DOLLAR GENERAL CORP 10-K

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA ​ Report of Independent Registered Public Accounting Fir m ​ To the Shareholders and the Board of Directors of Dollar General Corporation ​ Opinion on the Financial Statements ​ We have audited the accompanying consolidated balance sheets of Dollar General Corporation and subsidiaries (the Company) as of February 2, 2024 and February 3, 2023, the related consolidated statements of income, comprehensive income, shareholders' equity and cash flows for each of the three years in the period ended February 2, 2024, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at February 2, 2024 and February 3, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 2, 2024, 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 2, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated March 25, 2024, expressed an unqualified opinion thereon. ​ Basis for Opinion ​ These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s 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 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 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 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 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 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 financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the 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 42 Table of Contents audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosure to which it relates. ​ ​ ​ Estimate of Workers’ Compensation and General Liability Reserves ​ ​ Description of the Matter The Company records expenses and reserves for workers’ compensation matters related to alleged work-related employee accidents and injuries, as well as general liability matters related to alleged non-employee incidents and injuries. At February 2, 2024, the Company’s reserves for self-insurance risks were $307.9 million, which includes workers’ compensation and general liability reserves. As discussed in Note 1 of the consolidated financial statements, the Company retains a significant portion of risk related to its workers’ compensation and general liability exposures. Accordingly, provisions are recorded for the Company’s estimates of such losses. The undiscounted future claim costs for the workers’ compensation and general liability exposures are estimated using actuarial methods. ​ Auditing management’s assessment of the recorded workers’ compensation and general liability self-insurance exposure reserves was complex and judgmental due to the significant assumptions required in projecting the exposure on incurred claims (including those which have not been reported to the Company). In particular, the estimate was sensitive to significant assumptions such as loss development factors, trend factors, and pure loss rates. ​ ​ How We Addressed the Matter in Our Audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the Company’s accounting for these self-insurance exposures. For example, we tested controls over the appropriateness of the assumptions management used in the calculation and the completeness and accuracy of the data underlying the reserves. ​ To test the Company’s determination of the estimated required workers’ compensation and general liability self-insurance reserves, we performed audit procedures that included, among others, assessing the actuarial valuation methodologies utilized by management, testing the significant assumptions discussed above, testing the completeness and accuracy of the underlying data used by the Company in its evaluation, and testing the mathematical accuracy of the calculations. We also compared the significant assumptions used by management to industry accepted actuarial assumptions, reassessed the accuracy of management’s historical estimates utilized in prior period evaluations, and utilized an actuarial valuation specialist to assist in assessing the valuation methodologies and significant assumptions used in the valuation analysis, as well as to compare the Company’s recorded reserve to an independently developed range of actuarial reserves. ​ ​ ​ ​ ​ /s/ Ernst & Young LLP ​ We have served as the Company’s auditor since 2001. ​ Nashville, Tennessee March 25, 2024 ​ 43 Table of Contents DOLLAR GENERAL CORPORATION AND SUBSIDIARIES ​ CONSOLIDATED BALANCE SHEETS ​ (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 2, February 3, ​ ​ 2024 ​ 2023 ASSETS ​ ​ ​ ​ ​ Current assets: ​ ​ ​ ​ ​ ​ ​ Cash and cash equivalents ​ $ 537,283 ​ $ 381,576 ​ Merchandise inventories ​ 6,994,266 ​ 6,760,733 ​ Income taxes receivable ​ ​ 112,262 ​ ​ 135,775 ​ Prepaid expenses and other current assets ​ 366,913 ​ 302,925 ​ Total current assets ​ 8,010,724 ​ 7,581,009 ​ Net property and equipment ​ 6,087,722 ​ 5,236,309 ​ Operating lease assets ​ ​ 11,098,228 ​ ​ 10,670,014 ​ Goodwill ​ 4,338,589 ​ 4,338,589 ​ Other intangible assets, net ​ 1,199,700 ​ 1,199,700 ​ Other assets, net ​ 60,628 ​ 57,746 ​ Total assets ​ $ 30,795,591 ​ $ 29,083,367 ​ ​ ​ ​ ​ ​ ​ ​ ​ LIABILITIES AND SHAREHOLDERS’ EQUITY ​ ​ ​ ​ ​ ​ ​ Current liabilities: ​ ​ ​ ​ ​ ​ ​ Current portion of long-term obligations ​ $ 768,645 ​ $ — ​ Current portion of operating lease liabilities ​ ​ 1,387,083 ​ ​ 1,288,939 ​ Accounts payable ​ 3,587,374 ​ ​ 3,552,991 ​ Accrued expenses and other ​ 971,890 ​ ​ 1,036,919 ​ Income taxes payable ​ 10,709 ​ ​ 8,919 ​ Total current liabilities ​ 6,725,701 ​ 5,887,768 ​ Long-term obligations ​ 6,231,539 ​ 7,009,399 ​ Long-term operating lease liabilities ​ ​ 9,703,499 ​ ​ 9,362,761 ​ Deferred income taxes ​ 1,133,784 ​ 1,060,906 ​ Other liabilities ​ 251,949 ​ 220,761 ​ Commitments and contingencies ​ ​ ​ ​ ​ ​ ​ Shareholders’ equity: ​ ​ ​ ​ ​ ​ ​ Preferred stock ​ — ​ ​ — ​ Common stock; $ 0.875 par value, 1,000,000 shares authorized, 219,663 and 219,105 shares issued and outstanding at February 2, 2024 and February 3, 2023, respectively ​ 192,206 ​ 191,718 ​ Additional paid-in capital ​ 3,757,005 ​ 3,693,871 ​ Retained earnings ​ 2,799,415 ​ 1,656,140 ​ Accumulated other comprehensive income (loss) ​ 493 ​ 43 ​ Total shareholders’ equity ​ 6,749,119 ​ 5,541,772 ​ Total liabilities and shareholders' equity ​ $ 30,795,591 ​ $ 29,083,367 ​ ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ 44 Table of Contents DOLLAR GENERAL CORPORATION AND SUBSIDIARIES ​ CONSOLIDATED S TATEMENTS OF INCOME ​ (In thousands, except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ February 2, February 3, January 28, ​ ​ 2024 ​ 2023 ​ 2022 Net sales ​ $ 38,691,609 ​ $ 37,844,863 ​ $ 34,220,449 ​ Cost of goods sold ​ 26,972,585 ​ 26,024,765 ​ 23,407,443 ​ Gross profit ​ 11,719,024 ​ 11,820,098 ​ 10,813,006 ​ Selling, general and administrative expenses ​ 9,272,724 ​ 8,491,796 ​ 7,592,331 ​ Operating profit ​ 2,446,300 ​ 3,328,302 ​ 3,220,675 ​ Interest expense ​ 326,781 ​ 211,273 ​ 157,526 ​ Other (income) expense ​ — ​ 415 ​ — ​ Income before income taxes ​ 2,119,519 ​ 3,116,614 ​ 3,063,149 ​ Income tax expense ​ 458,245 ​ 700,625 ​ 663,917 ​ Net income ​ $ 1,661,274 ​ $ 2,415,989 ​ $ 2,399,232 ​ Earnings per share: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ $ 7.57 ​ $ 10.73 ​ $ 10.24 ​ Diluted ​ $ 7.55 ​ $ 10.68 ​ $ 10.17 ​ Weighted average shares outstanding: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Basic ​ 219,415 ​ 225,148 ​ 234,261 ​ Diluted ​ ​ 219,938 ​ 226,297 ​ 235,812 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Dividends per share ​ $ 2.36 ​ $ 2.20 ​ $ 1.68 ​ ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ 45 Table of Contents DOLLAR GENERAL CORPORATION AND SUBSIDIARIES ​ CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ February 2, February 3, January 28, ​ 2024 ​ 2023 ​ 2022 Net income $ 1,661,274 ​ $ 2,415,989 ​ $ 2,399,232 ​ Unrealized net gain (loss) on hedged transactions and currency translation, net of related income tax expense (benefit) of $ 31 , $ 353 , and $ 346 , respectively 450 ​ 1,235 ​ 971 ​ Comprehensive income $ 1,661,724 ​ $ 2,417,224 ​ $ 2,400,203 ​ ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ 46 Table of Contents DOLLAR GENERAL CORPORATION AND SUBSIDIARIES ​ CONSOLIDATED STATEMENTS OF SHAREHOLDE RS’ EQUITY ​ (In thousands except per share amounts) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Accumulated ​ ​ ​ ​ Common ​ ​ ​ ​ Additional ​ ​ ​ ​ Other ​ ​ ​ ​ ​ Stock ​ Common ​ Paid-in ​ Retained ​ Comprehensive ​ ​ ​ ​ ​ Shares ​ Stock ​ Capital ​ Earnings ​ Income (Loss) ​ Total Balances, January 29, 2021 240,785 ​ $ 210,687 ​ $ 3,446,612 ​ $ 3,006,102 ​ $ ( 2,163 ) ​ $ 6,661,238 ​ Net income — ​ — ​ — ​ 2,399,232 ​ — ​ 2,399,232 ​ Dividends paid, $ 1.68 per common share ​ — ​ ​ — ​ ​ — ​ ​ ( 392,217 ) ​ ​ — ​ ​ ( 392,217 ) ​ Unrealized net gain (loss) on hedged transactions — ​ — ​ — ​ — ​ 971 ​ 971 ​ Share-based compensation expense — ​ — ​ 78,178 ​ — ​ — ​ 78,178 ​ Repurchases of common stock ( 12,058 ) ​ ( 10,551 ) ​ — ​ ( 2,539,118 ) ​ — ​ ( 2,549,669 ) ​ Other equity and related transactions 1,289 ​ 1,129 ​ 63,124 ​ — ​ — ​ 64,253 ​ Balances, January 28, 2022 230,016 ​ $ 201,265 ​ $ 3,587,914 ​ $ 2,473,999 ​ $ ( 1,192 ) ​ $ 6,261,986 ​ Net income — ​ — ​ — ​ 2,415,989 ​ — ​ 2,415,989 ​ Dividends paid, $ 2.20 per common share ​ — ​ ​ — ​ ​ — ​ ​ ( 493,732 ) ​ ​ — ​ ​ ( 493,732 ) ​ Unrealized net gain (loss) on hedged transactions and currency translation — ​ — ​ — ​ — ​ 1,235 ​ 1,235 ​ Share-based compensation expense — ​ — ​ 72,712 ​ — ​ — ​ 72,712 ​ Repurchases of common stock ( 11,643 ) ​ ( 10,188 ) ​ — ​ ( 2,737,826 ) ​ — ​ ( 2,748,014 ) ​ Excise tax incurred on common stock repurchases ​ — ​ ​ — ​ ​ — ​ ​ ( 2,290 ) ​ ​ — ​ ​ ( 2,290 ) ​ Other equity and related transactions 732 ​ 641 ​ 33,245 ​ — ​ — ​ 33,886 ​ Balances, February 3, 2023 219,105 ​ $ 191,718 ​ $ 3,693,871 ​ $ 1,656,140 ​ $ 43 ​ $ 5,541,772 ​ Net income — ​ — ​ — ​ 1,661,274 ​ — ​ 1,661,274 ​ Dividends paid, $ 2.36 per common share ​ — ​ ​ — ​ ​ — ​ ​ ( 517,999 ) ​ ​ — ​ ​ ( 517,999 ) ​ Unrealized net gain (loss) on hedged transactions and currency translation — ​ — ​ — ​ — ​ 450 ​ 450 ​ Share-based compensation expense — ​ — ​ 51,891 ​ — ​ — ​ 51,891 ​ Other equity and related transactions 558 ​ 488 ​ 11,243 ​ — ​ — ​ 11,731 ​ Balances, February 2, 2024 219,663 ​ $ 192,206 ​ $ 3,757,005 ​ $ 2,799,415 ​ $ 493 ​ $ 6,749,119 ​ ​ The accompanying notes are an integral part of the consolidated financial statements. ​ ​ 47 Table of Contents DOLLAR GENERAL CORPORATION AND SUBSIDIARIES ​ CONSOLIDATED STATEMENTS OF CASH FLOWS ​ (In thousands) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the Year Ended ​ February 2, February 3, January 28, ​ 2024 ​ 2023 ​ 2022 Cash flows from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income $ 1,661,274 ​ $ 2,415,989 ​ $ 2,399,232 ​ Adjustments to reconcile net income to net cash from operating activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization 848,793 ​ 724,877 ​ 641,316 ​ Deferred income taxes 72,847 ​ 235,299 ​ 114,359 ​ Noncash share-based compensation 51,891 ​ 72,712 ​ 78,178 ​ Other noncash (gains) and losses 88,982 ​ 530,530 ​ 191,040 ​ Change in operating assets and liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Merchandise inventories ( 299,066 ) ​ ( 1,665,352 ) ​ ( 550,114 ) ​ Prepaid expenses and other current assets ( 63,576 ) ​ ( 65,102 ) ​ ( 47,471 ) ​ Accounts payable 36,940 ​ ( 194,722 ) ​ 98,735 ​ Accrued expenses and other liabilities ( 39,189 ) ​ ( 25,409 ) ​ ( 37,328 ) ​ Income taxes 25,303 ​ ( 37,517 ) ​ ( 14,642 ) ​ Other 7,599 ​ ( 6,750 ) ​ ( 7,494 ) ​ Net cash provided by (used in) operating activities 2,391,798 ​ 1,984,555 ​ 2,865,811 ​ Cash flows from investing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Purchases of property and equipment ( 1,700,222 ) ​ ( 1,560,582 ) ​ ( 1,070,460 ) ​ Proceeds from sales of property and equipment 6,199 ​ 5,236 ​ 4,903 ​ Net cash provided by (used in) investing activities ( 1,694,023 ) ​ ( 1,555,346 ) ​ ( 1,065,557 ) ​ Cash flows from financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Issuance of long-term obligations 1,498,260 ​ 2,296,053 ​ — ​ Repayments of long-term obligations ( 19,723 ) ​ ( 911,330 ) ​ ( 6,402 ) ​ Net increase (decrease) in commercial paper outstanding ​ ( 1,501,900 ) ​ ​ 1,447,600 ​ ​ 54,300 ​ Borrowings under revolving credit facilities 500,000 ​ — ​ — ​ Repayments of borrowings under revolving credit facilities ( 500,000 ) ​ — ​ — ​ Costs associated with issuance of debt ( 12,438 ) ​ ( 16,925 ) ​ ( 2,268 ) ​ Repurchases of common stock — ​ ( 2,748,014 ) ​ ( 2,549,669 ) ​ Payments of cash dividends ​ ( 517,979 ) ​ ​ ( 493,726 ) ​ ​ ( 392,188 ) ​ Other equity and related transactions 11,712 ​ 33,880 ​ 64,225 ​ Net cash provided by (used in) financing activities ( 542,068 ) ​ ( 392,462 ) ​ ( 2,832,002 ) ​ Net increase (decrease) in cash and cash equivalents 155,707 ​ 36,747 ​ ( 1,031,748 ) ​ Cash and cash equivalents, beginning of period 381,576 ​ 344,829 ​ 1,376,577 ​ Cash and cash equivalents, end of period $ 537,283 ​ $ 381,576 ​ $ 344,829 ​ Supplemental cash flow information: ​ ​ ​ ​ ​ ​ ​ ​ ​ Cash paid for: ​ ​ ​ ​ ​ ​ ​ ​ ​ Interest $ 352,473 ​ $ 195,312 ​ $ 159,803 ​ Income taxes $ 359,578 ​ $ 500,814 ​ $ 568,267 ​ Supplemental noncash investing and financing activities: ​ ​ ​ ​ ​ ​ ​ ​ ​ Right of use assets obtained in exchange for new operating lease liabilities $ 1,804,934 ​ $ 1,836,718 ​ $ 1,778,564 ​ Purchases of property and equipment awaiting processing for payment, included in Accounts payable $ 148,137 ​ $ 150,694 ​ $ 143,589 ​ ​ The accompanying notes are an integral part of the consolidated financial statements. 48 Table of Contents DOLLAR GENERAL CORPORATION AND SUBSIDIARIES ​ NOTES TO CONSOLIDATED F INANCIAL STATEMENTS ​ 1. Basis of presentation and accounting policies ​ Basis of presentation ​ These notes contain references to the years 2023, 2022, and 2021, which represent fiscal years ended February 2, 2024, February 3, 2023, and January 28, 2022, respectively. The Company’s 2023 and 2021 accounting periods were each comprised of 52 weeks, and the 2022 accounting period was comprised of 53 weeks. The Company’s fiscal year ends on the Friday closest to January 31. The consolidated financial statements include all subsidiaries of the Company, except for its not-for-profit subsidiary which the Company does not control. Intercompany transactions have been eliminated. ​ The Company sells general merchandise on a retail basis through 19,986 stores (as of February 2, 2024) in 48 U.S. states and Mexico with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States. As of February 2, 2024, the Company operated 18 distribution centers for non-refrigerated products, ten cold storage distribution centers, and three combination distribution centers which have both refrigerated and non-refrigerated products. The Company leases 14 of these facilities and the remainder are owned. ​ Cash and cash equivalents ​ Cash and cash equivalents include highly liquid investments with insignificant interest rate risk and original maturities of three months or less when purchased. Such investments primarily consist of money market funds, bank deposits, certificates of deposit, and commercial paper. The carrying amounts of these items are a reasonable estimate of their fair value due to the short maturity of these investments. ​ Payments due from processors for electronic tender transactions classified as cash and cash equivalents totaled approximately $ 109.3 million and $ 157.3 million at February 2, 2024 and February 3, 2023, respectively. ​ Investments in debt and equity securities ​ The Company accounts for investments in debt and marketable equity securities as held-to-maturity, available-for-sale, or trading, depending on their classification. Debt securities categorized as held-to-maturity are stated at amortized cost. Debt and equity securities categorized as available-for-sale are stated at fair value, with any unrealized gains and losses, net of deferred income taxes, reported as a component of Accumulated other comprehensive loss. Trading securities are stated at fair value, with changes in fair value recorded as a component of Selling, general and administrative (“SG&A”) expense. The cost of securities sold is based upon the specific identification method. ​ Merchandise inventories ​ Inventories are stated at the lower of cost or market (“LCM”) with cost determined using the retail last-in, first-out (“LIFO”) method as this method results in a better matching of costs and revenues. Under the Company’s retail inventory method (“RIM”), the calculation of gross profit and the resulting valuation of inventories at cost are computed by applying a calculated cost-to-retail inventory ratio to the retail value of sales at a department level. The use of the RIM will result in valuing inventories at LCM if markdowns are currently taken as a reduction of the retail value of inventories. Costs directly associated with warehousing and distribution are capitalized into inventory. ​ The excess of current cost over LIFO cost was approximately $ 875.1 million and $ 813.6 million at February 2, 2024 and February 3, 2023, respectively. Current cost is determined using the RIM on a first-in, first-out basis. Under the LIFO inventory method, the impacts of rising or falling market price changes increase or decrease cost of sales (the LIFO provision or benefit). The Company recorded a LIFO provision of $ 61.6 million in 2023, 49 Table of Contents $ 517.3 million in 2022, and $ 180.4 million in 2021, which is included in cost of goods sold in the consolidated statements of income. ​ The Company purchases its merchandise from a wide variety of suppliers. The Company’s two largest suppliers accounted for approximately 10 % and 8 %, respectively, of the Company’s purchases in 2023. ​ Vendor rebates ​ The Company accounts for all cash consideration received from vendors in accordance with applicable accounting standards pertaining to such arrangements. Cash consideration received from a vendor is generally presumed to be a rebate or an allowance and is accounted for as a reduction of merchandise purchase costs as earned. However, certain specific, incremental and otherwise qualifying SG&A expenses related to the promotion or sale of vendor products may be offset by cash consideration received from vendors, in accordance with arrangements such as cooperative advertising, when earned for dollar amounts up to but not exceeding actual incremental costs. ​ Prepaid expenses and other current assets ​ Prepaid expenses and other current assets include amounts receivable for certain vendor rebates and other miscellaneous receivables (primarily those expected to be collected in cash), and prepaid amounts for SAAS fees, maintenance, business licenses and insurance. ​ Property and equipment ​ Property and equipment acquired is recorded at cost. The Company records depreciation and amortization on a straight-line basis over the assets’ estimated useful lives. Amounts included in the Company’s property and equipment balances and their estimated lives are summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 2, February 3, (In thousands) ​ Life ​ 2024 ​ 2023 Land Indefinite ​ $ 236,899 ​ $ 230,814 ​ Land improvements ​ 20 ​ ​ 106,339 ​ 98,567 ​ Buildings 39 - 40 ​ 1,688,467 ​ 1,561,440 ​ Leasehold improvements ​ (a) ​ ​ 1,189,060 ​ 1,011,788 ​ Furniture, fixtures and equipment 3 - 10 ​ 6,604,870 ​ 5,714,456 ​ Construction in progress ​ ​ ​ ​ ​ 539,242 ​ 313,615 ​ Right of use assets - finance leases ​ Various ​ ​ 233,349 ​ ​ 215,052 ​ ​ ​ ​ ​ ​ ​ 10,598,226 ​ 9,145,732 ​ Less accumulated depreciation and amortization ​ ​ ​ ​ ​ ( 4,510,504 ) ​ ( 3,909,423 ) ​ Net property and equipment ​ ​ ​ ​ ​ $ 6,087,722 ​ $ 5,236,309 ​ (a) Depreciated over the lesser of the life of the applicable lease term or the estimated useful life of the asset. ​ Depreciation and amortization expense related to property and equipment was approximately $ 839.9 million, $ 717.8 million and $ 635.9 million for 2023, 2022 and 2021, respectively. Interest on borrowed funds during the construction of property and equipment is capitalized where applicable. Interest costs of $ 12.5 million, $ 4.8 million, and $ 1.2 million were capitalized in 2023, 2022 and 2021, respectively. ​ Impairment of long-lived assets ​ When indicators of impairment are present, the Company evaluates the carrying value of long-lived assets, excluding goodwill and other indefinite-lived intangible assets, in relation to the operating performance and future cash flows or the appraised values of the underlying assets. Generally, the Company’s policy is to review for impairment stores open more than three years for which current cash flows from operations are negative. Impairment results when the carrying value of the assets exceeds the undiscounted future cash flows expected to be 50 Table of Contents generated by the assets. The Company’s estimate of undiscounted future cash flows is based upon historical operations of the stores and estimates of future store profitability which encompasses many factors that are subject to variability and difficult to predict. If a long-lived asset is found to be impaired, the amount recognized for impairment is equal to the difference between the carrying value and the asset’s estimated fair value. The fair value is estimated based primarily upon estimated future cash flows over the asset’s remaining useful life (discounted at the Company’s credit adjusted risk-free rate) or other reasonable estimates of fair market value. Assets to be disposed of are adjusted to the fair value less the cost to sell if less than the book value. ​ The Company recorded impairment charges included in SG&A expense of approximately $ 6.7 million in 2023, $ 2.1 million in 2022 and $ 2.6 million in 2021, to reduce the carrying value of certain of its stores’ assets. Such action was deemed necessary based on the Company’s evaluation that such amounts would not be recoverable primarily due to insufficient sales or excessive costs resulting in the carrying value of the assets exceeding the estimated undiscounted future cash flows generated by the assets at these locations. ​ Goodwill and other intangible assets ​ If not deemed indefinite, the Company amortizes intangible assets over their estimated useful lives. Goodwill and intangible assets with indefinite lives are tested for impairment annually or more frequently if indicators of impairment are present. Definite lived intangible assets are tested for impairment if indicators of impairment are present. Impaired assets are written down to fair value as required. No impairment of intangible assets has been identified during any of the periods presented. ​ In accordance with accounting standards for goodwill and indefinite-lived intangible assets, an entity has the option first to assess qualitative factors to determine whether events and circumstances indicate that it is more likely than not that goodwill or an indefinite-lived intangible asset is impaired. If after such assessment an entity concludes that the asset is not impaired, then the entity is not required to take further action. However, if an entity concludes otherwise, then it is required to determine the fair value of the asset using a quantitative impairment test. If the results of such test indicate impairment, the associated assets must be written down to fair value as described in further detail below. ​ The quantitative goodwill impairment test requires management to make judgments in determining what assumptions to use in the calculation. The process consists of comparing the fair value of the reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is less than its carrying amount, management would then determine if the difference between the carrying amount and fair value is greater than the carrying amount of goodwill allocated to the reporting unit. If it is, the impairment recognized would be equal to the total carrying amount of goodwill allocated to the reporting unit, and if not, impairment would be recognized equal to the difference between the carrying amount of the reporting unit and its fair value. ​ The quantitative impairment test for intangible assets compares the fair value of the intangible asset with its carrying amount. If the carrying amount of an intangible asset exceeds its fair value, an impairment loss is recognized in an amount equal to that excess. ​ The Company’s goodwill balance has an indefinite life and is not expected to be deductible for income tax purposes. Substantially all of the Company’s other intangible assets are its trade names and trademarks which have an indefinite life. ​ Other assets ​ Noncurrent Other assets consist primarily of investments and qualifying prepaid expenses for maintenance, and utility and other deposits. ​ 51 Table of Contents Accrued expenses and other liabilities ​ Accrued expenses and other consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 2, February 3, (In thousands) ​ 2024 ​ 2023 Compensation and benefits ​ $ 145,665 ​ $ 214,472 ​ Self-insurance reserves ​ 151,317 ​ 136,911 ​ Taxes (other than taxes on income) ​ 275,636 ​ 296,343 ​ Other ​ 399,272 ​ 389,193 ​ ​ ​ $ 971,890 ​ $ 1,036,919 ​ ​ Included in other accrued expenses are liabilities for freight expense, interest, utilities, maintenance and legal settlements. ​ Supply chain finance programs ​ We utilize supply chain finance programs whereby qualifying suppliers may elect at their sole discretion to sell our payment obligations to designated third party financial institutions. While the terms of these agreements are between the supplier and the financial institution, the supply chain finance financial institutions allow the participating suppliers to utilize our creditworthiness in establishing credit spreads and associated costs. The payment terms that the Company has with participating suppliers under these programs generally range up to 120 days . The Company’s obligations to its suppliers in accounts payable and accrued expenses, including amounts due and scheduled payment dates, are not impacted by suppliers’ decisions to finance amounts under these arrangements. As of February 2, 2024 and February 3, 2023, the amount of obligations outstanding that the Company has confirmed with the financial institutions under the supply chain finance program were $ 306.8 million and $ 343.6 million, respectively. ​ Insurance liabilities ​ The Company retains a significant portion of risk for its workers’ compensation, employee health, general liability, property, auto liability and certain third-party landlord general liability claim exposures. Accordingly, provisions are made for the Company’s estimates of such risks which are recorded as self-insurance reserves pursuant to Company policy. The undiscounted future claim costs for the workers’ compensation, general liability, landlord liability, and health claim risks are derived using actuarial methods which are sensitive to significant assumptions such as loss development factors, trend factors, pure loss rates, and projected claim counts. To the extent that subsequent claim costs vary from the Company’s estimates, future results of operations will be affected as the reserves are adjusted. ​ Ashley River Insurance Company (“ARIC”), a Tennessee-based wholly owned captive insurance subsidiary of the Company, charges the operating subsidiary companies premiums to insure the retained workers’ compensation, medical stop-loss, and non-property general liability exposures. Pursuant to Tennessee insurance regulations, ARIC maintains certain levels of cash and cash equivalents related to its self-insured exposures. ​ Leases ​ The Company records operating lease right of use assets and liabilities on its balance sheet. Lease liabilities are recorded at a discount based upon the Company’s estimated collateralized incremental borrowing rate. Factors incorporated into the calculation of lease discount rates include the valuations and yields of the Company’s senior notes, their credit spread over comparable U.S. Treasury rates, and an index of the credit spreads for all North American investment grade companies by rating. To determine an indicative secured rate, the Company uses the estimated credit spread improvement that would result from an upgrade of one ratings classification by tenor. ​ The Company records single lease cost on a straight-line basis over the base, non-cancelable lease term commencing on the date that the Company takes physical possession of the property from the landlord, which may include a period prior to the opening of a store or other facility to make any necessary leasehold improvements and 52 Table of Contents install fixtures. Any tenant allowances received are recorded as a reduction of the right of use asset. Leases with an initial term of 12 months or less are not recorded on the balance sheet and lease expense for such leases is recognized on a straight-line basis over the lease term. The Company combines lease and nonlease components. Many leases include one or more options to renew, and the exercise of lease renewal options is at the Company’s sole discretion. The Company’s lease agreements do not contain any material residual value guarantees or material restrictive covenants. ​ Other liabilities ​ Other liabilities primarily consists of self-insurance which equaled $ 156.6 million in 2023 and $ 137.8 million in 2022. ​ Fair value accounting ​ The Company utilizes accounting standards for fair value, which include the definition of fair value, the framework for measuring fair value, and disclosures about fair value measurements. Fair value is a market-based measurement, not an entity-specific measurement. Therefore, a fair value measurement should be determined based on the assumptions that market participants would use in pricing the asset or liability. As a basis for considering market participant assumptions in fair value measurements, fair value accounting standards establish a fair value hierarchy that distinguishes between market participant assumptions based on market data obtained from sources independent of the reporting entity (observable inputs that are classified within Levels 1 and 2 of the hierarchy) and the reporting entity’s own assumptions about market participant assumptions (unobservable inputs classified within Level 3 of the hierarchy). ​ Level 1 inputs utilize quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access. Level 2 inputs are inputs other than quoted prices included in Level 1 that are directly or indirectly observable for the asset or liability. Level 2 inputs may include quoted prices for similar assets and liabilities in active markets, as well as inputs that are observable for the asset or liability (other than quoted prices), such as interest rates, foreign exchange rates, and yield curves that are observable at commonly quoted intervals. Level 3 inputs are unobservable inputs for the asset or liability, which are based on an entity’s own assumptions, as there is little, if any, observable market activity. In instances where the fair value measurement is based on inputs from different levels of the fair value hierarchy, the level in the fair value hierarchy within which the entire fair value measurement falls is based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. ​ Other comprehensive income ​ The Company previously recorded a loss on the settlement of derivatives associated with the issuance of long-term debt in 2013 which was deferred to other comprehensive income and is being amortized as an increase to interest expense over the 10-year period of the debt’s maturity. ​ Foreign currency denominated assets and liabilities held by foreign subsidiaries are translated into U.S. dollars using the spot rate in effect at the consolidated balance sheet date. Results of operations are translated using the average exchange rates in the period in which they occur. The effect of exchange rate fluctuations on translation of assets and liabilities is included as a component of shareholders’ equity in accumulated other comprehensive income or loss. ​ Revenue recognition ​ The Company recognizes retail sales in its stores at the time the customer takes possession of merchandise. All sales are net of discounts and are presented net of taxes assessed by governmental authorities that are imposed concurrent with those sales. ​ 53 Table of Contents The Company recognizes gift card sales revenue at the time of redemption. The liability for gift cards is established for the cash value at the time of purchase of the gift card. The liability for outstanding gift cards was approximately $ 13.8 million and $ 10.7 million at February 2, 2024 and February 3, 2023, respectively, and is recorded in Accrued expenses and other liabilities. Estimated breakage revenue, a percentage of gift cards that will never be redeemed based on historical redemption rates, is recognized over time in proportion to actual gift card redemptions. The Company recorded breakage revenue of $ 2.6 million, $ 2.3 million and $ 1.7 million in 2023, 2022 and 2021, respectively. ​ Advertising costs ​ Advertising costs are expensed upon performance, “first showing” or distribution, and are reflected in SG&A expenses net of earned cooperative advertising amounts provided by vendors which are specific, incremental and otherwise qualifying expenses related to the promotion or sale of vendor products for dollar amounts up to but not exceeding actual incremental costs. Advertising costs were $ 130.6 million, $ 126.0 million and $ 117.2 million in 2023, 2022 and 2021, respectively. These costs primarily include promotional circulars, targeted circulars supporting new stores, digital media support, and in-store signage. Vendor funding for cooperative advertising offset reported expenses by $ 35.7 million, $ 33.4 million and $ 34.3 million in 2023, 2022 and 2021, respectively. ​ Share-based payments ​ The Company recognizes compensation expense for share-based compensation based on the fair value of the awards on the grant date. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. This estimate may be adjusted periodically based on the extent to which actual forfeitures differ, or are expected to differ, from the prior estimate. The forfeiture rate is the estimated percentage of share-based awards granted that are expected to be forfeited or canceled before becoming fully vested. The Company bases this estimate on historical experience or estimates of future trends, as applicable. An increase in the forfeiture rate will decrease compensation expense. ​ The fair value of each option grant is separately estimated and amortized into compensation expense on a straight-line basis between the applicable grant date and each vesting date. The Company has estimated the fair value of all stock option awards as of the grant date by applying the Black-Scholes-Merton option pricing valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive to variation in the determination of compensation expense. ​ The Company calculates compensation expense for restricted stock, share units and similar awards as the difference between the market price of the underlying stock or similar award on the grant date and the purchase price, if any. Such expense is recognized on a straight-line basis for time-based awards and on an accelerated or straight-line basis for performance awards depending on the period over which the recipient earns the awards. ​ Store pre-opening costs ​ Pre-opening costs related to new store openings and the related construction periods are expensed as incurred. ​ Income taxes ​ Under the accounting standards for income taxes, the asset and liability method is used for computing the future income tax consequences of events that have been recognized in the Company’s consolidated financial statements or income tax returns. Deferred income tax expense or benefit is the net change during the year in the Company’s deferred income tax assets and liabilities. ​ The Company includes income tax related interest and penalties as a component of the provision for income tax expense. ​ 54 Table of Contents Income tax reserves are determined using a methodology which requires companies to assess each income tax position taken using a two-step process. A determination is first made as to whether it is more likely than not that the position will be sustained, based upon the technical merits, upon examination by the taxing authorities. If the tax position is expected to meet the more likely than not criteria, the benefit recorded for the tax position equals the largest amount that is greater than 50% likely to be realized upon ultimate settlement of the respective tax position. Uncertain tax positions require determinations and estimated liabilities to be made based on provisions of the tax law which may be subject to change or varying interpretation. If the Company’s determinations and estimates prove to be inaccurate, the resulting adjustments could be material to the Company’s future financial results. ​ Management estimates ​ The preparation of financial statements and related disclosures in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ from those estimates. Accounting standards ​ In March 2020 and January 2021, the Financial Accounting Standards Board (“FASB”) issued accounting standards updates pertaining to reference rate reform. This collective guidance is in response to accounting concerns regarding contract modifications and hedge accounting because of impending rate reform associated with structural risks of interbank offered rates (IBORs), and, particularly, the risk of cessation of LIBOR, related to regulators in several jurisdictions around the world having undertaken reference rate reform initiatives to identify alternative reference rates. The guidance provides optional expedients and exceptions for applying U.S. GAAP to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met. The adoption of this guidance is effective for all entities as of March 12, 2020 through December 31, 2024. The Company completed its transition from LIBOR to Term SOFR in its credit agreements governing the Facilities in fiscal year 2022 with no material impact to the financial statements. ​ In September 2022, the FASB issued new required disclosures for supplier finance programs. These disclosures are intended to enhance the transparency about the use of supplier finance programs for investors. The amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with the exception of the disclosure of rollforward information, which is effective for fiscal years beginning after December 15, 2023. The Company adopted the required disclosures for this accounting standard update in fiscal 2023, except for the disclosure of rollforward activity, which will be adopted for fiscal year 2024. ​ In November 2023, the FASB issued an update to the required disclosures for segment reporting. The update is intended to improve reportable segment disclosures, primarily through enhanced disclosures about significant segment expenses. The update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. The Company does not expect the adoption of this update to have a material impact on its consolidated results of operations, financial position, or cash flows. ​ In December 2023, the FASB issued an update to the required disclosures for income taxes. The update is intended to improve the rate reconciliation and income taxes paid disclosures to enhance the transparency and decision usefulness of income tax disclosures. The update is effective for fiscal years beginning after December 15, 2024. The Company is currently assessing the impact of the adoption of this required disclosure. ​ 55 Table of Contents 2. Earnings per share ​ Earnings per share is computed as follows (in thousands except per share data): ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2023 ​ ​ ​ ​ Weighted ​ ​ ​ ​ Net ​ Average ​ Per Share ​ ​ ​ Income ​ Shares ​ Amount ​ Basic earnings per share ​ $ 1,661,274 219,415 ​ $ 7.57 ​ Effect of dilutive share-based awards ​ ​ ​ 523 ​ ​ ​ ​ Diluted earnings per share ​ $ 1,661,274 219,938 ​ $ 7.55 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2022 ​ ​ ​ ​ Weighted ​ ​ ​ ​ Net ​ Average ​ Per Share ​ ​ ​ Income ​ Shares ​ Amount ​ Basic earnings per share ​ $ 2,415,989 225,148 ​ $ 10.73 ​ Effect of dilutive share-based awards ​ ​ ​ 1,149 ​ ​ ​ ​ Diluted earnings per share ​ $ 2,415,989 226,297 ​ $ 10.68 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 2021 ​ ​ ​ ​ Weighted ​ ​ ​ ​ Net ​ Average ​ Per Share ​ ​ ​ Income ​ Shares ​ Amount ​ Basic earnings per share ​ $ 2,399,232 234,261 ​ $ 10.24 ​ Effect of dilutive share-based awards ​ ​ ​ 1,551 ​ ​ ​ ​ Diluted earnings per share ​ $ 2,399,232 235,812 ​ $ 10.17 ​ ​ Basic earnings per share is computed by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per share is determined based on the dilutive effect of share-based awards using the treasury stock method. ​ Share-based awards that were outstanding at the end of the respective periods but were not included in the computation of diluted earnings per share because the effect of exercising such options would be antidilutive, were approximately 0.1 million, 0.1 million and 0.1 million in 2023, 2022 and 2021, respectively. ​ 3. Income taxes ​ The provision (benefit) for income taxes consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) 2023 2022 2021 Current: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ $ 324,339 ​ $ 400,752 ​ $ 472,913 ​ Foreign ​ 880 ​ 279 ​ 384 ​ State ​ 59,181 ​ 63,562 ​ 76,261 ​ ​ ​ 384,400 ​ 464,593 ​ 549,558 ​ Deferred: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Federal ​ 72,769 ​ 195,529 ​ 93,114 ​ Foreign ​ ​ ( 297 ) ​ ​ ( 24 ) ​ ​ ( 38 ) ​ State ​ 1,373 ​ 40,527 ​ 21,283 ​ ​ ​ 73,845 ​ 236,032 ​ 114,359 ​ ​ ​ $ 458,245 ​ $ 700,625 ​ $ 663,917 ​ ​ 56 Table of Contents A reconciliation between actual income taxes and amounts computed by applying the federal statutory rate to income before income taxes is summarized as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (Dollars in thousands) ​ 2023 ​ 2022 ​ 2021 U.S. federal statutory rate on earnings before income taxes $ 445,098 21.0 % $ 654,489 21.0 % $ 643,262 21.0 % State income taxes, net of federal income tax benefit ​ 47,855 2.2 ​ 82,134 2.6 ​ 77,086 2.5 ​ Jobs credits, net of federal income taxes ​ ( 34,279 ) ( 1.6 ) ​ ( 37,639 ) ( 1.2 ) ​ ( 39,936 ) ( 1.3 ) ​ Other, net ​ ( 429 ) — ​ 1,641 0.1 ​ ( 16,495 ) ( 0.5 ) ​ ​ ​ $ 458,245 21.6 % $ 700,625 22.5 % $ 663,917 21.7 % ​ The effective income tax rate for 2023 was 21.6 % compared to a rate of 22.5 % for 2022 which represents a net decrease of 0.9 percentage points. The effective income tax rate was lower in 2023 primarily due to the effect of certain rate-impacting items (such as federal tax credits) on lower earnings before taxes and a lower state effective rate resulting from increased recognition of state tax credits. ​ The effective income tax rate for 2022 was 22.5 % compared to a rate of 21.7 % for 2021 which represents a net increase of 0.8 percentage points. The effective income tax rate was higher in 2022 primarily due to decreased income tax benefits associated with stock-based compensation compared to 2021. ​ Deferred taxes reflect the effects of temporary differences between carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 2, February 3, (In thousands) ​ 2024 ​ 2023 Deferred tax assets: ​ ​ ​ ​ ​ ​ ​ Deferred compensation expense ​ $ 13,441 ​ $ 12,029 ​ Accrued expenses ​ 13,112 ​ 7,274 ​ Accrued rent ​ 306 ​ 473 ​ Lease liabilities ​ ​ 2,852,395 ​ ​ 2,760,588 ​ Accrued insurance ​ 8,732 ​ 7,514 ​ Accrued incentive compensation ​ 5,356 ​ 26,534 ​ Share based compensation ​ ​ 17,052 ​ ​ 15,309 ​ Interest rate hedges ​ — ​ 31 ​ Tax benefit of income tax and interest reserves related to uncertain tax positions ​ 1,028 ​ 77 ​ State and foreign tax net operating loss carry forwards, net of federal tax ​ 9,781 ​ 4,279 ​ State tax credit carry forwards, net of federal tax ​ 19,463 ​ 7,812 ​ Other ​ 22,882 ​ 22,756 ​ ​ ​ 2,963,548 ​ 2,864,676 ​ Less valuation allowances, net of federal income taxes ​ ( 17,000 ) ​ ( 9,001 ) ​ Total deferred tax assets ​ 2,946,548 ​ 2,855,675 ​ Deferred tax liabilities: ​ ​ ​ ​ ​ ​ ​ Property and equipment ​ ( 736,322 ) ​ ( 684,468 ) ​ Lease assets ​ ​ ( 2,815,466 ) ​ ​ ( 2,728,507 ) ​ Inventories ​ ( 199,603 ) ​ ( 176,798 ) ​ Trademarks ​ ( 306,915 ) ​ ( 307,734 ) ​ Prepaid insurance ​ ​ ( 20,275 ) ​ ​ ( 17,870 ) ​ Other ​ ( 1,751 ) ​ ( 1,204 ) ​ Total deferred tax liabilities ​ ( 4,080,332 ) ​ ( 3,916,581 ) ​ Net deferred tax liabilities ​ $ ( 1,133,784 ) ​ $ ( 1,060,906 ) ​ ​ The Company has state tax credit carryforwards of approximately $ 19.4 million (net of federal benefit) that will expire beginning in 2024 through 2035. The Company has approximately $ 8.1 million of state apportioned net 57 Table of Contents operating loss carryforwards, which will begin to expire in 2032 and will continue through 2042 and approximately $ 31.6 million of foreign net operating loss carryforwards, which will begin to expire in 2032 through 2034. ​ The Company has a valuation allowance for certain state tax credit carryforwards and foreign net operating loss carryforwards and deferred tax assets, in the amount of $ 17.0 million and $ 9.0 million (net of federal benefit) which increased income tax expense by $ 8.0 million and $ 3.8 million in 2023 and 2022, respectively. Management believes that the results from operations will not generate sufficient taxable income to realize the state deferred tax assets before they expire and, with respect to the foreign deferred tax assets, will assess the existing positive and negative evidence in evaluating a potential release of the valuation allowance on the deferred tax assets in future periods. ​ Management believes that it is more likely than not that the Company’s results of operations and its existing deferred tax liabilities will generate sufficient taxable income to realize the remaining deferred tax assets. ​ The Company’s 2019 and earlier tax years are not open for further examination by the Internal Revenue Service (“IRS”). The IRS, at its discretion, may choose to examine the Company’s 2020 through 2022 fiscal year income tax filings. The Company has various state income tax examinations that are currently in progress. Generally, with few exceptions, the Company’s 2020 and later tax years remain open for examination by the various state taxing authorities. ​ As of February 2, 2024, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 14.4 million, $ 1.0 million and $ 0.0 million, respectively, for a total of $ 15.4 million. As of February 3, 2023, accruals for uncertain tax benefits, interest expense related to income taxes and potential income tax penalties were $ 8.0 million, $ 0.3 million and $ 0.0 million, respectively, for a total of $ 8.3 million. These totals are reflected in noncurrent Other liabilities in the consolidated balance sheets. ​ The Company’s reserve for uncertain tax positions is expected to be reduced by $ 2.1 million in the coming twelve months as a result of expiring statutes of limitations or settlements. As of February 2, 2024 and February 3, 2023, approximately $ 11.5 million and $ 8.0 million, respectively, of the uncertain tax positions would impact the Company’s effective income tax rate if the Company were to recognize the tax benefit for these positions. ​ The amounts associated with uncertain tax positions included in income tax expense consists of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) 2023 2022 2021 Income tax expense (benefit) ​ $ 3,930 ​ $ 1,797 ​ $ ( 1,311 ) ​ Income tax related interest expense (benefit) ​ 710 ​ 28 ​ ( 281 ) ​ Income tax related penalty expense (benefit) ​ — ​ — ​ — ​ ​ A reconciliation of the uncertain income tax positions from January 29, 2021 through February 2, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (In thousands) 2023 2022 2021 Beginning balance ​ $ 7,988 ​ $ 6,191 ​ $ 7,502 ​ Increases—tax positions taken in the current year ​ 665 ​ — ​ — ​ Increases—tax positions taken in prior years ​ 8,101 ​ 3,499 ​ 2,803 ​ Decreases—tax positions taken in prior years ​ — ​ — ​ — ​ Statute expirations ​ ( 1,931 ) ​ ( 1,239 ) ​ ( 1,456 ) ​ Settlements ​ ( 446 ) ​ ( 463 ) ​ ( 2,658 ) ​ Ending balance ​ $ 14,377 ​ $ 7,988 ​ $ 6,191 ​ ​ ​ 4. Leases ​ As of February 2, 2024, the Company’s primary leasing activities were real estate leases for most of its retail store locations and certain of its distribution facilities. Many of the Company’s store locations are subject to 58 Table of Contents build-to-suit arrangements with landlords which typically carry a primary lease term of up to 15 years . The Company does not control build-to-suit properties during the construction period. Store locations not subject to build-to-suit arrangements are typically shorter-term leases. Certain of the Company’s leased store locations have variable payments based upon actual costs of common area maintenance, real estate taxes and property and liability insurance. In addition, some of the Company’s leased store locations have provisions for variable payments based upon a specified percentage of defined sales volume. The Company’s lease agreements generally do not contain material restrictive covenants. ​ Most of the Company’s leases include one or more options to renew and extend the lease term. The exercise of lease renewal options is at the Company’s sole discretion. Generally, a renewal option is not deemed to be reasonably certain to be exercised until such option is legally executed. The Company’s leases do not include purchase options or residual value guarantees on the leased property. The depreciable life of leasehold improvements is limited by the expected lease term. ​ Substantially all of the Company’s leases are classified as operating leases and the associated assets and liabilities are presented as separate captions in the consolidated balance sheets. Finance lease assets are included in net property and equipment, and finance lease liabilities are included in long-term obligations, in the consolidated balance sheets. At February 2, 2024, the weighted-average remaining lease term for the Company’s leases was 9.5 years, and the weighted average discount rate was 4.3 %. For 2023, 2022 and 2021, operating lease cost of $ 1.75 billion, $ 1.61 billion and $ 1.49 billion, respectively, and variable lease cost of $ 0.36 billion, $ 0.31 billion and $ 0.28 billion, respectively, were reflected as selling, general and administrative expenses in the consolidated statements of income. Cash paid for amounts included in the measurement of operating lease liabilities of $ 1.76 billion, $ 1.62 billion and $ 1.5 billion, respectively, were reflected in cash flows from operating activities in the consolidated statements of cash flows for 2023, 2022 and 2021. ​ The scheduled maturities of the Company’s operating lease liabilities are as follows: ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ 2024 ​ $ 1,822,383 ​ 2025 ​ 1,738,768 ​ 2026 ​ 1,627,370 ​ 2027 ​ 1,491,141 ​ 2028 ​ 1,318,226 ​ Thereafter ​ 5,481,482 ​ Total lease payments (a) ​ ​ 13,479,370 ​ Less imputed interest ​ ​ ( 2,388,788 ) ​ Present value of lease liabilities ​ $ 11,090,582 ​ a) Excludes approximately $ 407.4 million of legally binding minimum lease payments for leases signed which have not yet commenced . ​ ​ 59 Table of Contents 5. Current and long-term obligations ​ Consolidated current and long-term obligations consist of the following: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 2, February 3, (In thousands) ​ 2024 ​ 2023 Revolving Facility ​ $ — ​ $ — ​ 364-Day Revolving Facility ​ ​ — ​ ​ — ​ Unsecured commercial paper notes ​ ​ — ​ ​ 1,501,900 ​ 4.250 % Senior Notes due September 20, 2024 (net of discount of $ 230 and $ 563 ) ​ ​ 749,770 ​ ​ 749,437 ​ 4.150 % Senior Notes due November 1, 2025 (net of discount of $ 162 and $ 249 ) ​ ​ 499,838 ​ ​ 499,751 ​ 3.875 % Senior Notes due April 15, 2027 (net of discount of $ 160 and $ 207 ) ​ ​ 599,840 ​ ​ 599,793 ​ 4.625 % Senior Notes due November 1, 2027 (net of discount of $ 400 and $ 495 ) ​ ​ 549,600 ​ ​ 549,505 ​ 4.125 % Senior Notes due May 1, 2028 (net of discount of $ 237 and $ 287 ) ​ ​ 499,763 ​ ​ 499,713 ​ 5.200 % Senior Notes due July 5, 2028 (net of discount of $ 124 and $ 0 ) ​ ​ 499,876 ​ ​ — ​ 3.500 % Senior Notes due April 3, 2030 (net of discount of $ 441 and $ 504 ) ​ ​ 951,240 ​ ​ 952,440 ​ 5.000 % Senior Notes due November 1, 2032 (net of discount of $ 2,155 and $ 2,346 ) ​ ​ 697,845 ​ ​ 697,654 ​ 5.450 % Senior Notes due July 5, 2033 (net of discount of $ 1,521 and $ 0 ) ​ ​ 998,479 ​ ​ — ​ 4.125 % Senior Notes due April 3, 2050 (net of discount of $ 4,670 and $ 4,766 ) ​ ​ 495,330 ​ ​ 495,234 ​ 5.500 % Senior Notes due November 1, 2052 (net of discount of $ 288 and $ 292 ) ​ ​ 299,712 ​ ​ 299,708 ​ Other ​ ​ 200,418 ​ ​ 200,695 ​ Debt issuance costs, net ​ ( 41,527 ) ​ ( 36,431 ) ​ ​ ​ $ 7,000,184 ​ $ 7,009,399 ​ Less: current portion ​ ( 768,645 ) ​ — ​ Long-term obligations ​ $ 6,231,539 ​ $ 7,009,399 ​ ​ Revolving Facility ​ At February 2, 2024, the existing senior unsecured revolving credit facility (the “Revolving Facility”) had a commitment of $ 2.0 billion that provides for the issuance of letters of credit up to $ 100.0 million and is scheduled to mature on December 2, 2026. ​ Borrowings under the Revolving Facility bear interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) Adjusted Term SOFR (which is Term SOFR (as published by CME Group Benchmark Administration Limited) plus a credit spread adjustment of 0.10 %) or (b) a base rate (which is usually equal to the prime rate). The applicable interest rate margin for borrowings as of February 2, 2024 was 1.015 % for Adjusted Term SOFR borrowings and 0.015 % for base-rate borrowings. The Company is also required to pay a facility fee, payable on any used and unused commitment amounts of the Revolving Facility, and customary fees on letters of credit issued under the Revolving Facility. As of February 2, 2024, the facility fee rate was 0.11 %. The applicable interest rate margins for borrowings, the facility fees and the letter of credit fees under the Revolving Facility are subject to adjustment from time to time based on the Company’s long-term senior unsecured debt ratings. ​ The credit agreement governing the Revolving Facility contains a number of customary affirmative and negative covenants that, among other things, restrict, subject to certain exceptions, the Company’s ability to: incur additional liens; sell all or substantially all of the Company’s assets; consummate certain fundamental changes or change in the Company’s lines of business; and incur additional subsidiary indebtedness. The credit agreement governing the Revolving Facility also contains financial covenants which require the maintenance of a minimum fixed charge coverage ratio and a maximum leverage ratio. As of February 2, 2024, the Company was in compliance with all such covenants. On February 13, 2024, the Company amended the credit agreement governing the Revolving Facility to increase the maximum leverage ratio for the four quarters of fiscal 2024. The credit agreement governing the Revolving Facility also contains customary events of default. ​ As of February 2, 2024, the Company had no outstanding borrowings, no outstanding letters of credit, and borrowing availability of $ 2.0 billion under the Revolving Facility that, due to its intention to maintain borrowing availability related to the commercial paper program described below, could contribute liquidity of $ 1.8 billion. In 60 Table of Contents addition, the Company had outstanding letters of credit of $ 45.9 million which were issued pursuant to separate agreements. ​ 364-Day Revolving Facility ​ The Company had a 364-day $ 750 million unsecured revolving credit facility (the “364-Day Revolving Facility”) which expired on January 30, 2024. Borrowings under the 364-Day Revolving Facility bore interest at a rate equal to an applicable interest rate margin plus, at the Company’s option, either (a) Adjusted Term SOFR (which is Term SOFR, as published by CME Group Benchmark Administration Limited, plus a credit spread adjustment of 0.10 %) or (b) a base rate (which is usually equal to the prime rate). The Company was also required to pay a facility fee to the lenders under the 364-Day Revolving Facility for any used and unused commitments. Prior to its expiration, the applicable interest rate margin for Adjusted Term SOFR loans was 1.035 % and the facility fee rate was 0.09 %. The applicable interest rate margins for borrowings and the facility fees under the 364-Day Revolving Facility were subject to adjustment from time to time based on the Company’s long-term senior unsecured debt ratings. ​ Commercial Paper ​ As of February 2, 2024, the Company had a commercial paper program under which the Company may issue unsecured commercial paper notes (the “CP Notes”) from time to time in an aggregate amount not to exceed $ 2.0 billion outstanding at any time. The CP Notes may have maturities of up to 364 days from the date of issue and rank equal in right of payment with all of the Company’s other unsecured and unsubordinated indebtedness. The Company intends to maintain available commitments under the Revolving Facility in an amount at least equal to the amount of CP Notes outstanding at any time. As of February 2, 2024, the Company’s consolidated balance sheet reflected no outstanding CP Notes. CP Notes totaling $ 197.7 million were held by a wholly-owned subsidiary of the Company and are therefore not reflected on the consolidated balance sheets. ​ Senior Notes ​ On June 7, 2023, the Company issued $ 500.0 million aggregate principal amount of 5.20 % senior notes due 2028 (the “July 2028 Senior Notes”), net of discount of $ 0.1 million, and $ 1.0 billion aggregate principal amount of 5.45 % senior notes due 2033 (the “2033 Senior Notes”), net of discount of $ 1.6 million. The July 2028 Senior Notes are scheduled to mature on July 5, 2028, and the 2033 Senior Notes are scheduled to mature on July 5, 2033. Interest on the July 2028 Senior Notes and the 2033 Senior Notes is payable in cash on January 5 and July 5 of each year, commencing on January 5, 2024. The Company incurred $ 12.4 million of debt issuance costs associated with the issuance of the July 2028 Senior Notes and the 2033 Senior Notes. ​ On September 20, 2022, the Company issued $ 750.0 million aggregate principal amount of 4.25 % senior notes due 2024 (the “2024 Senior Notes”), net of discount of $ 0.7 million, $ 550.0 million aggregate principal amount of 4.625 % senior notes due 2027 (the “November 2027 Senior Notes”), net of discount of $ 0.5 million, $ 700.0 million aggregate principal amount of 5.0 % senior notes due 2032 (the “2032 Senior Notes”), net of discount of $ 2.4 million, and $ 300.0 million aggregate principal amount of 5.50 % senior notes due 2052 (the “2052 Senior Notes”), net of discount of $ 0.3 million. The 2024 Senior Notes are scheduled to mature on September 20, 2024, the November 2027 Senior Notes are scheduled to mature on November 1, 2027, the 2032 Senior Notes are scheduled to mature on November 1, 2032 and the 2052 Senior Notes are scheduled to mature on November 1, 2052. Interest on the 2024 Senior Notes is payable in cash on March 20 and September 20 of each year, commencing on March 20, 2023. Interest on the November 2027 Senior Notes, the 2032 Senior Notes and the 2052 Senior Notes is payable in cash on May 1 and November 1 of each year, commencing on May 1, 2023. The Company incurred $ 16.5 million of debt issuance costs associated with the issuance of the 2024 Senior Notes, November 2027 Senior Notes, 2032 Senior Notes and 2052 Senior Notes. ​ Collectively, the Company’s Senior Notes maturing between 2024 and 2052 (collectively, the “Senior Notes”), each of which were issued pursuant to an indenture as supplemented and amended by supplemental indentures relating to each series of Senior Notes (as so supplemented and amended, the “Senior Indenture”). The Company may redeem some or all of its Senior Notes at any time at redemption prices set forth in the Senior 61 Table of Contents Indenture. Upon the occurrence of a change of control triggering event, which is defined in the Senior Indenture, each holder of the Senior Notes has the right to require the Company to repurchase some or all of such holder’s Senior Notes at a purchase price in cash equal to 101 % of the principal amount thereof, plus accrued and unpaid interest, if any, to, but excluding, the repurchase date. ​ The Senior Indenture contains covenants limiting, among other things, the ability of the Company and its subsidiaries to (subject to certain exceptions): consolidate, merge, sell or otherwise dispose of all or substantially all of the Company’s assets; and to incur or guarantee indebtedness secured by liens on any shares of voting stock of significant subsidiaries. The Senior Indenture also provides for events of default which, if any of them occurs, would permit or require the principal of and accrued interest on the Senior Notes to become or to be declared due and payable, as applicable. ​ During the second quarter of 2021, the Company entered into interest rate swaps on a portion of the 2030 Senior Notes. These interest rate swaps are being accounted for as fair value hedges, with the derivative asset or liability offset by a corresponding adjustment to the carrying value of the 2030 Senior Notes. Such arrangements are not material to the Company’s consolidated financial statements. ​ Scheduled debt maturities at February 2, 2024 for the Company’s fiscal years listed below are as follows: ​ ​ ​ ​ ​ ​ (In thousands) ​ ​ 2024 ​ $ 768,645 ​ 2025 ​ 518,969 ​ 2026 ​ 17,478 ​ 2027 ​ 1,165,917 ​ 2028 ​ 1,015,222 ​ Thereafter ​ 3,614,187 ​ Total ​ ​ 7,100,418 ​ ​ ​ 6. Assets and liabilities measured at fair value ​ The following table presents the Company’s assets and liabilities required to be measured at fair value as of February 2, 2024, aggregated by the level in the fair value hierarchy within which those measurements are classified. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Quoted Prices ​ ​ ​ ​ ​ ​ ​ ​ in Active ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Markets ​ Significant ​ ​ ​ ​ ​ ​ ​ ​ ​ for Identical ​ Other ​ Significant ​ Total Fair ​ ​ ​ Assets and ​ Observable ​ Unobservable ​ Value at ​ ​ ​ Liabilities ​ Inputs ​ Inputs ​ February 2, ​ (In thousands) ​ (Level 1) ​ (Level 2) ​ (Level 3) ​ 2024 ​ Liabilities: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Current and long-term obligations (a) ​ $ 6,655,745 ​ $ 200,418 ​ $ — ​ $ 6,856,163 ​ Deferred compensation (b) ​ 51,346 ​ — ​ — ​ 51,346 ​ (a) Included in the consolidated balance sheet at book value as current portion of long-term obligations of $ 768,645 and long-term obligations of $ 6,231,539 . (b) Reflected at fair value in the consolidated balance sheet as a component of accrued expenses and other current liabilities of $ 3,100 and a component of noncurrent other liabilities of $ 48,246 . ​ The carrying amounts reflected in the consolidated balance sheets for cash, cash equivalents, short-term investments, receivables and payables approximate their respective fair values. The Company does not have any recurring fair value measurements using significant unobservable inputs (Level 3) as of February 2, 2024. ​ ​ 62 Table of Contents 7. Commitments and contingencies ​ Legal proceedings ​ From time to time, the Company is a party to various legal matters in the ordinary course of its business, including actions by employees, consumers, suppliers, government agencies, or others. The Company has recorded accruals with respect to these matters, where appropriate, which are reflected in the Company’s condensed consolidated financial statements. For some matters, a liability is not probable or the amount cannot be reasonably estimated and therefore an accrual has not been made. ​ On November 27, 2023, and November 30, 2023, respectively, the following putative shareholder class action lawsuits were filed in the United States District Court for the Middle District of Tennessee in which the plaintiffs allege that during the putative class periods noted below, the Company and certain of its current and former officers violated the federal securities laws by misrepresenting the impact of alleged store labor, inventory, pricing and other practices on the Company’s financial results and prospects: Washtenaw County Employees’ Retirement System v. Dollar General Corporation, et al. (Case No. 3:23-cv-01250) (putative class period of May 28, 2020 to August 30, 2023) ( “Washtenaw County” ); Robert J. Edmonds v. Dollar General Corporation, et al. (Case No. 3:23-cv-01259) (putative class period of February 23, 2023 to August 31, 2023) ( “Edmonds” ) (collectively, the “Shareholder Securities Litigation” ). The plaintiffs seek compensatory damages, equitable/injunctive relief, pre- and post-judgment interest and attorneys’ fees and costs. The Edmonds matter was voluntarily dismissed on January 19, 2024. Currently pending are multiple applications to serve as the lead plaintiff and counsel in the Washtenaw County matter. ​ At this time, it is not possible to estimate the value of the claims asserted in the Shareholder Securities Litigation or the potential range of loss in this matter, and no assurances can be given that the Company will be successful in its defense on the merits or otherwise. However, if the Company is not successful in its defense efforts, the resolution of the Shareholder Securities Litigation could have a material adverse effect on the Company’s consolidated financial statements as a whole. ​ On January 26 and 29, 2024, and February 1, 2024, respectively, the following shareholder derivative actions were filed in the United States District Court for the Middle District of Tennessee in which the plaintiff shareholders, purportedly on behalf and for the benefit of the Company, allege that certain of the Company’s current and former officers and directors (i) violated their fiduciary duties by misrepresenting the impact of alleged store labor, inventory pricing, and other practices on the Company’s financial results, prospects, and reputation, as well as creating a risk of adverse regulatory action; (ii) wasted corporate assets; and (iii) were unjustly enriched: Nathan Silva v. Todd J. Vasos, et. al. (Case No. 3:24-cv-00083) ( “Silva” ); Terry Dunn v. Todd J. Vasos, et. al. (Case No. 3:24-cv-00093) ( “Dunn” ); Kathryn A. Caliguiri Inh Ira Bene Of Catherine Sugarbaker v. Todd J. Vasos, et. al. (Case No. 3:24-cv-00117) ( “Caliguiri” ) (collectively, the “Shareholder Derivative Litigation” ). The Silva complaint also alleges certain of the Company’s current and former officers and directors violated federal securities laws and aided and abetted breach of fiduciary duty and that Mr. Vasos violated his fiduciary duties by misusing material, non-public information. The Dunn and Caliguiri complaints additionally allege that certain of the Company’s officers and directors violated their fiduciary duties by recklessly or negligently disregarding workplace safety practices, and that Mr. Vasos, Mr. Garratt and Ms. Fili-Krushel violated their fiduciary duties by misusing material, non-public information. The plaintiffs in the Shareholder Derivative Litigation seek both non-monetary and monetary relief for the benefit of the Company. Currently pending is an application to consolidate the Shareholder Derivative Litigation cases and appoint lead counsel. ​ Based on information currently available, the Company believes that its pending legal matters, both individually and in the aggregate, will be resolved without a material adverse effect on the Company’s consolidated financial statements as a whole. However, litigation and other legal matters involve an element of uncertainty. Adverse decisions and settlements, including any required changes to the Company’s business, or other developments in such matters could affect the consolidated operating results in future periods or result in liability or other amounts material to the Company’s annual consolidated financial statements. ​ 63 Table of Contents 8. Benefit plans ​ The Dollar General Corporation 401(k) Savings and Retirement Plan, which became effective on January 1, 1998, is a safe harbor defined contribution plan and is subject to the Employee Retirement and Income Security Act (“ERISA”). ​ A participant’s right to claim a distribution of his or her account balance is dependent on the plan, ERISA guidelines and Internal Revenue Service regulations. All active participants are fully vested in all contributions to the 401(k) plan. During 2023, 2022 and 2021, the Company expensed approximately $ 35.9 million, $ 35.7 million and $ 34.0 million, respectively, for matching contributions. ​ The Company also has a compensation deferral plan (“CDP”) and a nonqualified supplemental retirement plan (“SERP”), known as the Dollar General Corporation CDP/SERP Plan, for a select group of management and other key employees. The Company incurred compensation expense for these plans of approximately $ 1.0 million in 2023, $ 1.2 million in 2022 and $ 1.3 million in 2021. ​ The deferred compensation liability associated with the CDP/SERP Plan is reflected in the consolidated balance sheets as further disclosed in Note 6. ​ 9. Share-based payments ​ The Company accounts for share-based payments in accordance with applicable accounting standards, under which the fair value of each award is separately estimated and amortized into compensation expense over the service period. The fair value of the Company’s stock option grants are estimated on the grant date using the Black-Scholes-Merton valuation model. The application of this valuation model involves assumptions that are judgmental and highly sensitive in the determination of compensation expense. The fair value of the Company’s other share-based awards discussed below are estimated using the Company’s closing stock price on the grant date. Forfeitures are estimated at the time of valuation and reduce expense ratably over the vesting period. ​ On May 26, 2021, the Company’s shareholders approved the Dollar General Corporation 2021 Stock Incentive Plan (“2021 Plan”), which replaced the Company’s 2007 Stock Incentive Plan (“2007 Plan”). The Plans allow the granting of stock options, stock appreciation rights, and other stock-based awards or dividend equivalent rights to key employees, directors, consultants or other persons having a service relationship with the Company, its subsidiaries and certain of its affiliates. Upon the effective date of the 2021 Plan, no new awards may be granted under the 2007 Plan. Awards previously granted under the 2007 Plan remain outstanding in accordance with their terms. The number of shares of Company common stock authorized for grant under the 2021 Plan is 11,838,143 . ​ Generally, share-based awards issued by the Company are in the form of stock options, restricted stock units and performance share units, and unless noted otherwise, the disclosures that follow refer to such awards. With limited exceptions, stock options and restricted stock units granted to employees generally vest ratably on an annual basis over four-year and three-year periods, respectively. Awards granted to board members generally vest over a one-year period. The number of performance share units earned are based on performance criteria measured over a period of one to three years , and such awards generally vest over a three-year period. With limited exceptions, the performance share unit and restricted stock unit awards are payable in shares of common stock on the vesting date. ​ The weighted average for key assumptions used in determining the fair value of all stock options granted in the years ended February 2, 2024, February 3, 2023, and January 28, 2022, and a summary of the methodology applied to develop each assumption, are as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ February 2, February 3, January 28, ​ ​ 2024 ​ 2023 ​ 2022 Expected dividend yield 1.5 % 1.0 % 0.9 % Expected stock price volatility 27.7 % 25.4 % 26.5 % Weighted average risk-free interest rate 4.1 % 2.4 % 0.8 % Expected term of options (years) 4.7 ​ 4.8 ​ 4.9 ​ ​ Expected dividend yield - This is an estimate of the expected dividend yield on the Company’s stock. An increase in the dividend yield will decrease compensation expense. 64 Table of Contents ​ Expected stock price volatility - This is a measure of the amount by which the price of the Company’s common stock has fluctuated or is expected to fluctuate, calculated based upon historical volatility. An increase in the expected volatility will increase compensation expense. Weighted average risk-free interest rate - This is the U.S. Treasury rate for the week of the grant having a term approximating the expected life of the option. An increase in the risk-free interest rate will increase compensation expense. Expected term of options - This is the period of time over which the options granted are expected to remain outstanding. An increase in the expected term will increase compensation expense. ​ A summary of the Company’s stock option activity during the year ended February 2, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Average Remaining ​ ​ ​ ​ Options ​ Exercise ​ Contractual ​ Intrinsic (Intrinsic value amounts reflected in thousands) ​ Issued ​ Price ​ Term in Years ​ Value Balance, February 3, 2023 2,522,296 ​ $ 162.58 ​ ​ ​ ​ ​ ​ Granted 812,715 ​ 170.94 ​ ​ ​ ​ ​ ​ Exercised ( 350,240 ) ​ 97.45 ​ ​ ​ ​ ​ ​ Canceled or expired ( 571,129 ) ​ 207.54 ​ ​ ​ ​ ​ ​ Balance, February 2, 2024 2,413,642 ​ $ 164.21 6.7 ​ $ 26,616 ​ Exercisable at February 2, 2024 1,065,948 ​ $ 141.49 4.9 ​ $ 21,259 ​ ​ The weighted average grant date fair value per share of options granted was $ 44.97 , $ 52.06 and $ 42.89 during 2023, 2022 and 2021, respectively. The intrinsic value of options exercised during 2023, 2022 and 2021, was $ 19.0 million, $ 62.7 million and $ 132.3 million, respectively. ​ The number of performance share unit awards earned is based upon the Company’s financial performance as specified in the award agreement. A summary of performance share unit award activity during the year ended February 2, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Units Intrinsic (Intrinsic value amounts reflected in thousands) ​ Issued ​ Value Balance, February 3, 2023 314,897 ​ ​ ​ ​ Granted 115,197 ​ ​ ​ ​ Converted to common stock ( 175,476 ) ​ ​ ​ ​ Canceled ( 80,458 ) ​ ​ ​ ​ Balance, February 2, 2024 174,160 ​ $ 23,714 ​ ​ All performance share unit awards at February 2, 2024 are unvested, and the number of such awards which will ultimately vest will be based in part on the Company’s financial performance in future years. The weighted average grant date fair value per share of performance share units granted was $ 208.13 , $ 214.25 and $ 193.55 during 2023, 2022 and 2021, respectively. ​ A summary of restricted stock unit award activity during the year ended February 2, 2024 is as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ Units Intrinsic (Intrinsic value amounts reflected in thousands) ​ Issued ​ Value Balance, February 3, 2023 337,249 ​ ​ ​ ​ Granted 221,734 ​ ​ ​ ​ Converted to common stock ( 140,507 ) ​ ​ ​ ​ Canceled ( 48,013 ) ​ ​ ​ ​ Balance, February 2, 2024 370,463 ​ $ 50,442 ​ ​ The weighted average grant date fair value per share of restricted stock units granted was $ 193.78 , $ 223.51 and $ 193.76 during 2023, 2022 and 2021, respectively. 65 Table of Contents ​ At February 2, 2024, the total unrecognized compensation cost related to unvested stock-based awards was $ 69.6 million with an expected weighted average expense recognition period of 2.0 years. ​ The fair value method of accounting for share-based awards resulted in share-based compensation expense (a component of SG&A expenses) and a corresponding reduction in income before and net of income taxes as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Stock ​ Performance ​ Restricted ​ ​ ​ (In thousands) Options Share Units Stock Units Total Year ended February 2, 2024 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-tax ​ $ 19,400 ​ $ 1,732 ​ $ 30,759 ​ $ 51,891 ​ Net of tax ​ $ 15,210 ​ $ 1,358 ​ $ 24,115 ​ $ 40,683 ​ Year ended February 3, 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-tax ​ $ 20,502 ​ $ 26,920 ​ $ 25,249 ​ $ 72,671 ​ Net of tax ​ $ 15,893 ​ $ 20,868 ​ $ 19,573 ​ $ 56,334 ​ Year ended January 28, 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Pre-tax ​ $ 21,452 ​ $ 33,234 ​ $ 23,492 ​ $ 78,178 ​ Net of tax ​ $ 15,853 ​ $ 24,560 ​ $ 17,361 ​ $ 57,774 ​ ​ ​ 10. Segment reporting ​ The Company manages its business on the basis of one reportable operating segment. See Note 1 for a brief description of the Company’s business. As of February 2, 2024, the Company’s retail store operations were primarily located within the United States, with three retail stores in Mexico. Certain product sourcing and other operations are located outside the United States, which collectively are not material with regard to assets, results of operations or otherwise to the consolidated financial statements. The following net sales data is presented in accordance with accounting standards related to disclosures about segments of an enterprise. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (in thousands) 2023 2022 2021 Classes of similar products: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumables ​ $ 31,342,595 ​ $ 30,155,218 ​ $ 26,258,605 ​ Seasonal ​ 4,083,790 ​ 4,182,815 ​ 4,182,165 ​ Home products ​ 2,163,806 ​ 2,332,411 ​ 2,322,367 ​ Apparel ​ 1,101,418 ​ 1,174,419 ​ 1,457,312 ​ Net sales ​ $ 38,691,609 ​ $ 37,844,863 ​ $ 34,220,449 ​ ​ ​ 11. Common stock transactions ​ On August 29, 2012, the Company’s Board of Directors authorized a common stock repurchase program, which the Board has since increased on several occasions. On August 24, 2022, the Company’s Board of Directors authorized a $ 2.0 billion increase to the existing common stock repurchase program, bringing the cumulative total authorized under the program since its inception to $ 16.0 billion. The repurchase authorization has no expiration date and allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions. The timing, manner and number of shares repurchased will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under the Company’s debt agreements, cash requirements, excess debt capacity, results of operations, financial condition and other factors. Repurchases under the program may be funded from available cash or borrowings including under the Company’s Revolving Facility and issuance of CP Notes discussed in further detail in Note 5. ​ During the years ended February 2, 2024, February 3, 2023, and January 28, 2022, the Company repurchased no shares of its common stock, approximately 11.6 million shares of its common stock at a total cost of $ 2.7 billion, and approximately 12.1 million shares of its common stock at a total cost of $ 2.5 billion, respectively, pursuant to its common stock repurchase program. 66 Table of Contents ​ In March 2024, the Company’s Board of Directors declared a quarterly cash dividend of $ 0.59 per share, which is payable on or before April 23, 2024 to shareholders of record on April 9, 2024. The Company paid quarterly cash dividends of $ 0.59 per share in 2023. The amount and declaration of future cash dividends is subject to the sole discretion of the Company’s Board of Directors and will depend upon, among other things, the Company’s results of operations, cash requirements, financial condition, contractual restrictions, excess debt capacity and other factors that the Board may deem relevant in its sole discretion. ​ 67 Table of Contents ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE ​ Not applicable. ​