What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2021-08-26 compared with 2021-05-27 · 223 added, 149 removed, 149 unchanged (71% of the section changed)

6 unchanged sentences

For example, our forward-looking statements include, without limitation, statements regarding:

• The effect of higher costs and delays in importing merchandise from Asia, the capacity of our distribution centers to transport delayed goods to the stores on an expedited basis given current labor shortages, and the potential impact on our sales and merchandise margin;

• The reliability of, and cost associated with, our sources of supply, particularly imported goods such as those sourced from Asia and higher cost domestic goods;

• Our expectations regarding cost increases, including additional costs in fiscal 2021 as a result of higher shipping and domestic freight and fuel costs, increases in the minimum wage by States and localities, potential federal legislation increasing the minimum wage, and proposals to raise federal corporate tax rates;

• The impact of delays in receiving imported merchandise from Asia on our product availability, product mix, sales and merchandise margin;

• Our expectations regarding higher oceanic shipping and domestic freight and fuel costs, and our plans to manage those cost increases;

• The reliability of, and cost associated with, our sources of supply, particularly imported goods sourced from Asia and higher cost domestic goods;

• Our plans to address the labor shortage at our distribution centers;

• Our expectations regarding increases in the minimum wage by States and localities, potential federal legislation increasing the minimum wage, and proposals to raise federal corporate tax rates;

• The potential effect of general business or economic conditions on our business including the direct and indirect effects of the COVID-19 pandemic, inflation, labor shortages, consumer spending levels, unemployment, the physical and financial health of our customers, the effectiveness and duration of government assistance programs to individuals, households and businesses to support consumer spending, and increased expenses for higher wages and bonuses paid to associates;

• Our expectations regarding reductions in COVID-19-related expenses and the level of shrink in fiscal 2021;

• Our seasonal and weekly sales patterns and customer demand including those relating to the important holiday selling seasons;

• Our plans to renovate existing Family Dollar stores and build new stores in the H2 store format, including an increase in the number of stores with adult beverages, and the performance of that format on our results of operations;

• Our plans relating to new store openings and new store concepts such as Dollar Tree Plus!

and our Combination Store format;

• Our plans and expectations relating to new store openings and the adoption, testing, implementation and performance of new store concepts such as Dollar Tree Plus and our Combo Store format;

• The expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations, other legal proceedings or governmental investigations (including the proceeding by the Food and Drug Administration).

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The outcome of the events described in these forward-looking statements is subject to a variety of factors, including, but not limited to, the risks and uncertainties summarized below and the more detailed discussions in the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” sections and elsewhere in our Annual Report on Form 10-K for the fiscal year ended January 30, 2021, and in this Quarterly Report on Form 10-Q.

The following risks could have a material adverse impact on our sales, costs, profitability, or financial performance:

• Our profitability is vulnerable to cost increases such as wages and operating costs.

• We may continue to encounter higher costs in our supply chain, including higher shipping, freight and fuel costs, and disruptions in our distribution network including merchandise delays and shortages and labor shortages that could result in lower sales or higher costs for substituted goods.

• Risks associated with our domestic and foreign suppliers, including tariffs or restrictions on trade or disruptions in trade arising from the COVID-19 pandemic or otherwise.

• Our business and results of operations could be materially harmed if we experience a decline in consumer confidence and spending as a result of continued unfavorable economic conditions, for example because government assistance to households and businesses terminate or are reduced.

• A downturn or adverse change in economic conditions, such as inflation, could impact our sales or profitability.

The following risks could have a material adverse impact on our sales, costs, profitability, financial performance or implementation of strategic initiatives:

• We are experiencing disruptions in our supply chain, including shipping delays, port closings and congestion, that have had and could have an adverse impact on our product availability, product mix, sales and merchandise margin.

• Our profitability is vulnerable to increases in oceanic shipping costs, domestic freight and fuel costs, higher wages, substitution of higher cost domestic goods and increases in other operating costs.

• The labor shortage at our distribution centers has had and could have an adverse impact on the operating efficiency of our distribution centers and our ability to transport merchandise to our stores, and could result in lower sales.

• If the COVID-19 pandemic in North America or at our sources of supply overseas worsens or continues longer than expected, there could be a material adverse impact on our business and results of operations.

• Inflation or other adverse change or downturn in economic conditions could impact our sales or profitability.

• Our business and results of operations could be materially harmed if we experience a decline in consumer confidence and spending as a result of unfavorable economic conditions, for example because government assistance to households and businesses terminate or are reduced.

• We may not be successful in implementing important strategic initiatives, and our plans for implementing such initiatives may be delayed due to various factors, including shipping delays, supply chain disruptions and other factors that could affect the availability of adequate levels of necessary domestic and imported merchandise, which may have an adverse impact on our business and financial results.

• Duties, tariffs or other restrictions on trade could adversely affect our financial performance.

• Our supply chain may be disrupted by changes in United States trade policy with China.

• We may not be successful in implementing important strategic initiatives, which may have an adverse impact on our business and financial results.

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

• The potential unauthorized access to customer information may violate privacy laws and could damage our business reputation, subject us to negative publicity, litigation and costs, and adversely affect our results of operations or business.

• Litigation and arbitration may adversely affect our business, financial condition and results of operations.

• Litigation, arbitration and government proceedings may adversely affect our business, financial condition and results of operations.

• Changes in laws and government regulations, including any increase in federal corporate tax rates, or our failure to adequately estimate the impact of such changes, could increase our expenses, expose us to legal risks or otherwise adversely affect us.

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Easter sales were strong in both banners during 2021.

Our results of operations for the first quarter of fiscal 2020 include approximately $73.2 million of COVID-19-related expenses;

these expenses totaled $7.4 million in the first quarter of fiscal 2021.

Our results of operations for the first half of fiscal 2020 include approximately $208.0 million of COVID-19-related expenses;

these expenses totaled $10.4 million in the first half of fiscal 2021.

The future impact of COVID-19 on our customers and our business is difficult to predict.

The course of the pandemic, the effectiveness of health measures such as vaccines, and the impact of ongoing economic stabilization efforts is uncertain and government assistance payments may not provide enough funding to support current spending.

The course of the pandemic, including the spread of the Delta variant, the effectiveness of health measures such as vaccines, and the impact of ongoing economic stabilization efforts is uncertain and government assistance payments may not provide enough funding to support current spending.

The American Rescue Plan Act of 2021 (“Rescue Act”), which was enacted on March 11, 2021, provides U.S.

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Among other things, the Rescue Act provides for $1,400 direct payments to individuals, continues supplemental unemployment benefits until September 2021, extends a prior increase in food stamp benefits, expands the child tax credit and earned income tax credit, provides for rent and utility assistance, and funds COVID-19 vaccinations, testing, treatment and prevention.

Given the level of volatility and uncertainty surrounding the future impact of COVID-19 on our customers, suppliers and the broader economies in the locations that we operate as well as uncertainty around the future impact on our supply chain, it is challenging to predict our future operations and financial results.

Given the level of volatility and uncertainty surrounding the future impact of COVID-19 on our customers, suppliers and the broader economies in the locations that we operate as

well as uncertainty around the future impact on our supply chain and the global supply chain, it is challenging to predict our future operations and financial results.

For further discussion of the impacts that COVID-19 had on our financial condition and results of operations during fiscal 2020, refer to “Item 7.

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Stores that have been re-bannered are considered to be new stores and are not included in the calculation of the comparable store net sales change until after the first fifteen months of operation under the new brand.

At May 1, 2021, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces.

A breakdown of store counts and square footage by segment for the 13 weeks ended May 1, 2021 and May 2, 2020 is as follows:

At July 31, 2021, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces.

A breakdown of store counts and square footage by segment for the 26 weeks ended July 31, 2021 and August 1, 2020 is as follows:

26 Weeks Ended

May 1, 2021 May 2, 2020

July 31, 2021 August 1, 2020

Dollar Tree Family Dollar Total Dollar Tree Family Dollar Total

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New stores 1.3 0.7 2.0 1.5 0.5 2.0

Re-bannered stores — — — (0.1) 0.1 —

Closings (0.2) (0.2) (0.4) (0.1) (0.2) (0.3)

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Stores are included as re-banners when they close or open, respectively.

Comparable store net sales for Dollar Tree may be negatively affected when a Family Dollar store is re-bannered near an existing Dollar Tree store.

The average size of stores opened during the 13 weeks ended May 1, 2021 was approximately 8,520 selling square feet for the Dollar Tree segment and 9,110 selling square feet for the Family Dollar segment.

The average size of stores opened during the 26 weeks ended July 31, 2021 was approximately 8,530 selling square feet for the Dollar Tree segment and 9,030 selling square feet for the Family Dollar segment.

We believe that these size stores are in the ranges of our optimal sizes operationally and give our customers a shopping environment which invites them to shop longer, buy more and make return visits.

The percentage change in comparable store net sales on a constant currency basis for the 13 weeks ended May 1, 2021, as compared with the preceding year, is as follows:

13 Weeks Ended May 1, 2021

The percentage change in comparable store net sales on a constant currency basis for the 13 and 26 weeks ended July 31, 2021, as compared with the preceding year, is as follows:

13 Weeks Ended July 31, 2021 26 Weeks Ended July 31, 2021

Sales Growth Change in

Customer Traffic Change in

Average Ticket Sales Growth Change in

Customer Traffic Change in

Average Ticket

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Dollar Tree Initiatives

We believe that our Dollar Tree initiatives continue to positively affect our comparable store net sales.

In fiscal 2019, we introduced our Crafter’s Square initiative in more than 650 stores.

This offering includes a new expanded assortment of arts and crafts supplies.

During fiscal 2020, we expanded this program, completing the roll-out to all of our Dollar Tree stores.

We are continuing to implement our Dollar Tree Plus initiative which adds a multi-price product assortment to the traditional everything-is-one-dollar format.

This concept introduces products priced at the $3 and $5 price points and provides our customers with extraordinary value in discretionary categories.

As of July 31, 2021, we have approximately 310 Dollar Tree Plus stores and expect to achieve our target of 500 stores by the end of fiscal 2021.

We also plan to accelerate the implementation of the Dollar Tree Plus initiative in fiscal 2022 by adding the concept to an additional 1,500 stores.

The roll-out of our Crafter’s Square initiative to all of our Dollar Tree stores was completed during fiscal 2020.

The Crafter’s Square assortment carries mark-ups which are higher than our average mark-up.

Additionally, for more than a year, we have tested a multi-price initiative referred to as Dollar Tree Plus!

in more than 100 stores in southwestern markets.

Based on learnings from the test, we made modifications to:

the mix of products offered to include primarily discretionary items;

the displays and signage to drive awareness and excitement to the stores;

the price points to focus on the $1, $3 and $5 price points;

and increase the number of offerings above the $1 price point.

As of May 1, 2021, we have this assortment incorporated in more than 240 locations and initial feedback for this iteration is even more positive than in the prior test stores.

We have expanded Dollar Tree Plus!

into select locations in Colorado, as well as states in the southeast such as Georgia, Alabama, Louisiana and the Carolinas.

The newest iteration of the concept is experiencing a sales lift of more than double the prior versions.

Due to the stronger than forecasted sell-through combined with a potential for delayed shipments of import merchandise, the timing of our reaching our 500 store target may shift.

We believe these initiatives have and will continue to enable us to increase sales and earnings.

We believe that our Dollar Tree initiatives have and will continue to positively affect our comparable store net sales and earnings.

Family Dollar Initiatives

We are executing several initiatives in our Family Dollar stores to increase sales.

During 2020, we entered into a partnership with Instacart to enable our customers to shop online and receive merchandise without having to visit a store.

In fiscal 2019, we executed a store optimization program for our Family Dollar stores to improve performance.

Included in that program was a roll-out of a new model for both new and renovated Family Dollar stores internally known as H2.

The H2 model has significantly improved merchandise offerings, including approximately 20 Dollar Tree $1.00 merchandise sections and establishing a minimum number of freezer and cooler doors, throughout the store.

H2 stores have higher customer traffic and provide an average comparable store net sales lift in excess of 10%, when compared to non-renovated stores, in the first year following renovation.

In March 2021, we announced the development of a new combination store format, which we refer to as a Combo Store, that leverages the strengths of the Dollar Tree and Family Dollar brands under one roof.

We have taken Family Dollar’s great value and assortment and blended in select Dollar Tree merchandise categories to create a new store format targeted for small towns and rural communities.

The Combo store provides another way to introduce the multi-price assortment to Dollar Tree customers and the one-dollar assortment to Family Dollar customers.

As of July 31, 2021, we had 105 Combo Stores in operation.

Due to the success of the initiative, we plan to accelerate expansion of the program in fiscal 2022, and anticipate adding 400 new, renovated, or relocated Combo Stores in fiscal 2022.

We are also in the process of validating the Combo Store concept in other demographic markets.

After a successful pilot program in 2020, we entered into a partnership with Instacart, an online merchandise delivery platform, in February 2021 that enables our Family Dollar customers to shop online and receive same-day delivery of merchandise without having to visit a store.

The Instacart platform covers more than 6,000 Family Dollar stores across the United States.

We are also continuing to execute our store optimization programs.

Our H2 stores have significantly improved merchandise offerings throughout the store, including the addition of approximately 20 Dollar Tree $1.00 merchandise sections and establishing a minimum number of freezer and cooler doors.

These stores have higher customer traffic and provide a higher average comparable store net sales lift, when compared to non-renovated stores, in the first year following renovation.

H2 stores perform well in a variety of locations and especially in locations where our Family Dollar stores have been most challenged in the past.

As of May 1, 2021, we have approximately 2,800 H2 stores.

As of July 31, 2021, we have approximately 3,300 H2 stores.

We plan to renovate at least 1,250 stores to this format in fiscal 2021 and also plan to build new stores in this format.

In addition, we installed adult beverage product in more than 160 stores in the first quarter of 2021 and plan to add it to 800 stores in total in fiscal 2021.

In addition, we plan to add adult beverage to 450 stores in fiscal 2021.

We believe the addition of adult beverage to our assortment will drive traffic to our stores.

Building on the success of the H2 format, we have developed a Combination Store which leverages both the Dollar Tree and Family Dollar brands to serve small towns across the country.

We are taking Family Dollar’s great value and assortment and blending in select Dollar Tree merchandise categories, creating a new store format targeted for small towns and rural communities with populations of 3,000 to 4,000 residents.

As of May 1, 2021, we have approximately 60 Combination Stores.

Additionally, the following trends or uncertainties have already impacted or could impact our business or results of operations during 2021 or in the future:

Additional Considerations

The following trends or uncertainties have already impacted or could impact our business or results of operations during 2021 or in the future:

• Shipping Delays.

We rely heavily on Trans-Pacific shipping to acquire merchandise for our stores, and we are experiencing significant shipping delays as a result of the shipping capacity shortage.

We are also experiencing issues with port congestion and pandemic-related port closings and ship diversions.

If the shipping delays do not improve they could potentially have a material adverse impact on product availability and product mix, and on our sales and merchandise margin.

Sales could be negatively impacted if imported goods do not arrive in time to stock our stores.

If higher cost domestic goods are substituted for delayed imports, our merchandise margin could be adversely impacted.

To address delays in shipments, we are prioritizing product categories for shipment in an effort to obtain seasonal assortments in advance of holiday seasons, adding and evaluating the use of long-term and short-term chartered vessels, and adding alternative sources of supply from North American factories.

• Freight Costs.

We are experiencing significantly higher international and domestic freight costs as a result of disruptions in the global supply chain.

The combination of increased demand and limited availability of Trans-Pacific shipping capacity has caused spot market prices to increase substantially.

We are a large importer of merchandise from Asia and particularly sensitive to freight costs.

Freight costs for fiscal 2021 are now expected to be $1.50 to $1.60 per diluted share higher than fiscal year 2020.

We are working to reduce our freight costs by using chartered vessels, evaluating and securing long-term contracts with our carriers for vessels dedicated in large part to our needs, and adding alternative sources of supply that do not rely on Trans-Pacific shipping.

• Labor Shortage.

We are experiencing a shortage of associates and applicants to fill staffing requirements at our distribution centers and stores due to the current labor shortage affecting retail businesses.

This has adversely affected the operating efficiency of our distribution centers and our ability to transport merchandise from our distribution centers to our stores.

The steps we have taken to address the labor shortage at our distribution centers include hosting national hiring events, paying sign-on bonuses, offering enhanced wages in select competitive markets and paying tuition reimbursement.

• Minimum Wage Increases.

In 2021, the minimum wage has increased in certain States and localities and may increase nationally depending on the outcome of legislation proposed in Congress.

Minimum wage increases in States and localities are expected to increase our costs by $45.0 to $50.0 million in 2021.

• COVID-19 Costs.

The amount of COVID-19-related costs for premium pay including bonuses, supplies, protective equipment, and similar items was $279.0 million in fiscal 2020.

We expect these costs to be approximately $30.0 million in fiscal 2021.

• Shrink Costs.

We expect shrink at cost as a percentage of net sales to be significantly lower in fiscal 2021 than fiscal 2020.

• In 2021, the minimum wage will increase in certain States and localities and may increase nationally depending on the outcome of future legislation proposed in Congress.

Minimum wage increases in States and localities are expected to increase our costs by $45.0 to $50.0 million in 2021.

• We are experiencing significantly higher shipping costs as well as shipping delays as a result of Trans-Pacific shipping capacity shortage and port congestion.

◦ We now expect the increase in shipping and domestic freight costs in the last three quarters of fiscal 2021 compared to the last three quarters of fiscal 2020 to be $220.0 to $250.0 million, which is significantly higher than previously estimated.

◦ If the shipping delays do not improve they could potentially have a material adverse impact on our sales or on our merchandise margin.

Sales could be negatively impacted if imported goods do not arrive in time to stock our stores.

If higher cost domestic goods are substituted for delayed imports, our merchandise margin could be adversely impacted.

We also are experiencing a shortage of associates and applicants to fill staffing requirements at our distribution centers due to the current labor shortage affecting retail businesses.

Transporting delayed goods to our stores on an expedited basis could be challenging if we are unable to increase the staffing of our distribution centers.

Results of Operations

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The selling, general and administrative expense rate and operating income margin are calculated by dividing the applicable amount by total revenue.

13 Weeks Ended

May 1, May 2, Percentage

13 Weeks Ended 26 Weeks Ended

July 31, August 1, Percentage

Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

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on a constant currency basis (1.2) % 7.2 % (0.2) % 7.1 %

The increase in net sales in the 13 weeks ended May 1, 2021 was a result of a comparable store net sales increase in the Dollar Tree segment and sales of $169.8 million at new stores, partially offset by a decrease in comparable store net sales in the Family Dollar segment.

Enterprise comparable store net sales increased 0.8% on a constant currency basis in the 13 weeks ended May 1, 2021, as a result of a 9.6% increase in average ticket and an 8.0% decrease in customer traffic.

Comparable store net sales increased 0.9% when including the impact of Canadian currency fluctuations.

On a constant currency basis, comparable store net sales increased 4.7% in the Dollar Tree segment and decreased 2.8% in the Family Dollar segment.

In the first quarter of 2020, at the beginning of the COVID-19 pandemic, the Family Dollar segment had a comparable store net sales increase of 15.5% as we saw an increase in demand for essential products.

For the first quarter of 2020, the Dollar Tree segment had a decrease in comparable store net sales of 0.9%, resulting from lower traffic resulting from the COVID-19 pandemic which negatively affected Easter sales in the Dollar Tree segment.

13 Weeks Ended

May 1, May 2, Percentage

The increase in net sales in the 13 weeks ended July 31, 2021 was a result of sales of $167.6 million at new stores, partially offset by comparable store net sales decreases in the Family Dollar and Dollar Tree segments.

Enterprise comparable store net sales decreased 1.2% on a constant currency basis in the 13 weeks ended July 31, 2021, as a result of an 0.8% decrease in customer traffic and a 0.4% decrease in average ticket.

Comparable store net sales decreased 1.1% when including the impact of Canadian currency fluctuations.

On a constant currency basis, comparable store net sales decreased 2.1% in the Family Dollar segment and decreased 0.2% in the Dollar Tree segment.

The increase in net sales in the 26 weeks ended July 31, 2021 was a result of a comparable store net sales increase in the Dollar Tree segment and sales of $337.4 million at new stores, partially offset by a comparable store net sales decrease in the Family Dollar segment.

Enterprise comparable store net sales decreased 0.2% on a constant currency basis in the 26 weeks ended July 31, 2021, as a result of a 4.4% decrease in customer traffic, partially offset by an increase in average ticket of 4.5%.

Comparable store net sales decreased 0.1% when including the impact of Canadian currency fluctuations.

On a constant currency basis, comparable store net sales decreased 2.5% in the Family Dollar segment and increased 2.2% in the Dollar Tree segment.

In the first half of 2020, the Family Dollar segment had a comparable store net sales increase of 13.6% as we saw an increase in demand for essential products in the early stages of the COVID-19 pandemic.

For the first half of 2020, the Dollar Tree segment had a comparable store net sales increase of 1.1%, as the higher average ticket was partially offset by lower traffic resulting from the COVID-19 pandemic which negatively affected Easter sales.

13 Weeks Ended 26 Weeks Ended

July 31, August 1, Percentage

Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

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Gross profit margin 29.4 % 30.5 % (1.1) % 29.8 % 29.5 % 0.3 %

The increase in gross profit margin in the 13 weeks ended May 1, 2021 was a result of the following:

• Merchandise cost, including freight, decreased 105 basis points resulting from higher sales of higher margin discretionary merchandise, including higher Easter sales in both segments and improved initial mark-on for the Family Dollar segment, partially offset by higher freight costs.

The decrease in gross profit margin in the 13 weeks ended July 31, 2021 was a result of the net of the following:

• Merchandise cost, including freight, increased 170 basis points resulting primarily from higher freight costs on both segments and higher sales of lower margin consumable merchandise on the Family Dollar segment, partially offset by higher sales of higher margin discretionary merchandise on the Dollar Tree segment.

• Occupancy costs increased 25 basis points primarily due to the loss of leverage from the decrease in comparable store net sales for the quarter.

• Markdown costs decreased 10 basis points primarily due to the prior year including $9.8 million of uninsured markdown costs for stores affected by civil unrest.

• Distribution costs decreased 10 basis points resulting from the prior year quarter including COVID-19 premium pay of $2 per hour for all hourly associates, partially offset by higher distribution center payroll and depreciation costs in the Dollar Tree segment resulting from the two new distribution centers.

• Shrink costs decreased 55 basis points resulting from favorable inventory results in relation to accruals and decreases in the shrink accrual rates in both the Family Dollar and Dollar Tree segments in the current quarter.

• Distribution costs decreased 5 basis points resulting from the prior year quarter including COVID-19 premium pay of $2 per hour for all hourly associates for hours worked beginning March 8, 2020, partially offset by higher distribution center payroll and depreciation costs in the Dollar Tree segment.

The increase in gross profit margin in the 26 weeks ended July 31, 2021 was a result of the net of the following:

• Markdown costs decreased 15 basis points primarily due to lower seasonal markdowns in the Dollar Tree segment resulting from the improved sell-through of Easter merchandise in the current year and $9.8 million of uninsured markdown costs for stores affected by civil unrest in the prior year.

• Distribution costs decreased 10 basis points resulting from the prior year including COVID-19 premium pay of $2 per hour for all hourly associates for hours worked beginning March 8, 2020, partially offset by higher distribution center payroll and depreciation costs in the Dollar Tree segment resulting from the two new distribution centers.

• Occupancy costs increased 10 basis points primarily due to the loss of leverage from the decrease in comparable store net sales.

• Merchandise cost, including freight, increased 30 basis points resulting from higher freight costs on both segments, partially offset by higher sales of higher margin discretionary merchandise, including higher Easter sales in both segments and improved initial mark-on for the Family Dollar segment.

Selling, General and Administrative Expenses

13 Weeks Ended

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13 Weeks Ended 26 Weeks Ended

July 31, August 1, Percentage

Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

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expense rate 23.0 % 24.5 % (1.5) % 22.7 % 23.6 % (0.9) %

The decrease in the selling, general and administrative expense rate in the 13 weeks ended May 1, 2021 was the result of the net of the following:

• Payroll expenses decreased 55 basis points primarily due to lower COVID-19-related store payroll costs, partially offset by deleveraging resulting from the comparable store net sales decrease on the Family Dollar segment.

The 13 weeks ended May 2, 2020 included approximately $57.5 million, or 90 basis points, of store payroll costs for a $2 per hour premium for all store hourly associates for hours worked beginning March 8, 2020, guaranteed bonus payments for store managers and field management bonuses.

• Other selling, general and administrative expenses decreased 5 basis points resulting primarily from lower store supplies expense, partially offset by increased inventory service expenses.

The prior year quarter included costs for the installation of plexiglass sneeze guards at all registers in our stores and higher costs for masks, gloves and cleaning supplies due to the COVID-19 pandemic.

Also in the prior year quarter, inventory service expenses were lower resulting from the postponement of inventories from March 15, 2020 through the end of the quarter due to the COVID-19 pandemic.

• Store facility costs increased 20 basis points primarily due to increased repairs and maintenance costs.

Higher repairs and maintenance costs included higher snow removal costs in the current year.

Also, in the prior year quarter, we postponed certain maintenance activities as a result of the COVID-19 pandemic.

The decrease in the selling, general and administrative expense rate in the 13 weeks ended July 31, 2021 was the result of the net of the following:

• Payroll expenses decreased 145 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive and stock compensation costs, partially offset by loss of leverage resulting from the comparable store net sales decrease in the quarter and higher health insurance costs.

The 13 weeks ended August 1, 2020 included $114.6 million, or 185 basis points, of COVID-19-related payroll expenses including store payroll costs for a $2 per hour premium paid to all store hourly associates for all hours worked during the quarter, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

• Store facility costs decreased 15 basis points primarily due to lower repairs and maintenance costs.

The prior year quarter included $3.9 million, primarily for uninsured repairs, related to stores damaged in civil unrest.

• Other selling, general and administrative expenses increased 5 basis points resulting primarily from higher advertising and travel costs and increased debit and credit fees, partially offset by a decrease in insurance costs related to the favorable development of general liability claims and higher costs in the prior year quarter for masks, gloves and cleaning supplies due to the COVID-19 pandemic and expenses related to stores damaged in civil unrest.

The decrease in the selling, general and administrative expense rate in the 26 weeks ended July 31, 2021 was primarily the result of a 100 basis point decrease in payroll expenses primarily due to lower COVID-19-related store payroll costs and lower stock and incentive compensation costs, partially offset by loss of leverage resulting from the comparable store net sales decrease and increased health insurance costs.

The first half of 2020 included $172.1 million, or 135 basis points, of COVID-19-related payroll expenses including store payroll costs for a $2 per hour premium paid to all store hourly associates for all hours worked since March 8, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

Operating Income

13 Weeks Ended

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Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

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Operating income margin 6.3 % 6.0 % 0.3 % 7.2 % 5.9 % 1.3 %

Operating income margin increased to 8.0% for the 13 weeks ended May 1, 2021 compared to 5.8% for the same period last year as operating income margin in the Dollar Tree segment increased 290 basis points and the Family Dollar segment increased 120 basis points.

Operating income in the 13 weeks ended May 2, 2020 included $73.2 million of COVID-19-related expenses.

Operating income margin increased to 6.3% for the 13 weeks ended July 31, 2021 compared to 6.0% for the same period last year resulting from the decrease in the selling, general and administrative expense rate, partially offset by the decrease in gross profit margin as described above.

Operating income in the 13 weeks ended August 1, 2020 included $134.9 million of COVID-19-related expenses and $16.8 million of uninsured expenses related to civil unrest.

Operating income margin increased to 7.2% for the 26 weeks ended July 31, 2021 compared to 5.9% for the same period last year resulting from the decrease in the selling, general and administrative expense rate, partially offset by the decrease in gross profit margin as described above.

Operating income in the 26 weeks ended August 1, 2020 included $208.0 million of COVID-19-related expenses and $16.8 million of uninsured expenses related to civil unrest.

Interest Expense, Net

13 Weeks Ended

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Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

Interest expense, net $ 33.0 $ 34.8 (5.2) % $ 66.0 $ 75.0 (12.0) %

Interest expense, net decreased $7.2 million in the 13 weeks ended May 1, 2021 compared to the same period last year, resulting from lower average debt outstanding in the current year quarter.

Interest expense, net decreased $1.8 million in the 13 weeks ended July 31, 2021 compared to the same period last year, resulting from lower average debt outstanding in the current year quarter.

Interest expense, net decreased $9.0 million in the 26 weeks ended July 31, 2021 compared to the same period last year, resulting from lower average debt outstanding in the current year.

Provision for Income Taxes

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(dollars in millions) 2021 2020 2021 2020

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Effective tax rate 23.5 % 23.1 % 0.4 % 23.3 % 23.5 % (0.2) %

The effective tax rate for the 13 weeks ended May 1, 2021 was 23.1% compared to 23.9% for the same period last year resulting from additional tax deductions in the current year related to restricted stock vesting while last year the restricted stock vesting resulted in an increase in tax expense.

This benefit to the tax rate was partially offset by higher state tax rates and lower Work Opportunity Tax Credits as a percentage of pre-tax income in the current year quarter.

The effective tax rate for the 13 weeks ended July 31, 2021 was 23.5% compared to 23.1% resulting primarily from higher state tax rates and lower Work Opportunity Tax Credits as a percentage of pre-tax income in the current year quarter.

The effective tax rate for the 26 weeks ended July 31, 2021 was 23.3% compared to 23.5% for the same period last year resulting from additional tax deductions in the current year related to restricted stock vesting while last year the restricted stock vesting resulted in an increase in tax expense.

This benefit to the tax rate was partially offset by higher state tax rates and lower Work Opportunity Tax Credits as a percentage of pre-tax income in the current year.

Segment Information

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The following table summarizes the operating results of the Dollar Tree segment:

13 Weeks Ended

May 1, May 2, Percentage

13 Weeks Ended 26 Weeks Ended

July 31, August 1, Percentage

Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

4 unchanged sentences

Operation income margin 10.1 % 9.7 % 0.4 % 11.1 % 9.4 % 1.7 %

Net sales for the Dollar Tree segment increased $243.8 million, or 7.9%, for the 13 weeks ended May 1, 2021 compared to the same period last year.

Net sales for the Dollar Tree segment increased $87.4 million, or 2.8%, for the 13 weeks ended July 31, 2021 compared to the same period last year.

The increase was due to sales from new stores of $105.8 million, partially offset by a 0.2% decrease in comparable store net sales.

Average ticket decreased 1.3% and customer traffic increased 1.1%.

Net sales for the Dollar Tree segment increased $331.2 million, or 5.3%, for the 26 weeks ended July 31, 2021 compared to the same period last year.

The increase was due to a 2.2% increase in comparable store net sales and sales from new stores of $218.0 million.

Average ticket increased 3.9% and customer traffic declined 1.6%.

Gross profit margin for the Dollar Tree segment increased to 33.7% for the 13 weeks ended May 1, 2021 compared to 31.9% for the same period last year as a result of the net of the following:

• Merchandise cost, including freight, decreased 85 basis points primarily due to increased sales of higher margin discretionary merchandise, including a higher Easter sell-through, partially offset by higher freight costs.

Easter sales were significantly lower as a result of the COVID-19 pandemic in the first quarter of 2020.

Gross profit margin for the Dollar Tree segment decreased to 32.4% for the 13 weeks ended July 31, 2021 compared to 33.7% for the same period last year as a result of the net of the following:

• Merchandise cost, including freight, increased 175 basis points primarily due to increased freight costs and lower initial mark-on, partially offset by increased sales of higher margin discretionary merchandise.

• Occupancy costs increased 10 basis points as a result of the loss of leverage due to the comparable store net sales decrease in the quarter.

• Shrink costs decreased 55 basis points resulting from favorable inventory results in relation to accruals in the current quarter and a decrease in the shrink accrual rate.

• Markdown costs decreased 30 basis points resulting from lower seasonal markdowns due to the higher Easter sell-through in the current year quarter.

• Occupancy costs decreased 25 basis points as a result of leverage due to the comparable store net sales increase in the quarter.

• Distribution costs increased 10 basis points resulting from higher distribution payroll and depreciation costs in the current quarter.

Operating income margin for the Dollar Tree segment increased to 12.1% for the 13 weeks ended May 1, 2021 from 9.2% for the same period last year.

The increase in operating income margin in the 13 weeks ended May 1, 2021 was the result of the gross margin increase noted above, and a decrease in the selling, general and administrative expense rate.

The selling, general and administrative expense rate decreased to 21.6% in the 13 weeks ended May 1, 2021 compared to 22.7% for the same period last year as a result of the net of the following:

• Payroll expenses decreased 110 basis points primarily due to lower COVID-19-related store payroll costs and leverage from the comparable store net sales increase.

The 13 weeks ended May 2, 2020 included approximately $33.7 million of store payroll costs for a $2 per hour premium for all store hourly associates for hours worked beginning March 8, 2020, guaranteed bonus payments for store managers and field management bonuses.

• Other selling, general and administrative expenses decreased 5 basis points resulting primarily from lower store supplies expense, partially offset by increased inventory service expenses.

Also in the prior year quarter, inventory service expenses were lower resulting from the postponement of inventories from March 15, 2020 through the end of the quarter due to the COVID-19 pandemic.

• Store facility costs increased 10 basis points primarily due to higher repairs and maintenance expenses.

Repairs and maintenance expenses were lower in the prior year due to the cancellation or postponement of certain services at the onset of the COVID-19 pandemic.

Operating income in the 13 weeks ended May 2, 2020 included $42.2 million of COVID-19-related expenses.

• Distribution costs decreased 5 basis points as a result of a $2 per hour premium paid to all hourly distribution center associates for all hours worked in the prior year quarter, partially offset by increased payroll costs and higher depreciation costs in the current quarter resulting from two new distribution centers.

Total distribution center COVID-19-related expenses were approximately $6.7 million for the 13 weeks ended August 1, 2020.

Gross profit margin for the Dollar Tree segment increased to 33.0% for the 26 weeks ended July 31, 2021 compared to 32.8% for the same period last year as a result of the net of the following:

• Shrink costs decreased 50 basis points resulting from favorable inventory results in relation to accruals in the current year and a decrease in the shrink accrual rate.

• Markdown costs decreased 15 basis points resulting from lower seasonal markdowns due to the higher Easter sell-through in the current year.

• Occupancy costs decreased 5 basis points as a result of leverage due to the comparable store net sales increase in the current year.

• Distribution costs were flat as a percentage of net sales compared to the same period last year as increased payroll and depreciation costs related to two new distribution centers were offset by the $2 per hour premium paid in the prior year period to all distribution center hourly associates for all hours worked from March 8, 2020.

Total distribution center COVID-19-related expenses were approximately $10.3 million for the 26 weeks ended August 1, 2020.

• Merchandise cost, including freight, increased 45 basis points primarily due to higher freight costs, partially offset by increased sales of higher margin discretionary merchandise, including a higher Easter sell-through.

Easter sales were significantly lower last year as a result of the COVID-19 pandemic.

Operating income margin for the Dollar Tree segment increased to 10.1% for the 13 weeks ended July 31, 2021 from 9.7% for the same period last year.

The increase in operating income margin in the 13 weeks ended July 31, 2021 was the result of a lower selling, general and administrative expense rate and the gross margin decrease noted above.

The selling, general and administrative expense rate decreased to 22.3% in the 13 weeks ended July 31, 2021 compared to 24.0% for the same period last year as a result of the following:

• Payroll expenses decreased 155 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive compensation expenses, partially offset by higher health insurance expenses and the loss of leverage from the comparable store net sales decrease.

The 13 weeks ended August 1, 2020 included $66.0 million of COVID-19-related payroll expenses including store payroll costs for a $2 per hour premium paid to all store hourly associates for all hours worked during the 13 weeks ended August 1, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

• Other selling, general and administrative expenses decreased 20 basis points resulting primarily from a decrease in insurance costs related to the favorable development of general liability claims, partially offset by increased debit and credit fees resulting from higher debit and credit card penetration.

The prior year included higher costs for masks, gloves and cleaning supplies due to the COVID-19 pandemic.

• Store facility costs decreased 5 basis points due to lower repairs and maintenance costs.

Operating income in the 13 weeks ended August 1, 2020 included $76.6 million of COVID-19-related expenses.

Operating income margin for the Dollar Tree segment increased to 11.1% for the 26 weeks ended July 31, 2021 from 9.4% for the same period last year.

The increase in operating income margin in the 26 weeks ended July 31, 2021 was the result of the gross margin increase noted above, and a decrease in the selling, general and administrative expense rate.

The selling, general and administrative

expense rate decreased to 21.9% in the 26 weeks ended July 31, 2021 compared to 23.4% for the same period last year as a result of the following:

• Payroll expenses decreased 130 basis points primarily due to lower COVID-19-related store payroll costs, lower incentive compensation expenses and leverage from the comparable store net sales increase, partially offset by higher health care costs.

The first half of 2020 included $99.7 million of COVID-19-related payroll expenses including store payroll costs for a $2 per hour premium paid to all store hourly associates for all hours worked since March 8, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

• Other selling, general and administrative expenses decreased 10 basis points resulting primarily from lower store supplies expense and a decrease in insurance costs related to the favorable development of general liability claims, partially offset by increased debit and credit fees resulting from higher debit and credit card penetration.

The prior year included costs for the installation of plexiglass sneeze guards at all registers in our stores and higher costs for masks, gloves and cleaning supplies due to the COVID-19 pandemic.

• Depreciation and amortization decreased 5 basis points as a result of leverage from the comparable store net sales increase.

Operating income in the 26 weeks ended August 1, 2020 included $118.8 million of COVID-19-related expenses and $5.1 million of uninsured costs related to civil unrest.

Family Dollar

The following table summarizes the operating results of the Family Dollar segment:

13 Weeks Ended

May 1, May 2, Percentage

13 Weeks Ended 26 Weeks Ended

July 31, August 1, Percentage

Change July 31, August 1, Percentage

(dollars in millions) 2021 2020 2021 2020

4 unchanged sentences

Operation income margin 5.1 % 5.3 % (0.2) % 5.9 % 5.4 % 0.5 %

Net sales for the Family Dollar segment decreased $53.8 million, or 1.7%, for the 13 weeks ended May 1, 2021 compared to the same period last year.

Net sales for the Family Dollar segment decreased $24.8 million, or 0.8%, for the 13 weeks ended July 31, 2021 compared to the same period last year.

The decrease was due to a comparable store net sales decrease of 2.1%, offset partially by $61.8 million of new store sales.

For the 13 weeks ended May 1, 2021, average ticket increased 11.3% and customer traffic declined 12.7%.

Gross profit margin for the Family Dollar segment increased to 26.8% for the 13 weeks ended May 1, 2021 compared to 25.4% for the same period last year.

The increase is due to the net of the following:

• Merchandise cost, including freight, decreased 85 basis points primarily due to increased sales of higher margin discretionary merchandise and higher initial mark-on, offset partially by higher freight costs.

For the 13 weeks ended July 31, 2021, average ticket increased 1.4% and customer traffic declined 3.5%.

Net sales for the Family Dollar segment decreased $78.6 million, or 1.2%, for the 26 weeks ended July 31, 2021 compared to the same period last year.

The decrease was due to a comparable store net sales decrease of 2.5%, offset partially by $119.4 million of new store sales.

For the 26 weeks ended July 31, 2021, average ticket increased 6.3% and customer traffic declined 8.2%.

Gross profit margin for the Family Dollar segment decreased to 26.1% for the 13 weeks ended July 31, 2021 compared to 27.2% for the same period last year.

The decrease is due to the net of the following:

• Merchandise cost, including freight, increased 175 basis points primarily due to higher freight costs and increased sales of lower margin consumable merchandise.

• Occupancy costs increased 35 basis points as a result of loss of leverage from the comparable store net sales decrease.

• Distribution costs decreased 20 basis points primarily due to lower COVID-19-related distribution center payroll costs.

The 13 weeks ended August 1, 2020 included $4.7 million of incremental distribution center payroll costs, including a $2 per hour premium for all distribution center hourly associates for all hours worked during the quarter.

• Markdown costs decreased 25 basis points primarily due to $7.0 million of uninsured markdowns in the prior year quarter for stores affected by civil unrest.

• Shrink expense decreased 50 basis points resulting from favorable physical inventory results in relation to accruals in the current year quarter and a decrease in the shrink accrual rate.

Gross profit margin for the Family Dollar segment increased to 26.5% for the 26 weeks ended July 31, 2021 compared to 26.3% for the same period last year.

The increase is due to the net of the following:

• Shrink expense decreased 55 basis points resulting from favorable physical inventory results in relation to accruals in the current year and a decrease in the shrink accrual rate.

• Distribution costs decreased 20 basis points primarily due to lower COVID-19-related distribution center payroll costs.

The 13 weeks ended May 2, 2020 included $2.7 million of incremental distribution center payroll costs, including a $2 per hour premium for all distribution center hourly associates for all hours worked beginning March 8, 2020.

• Occupancy costs increased 15 basis points as a result of deleverage from the comparable store net sales decrease.

Operating income margin for the Family Dollar segment increased to 6.7% for the 13 weeks ended May 1, 2021 from 5.5% for the same period last year resulting from the gross margin increase noted above, offset partially by an increase in the selling, general and administrative expense rate.

The selling, general and administrative expense rate was 20.2% in the 13 weeks ended May 1, 2021 compared to 19.9% for the same period last year.

The current quarter increase in the selling, general and administrative expense rate was due to the net of the following:

• Store facility costs increased 25 basis points primarily due to higher snow removal costs in the current quarter and lower repairs and maintenance expenses in the prior year due to the cancellation or postponement of certain services at the onset of the COVID-19 pandemic.

• Other selling, general and administrative expenses increased 20 basis points primarily due to deleverage from the comparable store net sales decrease and lower inventory service expenses in the prior year as a result of postponement of physical inventories due to the COVID-19 pandemic.

• Depreciation and amortization expense increased 5 basis points primarily due to deleverage from the comparable store net sales decrease.

• Payroll expenses decreased 25 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive compensation, partially offset by deleverage from the comparable store net sales decrease.

The 13 weeks ended May 2, 2020 included $23.8 million, or 75 basis points, of payroll costs related to the COVID-19 pandemic, including a $2 per hour premium for all store hourly associates for hours worked beginning March 8, 2020.

Operating income in the 13 weeks ended May 2, 2020 included $30.4 million of COVID-19-related expenses.

The 26 weeks ended August 1, 2020 included $7.5 million of incremental distribution center payroll costs, including a $2 per hour premium for all distribution center hourly associates for all hours worked beginning March 8, 2020.

• Markdown costs decreased 10 basis points primarily due to $7.0 million of uninsured markdowns in the prior year for stores affected by civil unrest.

• Occupancy costs increased 25 basis points as a result of loss of leverage from the comparable store net sales decrease.

• Merchandise cost, including freight, increased 45 basis points primarily due to higher freight costs, offset partially by higher initial mark-on and increased sales of higher margin discretionary merchandise.

Operating income margin for the Family Dollar segment decreased to 5.1% for the 13 weeks ended July 31, 2021 from 5.3% for the same period last year resulting from the gross margin decrease noted above, offset partially by a decrease in the selling, general and administrative expense rate.

The selling, general and administrative expense rate was 21.0% in the 13 weeks ended July 31, 2021 compared to 21.9% for the same period last year.

The current quarter decrease in the selling, general and administrative expense rate was due to the net of the following:

• Payroll expenses decreased 95 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive compensation, partially offset by loss of leverage from the comparable store net sales decrease and higher health care costs.

The 13 weeks ended August 1, 2020 included $48.2 million, or 155 basis points, of COVID-19-related payroll expenses, including a $2 per hour premium paid to all store hourly associates for all hours worked during the 13 weeks ended August 1, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

• Store facility costs decreased 30 basis points primarily due to lower repairs and maintenance expenses.

The 13 weeks ended August 1, 2020 included $2.4 million of incremental repairs and maintenance expenses for stores damaged by civil unrest.

• Depreciation and amortization expense increased 10 basis points primarily due to loss of leverage from the comparable store net sales decrease.

• Other selling, general and administrative expenses increased 35 basis points primarily due to increases in advertising and travel expenses and loss of leverage from the comparable store net sales decrease.

Promotional advertising was lower in the prior year quarter due to the COVID-19 pandemic.

Operating income in the 13 weeks ended August 1, 2020 included $57.1 million of COVID-19-related expenses and $11.7 million of uninsured costs related to civil unrest.

Operating income margin for the Family Dollar segment increased to 5.9% for the 26 weeks ended July 31, 2021 from 5.4% for the same period last year resulting from the gross margin increase noted above and a decrease in the selling, general and administrative expense rate.

The selling, general and administrative expense rate was 20.6% in the 26 weeks ended July 31, 2021 compared to 20.9% for the same period last year.

The current year decrease in the selling, general and administrative expense rate was due to the net of the following:

• Payroll expenses decreased 60 basis points primarily due to lower COVID-19-related store payroll costs and lower incentive compensation, partially offset by loss of leverage from the comparable store net sales decrease.

The 26 weeks ended August 1, 2020 included $72.0 million, or 115 basis points, of COVID-19-related payroll expenses, including a $2 per hour premium for all store hourly associates for hours worked beginning March 8, 2020, bonuses for certain field management associates, guaranteed bonus payouts and Thank You bonuses for store managers, quarantine pay and sick pay as well as the related payroll taxes.

• Depreciation and amortization expense increased 5 basis points primarily due to loss of leverage from the comparable store net sales decrease.

• Other selling, general and administrative expenses increased 25 basis points primarily due to an increase in advertising expenses and loss of leverage from the comparable store net sales decrease.

Promotional advertising was lower in the prior year due to the COVID-19 pandemic.

Operating income in the 26 weeks ended August 1, 2020 included $87.5 million of COVID-19-related expenses and $11.7 million of uninsured costs related to civil unrest.

Liquidity and Capital Resources

2 unchanged sentences

Historically, we have satisfied our seasonal working capital requirements for existing stores and have funded our store opening and distribution network expansion programs from internally generated funds and borrowings under our credit facilities.

The following table compares cash-flow related information for the 13 weeks ended May 1, 2021 and May 2, 2020:

The following table compares cash-flow related information for the 26 weeks ended July 31, 2021 and August 1, 2020:

26 Weeks Ended

May 1, May 2,

July 31, August 1,

(in millions) 2021 2020

3 unchanged sentences

Financing activities (980.8) 245.4

Net cash provided by operating activities decreased $402.8 million primarily due to increases in merchandise inventories.

Net cash used in investing activities decreased $13.1 million primarily due to lower capital expenditures in the current year quarter.

For the 13 weeks ended May 1, 2021, cash used in financing activities was $276.6 million compared to cash provided by financing activities of $493.6 million for the 13 weeks ended May 2, 2020.

The cash used in financing activities in the current quarter is primarily due to $241.3 million of cash paid for stock repurchases.

In the prior year first quarter we preemptively drew $750.0 million on our Revolving Credit Facility to reduce our exposure to potential short-term liquidity risk in the banking system as a result of the COVID-19 pandemic, which was partially offset by the final $250.0 million payment on the Senior Floating Rate Notes.

At May 1, 2021, our long-term borrowings were $3.25 billion and we had $1.15 billion available under our Revolving Credit Facility.

We also have $390.0 million in Letter of Credit Reimbursement and Security Agreements with various financial institutions, under which $348.1 million was committed to letters of credit issued for routine purchases of imported merchandise as of May 1, 2021.

We repurchased 2,150,572 shares of common stock on the open market for approximately $250.0 million during the 13 weeks ended May 1, 2021.

Approximately $8.7 million in share repurchases had not settled as of May 1, 2021 and this amount was accrued in the accompanying unaudited condensed consolidated balance sheet as of May 1, 2021.

We did not repurchase any shares of common stock in the 13 weeks ended May 2, 2020.

As of May 1, 2021, we have $2.15 billion remaining under Board repurchase authorization.

Net cash provided by operating activities decreased $700.9 million primarily due to increases in merchandise inventories and decreases in current liabilities and other liabilities.

Net cash used in investing activities decreased $19.6 million primarily due to lower capital expenditures in the current year.

For the 26 weeks ended July 31, 2021, cash used in financing activities was $980.8 million compared to cash provided by financing activities of $245.4 million for the 26 weeks ended August 1, 2020.

The cash used in financing activities in the current year is primarily due to $947.5 million of cash paid for stock repurchases.

In the prior year, we preemptively drew $750.0 million on our Revolving Credit Facility to reduce our exposure to potential short-term liquidity risk in the banking system as a result of the COVID-19 pandemic, which was partially offset by the final $250.0 million payment on the Senior Floating Rate Notes and a $250.0 million repayment of the Revolving Credit Facility draw.

At July 31, 2021, our long-term borrowings were $3.25 billion and we had $1.15 billion available under our Revolving Credit Facility.

We also have $425.0 million in Letter of Credit Reimbursement and Security Agreements with various financial institutions, under which $393.3 million was committed to letters of credit issued for routine purchases of imported merchandise as of July 31, 2021.

We repurchased 9,156,898 shares of common stock on the open market for approximately $950.0 million during the 26 weeks ended July 31, 2021.

Approximately $2.5 million in share repurchases had not settled as of July 31, 2021 and this amount was accrued in the accompanying unaudited condensed consolidated balance sheet as of July 31, 2021.

We did not repurchase any shares of common stock in the 26 weeks ended August 1, 2020.

As of July 31, 2021, we have $1.45 billion remaining under Board repurchase authorization.

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