What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2026-08-27 compared with 2026-05-28 · 104 added, 79 removed, 216 unchanged (46% of the section changed)

6 unchanged sentences

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

• 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 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, and the reinvestment of certain tariff refunds in our business;

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

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

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

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

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

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

• Changes in economic conditions such as inflation, fuel prices, or interest rates, or consumer spending habits, could impact our sales or profitability.

• Changes in economic conditions such as inflation, fuel prices, interest rates, the availability of merchandise, helium or other raw materials, or the competition for and availability of qualified personnel, or consumer spending habits, could impact our sales or profitability.

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

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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 executing important strategic initiatives, which may have an adverse impact on our business and financial results.

• We may not be successful in executing or achieving the anticipated benefits of our reinvestment of tariff refunds or other important strategic initiatives, which may have an adverse impact on our business and financial results.

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

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• 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.

• Current and potential competitors could have more significant online and mobile shopping platforms or other advances in technologies and capabilities (including artificial intelligence) than we currently do, which could impair our ability to compete effectively and adversely affect our results of operations.

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

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Moreover, new risks and uncertainties emerge from time to time and it is not possible for us to predict all risks and uncertainties that could have an impact on our forward-looking statements.

We do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, or otherwise.

Except as otherwise required by law, we do not undertake to publicly update or revise any forward-looking statements after the date of this Quarterly Report on Form 10-Q, whether as a result of new information, future events, or otherwise.

Investors should also be aware that while we do, from time to time, communicate with securities analysts and others, it is against our policy to disclose to them any material, nonpublic information or other confidential commercial information.

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Quarterly Financial Highlights

Financial highlights for the 13 weeks ended May 2, 2026, as compared to the 13 weeks ended May 3, 2025, include:

Financial highlights for the 13 weeks ended August 1, 2026, as compared to the 13 weeks ended August 2, 2025, include:

• Net sales increased 7.0% to $4,886.5 million primarily due to a 3.7% comparable store net sales increase and net sales of $225.9 million at non-comparable stores.

• Gross profit increased 10.9% to $1,829.5 million primarily due to our net store growth, the 3.5% comparable store net sales increase, and a 120 basis point improvement in gross profit margin.

• Selling, general and administrative expenses, as a percentage of total revenue, increased 50 basis points to 27.8%.

• Transition services agreement income, net was $21.1 million resulting from services provided to Family Dollar following the sale.

• Gross profit increased 33.4% to $2,094.3 million primarily due to the receipt of $368.7 million of tariff refunds, the 3.7% comparable store net sales increase, our net store growth, lower tariff costs and improvements in shrink.

• Selling, general and administrative expenses, as a percentage of total revenue, decreased 40 basis points to 29.2%.

• Transition services agreement income, net was $17.7 million compared to $8.0 million in the prior year quarter, resulting from services provided to Family Dollar following the sale.

• Operating income, as a percentage of total revenue, increased 900 basis points to 14.1%.

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Store Activity and Selected Sales Data

At May 2, 2026, we operated stores in 48 states and the District of Columbia, as well as stores in seven Canadian provinces.

The average size of stores opened during the 13 weeks ended May 2, 2026 was approximately 9,230 selling square feet.

At August 1, 2026, we operated stores in 48 states and the District of Columbia, as well as stores in seven Canadian provinces.

The average size of stores opened during the 26 weeks ended August 1, 2026 was approximately 9,170 selling square feet.

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

26 Weeks Ended

May 2, 2026 May 3, 2025

August 1, 2026 August 2, 2025

Beginning 9,282 8,881

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

13 Weeks Ended

May 2, 2026 May 3, 2025

13 Weeks Ended 26 Weeks Ended

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

Sales Growth 3.7% 6.5% 3.6% 5.9%

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

Net sales per selling square foot for the 52 weeks ended May 2, 2026 and May 3, 2025 is as follows:

Net sales per selling square foot for the 52 weeks ended August 1, 2026 and August 2, 2025 is as follows:

52 Weeks Ended

May 2, 2026 May 3, 2025

August 1, 2026 August 2, 2025

Net sales per selling square foot $243 $237

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(i) expanding and enhancing our product assortment, (ii) managing costs with agility and discipline, (iii) strengthening our customer connection through data-driven marketing and other initiatives, (iv) opening new stores and improving store conditions, and (v) improving store operations and consistent execution to enhance the experience for our customers and our associates – all supported by supply chain enhancements, disciplined financial management, technology and investment in our people.

In addition, the tariff environment remains fluid.

On February 20, 2026, the U.S.

Supreme Court ruled that certain of the tariffs imposed in fiscal 2025 under the International Emergency Economic Powers Act (“IEEPA”) were unlawful and remanded the case to the U.S.

Court of International Trade (“CIT”) to provide a remedy for importers who had paid the tariffs.

On March 4, 2026, the CIT ordered U.S.

Customs and Border Protection (“CBP”) to begin refunding all tariffs imposed under IEEPA.

On April 20, 2026, CBP launched a process for importers to submit IEEPA refund claims.

The Company submitted claims for refunds totaling $379 million in April 2026.

In the second quarter of fiscal 2026, the Company began receiving refunds for IEEPA tariffs previously paid, totaling approximately $369 million, plus $14 million of interest.

Approximately $369 million is reflected within “Cost of sales,” and the interest is reflected within “Other income, net” in the accompanying unaudited Condensed Consolidated Income Statements.

We do not expect the amounts of the remaining refunds of IEEPA tariffs to be material.

During the second quarter, we began to reinvest certain of these proceeds in a number of initiatives designed to strengthen our business.

We expect to reinvest a significant portion of the total tariff refunds in these initiatives over the remainder of 2026.

For instance, we plan to direct approximately $40 million of these proceeds to a philanthropic fund that supports our associates and the communities served by our business.

Consistent with our strategic initiatives noted below, we also are using a portion of these proceeds to strengthen customer value and reinforce our core brand promise—value, convenience, and discovery—including targeted pricing strategies, customer messaging and marketing, and incremental improvements in store conditions and operations.

While we believe the reinvestment of tariff refunds is important to our business, there is no certainty that we will achieve the anticipated benefits, impacts or timing of these reinvestments or our strategic initiatives generally.

has continued to announce new tariffs on various imported products during 2026, and there remains substantial uncertainty regarding the outcome of legal challenges to tariffs, the scope and duration of any newly announced tariffs, and the possibility of further additional or modified tariffs or other measures.

As a result, our margins and operating results could vary significantly.

Expanded and Enhanced Assortment .

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Our multi-price strategy is designed to increase basket size and drive margin expansion by introducing complementary products, new categories, larger pack sizes, and select branded and licensed items that we could not historically offer under a single price point.

As of May 2, 2026, we carried our expanded multi-price assortment in the majority of our stores.

We are also expanding customer access through digital and delivery partnerships, such as Uber Eats.

As of August 1, 2026, we carried our expanded multi-price assortment in the substantial majority of our stores.

We are also expanding customer access through digital and delivery partnerships, such as Instacart, Uber Eats and Door Dash.

Agile Cost Management.

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renegotiating supplier terms, re-engineering products for efficiency, shifting country of origin where advantageous, discontinuing lower-margin or underperforming items, and executing targeted retail price adjustments when appropriate.

The tariff environment remains fluid, and we expect our results to continue to be impacted by near-term challenges, potentially including higher costs due to increases or variability in tariffs.

Further, we may continue to experience implementation costs associated with our mitigation strategies that impact us before the benefits from those efforts are expected to materialize.

On February 20, 2026, the U.S.

Supreme Court ruled that certain of the tariffs imposed last year under the International Emergency Economic Powers Act (“IEEPA”) were unlawful.

In April 2026, the U.S.

Customs and Border Protection launched a platform for submitting IEEPA tariff refund claims.

We are taking action to preserve our rights to refunds for these IEEPA tariffs and have submitted refund claims.

Subsequent to May 2, 2026, we began receiving refunds for IEEPA tariffs previously paid, totaling approximately $ 110 million through May 26, 2026, including $ 6 million of interest.

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 additional tariffs.

In May 2026, the U.S.

Court of International Trade invalidated these section 122 tariffs.

There remains substantial uncertainty regarding the impacts of these events on existing tariffs, the scope and duration of any newly announced tariffs, and the possibility of further additional or modified tariffs or retaliatory actions.

As a result, our margins and operating results could vary significantly.

Beyond addressing the cost of goods sold, our strategy includes disciplined management of operating expenses.

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In October 2025, we announced the purchase of a distribution center outside Phoenix, Arizona.

On May 13, 2026, we celebrated the grand opening of this 1.0 million square foot facility with outbound deliveries to begin in June 2026, shipping to approximately 700 stores across Arizona, Colorado, Nevada, New Mexico, and Utah.

In May 2026, we celebrated the grand opening of this 1.0 million square foot facility with outbound deliveries to approximately 700 stores across Arizona, Colorado, Nevada, New Mexico, and Utah.

These investments are expected to support long-term growth and improve network resilience, though they may modestly impact gross margin in the near-to-mid term as capacity ramps up.

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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 weeks ended May 2, 2026 and May 3, 2025:

13 Weeks Ended

The following table contains results of operations data for the 13 and 26 weeks ended August 1, 2026 and August 2, 2025:

13 Weeks Ended 26 Weeks Ended

(in millions, except percentages)

May 2, 2026 May 3, 2025

August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025

Net sales $ 4,886.5 $ 4,566.8 $ 9,857.0 $ 9,203.3

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Income from continuing operations as a percentage of total revenue 10.5 % 3.4 % 8.7 % 5.1 %

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Net sales $ 4,886.5 $ 4,566.8 7.0 % $ 9,857.0 $ 9,203.3 7.1 %

Comparable store net sales change 3.7 % 6.5 % 3.6 % 5.9 %

The increase in net sales in the 13 weeks ended May 2, 2026 was primarily the result of the comparable store net sales increase and net sales of $259.0 million at non-comparable stores.

Comparable store net sales increased 3.5% in the 13 weeks ended May 2, 2026, as a result of a 4.5% increase in average ticket, partially offset by a 1.0% decrease in customer traffic.

The increase in net sales in the 13 weeks ended August 1, 2026 was primarily the result of the comparable store net sales increase and net sales of $225.9 million at non-comparable stores.

Comparable store net sales increased 3.7% in the 13 weeks ended August 1, 2026, as a result of a 3.3% increase in average ticket and a 0.4% increase in customer traffic.

The increase in average ticket was as a result of targeted retail price changes executed during the second and third quarters of fiscal year 2025 and higher mix of multi-price penetration.

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

The increase in net sales in the 26 weeks ended August 1, 2026 was primarily the result of the comparable store net sales increase and net sales of $493.6 million at non-comparable stores.

Comparable store net sales increased 3.6% in the 26 weeks ended August 1, 2026, as a result of a 3.9% increase in average ticket, partially offset by a 0.3% decrease in customer traffic.

The increase in average ticket was as a result of targeted retail price changes executed during the second and third quarters of fiscal year 2025 and higher mix of multi-price penetration.

In addition, global helium supply shortages negatively impacted sales during the second quarter and could continue to impact our results in the future.

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Gross profit $ 2,094.3 $ 1,570.1 33.4 % $ 3,923.8 $ 3,219.6 21.9 %

Gross profit margin 42.9 % 34.4 % 8.5 % 39.8 % 35.0 % 4.8 %

Gross profit margin increased during the 13 weeks ended May 2, 2026 due to a 120 basis point decrease in cost of sales.

The cost of sales rate decreased to 63.2% during the 13 weeks ended May 2, 2026 from 64.4% during the same period last year primarily due to

improved mark-on from pricing initiatives executed during the second and third quarters of fiscal year 2025, lower import freight costs, and lower shrink from favorable inventory count results, partially offset by higher tariff costs and higher markdowns.

Gross profit margin increased during the 13 weeks ended August 1, 2026 due to an 850 basis point decrease in cost of sales.

The cost of sales rate decreased to 57.1% during the 13 weeks ended August 1, 2026 from 65.6% during the same period last year primarily due to a 755 basis point benefit from the receipt of $368.7 million in tariff refunds, lower tariff costs, lower shrink from favorable inventory count results, and occupancy cost leverage, partially offset by higher markdowns including approximately $22.0 million related to our tariff reinvestment initiative, a $13.0 million charge recorded for antidumping and countervailing duties related to the imports of paper plates and aluminum pans, and unfavorable sales mix resulting from lower sales of high margin discretionary merchandise.

Gross profit margin increased during the 26 weeks ended August 1, 2026 due to a 480 basis point decrease in cost of sales.

The cost of sales rate decreased to 60.2% during the 26 weeks ended August 1, 2026 from 65.0% during the same period last year primarily due to a 375 basis point benefit from the receipt of $368.7 million in tariff refunds, pricing initiatives executed during the second and third quarters of fiscal 2025, lower shrink from favorable inventory count results, and lower import freight costs, partially offset by higher tariff costs, higher markdowns including approximately $22.0 million related to our tariff reinvestment initiative, and a $13.0 million charge recorded for antidumping and countervailing duties related to the imports of paper plates and aluminum pans.

We expect additional costs to be incurred in the third and fourth quarters of fiscal 2026 related to our tariff refund reinvestment initiatives including additional markdowns, as well as higher freight expenses.

Selling, General and Administrative Expenses

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Selling, general and administrative expenses $ 1,426.6 $ 1,350.7 5.6 % $ 2,809.2 $ 2,619.3 7.3 %

Selling, general and administrative expense rate 29.2 % 29.6 % (0.4) % 28.5 % 28.4 % 0.1 %

The selling, general and administrative expense rate increased 50 basis points during the 13 weeks ended May 2, 2026 primarily due to increased investments in marketing, higher general liability claims costs, and higher depreciation expense from store investments, partially offset by lower payroll expenses.

Payroll expenses decreased primarily due to lower temporary labor used to support our multi-price rollout, lower corporate payroll and incentive compensation, partially offset by higher store payroll from wage increases.

The selling, general and administrative expense rate decreased 40 basis points during the 13 weeks ended August 1, 2026 primarily due to lower payroll expenses and lower consulting fees, partially offset by increased investments in marketing including costs related to our tariff reinvestment initiative, and higher depreciation expense from store investments.

Payroll expenses decreased primarily due to lower store payroll as the labor needed to support our pricing initiatives in fiscal 2025 did not re-occur, lower temporary labor used to support our multi-price rollout and lower corporate payroll, partially offset by additional labor incurred for our tariff reinvestment initiatives.

Selling, general and administrative expenses include costs to support the transition services agreement with Family Dollar.

The selling, general and administrative expense rate increased 10 basis points during the 26 weeks ended August 1, 2026 primarily due to increased investments in marketing including costs related to our tariff reinvestment initiative, higher general liability claims costs, and higher depreciation expense from store investments, partially offset by lower payroll expenses and consulting fees.

Payroll expenses decreased primarily due to lower store payroll as the labor needed to support our pricing initiatives in fiscal 2025 did not re-occur, lower temporary labor used to support our multi-price rollout and lower corporate payroll, partially offset by wage increases and additional labor incurred for our tariff reinvestment initiatives.

Selling, general and administrative expenses include costs to support the transition services agreement with Family Dollar.

We expect additional expenses to be incurred in the third and fourth quarters of fiscal 2026 related to our tariff refund reinvestment initiatives.

Transition Services Agreement Income, Net

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

Transition services agreement income, net $ 21.1 $ — N/A

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Transition services agreement income, net $ 17.7 $ 8.0 121.3% $ 38.8 $ 8.0 385.0%

Transition services agreement income, net as a percentage of total revenue 0.4 % 0.2 % 0.2 % 0.4 % 0.1 % 0.3 %

Transition services agreement income, net was $21.1 million in the 13 weeks ended May 2, 2026 resulting from services provided to Family Dollar following the sale.

Transition services agreement income, net was $17.7 million in the 13 weeks ended August 1, 2026 and $8.0 million in the same period last year, resulting from services provided to Family Dollar following the sale.

Transition services agreement income, net was $38.8 million in the 26 weeks ended August 1, 2026 and $8.0 million in the same period last year, resulting from services provided to Family Dollar following the sale.

Operating Income

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Operating income $ 690.1 $ 231.0 198.7 % $ 1,163.4 $ 615.1 89.1 %

Operating income margin 14.1 % 5.1 % 9.0 % 11.8 % 6.7 % 5.1 %

Operating income margin increased to 9.5% for the 13 weeks ended May 2, 2026 compared to 8.3% for the same period last year, resulting from the increase in gross profit margin as described above, and income from the transition services agreement with Family Dollar, partially offset by the increase in the selling, general and administrative expense rate.

Operating income margin increased to 14.1% for the 13 weeks ended August 1, 2026 compared to 5.1% for the same period last year, resulting from the increase in gross profit margin and the decrease in the selling, general and administrative expense rate as described above, and net income from the transition services agreement with Family Dollar.

Operating income margin increased to 11.8% for the 26 weeks ended August 1, 2026 compared to 6.7% for the same period last year, resulting from the increase in gross profit margin as described above, and net income from the transition services agreement with Family Dollar, partially offset by the marginal increase in the selling, general and administrative expense rate.

Interest Expense, Net

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Interest expense, net $ 17.8 $ 22.8 (21.9) % $ 34.1 $ 45.5 (25.1) %

Interest expense, net decreased $6.4 million in the 13 weeks ended May 2, 2026 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, partially offset by lower interest income on investments, and interest on our new $500 million Term Loan.

Interest expense, net decreased $5.0 million in the 13 weeks ended August 1, 2026 compared to the same period last year, primarily due to lower borrowings under our commercial paper program, partially offset by interest on our new $500 million Term Loan.

Interest expense, net decreased $11.4 million in the 26 weeks ended August 1, 2026 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 lower borrowings under our commercial paper program, partially offset by interest on our new $500 million Term Loan.

Other Income, Net

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Other income, net $ (14.1) $ (0.4) 3,425.0 % $ (19.5) $ (62.1) (68.6) %

Other income, net decreased $56.3 million in the 13 weeks ended May 2, 2026 compared to the same period last year, primarily due to a higher insurance gain recognized in the prior year 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.

Other income, net increased $13.7 million in the 13 weeks ended August 1, 2026 compared to the same period last year, primarily due to interest of $14 million received in the current year for tariff refunds.

Other income, net decreased $42.6 million in the 26 weeks ended August 1, 2026 compared to the same period last year, primarily due to a higher insurance gain recognized in the prior year 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, partially offset by interest of $14 million received in the current year for tariff refunds.

The insurance gain recognized in the first quarter of fiscal 2026 totaled $5.2 million compared to $62.0 million in fiscal 2025.

Provision for Income Taxes

13 Weeks Ended

(dollars in millions) May 2, 2026 May 3, 2025 Percentage Change

13 Weeks Ended 26 Weeks Ended

(dollars in millions) August 1, 2026 August 2, 2025 Percentage Change August 1, 2026 August 2, 2025 Percentage Change

Provision for income taxes $ 171.9 $ 53.1 223.7 % $ 287.0 $ 162.7 76.4 %

Effective tax rate 25.0 % 25.5 % (0.5) % 25.0 % 25.8 % (0.8) %

The effective tax rate decreased to 24.9% for the 13 weeks ended May 2, 2026 compared to 25.9% for the comparable prior year period, primarily due to increased benefits from the vesting of share-based payment awards, partially offset by an increase in expected state taxes and lower Work Opportunity Tax credits.

The effective tax rate decreased to 25.0% for the 13 weeks ended August 1, 2026 compared to 25.5% for the comparable prior year period, primarily due to decreased permanent items and higher pre-tax income, partially offset by an increase in expected state taxes and lower Work Opportunity Tax credits.

The effective tax rate decreased to 25.0% for the 26 weeks ended August 1, 2026 compared to 25.8% for the comparable prior year period, primarily due to increased benefits from the vesting of share-based payment awards, partially offset by an increase in expected state taxes and lower Work Opportunity Tax credits.

Liquidity and Capital Resources

We invest capital to build and open new stores, expand and renovate existing stores, enhance and grow our distribution network, operate our existing stores, maintain and upgrade our technology, and support our other strategic initiatives.

We invest capital to open new stores, expand and renovate existing stores, enhance and grow our distribution network, operate our existing stores, maintain and upgrade our technology, and support our other strategic initiatives.

Our working capital requirements for existing stores are seasonal in nature and typically reach their peak in the months of September and October.

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

The following table compares our cash flows for the 13 weeks ended May 2, 2026 and May 3, 2025:

The following table compares our cash flows for the 26 weeks ended August 1, 2026 and August 2, 2025:

26 Weeks Ended

(in millions) May 2, 2026 May 3, 2025

(in millions) August 1, 2026 August 2, 2025

Net cash provided by (used in):

2 unchanged sentences

Financing activities of continuing operations $ (723.8) $ (1,636.0)

Net cash provided by operating activities increased $265.5 million primarily due to higher income from continuing operations, net of non-cash items, increases in accounts payable in the current year compared to decreases in the prior year, and reductions in merchandise inventories compared to a prior year increase.

The changes in accounts payable and merchandise inventories were primarily due to the timing of certain payments and inventory receipts.

Net cash used in investing activities increased $54.0 million primarily due to no property and equipment-related insurance proceeds received in the current year compared to $50.0 million in insurance proceeds received in the prior year related to damaged property and equipment at our Dollar Tree distribution center in Marietta, Oklahoma as discussed in Note 3 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Capital expenditures were relatively unchanged from the prior year as we continue to invest in new stores and our supply chain network including the construction at our new distribution centers in Phoenix, Arizona and Marietta, Oklahoma.

Net cash used in financing activities decreased $338.5 million primarily due to $500.0 million in proceeds from our Term Loan, partially offset by higher share repurchases in the current year.

At May 2, 2026, our long-term borrowings were $3.0 billion, including our new $500.0 million Term Loan which we entered into on March 19, 2026 as discussed further in Note 4 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Net cash provided by operating activities increased $926.3 million primarily due to higher income from continuing operations, net of non-cash items, including the receipt of $383 million of tariff refunds, increases in accounts payable in the current year compared to decreases in the prior year, lower income tax payments in the current year, and reductions in merchandise inventories compared to a prior year increase.

The change in accounts payable and merchandise inventories was primarily due to the timing of certain payments and receipts as well as our ongoing strategic initiative to improve shelf space productivity.

The reduction in income tax payments in the current year is a result of tax benefits realized from losses on the sale of Family Dollar in fiscal 2025.

Net cash used in investing activities increased $478.6 million primarily due to $668.0 million of net proceeds received in the prior year from the sale of Family Dollar, and lower insurance recoveries for damaged property and equipment at our Dollar Tree distribution center in Marietta, Oklahoma, partially offset by cash divested from the sale of Family Dollar of $246.0 million.

Capital expenditures were relatively unchanged from the prior year as we continue to invest in opening new stores and our supply chain network including the construction at our new distribution centers in Phoenix, Arizona and Marietta, Oklahoma.

Net cash used in financing activities decreased $912.2 million primarily due to $500.0 million in proceeds from our Term Loan in the current year and the repayment of our $1.0 billion principal amount of 4.00% Senior Notes in the prior year, partially offset by higher share repurchases in the current year and lower borrowings under our commercial paper program.

At August 1, 2026, our long-term borrowings were $3.0 billion, including our new $500.0 million Term Loan which we entered into on March 19, 2026 as discussed further in Note 4 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

Additionally, we had $1.5 billion available under our Five-Year Credit Facility, as well as borrowing capacity under our commercial paper program.

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The $1.5 billion Five-Year Credit Facility serves as a liquidity backstop for the repayment of notes outstanding under the commercial paper program.

At May 2, 2026, we had no borrowings outstanding under our Five-Year Credit Facility or our commercial paper program.

We also have $85.0 million in trade letters of credit with various financial institutions, under which $2.6 million was committed to letters of credit issued for routine purchases of imported merchandise as of May 2, 2026.

We repurchased 5,552,410 and 5,926,985 shares of common stock on the open market at a cost of $600.4 million and $436.8 million, including applicable excise tax, during the 13 weeks ended May 2, 2026 and May 3, 2025, respectively.

Of the shares repurchased during the 13 weeks ended May 2, 2026 and May 3, 2025, $18.0 million and $5.0 million, respectively, settled subsequent to May 2, 2026 and May 3, 2025, respectively, and these amounts were accrued in the accompanying unaudited Condensed Consolidated Balance Sheets.

At May 2, 2026, we had $1.3 billion remaining under our existing $2.5 billion Board repurchase authorization.

Subsequent to May 2, 2026, we purchased an additional 1,031,569 shares of common stock on the open market at a cost of $98.0 million, as of May 26, 2026.

At August 1, 2026, we had no borrowings outstanding under our Five-Year Credit Facility or our commercial paper program.

We also had $85.0 million in trade letters of credit with various financial institutions, under which $2.5 million was committed to letters of credit issued for routine purchases of imported merchandise as of August 1, 2026.

We repurchased 11,136,764 shares of common stock on the open market and in a block trade transaction at a cost of $1.2 billion, including applicable excise tax, during the 26 weeks ended August 1, 2026.

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

Of the shares repurchased during the 26 weeks ended August 1, 2026 and August 2, 2025, $0.5 million and $5.5 million, respectively, settled subsequent to August 1, 2026 and August 2, 2025, respectively, and these amounts were accrued in the accompanying unaudited Condensed Consolidated Balance Sheets.

In June 2026, we repurchased $500.0 million of our common stock as part of a block trade involving selling stockholders including certain funds affiliated with Mantle Ridge LP which is reflected in the current year share repurchase activity above.

In July 2026, our Board of Directors replenished our share repurchase authorization to an aggregate amount of $2.5 billion, consistent with the authorization limit previously approved by the Board in July 2025.

At August 1, 2026, we had $2.49 billion remaining under the $2.5 billion Board repurchase authorization.

Subsequent to August 1, 2026, we purchased an additional 41,412 shares of common stock on the open market at a cost of $5.3 million as of August 25, 2026.

Critical Accounting Estimates and Assumptions

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What changed 10-Q

Item 2. Management’s Discussion and Analysis