acquisition. The excess of the purchase price over the fair values of the identifiable assets acquired and liabilities assumed is recorded as goodwill. During the measurement period, which is up to one year from the acquisition date, we may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon conclusion of the measurement period, any subsequent adjustments are recorded to earnings.

Goodwill

Goodwill represents the excess of purchase price over the fair value of net assets acquired. We do not amortize goodwill, but assess the recoverability of goodwill in the third quarter of each fiscal year, or more often if indicators warrant, by determining whether the fair value of each reporting unit supports its carrying amount. Each fiscal year, we may assess qualitative factors to determine whether it is more likely than not that the fair value of each reporting unit is less than its carrying amount as a basis for determining whether it is necessary to complete quantitative impairment assessments, with a quantitative assessment completed periodically or as facts and circumstances warrant. Additional information regarding our goodwill is included in Note 4.

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Intangible Assets, net

We amortize the cost of definite-lived intangible assets on a straight-line basis over their estimated useful lives, which range up to approximately 20 years, as this approximates the pattern of expected economic benefit. We evaluate our definite-lived intangible assets for impairment when evidence exists that certain triggering events or changes in circumstances indicate that the carrying amount of these assets may not be recoverable. Intangible assets with indefinite lives are tested in the third quarter of each fiscal year for impairment, or more often if indicators warrant. Additional information regarding our intangible assets is included in Note 4.

Supplier Finance Program

We have a supplier finance program whereby we have entered into payment processing agreements with select financial institutions. Under these agreements, the financial institutions act as our paying agents with respect to accounts payable due to certain suppliers. Participating suppliers may, at their sole discretion, elect to receive payment for one or more of our payment obligations, prior to their scheduled due dates, at a discounted price from participating financial institutions. We are not a party to the agreements between the participating financial institutions and the suppliers in connection with the program, and our rights and obligations to our suppliers are not impacted. We do not reimburse suppliers for any costs they incur for participation in the program, and we have not pledged any assets as security or provided any guarantees as part of the program. We have no economic interest in our suppliers’ decisions to participate in the program. Our responsibility is limited to making payment to the respective financial institution according to the terms originally negotiated with the supplier, regardless of whether the supplier elects to receive early payment from the financial institution.

The payment terms we negotiate with our suppliers are consistent, irrespective of whether a supplier participates in the program. Our current payment terms with a majority of our participating suppliers generally range from 30 to 60 days, which we deem to be commercially reasonable. Our outstanding payment obligations under our supplier finance program are recorded within accounts payable on our consolidated balance sheets. The associated payments are included in operating activities within our consolidated statements of cash flows.

The following table presents the changes in our outstanding obligations under our supplier finance program:

			Fiscal						Fiscal
in millions			2025						2024
Confirmed obligations outstanding at the beginning of the year			$	598					$	514
Invoices confirmed during the year			4,394						5,140
Confirmed invoices paid during the year			(4,578)						(5,056)
Confirmed obligations outstanding at the end of the year			$	414					$	598

Debt

We record any premiums or discounts associated with an issuance of long-term debt as a direct addition or deduction to the carrying amount of the related senior notes. We also record debt issuance costs associated with an issuance of long-term debt as a direct deduction to the carrying amount of the related senior notes. Premium, discount, and debt issuance costs are amortized over the term of the respective notes using the effective interest rate method.

Derivative Instruments and Hedging Activities

We use derivative instruments in the management of our interest rate exposure on long-term debt and our exposure to foreign currency fluctuations. We enter into derivative instruments for risk management purposes only; we do not enter into derivative instruments for trading or speculative purposes. All derivative instruments are recognized at their fair values in either assets or liabilities at the balance sheet date and are classified as either current or non-current based on each contract’s respective maturity. While we enter into master netting arrangements, our policy is to present the fair value of derivative instruments on a gross basis in our consolidated balance sheets.

Changes in the fair values for derivative instruments designated as cash flow or net investment hedges are recognized in accumulated other comprehensive income (loss) until the hedged item is recognized in earnings, which for net investment hedges is upon sale or substantial liquidation of the underlying net investment. Changes in fair value of outstanding fair value hedges and the offsetting changes in fair values of the hedged item are recognized in earnings. We record realized gains and losses from derivative instruments in the same financial statement line item as the hedged item.

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Cash flows from the settlement of derivative instruments appear in our consolidated statements of cash flows in the same categories as the cash flows of the hedged item.

Self-Insurance Reserves

We are self-insured for certain losses related to general liability (including product liability), workers’ compensation, employee group medical, and automobile claims. We recognize the expected ultimate cost for claims incurred (undiscounted) at the balance sheet date as a liability. The expected ultimate cost for claims incurred is estimated based upon analysis of historical data and actuarial estimates. We also maintain cybersecurity and privacy liability insurance coverage to help limit our exposure to losses such as those that may be caused by a significant compromise or breach of our data security, as well as property loss coverage. Our self-insurance liabilities, which are included in accrued salaries and related expenses, other accrued expenses, and other long-term liabilities in the consolidated balance sheets, were $1.6 billion at February 1, 2026, and $1.5 billion at February 2, 2025.

Treasury Stock

Treasury stock is reflected as a reduction of stockholders’ equity at cost. We use the weighted average purchase cost to determine the cost of treasury stock that is reissued, if any. Excise taxes incurred on share repurchases represent direct costs of the repurchase and are recorded as a part of the cost basis of the shares within treasury stock.

Revenue Recognition

We recognize revenue, net of expected returns and sales tax, at the time the customer takes possession of merchandise or when a service is performed. We recognize a liability for sales returns, which is estimated based on historical return levels and our expectation of future returns. We also recognize a return asset, and corresponding adjustment to cost of sales, for our right to recover the goods returned by the customer, measured at the former carrying amount of the goods, less any expected recovery cost. At each financial reporting date, we assess our estimates of expected returns, refund liabilities, and return assets.

Services revenue is generated through a variety of installation, home maintenance, and professional service programs. In these programs, the customer selects and purchases material for a project, and we provide or arrange for professional installation. These programs are offered through our stores, online, and in-home sales programs. Under certain programs, when we provide or arrange for the installation of a project and the subcontractor provides material as part of the installation, both the material and labor are included in services revenue. We recognize services revenue when the service for the customer is complete, which is not materially different from recognizing the revenue over the service period as the substantial majority of our services are completed within one week.

For products and services sold in stores or online, payment is typically due at the point of sale. When we receive payment before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete. Such performance obligations are part of contracts with expected original durations of typically three months or less. As of both February 1, 2026 and February 2, 2025, deferred revenue for products and services was $1.5 billion.

We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance. As of both February 1, 2026 and February 2, 2025, our performance obligations for unredeemed gift cards were $1.1 billion. Gift card breakage income, which is our estimate of the portion of our outstanding gift card balance not expected to be redeemed, is recognized in net sales and was immaterial in fiscal 2025, fiscal 2024, and fiscal 2023.

Certain customers are provided with the ability to purchase products on credit with pre-approved limits where payment is due after delivery to the customer. We also have agreements with third-party service providers who directly extend credit to customers, manage our PLCC program, and own the related receivables. We have evaluated the third-party entities holding the receivables under the program and concluded that they should not be consolidated. The agreement with the primary third-party service provider for our PLCC program expires in 2028, with us having the option, but no obligation, to purchase the existing receivables at the end of the agreement. Deferred interest charges incurred for our deferred financing programs offered to these customers, interchange fees charged to us for their use of the cards, and any profit sharing with the third-party service providers are included in net sales.

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Cost of Sales

Cost of sales includes the actual cost of merchandise sold and services performed; the cost of transportation of merchandise from vendors to our distribution network, stores, or customers; shipping and handling costs from our stores or distribution network to customers; and the operating cost and depreciation of our sourcing and distribution network. Vendor allowances that are not reimbursements of specific, incremental, and identifiable costs are also included within cost of sales.

Vendor Allowances

Vendor allowances primarily consist of volume rebates that are earned as a result of attaining certain purchase levels and co-op advertising allowances for the promotion of vendors’ products that are typically based on guaranteed minimum amounts with additional amounts being earned for attaining certain purchase levels. These vendor allowances are accrued as earned, with those allowances received as a result of attaining certain purchase levels accrued over the incentive period, which generally concludes at the end of the calendar year, based on estimates of purchases. Volume rebates and certain co-op advertising allowances reduce the carrying cost of inventory and are recognized in cost of sales when the related inventory is sold.

Selling, General and Administrative

Selling, general and administrative expenses generally include compensation and benefits for retail and support center associates, occupancy and operating costs of retail locations and support centers, insurance-related expenses, advertising costs, credit and debit card processing fees, and other administrative costs.

Advertising Expense

Advertising costs, including digital, television, radio and print, are expensed when the advertisement first appears. Certain co-op advertising allowances that are reimbursements of specific, incremental, and identifiable costs incurred to promote vendors’ products are recorded as an offset against advertising expense. Net advertising expense included in SG&A was $1.3 billion, $1.2 billion, and $1.1 billion for fiscal 2025, 2024, and 2023, respectively.

Stock-Based Compensation

We are currently authorized to issue equity awards including incentive and nonqualified stock options, restricted stock, restricted stock units, performance shares, performance units, stock appreciation rights, and deferred shares to certain of our associates and non-employee directors under certain stock incentive plans. We measure and recognize compensation expense for all stock-based payment awards granted to associates and non-employee directors based on estimated fair values. The value of the portion of the award that is ultimately expected to vest is recognized as stock-based compensation expense, on a straight-line basis, over the requisite service period or as restrictions lapse. We include estimated forfeitures expected to occur when calculating stock-based compensation expense. Additional information on our stock-based payment awards is included in Note 9.

Income Taxes

Income taxes are accounted for under the asset and liability method. We provide for federal, state, and foreign income taxes currently payable, as well as for those deferred due to timing differences between reporting income and expenses for financial statement purposes versus tax purposes. Deferred tax assets and liabilities are recognized for the future tax consequences attributable to temporary differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted income tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect of a change in income tax rates is recognized as income or expense in the period that includes the enactment date. We routinely evaluate the likelihood of realizing the benefit of our deferred tax assets and may record a valuation allowance if, based on all available evidence, we determine that it is more likely than not that some portion of the tax benefit will not be realized.

We recognize the effect of income tax positions only if those positions are more likely than not of being sustained. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs.

We recognize interest and penalties related to income tax matters in interest expense and SG&A, respectively, on our consolidated statements of earnings. Accrued interest and penalties related to income tax matters are recognized in other accrued expenses and other long-term liabilities on our consolidated balance sheets.

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We file a consolidated U.S. federal income tax return which includes certain eligible subsidiaries. Non-U.S. subsidiaries and certain U.S. subsidiaries, which are consolidated for financial reporting purposes, are not eligible to be included in our consolidated U.S. federal income tax return. Separate provisions for income taxes have been determined for these entities. For unremitted earnings of our non-U.S. subsidiaries, we are required to make an assertion regarding reinvestment or repatriation for tax purposes. For any earnings that we do not make a permanent reinvestment assertion, we recognize a provision for deferred income taxes. For earnings where we have made a permanent reinvestment assertion, no provision is recognized. See Note 6 for further discussion.

We are subject to global intangible low-taxed income tax, an incremental tax on foreign income. We have made an accounting election to record this tax in the period the tax arises.

Comprehensive Income

Comprehensive income includes net earnings adjusted for certain gains and losses that are excluded from net earnings and recognized within accumulated other comprehensive loss as a component of equity, which consists primarily of foreign currency translation adjustments. Accumulated other comprehensive loss also includes net losses on cash flow hedges that were immaterial as of February 1, 2026 and February 2, 2025. Reclassifications from accumulated other comprehensive loss into earnings were immaterial in fiscal 2025, fiscal 2024, and fiscal 2023.

Foreign Currency Translation

Assets and liabilities denominated in a foreign currency are translated into U.S. dollars at the current rate of exchange on the last day of the reporting period. Revenues and expenses are translated using average exchange rates for the period, and equity transactions are translated using the actual rate on the day of the transaction. Cumulative foreign currency translation adjustments recorded in accumulated other comprehensive loss as of February 1, 2026 and February 2, 2025 were losses of $501 million and $970 million, respectively.

Recently Adopted Accounting Pronouncements

ASU No. 2023-09. In December 2023, the FASB issued ASU No. 2023-09, “Income Taxes (Topic 740): Improvements to Income Tax Disclosures,” which requires disclosure of disaggregated information about a reporting entity’s effective tax rate reconciliation as well as disclosures on income taxes paid by jurisdiction. ASU No. 2023-09 is effective for annual periods beginning after December 15, 2024. The guidance is required to be applied on a prospective basis, with the option to apply the standard retrospectively. We adopted ASU No. 2023-09 on a retrospective basis in the fourth quarter of fiscal 2025. The adoption of this guidance resulted in additional financial statement disclosures and had no impact to our consolidated financial condition, results of operations, or cash flows. See Note 6, which includes the disclosures resulting from our adoption of this guidance.

Accounting Pronouncements Not Yet Adopted

ASU No. 2025-06. In September 2025, the FASB issued ASU No. 2025-06, “Intangibles—Goodwill and Other—Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software,” which is intended to modernize internal-use software guidance by removing all references to project stages and by clarifying the thresholds entities apply to begin capitalizing costs. ASU No. 2025-06 is effective for fiscal years beginning after December 15, 2027, and interim periods within those annual reporting periods. Early adoption is permitted. The guidance can be applied on a prospective basis, a modified basis for in-process projects, or a retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statements.

ASU No. 2024-03. In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses,” which is intended to improve disclosures about a public business entity’s expenses by requiring disaggregated disclosure, in the notes to the financial statements, of prescribed categories of expenses within relevant income statement captions. ASU No. 2024-03 is effective for fiscal years beginning after December 15, 2026 and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The new standard may be applied either on a prospective or retrospective basis. We are currently evaluating the impact of the standard on our consolidated financial statement disclosures.

Recent accounting pronouncements adopted or pending adoption not discussed above are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.

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**2.**SEGMENT REPORTING AND NET SALES

Segment Reporting

The Company defines its segments based on how internally reported financial information is regularly reviewed by the chief operating decision maker (“CODM”), our President and Chief Executive Officer, to analyze financial performance, make decisions, and allocate resources.

Primary Segment. We are engaged in retail operations and sell a wide assortment of home improvement products, building materials, lawn and garden products, décor products, and facilities MRO products both in stores and online. We also provide a number of services, including home improvement installation services, and tool and equipment rental. We currently conduct these operations in the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico, each of which represents an operating segment. For disclosure purposes, we aggregate these three geographic operating segments into one reportable segment (the “Primary segment”) due to the similar nature of their operations and economic characteristics.

Other. As discussed in Note 13, in June 2024, we acquired SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor through branches located throughout the U.S. On September 4, 2025, SRS completed the acquisition of GMS, a leading distributor of specialty building products, including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. GMS became an additional vertical within SRS referred to as interior and construction products, and SRS is now organized as four different lines of business: roofing and building products, interior and construction products, landscape, and pool. We have determined that each of these four lines of business represents an operating segment, none of which meets the thresholds prescribed under Accounting Standards Codification Topic 280: “Segment Reporting” to be deemed a reportable segment. Therefore, results from these operating segments are presented in “Other.”

Segment Information. For our Primary segment, our CODM uses operating income to allocate resources in the planning and forecasting process and to assess segment performance by monitoring actual results versus prior-period, forecasted results, and the annual plan. Assets are reviewed by our CODM on a total company consolidated basis and not by segment. The accounting policies of our Primary segment are the same as those described in our summary of significant accounting policies.

The following table presents net sales, significant expenses, and operating income for our Primary segment:

in millions			Fiscal 2025						Fiscal 2024						Fiscal 2023
Net sales			$	151,966					$	153,108					$	152,669
Cost of sales			99,717						101,194						101,709
Selling, general and administrative			28,885						27,822						26,598
Depreciation and amortization			2,790						2,779						2,673
Operating income			$	20,574					$	21,313					$	21,689

The following table presents a reconciliation of certain segment information to our consolidated totals:

			Fiscal 2025																		Fiscal 2024
in millions			Primary						Other (1)						Consolidated						Primary						Other (1)						Consolidated
Net sales			$	151,966					$	12,717					$	164,683					$	153,108					$	6,406					$	159,514
Operating income			20,574						316						20,890						21,313						213						21,526
Interest income and other, net															(124)																		(201)
Interest expense															2,412																		2,321
Earnings before provision for income taxes															$	18,602																	$	19,406
Depreciation and amortization (2)			$	3,344					$	715					$	4,059					$	3,350					$	358					$	3,708

—————

*(1)*Net sales presented in Other relate to the sale of products within our SRS non-reportable operating segments, following our acquisition of SRS in the second quarter of fiscal 2024 and the subsequent acquisition of GMS in the third quarter of fiscal 2025. Operating income presented in Other includes cost of sales and operating expenses totaling $12.4 billion and $6.2 billion for fiscal 2025 and fiscal 2024, respectively, within these SRS non-reportable operating segments.

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*(2)*Includes depreciation and finance lease amortization in cost of sales. Also includes intangible asset amortization expense of $209 million and $207 million for fiscal 2025 and fiscal 2024, respectively, in our Primary segment, and intangible asset amortization expense of $398 million and $218 million for fiscal 2025 and fiscal 2024, respectively, in Other.

Prior to the SRS acquisition in fiscal 2024, our total Company consolidated results represented our Primary segment. Therefore, a reconciliation to our consolidated totals is not applicable for fiscal 2023.

The following table presents net property and equipment, classified by geography:

in millions			February 1, 2026						February 2, 2025						January 28, 2024
Net property and equipment – in the U.S.			$	25,139					$	24,193					$	23,347
Net property and equipment – outside the U.S.			2,882						2,509						2,807
Net property and equipment			$	28,021					$	26,702					$	26,154

Net Sales

The following table presents our Primary segment major product lines and the related merchandising departments (and related services):

Major Product Line						Merchandising Departments
Building Materials						Building Materials, Electrical, Lumber, Millwork, and Plumbing
Décor						Appliances, Bath, Flooring, Kitchen & Blinds, Lighting, and Paint
Hardlines						Hardware, Indoor Garden, Outdoor Garden, Power, and Storage & Organization

As noted in our Quarterly Report on Form 10-Q for the first quarter of fiscal 2025, we made changes that realigned certain product categories across our major product lines and merchandising departments within our Primary segment. As a result, prior-year amounts in each of the respective tables below have been reclassified to conform with the current-year presentation. These changes had no impact on consolidated net sales.

The following table presents net sales by major product line (and related services) within our Primary segment, as well as Other net sales:

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Building Materials			$	52,439					$	52,862					$	52,572
Décor			51,679						52,525						52,750
Hardlines			47,848						47,721						47,347
Primary segment net sales			151,966						153,108						152,669
Other net sales (1)			12,717						6,406						—
Net sales			$	164,683					$	159,514					$	152,669

—————

*(1)*Net sales presented in Other relate to the sale of products within our SRS non-reportable operating segments, following our acquisition of SRS in the second quarter of fiscal 2024 and the subsequent acquisition of GMS in the third quarter of fiscal 2025. Roofing and related products accounted for approximately 53% and 68% of Other net sales for fiscal 2025 and fiscal 2024, respectively.

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The following table presents net sales by merchandising department (and related services) within our Primary segment, as well as Other net sales:

			Fiscal												Fiscal												Fiscal
			2025												2024												2023
dollars in millions			Net Sales						% of Net Sales						Net Sales						% of Net Sales						Net Sales						% of Net Sales
Appliances			$	13,987					8.5		%				$	14,068					8.8		%				$	13,875					9.1		%
Bath			6,495						3.9						6,462						4.1						6,580						4.3
Building Materials			12,375						7.5						12,429						7.8						12,098						7.9
Electrical			8,010						4.9						7,875						4.9						7,993						5.2
Flooring			8,232						5.0						8,692						5.4						8,703						5.7
Hardware			8,983						5.5						8,982						5.6						8,956						5.9
Indoor Garden			10,176						6.2						10,302						6.5						10,276						6.7
Kitchen & Blinds			7,982						4.8						7,889						4.9						7,999						5.2
Lighting			4,006						2.4						4,221						2.6						4,549						3.0
Lumber			11,391						6.9						11,768						7.4						11,734						7.7
Millwork			8,187						5.0						8,328						5.2						8,456						5.5
Outdoor Garden			10,467						6.4						10,329						6.5						10,384						6.8
Paint			10,977						6.7						11,193						7.0						11,044						7.2
Plumbing			12,476						7.6						12,462						7.8						12,291						8.1
Power			13,168						8.0						13,210						8.3						12,850						8.4
Storage & Organization			5,054						3.1						4,898						3.1						4,881						3.2
Primary segment net sales			151,966						92.3						153,108						96.0						152,669						100.0
Other net sales (1)			12,717						7.7						6,406						4.0						—						—
Net sales			$	164,683					100.0		%				$	159,514					100.0		%				$	152,669					100.0		%

—————

Note: Certain percentages may not sum to totals due to rounding.

*(1)*See above for further discussion of net sales presented in Other.

The following table presents net sales, classified by geography:

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Net sales – in the U.S.			$	152,170					$	147,007					$	140,083
Net sales – outside the U.S.			12,513						12,507						12,586
Net sales			$	164,683					$	159,514					$	152,669

The following table presents net sales by products and services:

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Net sales – products			$	159,029					$	153,674					$	146,835
Net sales – services			5,654						5,840						5,834
Net sales			$	164,683					$	159,514					$	152,669

No sales to an individual customer accounted for more than 10% of revenue during any of the last three fiscal years.

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**3.**PROPERTY AND LEASES

Net Property and Equipment

The following table presents components of net property and equipment:

in millions			February 1, 2026						February 2, 2025
Land			$	9,499					$	9,060
Buildings and improvements			21,321						20,260
Furniture, fixtures, and equipment			20,289						18,474
Leasehold improvements			2,571						2,423
Construction in progress			1,654						1,521
Finance leases			4,133						4,045
Property and equipment, at cost			59,467						55,783
Less: accumulated depreciation and finance lease amortization			31,446						29,081
Net property and equipment			$	28,021					$	26,702

The following table presents depreciation and finance lease amortization expense, including depreciation and finance lease amortization expense included in cost of sales:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Depreciation and finance lease amortization expense			$	3,452					$	3,283					$	3,020

Leases

The following table presents certain consolidated balance sheet information related to operating and finance leases:

in millions			Consolidated Balance Sheet Classification						February 1, 2026						February 2, 2025
Assets:
Operating lease assets			Operating lease right-of-use assets						$	9,204					$	8,592
Finance lease assets (1)			Net property and equipment						2,563						2,638
Total lease assets									$	11,767					$	11,230
Liabilities:
Current:
Operating lease liabilities			Current operating lease liabilities						$	1,418					$	1,274
Finance lease liabilities			Current installments of long-term debt						288						272
Long-term:
Operating lease liabilities			Long-term operating lease liabilities						8,160						7,633
Finance lease liabilities			Long-term debt, excluding current installments						2,675						2,749
Total lease liabilities									$	12,541					$	11,928

—————

(1) Finance lease assets are recorded net of accumulated amortization of $1.6 billion as of February 1, 2026 and $1.4 billion as of February 2, 2025.

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The following table presents components of lease cost, excluding short-term lease cost and sublease income, which are immaterial:

			Consolidated Statement of Earnings Classification (1)						Fiscal						Fiscal						Fiscal
in millions						2025						2024						2023
Operating lease cost			Selling, general and administrative						$	1,846					$	1,661					$	1,359
Finance lease cost:
Amortization of leased assets			Depreciation and amortization						322						328						304
Interest on lease liabilities			Interest expense						113						118						126
Variable lease cost			Selling, general and administrative						585						566						486

—————

*(1)*Costs associated with our sourcing and distribution network are recorded in cost of sales, with the exception of interest on finance lease liabilities.

The following table presents weighted average remaining lease terms and discount rates:

			February 1, 2026						February 2, 2025
Weighted Average Remaining Lease Term (Years):
Operating leases			8						9
Finance leases			12						12
Weighted Average Discount Rate:
Operating leases			4.2		%				4.0		%
Finance leases			3.7		%				3.7		%

The following table presents approximate future minimum payments under operating and finance leases at February 1, 2026:

in millions			Operating Leases						Finance Leases
Fiscal 2026			$	1,792					$	391
Fiscal 2027			1,806						386
Fiscal 2028			1,607						346
Fiscal 2029			1,386						318
Fiscal 2030			1,062						294
Thereafter			3,985						1,856
Total lease payments			11,638						3,591
Less: imputed interest			2,060						628
Present value of lease liabilities			$	9,578					$	2,963

—————

Note: We have excluded approximately $675 million of lease payments (undiscounted basis) for leases that have been signed but have not yet commenced.

The following table presents supplemental cash flow information related to leases:

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows – operating leases			$	1,847					$	1,601					$	1,328
Operating cash flows – finance leases			113						118						126
Financing cash flows – finance leases			327						380						271
Supplemental non-cash information:
Lease assets obtained in exchange for new operating lease liabilities			1,741						1,384						1,827
Lease assets obtained in exchange for new finance lease liabilities			263						153						336

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**4.**GOODWILL AND INTANGIBLE ASSETS

Goodwill

The following table presents the changes in the carrying amount of our goodwill:

in millions			Primary						Other (3)						Consolidated
Goodwill, balance at January 28, 2024			$	8,455					$	—					$	8,455
Acquisitions (1)			23						11,025						11,048
Other (2)			(28)						—						(28)
Goodwill, balance at February 2, 2025			8,450						11,025						19,475
Acquisitions (1)			86						2,757						2,843
Other (2)			28						(2)						26
Goodwill, balance at February 1, 2026			$	8,564					$	13,780					$	22,344

—————

(1) Activity in fiscal 2024 includes the preliminary determination of goodwill related to the SRS acquisition and other immaterial acquisitions completed during that fiscal year. Activity in fiscal 2025 includes the preliminary determination of goodwill related to the GMS acquisition and other immaterial acquisitions completed during that fiscal year. See Note 13 for details regarding the SRS and GMS acquisitions.

(2) Primarily reflects the net impact of foreign currency translation as well as immaterial measurement period adjustments related to acquisitions completed in the prior fiscal year.

(3) Amounts presented in the Other column represent goodwill activity within our SRS non-reportable operating segments.

During the third quarter of fiscal 2025, we completed our annual assessment of the recoverability of goodwill for our U.S., Canada, and Mexico reporting units that reside within our Primary segment. As the results of our most recent quantitative analysis in fiscal 2023 indicated that the fair value of each reporting unit substantially exceeded its respective carrying amount, we performed a qualitative assessment to determine if there were any indicators of impairment. Based on this assessment, we concluded that while there have been events and circumstances that have both positively and negatively impacted the fair values of our reporting units, no single factor or combination of factors is an indicator that it is more likely than not that the fair value of any of these reporting units was less than its carrying amount.

During the third quarter of fiscal 2025, we also completed our annual assessment of our SRS roofing and building products, landscape, and pool reporting units using a quantitative approach. The quantitative test for goodwill impairment was performed by determining the fair value of each reporting unit using a combination of discounted cash flow and market-based approaches. The results of our quantitative analysis indicated that the fair value of each reporting unit exceeded its respective carrying amount, including goodwill. Additionally, due to the proximity of the GMS acquisition date to our annual impairment assessment date, we concluded that there were no events or circumstances that would indicate that it is more likely than not that the fair value of the goodwill recognized in the acquisition was less than its carrying amount.

There were also no impairment charges related to goodwill in fiscal 2024 or fiscal 2023.

Intangible Assets

The following table presents information regarding our intangible assets:

			February 1, 2026																		February 2, 2025
in millions			Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount						Gross Carrying Amount						Accumulated Amortization						Net Carrying Amount
Definite-Lived Intangible Assets:
Customer relationships			$	10,517					$	(1,535)					$	8,982					$	8,845					$	(1,035)					$	7,810
Trade names			889						(191)						698						610						(86)						524
Other			1						(1)						—						11						(11)						—
Indefinite-Lived Intangible Assets:
Trade names			649												649						649												649
Total Intangible Assets			$	12,056					$	(1,727)					$	10,329					$	10,115					$	(1,132)					$	8,983

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Our intangible asset amortization expense was $607 million, $425 million, and $186 million for fiscal 2025, fiscal 2024, and fiscal 2023, respectively.

The following table presents the estimated future amortization expense related to definite-lived intangible assets as of February 1, 2026:

in millions			Amortization Expense
Fiscal 2026			$	683
Fiscal 2027			674
Fiscal 2028			654
Fiscal 2029			615
Fiscal 2030			578
Thereafter			6,476
Total			$	9,680

During the third quarter of fiscal 2025, we completed our annual assessment of the recoverability of our indefinite-lived intangible assets based on quantitative factors and concluded that no impairment losses should be recognized.

There were no impairment charges related to any of our definite or indefinite-lived intangible assets in fiscal 2025, fiscal 2024, or fiscal 2023.

**5.**DEBT AND DERIVATIVE INSTRUMENTS

Short-Term Debt

At the beginning of fiscal 2025, we had a commercial paper program that allowed for an aggregate of $7.0 billion in borrowings, and was supported by $7.0 billion of back-up credit facilities. These back-up credit facilities consisted of a five-year $3.5 billion credit facility scheduled to expire in July 2027, a 364-day $2.0 billion credit facility scheduled to expire in May 2025, and a 364-day $1.5 billion credit facility scheduled to expire in July 2025.

In May 2025, we terminated all three back-up credit facility agreements and simultaneously entered into a new five-year $3.5 billion credit facility scheduled to expire in May 2030 and a new 364-day $3.5 billion credit facility scheduled to expire in May 2026.

In July 2025, we increased our commercial paper program by $4.0 billion in connection with the anticipated financing of the GMS acquisition (see Note 13). In July 2025, in connection with the increase in the commercial paper program, we also entered into a new three-year $3.0 billion back-up credit facility scheduled to expire in July 2028, and a new 364-day $1.0 billion back-up credit facility scheduled to expire in July 2026, as well as amended and restated our existing 364-day $3.5 billion credit facility to extend the maturity from May 2026 to July 2026. In the aggregate, as of February 1, 2026, our commercial paper program allows for borrowings up to $11.0 billion and is supported by $11.0 billion of back-up credit facilities.

During fiscal 2025, all of our short-term borrowings were under our commercial paper program, and the maximum amount outstanding during that period was $5.8 billion. At February 1, 2026, we had $4.5 billion of outstanding borrowings under our commercial paper program with a weighted average interest rate of 3.7% and no outstanding borrowings under back-up credit facilities. At February 2, 2025, we had $316 million of outstanding borrowings under our commercial paper program with a weighted-average interest rate of 4.4% and no outstanding borrowings under back-up credit facilities.

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Long-Term Debt

The following table presents details of the components of our long-term debt:

															Carrying Amount (1)
in millions			Interest Payable						Principal Amount						February 1, 2026						February 2, 2025
2.70% Senior notes due April 2025			Semi-annually						$	—					$	—					$	500
5.125% Senior notes due April 2025			Semi-annually						—						—						500
3.35% Senior notes due September 2025			Semi-annually						—						—						999
4.00% Senior notes due September 2025			Semi-annually						—						—						749
Floating rate Senior notes due December 2025			Quarterly						—						—						599
5.10% Senior notes due December 2025			Semi-annually						—						—						898
3.00% Senior notes due April 2026			Semi-annually						1,300						1,299						1,297
5.15% Senior notes due June 2026			Semi-annually						1,500						1,499						1,496
2.125% Senior notes due September 2026			Semi-annually						1,000						999						997
4.95% Senior notes due September 2026			Semi-annually						750						749						747
2.875% Senior notes due April 2027			Semi-annually						750						748						747
2.50% Senior notes due April 2027			Semi-annually						750						749						747
4.875% Senior notes due June 2027			Semi-annually						1,000						997						995
2.80% Senior notes due September 2027			Semi-annually						1,000						993						984
0.90% Senior notes due March 2028			Semi-annually						500						498						497
1.50% Senior notes due September 2028			Semi-annually						1,000						997						995
3.75% Senior notes due September 2028			Semi-annually						500						498						—
3.90% Senior notes due December 2028			Semi-annually						1,000						987						972
4.90% Senior notes due April 2029			Semi-annually						750						745						744
2.95% Senior notes due June 2029			Semi-annually						1,750						1,704						1,672
4.75% Senior notes due June 2029			Semi-annually						1,250						1,241						1,239
2.70% Senior notes due April 2030			Semi-annually						1,500						1,401						1,359
3.95% Senior notes due September 2030			Semi-annually						500						496						—
1.375% Senior notes due March 2031			Semi-annually						1,250						1,192						1,173
4.85% Senior notes due June 2031			Semi-annually						1,000						991						989
1.875% Senior notes due September 2031			Semi-annually						1,000						955						939
3.25% Senior notes due April 2032			Semi-annually						1,250						1,241						1,240
4.50% Senior notes due September 2032			Semi-annually						1,250						1,244						1,244
4.95% Senior notes due June 2034			Semi-annually						1,750						1,727						1,725
4.65% Senior notes due September 2035			Semi-annually						1,000						993						—
5.875% Senior notes due December 2036			Semi-annually						3,000						2,901						2,879
3.30% Senior notes due April 2040			Semi-annually						1,250						1,111						1,071
5.40% Senior notes due September 2040			Semi-annually						500						496						496
5.95% Senior notes due April 2041			Semi-annually						1,000						991						991
4.20% Senior notes due April 2043			Semi-annually						1,000						953						937
4.875% Senior notes due February 2044			Semi-annually						1,000						983						982
4.40% Senior notes due March 2045			Semi-annually						1,000						981						981
4.25% Senior notes due April 2046			Semi-annually						1,600						1,587						1,587
3.90% Senior notes due June 2047			Semi-annually						1,150						1,145						1,145
4.50% Senior notes due December 2048			Semi-annually						1,500						1,467						1,466
3.125% Senior notes due December 2049			Semi-annually						1,250						1,191						1,176
3.35% Senior notes due April 2050			Semi-annually						1,500						1,473						1,473
2.375% Senior notes due March 2051			Semi-annually						1,250						1,171						1,152
2.75% Senior notes due September 2051			Semi-annually						1,000						984						984
3.625% Senior notes due April 2052			Semi-annually						1,500						1,460						1,459
4.95% Senior notes due September 2052			Semi-annually						1,000						981						980
5.30% Senior notes due June 2054			Semi-annually						1,500						1,467						1,466
3.50% Senior notes due September 2056			Semi-annually						1,000						975						974
5.40% Senior notes due June 2064			Semi-annually						500						488						489
Total senior notes									$	48,800					$	47,748					$	49,731
Finance lease obligations; payable in varying installments through July 31, 2075															2,963						3,021
Other long-term debt															597						315
Total long-term debt															51,308						53,067
Less: current installments of long-term debt															4,967						4,582
Long-term debt, excluding current installments															$	46,341					$	48,485

—————

(1) Includes unamortized discounts, premiums, debt issuance costs, and the effects of fair value hedges.

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September 2025 Senior Notes Issuance. In September 2025, we issued three tranches of senior notes.

• The first tranche consisted of $500 million of 3.75% senior notes due September 15, 2028 (the “2028 notes”) at a discount of $0.3 million. Interest on the 2028 notes is due semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026.

• The second tranche consisted of $500 million of 3.95% senior notes due September 15, 2030 (the “2030 notes”) at a discount of $1.8 million. Interest on the 2030 notes is due semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026.

• The third tranche consisted of $1.0 billion of 4.65% senior notes due September 15, 2035 (the “2035 notes”) at a discount of $3.1 million. Interest on the 2035 notes is due semi-annually on March 15 and September 15 of each year, beginning on March 15, 2026.

• Issuance costs for the September 2025 issuance totaled $10 million.

Senior Notes Redemption. All of our fixed rate notes may be redeemed by us at any time, in whole or in part, at the redemption price plus accrued and unpaid interest up to the redemption date. With respect to the 5.15% 2026 notes and 5.875% 2036 notes, the redemption price is equal to the greater of (1) 100% of the principal amount of the notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest on the notes that would be due after the related redemption date. With respect to all other fixed rate notes, prior to the relevant Par Call Date, as defined in the respective notes, the redemption price is equal to the greater of (1) 100% of the principal amount of the notes to be redeemed and (2) the sum of the present values of the remaining scheduled payments of principal and interest to the Par Call Date. On or after the relevant Par Call Date, the redemption price is equal to 100% of the principal amount of such notes. Additionally, if a Change in Control Triggering Event occurs, as defined in the applicable notes, holders of such applicable notes have the right to require us to offer payment, in cash, for those notes equal to 101% of the aggregate principal amount of such notes plus accrued and unpaid interest up to the date of purchase.

The indentures governing our senior notes do not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity. The indentures governing these notes contain various covenants, none of which are expected to impact our liquidity or capital resources.

Senior Notes Repayments**.** In December 2025, we repaid our $900 million 5.10% senior notes and $600 million floating rate senior notes at maturity. In September 2025, we repaid our $1.0 billion 3.35% and $750 million 4.00% senior notes at maturity. In April 2025, we repaid our $500 million 2.70% and $500 million 5.125% senior notes at maturity.

Maturities of Long-Term Debt. The following table presents our long-term debt maturities, excluding finance leases, as of February 1, 2026:

in millions			Principal
Fiscal 2026			$	4,684
Fiscal 2027			3,625
Fiscal 2028			3,115
Fiscal 2029			3,852
Fiscal 2030			2,072
Thereafter			32,049
Total			$	49,397

Derivative Instruments and Hedging Activities

We use derivative instruments as part of our normal business operations in the management of our exposure to fluctuations in foreign currency exchange rates and interest rates on certain debt. Our objective in managing these exposures is to decrease the volatility of cash flows affected by changes in the underlying rates and minimize the risk of changes in the fair value of our senior notes.

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Fair Value Hedges. We had outstanding interest rate swap agreements with combined notional amounts of $5.4 billion at both February 1, 2026 and February 2, 2025. These agreements are accounted for as fair value hedges that swap fixed for variable rate interest to hedge changes in the fair values of certain senior notes. At February 1, 2026 and February 2, 2025, the fair values of these agreements totaled $558 million and $795 million, respectively, all of which are recognized in other long-term liabilities on our consolidated balance sheets. All of our interest rate swap agreements designated as fair value hedges meet the shortcut method requirements under GAAP. Accordingly, the changes in the fair values of these agreements offset the changes in the fair value of the hedged long-term debt. At February 1, 2026 and February 2, 2025, the carrying amount of long-term debt, excluding current installments, subject to fair value hedges was $14.6 billion and $14.3 billion, respectively.

Cash Flow Hedges. At February 1, 2026 and February 2, 2025, we had outstanding foreign currency forward contracts accounted for as cash flow hedges, which hedge the variability of forecasted cash flows associated with certain payments made in our foreign operations. At February 1, 2026 and February 2, 2025, the notional amounts and the fair values of these contracts were not material. Additionally, the realized and unrealized gains and losses on these instruments were not material during fiscal 2025, fiscal 2024, and fiscal 2023.

From time to time, we also use treasury locks or forward-starting interest rate swap agreements to hedge the variability in future interest payments attributable to changing interest rates on forecasted debt issuances. There were no such instruments outstanding as of February 1, 2026 or February 2, 2025. All previously settled arrangements were designated as cash flow hedges and thus, the corresponding losses were initially recognized in accumulated other comprehensive loss and are being amortized to interest expense over the life of the respective notes. Unamortized losses remaining in accumulated other comprehensive loss were immaterial as of February 1, 2026 and February 2, 2025, as were the losses recognized within interest expense for fiscal 2025, fiscal 2024, and fiscal 2023.

We expect an immaterial amount of losses related to cash flow hedges recorded in accumulated other comprehensive loss as of February 1, 2026 to be reclassified into earnings within the next 12 months.

Collateral. We generally enter into master netting arrangements, which are designed to reduce credit risk by permitting net settlement of transactions with the same counterparty. To further limit our credit risk, we enter into collateral security arrangements that provide for collateral to be received or posted when the net fair value of certain derivative instruments exceeds or falls below contractually established thresholds. The cash collateral posted by the Company related to derivative instruments under our collateral security arrangements was $459 million and $668 million as of February 1, 2026 and February 2, 2025, respectively, which was recorded in other current assets on our consolidated balance sheets. We did not hold any cash collateral from counterparties as of February 1, 2026 or February 2, 2025.

**6.**INCOME TAXES

Provision for Income Taxes and Income Taxes Paid

The following table presents our earnings before the provision for income taxes:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
United States			$	17,431					$	18,119					$	18,681
Foreign			1,171						1,287						1,243
Total			$	18,602					$	19,406					$	19,924

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The following table presents our provision for income taxes:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Current:
Federal			$	2,812					$	3,417					$	3,764
State			725						836						882
Foreign			414						386						365
Total current			3,951						4,639						5,011
Deferred:
Federal			503						(67)						(228)
State			46						25						12
Foreign			(54)						3						(14)
Total deferred			495						(39)						(230)
Provision for income taxes:
Federal			3,315						3,350						3,536
State			771						861						894
Foreign			360						389						351
Total			$	4,446					$	4,600					$	4,781

The following table presents the reconciliation of our provision for income taxes at the federal statutory rate of 21% to the actual tax expense as well as our effective tax rate:

			Fiscal												Fiscal												Fiscal
in millions			2025												2024												2023
Amount						Percent						Amount						Percent						Amount						Percent
U.S. federal statutory income tax rate			$	3,906					21.0		%				$	4,075					21.0		%				$	4,184					21.0		%
State and local income taxes, net of federal income tax effect (1)			663						3.6						701						3.6						698						3.5
Foreign tax effects			190						1.0						164						0.8						133						0.7
Tax credits			(142)						(0.8)						(150)						(0.8)						(142)						(0.7)
Other adjustments (2)			(171)						(0.9)						(190)						(1.0)						(92)						(0.5)
Total			$	4,446					23.9		%				$	4,600					23.7		%				$	4,781					24.0		%

—————

Note: Certain percentages may not sum to totals due to rounding.

(1) State taxes in California, Illinois, Massachusetts, New Jersey and New York made up the majority (greater than 50 percent) of the tax effect in this category.

(2) Includes immaterial activities in nontaxable or nondeductible items, cross-border tax laws, and changes in unrecognized tax benefits. The Company had no activity in changes in federal tax laws or rates enacted in the current period or changes in federal valuation allowances.

The following table presents income taxes paid:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Federal			$	3,590					$	2,475					$	3,737
Domestic state and local:
California			*						186						*
Other			799						606						854
Domestic state and local subtotal			799						792						854
Foreign			459						386						432
Total income taxes paid			$	4,848					$	3,653					$	5,023

—————

** The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.*

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On July 4, 2025, the OBBBA was signed into law in the U.S., which contains a broad range of tax provisions, including the allowance to expense 100% of the cost of qualified property and immediate expensing of domestic research and experimental expenditures. The provisions of the OBBBA did not have a material impact to our fiscal 2025 effective tax rate. We have realized a reduction in our fiscal 2025 cash tax payments due to the above mentioned provisions.

In fiscal 2024, the IRS provided automatic income tax relief to taxpayers in certain southeastern states, extending the timeline to make certain tax payments. As a result, our fourth quarter fiscal 2024 estimated federal tax payment was deferred and paid in the first quarter of fiscal 2025.

Deferred Taxes

The following table presents the tax effects of temporary differences that give rise to significant portions of our deferred tax assets and deferred tax liabilities:

in millions			February 1, 2026						February 2, 2025
Assets:
Deferred compensation			$	289					$	230
Accrued self-insurance liabilities			262						271
State income taxes			118						133
Non-deductible reserves			450						475
Net operating losses			95						92
Lease liabilities			2,358						2,255
Deferred revenue			265						259
Other			79						77
Total deferred tax assets			3,916						3,792
Valuation allowance			(6)						(4)
Total deferred tax assets, net of valuation allowance			3,910						3,788
Liabilities:
Merchandise inventories			(26)						(12)
Property and equipment			(1,514)						(854)
Intangible assets and goodwill			(2,438)						(2,200)
Lease right-of-use assets			(2,276)						(2,178)
Tax on unremitted earnings			(42)						(54)
Other			(167)						(183)
Total deferred tax liabilities			(6,463)						(5,481)
Net deferred tax liabilities			$	(2,553)					$	(1,693)

The following table presents our deferred tax assets and deferred tax liabilities, netted by tax jurisdiction, as presented on the consolidated balance sheets:

in millions			Consolidated Balance Sheet Classification						February 1, 2026						February 2, 2025
Deferred tax assets			Other assets						$	292					$	269
Deferred tax liabilities			Deferred income taxes						(2,845)						(1,962)
Net deferred tax liabilities									$	(2,553)					$	(1,693)

As of February 1, 2026, we recorded immaterial amounts of deferred tax assets for net operating losses as well as tax credits, primarily related to state jurisdictions. These losses and credits expire at various dates beginning in fiscal 2026. We have concluded that it is more likely than not that tax benefits related to substantially all net operating losses and tax credits will be realized based upon the expectation that we will generate the necessary taxable income in future periods. The overall change in our valuation allowance was not material in fiscal 2025.

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Reinvestment of Unremitted Earnings

Substantially all of our current year foreign cash earnings in excess of working capital and cash needed for strategic investments are not intended to be indefinitely reinvested offshore. Therefore, the tax effects of repatriation for applicable state taxes and foreign withholding taxes of such cash earnings have been provided for in the accompanying consolidated statements of earnings. We have the intent and ability to reinvest substantially all non-cash unremitted earnings of our non-U.S. subsidiaries indefinitely. Accordingly, no provision for state taxes or foreign withholding taxes was recorded on these unremitted earnings in the accompanying consolidated statements of earnings. It is impracticable for us to determine the amount of unrecognized deferred tax liabilities on these indefinitely reinvested earnings due to the complexities associated with the hypothetical calculation.

Tax Return Examination Status

Our income tax returns are routinely examined by U.S. federal, state and local, and foreign tax authorities. The Company remains subject to U.S. federal income tax examination for fiscal years 2015 through 2024, with the IRS currently examining our U.S. federal income tax returns for fiscal years 2016 through 2021. There are also ongoing U.S. state and local audits and other foreign audits covering fiscal years 2013 through 2023. We do not expect the results from any ongoing income tax audit to have a material impact on our consolidated financial condition, results of operations, or cash flows.

Unrecognized Tax Benefits

The following table reconciles the beginning and ending amount of our gross unrecognized tax benefits:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Unrecognized tax benefits balance at beginning of fiscal year			$	627					$	689					$	643
Additions based on tax positions related to the current year			67						71						74
Additions for tax positions of prior years			11						3						13
Reductions for tax positions of prior years			(71)						(42)						(14)
Reductions due to settlements			(33)						(51)						—
Reductions due to lapse of statute of limitations			(42)						(43)						(27)
Unrecognized tax benefits balance at end of fiscal year			$	559					$	627					$	689

Unrecognized tax benefits that, if recognized, would affect our annual effective income tax rate were $464 million, $509 million, and $568 million at February 1, 2026, February 2, 2025, and January 28, 2024, respectively.

Interest and Penalties

Interest and penalties associated with uncertain tax positions recognized in the consolidated statements of earnings were immaterial in fiscal 2025, fiscal 2024, and fiscal 2023. Our total accrued interest and penalties associated with uncertain tax positions were immaterial as of February 1, 2026 and February 2, 2025.

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**7.**STOCKHOLDERS’ EQUITY

Stock Rollforward

The following table presents a reconciliation of the number of shares of our common stock outstanding and cash dividends per share:

shares in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Common stock:
Shares at beginning of year			1,800						1,796						1,794
Shares issued under employee stock plans, net			2						4						2
Shares at end of year			1,802						1,800						1,796
Treasury stock:
Shares at beginning of year			(806)						(804)						(778)
Repurchases of common stock			—						(2)						(26)
Shares at end of year			(806)						(806)						(804)
Shares outstanding at end of year			996						994						992
Cash dividends per share			$	9.20					$	9.00					$	8.36

Share Repurchases

In August 2023, our Board approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved in August 2022. The August 2023 authorization does not have a prescribed expiration date. As of February 1, 2026, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available. In March 2024, we paused share repurchases and have not resumed repurchase activity as of February 1, 2026.

The following table presents information about our repurchases of common stock, all of which were completed through open market purchases:

			Fiscal						Fiscal						Fiscal
in millions			2025						2024						2023
Total number of shares repurchased			—						2						26
Total cost of shares repurchased			$	—					$	599					$	8,074

The cost of shares repurchased may differ from the repurchases of common stock amounts in the consolidated statements of cash flows due to unsettled share repurchases at the end of a period and net excise taxes incurred on share repurchases.

**8.**FAIR VALUE MEASUREMENTS

The fair value of an asset is considered to be the price at which the asset could be sold in an orderly transaction between unrelated knowledgeable and willing parties. A liability’s fair value is defined as the amount that would be paid to transfer the liability to a new obligor, rather than the amount that would be paid to settle the liability with the creditor. Assets and liabilities recorded at fair value are measured using a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The levels of the fair value hierarchy are:

• Level 1: observable inputs such as quoted prices in active markets for identical assets or liabilities;

• Level 2: inputs other than quoted prices in active markets in Level 1 that are either directly or indirectly observable; and

• Level 3: unobservable inputs for which little or no market data exists, therefore requiring management judgment to develop the Company’s own models with estimates and assumptions.

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Assets and Liabilities Measured at Fair Value on a Recurring Basis

The following table presents the assets and liabilities that are measured at fair value on a recurring basis:

									February 1, 2026																		February 2, 2025
in millions									Fair Value (Level 2)																		Fair Value (Level 2)
Derivative agreements – assets									$	—																	$	—
Derivative agreements – liabilities									(559)																		(795)
Total									$	(559)																	$	(795)

The fair values of our derivative instruments are determined using an income approach and Level 2 inputs, which primarily include the respective interest rate forward curves and discount rates. Our derivative instruments are discussed further in Note 5.

Assets and Liabilities Measured at Fair Value on a Nonrecurring Basis

Long-lived assets, goodwill, and other intangible assets are subject to nonrecurring fair value measurement for the assessment of impairment.

We did not have any material assets or liabilities that were measured and recognized at fair value on a nonrecurring basis during fiscal 2025, fiscal 2024, or fiscal 2023. See Note 13 for discussion on the fair values of assets acquired and liabilities assumed in the SRS and GMS acquisitions.

Other Fair Value Disclosures

The carrying amounts of cash and cash equivalents, receivables, accounts payable, short-term debt, and other long-term debt approximate fair value.

The following table presents the aggregate fair values and carrying amounts of our senior notes:

			February 1, 2026												February 2, 2025
in millions			Fair Value (Level 1)						Carrying Amount						Fair Value (Level 1)						Carrying Amount
Senior notes			$	44,653					$	47,748					$	45,499					$	49,731

**9.**STOCK-BASED COMPENSATION

Omnibus Stock Incentive Plan

The Home Depot, Inc. Omnibus Stock Incentive Plan, as Amended and Restated May 19, 2022 (the “Omnibus Plan”) provides that incentive and nonqualified stock options, restricted stock, restricted stock units, performance shares, performance units, deferred shares, stock appreciation rights, and other stock-based awards may be issued to certain of our associates and non-employee directors. Under the Omnibus Plan, the maximum number of shares of our common stock authorized for issuance is 80 million shares plus a number of shares (not to exceed 10 million) related to underlying awards outstanding as of May 19, 2022, which can be returned to the share pool if those awards are subsequently terminated or expire unexercised, or are cancelled, forfeited or lapse for any reason, with any award other than a stock option or stock appreciation right reducing the number of shares available for issuance by 2.11 shares. At February 1, 2026, there were approximately 67 million shares available for future grants under the Omnibus Plan.

The following table presents total stock-based compensation expense, net of estimated forfeitures, including expense related to our ESPPs, and related income tax benefit:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Pre-tax stock-based compensation expense			$	524					$	444					$	382
Income tax benefit			(108)						(92)						(79)
After-tax stock-based compensation expense			$	416					$	352					$	303

At February 1, 2026, there was $755 million of unrecognized stock-based compensation expense, which is expected to be recognized over a weighted average period of approximately three years.

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The award types issued under the Omnibus Plan are as follows:

Stock Options. Under the terms of the Omnibus Plan, incentive stock options and nonqualified stock options must have an exercise price at or above the fair market value of our stock on the date of the grant. Typically, nonqualified stock options vest at the rate of 25% per year commencing on the second anniversary date of the grant and expire on the tenth anniversary date of the grant. These awards become non-forfeitable upon the associate reaching age 60, provided the associate has had at least five years of continuous service. There are no incentive stock options outstanding under the Omnibus Plan.

We estimate the fair value of stock option awards on the date of grant using the Black-Scholes option-pricing model. Our determination of fair value of stock option awards is affected by our stock price as well as assumptions regarding a number of variables.

The following table presents the per share weighted average fair value of stock options granted and the assumptions used in determining fair value at the date of grant using the Black-Scholes option-pricing model:

			Fiscal						Fiscal						Fiscal
			2025						2024						2023
Per share weighted average fair value			$	92.81					$	95.50					$	66.01
Risk-free interest rate			4.1		%				4.2		%				3.6		%
Expected volatility			26.2		%				24.6		%				26.7		%
Dividend yield			2.5		%				2.4		%				2.8		%
Expected term			7 years						6 years						6 years

The risk-free interest rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the expected term of the options. Expected volatility is based on a combination of historical and implied volatility of our stock. The expected term is based on an analysis of historical and expected future exercise patterns.

The following table presents a summary of stock option activity by number of shares and weighted average exercise price during fiscal 2025:

shares in thousands			Number of Shares						Weighted Average Exercise Price
Outstanding at beginning of year			2,201						$	228.23
Granted			249						364.09
Exercised			(257)						166.21
Forfeited			(37)						346.62
Outstanding at end of year			2,156						249.25

The following table presents the total intrinsic value of stock options exercised:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Total intrinsic value of stock options exercised			$	57					$	254					$	152

The following table presents details regarding outstanding and exercisable stock options at February 1, 2026:

shares in thousands, dollars in millions, except for per share amounts			Number of Shares						Intrinsic Value						Weighted Average Remaining Life						Weighted Average Exercise Price
Outstanding			2,156						$	272					4.7 years						$	249.25
Exercisable			1,450						245						3.2 years						205.93

Shares of common stock issued from stock option exercises may be issued from authorized and unissued common stock or treasury stock.

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Restricted Stock Awards. Restrictions on the restricted stock issued under the Omnibus Plan generally lapse over various periods up to five years. At the grant date of the award, recipients of restricted stock are granted voting rights and generally receive dividends on unvested shares, paid in the form of cash on each dividend payment date. Dividends paid on unvested shares were immaterial for fiscal 2025, fiscal 2024, and fiscal 2023. Additionally, the majority of our restricted stock awards may become non-forfeitable upon the associate reaching age 60, provided the associate has had at least five years of continuous service. The fair value of restricted stock is based on the closing stock price on the date of grant and is expensed over the period during which the restrictions lapse.

Restricted Stock Units. Each restricted stock unit entitles the associate to one share of common stock to be received upon vesting up to five years after the grant date. Additionally, the majority of these awards may become non-forfeitable upon the associate reaching age 60, provided the associate has had at least five years of continuous service. Recipients of restricted stock units have no voting rights until the vesting of the award. Recipients receive dividend equivalents that accrue on unvested units and are paid out in the form of additional shares of stock on the vesting date. The fair value of restricted stock units is based on the closing stock price on the date of grant and is expensed over the period during which the units vest.

The following table presents a summary of restricted stock and restricted stock unit activity during fiscal 2025:

shares in thousands			Number of Shares						Weighted Average Grant Date Fair Value
Nonvested at beginning of year			3,050						$	323.61
Granted			1,365						365.48
Vested			(1,083)						295.37
Forfeited			(217)						346.38
Nonvested at end of year			3,115						350.21

The following table presents the total fair value of restricted stock and restricted stock units vested:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Total fair value vested			$	390					$	429					$	312

Performance Share Awards. We also grant performance share awards under the Omnibus Plan. Recipients of performance share awards have no voting rights until the shares are issued following completion of the performance period. Dividend equivalents accrue on performance shares (as reinvested shares) and are paid upon the payout of the award based upon the actual number of shares earned.

Certain of these performance share awards provide for the issuance of shares of our common stock at the end of a three-year performance cycle based upon our performance against target average ROIC and operating profit over that performance cycle. These awards become non-forfeitable upon the associate reaching age 60, provided the associate has had at least five years of continuous service and minimum performance targets are achieved. The fair value of these performance share awards is based on the closing stock price on the date of grant.

Separately, in connection with, as well as subsequent to, the SRS acquisition, we also granted performance share awards to various SRS employees. These awards provide for the issuance of shares of our common stock at the end of a five-year performance period. A portion of these awards are subject to the achievement of SRS earnings before interest, taxes, depreciation and amortization (“EBITDA”) and sales targets, and a portion of these awards are subject to market conditions based on our stock price performance. The fair value of the portion of the awards subject to the achievement of EBITDA and sales targets were valued based on the closing stock price on the grant date. The portion of the awards subject to market conditions were valued using a Monte Carlo simulation on the date of grant.

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The following table presents the per share weighted average fair value and the assumptions used in the Monte Carlo simulation for the market-based awards:

			Fiscal						Fiscal
			2025						2024
Per share weighted average fair value			$	120.50					$	125.92
Risk-free interest rate			3.8		%				4.1		%
Expected volatility			24.2		%				25.4		%
Dividend yield			2.5		%				2.5		%
Award term			4 years						5 years

The risk-free interest rate is based on the U.S. Treasury (constant maturity) risk-free rate in effect at the date of grant for periods corresponding with the term of the award. Expected volatility is based on a combination of historical and implied volatility of our stock. The award term is based on the vesting period of the award.

The following table presents a summary of performance share activity during fiscal 2025:

shares in thousands			Number of Shares						Weighted Average Grant Date Fair Value
Nonvested at beginning of year			1,208						$	296.42
Granted			384						315.42
Vested			(29)						317.05
Forfeited			(120)						303.96
Nonvested at end of year			1,443						300.43

The following table presents the total fair value of performance shares vested:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Total fair value vested			$	11					$	83					$	100

Deferred Shares. We grant awards of deferred shares to non-employee directors under the Omnibus Plan. Each deferred share entitles the non-employee director to one share of common stock to be received following termination of Board service. Recipients of deferred shares have no voting rights and receive dividend equivalents that accrue and are paid out in the form of additional shares of stock upon payout of the underlying shares following termination of service. The fair value of the deferred shares is based on the closing stock price on the date of grant and is expensed immediately upon grant. Deferred shares granted to non-employee directors were immaterial during fiscal 2025, fiscal 2024, and fiscal 2023.

Employee Stock Purchase Plans

We maintain two ESPPs: a U.S. and a non-U.S. plan. The plan for U.S. associates is a tax-qualified plan under Section 423 of the Internal Revenue Code. The non-U.S. plan is not a Section 423 plan. At February 1, 2026, there were approximately 13 million shares available under the U.S. plan and approximately 18 million shares available under the non-U.S. plan. The purchase price of shares under the ESPPs is equal to 85% of the stock’s fair market value on the last day of the purchase period, which is a six-month period ending on December 31 and June 30 of each year. During fiscal 2025, there were approximately 1 million shares purchased under the ESPPs at an average price of $302.50. Under the outstanding ESPPs at February 1, 2026, associates have contributed $33 million to purchase shares at 85% of the stock’s fair market value on the last day of the current purchase period, June 30, 2026.

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**10.**EMPLOYEE BENEFIT PLANS

We maintain active defined contribution retirement plans for our associates (the “Benefit Plans”). All associates satisfying certain service requirements are eligible to participate in the Benefit Plans. We make cash contributions each payroll period up to specified percentages of associates’ contributions as approved by our Board.

We also maintain the Restoration Plans to provide certain associates deferred compensation that they would have received under the Benefit Plans as a matching contribution if not for the maximum compensation limits under the Internal Revenue Code. We fund the Restoration Plans through contributions made to grantor trusts, which are then used to purchase shares of our common stock in the open market.

The following table presents our contributions to the Benefit Plans and the Restoration Plans:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Contributions to the Benefit Plans and the Restoration Plans			$	382					$	347					$	293

At February 1, 2026, the Benefit Plans and the Restoration Plans held a total of 4.4 million shares of our common stock in trusts for plan participants.

**11.**WEIGHTED AVERAGE COMMON SHARES

The following table presents the reconciliation of our basic to diluted weighted average common shares as well as the number of anti-dilutive securities excluded from diluted weighted average common shares:

in millions			Fiscal						Fiscal						Fiscal
2025						2024						2023
Basic weighted average common shares			993						990						999
Effect of potentially dilutive securities (1)			2						3						3
Diluted weighted average common shares			995						993						1,002

Anti-dilutive securities excluded from diluted weighted average common shares			—						—						1

—————

(1) Represents the dilutive impact of stock-based awards.

**12.**COMMITMENTS AND CONTINGENCIES

At February 1, 2026, we had outstanding letters of credit totaling $738 million, primarily related to certain business transactions, including insurance programs, trade contracts, and construction contracts.

We are involved in litigation arising in the normal course of business. In management’s opinion, any such litigation is not expected to have a material adverse effect on our consolidated financial condition, results of operations, or cash flows.

**13.**ACQUISITIONS

GMS Acquisition

On June 29, 2025, we entered into a definitive agreement to acquire GMS, a leading distributor of specialty building products including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. Under the terms of the merger agreement, we, through a wholly owned subsidiary, made a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share. All conditions of the offer were satisfied, including receipt of the requisite regulatory approvals, and the merger was completed on September 4, 2025. As a result of the merger, GMS became a direct subsidiary of SRS and an indirect, wholly owned subsidiary of the Company. We believe the GMS acquisition will enhance SRS's position as a leading multi-category building materials distributor, bringing differentiated capabilities, product categories and customer relationships that are highly complementary to SRS's existing business.

Cash consideration remitted by the Company for the purchase of all outstanding shares of GMS common stock totaled approximately $4.3 billion, and we also repaid approximately $1.2 billion of certain GMS outstanding debt concurrent with the completion of the merger. The merger consideration and repayment of GMS debt was funded through a combination of cash on hand and approximately $2.0 billion of borrowings under our commercial paper program, which were refinanced with the issuance of $2.0 billion of long-term debt in September 2025 (see Note 5).

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The acquisition was accounted for in accordance with Accounting Standards Codification Topic 805: “Business Combinations” and GMS’s results of operations have been consolidated in the Company’s financial statements effective September 4, 2025. Acquisition-related costs were expensed as incurred and were not material.

Fair Value of Consideration Transferred. The following table summarizes total purchase consideration:

in millions
Cash consideration for outstanding shares			$	4,257
Repayment of GMS outstanding debt (1)			824
Total purchase consideration			$	5,081

—————

(1) Represents the repayment of certain GMS long-term debt which was required to be repaid upon a change in control. As further discussed below, an additional $354 million of GMS long-term debt was also repaid upon completion of the merger and has been reflected as an assumed liability upon consummation of the transaction.

Allocation of Consideration Transferred. We recorded a preliminary allocation of the purchase price to assets acquired and liabilities assumed based on their estimated fair values as of September 4, 2025. The following table summarizes our preliminary purchase price allocation, including resulting goodwill:

in millions			Preliminary Fair Value
Cash and cash equivalents			$	136
Receivables			899
Merchandise inventories			568
Property and equipment			715
Goodwill			2,610
Intangible assets			1,800
Other current and non-current assets			458
Total assets acquired			$	7,186
Accounts payable			$	380
Other current liabilities			414
Senior notes (1)			354
Deferred income taxes (2)			403
Other long-term liabilities			554
Total liabilities assumed			$	2,105
Net assets acquired			$	5,081

—————

(1) Represents GMS senior notes that were redeemed by the Company upon completion of the merger. As the repayment was made at the discretion of the Company, the senior notes are reflected as an assumed liability upon consummation of the transaction with the corresponding long-term debt repayment presented within financing activities on our consolidated statement of cash flows.

(2) Primarily resulting from the difference in book and tax basis related to identifiable intangible assets.

The preliminary fair values of identifiable intangible assets were determined by using certain estimates and assumptions that are not observable in the market. The Company used the multi-period excess earnings method to value the customer relationships intangible assets. The significant assumptions used to estimate the fair value of customer relationships included forecasted revenues, customer attrition rates, and the discount rate. Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives. The preliminary fair value and estimated useful lives of identifiable intangible assets are as follows:

in millions			Weighted Average Useful Life (Years)						Preliminary Fair Value
Customer relationships			19						$	1,540
Trade names			7						260
Total identifiable intangible assets									$	1,800

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The goodwill arising from the acquisition is calculated as the excess of the purchase price over the net assets acquired and is attributable to anticipated (i) growth acceleration in the residential and commercial Pro market; (ii) expanded capabilities and product categories; (iii) additional addressable market opportunities; (iv) enhanced delivery network capabilities; and (v) growth in sales force. We expect approximately $214 million of goodwill related to the acquisition to be deductible for U.S. federal and state income tax purposes. As the valuation is preliminary, we have not yet finalized the assignment of goodwill to our reporting units, and no goodwill related to the GMS acquisition currently resides in our Primary segment.

We have completed preliminary valuation analyses necessary to assess the fair values of the assets acquired and liabilities assumed and the amount of goodwill to be recognized as of the acquisition date. These fair values were based on management’s estimates and assumptions; however, the amounts indicated above are preliminary in nature and are subject to adjustment as additional information is obtained about the facts and circumstances that existed as of the acquisition date. Accordingly, there may be adjustments to the assigned values of acquired assets and liabilities. The primary areas that remain preliminary include, but are not limited to, intangible assets, including the preliminary assumptions used in their estimates of fair values and their respective estimated useful lives, the valuation of certain tangible assets, income taxes, and residual goodwill. The final determination of the fair values, related income tax impacts, and residual goodwill will be completed as soon as practicable, and within the measurement period of up to one year from the acquisition date as permitted under GAAP. Any adjustments to provisional amounts that are identified during the measurement period will be recorded in the reporting period in which the adjustment is determined. Measurement period adjustments recognized during fiscal 2025 were immaterial.

Results of Operations. Net sales attributable to GMS since the completion of the acquisition and included within our results of operations for fiscal 2025 totaled $2.0 billion. Net earnings attributable to GMS since the completion of the acquisition and included within our results of operations for fiscal 2025 were immaterial.

Pro forma results of operations are not presented as the effect of the acquisition was not material to our financial results.

SRS Acquisition

On March 27, 2024, we entered into a definitive agreement to acquire SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor. On June 18, 2024, following the satisfaction or waiver of the applicable closing conditions, including receipt of the requisite regulatory approvals, the acquisition was completed and all merger consideration was transferred. Under the terms of the merger agreement, a subsidiary of The Home Depot, Inc. merged with and into Shingle Acquisition Holdings, Inc., the parent company of SRS, with Shingle Acquisition Holdings, Inc. as the surviving entity and a wholly owned subsidiary of the Company. The acquisition was completed to accelerate the Company’s growth with Pros, including establishing the Company as a leading specialty trade distributor across multiple verticals, complementing our existing capabilities, and enabling us to better serve complex project purchase occasions with the renovator/remodeler. We primarily used a combination of proceeds from commercial paper borrowings, the issuance of long-term debt, as well as cash on hand to fund the acquisition.

The acquisition was accounted for in accordance with Accounting Standards Codification Topic 805 “Business Combinations,” and SRS’s results of operations have been consolidated in the Company’s financial statements effective June 18, 2024. In fiscal 2024, we recorded a preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated acquisition date fair values. Measurement period adjustments recognized in fiscal 2025 were immaterial, and we finalized our purchase price allocation during the first quarter of fiscal 2025. Acquisition-related costs were expensed as incurred and were not material.

Fair Value of Consideration Transferred. The following table summarizes total purchase consideration:

in millions
Total cash consideration			$	17,707
Fair value of common stock issued (1)			321
Total purchase consideration			$	18,028

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(1) In connection with the acquisition, certain members of SRS’s management team concurrently reinvested a portion of their respective after-tax merger consideration proceeds into shares of the Company’s common stock. A portion of such shares of Company common stock are fully vested, and accordingly, the fair value of such shares was recorded as non-cash purchase consideration. A portion of such shares of Company common stock, which replaced legacy SRS stock-based awards, are subject to service-based vesting conditions over a three-year period and become forfeitable if such vesting conditions are not satisfied. Accordingly, a portion of the fair value of these shares was recorded as non-cash purchase consideration, and the remainder will be recorded as post-combination expense over the vesting period. The fair value of these shares, including the amount which will be recorded as post-combination compensation expense, is not material.

Allocation of Consideration Transferred. The following table summarizes our purchase price allocation, including resulting goodwill:

in millions			Fair Value
Cash and cash equivalents			$	161
Receivables			1,831
Merchandise inventories			1,988
Property and equipment			789
Goodwill			11,003
Intangible assets			5,780
Other current and non-current assets			744
Total assets acquired			$	22,296
Accounts payable			$	1,791
Other current liabilities			584
Deferred tax liabilities (1)			1,111
Other long-term liabilities			782
Total liabilities assumed			$	4,268
Net assets acquired			$	18,028

—————

(1) Primarily resulting from the difference in book and tax basis related to identifiable intangible assets.

The acquisition date fair values of identifiable intangible assets were determined by using certain estimates and assumptions that are not observable in the market. The Company used the multi-period excess earnings method to determine the estimated acquisition date fair values of the customer relationships intangible assets. The significant assumptions used to estimate the fair values of customer relationships included forecasted revenues, expected customer attrition rates, and the discount rate applied. Determining the useful life of an intangible asset also requires judgment, as different types of intangible assets will have different useful lives.

The estimated fair values and estimated useful lives of identifiable intangible assets are as follows:

in millions			Weighted Average Useful Life (Years)						Fair Value
Customer relationships			20						$	5,400
Trade names			5						380
Total identifiable intangible assets									$	5,780

The goodwill arising from the acquisition is attributable to anticipated (i) growth acceleration in the Pro market; (ii) expansion in high growth verticals including roofing; (iii) additional addressable market opportunities; (iv) enhanced delivery network capabilities; and (v) growth in sales force. We expect approximately $1.0 billion of goodwill related to the acquisition to be deductible for U.S. federal and state income tax purposes. The goodwill has been allocated to our SRS roofing and building products, landscape, and pool reporting units and no goodwill related to the SRS acquisition resides in our Primary segment.

Results of Operations. Net sales attributable to SRS since the completion of the acquisition and included within our results of operations for fiscal 2024 totaled $6.4 billion. Net earnings attributable to SRS since the completion of the acquisition and included within our results of operations for fiscal 2024 were immaterial.

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Pro forma results of operations are not presented as the effect of the acquisition was not material to our financial results.

Other Acquisitions

All other acquisitions completed during fiscal 2025 and fiscal 2024 were immaterial both individually and in the aggregate.