What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-12-03 compared with 2025-09-03 · 101 added, 102 removed, 196 unchanged (51% of the section changed)

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

• 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 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;

• Our customer’s response to our product offerings, value and shopping experience;

• Our expectations regarding the implementation and impact of investments in supply chain, distribution facilities, warehouse and human capital management systems, trucking fleet and transportation management systems, and store delivery and equipment, including new distribution centers, the expansion or conversion of existing distribution centers, and the capabilities of our distribution center network;

• Our plans and expectations regarding our current and future strategic initiatives, including our operational strategy for Dollar Tree as a standalone business following the sale of Family Dollar;

• Our merchandising plans and initiatives and related impacts, including those regarding our multi-price offerings and product assortment;

• Our cost management initiatives, including our mitigation strategies to offset the impact of cost pressures and inflation, and the financial and business impacts of those strategies;

• Our long-term approach to managing selling, general and administrative expenses;

• Our plans to add, refresh and renovate stores, improve store standards and operations, and optimize and modernize stores and shelf space;

• Our customer connection and customer’s response to our product offerings, value and shopping experience;

• Our expectations regarding the implementation and impact of investments in supply chain, distribution facilities, warehouse, inventory, transportation and human capital management systems, including new distribution centers, the expansion or conversion of existing distribution centers, and the capabilities of our distribution center network;

• Our expectations regarding the implementation and impact of investments in our technology infrastructure;

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

• 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 design and implementation of key control activities around updated systems and various investments and initiatives;

• Our plans and expectations regarding the sale of the Family Dollar business, including those regarding the estimated proceeds and tax benefits 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;

• The direct and indirect impacts of and challenges associated with the current and potential tariff environment;

• 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.

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

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

A forward-looking statement is neither a prediction nor a guarantee of future results, events or circumstances.

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• We rely on third parties in many aspects of our business, which creates additional risk.

• 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.

• We may not be successful in anticipating the impacts of implementing, achieving or realizing the benefits of our strategies, initiatives and long-term goals, which may have an adverse impact on our business and financial results.

• Our growth and profitability is dependent on our customer’s response to our initiatives, including multi-price assortments, pricing initiatives, and store standards.

• 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.

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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 9,100 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.

We are a leading operator of more than 9,200 retail discount stores, as of November 1, 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.

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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.

Net proceeds from the sale consisted of $665 million paid at closing and $22 million to be received post-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.

As of November 1, 2025, the remaining receivable for estimated net proceeds to be received totaled $14.7 million.

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

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Quarterly Results

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

Financial highlights for the 13 weeks ended November 1, 2025, as compared to the 13 weeks ended November 2, 2024, include:

• Net sales increased 9.4% to $4,746.3 million due to a 4.2% comparable store net sales increase and net sales of $351.7 million at non-comparable stores.

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Store Activity & Selected Sales Data

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.

At November 1, 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 39 weeks ended November 1, 2025 was approximately 9,230 selling square feet.

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

39 Weeks Ended

August 2, 2025 August 3, 2024

November 1, 2025 November 2, 2024

Beginning 8,881 8,415

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Ending 82.5 78.3

*Selling square footage impact of converted stores is only provided if it equals or exceeds 0.1 million selling square feet.

The store counts above do not include new stores until they are opened for sales.

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13 Weeks Ended 39 Weeks Ended

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

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Sales Growth 4.2% 1.8% 5.4% 1.6%

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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 August 2, 2025 and August 3, 2024 is as follows:

Net sales per selling square foot for the 52 weeks ended November 1, 2025 and November 2, 2024 is as follows:

52 Weeks Ended

August 2, 2025 August 3, 2024

November 1, 2025 November 2, 2024

Net sales per selling square foot $236 $233

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Strategic Initiatives and Recent Developments

We continue to execute on a number of strategic initiatives to drive productive sales growth, improve operating efficiency, invest in technology, and expand our culture of service to our associates.

These initiatives include, among others, and in no particular order, the following.

Dollar Tree Merchandising.

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 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.

Beginning in the first quarter of 2025, new tariffs were announced on imports to the U.S.

Tariffs”), including additional tariffs on imports from China, Mexico, Canada and other countries from which we import goods.

In response, several countries have imposed, or threatened to impose, reciprocal tariffs on imports from the U.S.

and other retaliatory measures.

Various modifications and delays to the U.S.

Tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures.

We are actively implementing mitigation strategies to offset the impact of cost inflation including tariffs as noted above, by negotiating lower product costs, rebates or invoice deductions with our suppliers, shifting supply sources to alternate countries, changing our product assortment or discontinuing certain items, or increasing our prices.

We continue to execute on a number of strategic initiatives across our business to drive profitable growth for Dollar Tree as a standalone banner following the sale of Family Dollar.

During our Investor Day on October 15, 2025, we outlined our operational strategy for the years ahead, including an expanded, more relevant assortment, agile cost management, a more connected customer experience in stores, new store growth, and improved store conditions and operations, supported by an evolving supply chain and disciplined financial management.

Some of these initiatives and other recent developments, in no particular order, include the following.

Merchandising .

In addition to our $1.25 price point, we continue to expand our multi-price offerings to provide a broader, more relevant assortment and differentiated value to our customers.

As of November 1, 2025, we carried this multi-price assortment in more than 5,000 of our stores.

In August 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.

Cost Management.

We are actively implementing mitigation strategies to offset the impact of cost pressures and inflation, including tariffs, by re-negotiating supplier terms, re-engineering products for efficiency, shifting country of origin where it adds advantage, discontinuing lower-margin or underperforming items and executing targeted retail price changes.

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 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.

The ultimate impact of cost inflation including tariffs and other related measures remains uncertain and will depend on several factors, including whether additional or incremental U.S.

Tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, the overall magnitude and duration of these measures, and the costs and effectiveness of, and consumer response to, our mitigation efforts.

Our Workforce & Our Workplace.

In addition, our long-term strategy includes a disciplined approach to managing our selling, general and administrative expenses to drive operating leverage and profitability.

During fiscal 2025, we have experienced increased costs associated with the tariff environment and implementation of our mitigation strategies, including discrete price-change costs.

We expect our results to continue to be impacted by near-term challenges, including higher costs due to the volatility in the tariff environment, in the fourth quarter of fiscal 2025.

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

The ultimate impact of cost inflation, including tariffs and other related measures, remains uncertain and will depend on several factors, including whether additional or incremental tariffs or other measures are announced or imposed, to what extent other countries implement tariffs or other retaliatory measures in response, the overall magnitude and duration of these measures, and the costs and effectiveness of, and consumer response to, our mitigation efforts.

Our Workforce .

We are investing in our talent, including initiatives to provide competitive pay and benefits, enhanced training, and attractive career opportunities to deliver an enhanced associate experience, reduce turnover, and improve our store standards and efficiencies and ultimately the customer experience.

Additional initiatives include projects to optimize and modernize our stores, with a focus on improving the in-store experience through renovations and customer service enhancements.

Store Growth and Improved Conditions.

Our strategy includes continued new store growth, as well as improved store conditions and operations to deliver a consistent experience for our associates and customers, provide a stronger customer connection and drive profitable growth.

These initiatives include projects to optimize and modernize our stores, with a focus on increasing shelf space productivity, improving the in-store experience through refresh and renovation programs and customer service enhancements.

Supply Chain Optimization .

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.

Our supply chain initiatives include expanding and enhancing our distribution network, improving our transportation and inventory management capabilities and upgrading our warehouse management systems.

Investments are also

underway for enhancements in automation in existing buildings to improve efficiency.

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

In April 2025, we announced that we will be returning to Marietta, Oklahoma with a new, enhanced distribution center that is expected to be fully operational by spring 2027 with the capacity to serve 700 stores across the West and Southwest regions of the country.

We broke ground on the new Marietta distribution center in September 2025.

In October 2025, we announced that we purchased a 1.25 million square foot distribution center outside of Phoenix, Arizona, which we expect to open in spring 2026.

This new distribution center will strengthen our supply chain in the Southwest, servicing stores in Arizona, Colorado, Nevada, New Mexico and Utah.

Technology Investment .

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

Marietta, Oklahoma Distribution Center.

In the first quarter of fiscal 2024, a tornado destroyed our distribution center in Marietta, Oklahoma.

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 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.

Family Dollar Strategic Alternatives Review .

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.

Net proceeds from the sale consisted of $665 million paid at closing and $22 million to be received post-closing, subject to final adjustment under the terms of the purchase agreement.

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.

As of November 1, 2025, the remaining receivable for estimated net proceeds to be received totaled $14.7 million.

The Company has continuing involvement with Family Dollar under a transition services agreement, through which the Company and Family Dollar continue to provide certain services to each other for a period of 18 months following the date of sale.

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.

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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 and 26 weeks ended August 2, 2025 and August 3, 2024:

The following table contains results of operations data for the 13 and 39 weeks ended November 1, 2025 and November 2, 2024:

13 Weeks Ended 39 Weeks Ended

(in millions, except percentages)

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

November 1, 2025 November 2, 2024 November 1, 2025 November 2, 2024

Net sales $ 4,746.3 $ 4,338.0 $ 13,949.6 $ 12,569.1

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13 Weeks Ended 39 Weeks Ended

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

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Net sales $ 4,746.3 $ 4,338.0 9.4 % $ 13,949.6 $ 12,569.1 11.0 %

Comparable store net sales change 4.2 % 1.8 % 5.4 % 1.6 %

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.

The increase in net sales in the 13 weeks ended November 1, 2025 was a result of the comparable store net sales increase and net sales of $351.7 million at non-comparable stores.

Comparable store net sales increased 4.2% in the 13 weeks ended November 1, 2025, as a result of a 4.5% increase in average ticket, partially offset by a 0.3% decrease in customer traffic.

The increase in net sales in the 39 weeks ended November 1, 2025 was a result of the comparable store net sales increase and net sales of $1,037.7 million at non-comparable stores.

Comparable store net sales increased 5.4% in the 39 weeks ended November 1, 2025, as a result of a 3.6% increase in average ticket and a 1.8% increase in customer traffic.

13 Weeks Ended 39 Weeks Ended

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

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Gross profit $ 1,700.5 $ 1,534.1 10.8 % $ 4,920.1 $ 4,401.9 11.8 %

Gross profit margin 35.8 % 35.4 % 0.4 % 35.3 % 35.0 % 0.3 %

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.

Gross profit margin increased during the 13 weeks ended November 1, 2025 due to a 40 basis point decrease in cost of sales.

The cost of sales rate decreased to 64.2% during the 13 weeks ended November 1, 2025 from 64.6% during the same period last year

primarily due to improved mark-on from pricing initiatives, lower domestic and import freight costs, and favorable sales mix resulting from increased sales of higher margin discretionary merchandise as a percentage of net sales, partially offset by higher tariff costs, higher markdowns, and higher shrink costs resulting from unfavorable inventory results.

Gross profit margin increased during the 39 weeks ended November 1, 2025 due to a 30 basis point decrease in cost of sales.

The cost of sales rate decreased to 64.7% during the 39 weeks ended November 1, 2025 from 65.0% during the same period last year primarily due to improved mark-on from pricing initiatives, lower domestic and import freight costs, favorable sales mix resulting from increased sales of higher margin discretionary 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, higher shrink costs resulting from unfavorable inventory results, and increased distribution costs expense.

The higher markdowns for both the 13 weeks and 39 weeks ended November 1, 2025 included a $56.0 million write-off of various slow-turning SKUs recorded during the third quarter of fiscal 2025.

This reflects actions taken related to our ongoing strategic initiative to increase shelf space productivity, as described above.

Selling, General and Administrative Expenses

13 Weeks Ended 39 Weeks Ended

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

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Selling, general and administrative

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expense rate 29.2 % 27.8 % 1.4 % 28.7 % 27.7 % 1.0 %

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.

The selling, general and administrative expense rate increased 140 basis points during the 13 weeks ended November 1, 2025 primarily due to higher store payroll in support of our pricing initiatives and from wage increases, higher general liability claims costs, and higher depreciation expense from store investments, partially offset by lower stock compensation, lower corporate payroll, and leverage from the comparable store net sales increase.

The selling, general and administrative expense rate increased 100 basis points during the 39 weeks ended November 1, 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 lower stock compensation, lower corporate payroll, and leverage from the comparable store net sales increase.

Operating Income

13 Weeks Ended 39 Weeks Ended

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

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Operating income $ 343.3 $ 330.7 3.8 % $ 958.4 $ 928.4 3.2 %

Operating income margin 7.2 % 7.6 % (0.4) % 6.9 % 7.4 % (0.5) %

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.

Operating income margin decreased to 7.2% for the 13 weeks ended November 1, 2025 compared to 7.6% 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 6.9% for the 39 weeks ended November 1, 2025 compared to 7.4% 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 39 Weeks Ended

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

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Interest expense, net $ 21.9 $ 28.3 (22.6) % $ 67.4 $ 84.9 (20.6) %

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.

Interest expense, net decreased $6.4 million in the 13 weeks ended November 1, 2025 compared to the same period last year, primarily due to the repayment of our $1.0 billion principal amount of 4.00% Senior Notes in the second quarter of fiscal 2025, and higher interest income on investments, partially offset by higher borrowings of commercial paper.

Interest expense, net decreased $17.5 million in the 39 weeks ended November 1, 2025 compared to the same period last year, primarily due to the repayment of our $1.0 billion principal amount of 4.00% Senior Notes in the second quarter of fiscal 2025, and higher interest income on investments, partially offset by higher borrowings of commercial paper.

Other (Income) Expense, Net

13 Weeks Ended 39 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.

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Other (income) expense, net $ 0.1 $ 0.1 — % $ (62.0) $ 0.2 (31,100.0) %

Other income, net was $62.0 million in the 39 weeks ended November 1, 2025 compared to expense of $0.2 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 39 Weeks Ended

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

(dollars in millions) November 1, 2025 November 2, 2024 Percentage Change November 1, 2025 November 2, 2024 Percentage Change

Provision for income taxes $ 76.7 $ 70.0 9.6 % $ 239.4 $ 201.0 19.1 %

Effective tax rate 23.9 % 23.2 % 0.7 % 25.1 % 23.8 % 1.3 %

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.

The effective tax rate increased to 23.9% for the 13 weeks ended November 1, 2025 compared to 23.2% for the comparable prior year period, primarily due to an increase in expected state taxes, partially offset by a decrease in non-deductible compensation.

The effective tax rate increased to 25.1% for the 39 weeks ended November 1, 2025 compared to 23.8% for the comparable prior year period, primarily due to an increase in expected state taxes and reduced benefits from the vesting of share-based payment awards, partially offset by a decrease in non-deductible compensation.

Liquidity and Capital Resources

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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 26 weeks ended August 2, 2025 and August 3, 2024:

The following table compares our cash flows for the 39 weeks ended November 1, 2025 and November 2, 2024:

39 Weeks Ended

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

(in millions) November 1, 2025 November 2, 2024

Net cash provided by (used in):

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Net cash provided by operating activities decreased $377.3 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 investing activities decreased $568.5 primarily due to $672.0 million of net proceeds received for the sale of Family Dollar, and lower capital expenditures, partially offset by $246.0 million of cash divested from the sale of Family Dollar.

Net cash used in financing activities increased $1,290.6 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.

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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.

The Company expects the impact will defer the payment of approximately $100.0 million of current federal income taxes.

At November 1, 2025, our long-term borrowings were $2.45 billion.

Additionally, we had $1.5 billion available under our new Five-Year Credit Facility and $1.0 billion available under our 364-Day Revolving Credit Facility.

Refer to Note 4 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q for further discussion of the new Five-Year Credit Facility and 364-Day Revolving Credit Facility.

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.

We have a commercial paper program which as of November 1, 2025 allowed us to issue unsecured commercial paper notes up to an aggregate amount outstanding at any time of $1.5 billion.

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 $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.

As of November 1, 2025, $620.0 million principal amount of notes were outstanding under the commercial paper program.

Additionally, we have $85.0 million in trade letters of credit with various financial institutions, under which $3.1 million was committed to letters of credit issued for routine purchases of imported merchandise as of November 1, 2025.

Our credit facilities serve as a liquidity backstop for the repayment of notes outstanding under the commercial paper program.

On November 10, 2025, we increased the size of our commercial paper program to permit the issuance of commercial paper notes up to a maximum aggregate amount outstanding at any time of $2.5 billion, compared to the previous maximum permitted of $1.5 billion.

The $2.5 billion maximum is authorized through the maturity date of our 364-Day Revolving Credit Facility on March 20, 2026 or such later date to which the maturity of the 364-Day Facility or a similar replacement financing arrangement is extended, and will return to $1.5 billion thereafter.

We repurchased 15,007,491 and 3,283,837 shares of common stock on the open market at a cost of $1.3 billion and $403.6 million, including applicable excise tax, during the 39 weeks ended November 1, 2025 and November 2, 2024, respectively.

Of the shares repurchased during the 39 weeks ended November 1, 2025, $12.8 million settled subsequent to November 1, 2025 and these amounts were accrued in the accompanying unaudited Condensed Consolidated Balance Sheets.

In July 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 November 1, 2025, we had $2.0 billion remaining under the $2.5 billion Board repurchase authorization.

Subsequent to November 1, 2025, we purchased an additional 1,711,878 shares of common stock on the open market at a cost of $176.0 million, as of December 1, 2025.

Critical Accounting Estimates and Assumptions

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis