What changed in this filing

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Item 1A. Risk Factors

2026-03-16 compared with 2025-03-26 · 202 added, 207 removed, 207 unchanged (66% of the section changed)

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Profitability and Operational Risks

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

Future increases in costs such as the cost of merchandise, wage and benefit costs, ocean shipping rates, domestic freight costs, fuel and energy costs, tariffs, duties and other measures that create barriers to or increase the costs associated with international trade, and store occupancy costs, whether due to inflation and economic conditions, geopolitical tensions, or otherwise, would reduce our profitability.

For example, recent U.S.

tariffs imposed or threatened to be imposed on China, Mexico, Canada, and other countries and any retaliatory actions taken by such countries could result in us incurring substantial additional costs to procure a large portion of the merchandise we offer.

In addition, we have experienced increases in wage rates and labor costs and distribution costs in prior years, and we expect further increases in certain cost categories in fiscal 2025.

In addition to pressures from a tight labor market, we have incurred additional costs as a result of recent minimum wage increases by certain states and localities, and we expect additional minimum wage increases by states and localities in fiscal 2025.

In addition, the U.S.

Department of Labor finalized a rule in 2024 raising the minimum salary for associates to have exempt status under the Fair Labor Standards Act.

Although the rule’s scheduled January 1, 2025 increase to the salary thresholds was recently vacated by a federal court, this or similar future rules could materially impact our wage rates and labor costs.

Separately, government or industry actions addressing the impact of climate change, or shifts in customer preferences for more sustainable products, or our adoption of goals or initiatives aligned with related stakeholder expectations may result in increases in our merchandise or operating costs.

In our Dollar Tree segment, we continue to expand our brand assortment at the $1.25 price point and our multi-price product assortment generally, which began with the introduction of $3 and $5 Dollar Tree Plus product 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.

Although we have increased our price points at our Dollar Tree stores and expanded our multi-price assortment, we may not be able to adjust our prices to offset cost increases.

Further, raising the price point of merchandise could cause customers to buy fewer products.

As a result, our ability to adjust our product assortment, to operate more efficiently or to increase our comparable store net sales in order to offset cost increases is critical to maintaining our profitability levels.

Further, supply chain constraints and higher commodity costs could make it more difficult for us to obtain sufficient quantities of certain products and could negatively affect our product assortment and merchandise costs.

We can give no assurance that we will be able to adjust our product assortment, operate more efficiently or increase our comparable store net sales in the future.

Please see “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” for further discussion of the effect of economic factors on our operations.

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

Future increases in costs such as the cost of merchandise, wage and benefit costs, ocean shipping rates, domestic freight costs, fuel and energy costs, tariffs and other trade-related measures, and store occupancy costs, whether due to inflation and economic conditions, government action, geopolitical tensions, or otherwise, would reduce our profitability.

For example, we recently have experienced, and could continue to experience, increased merchandise costs associated with the tariff environment and related mitigation efforts.

In addition, we have experienced increases in wage rates and labor costs, distribution costs, and unfavorable development in self-insured general liability claims in prior years, and we expect further increases in certain cost categories in fiscal 2026.

In addition to pressures from a tight labor market, we recently have experienced increased labor costs in connection with our multi-price rollout.

We also have incurred additional costs as a result of recent minimum wage increases by certain states and localities, and we expect additional minimum wage increases by states and localities in fiscal 2026.

We continue to expand and refine our multi-price assortment to deliver a broader, more relevant offering while preserving our foundational value proposition.

Although our multi-price assortment has grown, the majority of our products are priced at $1.25, and 85% of products in the average Dollar Tree store are currently priced at $2.00 or less, and we generally have fewer price bands for our goods than other retailers.

Accordingly, we may not be able to adjust our prices to effectively offset cost increases while providing

expected value.

Further, raising the price points of merchandise could cause customers to buy fewer products and affect our competitive position with other retailers.

Our ability to re-negotiate supplier terms, re-engineer products for efficiency, shift country of origin where it adds advantage or discontinue lower-margin or underperforming items, in addition to targeted retail price changes, in order to address a volatile cost environment is critical to maintaining our profitability levels.

We can give no assurance that we will be able to successfully mitigate cost pressures, maintain our profitability and competitiveness and provide our customers with desirable merchandise and value that they expect in the future.

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

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We rely on the timely availability of imported goods at favorable wholesale prices.

Merchandise imported directly typically accounts for approximately 40% of our Dollar Tree segment’s total retail value purchases and approximately 12% of Family Dollar’s total retail value purchases.

Merchandise imported directly typically accounts for approximately 40% of total retail value purchases.

In addition, we believe that a significant portion of our goods purchased from domestic vendors is imported.

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Among our foreign suppliers, China is the source of the majority of our direct imports.

In early 2025, the United States imposed or threatened to impose significant additional tariffs, including reciprocal tariffs, on China, Mexico, Canada and other countries from which we import goods.

In addition, the Trump administration has announced plans to impose significant fees on Chinese shipping companies and any Chinese-built vessels that enter U.S.

The imposition of these or other additional tariffs on imported merchandise or other actions against China or other countries from which we import goods, and any retaliatory actions or other responses by such countries, could impair our ability to meet customer demand and could result in lost sales, an increase in our cost of merchandise or other adverse impacts on our operations, unless we are able to successfully offset or mitigate these impacts.

Our mitigation efforts could include negotiating lower product costs, rebates or invoice deductions;

shifting supply sources to alternate countries;

changing our product assortment or discontinuing certain items;

or increasing our prices.

Even if we are able to mitigate the impact of tariffs in the short-term through one or more of the foregoing actions, a change in product assortment, reduced product offering or increase in pricing could reduce the competitiveness of our products, particularly if our competitors do not keep pace with any such changes or are able to offset the impact of tariffs through other actions.

Furthermore, in response to the recent tariffs announced by the United States, China and other countries have imposed or proposed additional tariffs on certain exports from the United States.

These and any other retaliatory countermeasures imposed by countries subject to such tariffs, such as China, could increase our, or our vendors’, import expenses.

Additionally, even if the products we import are not directly impacted by additional tariffs, the imposition of such additional tariffs on goods imported into the United States could cause increased prices for consumer goods in general, which could have a negative impact on consumer spending for discretionary items reducing demand for our products.

These direct and indirect impacts of increased tariffs or trade restrictions implemented by the United States, both individually and cumulatively, could have a material adverse effect on our business, financial condition and results of future operations.

In early 2025, the United States imposed a new tariff and trade policy, announcing significant additional tariffs on a wide variety of products originating from countries worldwide, including China, and other countries from which we import goods.

Subsequently, there have been various updates and revisions to these tariffs and the United States’ tariff policy, with some tariffs delayed or temporarily paused as country-specific agreements have been negotiated with certain countries.

On February 20, 2026, the Supreme Court ruled that certain of the tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”) were unlawful.

Following the Supreme Court’s decision, the United States imposed new, temporary tariffs on imports from all countries under Section 122 of the Trade Act of 1974 and could take action to invoke other laws to collect tariffs.

While the company has taken action to preserve its rights, there remains substantial uncertainty regarding the impacts of this decision on the availability, timing, and amount of potential refunds, if any, for the invalidated tariffs, the scope and duration of newly announced tariffs, and the possibility of further additional or modified tariffs or retaliatory actions.

The imposition of tariffs on imported merchandise or other actions against China or other countries from which we import goods, and any retaliatory actions or other responses by such countries, could negatively impact product availability or impair our ability to meet customer demand and could result in lost sales, an increase in our cost of merchandise or other adverse impacts on our operations, unless we are able to successfully offset or mitigate these impacts.

We have actively implemented mitigation strategies to offset the impact of tariffs and other cost pressures 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 experienced increased costs during fiscal 2025 related to the implementation of these mitigation strategies, including significant labor and other discrete costs related to price changes, and our results could continue to be negatively impacted by tariffs

and related measures in the future.

We expect tariff volatility to persist in the near-term, and implementation costs associated with our mitigation strategies may continue to be experienced before the benefits from those efforts are expected to materialize.

Further, there is no guarantee that we will be able to successfully mitigate the impact of tariffs through one or more of the foregoing strategies or that our customers will respond favorably to the implementation of these strategies.

The competitiveness of our products could be reduced if our competitors are able to react quickly to changes in the tariff environment to increase the relative value of their products or are otherwise able to offset the impact of tariffs.

These direct and indirect impacts and the collective interaction of tariffs and other related measures, our mitigation strategies and those of our competitors, our customers’ response and consumer behavior generally, and other factors, could have a material adverse effect on our business, financial condition and results of operations.

In addition, the U.S.

Department of Commerce recently has conducted investigations of anti-dumping and countervailing duties with respect to paper plates and aluminum pans.

Based on determinations by the Department of Commerce and International Trade Commission, we accrued $25.0 million related to additional duties on paper plates imported during fiscal 2024.

Any additional duties related to these or other goods that we import could increase the cost of our imported merchandise and adversely impact our operations and profit margins.

Please see “Our profitability is vulnerable to cost pressures from increases in merchandise, shipping, freight and fuel costs, wage and benefit and other operating costs” for further discussion of the effect of costs on our operations.

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

Our success is dependent on our ability to import or transport merchandise to our distribution centers and store, pick and ship merchandise to our stores in a safe, timely and cost-effective manner, and we are relying on a number of initiatives to improve upon our logistics execution, including new management systems.

Department of Commerce recently has conducted investigations of anti-dumping and countervailing duties with respect to various goods we import from foreign countries.

For example, based on determinations by the Department of Commerce and International Trade Commission, we accrued $25.0 million related to additional duties on paper plates imported during fiscal 2024.

Any additional duties related to these or other goods that we import, including any imposed on a retroactive basis, could increase the cost of our imported merchandise and adversely impact our operations and profit margins.

Please see “Our profitability is vulnerable to cost pressures from increases in merchandise, shipping, freight and fuel costs, wage and benefit and other operating costs” and Note 5 to our consolidated financial statements under the caption “Contingencies” for further discussion of the effect of costs on our operations.

Higher costs and disruptions in our supply chain could have an adverse impact on our sales and profitability.

Our success is dependent on our ability to import or transport merchandise to our distribution centers and deliver merchandise to our stores in a safe, timely and cost-effective manner.

We are executing on a number of initiatives to modernize our distribution network, expand distribution center capacity, enhance warehouse management systems, and improve transportation systems.

These initiatives are expected to increase our costs in the short term.

In addition to our internal distribution network, we also rely heavily on third parties including ocean carriers and truckers.

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If we fail to execute properly, we may not be able to deliver merchandise at the quality and in the quantities and at the times demanded to successfully meet our customers’ demand.

We have also experienced and could continue to experience challenges in attracting and retaining an adequate and reliable workforce.

Although we have offered enhanced wages in certain markets to address the shortage of labor at our distribution centers, such measures have increased our costs and are expected to continue to increase our costs, which could have an adverse effect on our margins and profitability.

• Distribution center capacity .

We recently have experienced capacity pressure in our distribution network and are working to expand our distribution center capacity, including to replace that lost with our Marietta, Oklahoma distribution center.

To the extent that we are unable to, or experience delays in, opening new distribution centers or otherwise expanding our capacity, our product availability, product mix, overall sales, and merchandise margins could be impacted, especially at Dollar Tree.

To support our growth initiatives, we are working to expand our distribution center capacity, including to replace that lost following the 2024 tornado that destroyed our Marietta, Oklahoma distribution center.

In 2025, we purchased a distribution center outside of Phoenix, Arizona that we plan to open in 2026 and broke ground on a new distribution center in Marietta, Oklahoma that is expected to be fully operational by 2027.

• Shipping costs.

We have previously experienced significant changes in freight costs.

Ocean shipping and other freight costs could increase because of shocks or disruptions in the global supply chain and as freight contracts terminate or renew.

While we experienced lower domestic and import freight costs in fiscal 2025, we expect those costs to increase in the future.

We could experience increased freight costs due to shifts in country of origin to mitigate tariff impacts and increased spot market usage.

Ocean shipping and other freight costs could increase because of the macroeconomic environment, armed conflicts and other geopolitical tensions, or other shocks or disruptions in the global supply chain.

As freight contracts terminate or renew, our costs or benefits may lag changes in market rates based on the timing of freight contract terms.

A significant increase in our freight costs could have a material adverse impact on our business and results of operations.

A return to more normalized costs/rates may lag a decrease in market rates based on the timing of freight contract terms.

• Trucking and diesel fuel costs.

We have experienced significant increases in trucking costs in recent years due to a truck driver shortage and other factors.

The truck driver shortage also required us to increase our use of more expensive surge carriers to transport our merchandise.

• Trucking and fuel costs .

We have experienced in recent years, and could continue to experience, difficulties in sourcing adequate truck drivers, which could increase our costs or require us to increase our use of more expensive surge carriers to transport our merchandise.

In addition, we could experience increased costs related to fuel prices due to ongoing conflicts in the Middle East and Ukraine and other geopolitical tensions.

• Shipping disruptions .

We have experienced disruptions in the global supply chain, including issues with shipping capacity and port congestion, and could experience disruptions because of geopolitical tensions and other international events such as armed conflict, war, economic sanctions, piracy or acts of terrorism.

Tensions in the Red Sea and traffic restrictions through the Panama Canal caused global supply chain disruptions in recent years and may continue, which could increase ocean shipping costs and transit times.

Tensions in the Persian Gulf and Red Sea and traffic restrictions through the Panama Canal caused global supply chain disruptions in recent years and may continue, which, along with ongoing conflicts in the Middle East, could increase ocean shipping costs, transit times and port congestion.

Our receipt of imported merchandise has been and may in the future be disrupted or delayed because of these or other factors.

Delays could potentially have a material adverse impact on future product availability, product mix, overall sales, and merchandise margins, especially at Dollar Tree.

Delays could potentially have a material adverse impact on future product availability, product mix, overall sales, and merchandise margins.

• Labor disagreement .

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• Vulnerability to natural or man-made disasters, including climate change .

A fire, explosion or natural disaster at a port or any of our distribution or store support facilities could result in a loss of merchandise and impair our ability to adequately stock our stores.

Some facilities are vulnerable to earthquakes, hurricanes, tornadoes or floods, and an increase in the severity and frequency of extreme weather events and patterns may increase our operating costs, disrupt manufacturing or our supply chain, change customer buying patterns, result in closures of our stores or distribution and store support centers and impede physical access to our stores.

During 2024, a tornado destroyed our Dollar Tree distribution center in Marietta, Oklahoma.

In addition to the loss of inventory in the facility and the facility itself, we incurred additional costs as a result of additional stem miles for product delivery and outside storage for the stores previously serviced by that distribution center, and we expect those costs to continue in 2025.

A fire, explosion or natural disaster at a port or any of our distribution or store support facilities could result in a loss of merchandise and increased costs and impair our ability to adequately stock our stores.

Some of our facilities are in areas that are vulnerable to earthquakes, hurricanes, tornadoes or floods, such as the tornado that destroyed our Marietta, Oklahoma distribution center in 2024 and resulted in the loss of inventory and the facility itself as well as additional distribution and storage costs.

In addition, the potential long-term impacts of a changing climate may be widespread and unpredictable and present the possibility of physical risks (such as extreme weather conditions or rising sea levels) and transition risks (such as regulatory changes and reputational considerations).

For example, an increase in the severity and frequency of extreme weather events and patterns may increase our operating costs, disrupt manufacturing or our supply chain, change customer buying patterns, result in closures of our stores or distribution and store support centers and impede physical access to our stores.

• Direct-to-store deliveries .

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To the extent that supply chain disruptions and higher costs affect our suppliers, we may be subject to delays or reductions in deliveries and higher costs for merchandise.

We may stop selling or recall certain products for safety-related or other issues.

We may stop selling or recall certain products, including our private label brands and imported products, for safety-related or other issues, including product contamination, product content, improper manufacturing or distribution processes, improper testing, product mislabeling or product tampering.

We may also stop selling or recall products if the products, the operations of our suppliers, or our operations violate applicable laws or regulations, including food, drug and cosmetic safety laws, or raise potential health and safety-related issues, including improper storage, product mishandling, contamination or other adulteration, or when products or their contents could cause injury, illness or death.

Any recall may require significant management attention, and we could experience significant costs, lost sales, compliance or enforcement actions by governmental authorities which could result in fines or other penalties, and/or product liability legal claims and consumer lawsuits.

Recalls may also subject us to public claims of false or deceptive advertising and other criticism.

A significant product liability or other legal judgment against us, a regulatory enforcement action or a product recall could materially and adversely affect our reputation, financial condition and/or results of operations.

Additionally, any product recall may lead to increased scrutiny of our operations by regulatory agencies, requiring further management attention and potential legal fees and other expenses.

We could experience a decline in consumer confidence and spending because of concerns about the quality and safety of our products or our brand standards.

We could experience a decline in consumer confidence and spending if our customers become concerned about the quality and safety of the products we sell.

The sale of private brand items has been an important component of our sales growth and gross profit rate enhancement plans.

The sale and expansion of these offerings also subjects us to or increases certain risks, such as:

liability claims and product recalls;

disruptions in raw material and finished product supply and distribution chains;

supplier labor and human rights issues, and other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail.

Failure to appropriately address these risks could materially and adversely affect our private brand initiatives, reputation, results of operations and financial condition.

Inflation, other changes in economic conditions or consumer spending habits could impact our sales or profitability.

Our growth is dependent on our ability to increase sales in existing stores.

Our strategic plan includes improvements in store productivity through initiatives to improve store standards and operational consistency, refresh and renovation programs, shelf productivity optimization, and elevated store execution and cleanliness.

Our ability to drive traffic and increase sales in our existing stores is critical to our success and is dependent on a variety of factors, including merchandise quality, assortment, price, relevance and availability, marketing efforts, store operations and customer satisfaction.

In addition, increased competition could adversely affect our sales.

If our initiatives to improve store productivity are unsuccessful, our customers do not respond favorably to these initiatives, or we otherwise are unable to grow our sales or productivity in line with our expectations, our margins and profitability would be adversely affected.

Our growth is dependent on our ability to expand our square footage profitably.

Expanding our square footage profitably depends on a number of uncertainties, including our ability to locate, lease, build out and open or expand stores in suitable locations on a timely basis under favorable economic terms.

We also open or expand stores within our established geographic markets, where new or expanded stores may draw sales away from our existing stores.

Obtaining an increasing number of profitable stores is an ever-increasing challenge.

In certain cases, we have obtained substantial numbers of leases from other retailers, either by assumption in bankruptcy or by sublease of their closed stores, which may subject us to risks relating to their creditworthiness, such as to the original landlords.

In addition, our expansion is dependent upon the company and its third-party developers’ abilities to acquire land, obtain financing, and secure necessary permits and approvals.

We have experienced higher construction, rent, commodity and other costs associated with the build-out of new stores and the renovation of existing stores.

We have also experienced delays in new store openings and the renovation of existing stores due to inspection, permitting and contractor delays and limitations on the availability of certain fixtures and equipment.

We anticipate these increased costs and delays may continue for the foreseeable future, which could adversely affect our sales and profitability.

Further, we may not manage our expansion effectively, and our failure to achieve our expansion plans could materially and adversely affect our business, financial condition and results of operations.

Our sales and profitability are affected by our product assortment and customer response to the mix of products we sell.

Our success depends on our ability to select and obtain sufficient quantities of relevant merchandise at prices that allow us to sell such merchandise at profitable and appropriate prices, and to market such merchandise effectively to customers.

We continue to expand and refine our multi-price assortment to deliver a broader, more relevant offering while preserving our foundational value proposition.

However, if our value proposition does not meet customer expectations or we do not provide a selection of merchandise that is attractive to our customers, our products will be less desirable to our customers and our traffic and sales could suffer.

Further, our failure to drive brand clarity and loyalty around our expanded product assortment could negatively affect our customer’s perception of our value proposition or harm our reputation.

In addition, the success of our business depends in part on our ability to anticipate, identify and respond promptly to evolving trends in consumer preferences.

If we are unable to accurately predict the products that our customers will demand, implement competitive and effective pricing and marketing strategies, or timely and appropriately respond to changing demographics, consumer needs, preferences or spending patterns, then the demand for our products (including our higher-margin discretionary merchandise), our market share and our results of operations could be adversely affected.

In addition, our product mix is affected by the supply of goods and could be negatively impacted by various factors, including those described under “Risks associated with merchandise supply could adversely affect our financial performance” and “Higher costs and disruptions in our supply chain could have an adverse impact on our sales and profitability” within this “Item 1A.

Risk Factors.”

Changes in economic conditions or consumer spending habits could impact our sales or profitability.

A deterioration in economic conditions could reduce consumer spending or cause customers to shift their spending to products we either do not sell or do not sell as profitably.

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Furthermore, factors that could adversely affect consumer disposable income could decrease our customers’ spending on products we sell most profitably.

In fiscal 2024, we continued to experience a material shift in consumer purchasing from higher-margin discretionary merchandise to lower-margin consumable goods, and we expect this trend could continue in 2025.

Over the past several years, we have experienced a shift in consumer purchasing from higher-margin discretionary merchandise to lower-margin consumable goods.

Factors that could reduce our customers’ disposable income and over which we exercise no influence include inflation in food, housing, fuel or other energy costs, increased unemployment, increases in mortgage and interest rates, lack of available credit, higher tax rates and other changes in tax laws, increasing healthcare costs, and changes in government subsidies such as unemployment and food assistance programs, including the Supplemental Nutrition Assistance Program (“SNAP”).

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We have limited or no ability to control many of these factors.

Our growth is dependent on our ability to increase sales in existing stores and to expand our square footage profitably.

Existing store sales growth is critical to good operating results and is dependent on a variety of factors, including merchandise quality, price, relevance and availability, store operations and customer satisfaction.

In addition, increased competition could adversely affect our sales.

We have embarked on several initiatives to increase our sales and profitability, some of which remain in the early stages.

If these initiatives are unsuccessful or we otherwise are unable to grow our sales in line with our expectations, our margins and profitability would be adversely affected.

In addition, we have entered into an agreement to sell the Family Dollar business.

For more information, see “ Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations ” and Note 15 to our consolidated financial statements.

If that sale is completed, our future growth and operating results will be dependent on our ability to increase sales and profitability in our Dollar Tree stores.

We also open or expand stores within our established geographic markets, where new or expanded stores may draw sales away from our existing stores.

Obtaining an increasing number of profitable stores is an ever-increasing challenge.

In addition, our expansion is dependent upon the company and its third-party developers’ abilities to acquire land, obtain financing, and secure necessary permits and approvals.

We have experienced higher construction, commodity and other costs associated with the build-out of new stores and the renovation of existing stores.

We have also experienced delays in new store openings and the renovation of existing stores due to inspection, permitting and contractor delays.

In addition, we have experienced delays in new store openings due to limitations on the availability of certain fixtures and equipment.

We anticipate these increased costs and delays may continue for the foreseeable future, which could adversely affect our sales and profitability.

Further, we may not manage our expansion effectively, and our failure to achieve our expansion plans could materially and adversely affect our business, financial condition and results of operations.

Our profitability is affected by the mix of products we sell.

Our gross profit margin decreases when we increase the proportion of higher cost goods we sell.

For example, some of our consumable products carry higher costs than other goods, so our gross profit margin will be negatively impacted as the percentage of our sales from higher cost consumable products increases.

Imported merchandise and private label goods generally carry lower costs than domestic goods.

Our product mix is affected by the supply of goods, including imported goods, and could be negatively impacted

by various factors, including those described under “ Risks associated with merchandise supply could adversely affect our financial performance ” on page 10 and “ Higher costs and disruptions in our distribution network could have an adverse impact on our sales and profitability ” on page 11.

Our success also depends on our ability to select and obtain sufficient quantities of relevant merchandise at prices that allow us to sell such merchandise at profitable and appropriate prices.

We recently have been expanding our multi-price product assortment at Dollar Tree, which now comprises a wide assortment of consumable and discretionary product at varying price points.

If our sales price that is too high, or we do not provide a selection of popular merchandising items, our products will be less attractive to our customers and our sales could suffer.

We are continuing to refine our pricing strategy and expand our multi-price assortment at Dollar Tree to provide value to our customers and increase customer traffic and loyalty and store productivity.

Our inability to successfully implement our pricing strategies or multi-price assortment and provide our customers with desirable merchandise at appropriate prices could have a negative effect on our business.

We face significant pressure from competitors which may reduce our sales and profits.

The retail industry is highly competitive with respect to price, customers, store locations, merchandise quality, product assortment, service offerings, customer service, shopping experience, product sourcing, labor, and market share.

The marketplace is highly fragmented as many different retailers compete for market share by utilizing a variety of sales channels, store formats and merchandising strategies, including mobile and online shopping.

Our ability to successfully differentiate ourselves depends on many competitive factors, including customer perceptions regarding our shopping experience, the safety and cleanliness of our stores, our ability to offer attractive products at affordable prices, and our in-stock levels.

Further, to remain competitive, we may be required to change our product offerings or lower our prices, but our ability to do so may be limited or delayed with the result that we could see lower traffic or sales or reduced profitability.

We expect competition to increase in the future.

There are no significant economic barriers for others to enter our retail sector.

We compete with discount stores and many other retailers, including mass merchandise, warehouse club, grocery, drug, convenience, variety, online retailers, and certain specialty stores.

Some of our current or potential competitors have greater financial, distribution, marketing and other resources than we do.

In addition, the substantial growth in e-commerce and expanded availability of mobile, web-based and other digital technologies has encouraged the entry of many new competitors, new business models, and an increase in competition from established companies looking for ways to create convenient and competitive online or mobile shopping alternatives.

While we have partnered with online personal shopping providers like Instacart and UberEats, some of our current and potential competitors have more significant online and mobile shopping platforms or other advances in technologies and capabilities (including artificial intelligence) than we currently do.

We cannot guarantee that we will continue to be able to compete successfully against existing or future competitors, and we believe that doing so may require substantial capital expenditures, for example in technology.

Our ability to effectively compete will depend upon our ability to successfully develop and execute on our strategic initiatives and to anticipate or respond effectively to competitive pressures, industry changes that may include mergers and acquisitions, technological advancements and changing customer preferences and shopping habits.

If we fail to do so, it could adversely affect our operating results and financial condition.

Please see “ Item 1.

Business ” for further discussion of the effect of competition on our operations.

Our business is seasonal, and adverse events during the fourth quarter could materially affect our full-year financial results.

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Lead times for seasonal product purchases are longer and could result in inventory markdowns if sales do not meet expectations.

A reduction in sales during these periods could adversely affect our operating results, particularly operating and net income, to a greater extent than if a reduction occurred at other times of the year.

Adverse events such as inclement

weather or unfavorable economic conditions during the fourth quarter could cause a reduction in sales during these periods, which in turn could adversely affect our operating results, particularly operating and net income, to a greater extent than if a reduction occurred at other times of the year.

Untimely merchandise delays due to receiving or distribution problems could have a similar effect.

When Easter is observed earlier in the year, the selling season is shorter and, as a result, our sales could be adversely affected.

Easter was observed on March 31, 2024, and will be observed on April 20, 2025.

Easter was observed on April 20, 2025, and will be observed on April 5, 2026.

Failure to protect our inventory or other assets from loss and theft may impact our financial results.

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We have experienced charges in the past, and our inability to cost-effectively prevent and/or minimize the loss or theft of assets, or to accurately predict and accrue for the impact of those losses, could adversely affect our operating results.

We may stop selling or recall certain products for safety-related or other issues.

Recalls may also subject us to public claims of false or deceptive advertising and other criticism.

Additionally, any product recall may lead to increased scrutiny of our operations by regulatory agencies, requiring further management attention and potential legal fees and other expenses.

We could experience a decline in consumer confidence and spending because of concerns about the quality and safety of our products or our brand standards.

We could experience a decline in consumer confidence and spending if our customers become concerned about the quality and safety of the products we sell.

Our privately sourced and control brand items are an important component of our product mix and our sales and profitability growth plans.

Broad market acceptance of our private brands depends on many factors, including pricing, quality, customer perception, and timely development and introduction of new products.

The sale and expansion of these offerings also subjects us to or increases certain risks, such as:

product liability claims and product recalls;

disruptions in raw material and finished product supply and distribution chains;

supplier labor and human rights issues, and other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail.

Failure to appropriately address these risks could materially and adversely affect our private brand initiatives, reputation, results of operations and financial condition.

We have risks related to the security of our facilities including risks of personal injury to customers or associates.

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Any such incidents of violence could have a negative effect on our business, financial condition, results of operations, associate relations or customer reputation.

We face significant pressure from competitors which may reduce our sales and profits.

To remain competitive, we may be required to change our product offering or lower our prices, but our ability to do so may be limited with the result that we could see lower sales or reduced profitability.

We expect competition to increase in the future.

There are no significant economic barriers for others to enter our retail sector.

We compete with discount stores and many other retailers, including mass merchandise, warehouse club, grocery, drug, convenience, variety, online retailers, and certain specialty stores.

Some of our current or potential competitors have greater financial, distribution, marketing and other resources than we do.

Some of our current and potential competitors have more significant online shopping platforms than we do, and our reliance on the in-store shopping experience could reduce our competitiveness.

Our ability to effectively compete will depend upon our ability to successfully develop and execute on our strategic initiatives.

Please see “ Item 1.

Business ” for further discussion of the effect of competition on our operations.

Our business could be adversely affected if we fail to manage our organizational talent and capacity, including attracting and retaining qualified associates and key personnel.

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Our ability to meet labor needs while controlling costs is subject to many external factors, including competition for and availability of qualified personnel, unemployment levels, wage rates and salary levels (including the heightened possibility of increased federal, state and/or local minimum wage rates/salary levels), health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs), labor activism, associate safety issues, associate expectations and productivity, and our reputation and relevance within the labor market.

If we are unable to attract, develop and retain adequate numbers of qualified associates, our operations, customer service levels, legal and regulatory compliance, and support functions could suffer.

If we are unable to attract, develop and retain adequate

numbers of qualified associates, our operations, customer service levels, legal and regulatory compliance, and support functions could suffer.

Further, our stores are typically staffed with relatively few associates, which increases our exposure to the foregoing risks.

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In addition, failure to develop an adequate succession plan for senior positions could reduce our organizational capabilities and competitive advantage during a transition.

We recently have experienced turnover in senior positions, which, in addition to organizational changes related to our pending sale of the Family Dollar business, can disrupt progress in implementing business strategies, result in a loss of institutional knowledge, cause greater workload demands for remaining team members and divert attention away from key areas of the business, or otherwise negatively impact the company’s growth prospects or future operating results.

We recently have experienced turnover in senior positions, which, in addition to organizational changes related to our sale of the Family Dollar business, can disrupt progress in implementing business strategies, result in a loss of institutional knowledge, cause greater workload demands for remaining team members and divert attention away from key areas of the business, or otherwise negatively impact the company’s growth prospects or future operating results.

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

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Additionally, while we have policies and procedures for managing these relationships, they inherently involve a lesser degree of control over business operations, governance and compliance, thereby potentially increasing our financial, legal, reputational and operational risk.

Risks Relating to Strategic Initiatives and the Pending Sale of the Family Dollar Business

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.

In recent years, we have embarked on a number of strategic initiatives across the Dollar Tree and Family Dollar banners to drive productive sales growth and improve operating efficiency.

In our Dollar Tree banner, those initiatives include, among others:

• We continue to expand our Dollar Tree brand assortment at the $1.25 price point and expand our multi-price product assortment, which now comprises a wide assortment of consumable and discretionary product at varying price points.

• We secured the leases for 164 former 99 Cents Only Stores across Arizona, California, Nevada and Texas and opened those stores under our Dollar Tree segment.

More recently we have acquired designation rights for approximately 138 Party City stores and as we complete our diligence on this group of stores, we intend to designate acceptable stores and open these as Dollar Tree segment stores.

• We have initiatives to provide competitive pay and benefits, enhanced training, and other projects to support our workforce as well as initiatives to optimize and modernize our stores.

Our supply chain initiatives include optimizing our transportation network and distribution methods.

• We continue our significant investments in our technology across our business, including our mobile apps, store systems, merchandising and supply chain.

In addition, we have been executing on a number of strategic initiatives in our Family Dollar banner, culminating with our agreement in March 2025 to sell the Family Dollar business.

For more information about the impacts of the sale of Family Dollar, please see “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” and “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” below.

Risks Relating to Our Strategic Initiatives

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

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

During 2025, we outlined our strategic plan designed to reinforce our core brand promise—value, convenience, and discovery—while improving operating leverage and returns over time.

Those initiatives include, among others:

• Expanding and refining our multi-price assortment to deliver a broader, more relevant offering while preserving the foundational value proposition of Dollar Tree;

• Managing costs with agility, including our strategies to mitigate tariffs and inflationary pressures, manage operating expenses, and reduce corporate SG&A as a percentage of sales;

• Continuing new store growth, as well as improving store standards and operational consistency through refresh and renovation programs, shelf productivity optimization, and initiatives to elevate store execution and cleanliness;

• Expanding and modernizing our distribution network, enhancing warehouse management systems, and improving our transportation systems;

• Modernizing our technology platform, replacing legacy systems, and enhancing our mobile app, human capital management systems, supply chain platforms, and data analytics capabilities.

We may not be successful in executing or achieving the anticipated benefits of these important strategic initiatives, which may not result in the desired growth or impacts on our traffic and basket size, sales, operating leverage, costs, profitability or other results.

The implementation, timing and results of these complex strategic initiatives are subject to various risks and uncertainties, which may require that we make significant estimates and assumptions in our planning.

These initiatives place significant demands on our accounting, financial, information technology, and other systems, and on our business overall.

We are dependent on our management’s ability to oversee these initiatives effectively and implement them successfully.

If our estimates and assumptions about our initiatives are incorrect, or if we miscalculate the resources or time we need to complete them or fail to execute on them effectively, our pursuit of these initiatives may increase our costs and reduce our margins and profitability.

The success of these initiatives depends, among other things, on our ability to execute and scale these initiatives consistently across a large, geographically diverse store and distribution footprint and, ultimately, customer receptiveness and acceptance.

If our initiatives, including our expanded multi-price offerings, do not appeal to our customers, or if we are unable to consistently meet our brand execution promises in a cost-effective manner, we may experience a loss of customer confidence or lost sales, which could adversely affect our reputation and results of operations.

These initiatives also place significant demands on our accounting, financial, information technology, and other systems, and on our business overall.

We are dependent on our management’s ability to oversee these initiatives effectively and implement them

successfully.

If our estimates and assumptions about our initiatives are incorrect, or if we miscalculate or misalign the resources or time we need to complete them or fail to execute on them effectively, our pursuit of these initiatives may increase our costs and reduce our margins and profitability.

To be effective, our strategies have and will continue to require significant investment in cross-functional operations and management focus, along with supporting investments.

For example, we experienced increased expenses from temporary labor on the Dollar Tree segment during 2024 to support our multi-price rollout.

If we are unable to attract and retain employees or contract with third parties having the specialized skills needed to support our efforts, implement improvements to systems in a timely manner, our ability to compete and our results of operations could be adversely affected.

In addition, if initiatives related to our multi-priced merchandise at Dollar Tree and improved customer experience do not appeal to our customers or if we are unable to consistently meet our brand execution promises in a cost-effective manner, we may experience a loss of customer confidence or lost sales, which could adversely affect our reputation and results of operations.

Our strategies include managing operating expenses and reducing corporate SG&A as a percentage of sales, while also implementing other initiatives to invest in our business.

We may incur implementation or other costs associated with these initiatives before the benefits from those efforts can materialize.

If we are unable to attract and retain employees or contract with third parties having the specialized skills needed to support our efforts, or implement our strategic initiatives and improvements to systems in a timely and cost-effective manner, our ability to compete and our results of operations could be adversely affected.

A failure to properly execute our plans and business strategies, delays in executing our plans and business strategies, increased costs associated with executing on our plans and business strategies, or failure to identify alternative strategies could have a material adverse effect on our business, financial position, results of operations, and cash flows.

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.

As previously reported, in fiscal 2024 we initiated a formal review of strategic alternatives for the Family Dollar business.

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, subject to regulatory review and other closing conditions.

The pending sale of the Family Dollar business is subject to various risks and uncertainties that could adversely affect our business, financial condition and results of operations.

We have expended and will continue to expend significant management time and resources and have incurred and will continue to incur significant expenses due to legal, advisory and financial services fees related to the sale.

The majority of these expenses are payable by us regardless of whether the sale is consummated.

Accordingly, if the pending sale of the Family Dollar business is delayed or is not completed on the terms set forth in the definitive purchase agreement or at all, our business, results of operations, financial condition, cash flows and/or stock price could be adversely affected.

In addition, the pendency and anticipated completion of the sale of the Family Dollar business may impose challenges on our business, including the diversion of management’s attention from ongoing business concerns;

impacts on our resources, systems, procedures and controls;

attracting, retaining and motivating key management and other employees;

retaining existing, or attracting new, business and operational relationships, including with suppliers and other business counterparties;

potential negative reactions from the financial markets and other unanticipated adverse impacts;

any of which could adversely affect our business and financial condition.

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.

If the pending sale of the Family Dollar business is completed, our operational and financial profile will change significantly, with the Dollar Tree banner comprising substantially all of our retail operations.

Our company following the sale would be smaller and less diversified than exists today, and our exposure to the risks inherent in our remaining business would increase.

Our diversification of revenues, costs and cash flows would diminish, such that our results of operations, cash flows, working capital, and financing requirements may be subject to increased volatility and vulnerability to changing market conditions.

Further, there can be no assurance that our credit ratings, access to financial markets and potential sources of liquidity and/or cost of financing would not be adversely impacted following the sale.

As a result, our ability to fund capital expenditures and investments, pay dividends and meet debt obligations and other liabilities may be diminished.

Until the market has fully analyzed the value of the Dollar Tree banner as a separate company, the price of our common stock also may experience volatility.

In addition, the sale of our Family Dollar business and other recent strategic initiatives entail significant changes across our organizational structure, senior leadership, culture, functional alignment, outsourcing and other areas.

We may not achieve the anticipated benefits of the sale of the Family Dollar business.

Following the sale of the Family Dollar business, our operational and financial profile changed significantly, with the Dollar Tree banner comprising substantially all of our retail operations.

Accordingly, our company following the sale is smaller and less diversified, such that our results of operations, cash flows, working capital, and financing requirements may be subject to increased volatility and vulnerability to changing market conditions.

The sale of our Family Dollar business and other recent strategic initiatives have also entailed significant changes across our organizational structure, senior leadership, culture, functional alignment, outsourcing and other areas.

These changes have been and could continue to be disruptive to our business operations.

Further, there can also be no assurance that the stranded costs or dis-synergies of such a transaction will not exceed the anticipated amounts.

Any of the foregoing could have a material adverse effect on our business, results of operations, financial conditions and cash flows, and we cannot assure you that the Dollar Tree banner, as an independent company, will be successful.

Further, we expect to have continuing obligations to Family Dollar pursuant to transition services or other agreements in connection with the sale of the Family Dollar business, which could require significant management and operational resources or reduce our ability to fully realize cost savings and efficiency initiatives that we would otherwise be able to implement following such a disposition.

While we anticipate receiving payment for the transition services that we provide, we may not be able to recoup all of the underlying costs.

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

Further, there can also be no assurance that unbudgeted or stranded costs or dis-synergies of the Family Dollar sale will not exceed our expectations or the anticipated benefits of the transaction.

In addition, we agreed to indemnify the purchaser for losses arising from certain liabilities of the Family Dollar business arising before the sale.

Any of the foregoing could have a material adverse effect on our business or results of operations.

We also have continuing obligations to Family Dollar pursuant to transition services or other agreements through which we continue to provide certain services to Family Dollar for 18 months following the date of sale.

This has required, and could continue to require, significant management and operational resources which could reduce our ability to fully realize cost savings and efficiency initiatives that we would otherwise be able to implement.

While we are receiving payment for the transition services that we provide, we may not be able to recoup all of the underlying costs.

We could incur losses due to impairment of goodwill and other long-lived assets.

generally accepted accounting principles, we review our long-lived assets for impairment whenever economic events or changes in circumstances indicate that the carrying value of an asset may not be recoverable.

Identifiable intangible assets with an indefinite useful life, including goodwill, are not amortized but are evaluated annually for impairment.

Identifiable intangible assets with an indefinite useful life, such as goodwill, are not amortized but are evaluated annually for impairment.

An evaluation is also performed if events or circumstances indicate that impairment could have occurred.

For example, in the fourth quarter of fiscal 2023, we recorded a $1,069.0 million non-cash goodwill impairment charge and a $950.0 million non-cash trade name impairment charge resulting from our annual impairment testing and a $503.9 million non-cash store asset impairment charge related to our store portfolio optimization review.

In the fourth quarter of fiscal 2024, we recorded a $490.5 million non-cash goodwill impairment charge and a $1,400.0 million non-cash trade name impairment charge resulting from our annual impairment testing and an $88.1 million store asset impairment charge.

Additionally, in the fourth quarter of fiscal 2024, we determined that the Family Dollar business met the held for sale and discontinued operations accounting criteria and recognized an impairment of $3,438.8 million to reflect the write-down of the carrying value to fair value less costs to sell.

The Family Dollar goodwill and trade name comprise a substantial portion of our goodwill and indefinite-lived intangible assets and management’s judgment utilized in the Family Dollar goodwill and trade name impairment evaluations is critical.

Please refer to “ Critical Accounting Estimates and Assumptions ” in “Item 7.

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

Should we experience business challenges or significant negative industry or general economic trends, we could recognize additional impairments to our goodwill, intangible assets and other long-lived assets.

Should we experience business challenges or significant negative industry or general economic trends, we could recognize impairments to our goodwill and other long-lived assets.

We monitor key assumptions and other factors utilized in our impairment analysis, and if business or other market conditions develop that are materially different than we currently anticipate, we will conduct an additional impairment evaluation.

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For example, our liabilities related to our self-insurance programs, which include general liability claims, are estimates that require judgment and the use of assumptions.

As a result of unfavorable developments due to the rising costs to reimburse, settle, or litigate claims related to customer accidents and other incidents at our stores, our actuarially determined liabilities were increased during 2024, contributing to a $20.4 million increase in our general liability claim expenses compared to the prior year.

Should these or any other estimates and assumptions change or prove to have been incorrect, it could adversely affect our results of operations.

As a result of unfavorable developments due to the rising costs to reimburse, settle, or litigate claims related to customer accidents and other incidents at our stores, our actuarially determined liabilities were increased during 2024 and 2025, contributing to increases in our general liability claim expenses of $20.4 million and $33.6 million,

respectively, compared to the prior year.

Should these or any other estimates and assumptions change, it could adversely affect our results of operations.

Cybersecurity and Technology Risks

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

For additional discussion of the company’s cybersecurity posture, including risk management and governance, please see “ Item 1C.

Cybersecurity .”

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

We rely extensively on our computer and technology systems and, in certain cases, those of third-party service providers to support nearly all key functions in our business, including managing inventory, operating our stores, processing credit card and customer transactions, managing our customer and associate relationships and summarizing results.

Our ability to effectively manage

our business and coordinate the distribution and sale of our merchandise depends significantly on the capabilities, confidentiality, integrity and availability of these systems and on our ability to successfully acquire and integrate upgraded or replacement systems as needed to support our business requirements and strategic initiatives.

Our ability to effectively manage our business and coordinate the distribution and sale of our merchandise depends significantly on the capabilities, confidentiality, integrity and availability of these systems and on our ability to successfully acquire and integrate upgraded or replacement systems as needed to support our business requirements and strategic initiatives.

We also rely on third-party providers and platforms for many of these computer and technology systems and support.

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This may be as the result of deliberate breach in the security of these systems or platforms by bad actors, including through malicious software, ransomware and other cyberattacks, which may originate from state actors and may increase during times of international tensions.

Such incidents have occurred, including with respect to our third-party vendors, although without material impact to date.

Failures may also be caused by various other factors, including power outages, catastrophic events, physical theft, computer and network failures, inadequate or ineffective redundancy, obsolescence or failure of vendor support, flaws in third-party software or services, errors or improper use by our employees or third-party service providers.

To support the growth of our business, we are making substantial investments in our information technology systems.

Transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources.

To support the growth of our business, we are making substantial investments in our information technology systems, including updating or replacing legacy systems.

Certain of our existing infrastructure is comprised of complex legacy technologies with limited flexibility, inconsistencies, manual workarounds and other inefficiencies.

These systems require time and investment to upgrade without material disruptions to our business.

Further, transitioning to these new or upgraded processes and systems requires significant capital investments and personnel resources.

Implementation is also highly dependent on the coordination of numerous associates, contractors and software and system providers.

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We cannot guarantee that we will be successful at improving our operational systems, or that our efforts will result in the anticipated benefits to us.

We may also experience difficulties in implementing or operating our new or upgraded operational or IT systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits.

We may also experience difficulties in implementing or operating our new or upgraded operational or technology systems, including, but not limited to, ineffective or inefficient operations, significant system failures, system outages, delayed implementation and loss of system availability, which could lead to increased implementation and/or operational costs, loss or corruption of data, delayed shipments, excess inventory and interruptions of operations resulting in lost sales and/or profits.

If our information technology systems, upgrades and associated change management are not adequate to support our business and our strategic initiatives, our financial condition and results of operations could be adversely affected, and our business may become less competitive.

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We are exposed to persistent and substantial risks from cybersecurity threats, as the number of cyberattacks targeting retailers and corporate networks grows, and the volume, intensity and sophistication of attempted attacks, intrusions and threats from around the world increase daily.

The continued evolution and increased usage of artificial intelligence technologies may further increase these risks.

Both we and our vendors have experienced data security incidents;

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Cybercriminals, who may include well-funded state actors or organized criminal groups, are rapidly evolving their cyberattack techniques and tactics, which are becoming increasingly more sophisticated and challenging to detect.

We and/or our third-party suppliers may be vulnerable to and unable to anticipate, detect, and appropriately respond to cybersecurity attacks, including data security breaches and data loss.

We and/or our third-party vendors may be vulnerable to and unable to anticipate, detect, and appropriately respond to cybersecurity attacks, including data security breaches and data loss.

We are also subject to laws and regulations in various jurisdictions in which we operate regarding privacy, data protection and data security, including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data of customers, associates, or others.

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A failure to meet and maintain compliance with PCI-DSS requirements could result in our inability to continue to accept credit cards as a form of payment, which would materially impact our ability to sell our products.

In addition, our credibility and reputation within the business community and with our customers may be

affected, which could result in our customers discontinuing the use of debit or credit cards in our stores or not shopping in our stores altogether.

In addition, our credibility and reputation within the business community and with our customers may be affected, which could result in our customers discontinuing the use of debit or credit cards in our stores or not shopping in our stores altogether.

Non-compliance with PCI-DSS requirements also may subject us to recurring and accumulating fines until compliance is achieved.

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Any of these factors could have a material adverse effect on our reputation, results of operations or financial condition.

Legal, Regulatory and Environmental, Social and Governance (“ESG”) Risks

We use, and may over time increase the usage of, artificial intelligence and machine learning in our business, and challenges with properly managing its use could adversely affect our business.

We utilize artificial intelligence-enabled technologies in our business, and advancements in technology may allow us to expand the use or applications of artificial intelligence, including generative artificial intelligence, into key operational and/or administrative aspects of our business in the future.

Our competitors or other third parties may incorporate artificial intelligence into their businesses more quickly or more successfully than us, which could impair our ability to compete effectively and adversely affect our results of operations.

Additionally, if the types of information that artificial intelligence applications assist in producing are or are alleged to be deficient, inaccurate, or biased, our business, financial condition, and results of operations may be adversely affected.

Furthermore, generative artificial intelligence presents emerging ethical issues and could negatively impact our customers and associates.

If our use of generative artificial intelligence becomes controversial or is inaccurate or ineffective, our reputation and competitive position could be adversely affected.

The rapid evolution of artificial intelligence, including potential government regulation of artificial intelligence, may require significant resources to develop, test and maintain our implementations of artificial intelligence.

Legal and Regulatory Risks and Related Considerations

Legal proceedings may adversely affect our reputation, business, results of operations or financial condition.

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Department of Agriculture, the Occupational Safety and Health Administration, states’ attorneys-general, and other federal, state, local and applicable foreign governmental authorities.

Where such authorities believe that we have failed to comply with applicable regulations and/or procedures, they may require prompt corrective action, and/or proceed directly to other forms of enforcement action, including the imposition of operating restrictions, including a ceasing of operations in one or more facilities, enjoining and restraining certain violations of applicable law pertaining to products, seizure of products, assessing civil or criminal sanctions or penalties, and requiring enhancements to our compliance programs or reporting requirements.

Where such authorities believe that we have

failed to comply with applicable regulations and/or procedures, they may require prompt corrective action, and/or proceed directly to other forms of enforcement action, including the imposition of operating restrictions, including a ceasing of operations in one or more facilities, enjoining and restraining certain violations of applicable law pertaining to products, seizure of products, assessing civil or criminal sanctions or penalties, and requiring enhancements to our compliance programs or reporting requirements.

Any adverse regulatory action, depending on its magnitude, may restrict us from effectively selling our products and could have a material adverse effect on our business, financial condition and/or results of operations.

For example, in 2024 we resolved a previously disclosed investigation by the United States Department of Justice (the “DOJ”) regarding a historical rodent issue at Family Dollar’s West Memphis, Arkansas distribution center (“DC 202”) and the related adulteration of products regulated by the FDA.

Under this resolution, a Family Dollar subsidiary pled guilty to a one count misdemeanor violation of Title 21, United States Code, Sections 331(k), 333(a)(1) for causing FDA-regulated products to become adulterated and paid $200,000 in fines and a forfeiture money judgment in the amount of $41,475,000 to the United States.

For a discussion of other impacts of this resolution, see also “Our failure to comply with applicable law, or to adequately respond to changes to such laws, could increase our expenses, expose us to legal risks or otherwise adversely affect us” below.

Our products could also cause illness or injury, harm our reputation, and subject us to litigation.

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We operate in an increasingly regulated environment across a large and diverse geographic footprint, and we devote substantial resources to ensure effective compliance with numerous and frequently changing laws and regulations.

The complexity of this regulatory environment and related compliance costs continue to increase due to additional legal and regulatory requirements, our expanding operations, and increased regulatory scrutiny and enforcement efforts.

The complexity of this regulatory environment and related compliance costs continue to increase due to additional legal and regulatory requirements, our expanding operations, new strategic initiatives, and increased regulatory scrutiny and enforcement efforts.

For example, our continued expansion of multi-price product assortments and retail price changes, in addition to increased scrutiny of retailers by local, state and federal agencies, has resulted in increased regulatory and legal risks regarding pricing and price clarity.

New or revised laws, regulations, orders, policies and related interpretations and enforcement practices, including product and food safety, marketing, labeling or pricing;

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imports and customs;

climate change;

anti-bribery;

sustainability;

and environmental compliance, may significantly increase our expenses or require extensive system and operating changes that could materially increase our cost of doing business.

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Violations of applicable laws and regulations or untimely or incomplete execution of a required product recall can result in significant penalties (including loss of licenses, eligibility to accept certain government benefits such as SNAP or significant fines), class action or other litigation, governmental investigation or action and reputational damage.

As part of our 2024 resolution of the DOJ investigation regarding DC 202, we agreed to implement improved internal controls, compliance codes, policies, and procedures, many of which were already underway or completed, and to make periodic reports to the DOJ for three years.

The failure to properly manage our overall compliance program and fully comply with our obligations could adversely affect our ability to conduct business, result in significant fines and other penalties, damage our brand and reputation, and negatively impact our financial position and results of operations.

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These laws and regulations may include, but are not limited to, requirements relating to hazardous waste materials, recycling, single-use plastics, so-called “chemicals of concern,” extended producer responsibility, use of refrigerants, carbon pricing or carbon taxes, product energy efficiency, animal welfare standards and product labeling.

In addition, significant changes in laws or regulations that impact our relationship with our workforce, such as minimum wage increases, health care, labor relations laws or workplace safety, could increase our expenses and adversely affect our operations.

In addition, significant changes in laws or regulations that impact our relationship with our workforce, in areas such as wage and hour, health care, scheduling and leave, labor relations or workplace safety, could increase our expenses and adversely affect our operations.

An increase in federal corporate tax rates also could adversely affect our profitability.

Changes in other regulatory areas, such as consumer credit, privacy and information security, product and food safety, energy or environmental protection, international labor protections, and tariff and other trade restrictions, among others, could cause our expenses to increase or result in product recalls.

Our business is subject to evolving disclosure requirements and expectations with respect to environmental, social and governance matters that could expose us to numerous risks.

Our business faces increasing public scrutiny related to social responsibility, climate change and other ESG practices.

We risk damage to our brand and reputation, including risk to our plans for profitable growth, if we fail to act responsibly in a number of areas, such as worker safety and welfare, diversity and inclusion, environmental stewardship, support for local communities, and corporate governance and transparency.

Conversely, if efforts around diversity, equity and inclusion (“DEI”) are perceived as too ambitious, we may be subject to investigations, litigation and other proceedings and our brand and reputation and stock price may be harmed.

Adverse incidents could impact the value of our brand, the cost of our operations and relationships with associates, customers or investors, all of which could adversely affect our business and results.

In addition, regulators, customers, investors, associates, and other stakeholders are focusing on ESG matters and related disclosures.

Our business is subject to evolving disclosure requirements and expectations with respect to social, environmental, and similar matters that could expose us to numerous risks.

Our business faces increasing public scrutiny related to corporate social responsibility, environmental concerns, governance and related practices.

We risk damage to our brand and reputation, including risk to our plans for profitable growth, if we fail to act responsibly or in line with regulatory and stakeholder expectations in a number of areas, such as worker safety and welfare, human rights, associate relations, environmental stewardship, support for local communities, and corporate governance and transparency.

Negative reputational incidents could impact the value of our brand, the cost of our operations and relationships with associates, customers or investors, all of which could adversely affect our business and results.

The rules, regulations and expectations of regulators, customers, investors, associates, and other stakeholders with respect to these matters continue to evolve.

These changing rules, regulations and stakeholder expectations have resulted in, and are likely to continue to result in, increased general and administrative expenses and increased management time and attention spent complying with or meeting such regulations and expectations.

For example, developing and acting on initiatives within the scope of ESG, and collecting, measuring, and reporting ESG-related information and metrics can be costly, difficult and time consuming and is subject to evolving reporting standards.

We may also communicate certain initiatives and goals regarding environmental matters, culture and belonging, responsible sourcing and social investments and other ESG-related matters, in our SEC filings or in other public disclosures.

These initiatives and goals within the scope of ESG could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy, or completeness of the disclosure.

Further, statements about our ESG-related initiatives and goals, and progress toward those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to mature, and assumptions that are subject to change in the future.

Further, the Supreme Court’s recent ruling striking down race-based affirmative action in higher education has increased scrutiny of corporate diversity, equity and inclusion practices.

Some groups and attorneys general have begun to analogize the outcome of that case to private employment matters, asserting that certain corporate DEI practices are racially discriminatory and unlawful.

Anti-ESG and anti-DEI related policies, legislation, initiatives and scrutiny could expose us to the risk of litigation, investigations or challenges by federal or state authorities, result in injunctions, penalties and reputational harm and require certain investors to divest or discourage certain fund investors from investing in our funds.

If we are unable to meet our ESG-related goals or evolving stakeholder expectations and industry standards, if our ESG-related data, processes and reporting are incomplete or inaccurate, or if our efforts around ESG-related issues are perceived as insufficient or too ambitious, consumers may choose to stop purchasing our products or purchase products from a competitor, and our reputation, business or financial condition may be adversely affected.

Developing and acting on such initiatives, and collecting, measuring, and reporting related information and metrics can be costly, difficult and time consuming and is subject to evolving reporting standards.

For example, compliance with California’s recently implemented climate-related and extended producer responsibility reporting requirements, and similar proposals by state regulators and other regulatory bodies, could be costly, difficult and time consuming, especially as reporting standards are still evolving.

We may also communicate certain initiatives and goals regarding environmental matters, culture and belonging, responsible sourcing and social investments and other related matters, in our SEC filings or in other public disclosures.

These initiatives and goals could be difficult and expensive to implement, the technologies needed to implement them may not be cost effective and may not advance at a sufficient pace, and we could be criticized for the accuracy, adequacy, or completeness of the disclosure.

Further, statements about our related initiatives and goals, and progress toward those goals, may be based on standards for measuring progress that are still developing, internal controls and processes that continue to mature, and assumptions that are subject to change in the future.

Any failure, or perceived failure, to meet any of our published initiatives or goals, which often may be outside of our control, could adversely affect public perception of our business, associate retention or recruiting, business opportunities, or customer, vendor or shareholder support.

Further, as the rules, regulations and expectations continue to evolve, our stakeholders may have differing views.

For example, we may face criticism as a result of diverging sentiment among governmental authorities, regulators, customers, investors, associates, or other stakeholders.

Scrutiny, or the perception that our efforts are too ambitious or misdirected, could expose us to the risk of litigation, investigations or challenges by federal or state authorities, injunctions or penalties, cause reputational harm, or adversely affect the ability of certain fund investors to hold our stock.

Federal and state regulations may establish differing standards or mutually exclusive requirements.

These evolving and divergent expectations may make it difficult for us to satisfy all regulatory and stakeholder expectations.

If we are unable to meet our social- or environmental-related goals or evolving and divergent stakeholder expectations and industry standards, if our related data, processes and reporting are incomplete or inaccurate, or if our efforts around issues of concern are perceived as insufficient or too ambitious, consumers may choose to stop purchasing our products or purchase products from a competitor, and our reputation, business or financial condition may be adversely affected.

Risks Relating to Indebtedness and Our Common Stock

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We rely on internally generated funds and borrowings under our credit facilities and commercial paper program to fund our seasonal working capital requirements for existing and new stores, distribution network programs and other capital projects.

In addition, we have $3.45 billion of senior notes outstanding as of February 1, 2025, of which $1.0 billion matures in May 2025.

Our continued access to financial markets depends on multiple factors, including market conditions, our operating performance and our credit ratings.

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Responding to these actions may be costly and time-consuming, disrupt our operations, divert the attention of our Board of Directors, management, and associates, and impact our relationship with investors, vendors, and other third parties.

Shareholder engagement also may result in changes to our business plans, operations, strategies, initiatives, governance, management, and risk

Shareholder engagement also may result in changes to our business plans, operations, strategies, initiatives, governance, management, and risk factors.

The perceived uncertainty as to our future direction resulting from these actions of shareholders could also affect the market price and volatility of our common stock.

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trading activity by sophisticated algorithms (high-frequency trading);

speculation about our business in the press or the investment community;

investor perceptions of the retail industry or us;

our actual results of operations relative to estimates or expectations;

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legislative or regulatory actions or changes;

and changes in general economic or market conditions.

geopolitical tensions or major catastrophic events;

inflation, monetary policy and changes in general economic or market conditions affecting the retail industry or the economy generally.

In addition, the stock market in general has from time-to-time experienced extreme price and volume fluctuations.

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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-K

Item 1A. Risk Factors