filings.toolsItem 1. Financial Statements.
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Item 1. Financial Statements.
THE HOME DEPOT, INC.
CONSOLIDATED BALANCE SHEETS
(Unaudited)
| in millions, except per share data | August 2, 2026 | February 1, 2026 | |||||||||
| Assets | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 2,085 | $ | 1,389 | |||||||
| Receivables, net | 6,963 | 5,597 | |||||||||
| Merchandise inventories | 26,847 | 25,817 | |||||||||
| Other current assets | 1,825 | 1,588 | |||||||||
| Total current assets | 37,720 | 34,391 | |||||||||
| Net property and equipment | 28,147 | 28,021 | |||||||||
| Operating lease right-of-use assets | 9,300 | 9,204 | |||||||||
| Goodwill | 22,899 | 22,344 | |||||||||
| Intangible assets, net | 10,482 | 10,329 | |||||||||
| Other assets | 836 | 806 | |||||||||
| Total assets | $ | 109,384 | $ | 105,095 | |||||||
| Liabilities and Stockholders' Equity | |||||||||||
| Current liabilities: | |||||||||||
| Short-term debt | $ | 4,248 | $ | 4,464 | |||||||
| Accounts payable | 13,585 | 11,491 | |||||||||
| Accrued salaries and related expenses | 2,471 | 2,529 | |||||||||
| Sales taxes payable | 729 | 508 | |||||||||
| Deferred revenue | 2,728 | 2,575 | |||||||||
| Income taxes payable | 253 | 114 | |||||||||
| Current installments of long-term debt | 4,697 | 4,967 | |||||||||
| Current operating lease liabilities | 1,516 | 1,418 | |||||||||
| Other accrued expenses | 4,761 | 4,358 | |||||||||
| Total current liabilities | 34,988 | 32,424 | |||||||||
| Long-term debt, excluding current installments | 43,951 | 46,341 | |||||||||
| Long-term operating lease liabilities | 8,155 | 8,160 | |||||||||
| Deferred income taxes | 2,850 | 2,845 | |||||||||
| Other long-term liabilities | 2,823 | 2,512 | |||||||||
| Total liabilities | 92,767 | 92,282 | |||||||||
| Contingencies (Note 9) | |||||||||||
| Common stock, par value $0.05; authorized: 10,000 shares; issued: 1,804 shares at August 2, 2026 and 1,802 shares at February 1, 2026; outstanding: 998 shares at August 2, 2026 and 996 shares at February 1, 2026 | 90 | 90 | |||||||||
| Paid-in capital | 15,237 | 14,809 | |||||||||
| Retained earnings | 97,949 | 94,537 | |||||||||
| Accumulated other comprehensive loss | (688) | (652) | |||||||||
| Treasury stock, at cost, 806 shares at August 2, 2026 and February 1, 2026 | (95,971) | (95,971) | |||||||||
| Total stockholders’ equity | 16,617 | 12,813 | |||||||||
| Total liabilities and stockholders’ equity | $ | 109,384 | $ | 105,095 |
—————
See accompanying notes to consolidated financial statements.
| Fiscal Q2 2026 Form 10-Q | 1 |  |
THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions, except per share data | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net sales | $ | 47,861 | $ | 45,277 | $ | 89,626 | $ | 85,133 | |||||||||||||||
| Cost of sales | 31,746 | 30,152 | 59,730 | 56,549 | |||||||||||||||||||
| Gross profit | 16,115 | 15,125 | 29,896 | 28,584 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling, general and administrative | 8,424 | 7,764 | 16,383 | 15,294 | |||||||||||||||||||
| Depreciation and amortization | 852 | 806 | 1,693 | 1,602 | |||||||||||||||||||
| Total operating expenses | 9,276 | 8,570 | 18,076 | 16,896 | |||||||||||||||||||
| Operating income | 6,839 | 6,555 | 11,820 | 11,688 | |||||||||||||||||||
| Interest and other (income) expense: | |||||||||||||||||||||||
| Interest income and other, net | (59) | (25) | (66) | (49) | |||||||||||||||||||
| Interest expense | 583 | 575 | 1,194 | 1,190 | |||||||||||||||||||
| Interest and other, net | 524 | 550 | 1,128 | 1,141 | |||||||||||||||||||
| Earnings before provision for income taxes | 6,315 | 6,005 | 10,692 | 10,547 | |||||||||||||||||||
| Provision for income taxes | 1,549 | 1,454 | 2,637 | 2,563 | |||||||||||||||||||
| Net earnings | $ | 4,766 | $ | 4,551 | $ | 8,055 | $ | 7,984 | |||||||||||||||
| Basic weighted average common shares | 994 | 992 | 994 | 992 | |||||||||||||||||||
| Basic earnings per share | $ | 4.79 | $ | 4.59 | $ | 8.10 | $ | 8.05 | |||||||||||||||
| Diluted weighted average common shares | 996 | 994 | 996 | 994 | |||||||||||||||||||
| Diluted earnings per share | $ | 4.79 | $ | 4.58 | $ | 8.09 | $ | 8.03 |
—————
See accompanying notes to consolidated financial statements.
| Fiscal Q2 2026 Form 10-Q | 2 | |
THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net earnings | $ | 4,766 | $ | 4,551 | $ | 8,055 | $ | 7,984 | |||||||||||||||
| Other comprehensive income (loss), net of tax: | |||||||||||||||||||||||
| Foreign currency translation adjustments | (32) | 167 | (40) | 289 | |||||||||||||||||||
| Cash flow hedges | 2 | 1 | 4 | 5 | |||||||||||||||||||
| Total other comprehensive income (loss), net of tax | (30) | 168 | (36) | 294 | |||||||||||||||||||
| Comprehensive income | $ | 4,736 | $ | 4,719 | $ | 8,019 | $ | 8,278 |
—————
See accompanying notes to consolidated financial statements.
| Fiscal Q2 2026 Form 10-Q | 3 | |
THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Unaudited)
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Common Stock: | |||||||||||||||||||||||
| Balance at beginning of period | $ | 90 | $ | 90 | $ | 90 | $ | 90 | |||||||||||||||
| Shares issued under employee stock plans, net | — | — | — | — | |||||||||||||||||||
| Balance at end of period | 90 | 90 | 90 | 90 | |||||||||||||||||||
| Paid-in Capital: | |||||||||||||||||||||||
| Balance at beginning of period | 14,907 | 14,159 | 14,809 | 14,117 | |||||||||||||||||||
| Shares issued under employee stock plans, net | 156 | 148 | 80 | 33 | |||||||||||||||||||
| Stock-based compensation expense | 174 | 131 | 348 | 288 | |||||||||||||||||||
| Balance at end of period | 15,237 | 14,438 | 15,237 | 14,438 | |||||||||||||||||||
| Retained Earnings: | |||||||||||||||||||||||
| Balance at beginning of period | 95,506 | 90,680 | 94,537 | 89,533 | |||||||||||||||||||
| Net earnings | 4,766 | 4,551 | 8,055 | 7,984 | |||||||||||||||||||
| Cash dividends | (2,323) | (2,288) | (4,643) | (4,574) | |||||||||||||||||||
| Balance at end of period | 97,949 | 92,943 | 97,949 | 92,943 | |||||||||||||||||||
| Accumulated Other Comprehensive Loss: | |||||||||||||||||||||||
| Balance at beginning of period | (658) | (1,003) | (652) | (1,129) | |||||||||||||||||||
| Foreign currency translation adjustments, net of tax | (32) | 167 | (40) | 289 | |||||||||||||||||||
| Cash flow hedges, net of tax | 2 | 1 | 4 | 5 | |||||||||||||||||||
| Balance at end of period | (688) | (835) | (688) | (835) | |||||||||||||||||||
| Treasury Stock: | |||||||||||||||||||||||
| Balance at beginning and end of period | (95,971) | (95,971) | (95,971) | (95,971) | |||||||||||||||||||
| Total stockholders’ equity | $ | 16,617 | $ | 10,665 | $ | 16,617 | $ | 10,665 |
—————
See accompanying notes to consolidated financial statements.
| Fiscal Q2 2026 Form 10-Q | 4 | |
THE HOME DEPOT, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
| Six Months Ended | |||||||||||
| in millions | August 2, 2026 | August 3, 2025 | |||||||||
| Cash Flows from Operating Activities: | |||||||||||
| Net earnings | $ | 8,055 | $ | 7,984 | |||||||
| Reconciliation of net earnings to net cash provided by operating activities: | |||||||||||
| Depreciation and amortization, excluding amortization of intangible assets | 1,839 | 1,720 | |||||||||
| Intangible asset amortization | 349 | 278 | |||||||||
| Stock-based compensation expense | 326 | 288 | |||||||||
| Changes in receivables, net | (1,233) | (986) | |||||||||
| Changes in merchandise inventories | (831) | (1,205) | |||||||||
| Changes in other current assets | (225) | (190) | |||||||||
| Changes in accounts payable and accrued expenses | 2,524 | 1,323 | |||||||||
| Changes in deferred revenue | 152 | (24) | |||||||||
| Changes in income taxes payable | 183 | (739) | |||||||||
| Changes in deferred income taxes | 58 | 490 | |||||||||
| Other operating activities | 225 | 29 | |||||||||
| Net cash provided by operating activities | 11,422 | 8,968 | |||||||||
| Cash Flows from Investing Activities: | |||||||||||
| Capital expenditures | (1,724) | (1,723) | |||||||||
| Payments for businesses acquired, net | (1,333) | (233) | |||||||||
| Other investing activities | 46 | 64 | |||||||||
| Net cash used in investing activities | (3,011) | (1,892) | |||||||||
| Cash Flows from Financing Activities: | |||||||||||
| Repayments of short-term debt, net | (216) | (316) | |||||||||
| Proceeds from long-term debt | 122 | 76 | |||||||||
| Repayments of long-term debt | (3,040) | (1,199) | |||||||||
| Proceeds from sales of common stock | 192 | 163 | |||||||||
| Cash dividends | (4,643) | (4,574) | |||||||||
| Other financing activities | (116) | (130) | |||||||||
| Net cash used in financing activities | (7,701) | (5,980) | |||||||||
| Change in cash and cash equivalents | 710 | 1,096 | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | (14) | 49 | |||||||||
| Cash and cash equivalents at beginning of period | 1,389 | 1,659 | |||||||||
| Cash and cash equivalents at end of period | $ | 2,085 | $ | 2,804 | |||||||
| Supplemental Disclosures: | |||||||||||
| Cash paid for interest, net of interest capitalized | $ | 1,169 | $ | 1,189 | |||||||
| Cash paid for income taxes | 2,431 | 3,092 | |||||||||
—————
See accompanying notes to consolidated financial statements.
| Fiscal Q2 2026 Form 10-Q | 5 | |
THE HOME DEPOT, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
**1.**SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Presentation
The accompanying consolidated financial statements of The Home Depot, Inc., together with its subsidiaries (the “Company,” “The Home Depot,” “Home Depot,” “we,” “our” or “us”), have been prepared in accordance with the instructions to Form 10-Q and do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Results of operations for interim periods are not necessarily indicative of results for the entire year. As a result, these consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto included in our 2025 Form 10-K. During the six months ended August 2, 2026, there were no significant changes to our significant accounting policies as disclosed in the 2025 Form 10-K.
Receivables, net
The following table presents components of receivables, net:
| in millions | August 2, 2026 | February 1, 2026 | |||||||||
| Card receivables | $ | 1,342 | $ | 1,021 | |||||||
| Rebate receivables | 1,496 | 1,421 | |||||||||
| Customer receivables | 3,557 | 2,588 | |||||||||
| Other receivables | 568 | 567 | |||||||||
| Receivables, net | $ | 6,963 | $ | 5,597 |
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 our receivables was not material to our consolidated financial statements at August 2, 2026 or February 1, 2026.
Supplier Finance Program
We have a supplier finance program whereby 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. The payment terms we negotiate with our suppliers are consistent, irrespective of whether a supplier participates in the program, and we are not a party to the agreements between the participating financial institutions and the suppliers in connection with the program. 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. Our outstanding obligations under our supplier finance program were $542 million at August 2, 2026 and $414 million at February 1, 2026 and are recorded within accounts payable on our consolidated balance sheets, and the associated payments are included in operating activities within our consolidated statements of cash flows.
Recent Accounting Pronouncements
We did not adopt any new accounting pronouncements during the six months ended August 2, 2026 that had a material impact on our consolidated financial condition, results of operations, or cash flows. There have been no significant changes in accounting pronouncements not yet adopted as disclosed in the 2025 Form 10-K, and those not discussed in the 2025 Form 10-K are either not applicable or are not expected to have a material impact on our consolidated financial condition, results of operations, or cash flows.
| Fiscal Q2 2026 Form 10-Q | 6 | |
**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 maintenance, repair, and operations 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. Through our SRS distribution operations, we are a leading specialty trade distributor of roofing and building products, interior and construction products, and outdoor living products, which consist of landscape and pool supplies. In the second quarter of fiscal 2026, SRS completed the acquisition of Mingledorff’s (see Note 10), which distributes heating, ventilation, and air conditioning (HVAC) equipment, parts, and supplies. The acquisition of Mingledorff’s resulted in the creation of a new vertical within SRS, and SRS is now organized into five lines of business: 1) roofing and building products, 2) interior and construction products, 3) landscape, 4) pool, and 5) HVAC products. Each of these five lines of business represents an operating segment, none of which meets the thresholds prescribed under Topic 280 to be deemed a reportable segment. Therefore, results from these operating segments are presented in “Other.”
Segment Information. 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:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net sales | $ | 42,806 | $ | 42,157 | $ | 80,569 | $ | 79,444 | |||||||||||||||
| Cost of sales | 27,750 | 27,728 | 52,495 | 52,112 | |||||||||||||||||||
| Selling, general and administrative | 7,766 | 7,375 | 15,124 | 14,539 | |||||||||||||||||||
| Depreciation and amortization | 698 | 700 | 1,393 | 1,393 | |||||||||||||||||||
| Operating income | $ | 6,592 | $ | 6,354 | $ | 11,557 | $ | 11,400 |
| Fiscal Q2 2026 Form 10-Q | 7 | |
The following tables present a reconciliation of certain segment information to our consolidated totals:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| August 2, 2026 | August 2, 2026 | ||||||||||||||||||||||||||||||||||||||||||||||||||||
| in millions | Primary | Other (1) | Consolidated | Primary | Other (1) | Consolidated | |||||||||||||||||||||||||||||||||||||||||||||||
| Net sales | $ | 42,806 | $ | 5,055 | $ | 47,861 | $ | 80,569 | $ | 9,057 | $ | 89,626 | |||||||||||||||||||||||||||||||||||||||||
| Operating income | 6,592 | 247 | 6,839 | 11,557 | 263 | 11,820 | |||||||||||||||||||||||||||||||||||||||||||||||
| Interest income and other, net | (59) | (66) | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Interest expense | 583 | 1,194 | |||||||||||||||||||||||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | $ | 6,315 | $ | 10,692 | |||||||||||||||||||||||||||||||||||||||||||||||||
| Depreciation and amortization (2) | $ | 859 | $ | 236 | $ | 1,095 | $ | 1,699 | $ | 462 | $ | 2,161 |
—————
(1) Net sales presented in Other relate to the sale of products within our SRS non-reportable operating segments, including the HVAC products operating segment beginning in the second quarter of fiscal 2026 upon the acquisition of Mingledorff’s, as well as the interior and construction products operating segment beginning in the third quarter of fiscal 2025 upon the acquisition of GMS. Operating income presented in Other includes cost of sales and operating expenses totaling $4.8 billion and $8.8 billion for the three and six months ended August 2, 2026, respectively, within these SRS non-reportable operating segments.
(2) Includes depreciation and finance lease amortization in cost of sales. Also includes intangible asset amortization expense of $53 million and $105 million for the three and six months ended August 2, 2026, respectively, in our Primary segment, and intangible asset amortization expense of $125 million and $244 million for the three and six months ended August 2, 2026, respectively, in Other.
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||||||||||||||
| August 3, 2025 | August 3, 2025 | ||||||||||||||||||||||||||||||||||
| in millions | Primary | Other (1) | Consolidated | Primary | Other (1) | Consolidated | |||||||||||||||||||||||||||||
| Net sales | $ | 42,157 | $ | 3,120 | $ | 45,277 | $ | 79,444 | $ | 5,689 | $ | 85,133 | |||||||||||||||||||||||
| Operating income | 6,354 | 201 | 6,555 | 11,400 | 288 | 11,688 | |||||||||||||||||||||||||||||
| Interest income and other, net | (25) | (49) | |||||||||||||||||||||||||||||||||
| Interest expense | 575 | 1,190 | |||||||||||||||||||||||||||||||||
| Earnings before provision for income taxes | $ | 6,005 | $ | 10,547 | |||||||||||||||||||||||||||||||
| Depreciation and amortization (2) | $ | 838 | $ | 150 | $ | 988 | $ | 1,669 | $ | 297 | $ | 1,966 |
—————
(1) Net sales presented in Other relate to the sale of products within our SRS non-reportable operating segments. Operating income presented in Other includes cost of sales and operating expenses totaling $2.9 billion and $5.4 billion for the three and six months ended August 3, 2025, respectively, within these SRS non-reportable operating segments.
(2) Includes depreciation and finance lease amortization in cost of sales. Also includes intangible asset amortization expense of $52 million and $104 million for the three and six months ended August 3, 2025, respectively, in our Primary segment, and intangible asset amortization expense of $87 million and $174 million for the three and six months ended August 3, 2025, respectively, in Other.
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 |
| Fiscal Q2 2026 Form 10-Q | 8 | |
The following table presents net sales by major product line (and related services) within our Primary segment, as well as Other net sales:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Building Materials | $ | 14,432 | $ | 14,225 | $ | 27,403 | $ | 27,197 | |||||||||||||||
| Décor | 13,929 | 13,805 | 26,534 | 26,250 | |||||||||||||||||||
| Hardlines | 14,445 | 14,127 | 26,632 | 25,997 | |||||||||||||||||||
| Primary segment net sales | 42,806 | 42,157 | 80,569 | 79,444 | |||||||||||||||||||
| Other net sales (1) | 5,055 | 3,120 | 9,057 | 5,689 | |||||||||||||||||||
| Net sales | $ | 47,861 | $ | 45,277 | $ | 89,626 | $ | 85,133 |
—————
Note: Certain product category changes within our Primary segment in the current year have resulted in prior year amounts being reclassified to conform with the current-year presentation. These changes had no impact on consolidated net sales.
(1) Other net sales relate to the sale of products within our SRS non-reportable operating segments. Roofing and related products accounted for approximately 39% of Other net sales for both the three and six months ended August 2, 2026, and approximately 62% and 63% for the three and six months ended August 3, 2025, respectively.
The following table presents net sales, classified by geography:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net sales – in the U.S. | $ | 43,907 | $ | 41,729 | $ | 82,640 | $ | 78,953 | |||||||||||||||
| Net sales – outside the U.S. | 3,954 | 3,548 | 6,986 | 6,180 | |||||||||||||||||||
| Net sales | $ | 47,861 | $ | 45,277 | $ | 89,626 | $ | 85,133 |
The following table presents net sales by products and services:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| in millions | August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | |||||||||||||||||||
| Net sales – products | $ | 46,300 | $ | 43,725 | $ | 86,736 | $ | 82,237 | |||||||||||||||
| Net sales – services | 1,561 | 1,552 | 2,890 | 2,896 | |||||||||||||||||||
| Net sales | $ | 47,861 | $ | 45,277 | $ | 89,626 | $ | 85,133 |
Deferred Revenue
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 August 2, 2026 and February 1, 2026, deferred revenue for products and services was $1.7 billion and $1.5 billion, respectively.
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 August 2, 2026 and February 1, 2026, our performance obligations for unredeemed gift cards were $1.0 billion and $1.1 billion, respectively. 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 for the three and six months ended August 2, 2026 and August 3, 2025.
| Fiscal Q2 2026 Form 10-Q | 9 | |
**3.**PROPERTY AND LEASES
Net Property and Equipment
Net property and equipment included accumulated depreciation and finance lease amortization of $32.9 billion as of August 2, 2026 and $31.4 billion as of February 1, 2026.
Leases
The following table presents certain consolidated balance sheet information related to operating and finance leases:
| in millions | Consolidated Balance Sheet Classification | August 2, 2026 | February 1, 2026 | |||||||||||
| Assets: | ||||||||||||||
| Operating lease assets | Operating lease right-of-use assets | $ | 9,300 | $ | 9,204 | |||||||||
| Finance lease assets (1) | Net property and equipment | 2,691 | 2,563 | |||||||||||
| Total lease assets | $ | 11,991 | $ | 11,767 | ||||||||||
| Liabilities: | ||||||||||||||
| Current: | ||||||||||||||
| Operating lease liabilities | Current operating lease liabilities | $ | 1,516 | $ | 1,418 | |||||||||
| Finance lease liabilities | Current installments of long-term debt | 303 | 288 | |||||||||||
| Long-term: | ||||||||||||||
| Operating lease liabilities | Long-term operating lease liabilities | 8,155 | 8,160 | |||||||||||
| Finance lease liabilities | Long-term debt, excluding current installments | 2,791 | 2,675 | |||||||||||
| Total lease liabilities | $ | 12,765 | $ | 12,541 |
—————
(1) Finance lease assets are recorded net of accumulated amortization of $1.7 billion and $1.6 billion as of August 2, 2026 and February 1, 2026, respectively.
The following table presents supplemental non-cash information related to leases:
| Six Months Ended | |||||||||||
| in millions | August 2, 2026 | August 3, 2025 | |||||||||
| Lease assets obtained in exchange for new operating lease liabilities | $ | 816 | $ | 793 | |||||||
| Lease assets obtained in exchange for new finance lease liabilities | 294 | 154 |
**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 February 1, 2026 | $ | 8,564 | $ | 13,780 | $ | 22,344 | |||||||||||||||||||||||||||||
| Acquisitions (1) | 38 | 525 | 563 | ||||||||||||||||||||||||||||||||
| Other (2) | 1 | (9) | (8) | ||||||||||||||||||||||||||||||||
| Goodwill, balance at August 2, 2026 | $ | 8,603 | $ | 14,296 | $ | 22,899 | |||||||||||||||||||||||||||||
—————
(1) Activity includes the preliminary determination of goodwill related to the Mingledorff’s acquisition and other immaterial acquisitions completed during the six months ended August 2, 2026. See Note 10 for details regarding the Mingledorff’s acquisition.
(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.
| Fiscal Q2 2026 Form 10-Q | 10 | |
Intangible Assets
The following table presents information regarding our intangible assets:
| August 2, 2026 | February 1, 2026 | ||||||||||||||||||||||||||||||||||
| in millions | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | Gross Carrying Amount | Accumulated Amortization | Net Carrying Amount | |||||||||||||||||||||||||||||
| Definite-Lived Intangible Assets: | |||||||||||||||||||||||||||||||||||
| Customer relationships | $ | 10,968 | $ | (1,817) | $ | 9,151 | $ | 10,517 | $ | (1,535) | $ | 8,982 | |||||||||||||||||||||||
| Trade names | 928 | (258) | 670 | 889 | (191) | 698 | |||||||||||||||||||||||||||||
| Other | 13 | (1) | 12 | 1 | (1) | — | |||||||||||||||||||||||||||||
| Indefinite-Lived Intangible Assets: | |||||||||||||||||||||||||||||||||||
| Trade names | 649 | 649 | 649 | 649 | |||||||||||||||||||||||||||||||
| Total Intangible Assets | $ | 12,558 | $ | (2,076) | $ | 10,482 | $ | 12,056 | $ | (1,727) | $ | 10,329 |
Our intangible asset amortization expense was $178 million and $349 million for the three and six months ended August 2, 2026, respectively, and $139 million and $278 million for the three and six months ended August 3, 2025, respectively.
The following table presents the estimated future amortization expense related to definite-lived intangible assets as of August 2, 2026:
| in millions | Amortization Expense | ||||
| Fiscal 2026 - remaining | $ | 359 | |||
| Fiscal 2027 | 707 | ||||
| Fiscal 2028 | 687 | ||||
| Fiscal 2029 | 648 | ||||
| Fiscal 2030 | 605 | ||||
| Thereafter | 6,827 | ||||
| Total | $ | 9,833 |
| Fiscal Q2 2026 Form 10-Q | 11 | |
**5.**DEBT AND DERIVATIVE INSTRUMENTS
Short-Term Debt
We have a commercial paper program that allows for an aggregate of $11.0 billion in borrowings, and is supported by $11.0 billion of back-up credit facilities. At the beginning of fiscal 2026, these back-up credit facilities consisted of a five-year $3.5 billion credit facility scheduled to expire in May 2030, a 364-day $3.5 billion credit facility scheduled to expire in July 2026, a three-year $3.0 billion credit facility scheduled to expire in July 2028, and a 364-day $1.0 billion credit facility scheduled to expire in July 2026. During the second quarter of fiscal 2026, we entered into a new 364-day $4.5 billion back-up credit facility scheduled to expire in July 2027. This facility replaced our prior 364-day $3.5 billion and 364-day $1.0 billion back-up credit facilities, which were scheduled to expire in July 2026.
During the first six months of fiscal 2026, all of our short-term borrowings were under our commercial paper program, and the maximum amount outstanding during that period was $6.2 billion. At August 2, 2026, we had $4.2 billion of outstanding borrowings under our commercial paper program with a weighted average interest rate of 3.8% and no outstanding borrowings under our back-up credit facilities. 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 our back-up credit facilities.
Long-Term Debt
We did not have any issuances of senior notes during the first six months of fiscal 2026. In April 2026, we repaid our $1.3 billion 3.00% senior notes at maturity. In June 2026, we repaid our $1.5 billion 5.15% senior notes at maturity.
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 to minimize the risk of changes in the fair value of certain senior notes.
We had outstanding interest rate swap agreements with combined notional amounts of $5.4 billion at both August 2, 2026 and February 1, 2026. 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 August 2, 2026 and February 1, 2026, the fair values of these agreements totaled $621 million and $558 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 August 2, 2026 and February 1, 2026, the carrying amount of our long-term debt, excluding current installments, subject to fair value hedges was $14.5 billion and $14.6 billion, respectively.
During the three and six months ended August 2, 2026, there was no new material hedging activity or material change to any other hedging arrangement disclosed in our 2025 Form 10-K, and all related activity was immaterial for the periods presented within this report.
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 $498 million and $459 million as of August 2, 2026 and February 1, 2026, respectively, which was recorded in other current assets on our consolidated balance sheets. We did not hold any cash collateral from counterparties as of August 2, 2026 or February 1, 2026.
| Fiscal Q2 2026 Form 10-Q | 12 | |
**6.**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 | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | ||||||||||||||||||||
| Common stock: | |||||||||||||||||||||||
| Shares at beginning of period | 1,803 | 1,801 | 1,802 | 1,800 | |||||||||||||||||||
| Shares issued under employee stock plans, net | 1 | — | 2 | 1 | |||||||||||||||||||
| Shares at end of period | 1,804 | 1,801 | 1,804 | 1,801 | |||||||||||||||||||
| Treasury stock: | |||||||||||||||||||||||
| Shares at beginning and end of period | (806) | (806) | (806) | (806) | |||||||||||||||||||
| Shares outstanding at end of period | 998 | 995 | 998 | 995 | |||||||||||||||||||
| Cash dividends per share | $ | 2.33 | $ | 2.30 | $ | 4.66 | $ | 4.60 |
Share Repurchases
In August 2023, our Board of Directors (the “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. In March 2024, we paused share repurchases and have not resumed share repurchase activity as of August 2, 2026. As of August 2, 2026, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available.
**7.**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;
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Level 2: inputs other than quoted prices in active markets in Level 1 that are either directly or indirectly observable; and
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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.
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:
| August 2, 2026 | February 1, 2026 | ||||||||||||||||||||||||||||||||||
| in millions | Fair Value (Level 2) | Fair Value (Level 2) | |||||||||||||||||||||||||||||||||
| Derivative agreements – assets | $ | — | $ | — | |||||||||||||||||||||||||||||||
| Derivative agreements – liabilities | (623) | (559) | |||||||||||||||||||||||||||||||||
| Total | $ | (623) | $ | (559) |
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.
| Fiscal Q2 2026 Form 10-Q | 13 | |
We did not have any material assets or liabilities that were measured and recognized at fair value on a nonrecurring basis during the three and six months ended August 2, 2026 or August 3, 2025.
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:
| August 2, 2026 | February 1, 2026 | ||||||||||||||||||||||
| in millions | Fair Value (Level 1) | Carrying Amount | Fair Value (Level 1) | Carrying Amount | |||||||||||||||||||
| Senior notes | $ | 39,859 | $ | 44,905 | $ | 44,653 | $ | 47,748 |
**8.**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 | Three Months Ended | Six Months Ended | |||||||||||||||||||||
| August 2, 2026 | August 3, 2025 | August 2, 2026 | August 3, 2025 | ||||||||||||||||||||
| Basic weighted average common shares | 994 | 992 | 994 | 992 | |||||||||||||||||||
| Effect of potentially dilutive securities (1) | 2 | 2 | 2 | 2 | |||||||||||||||||||
| Diluted weighted average common shares | 996 | 994 | 996 | 994 | |||||||||||||||||||
| Anti-dilutive securities excluded from diluted weighted average common shares | 2 | 1 | 1 | 1 |
—————
(1) Represents the dilutive impact of stock-based awards.
**9.**CONTINGENCIES
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.
**10.**ACQUISITIONS
Mingledorff's Acquisition
On May 11, 2026, we through our wholly owned subsidiary SRS, completed the acquisition of Mingledorff's, a leading wholesale distributor of HVAC equipment, parts, and supplies across the southeastern U.S., for total preliminary cash purchase consideration of approximately $1.1 billion. We have performed a preliminary purchase price allocation and recorded the estimated fair values of the assets acquired and liabilities assumed, including aggregate definite-lived intangible assets of $410 million with a weighted average amortization period of 21 years, and goodwill of $412 million. Net sales and net earnings attributable to Mingledorff’s for both the three and six months ended August 2, 2026 were immaterial. Pro forma results of operations are not presented as the effect of the acquisition was not material to our financial results.
GMS Acquisition
On September 4, 2025, we 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, for total cash purchase consideration of $5.1 billion. In fiscal 2025, we recorded a preliminary allocation of the purchase price to the assets acquired and liabilities assumed based on their estimated acquisition date fair values. Areas that remain preliminary as of August 2, 2026 primarily relate to income taxes, as well as any changes to residual goodwill resulting from measurement period adjustments. Measurement period adjustments recognized in the first six months of fiscal 2026 were immaterial.
| Fiscal Q2 2026 Form 10-Q | 14 | |
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