What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-09-04 compared with 2026-06-05 · 113 added, 79 removed, 285 unchanged (40% of the section changed)

Management's Discussion and Analysis of Financial Condition and Results of Operations

Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us” and “our” refers to Best Buy Co., Inc.

and its consolidated subsidiaries.

Unless the context otherwise requires, the use of the terms “Best Buy,” “we,” “us,” “our” and the “company” refers to Best Buy Co., Inc.

and, as applicable, its consolidated subsidiaries.

Any references to our website addresses do not constitute incorporation by reference of the information contained on the websites.

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The reclassification impacts only the presentation of revenue by category and does not affect previously reported total revenue, total comparable sales, net earnings or cash flows.

Revenue mix and comparable sales by revenue category for the three months ended May 3, 2025, have been recast to conform with this reclassification.

Revenue mix and comparable sales by revenue category for the three and six months ended August 2, 2025, have been recast to conform with this reclassification.

The key components of each revenue category are now as follows:

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• Appliances - large appliances (including dishwashers, laundry, ovens and refrigerators) and small appliances (including blenders, coffee makers, vacuums and personal care);

• Entertainment - drones, gaming (including hardware, peripherals and certain software, as well as augmented reality glasses), toys and virtual reality;

• Entertainment - drones, gaming (including hardware, peripherals and certain software, as well as AI glasses and trading cards), toys and virtual reality;

• Services - advertising, credit card revenue, digital content (including digital gaming, software and subscriptions), fulfillment, health-related services, installation, marketplace commissions, memberships, repair, technical support and warranty-related services;

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Refer to the Non-GAAP Financial Measures section below for detailed reconciliations of items impacting consolidated adjusted SG&A, consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS in the presented periods.

We continue to monitor developments with respect to tariffs and other trade policy matters closely, including impacts from the U.S.

Supreme Court decision that ruled the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unauthorized.

We are participating in the process established by the U.S.

Customs and Border Protection for refunds of tariffs we paid as the importer of record under IEEPA.

The timing and amount of refunds ultimately received is subject to ongoing legal and administrative uncertainty.

Accordingly, we did not recognize any amounts related to these refunds during the three months ended May 2, 2026.

Tariff Refunds

In the second quarter of fiscal 2027, $34 million of tariffs imposed under the International Emergency Economic Powers Act ("IEEPA") were refunded pursuant to the U.S.

Supreme Court decision on February 20, 2026, that such tariffs were unauthorized.

On September 2, 2026, an additional $41 million was refunded, which will be recorded in the financial statements in the third quarter of fiscal 2027.

These refunds, in aggregate, represent substantially all of the tariff refunds we have requested.

Tariff refunds are recorded as a reduction to Cost of sales on our Condensed Consolidated Statements of Earnings in the fiscal period received.

As tariff and trade policy discussions are ongoing and related matters continue to evolve, we cannot predict with certainty their ultimate impact on our business in future periods, including our results of operations and cash flows.

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Selected consolidated financial data was as follows ($ in millions, except per share amounts):

Three Months Ended

May 2, 2026 May 3, 2025

Three Months Ended Six Months Ended

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

Revenue $ 9,779 $ 9,438 $ 18,715 $ 18,205

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For additional information regarding costs classified in cost of sales and SG&A, refer to Note 1, Summary of Significant Accounting Policies , of the Notes to Consolidated Financial Statements included in Item 8, Financial Statements and Supplementary Data , of our Annual Report on Form 10-K for the fiscal year ended January 31, 2026.

In the first quarter of fiscal 2027, we generated $8.9 billion in revenue and our comparable sales grew 2.0%, primarily driven by comparable sales growth in gaming, computing and mobile phones, partially offset by a comparable sales decline in major appliances.

The comparable sales growth was due to a mix of new technology innovation, our continued focus on omni-channel customer experience and strong vendor partnerships.

We recorded a reduction to restructuring charges in the first quarter of fiscal 2027, primarily related to adjustments for termination benefits associated with a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026.

In the second quarter and first six months of fiscal 2027, we generated $9.8 billion and $18.7 billion in revenue, respectively, and our comparable sales grew 4.1% and 3.1%, respectively, driven by growth in many of our major product categories, as well as strong performance in our Best Buy Marketplace and Best Buy Ads initiatives.

Our results reflect the benefits of ongoing investments in our business, including elevating specialty expertise in our stores, partnering closely with our vendors to bring innovation to market, and improving fulfillment speed and execution across our supply chain, as well as a healthy demand environment.

Comparable sales increased in the second quarter of fiscal 2027, primarily driven by computing, home theater, AI glasses and trading cards.

This growth was partially offset by a comparable sales decline in the traditional gaming category.

Comparable sales increased in the first six months of fiscal 2027, primarily driven by computing, mobile phones, AI glasses, home theater and trading cards, partially offset by comparable sales declines in large appliances and the traditional gaming category.

We recorded a reduction to restructuring charges in the second quarter and first six months of fiscal 2027, primarily related to subsequent adjustments for termination benefits associated with previously planned organizational changes.

Refer to Note 2, Restructuring , of the Notes to Consolidated Financial Statements for additional information.

Operating income rate increased in the first quarter of fiscal 2027, primarily due to lower restructuring charges.

Diluted EPS increased in the first quarter of fiscal 2027, primarily due to higher operating income.

Revenue, gross profit rate, SG&A rate and operating income rate changes in the first quarter of fiscal 2027 were primarily driven by our Domestic segment.

Operating income rate increased in the second quarter and first six months of fiscal 2027, primarily due to lower restructuring charges and favorable gross profit rates.

Diluted EPS increased in the second quarter and first six months of fiscal 2027, primarily due to higher operating income.

Revenue, gross profit rate, SG&A rate and operating income rate changes in the second quarter and first six months of fiscal 2027 were primarily driven by our Domestic segment.

For further discussion of our Domestic and International segments, see Segment Performance Summary , below.

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Stores open by segment were as follows:

May 2, 2026 May 3, 2025

August 1, 2026 August 2, 2025

Best Buy 886 885

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As we approach the expiration of leases, we evaluate various options for each location, including whether a store should remain open.

We currently expect to increase our Domestic segment Best Buy store count by an additional four stores by the end of fiscal 2027.

We currently expect to increase our Domestic segment Best Buy store count by an additional two stores by the end of fiscal 2027.

Income Tax Expense

Income tax expense increased to $102 million in the first quarter of fiscal 2027 compared to $19 million in the first quarter of fiscal 2026, primarily due to the discrete tax impacts of the restructuring charges and the associated exit of a component of our Best Buy Health business in the prior year, as well as higher pre-tax income.

Effective tax rate (“ETR”) increased to 26.9% in the first quarter of fiscal 2027 compared to 8.6% in the first quarter of fiscal 2026, primarily due to these prior-year discrete tax impacts.

Income tax expense increased to $116 million in the second quarter of fiscal 2027 compared to $68 million in the second quarter of fiscal 2026, primarily due to higher pre-tax income.

Effective tax rate (“ETR”) increased to 27.1% in the second quarter of fiscal 2027 compared to 26.8% in the second quarter of fiscal 2026, primarily due to prior-year tax benefits from the restructuring charges and associated exit of a component of our Best Buy Health business, partially offset by the impact of higher pre-tax income.

Income tax expense increased to $218 million in the first six months of fiscal 2027 compared to $87 million in the first six months of fiscal 2026, primarily due to the discrete tax impacts of the restructuring charges and associated exit of a component of our Best Buy Health business in the prior year, as well as higher pre-tax income.

ETR increased to 27.0% in the first six months of fiscal 2027 compared to 18.3% in the first six months of fiscal 2026, primarily due to prior-year tax benefits from the restructuring charges and associated exit of a component of our Best Buy Health business, partially offset by the impact of higher pre-tax income.

See Note 2, Restructuring , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q for additional information.

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Selected financial data for the Domestic segment was as follows ($ in millions):

Three Months Ended

May 2, 2026 May 3, 2025

Three Months Ended Six Months Ended

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

Revenue $ 9,070 $ 8,698 $ 17,319 $ 16,825

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Adjusted operating income (2)

$ 404 $ 351 $ 762 $ 680

Adjusted operating income as a % of revenue (4)

4.5 % 4.0 % 4.4 % 4.0 %

Selected Online Revenue Data

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Comparable online sales % change (1)

5.1 % 5.1 % 3.4 % 3.7 %

(1) Comparable online sales are included in the comparable sales calculation.

(2) Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with Accounting Standards Codification ("ASC") 280, Segment Reporting .

(3) Adjusted SG&A as a % of revenue is calculated as Domestic segment Adjusted SG&A divided by Domestic segment Revenue.

(4) Adjusted operating income as a % of revenue is calculated as Domestic segment Adjusted operating income divided by Domestic segment Revenue.

Domestic segment revenue increased in the first quarter of fiscal 2027, primarily driven by comparable sales growth in gaming, computing, mobile phones and services, partially offset by a comparable sales decline in appliances.

Online revenue of $2.6 billion in the first quarter of fiscal 2027 increased 1.4% on a comparable basis.

(3) Adjusted SG&A as a % of revenue is calculated as segment Adjusted SG&A divided by segment Revenue.

(4) Adjusted operating income as a % of revenue is calculated as segment Adjusted operating income divided by segment Revenue.

Domestic segment revenue increased in the second quarter of fiscal 2027, primarily driven by comparable sales growth in computing, home theater, AI glasses and trading cards.

This growth was partially offset by a comparable sales decline in the traditional gaming category.

Domestic segment revenue increased in the first six months of fiscal 2027, primarily driven by comparable sales growth in computing, AI glasses, home theater, mobile phones and trading cards, partially offset by a comparable sales decline in large appliances.

Domestic segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:

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Three Months Ended Three Months Ended

May 2, 2026 May 3, 2025 (1)

August 1, 2026 August 2, 2025 (1)

Computing and Mobile Phones 46 % 44 % 6.8 % 3.8 %

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Total 100 % 100 % 4.5 % 1.1 %

(1) Revenue mix and comparable sales by revenue category for the three months ended May 3, 2025, have been recast to conform to the current presentation.

See Revenue Category Reclassificatio n, above, for additional information.

(1) Revenue mix and comparable sales by revenue category for the three months ended August 2, 2025, have been recast to conform to the current presentation.

See Revenue Category Reclassification , above, for additional information.

Notable comparable sales changes by revenue category were as follows:

• Computing and Mobile Phones:

The 4.2% comparable sales growth was driven primarily by computing and mobile phones.

Comparable sales growth was driven primarily by computing, tablets and mobile phones.

• Consumer Electronics:

The 2.7% comparable sales decline was driven primarily by home theater, headphones and portable speakers.

Comparable sales growth was driven primarily by home theater.

• Appliances:

The 13.6% comparable sales decline was driven primarily by large appliances.

The 5.5% comparable sales growth was driven primarily by Best Buy Marketplace and credit card revenue.

Comparable sales growth was driven primarily by large appliances, partially offset by a comparable sales decline in small appliances.

Comparable sales growth was driven primarily by Best Buy Marketplace and warranty services.

• Entertainment:

The 38.1% comparable sales growth was driven primarily by gaming.

Domestic segment gross profit rate increased in the first quarter of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, and improved financial performance from our traditional services offerings.

These increases were primarily offset by lower product margin rates.

Domestic segment adjusted SG&A increased in the first quarter of fiscal 2027, primarily due to higher expenses related to our Best Buy Marketplace and Best Buy Ads initiatives, and lapping a favorable indirect tax settlement received in the first quarter of fiscal 2026.

Comparable sales decline was driven primarily by the traditional gaming category, partially offset by comparable sales growth in AI glasses and trading cards.

Domestic segment gross profit rate increased in the second quarter of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, and IEEPA tariff refunds of $34 million.

These increases were partially offset by lower product margin rates.

Domestic segment gross profit rate increased in the first six months of fiscal 2027, primarily due to growth in Best Buy Marketplace and Best Buy Ads, IEEPA tariff refunds of $34 million, lower supply chain costs and improved financial performance from our traditional services offerings.

These increases were partially offset by lower product margin rates.

Domestic segment adjusted SG&A increased in the second quarter of fiscal 2027, primarily due to higher employee compensation expense, which includes incentive compensation, higher expenses related to our Best Buy Marketplace and Best Buy Ads initiatives, and higher advertising expense.

These increases were partially offset by lower Best Buy Health expense.

Domestic segment adjusted operating income rate increased in the first quarter of fiscal 2027, primarily due to a favorable gross profit rate.

Domestic segment adjusted SG&A increased in the first six months of fiscal 2027, primarily due to higher employee compensation expense, which includes incentive compensation, higher expenses related to our Best Buy Marketplace and Best Buy Ads initiatives, and higher credit card processing fees.

These increases were partially offset by lower Best Buy Health expense and lower depreciation expense.

Domestic segment adjusted operating income rate increased in the second quarter and first six months of fiscal 2027, primarily due to favorable gross profit rates.

International Segment

Selected financial data for the International segment was as follows ($ in millions):

Three Months Ended

May 2, 2026 May 3, 2025

Three Months Ended Six Months Ended

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

Revenue $ 709 $ 740 $ 1,396 $ 1,380

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Adjusted SG&A (1)

$ 145 $ 143 $ 288 $ 280

Adjusted SG&A as a % of revenue (2)

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Adjusted operating income (1)

$ 13 $ 18 $ 18 $ 22

Adjusted operating income as a % of revenue (3)

1.8 % 2.4 % 1.3 % 1.6 %

(1) Represents segment Adjusted SG&A and segment Adjusted operating income in accordance with ASC 280, Segment Reporting .

(2) Adjusted SG&A as a % of revenue is calculated as International segment Adjusted SG&A divided by International segment Revenue.

(3) Adjusted operating income as a % of revenue is calculated as International segment Adjusted operating income divided by International segment Revenue.

International segment revenue increased in the first quarter of fiscal 2027, primarily driven by comparable sales growth of 4.7% and the favorable impact of foreign exchange rates.

The comparable sales growth was primarily driven by mobile phones, gaming and digital imaging.

(2) Adjusted SG&A as a % of revenue is calculated as segment Adjusted SG&A divided by segment Revenue.

(3) Adjusted operating income as a % of revenue is calculated as segment Adjusted operating income divided by segment Revenue.

International segment revenue decreased in the second quarter of fiscal 2027, primarily driven by a comparable sales decline in gaming, partially offset by comparable sales growth in mobile phones and the unfavorable impact of foreign exchange rates.

International segment revenue increased in the first six months of fiscal 2027, primarily driven by comparable sales growth in mobile phones and digital imaging, partially offset by a comparable sales decline in gaming.

International segment revenue mix percentages and comparable sales percentage changes by revenue category were as follows:

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Three Months Ended Three Months Ended

May 2, 2026 May 3, 2025 (1)

August 1, 2026 August 2, 2025 (1)

Computing and Mobile Phones 47 % 46 % 2.1 % 9.1 %

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Total 100 % 100 % (1.8) % 7.6 %

(1) Revenue mix and comparable sales by revenue category for the three months ended May 3, 2025, have been recast to conform to the current presentation.

See Revenue Category Reclassificatio n, above, for additional information.

(1) Revenue mix and comparable sales by revenue category for the three months ended August 2, 2025, have been recast to conform to the current presentation.

See Revenue Category Reclassification , above, for additional information.

Notable comparable sales changes by revenue category were as follows:

• Computing and Mobile Phones:

The 6.4% comparable sales growth was driven primarily by mobile phones and computing.

Comparable sales growth was driven primarily by mobile phones, partially offset by a comparable sales decline in tablets.

• Consumer Electronics:

The 2.0% comparable sales growth was driven primarily by digital imaging, partially offset by a comparable sales decline in home theater.

Comparable sales growth was driven primarily by digital imaging.

• Appliances:

The 8.3% comparable sales decline was driven primarily by large appliances.

The 2.5% comparable sales growth was driven primarily by growth in marketplace and our membership programs, partially offset by a comparable sales decline in digital content.

Comparable sales decline was driven primarily by small appliances.

Comparable sales growth was driven primarily by growth in marketplace, partially offset by a comparable sales decline in warranty services.

• Entertainment:

The 19.2% comparable sales growth was driven primarily by gaming.

International segment gross profit rate decreased in the first quarter of fiscal 2027, primarily due to lower product margin rates.

International segment adjusted SG&A increased in the first quarter of fiscal 2027, primarily due to the negative impact of foreign exchange rates and higher depreciation expense.

International segment adjusted operating income rate increased in the first quarter of fiscal 2027, primarily due to increased leverage from higher sales volumes, which resulted in a favorable adjusted SG&A rate, largely offset by an unfavorable gross profit rate.

Comparable sales decline was driven primarily by gaming.

International segment gross profit rate increased in the second quarter of fiscal 2027, primarily due to improved product margin rates.

International segment gross profit rate was effectively unchanged in the first six months of fiscal 2027.

International segment adjusted SG&A increased in the second quarter of fiscal 2027, primarily due to higher advertising and depreciation expense, partially offset by the favorable impact of foreign exchange rates.

International segment adjusted SG&A increased in the first six months of fiscal 2027, primarily due to higher depreciation and advertising expense, as well as the unfavorable impact of foreign exchange rates.

These increases were partially offset by lower employee compensation expense.

International segment adjusted operating income rate decreased in the second quarter of fiscal 2027, primarily due to decreased leverage from lower sales volumes, which contributed to an unfavorable adjusted SG&A rate, partially offset by a favorable gross profit rate.

International segment adjusted operating income rate decreased in the first six months of fiscal 2027, primarily due to an unfavorable adjusted SG&A rate.

Non-GAAP Financial Measures

Reconciliations of consolidated SG&A, consolidated operating income, consolidated effective tax rate and consolidated diluted EPS (GAAP financial measures) to consolidated adjusted SG&A, consolidated adjusted operating income, consolidated adjusted effective tax rate and consolidated adjusted diluted EPS (non-GAAP financial measures), respectively, were as follows ($ in millions, except per share amounts):

Three Months Ended

May 2, 2026 May 3, 2025

Three Months Ended Six Months Ended

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

SG&A $ 1,923 $ 1,829 $ 3,664 $ 3,550

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Intangible asset amortization (1)

(2) (4) (4) (9)

Adjusted SG&A $ 1,921 $ 1,825 $ 3,660 $ 3,541

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Restructuring charges (2)

(6) 114 (15) 223

Adjusted operating income $ 417 $ 369 $ 780 $ 702

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Intangible asset amortization (1)

- % - % - % 0.2 %

Restructuring charges (2)

- % 0.9 % - % 8.7 %

Loss on disposal of subsidiaries (3)

- % 0.1 % - % 0.2 %

Adjusted effective tax rate 27.1 % 27.8 % 27.0 % 27.4 %

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Intangible asset amortization (1)

0.01 0.02 0.02 0.04

Restructuring charges (2)

(0.02) 0.54 (0.07) 1.05

Loss on disposal of subsidiaries (3)

- 0.02 - 0.02

Income tax impact of non-GAAP adjustments (4)

- (0.17) 0.01 (0.50)

Adjusted diluted EPS $ 1.47 $ 1.28 $ 2.75 $ 2.43

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(1) Represents the non-cash amortization of definite-lived intangible assets associated with acquisitions, including customer relationships and tradenames.

(2) Amounts for the three months ended May 2, 2026, primarily related to subsequent adjustments to a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026.

Charges for the three months ended May 3, 2025, primarily related to a restructuring initiative within our Best Buy Health business that commenced in the first quarter of fiscal 2026.

(2) Amounts for the three and six months ended August 1, 2026, primarily relate to subsequent adjustments to previously planned organizational changes.

Amounts for the three and six months ended August 2, 2025, primarily relate to charges related to a labor and store optimization restructuring initiative that commenced in the second quarter of fiscal 2026 and a restructuring initiative within our Best Buy Health business that commenced in the first quarter of fiscal 2026.

(3) Primarily represents the loss on disposal of a component of our Best Buy Health business.

(4) The non-GAAP adjustments primarily relate to the U.S.

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Cash and cash equivalents were as follows ($ in millions):

May 2, 2026 January 31, 2026 May 3, 2025

August 1, 2026 January 31, 2026 August 2, 2025

Cash and cash equivalents $ 2,255 $ 1,738 $ 1,456

The increases in cash and cash equivalents from January 31, 2026, and May 3, 2025, were primarily due to positive operating cash flows from earnings, partially offset by dividend payments and capital expenditures.

The increases in cash and cash equivalents from January 31, 2026, and August 2, 2025, were primarily due to positive cash flows from operations, primarily driven by earnings, partially offset by dividend payments and capital expenditures.

Cash flows were as follows ($ in millions):

Three Months Ended

May 2, 2026 May 3, 2025

Six Months Ended

August 1, 2026 August 2, 2025

Total cash provided by (used in):

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Operating Activities

The increase in cash provided by operating activities in the first quarter of fiscal 2027 was primarily driven by higher cash outflows from accounts payable in the prior year due to the timing and volume of inventory purchases and payments.

The increase in cash provided by operating activities in the first six months of fiscal 2027 was primarily driven by the timing and volume of inventory purchases and payments, and the timing of income tax payments.

Investing Activities

The decrease in cash used in investing activities in the first quarter of fiscal 2027 was primarily driven by lower capital expenditures.

The decrease in cash used in investing activities in the first six months of fiscal 2027 was primarily driven by the disposal of a component of our Best Buy Health business in the prior year.

Financing Activities

The decrease in cash used in financing activities in the first quarter of fiscal 2027 was primarily driven by lower share repurchases.

The decrease in cash used in financing activities in the first six months of fiscal 2027 was primarily driven by lower share repurchases.

Sources of Liquidity

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We have a $1.25 billion five-year senior unsecured revolving credit facility agreement (the “Five-Year Facility Agreement”) with a syndicate of banks that expires in April 2030.

There were no borrowings outstanding under the Five-Year Facility Agreement as of May 2, 2026, January 31, 2026, or May 3, 2025.

There were no borrowings outstanding under the Five-Year Facility Agreement as of August 1, 2026, January 31, 2026, or August 2, 2025.

Restricted Cash

Our liquidity is also affected by restricted cash balances that are primarily restricted to cover product protection plans provided under our membership offerings and self-insurance liabilities.

Restricted cash, which is included in Other current assets on our Condensed Consolidated Balance Sheets, remained relatively consistent at $287 million, $285 million and $288 million as of May 2, 2026, January 31, 2026, and May 3, 2025, respectively .

Our liquidity is also affected by restricted cash balances that are primarily restricted to support obligations related to product protection plans provided under our membership offerings, self-insurance liabilities and amounts held on behalf of third-party sellers on Best Buy Marketplace.

Restricted cash, which is included in Other current assets on our Condensed Consolidated Balance Sheets, was $279 million, $285 million and $257 million as of August 1, 2026, January 31, 2026, and August 2, 2025, respectively .

The decrease in restricted cash from January 31, 2026, was primarily due to a lower balance to support product protection plan obligations.

The increase in restricted cash from August 2, 2025, was primarily due to higher balances to support Best Buy Marketplace and self-insurance obligations, partially offset by a lower balance to support product protection plan obligations.

Debt and Capital

As of May 2, 2026, we had $500 million of principal amount of notes due October 1, 2028, and $650 million of principal amount of notes due October 1, 2030.

As of August 1, 2026, we had $500 million of principal amount of notes due October 1, 2028, and $650 million of principal amount of notes due October 1, 2030.

Refer to Note 6, Debt , of the Notes to Condensed Consolidated Financial Statements, included in this Quarterly Report on Form 10-Q, and Note 7, Debt , of the Notes to Consolidated Financial Statements included in our Annual Report on Form 10-K for the fiscal year ended January 31, 2026, for additional information about our outstanding debt.

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Share repurchase and dividend activity were as follows ($ and shares in millions, except per share amounts):

Three Months Ended

May 2, 2026 May 3, 2025

Three Months Ended Six Months Ended

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

Total cost of shares repurchased $ 37 $ 67 $ 37 $ 167

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Cash dividends declared and paid $ 203 $ 201 $ 405 $ 403

There were no shares repurchased in the first quarter of fiscal 2027.

Cash dividends declared and paid remained effectively unchanged in the first quarter of fiscal 2027, as the increase in the regular quarterly cash dividend per share was offset by fewer shares outstanding.

The total cost of shares repurchased decreased in the second quarter and first six months of fiscal 2027, due to decreases in the volume of repurchases, partially offset by higher average prices per share.

Cash dividends declared and paid increased during the second quarter and first six months of fiscal 2027, due to increases in the regular quarterly cash dividend per share, partially offset by fewer shares outstanding.

Off-Balance-Sheet Arrangements and Contractual Obligations

Our liquidity is not dependent on the use of off-balance-sheet financing arrangements other than in connection with our $1.25 billion in undrawn capacity on our Five-Year Facility Agreement as of May 2, 2026, which, if drawn upon, would be included in either short-term or long-term debt on our Condensed Consolidated Balance Sheets.

Our liquidity is not dependent on the use of off-balance-sheet financing arrangements other than in connection with our $1.25 billion in undrawn capacity on our Five-Year Facility Agreement as of August 1, 2026, which, if drawn upon, would be included in either short-term or long-term debt on our Condensed Consolidated Balance Sheets.

There has been no material change in our contractual obligations other than in the ordinary course of business since the end of fiscal 2026.

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis