What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-09-03 compared with 2025-06-04 · 99 added, 80 removed, 199 unchanged (47% of the section changed)

7 unchanged sentences

• Our plans and expectations regarding our current and future strategic initiatives, and the uncertainty with respect to the amount, timing and impact of those initiatives and investments on our business and results of operations;

• Our merchandising plans and initiatives and related impacts, including those regarding multi-price assortments in the Dollar Tree segment and our ability to adjust pricing;

• Our merchandising plans and initiatives and related impacts, including those regarding our pricing initiatives and product assortment;

• Our plans to add, renovate and remodel stores, and our expectations regarding store standards and operations, efficiency initiatives, selling square footage, the in-store experience and the performance of those formats;

3 unchanged sentences

• The design and implementation of internal controls around various investments and initiatives;

• Our plans and expectations regarding the pending sale of the Family Dollar business;

• Our plans and expectations regarding the sale of the Family Dollar business, including those regarding the estimated proceeds therefrom and the transition services agreement;

• The potential effect of general business or economic conditions on our business and our customers, including the direct and indirect effects of inflation and interest rates on our business;

• The direct and indirect impacts of current and potential tariffs and other trade-related measures, restrictions and policies and any retaliatory counter measures, and our plans to mitigate those impacts;

• The direct and indirect impacts of current and potential tariffs and other trade-related measures, restrictions and policies and any retaliatory counter measures;

• Our plans to mitigate the impact of current and potential tariffs and related implementation costs;

• The expected and possible outcome, costs, and impact of pending or potential litigation, arbitrations, other legal proceedings or governmental investigations, our plans regarding these matters, and the availability of indemnification or insurance with respect to such matters;

• The impacts of tornado damage to our Dollar Tree distribution center in Marietta, Oklahoma, including changes within our supply chain network and expectations regarding our customer shopping experience;

• The impacts of recent legislation, including those affecting various tax regulations;

• Our liquidity and cash needs, including our ability to fund our future capital expenditures and working capital requirements.

5 unchanged sentences

• Our profitability is vulnerable to cost pressures from increases in merchandise, shipping, freight and fuel costs, wage and benefit and other operating costs.

• Risks associated with merchandise supply could adversely affect our financial performance.

• Risks associated with merchandise supply, including tariffs and other trade-related measures, restrictions and policies and any retaliatory counter measures, could adversely affect our financial performance.

• Our tariff mitigation strategies could subject us to increased costs and other risks.

• Higher costs and disruptions in our distribution network could have an adverse impact on our sales and profitability.

11 unchanged sentences

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

• The completion of the pending sale of the Family Dollar business is subject to various risks and uncertainties, may not be completed in a timely fashion or at all, and the pending sale may be disruptive to our business operations and adversely affect our profitability.

• If the pending sale of the Family Dollar business is completed, we may not achieve the anticipated benefits of the transaction, and the transaction may expose us to new risks.

• We have incurred losses due to impairment of goodwill and other long-lived assets.

• The completion of the sale of the Family Dollar business is subject to various risks and uncertainties, including those related to the estimated proceeds therefrom and transition services agreement income, and may be disruptive to our business operations and adversely affect our profitability.

• We may not achieve the anticipated benefits of the sale of the Family Dollar business, and the transaction may expose us to new risks.

• We have incurred and may in the future incur losses due to impairment of goodwill and other long-lived assets.

• We make estimates and assumptions in connection with the preparation of our consolidated financial statements, and any changes to those estimates and assumptions could adversely affect our results of operations.

15 unchanged sentences

Thus, to the extent that reports issued by securities analysts contain any projections, forecasts or opinions, such reports are not our responsibility.

We are a leading operator of more than 9,000 retail discount stores, as of May 3, 2025, offering merchandise predominantly at the opening price point of $1.25, with additional offerings at higher price points.

We are a leading operator of more than 9,100 retail discount stores, as of August 2, 2025, offering merchandise predominantly at the opening price point of $1.25, with additional offerings at higher price points.

Our net sales are derived from the sale of merchandise.

7 unchanged sentences

Additionally, sales that are excluded from the calculation of comparable store net sales are referred to as non-comparable store sales and consist of sales from new stores open fifteen months or less and stores that are closed permanently or expected to be closed for more than 90 days.

On March 25, 2025, the Company entered into a definitive agreement to sell the Family Dollar business to Brigade Capital Management, LP and Macellum Capital Management, LLC, for a purchase consideration of $1,007.0 million, subject to a number of adjustments, including with respect to working capital and net indebtedness.

The closing of the transaction is subject to satisfaction of customary closing conditions.

Net proceeds are estimated to total approximately $800 million.

The transaction is expected to close in the second quarter of fiscal 2025.

On July 5, 2025, the Company completed its previously announced sale of the Family Dollar business to 1959 Holdings, LLC, for a purchase consideration of $1,007.5 million, subject to certain adjustments, including with respect to working capital and net indebtedness.

Net proceeds from the sale consisted of $665 million paid at closing and $22 million to be received within 90 days of closing, subject to final adjustment under the terms of the purchase agreement, dated as of March 25, 2025.

In addition, the Company monetized approximately $113 million of cash from Family Dollar prior to the closing date primarily through a reduction of net working capital.

Together, the total cash monetized from the sale of the Family Dollar business approximates $800 million.

The results of Family Dollar are presented as discontinued operations in the accompanying unaudited Condensed Consolidated Income Statements for all periods presented.

The assets and liabilities of Family Dollar have been reflected as assets and liabilities of discontinued operations in the accompanying unaudited Condensed Consolidated Balance Sheets for all periods presented.

Unless otherwise noted, all amounts, percentages and discussions below reflect only the results of operations and financial condition of our continuing operations.

1 unchanged sentence

Quarterly Results

Financial highlights for the 13 weeks ended May 3, 2025, as compared to the 13 weeks ended May 4, 2024, include:

Financial highlights for the 13 weeks ended August 2, 2025, as compared to the 13 weeks ended August 3, 2024, include:

• Net sales increased 12.3% to $4,566.8 million due to a 6.5% comparable store net sales increase and net sales of $318.7 million at non-comparable stores.

2 unchanged sentences

• Selling, general and administrative expenses, as a percentage of total revenues, increased 60 basis points to 29.6%.

• Transition services agreement income, net was $8.0 million resulting from services provided to Family Dollar following the sale.

• Operating income, as a percentage of total revenues, decreased 20 basis points to 5.1%.

2 unchanged sentences

Store Activity & Selected Sales Data

At May 3, 2025, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces.

The average size of stores opened during the 13 weeks ended May 3, 2025 was approximately 8,910 selling square feet.

At August 2, 2025, we operated stores in 48 states and the District of Columbia, as well as stores in five Canadian provinces.

The average size of stores opened during the 26 weeks ended August 2, 2025 was approximately 9,210 selling square feet.

A breakdown of the changes in store count and square footage is as follows:

26 Weeks Ended

May 3, 2025 May 4, 2024

August 2, 2025 August 3, 2024

Beginning 8,881 8,415

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The percentage change in comparable store net sales, as compared with the preceding year, is as follows:

13 Weeks Ended

May 3, 2025 May 4, 2024

13 Weeks Ended 26 Weeks Ended

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Sales Growth 6.5% 1.3% 5.9% 1.5%

3 unchanged sentences

Net sales per selling square foot is calculated based on total net sales for the preceding 12 months as of the end of the reporting period divided by the average selling square footage during the period.

Selling square footage excludes the storage, receiving and office space that generally occupies approximately 20% of the total square footage of our stores.

Selling square footage excludes the storage, receiving and

office space that generally occupies approximately 20% of the total square footage of our stores.

We believe that net sales per selling square foot more accurately depicts the productivity and operating performance of our stores as it reflects the portion of our footprint that is dedicated to selling merchandise.

Net sales per selling square foot for the 52 weeks ended May 3, 2025 and May 4, 2024 is as follows:

Net sales per selling square foot for the 52 weeks ended August 2, 2025 and August 3, 2024 is as follows:

52 Weeks Ended

May 3, 2025 May 4, 2024

August 2, 2025 August 3, 2024

Net sales per selling square foot $237 $235

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Dollar Tree Merchandising.

We continue to expand our brand assortment at the $1.25 price point to provide greater value to our customers and increase customer traffic and store productivity.

In addition to our $1.25 price point, we continue to expand our brand assortment at varying price points to provide greater value to our customers and increase customer traffic and store productivity.

We are continuing to expand our multi-price product assortment, which began with the introduction of $3 and $5 products in select discretionary categories, expanded into $3, $4 and $5 frozen and refrigerated product, and now comprises a wide assortment of other consumable and discretionary product at varying price points.

As of May 3, 2025, we had more than 3,520 multi-price format stores.

As of August 2, 2025, we had more than 4,240 multi-price format stores.

On August 28, 2025, we announced a new nationwide partnership with Uber to bring the Uber Eats platform to nearly 9,000 Dollar Tree stores, offering customers on-demand access to and delivery of value-driven essentials, snacks, party supplies and seasonal surprises.

Tariffs and Other Trade Measures.

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We believe our mitigation strategies will allow us to protect our margins and maintain our competitiveness over the long term and, most importantly, keep providing our customers with the value, convenience, and discovery they expect for the products they need to help live and celebrate their lives.

However, we expect our results to be impacted by near-term challenges, including higher costs due to the volatility in effective tariffs in the second quarter of fiscal 2025.

However, we expect our results to be impacted by near-term challenges, including higher costs due to the volatility in effective tariffs in the second half of fiscal 2025.

Additionally, implementation costs associated with our mitigation strategies may be experienced before the benefits from those efforts are expected to materialize.

5 unchanged sentences

Supply Chain Optimization .

Our supply chain initiatives include expanding and enhancing our distribution and transportation network, including investments in our truck fleet, transportation management systems, a new distribution center with enhanced automation to improve efficiency, and a new RotaCart delivery process to streamline the truck unloading and store delivery process.

Significant investments are also underway to improve climate control conditions in our distribution centers.

Our supply chain initiatives include expanding and enhancing our distribution and transportation network, investments in our truck fleet, and upgrades in our warehouse management systems.

Investments are also underway for a new distribution center as well as enhancements in automation in existing buildings to improve efficiency.

These investments are expected to negatively impact gross margin in the near-to-mid term.

Technology Investment.

We continue our multi-year plan for significant investment in our technology across our business, including our mobile apps, human capital management system and supply chain system.

We continue our multi-year plan for significant investment in our technology across our business, including our mobile app, human capital management system and supply chain system.

We believe these improvements can promote operational efficiencies and deliver an elevated customer experience.

2 unchanged sentences

Based on the significant damage sustained by the facility, the inventory contained in the facility and the facility itself are not salvageable.

We have pivoted our supply chain network to deliver products to the approximately 600 Marietta-serviced stores, and we believe these efforts have limited and will continue to limit disruption to the Dollar Tree shopping experience.

Such efforts included the conversion of the West Memphis Family Dollar distribution center to a Dollar Tree distribution center in the third quarter of fiscal 2024, and the expected conversion of the Odessa, Texas Family Dollar distribution center to a Dollar Tree distribution center in the second quarter of fiscal 2025.

We have pivoted our supply chain network to deliver products to the approximately 600 Marietta-serviced stores, and

we believe these efforts have limited and will continue to limit disruption to the Dollar Tree shopping experience.

Such efforts included the conversion of the West Memphis Family Dollar distribution center to a Dollar Tree distribution center in the third quarter of fiscal 2024 and the conversion of the Odessa, Texas Family Dollar distribution center to a Dollar Tree distribution center in the second quarter of fiscal 2025.

We are incurring additional costs within our supply chain as a result of servicing these impacted stores, including additional stem miles for delivered product and outside storage, and expect such costs to continue negatively impacting gross margin in the near-to-mid term.

1 unchanged sentence

Family Dollar Strategic Alternatives Review.

During the second quarter of fiscal 2024, we announced that we had initiated a formal review of strategic alternatives for the Family Dollar business, which could have included among others, a potential sale, spin-off or other disposition of the business.

This strategic alternatives review concluded in the fourth quarter of fiscal 2024 and resulted in the decision to sell the Family Dollar business.

As a result, we concluded the Family Dollar business met the held for sale and

discontinued operations accounting criteria.

On March 25, 2025, we entered into a definitive agreement to sell the Family Dollar business to Brigade Capital Management, LP and Macellum Capital Management, LLC, for a purchase consideration of $1,007.0 million, subject to a number of adjustments, including with respect to working capital and net indebtedness.

The closing of the transaction is subject to satisfaction of customary closing conditions.

Net proceeds are estimated to total approximately $800 million.

The transaction is expected to close in the second quarter of fiscal 2025.

On March 25, 2025, we entered into a definitive agreement to sell the Family Dollar business to 1959 Holdings, LLC, and on July 5, 2025, we completed the sale for a purchase consideration of $1,007.5 million, subject to certain adjustments, including with respect to working capital and net indebtedness.

In addition, the Company monetized approximately $113 million of cash from Family Dollar prior to the closing date primarily through a reduction of net working capital.

Together, the total cash monetized from the sale of the Family Dollar business approximates $800 million.

For information on discontinued operations, refer to Note 10 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

6 unchanged sentences

A 100 basis point increase equals 1.00% and a 1 basis point increase equals 0.01%.

The following table contains results of operations data for the 13 weeks ended May 3, 2025 and May 4, 2024:

13 Weeks Ended

The following table contains results of operations data for the 13 and 26 weeks ended August 2, 2025 and August 3, 2024:

13 Weeks Ended 26 Weeks Ended

(in millions, except percentages)

May 3, 2025 May 4, 2024

August 2, 2025 August 3, 2024 August 2, 2025 August 3, 2024

Net sales $ 4,566.8 $ 4,065.5 $ 9,203.3 $ 8,231.1

1 unchanged sentence

Total revenue 4,570.4 4,068.6 9,210.1 8,237.5

Expenses & other operating items

Cost of sales 2,996.7 2,674.2 5,983.7 5,363.3

Selling, general and administrative expenses 1,350.7 1,178.6 2,619.3 2,276.5

Transition services agreement income, net 8.0 — 8.0 —

Operating income 231.0 215.8 615.1 597.7

9 unchanged sentences

Operating income margin 5.1 % 5.3 % 6.7 % 7.3 %

Interest expense, net as a percentage of total revenue

Income from continuing operations before income taxes as a percentage of total revenue 4.6 % 4.6 % 6.9 % 6.6 %

2 unchanged sentences

Income from continuing operations as a percentage of total revenue 3.4 % 3.5 % 5.1 % 5.0 %

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Net sales $ 4,566.8 $ 4,065.5 12.3 % $ 9,203.3 $ 8,231.1 11.8 %

Comparable store net sales change 6.5 % 1.3 % 5.9 % 1.5 %

The increase in net sales in the 13 weeks ended May 3, 2025 was a result of the comparable store net sales increase and net sales of $345.3 million at non-comparable stores.

Comparable store net sales increased 5.4% in the 13 weeks ended May 3, 2025, as a result of a 2.8% increase in average ticket and a 2.5% increase in customer traffic.

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

The increase in net sales in the 13 weeks ended August 2, 2025 was a result of the comparable store net sales increase and net sales of $318.7 million at non-comparable stores.

Comparable store net sales increased 6.5% in the 13 weeks ended August 2, 2025, as a result of a 3.4% increase in average ticket and a 3.0% increase in customer traffic.

The increase in net sales in the 26 weeks ended August 2, 2025 was a result of the comparable store net sales increase and net sales of $670.7 million at non-comparable stores.

Comparable store net sales increased 5.9% in the 26 weeks ended August 2, 2025, as a result of a 3.1% increase in average ticket and a 2.8% increase in customer traffic.

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Gross profit $ 1,570.1 $ 1,391.3 12.9 % $ 3,219.6 $ 2,867.8 12.3 %

Gross profit margin 34.4 % 34.2 % 0.2 % 35.0 % 34.8 % 0.2 %

Gross profit margin increased during the 13 weeks ended May 3, 2025 due to a 20 basis point decrease in cost of sales.

The cost of sales rate decreased to 64.4% during the 13 weeks ended May 3, 2025 from 64.6% during the same period last year primarily due to lower freight costs, improved mark-on and lower occupancy costs due to leverage from the comparable store net sales increase, partially offset by increased distribution costs, shrink costs and markdown costs.

Gross profit margin increased during the 13 weeks ended August 2, 2025 due to a 20 basis point decrease in cost of sales.

The cost of sales rate decreased to 65.6% during the 13 weeks ended August 2, 2025 from 65.8% during the same period last year primarily due to improved mark-on from pricing initiatives, lower domestic freight costs, favorable sales mix resulting from lower sales of low margin consumable merchandise as a percentage of net sales, and lower occupancy costs due to leverage from the comparable store net sales increase, partially offset by higher tariff costs, higher markdowns, increased distribution costs, and higher shrink costs resulting from unfavorable inventory results.

Gross profit margin increased during the 26 weeks ended August 2, 2025 due to a 20 basis point decrease in cost of sales.

The cost of sales rate decreased to 65.0% during the 26 weeks ended August 2, 2025 from 65.2% during the same period last year primarily due to improved mark-on from pricing initiatives, lower domestic freight costs, favorable sales mix resulting from lower sales of low margin consumable merchandise as a percentage of net sales, and lower occupancy costs due to leverage from the comparable store net sales increase, partially offset by higher tariff costs, higher markdowns, increased distribution costs, and higher shrink costs resulting from unfavorable inventory results.

Selling, General and Administrative Expenses

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Selling, general and administrative

2 unchanged sentences

expense rate 29.6 % 29.0 % 0.6 % 28.4 % 27.6 % 0.8 %

The selling, general and administrative expense rate increased 100 basis points during the 13 weeks ended May 3, 2025 primarily due to higher depreciation expense from store investments, higher store payroll from wage increases, higher general liability claims costs, and higher utilities costs, partially offset by lower stock compensation, lower temporary labor needed to support our multi-price rollout, and leverage from the comparable store net sales increase.

The selling, general and administrative expense rate increased 60 basis points during the 13 weeks ended August 2, 2025 primarily due to higher store payroll in support of our pricing initiatives and from wage increases, higher depreciation expense from store investments, higher incentive compensation and higher store-related repairs and maintenance expenses, partially offset by a decrease in general liability expenses, lower stock compensation and leverage from the comparable store net sales increase.

While we continue to see increases in general liability claim costs, the unfavorable actuarial adjustments were higher in the prior year quarter.

The selling, general and administrative expense rate increased 80 basis points during the 26 weeks ended August 2, 2025 primarily due to higher store payroll in support of our pricing initiatives and from wage increases, higher depreciation expense from store investments, higher incentive compensation and higher store-related repairs and maintenance expenses, partially offset by a decrease in general liability expenses, lower stock compensation and leverage from the comparable store net sales increase.

While we continue to see increases in general liability claims costs, the unfavorable actuarial adjustments were higher in the prior year.

Operating Income

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Operating income $ 231.0 $ 215.8 7.0 % $ 615.1 $ 597.7 2.9 %

Operating income margin 5.1 % 5.3 % (0.2) % 6.7 % 7.3 % (0.6) %

Operating income margin decreased to 8.3% for the 13 weeks ended May 3, 2025 compared to 9.2% for the same period last year, resulting from the increase in the selling, general and administrative expense rate, partially offset by the increase in gross profit margin as described above.

Operating income margin decreased to 5.1% for the 13 weeks ended August 2, 2025 compared to 5.3% for the same period last year, resulting from the increase in the selling, general and administrative expense rate, partially offset by the increase in gross profit margin as described above and income from the transition services agreement with Family Dollar.

Operating income margin decreased to 6.7% for the 26 weeks ended August 2, 2025 compared to 7.3% for the same period last year, resulting from the increase in the selling, general and administrative expense rate, partially offset by the increase in gross profit margin as described above and income from the transition services agreement with Family Dollar.

Interest Expense, Net

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Interest expense, net $ 22.8 $ 29.9 (23.7) % $ 45.5 $ 56.6 (19.6) %

Interest expense, net decreased $4.0 million in the 13 weeks ended May 3, 2025 compared to the same period last year, primarily due to higher interest income on investments.

Other (Income) Expense, Net

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

Interest expense, net decreased $7.1 million in the 13 weeks ended August 2, 2025 compared to the same period last year, primarily due to higher interest income on investments.

Interest expense, net decreased $11.1 million in the 26 weeks ended August 2, 2025 compared to the same period last year, primarily due to higher interest income on investments.

Other (Income) Expense, Net

Other income, net was $61.7 million in the 13 weeks ended May 3, 2025 compared to expense of $0.1 million in the same period last year, primarily due to an insurance gain of approximately $62.0 million recognized in the first quarter of fiscal 2025 for the excess of the insurance proceeds received over the losses incurred for damaged property and equipment and damaged inventory associated with the tornado that destroyed our Marietta, Oklahoma Dollar Tree distribution center.

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Other (income) expense, net $ (0.4) $ — N/A $ (62.1) $ 0.1 (62,200.0) %

Other income, net was $62.1 million in the 26 weeks ended August 2, 2025 compared to expense of $0.1 million in the same period last year, primarily due to an insurance gain of approximately $62.0 million recognized in the first quarter of fiscal 2025 for the excess of the insurance proceeds received over the losses incurred for damaged property and equipment and damaged inventory associated with the tornado that destroyed our Marietta, Oklahoma Dollar Tree distribution center.

Provision for Income Taxes

13 Weeks Ended

(dollars in millions) May 3, 2025 May 4, 2024 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 2, 2025 August 3, 2024 Percentage Change August 2, 2025 August 3, 2024 Percentage Change

Provision for income taxes $ 53.1 $ 43.6 21.8 % $ 162.7 $ 131.0 24.2 %

Effective tax rate 25.5 % 23.5 % 2.0 % 25.8 % 24.2 % 1.6 %

The effective tax rate was 25.9% for the 13 weeks ended May 3, 2025 compared to 24.6% for the comparable prior year period, primarily due to reduced benefits from the vesting of share-based payment awards.

The effective tax rate increased to 25.5% for the 13 weeks ended August 2, 2025 compared to 23.5% for the comparable prior year period, primarily due to the impact of favorable audit settlements in the second quarter of fiscal 2024 and an increase in expected state taxes.

The effective tax rate increased to 25.8% for the 26 weeks ended August 2, 2025 compared to 24.2% for the comparable prior year period, primarily due to reduced benefits from the vesting of share-based payment awards and an increase in expected state taxes.

Liquidity and Capital Resources

2 unchanged sentences

We have satisfied our seasonal working capital requirements for existing and new stores and have funded our distribution network programs and other capital projects from internally generated funds and borrowings under our credit facilities and commercial paper program.

The following table compares our cash flows for the 13 weeks ended May 3, 2025 and May 4, 2024:

The following table compares our cash flows for the 26 weeks ended August 2, 2025 and August 3, 2024:

26 Weeks Ended

(in millions) May 3, 2025 May 4, 2024

(in millions) August 2, 2025 August 3, 2024

Net cash provided by (used in):

2 unchanged sentences

Financing activities of continuing operations (1,636.0) (164.9)

Net cash provided by operating activities decreased $126.7 million primarily due to a decrease in accounts payable, partially offset by higher income tax accruals and other changes in accrued liabilities.

Net cash used in investing activities decreased $117.8 million primarily due to lower capital expenditures and $50.0 million of insurance recoveries related to damaged property and equipment at our Dollar Tree distribution center in Marietta, Oklahoma as discussed in Note 3 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Net cash used in financing activities increased $151.6 million primarily due to higher stock repurchases.

At May 3, 2025, our long-term borrowings were $3.45 billion, including $1.0 billion 4.00% Senior Notes maturing on May 15, 2025.

Net cash provided by operating activities decreased $98.5 million primarily due to a decrease in accounts payable in the current year compared to an increase in the prior year, partially offset by inventory levels increasing at a lower rate compared to the prior year, and higher income from continuing operations.

Net cash used in investing activities decreased $617.7 primarily due to $668.0 million of net proceeds received for the sale of Family Dollar, lower capital expenditures, and higher insurance recoveries related to damaged property and equipment at our Dollar Tree distribution center in Marietta, Oklahoma in the current year period, partially offset by $246.0 million of cash divested from the sale of Family Dollar.

Net cash used in financing activities increased $1,471.1 million primarily due to the repayment of our $1.0 billion principal amount of 4.00% Senior Notes due May 15, 2025, and higher stock repurchases, partially offset by increased borrowings under our commercial paper program.

On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S.

The most significant impacts to the Company of the OBBBA are the immediate expensing of domestic research and development expenditures and the permanent reinstatement of bonus depreciation for qualifying properties.

The Company expects the impact will defer the payment of a significant portion of current federal income taxes.

The Company currently expects to defer approximately $100.0 million in cash payments for federal income taxes related to these changes.

In connection with the sale of Family Dollar, completed on July 5, 2025, the Company expects to realize cash tax benefits from losses on the sale totaling approximately $425.0 million, subject to final adjustment under the terms of the purchase agreement approximately 90 days after the closing date.

At August 2, 2025, our long-term borrowings were $2.45 billion.

Additionally, we had $1.5 billion available under our new Five-Year Credit Facility, less amounts outstanding for standby letters of credit totaling $3.8 million, and $1.0 billion available under our 364-Day Revolving Credit Facility.

1 unchanged sentence

We also have a commercial paper program under which we may issue unsecured commercial paper notes up to an aggregate amount outstanding at any time of $1.5 billion.

As of May 3, 2025, there were no commercial paper notes outstanding.

On May 15, 2025, we leveraged our commercial paper program, in addition to utilizing available cash, to redeem our $1.0 billion principal amount of 4.00% Senior Notes.

As of August 2, 2025, $300.0 million principal amount of notes were outstanding under the commercial paper program.

Our Five-Year Credit Facility serves as a liquidity backstop for the repayment of notes outstanding under the program.

Additionally, we have $100.0 million in trade letters of credit with various financial institutions, under which $4.3 million was committed to letters of credit issued for routine purchases of imported merchandise as of May 3, 2025.

On May 15, 2025, we leveraged our commercial paper program to redeem our $1.0 billion 4.00% Senior Notes, in addition to utilizing available cash.

As of June 2, 2025, we had $550.0 million of commercial paper notes outstanding.

We repurchased 5,926,985 and 2,537,302 shares of common stock on the open market at a cost of $436.8 million and $312.8 million, including applicable excise tax, during the 13 weeks ended May 3, 2025 and May 4, 2024, respectively.

Of the shares repurchased during the 13 weeks ended May 3, 2025 and May 4, 2024, $5.0 million and $37.8 million, respectively, settled subsequent to May 3, 2025 and May 4, 2024, respectively, and these amounts were accrued in the accompanying unaudited Condensed Consolidated Balance Sheets.

At May 3, 2025, we had $519.7 million remaining under our existing $2.5 billion Board repurchase authorization.

Subsequent to May 3, 2025, we purchased an additional 779,512 shares of common stock on the open market at a cost of $67.5 million, as of June 2, 2025.

Additionally, we have $100.0 million in trade letters of credit with various financial institutions, under which $3.5 million was committed to letters of credit issued for routine purchases of imported merchandise as of August 2, 2025.

We repurchased 10,957,077 and 3,283,837 shares of common stock on the open market at a cost of $938.2 million and $403.6 million, including applicable excise tax, during the 26 weeks ended August 2, 2025 and August 3, 2024, respectively.

Of the shares repurchased during the 26 weeks ended August 2, 2025, $5.5 million settled subsequent to August 2, 2025 and these amounts were accrued in the accompanying unaudited Condensed Consolidated Balance Sheets.

In the 13 weeks ended August 2, 2025, our Board of Directors replenished the Company’s share repurchase authorization to an aggregate amount of $2.5 billion, reflecting the limit previously approved by the Board in September 2021.

At August 2, 2025, we had $2.4 billion remaining under the $2.5 billion Board repurchase authorization.

Subsequent to August 2, 2025, we purchased an additional 621,750 shares of common stock on the open market at a cost of $71.2 million, as of August 29, 2025.

Critical Accounting Estimates and Assumptions

7 unchanged sentences

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