What changed in this filing

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Item 1. Business

2022-03-15 compared with 2021-03-16 · 74 added, 181 removed, 88 unchanged (74% of the section changed)

We are a leading operator of discount variety stores.

We believe the convenience and value we offer are key factors in serving and growing our base of loyal customers.

At January 30, 2021, we operated 15,685 discount variety retail stores.

We are a leading operator of discount variety stores with a solid history of growth and performance.

Our stores operate under the brand names of Dollar Tree, Family Dollar and Dollar Tree Canada.

At January 29, 2022, we operated 16,077 discount variety retail stores across 48 states and five Canadian provinces and over the long-term, we believe that the market can support more than 10,000 Dollar Tree stores and 15,000 Family Dollar stores across the United States, and approximately 1,000 Dollar Tree stores in Canada.

We believe the convenience and value we offer are key factors in serving and growing our base of loyal customers.

We operate in two reporting business segments:

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Management’s Discussion and Analysis of Financial Condition and Results of Operations ” under the caption “Segment Information” and Note 11 to our consolidated financial statements.

Impact of COVID-19

Beginning in fiscal 2020, our business was affected by the COVID-19 pandemic.

As an essential business, our stores and distribution centers have remained open during the pandemic;

however, our business trends and operations have been impacted in various ways.

For example, we have experienced fewer customer visits and higher average ticket and the mix and profit margin of products purchased by our customers has differed from historical patterns.

We have seen a shift in our customers’ purchases towards higher-margin discretionary products.

We have also experienced changes in when our customers are shopping relative to the dates of seasonal holidays with spending occurring further in advance of the holidays than in previous years.

The future impact of COVID-19 on our customers is difficult to predict as the course of the pandemic, the effectiveness of health measures, and the impact of ongoing economic stabilization efforts is uncertain and government assistance payments may not provide enough funding to support current spending levels.

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

government funding to address the continuing impact of COVID-19 on the economy, public health, individuals and businesses.

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.

An increase in the federal minimum wage was not included in the Rescue Act as enacted.

During fiscal 2020, we paid wage premiums to our store and distribution center associates as well as “Thank You” bonuses to our store managers in recognition of their extraordinary efforts during the COVID-19 pandemic, which increased our costs.

We currently do not anticipate paying these types of premiums and bonuses in fiscal 2021.

As a result of COVID-19, our supply chain has been strained and our suppliers have faced challenges in keeping up with the unprecedented demand for essential goods, as well as discretionary goods.

Recently, the ocean-shipping industry has faced capacity issues resulting in higher costs and delays in the shipment of products from Asia.

We continue to make operational changes in an attempt to minimize the impact of these challenges on our business;

however, we do not know how long these disruptions will continue.

For additional information regarding the impact of COVID-19 on our business, refer to the discussion in this Item 1.

below and “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Our Dollar Tree segment is the leading operator of discount variety stores offering merchandise predominantly at the fixed price point of $1.00.

We execute a dual-banner strategy that aims to offer the best of our brands in various store formats to serve customers in all types of geographic markets.

Dollar Tree is the leading operator of discount variety stores offering merchandise predominantly at the fixed price point of $1.25.

Dollar Tree stores serve a broad range of income customers in suburban locations, striving continuously to “Wow” the customer with a compelling, fun and fresh merchandise assortment comprising a variety of the things the customer wants and needs, all at incredible values in bright, clean and friendly stores.

Family Dollar operates general merchandise retail discount stores providing customers with a selection of competitively-priced merchandise in convenient neighborhood stores.

Family Dollar primarily serves a lower than average income customer in urban and rural locations, offering great values on everyday items.

We are committed to growing our combined business through new store openings and through our store relocation, expansion and remodel program.

We plan to open new stores in underserved markets and to strategically increase our presence in our existing markets.

We are executing our strategic initiatives including Dollar Tree Plus and the Family Dollar H2 and Combination Store (or Combo Store) format initiatives.

We are focused on revitalizing our assortment in every store by leveraging the complementary merchandise expertise of each segment, including Dollar Tree’s sourcing and product development expertise and Family Dollar’s consumer package goods and national brands sourcing expertise.

These initiatives are discussed further in the overview of each segment below.

Corporate Culture

We believe that honesty and integrity, and treating people fairly and with respect are core values within our corporate culture.

We believe that running a business, and certainly a public company, carries with it a responsibility to be above reproach when making operational and financial decisions.

Our executive management team visits and shops at our stores like every customer, and ideas and individual creativity on the part of our associates are encouraged, particularly from our store managers who know their stores and their customers.

We have standards for store displays, merchandise presentation, and store operations.

We maintain an open door policy for all associates.

Our distribution centers are operated based on objective measures of performance and virtually everyone in our store support center is available to assist associates in our stores and distribution centers.

For more information, see Human Capital Resources below.

Our disclosure committee meets at least quarterly and monitors our internal controls over financial reporting to ensure that our public filings contain discussions about the potential risks our business faces.

We believe that we have appropriate controls in place to be able to certify our financial statements.

Additionally, we have complied with the listing requirements for the Nasdaq Global Select Market.

The Dollar Tree segment includes 8,061 stores operating under the Dollar Tree and Dollar Tree Canada brands, 15 distribution centers in the United States and two in Canada.

Our stores predominantly range from 8,000 - 10,000 selling square feet.

In our Dollar Tree stores in the United States, we sell items primarily for $1.00 or less and in our Dollar Tree Canada stores, we sell items principally for $1.25(CAD) or less.

During the third quarter of 2021, we announced our new pricing initiative to increase the price point on a majority of our $1.00 merchandise to a new $1.25 price point across our Dollar Tree stores in the United States.

We believe that the new pricing strategy will enable us to introduce new products and expand our merchandise assortment in Dollar Tree stores while maintaining great value for our customers.

At January 29, 2022, the new price point was rolled out to more than 5,800 of our stores and we completed the rollout to the remaining stores in the first quarter of 2022.

We continue to implement our Dollar Tree Plus initiative which provides our customers with extraordinary value in discretionary categories priced at the $3 and $5 price points.

During 2021, we entered into a partnership with Instacart and as of January 29, 2022, our customers can shop online and receive same-day delivery from nearly 7,000 Dollar Tree stores without having to visit a store.

In our Dollar Tree Canada stores, we sell items principally for $1.25(CAD) or less.

Our revenue and assets in Canada are not material.

We are the owners of several trademarks including “Dollar Tree” and the “Dollar Tree” logo.

We strive to exceed our customers’ expectations of the variety and quality of products they can purchase for $1.00 by offering items we believe typically sell for higher prices elsewhere.

We strive to exceed our customers’ expectations of the variety and quality of products they can purchase by offering items we believe typically sell for higher prices elsewhere.

We buy approximately 57% to 59% of our merchandise domestically and import the remaining 41% to 43%.

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In addition, direct relationships with manufacturers permit us to select from a broad range of products and customize packaging, product sizes and package quantities that meet our customers’ needs.

We believe that our initiatives 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.

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!

Beginning in fiscal 2019, we began testing multi-price assortments 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.

We plan to expand this initiative into a total of 500 stores beginning in the first quarter of fiscal 2021.

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

We carry approximately 7,000 items in our Dollar Tree stores and as of the end of fiscal 2021 approximately 30% of our items are automatically replenished.

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Family Dollar

Our Family Dollar segment operates general merchandise retail discount stores providing customers with a selection of competitively-priced merchandise in convenient neighborhood stores.

Our stores predominantly range from 6,000 - 8,000 selling square feet.

In our 8,016 Family Dollar stores, we sell merchandise at prices that generally range from $1.00 to $10.00.

Our stores predominantly range from 6,000 - 8,000 selling square feet.

The Family Dollar segment consists of our store operations under the Family Dollar brand and 11 distribution centers.

We have two primary initiatives for our Family Dollar stores, the H2 format and our Combo Store format, both of which incorporate elements of our Dollar Tree stores into Family Dollar stores.

The H2 model stores include approximately 20 Dollar Tree $1.25 merchandise sections and establish a minimum number of freezer and cooler doors, throughout the store.

As of January 29, 2022, we operated approximately 3,815 H2 stores.

The Combo Store format, which was designed specifically for small towns and rural communities with populations of 3,000 to 4,000 residents, blends Family Dollar’s great value and assortment with select Dollar Tree merchandise categories under one roof.

As of January 29, 2022, we operated more than 240 Combo Stores.

Our new and renovated H2 and Combo Stores have higher sales and operating income margins compared with legacy Family Dollar stores.

During 2021, we entered into a partnership with Instacart and as of January 29, 2022, our customers can shop online and receive same-day delivery from more than 6,000 Family Dollar stores without having to visit a store.

We are the owners of the trademarks “Family Dollar,” “Family Dollar Stores” and other names and designs of certain merchandise sold in Family Dollar stores.

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In addition, approximately 16% of our merchandise is imported directly.

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.

During 2019, we introduced a new model for both new and renovated Family Dollar stores internally known as H2.

This 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.

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 January 30, 2021, we have approximately 2,385 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.

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 combining Family Dollar’s great value and assortment with Dollar Tree’s “thrill of the hunt” and fixed price point, creating a new strategic store format targeted for small towns and rural communities with populations of 3,000 to 4,000 residents.

While the number of items in a given store can vary based on the store’s size, geographic location, merchandising initiatives and other factors, our typical Family Dollar store generally carries approximately 7,600 basic items alongside items that are ever-changing and seasonally-relevant throughout the year.

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For information regarding the amounts and percentages of our net sales contributed by the above merchandise categories for the last three fiscal years, please refer to Note 11 to our consolidated financial statements.

Business Strategy

Continue to execute our proven and best‑in‑class retail business strategy.

We will continue to execute our proven strategies that have generated a history of success and continued growth for us.

Key elements of our strategy include:

• aiming continuously to “Wow” the customer with a compelling, fun and fresh merchandise assortment comprising a variety of the things you want and things you need, all at incredible values in bright, clean and friendly stores;

• maintaining a flexible sourcing merchandise model that allows a variety of products to be sold as long as desired merchandise margin thresholds are met;

• growing and improving both the Dollar Tree and Family Dollar brands;

• pursuing a “more, better, faster” approach to the roll-out of new Dollar Tree and Family Dollar stores to broaden our geographic footprint;

• maintaining customer relevance by ensuring that we reinvent ourselves constantly through new merchandise categories and initiatives;

• leveraging the complementary merchandise expertise of each segment including Dollar Tree’s sourcing and product development expertise and Family Dollar’s consumer package goods and national brands sourcing expertise;

• maintaining a prudent approach with our use of capital for the benefit of our shareholders.

Operate a diversified and complementary business model across both fixed ‑ price and multi ‑ price point strategies.

We plan to operate and grow both the Dollar Tree and Family Dollar brands.

We will utilize the reach and scale of our combined company to serve a broader range of customers in more ways, offering better prices and more value for the customer.

At Dollar Tree, everything is predominantly $1.00, offering the customer a balanced mix of things they need and things they want.

Our shopping experience will remain fun and friendly as we exceed our customers’ expectations for what they can buy for $1.00.

As noted previously, we plan to expand our Dollar Tree Plus!

initiative into a total of 500 stores beginning in the first quarter of fiscal 2021.

Merchandise in these stores includes select items which retail for more than $1.00 but not more than $5.00 and maintain our customers’ expectations of extreme value.

Dollar Tree serves a broad range of income customers in suburban locations.

Family Dollar stores will continue to operate using multiple price points, serving customers as their “neighborhood discount store,” offering great values on everyday items and a convenient shopping experience.

Family Dollar primarily serves a lower than average income customer in urban and rural locations.

We expect to benefit from an expanded target customer profile and utilize the store concepts of both Dollar Tree and Family Dollar to serve a broader range of customer demographics to drive further improvements in sales and profitability.

Take advantage of significant white-space opportunity.

Over the past decade we have built a solid and scalable infrastructure, which provides a strong foundation for our future growth.

We are committed to growing our combined business to take advantage of significant market or white space opportunities that we believe exist for both the Dollar Tree and Family Dollar store concepts.

Using our proven real estate strategy across our combined business, we intend to drive future store openings by capitalizing on data‑driven insights regarding location, target customer profile, competitive dynamics and cost structure.

Over the long-term, we believe that the market can support more than 10,000 Dollar Tree stores and 15,000 Family Dollar stores across the United States, and approximately 1,000 Dollar Tree stores in Canada.

Convenient Locations and Store Size.

We focus primarily on opening new Dollar Tree stores in strip shopping centers anchored by large retailers who draw target customers we believe to be similar to ours.

Our stores are successful in metropolitan areas, mid-sized cities and small towns.

We open new Family Dollar stores in strip shopping centers, freestanding buildings and downtown buildings.

The range of our new store sizes, 8,000 - 10,000 selling square feet for Dollar Tree and 7,000 - 10,000 selling square feet

for Family Dollar, allows us to target a particular location with a store that best suits that market and takes advantage of available real estate opportunities.

Our stores are attractively designed and create an inviting atmosphere for shoppers by using bright lighting, vibrant colors and decorative signs.

We enhance the store design with attractive merchandise displays.

We believe this design attracts new and repeat customers and enhances our image as both a destination and impulse purchase store.

Profitable Stores with Strong Cash Flow.

We maintain a disciplined, cost-sensitive approach to store site selection in order to minimize the initial capital investment required and maximize our potential to generate high operating margins and strong cash flows.

We believe that our Dollar Tree stores and our urban Family Dollar stores have a relatively small shopping radius, which allows us to profitably concentrate multiple stores within a single market.

In addition, our rural Family Dollar stores have a larger shopping radius, allowing us to profitably locate in these areas because of our ability to reach customers who live farther from our stores.

Our ability to open new stores is dependent upon, among other factors, locating suitable sites and negotiating favorable lease terms.

The strong cash flows generated by our stores allow us to self-fund infrastructure investment and new stores.

Typically, our cash flows from operating activities exceed our capital expenditures.

For more information on our results of operations, see “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Merchandising Cost Control .

We believe that our substantial buying power and our flexibility in making sourcing decisions contributes to our successful purchasing strategy, which includes targeted merchandise margin goals by category.

We believe our substantial buying power and our flexibility in making sourcing decisions contributes to our successful purchasing strategy, which includes targeted merchandise margin goals by category.

We leverage our merchandising team to source products that can be sold in both Dollar Tree and Family Dollar stores.

We also believe our ability to negotiate with our vendor partners allows us to minimize the margin impact of economic pressures such as tariffs.

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Historically, no vendor has accounted for more than 10% of total merchandise purchased by us.

Our supply chain systems continue to provide us with valuable sales information to assist our buyers and improve merchandise allocation to our stores.

Our merchandise systems provide us with valuable sales information to assist our buyers and improve product allocation to our stores.

We use this information to target our inventory levels in our distribution centers and stores in order to plan for capacity and labor needs.

Information Systems.

We believe that investments in technology help us to increase sales and control costs.

Our inventory management system provides information to calculate our estimate of inventory cost under the retail inventory method, which is widely used in the retail industry.

Our automated replenishment system replenishes key items, based on actual store-level sales and inventory.

Point-of-sale data allows us to track sales and inventory by merchandise category at the store level and assists us in planning for future purchases of inventory.

We believe that this information allows us to ship the appropriate product to stores at the quantities commensurate with selling patterns.

Using this point-of-sale data to plan purchases has helped us manage our inventory levels.

Corporate Culture and Values.

We believe that honesty and integrity, and treating people fairly and with respect are core values within our corporate culture.

We believe that running a business, and certainly a public company, carries with it a responsibility to be above reproach when making operational and financial decisions.

We have standards for store displays, merchandise presentation, and store operations.

We maintain an open door policy for all associates.

Our distribution centers are operated based on objective measures of performance and virtually everyone in our store support centers is available to assist associates in our stores and distribution centers.

During 2020, we launched an enterprise Executive Diversity Council comprised of diverse leaders from every department within the company who are charged with creating a diversity, equity and inclusion (“DEI”) strategy which is linked with our business goals, catalyzing cultural change throughout the organization and driving accountability at the senior management level for progress on key DEI objectives.

We believe that we have appropriate controls in place to be able to certify our financial statements.

Additionally, we have complied with the listing requirements for the Nasdaq Global Select Market.

For information on the impact of seasonality, see “ Item 1A.

Risk Factors ” and “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Growth Strategy

Store Openings, Relocations and Square Footage Growth.

The primary factors contributing to our net sales growth have been new store openings and an active store relocation, expansion and remodel program.

In the last five years, net sales increased at a compound annual growth rate of 5.3%.

During this time, our store count and approximate selling square footage increased from

13,851 and 108.4 million square feet at January 30, 2016 to 15,685 and 125.1 million square feet at January 30, 2021.

We expect that the majority of our future sales growth will come from new store openings in our Dollar Tree and Family Dollar segments and our store expansion and relocation program as well as our renovation initiatives.

Our growth and productivity statistics are reported based on selling square footage because our management believes the use of selling square footage yields a more accurate measure of store productivity.

We expect to increase the selling square footage in our stores in the future by opening new stores in underserved markets and strategically increasing our presence in our existing markets via new store openings and store expansions (expansions include store relocations).

In fiscal 2021 and beyond, we plan to predominantly open Dollar Tree stores that are approximately 8,000 - 10,000 selling square feet and Family Dollar stores that are approximately 7,000 - 10,000 selling square feet.

We believe these store sizes allow us to achieve our objectives in the markets in which we plan to expand.

In addition to new store openings, we plan to continue our Dollar Tree and Family Dollar store relocation and expansion program to increase our net sales per store and take advantage of market opportunities.

We target stores for expansion based on the current sales per selling square foot and changes in market opportunities.

Stores targeted for expansion are generally less than 7,000 selling square feet in size.

Store expansions generally increase the existing store size by approximately 2,500 selling square feet.

At January 30, 2021, 6,591 of our Dollar Tree stores, totaling approximately 88% of our Dollar Tree segment selling square footage, were 7,000 selling square feet or larger.

Since 1995, we have added a total of 695 stores through several mergers and acquisitions, excluding our acquisition of Family Dollar.

Historically, our acquisition strategy has been to target companies that have a similar single price point concept that have shown success in operations or companies that provide a strategic advantage.

We evaluate potential acquisition opportunities as they become available.

In 2015, we completed our acquisition of Family Dollar which allowed us to create a diversified company with complementary business models.

From time to time, we also acquire the rights to store leases through bankruptcy or other proceedings.

We will continue to take advantage of these opportunities as they arise depending upon several factors including their fit within our location and selling square footage size parameters.

Merchandising and Distribution.

Expanding our customer base is important to our growth plans.

We plan to continue to stock our stores with a compelling mix of ever-changing merchandise that our customers have come to appreciate.

Consumable merchandise typically leads to more frequent return trips to our stores resulting in increased sales.

The presentation and display of merchandise in our stores are critical to communicating value to our customers and creating a more exciting shopping experience.

We believe our approach to visual merchandising results in higher sales volume and an environment that encourages impulse purchases.

We leverage our merchandising team to source products that can be sold in both Dollar Tree and Family Dollar stores.

Our Family Dollar H2 stores include $1.00 sections of Dollar Tree merchandise and our Dollar Tree Plus!

stores sell items at the $1.00, $3.00 and $5.00 price points.

A strong and efficient distribution network is critical to our ability to grow and to maintain a low-cost operating structure.

In fiscal 2020, we completed construction of our Rosenberg, Texas automated distribution center, which is 1.2 million square feet and currently serves stores in our Dollar Tree segment.

Additionally, in fiscal 2020, we completed construction of a 0.5 million square foot distribution center in Ocala, Florida and we began shipping product from this facility during the third quarter of fiscal 2020.

We expect to complete an expansion of the Ocala, Florida distribution center in 2023.

New distribution sites are strategically located to reduce stem miles, maintain flexibility and improve efficiency in our store service areas.

We currently operate 26 distribution centers in the United States, 15 of which are primarily dedicated to serving our Dollar Tree stores and 11 distribution centers primarily serve our Family Dollar stores.

George, Utah distribution center, which is a legacy Family Dollar facility, services both Dollar Tree and Family Dollar stores and we expect future distribution centers to be built with the capability to service both Dollar Tree and Family Dollar stores.

Our distribution network supports multiple store formats including H2, Combination Stores and Dollar Tree Plus!

We ship to our H2 format stores from our Family Dollar distribution centers and we ship to our Dollar Tree Plus!

format stores from our Dollar Tree distribution centers.

We ship to our Combination Stores from both Dollar Tree and Family Dollar distribution centers.

We believe our distribution center network is currently capable of supporting approximately $30.2 billion in annual sales in the United States.

We also are party to an agreement which provides distribution services from two facilities in Canada.

New distribution sites are strategically located to reduce stem miles, maintain flexibility and improve efficiency in our store service areas.

We expect to complete a significant expansion of our Ocala, Florida distribution center in 2024 which will include more modern automation.

Our Dollar Tree stores receive approximately 91% of their inventory from our distribution centers via contract carriers and our Family Dollar stores receive approximately 71% of their inventory from our distribution centers.

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Properties .”

For information on the impact of seasonality, see “ Item 1A.

Risk Factors ” and “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

Our segment of the retail industry is fragmented and highly competitive and we expect competition to increase in the future.

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Our business success is built upon our dedicated, passionate and diverse associates who work and live in the communities we serve.

Our associates share our corporate values, “Attitude, Judgment, and Commitment.” We recruit and hire in these communities using local job fairs, social media as well as local community service partners to provide part-time and full-time jobs that can become lasting careers.

Our Human Resources team, with oversight from our Board of Directors and their Committees, develops and executes programs for compensation and benefits, onboarding and training, professional development, performance management, retention and succession planning.

We strive to create and maintain a safe working environment for our associates.

We consider our relationship with our associates to be good, and have not experienced significant interruptions of operations due to labor disagreements.

Our goal is to provide a working environment that is welcoming and inclusive, offers competitive pay and benefits, supports the growth and development of our associates, and affirms our corporate values and mission.

We recruit and hire in the communities we serve using local job fairs, social media as well as local community service partners to provide part-time and full-time jobs that can become lasting careers.

Our Human Resources team, with oversight from our Board of Directors and its committees, develops and executes programs for compensation and benefits, onboarding and training, professional development, performance management, retention and succession planning.

We greatly value our people and invest in their personal well-being and professional growth through various human capital programs and initiatives, including the following:

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All full-time and part-time associates are eligible for competitive health and welfare benefits, including medical, dental, vision, disability, life insurance and other benefits.

We also offer a voluntary benefit called “pay any-day,” which allows associates to advance their payday earnings for flexibility in meeting their bills and expenses.

• Health, wellness and family resources.

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We offer primary caregiver and parental leave to support our associates while they are starting or growing their families and we have a program that provides financial support to associates recovering from natural disasters and personal hardships.

To support our associates with high school-aged children, we recently launched a scholarship program to provide access to financial support in their pursuit of higher education.

• Talent development:

We believe in the growth and development of our associates and provide a multitude of professional and leadership development experiences, including online and instructor-led trainings that enable associates to consume relevant learning content for their current role and future career growth.

To remove barriers to education, we recently launched an education assistance program that provides tuition reimbursement, as well as discounted tuition at over 200 colleges and universities for our associates and their families.

To support our associates with high school-aged children, we launched a scholarship program in 2021 to provide access to financial support in their pursuit of higher education.

• Talent development and retention.

We believe in the growth and development of our associates and are committed to building a culture of learning in which associates are given the opportunity to enhance their skills at every stage of their career.

To support this objective, we provide a multitude of professional and leadership development experiences, including online and instructor-led trainings that enable associates to consume relevant learning content for their current role and future career growth.

To remove barriers to education, we launched an education assistance program in 2021 that provides tuition reimbursement, as well as discounted tuition at over 200 colleges and universities for our associates and their families.

Our associates also receive personalized coaching and advisement on degree programs that meet their needs.

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To identify high-potential talent, leadership assesses talent at the store manager level and above on a regular basis through structured talent reviews and succession planning paired with customized development plans.

This focus on talent has resulted in more than 35,600 promotions in 2020.

This focus on talent resulted in more than 48,500 promotions in fiscal 2021.

• Diversity, equity and inclusion.

We believe our associates should mirror our diverse customer base and the communities we serve.

In 2020, we launched an enterprise Executive Diversity Council comprised of diverse leaders from every department within the company who are charged with creating a DEI strategy which is linked with our business goals, catalyzing cultural change throughout the organization and driving accountability at the senior management level for

progress on key DEI objectives.

Our goal is to create and support a culture of inclusion among a diverse and inclusive workforce where the individual differences of our associates are understood, respected and appreciated.

To further this goal, we launched a Diversity, Equity and Inclusion (DEI) Executive Council in 2020 comprised of senior leaders from every department within the company.

The DEI Executive Council is charged with creating and implementing DEI-focused strategies consistent with our business goals, catalyzing cultural change throughout the organization and driving accountability at the senior management level for progress on key DEI objectives.

In addition, we have provided associate training on DEI topics and committed to forming a number of employee resource groups that are intended to serve as platforms for discussion and support among communities of associates within targeted demographics.

Our plan is for each employee resource group to have an executive sponsor who is a member of the DEI Executive Council.

• Workplace safety.

We strive to maintain a safe working environment for our associates with a safety program designed to promote accident prevention.

Among other things, our environmental health and safety department establishes standard safety protocols and operating procedures across the company, and our field managers are responsible for overseeing associate safety training and conducting store safety audits.

In response to the COVID-19 pandemic, we implemented several changes to protect our associates and our customers and to ensure adherence to Centers for Disease Control and Prevention (CDC) recommendations.

During 2020, we provided personal protective equipment including masks, gloves and sanitizers for our store and distribution center associates, installed plexiglass sneeze guards at all store registers and

enabled the majority of our store support center teams to work remotely.

We provided wage premiums for store and distribution center hourly associates, provided minimum guaranteed sales bonuses for store managers and pay continuation for associates who tested positive for COVID-19.

• Communication and Engagement.

We believe that our associates are critical to our business and the right culture is essential to creating an environment of high engagement and inclusivity in which Associates thrive.

It is important to listen to Associate feedback and perspectives on various matters affecting their relationship with the company.

As a result, we have launched a culture assessment that enables us to define the culture we aspire to be, measure the culture we are today and close the gaps so we realize our goals, execute on our business strategies and create a compelling associate experience within the organization.

As of January 29, 2022, we employed more than 210,500 associates, as follows:

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Part-time associates work an average of less than 30 hours per week and the number of part-time associates fluctuates depending on seasonal needs.

COVID-19 Response.

We implemented several changes to protect our associates and our customers in response to the COVID-19 pandemic and to ensure adherence to Centers for Disease Control and Prevention (CDC) recommendations.

We provided personal protective equipment including masks, gloves and sanitizers for our store and distribution center associates, installed plexiglass sneeze guards at all store registers and enabled the majority of our store support center teams to work remotely.

For additional information on the steps taken to support our associates in response to the COVID-19 pandemic, refer to “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations .”

We consider our relationship with our associates to be good, and have not experienced significant interruptions of operations due to labor disagreements.

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-K

Item 1. Business