What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2025-03-24 compared with 2024-03-25 · 199 added, 274 removed, 892 unchanged (35% of the section changed)

5 unchanged sentences

Consolidated Balance Sheets

Consolidated Statements of Shareholders’ (Deficit)/Equity

Consolidated Statements of Shareholders’ Deficit

Consolidated Statements of Cash Flows

12 unchanged sentences

Other Information

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S egment Information

MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING

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Further, because of changes in conditions, the effectiveness may vary over time.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our Internal Control as of February 2, 2024.

Our management, with the participation of the Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our Internal Control as of January 31, 2025.

In evaluating our Internal Control, we used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control – Integrated Framework (2013).

Based on our management’s assessment, we have concluded that, as of February 2, 2024, our Internal Control is effective.

Based on our management’s assessment, we have concluded that, as of January 31, 2025, our Internal Control is effective.

Deloitte & Touche LLP, the independent registered public accounting firm that audited the financial statements contained in this Annual Report, was engaged to audit our Internal Control.

Their report appears on page 37 .

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We have audited the accompanying consolidated balance sheets of Lowe’s Companies, Inc.

and subsidiaries (the “Company”) as of February 2, 2024 and February 3, 2023, the related consolidated statements of earnings, comprehensive income, shareholders’ (deficit)/equity, and cash flows, for each of the three years in the period ended February 2, 2024, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of February 2, 2024 and February 3, 2023, and the results of its operations and its cash flows for each of the three years in the period ended February 2, 2024, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of February 2, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 25, 2024, expressed an unqualified opinion on the Company's internal control over financial reporting.

and subsidiaries (the “Company”) as of January 31, 2025 and February 2, 2024, the related consolidated statements of earnings, comprehensive income, shareholders’ deficit, and cash flows, for each of the three years in the period ended January 31, 2025, and the related notes (collectively referred to as the “financial statements”).

In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2025 and February 2, 2024, and the results of its operations and its cash flows for each of the three years in the period ended January 31, 2025, in conformity with accounting principles generally accepted in the United States of America.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 24, 2025, expressed an unqualified opinion on the Company's internal control over financial reporting.

Basis for Opinion

20 unchanged sentences

Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected annual purchase volumes, especially in the case of programs that provide for increased funding when graduated purchase volumes are met.

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We identified the completeness and accuracy of vendor funds as a critical audit matter given the significance of vendor funds to the financial statements and volume of the individual vendor agreements.

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• We selected a sample of vendor funds and sent confirmations to test the completeness of programs as well as the accuracy of amounts earned and terms of the agreement directly with the vendor.

• Where confirmation responses from vendors were not received, we completed alternative procedures, such as agreement to underlying contractual arrangements and tested the settlement of the arrangement.

/s/ Deloitte & Touche LLP

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We have served as the Company's auditor since 1962.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

2 unchanged sentences

We have audited the internal control over financial reporting of Lowe’s Companies, Inc.

and subsidiaries (the “Company”) as of February 2, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of February 2, 2024, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended February 2, 2024, of the Company and our report dated March 25, 2024, expressed an unqualified opinion on those financial statements.

and subsidiaries (the “Company”) as of January 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of January 31, 2025, based on criteria established in Internal Control – Integrated Framework (2013) issued by COSO.

We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the fiscal year ended January 31, 2025, of the Company and our report dated March 24, 2025, expressed an unqualified opinion on those financial statements.

Basis for Opinion

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March 24, 2025

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Lowe’s Companies, Inc.

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Fiscal Years Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Current Earnings Amount % Sales Amount % Sales Amount % Sales

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Fiscal Years Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Amount % Sales Amount % Sales Amount % Sales

6 unchanged sentences

See accompanying notes to consolidated financial statements.

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Lowe’s Companies, Inc.

1 unchanged sentence

(In millions, except par value)

February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024

Current assets:

12 unchanged sentences

Current liabilities:

Short-term borrowings $ — $ 499

Current maturities of long-term debt 2,586 537

3 unchanged sentences

Deferred revenue 1,358 1,408

Income taxes payable 33 1,181

Other current liabilities 3,952 3,478

18 unchanged sentences

See accompanying notes to consolidated financial statements.

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Lowe’s Companies, Inc.

Consolidated Statements of Shareholders’ (Deficit)/Equity

Consolidated Statements of Shareholders’ Deficit

(In millions, except per share data)

Common Stock Capital in Excess

of Par Value Retained Earnings/(Accumulated Deficit) Accumulated Other Comprehensive

of Par Value Accumulated Deficit Accumulated Other Comprehensive

(Loss)/Income Total

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Issuance of common stock under share-based payment plans 2 1 150 — — 151

Balance January 28, 2022 670 $ 335 $ — $ ( 5,115 ) $ ( 36 ) $ ( 4,816 )

Balance February 3, 2023 601 $ 301 $ — $ ( 14,862 ) $ 307 $ ( 14,254 )

Net earnings — — — 7,726 — 7,726

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Issuance of common stock under share-based payment plans 2 1 158 — — 159

Balance February 2, 2024 574 $ 287 $ — $ ( 15,637 ) $ 300 $ ( 15,050 )

Balance January 31, 2025 560 $ 280 $ — $ ( 14,799 ) $ 288 $ ( 14,231 )

See accompanying notes to consolidated financial statements.

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Lowe’s Companies, Inc.

2 unchanged sentences

Fiscal Years Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Cash flows from operating activities:

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Accounts payable 633 ( 1,820 ) ( 549 )

Deferred revenue ( 170 ) ( 183 ) 413

Other operating liabilities ( 94 ) ( 2,227 ) 205

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Effect of exchange rate changes on cash — — ( 16 )

Net (decrease)/increase in cash and cash equivalents ( 427 ) 215 ( 3,557 )

Net increase/(decrease) in cash and cash equivalents 840 ( 427 ) 215

Cash and cash equivalents, beginning of year 921 1,348 1,133

1 unchanged sentence

See accompanying notes to consolidated financial statements.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

YEARS ENDED FEBRUARY 2, 2024, FEBRUARY 3, 2023, AND JANUARY 28, 2022

YEARS ENDED JANUARY 31, 2025, FEBRUARY 2, 2024, AND FEBRUARY 3, 2023

Summary of Significant Accounting Policies

Lowe’s Companies, Inc.

and subsidiaries (the Company) is the world’s second-largest home improvement retailer and operated 1,746 stores and outlets in the United States as of February 2, 2024.

and subsidiaries (the Company) is the world’s second-largest home improvement retailer and operated 1,748 stores and outlets in the United States as of January 31, 2025.

On February 3, 2023, Lowe’s completed the sale of its Canadian retail business, which operated 232 stores in Canada, as well as serviced 210 dealer-owned stores.

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Fiscal 2022 contained 53 weeks, and fiscal years 2023 and 2024 each contained 52 weeks.

All references herein for the years 2023, 2022, and 2021 represent the fiscal years ended February 2, 2024, February 3, 2023, and January 28, 2022, respectively.

All references herein for the years 2024, 2023, and 2022 represent the fiscal years ended January 31, 2025, February 2, 2024, and February 3, 2023, respectively.

Principles of Consolidation - The consolidated financial statements include the accounts of the Company and its wholly-owned or controlled subsidiaries.

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The majority of payments due from financial institutions for the settlement of credit card and debit card transactions process within two business days and are, therefore, classified as cash and cash equivalents.

Investments - Investments generally consist of commercial paper, corporate debt securities, governmental securities, certificates of deposit, and money market funds, which are classified as available-for-sale.

Investments - Investments generally consist of certificates of deposit, commercial paper, corporate debt securities, governmental securities, and money market funds, which are classified as available-for-sale.

Available-for-sale debt securities are recorded at fair value, and unrealized gains and losses are recorded, net of tax, as a component of accumulated other comprehensive income.

The proceeds from sales of available-for-sale debt securities were insignificant for 2023 and $ 10 million and $ 308 million for 2022 and 2021, respectively.

Gross realized gains and losses on the sale of available-for-sale debt securities were not significant for any of the periods presented.

The proceeds from sales and gross realized gains and losses on available-for-sale debt securities were not significant for any of the periods presented.

Also included in long-term investments is performance-based contingent consideration associated with the sale of the Canadian retail business.

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All other investments are classified as long-term.

Available-for-sale debt securities classified as long-term as of February 2, 2024, will mature in one to three years , based on stated maturity dates.

Available-for-sale debt securities classified as long-term as of January 31, 2025, will mature in one to three years , based on stated maturity dates.

The Company classifies as investments restricted balances pledged as collateral for the Company’s extended protection plan program.

Restricted balances included in short-term investments were $ 307 million as of February 2, 2024, and $ 384 million as

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of February 3, 2023.

Restricted balances included in long-term investments were $ 252 million as of February 2, 2024, and $ 100 million as of February 3, 2023.

Merchandise Inventory - The majority of the Company’s inventory is stated at the lower of cost and net realizable value using the first-in, first-out method of inventory accounting.

Restricted balances included in short-term investments were $ 372 million as of January 31, 2025, and $ 307 million as of February 2, 2024.

Restricted balances included in long-term investments were $ 277 million as of January 31, 2025, and $ 252 million as of February 2, 2024.

Merchandise Inventory - The Company’s inventory is stated at the lower of cost and net realizable value (LCNRV) using the first-in, first-out method of inventory accounting.

The cost of inventory includes certain costs associated with the preparation of inventory for resale, including distribution center costs, and is net of vendor funds.

The Company records an inventory reserve for the anticipated loss associated with selling inventories below cost.

The Company records an inventory reserve for the estimated adjustment to mark down merchandise inventory to the lower of cost or net realizable value.

This reserve is based on management’s current knowledge with respect to inventory levels, sales trends, and historical experience.

Management does not believe the Company’s merchandise inventories are subject to significant risk of obsolescence in the near term in excess of established reserves, and management has the ability to adjust purchasing patterns based on anticipated sales trends and general economic conditions.

Management does not believe the Company’s merchandise inventories are subject to significant risk of markdown in the near term in excess of established reserves, and management has the ability to adjust purchasing patterns based on anticipated sales trends and general economic conditions.

However, changes in consumer purchasing patterns could result in the need for additional reserves.

The Company’s reserve for loss on obsolete inventory was $ 245 million as of February 2, 2024, and $ 139 million as of February 3, 2023.

The Company’s LCNRV inventory reserve was $ 222 million as of January 31, 2025, and $ 245 million as of February 2, 2024.

The Company also records an inventory reserve for the estimated shrinkage between physical inventories.

1 unchanged sentence

Changes in the estimated shrink reserve are made based on the timing and results of physical inventories.

The Company’s reserve for inventory shrinkage was $ 425 million as of February 2, 2024, and $ 428 million as of February 3, 2023.

The Company’s reserve for inventory shrinkage was $ 427 million as of January 31, 2025, and $ 425 million as of February 2, 2024.

The Company receives funds from vendors in the normal course of business, principally as a result of purchase volumes, early payments, or sales-based promotions of vendors’ products.

8 unchanged sentences

All derivative financial instruments are recognized at their fair values as either assets or liabilities at the balance sheet date and reported on a gross basis.

The Company held fixed-to-floating interest rate swap agreements as fair value hedges on certain debt as of February 2, 2024, and February 3, 2023.

The Company held fixed-to-floating interest rate swap agreements as fair value hedges on certain debt as of January 31, 2025, and February 2, 2024.

The Company evaluates the effectiveness of the fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective.

7 unchanged sentences

The Company has the option, but no obligation, to purchase the receivables at the end of the agreement.

Prior to September 2023, the Company also had an agreement with Synchrony under which Synchrony purchased at face value commercial business accounts receivable originated by the Company and services these accounts.

The Company primarily accounted for these transfers as sales of the accounts receivable.

When the Company transferred its commercial business accounts receivable, it retained certain interests in those receivables, including the funding of a loss reserve and its obligation

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related to Synchrony’s ongoing servicing of the receivables sold.

Any gain or loss on the sale was determined based on the previous carrying amounts of the transferred assets allocated at fair value between the receivables sold and the interests retained.

When the Company transferred its commercial business accounts receivable, it retained certain interests in those receivables, including the funding of a loss reserve and its obligation related to Synchrony’s ongoing servicing of the receivables sold.

Any gain or loss on the sale was determined based on the previous carrying amounts of the transferred assets allocated at fair value between the receivables sold and the interests

Fair value was based on the present value of expected future cash flows, taking into account the key assumptions of anticipated credit losses, payment rates, late fee rates, Synchrony’s servicing costs, and the discount rate commensurate with the uncertainty involved.

1 unchanged sentence

In 2023, Synchrony exercised an option under the agreement to directly extend credit to the commercial accounts receivable customers, for which the related transition period was completed in August 2023.

In 2023, prior to the option’s effective date, $ 3.1 billion of accounts receivable were sold to Synchrony and the Company recognized losses of $ 63 million related to the servicing costs remitted to Synchrony monthly.

In 2022 and 2021, total commercial business accounts receivable sold to Synchrony were $ 5.2 billion and $ 4.3 billion, respectively, and the Company recognized losses of $ 76 million and $ 50 million, respectively.

In 2023, prior to the option’s effective date, $ 3.1 billion of accounts receivable were sold to Synchrony and the Company recognized a loss of $ 63 million related to the servicing costs remitted to Synchrony monthly.

In 2022, total commercial business accounts receivable sold to Synchrony were $ 5.2 billion and the Company recognized a loss of $ 76 million.

Property and Depreciation - Property is recorded at cost.

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Some of the Company’s leases also include rental escalation clauses and/or termination provisions.

Renewal options and termination options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering

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financial performance, strategic importance and/or invested capital.

Leases with an original term of twelve months or less are not recognized on the Company’s balance sheet, and the lease expense related to those short-term leases is recognized over the lease term.

Renewal options and termination options are included in the determination of lease payments when management determines the options are reasonably certain of exercise, considering financial performance, strategic importance and/or invested capital.

Leases with an original term of twelve months or less are not recognized on the Company’s balance sheet, and the lease expense related to those short-term leases is recognized over the

The Company does not account for lease and non-lease (e.g., common area maintenance) components of contracts separately for any underlying asset class.

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The rollforward of the Company’s outstanding payment obligations that suppliers financed to participating financial institutions, which are included in accounts payable on the consolidated balance sheets, are as follows:

(In millions) February 2, 2024 February 3, 2023 January 28, 2022

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Financed payment obligations outstanding at the beginning of the year $ 1,356 $ 2,257 $ 2,274

3 unchanged sentences

Other Current Liabilities - Other current liabilities on the consolidated balance sheets consist of:

(In millions) February 2, 2024 February 3, 2023

(In millions) January 31, 2025 February 2, 2024

Accrued dividends $ 645 $ 633

Self-insurance liabilities 431 424

Income taxes payable 491 33

Accrued interest 449 456

Sales return reserve 191 234

Self-insurance liabilities 432 431

Sales tax liabilities 195 164

Sales return reserve 167 191

Accrued property taxes 138 130

1 unchanged sentence

Total $ 3,952 $ 3,478

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Self-Insurance - The Company is self-insured for certain losses relating to workers’ compensation, automobile, property, and general and product liability claims.

The Company has excess insurance coverage above certain retention amounts to limit exposure from these claims.

The Company has excess insurance coverage above certain retention amounts to limit

exposure from these claims.

The Company is also self-insured for certain losses relating to extended protection plans, as well as medical and dental claims.

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Although management believes it has the ability to reasonably estimate losses related to claims, it is possible that actual results could differ from recorded self-insurance liabilities.

Total self-insurance liabilities, including the current and non-current portions, were $ 1.1 billion as of February 2, 2024, and February 3, 2023.

Total self-insurance liabilities, including the current and non-current portions, were $ 966 million as of January 31, 2025, and $ 1.1 billion as of February 2, 2024.

The Company provides surety bonds issued by insurance companies to secure payment of workers’ compensation liabilities as required in certain states where the Company is self-insured.

Outstanding surety bonds relating to self-insurance were $ 280 million as of February 2, 2024, and $ 270 million as of February 3, 2023.

Outstanding surety bonds relating to self-insurance were $ 272 million as of January 31, 2025, and $ 280 million as of February 2, 2024.

Income Taxes - The Company establishes deferred income tax assets and liabilities for temporary differences between the tax and financial accounting bases of assets and liabilities.

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The Company records any applicable penalties related to tax issues within the income tax provision.

Transferable Tax Credits

In August 2022, the Inflation Reduction Act was enacted which included provisions that allow for the transfer of certain federal clean energy tax credits (Federal Transferable Tax Credits).

The Company paid $ 909 million and $ 143 million for the purchase of Federal Transferable Tax Credits in 2024 and 2023, respectively.

All amounts paid have been included in payments for income taxes, and differences between tax credits purchased and amounts paid are included as a component of the income tax provision.

Income Tax Relief

In October 2022, the Internal Revenue Service announced that businesses in certain states, including North Carolina, affected by Hurricane Ian would receive tax relief by postponing certain tax-payment deadlines.

Under this relief, the Company’s quarterly federal estimated income tax payments originally due by October 17, 2022, and January 17, 2023, were deferred until February 15, 2023.

As of February 3, 2023, the Company deferred $ 1.2 billion of federal income taxes payable, which is included in income taxes payable in the consolidated balance sheet.

On October 1, 2024, the Internal Revenue Service announced that businesses in North Carolina, affected by Hurricane Helene would receive tax relief by postponing certain tax-payment deadlines.

Under this relief, certain federal estimated income tax payments can be deferred until May 1, 2025.

As of January 31, 2025, the Company deferred $ 478 million of federal income taxes payable, which is included in other current liabilities in the consolidated balance sheet.

Shareholders’ Deficit - The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private market transactions.

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Once additional paid-in capital is fully depleted, remaining excess of cost over par value is charged to accumulated deficit.

In August 2022, the Inflation Reduction Act (IRA) enacted a 1% excise tax on net share repurchases after December 31, 2022.

Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired in the consolidated statements of shareholders’ (deficit)/equity.

In August 2022, the Inflation Reduction Act enacted a 1% excise tax on net share repurchases after December 31, 2022.

Any excise tax incurred on share repurchases is recognized as part of the cost basis of the shares acquired in the consolidated statements of shareholders’ deficit.

Revenue Recognition - The Company recognizes revenue to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those goods or services.

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The Company recognizes revenue associated with services as they are rendered, and the majority of services are completed within one week from initiation.

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Retail deferred revenue consists of amounts received for which customers have not yet taken possession of the merchandise or for which installation has not yet been completed.

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- Freight expenses associated with moving merchandise inventories from vendors to selling locations;

- Costs associated with operating the Company’s distribution network, including payroll and benefit costs and occupancy costs;

- Costs associated with operating the Company’s distribution network, including employee compensation and benefit costs and occupancy costs;

- Depreciation of assets associated with the Company’s distribution network;

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n Depreciation of assets used in delivering product to customers;

n Costs associated with inventory shrinkage and obsolescence;

n Costs associated with inventory shrinkage and markdown;

n Costs of services performed under the Lowe’s protection plan.

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Advertising expenses were $ 921 million, $ 831 million, and $ 869 million in 2024, 2023, and 2022, respectively.

Comprehensive Income - The Company reports comprehensive income in its consolidated statements of comprehensive income and consolidated statements of shareholders’ (deficit)/equity.

Comprehensive Income - The Company reports comprehensive income in its consolidated statements of comprehensive income and consolidated statements of shareholders’ deficit.

Comprehensive income represents changes in shareholders’ deficit from non-owner sources and is comprised of net earnings adjusted primarily for cash flow hedge derivative contracts.

Net cash flow hedge gains, net of tax, classified in accumulated other comprehensive income were $ 301 million, $ 315 million, and $ 6 million as of February 2, 2024, February 3, 2023, and January 28, 2022, respectively.

Segment Information - The Company’s home improvement retail operations represent a single reportable segment.

Key operating decisions are made at the Company level in order to maintain a consistent retail customer experience.

The Company’s home improvement retail stores, in addition to online selling channels, sell similar products and services, use similar processes to sell those products and services, and sell their products and services to similar classes of customers.

In addition, the Company’s operations exhibit similar long-term economic characteristics.

Beginning February 3, 2023, long-lived assets outside of the U.S.

were immaterial as a result of the sale of the Canadian retail business.

Net sales outside of the U.S.

were approximately 5.2 % for the fiscal year ended February 3, 2023.

The amounts of long-lived assets and net sales outside of the U.S.

were approximately 7.2 % and 6.1 %, respectively, as of January 28, 2022.

Accounting Pronouncements Not Yet Adopted - In November 2023, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment

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Net cash flow hedge gains, net of tax, classified in accumulated other comprehensive income were $ 288 million, $ 301 million, and $ 315 million as of January 31, 2025, February 2, 2024, and February 3, 2023, respectively.

Reclassifications - Income taxes payable for the prior year was reclassified to conform with current year presentation and is included in Other current liabilities on the consolidated balance sheets.

Accounting Pronouncements Recently Adopted - Effective November 2, 2024, the Company adopted Accounting Standards Update (ASU) 2023-07, Segment Reporting (Topic 280):

Improvements to Reportable Segment Disclosures.

The ASU expands public entities’ segment disclosures by requiring disclosure of significant segment expenses that are regularly provided to the chief operating decision maker and included within each reported measure of segment profit or loss, an amount and description of its composition for other segment items, and interim disclosures of a reportable segment’s profit or loss and assets.

Under the ASU, all disclosure requirements in this update and ASC 280, Segment Reporting , will be required for public entities with a single reportable segment.

The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended January 31, 2025, and subsequent interim periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting this ASU on its disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740):

Under the ASU, all disclosure requirements in this update and ASC 280, Segment Reporting , are required for public entities with a single reportable segment.

See Note 1 7 for additional details of the Company’s reportable segment.

Accounting Pronouncements Not Yet Adopted -

In December 2023, the Financial Accounting Standards Board (FASB) issued ASU 2023-09, Income Taxes (Topic 740):

Improvements to Income Tax Disclosures .

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The Company is currently evaluating the impact of adopting this ASU on its disclosures.

In March 2024, the SEC adopted its climate-related final rule SEC Release No.

34-99678, The Enhancement and Standardization of Climate-Related Disclosures for Investors, which will require registrants to provide certain climate-related information in their registration statements and annual reports.

The rules require significant effects of severe weather events and other natural conditions, as well as amounts related to carbon offsets and renewable energy credits or certificates to be disclosed in the audited financial statements in certain circumstances.

The disclosure requirements related to financial statements are effective for the Company’s Annual Report on Form 10-K for the fiscal year ended January 30, 2026.

The Company is currently evaluating the impact of the rule on its disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures .

The ASU requires a public business entity to provide disaggregated disclosures of certain categories of expenses on an annual and interim basis including purchases of inventory, employee compensation, depreciation, and intangible asset amortization for each income statement line item that contains those expenses.

The ASU is effective for the Company’s Annual Report on Form 10-K for the fiscal year ended January 28, 2028, and subsequent interim periods, with early adoption permitted.

The Company is currently evaluating the impact of adopting this ASU on its disclosures.

Recent accounting pronouncements pending adoption not discussed in this Form 10-K are either not applicable to the Company or are not expected to have a material impact on the Company.

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(In millions) Years Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Products $ 80,538 $ 83,002 $ 93,392

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The balances and classification within the consolidated balance sheets for anticipated sales returns and the associated right of return assets are as follows:

(In millions) Classification February 2, 2024 February 3, 2023

(In millions) Classification January 31, 2025 February 2, 2024

Anticipated sales returns Other current liabilities $ 167 $ 191

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Deferred revenue for retail and stored-value cards are as follows:

(In millions) February 2, 2024 February 3, 2023

(In millions) January 31, 2025 February 2, 2024

Retail deferred revenue $ 770 $ 796

1 unchanged sentence

Deferred revenue $ 1,358 $ 1,408

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Deferred revenue - Lowe’s protection plans

Deferred revenue associated with Lowe’s protection plans is as follows:

(In millions) February 2, 2024 February 3, 2023

(In millions) January 31, 2025 February 2, 2024

Deferred revenue - Lowe’s protection plans $ 1,268 $ 1,225

1 unchanged sentence

(In millions) Years Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Lowe’s protection plan deferred revenue recognized into sales $ 561 $ 549 $ 527

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The following table presents the Company’s net sales disaggregated by merchandise division:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(In millions) Total Sales % Total Sales % Total Sales %

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Merchandise division net sales for prior periods have been reclassified to conform to the current year presentation.

1 Home Décor includes the following product categories:

1 Home Decor includes the following product categories:

Appliances, Décor, Flooring, Kitchens & Bath, and Paint

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(In millions) Years Ended

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

United States $ 83,674 $ 86,377 $ 92,010

— 5,049 5,902

Net Sales $ 83,674 $ 86,377 $ 97,059

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• Level 3 - inputs to the valuation techniques that are unobservable for the assets or liabilities

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Assets and Liabilities that are Measured at Fair Value on a Recurring Basis

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Fair Value Measurements at

(In millions) Classification Measurement Level February 2, 2024 February 3, 2023

(In millions) Classification Measurement Level January 31, 2025 February 2, 2024

Available-for-sale debt securities:

1 unchanged sentence

Money market funds Short-term investments Level 1 91 56

Commercial paper Short-term investments Level 2 49 5

Corporate debt securities Short-term investments Level 2 16 50

Certificates of deposit Short-term investments Level 1 13 42

Commercial paper Short-term investments Level 2 5 52

Municipal obligations Short-term investments Level 2 2 —

Foreign government debt securities Short-term investments Level 2 4 —

Municipal obligations Short-term investments Level 2 — 2

Treasury securities Long-term investments Level 1 150 213

3 unchanged sentences

Derivative instruments:

Forward interest rate swaps Other current assets Level 2 $ — $ 251

Fixed-to-floating interest rate swaps Other current liabilities Level 2 $ 11 $ —

Fixed-to-floating interest rate swaps Other liabilities Level 2 35 76

Other financial instruments:

Contingent consideration Long-term investments Level 3 $ — $ 21

There were no transfers between Levels 1, 2, or 3 during any of the periods presented.

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The inputs to the pricing models were typically benchmark yields, reported trades, broker-dealer quotes, issuer spreads, and benchmark securities, among others.

The performance-based contingent consideration is related to the fiscal 2022 sale of the Canadian retail business and is classified as a Level 3 long-term investment.

In addition, the Company has received performance-based contingent consideration related to the fiscal 2022 sale of the Canadian retail business and is classified as a Level 3 long-term investment.

The Company determined the initial fair value for contingent consideration as of February 3, 2023, based on an income approach using an option pricing model, calculated using the significant unobservable inputs such as total equity value, volatility, and expected term.

1 unchanged sentence

The rollforward of the fair value of contingent consideration is as follows:

(In millions) February 2, 2024 February 3, 2023

(In millions) January 31, 2025 February 2, 2024

Beginning balance $ — $ 21

Recognition of contingent consideration at initial fair value — 21

Change in fair value 177 102

1 unchanged sentence

Ending balance $ — $ —

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Assets and Liabilities that are Measured at Fair Value on a Nonrecurring Basis

For the fiscal year ended February 2, 2024, the Company had no material measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

For the fiscal year ended February 3, 2023, the Company’s only significant assets or liabilities measured at fair value on a nonrecurring basis subsequent to their initial recognition were certain long-lived assets as further described below.

The Company reviews the carrying amounts of long-lived assets whenever certain events or changes in circumstances indicate that the carrying amounts may not be recoverable.

When evaluating long-lived assets for impairment, the asset group is generally at an individual location level, as that is the lowest level for which cash flows are identifiable.

Cash flows for individual locations do not include an allocation of corporate overhead.

The Company evaluates long-lived assets for triggering events on a quarterly basis to determine when assets may not be recoverable.

An impairment loss is recognized when the carrying amount of the asset (disposal) group is not recoverable and exceeds its fair value.

The Company estimates the fair values of assets subject to long-lived asset impairment based on the Company’s own judgments about the assumptions that market participants would use in pricing the assets and on observable market data, when available.

The Company classifies these fair value measurements as Level 3.

During the third quarter of fiscal 2022, the Company determined it was more likely than not that the assets within the Canadian retail business would be sold or otherwise disposed of significantly before the end of their previously estimated useful lives, and these assets were evaluated for recoverability.

Based on the proposed transaction, the Company reconsidered the appropriate asset grouping of long-lived assets attributable to the Company’s Canadian locations given the change in the Company’s expectations regarding use and disposition of its associated assets.

The Company determined the total Canadian retail business (Canada asset group) to be the appropriate asset group for which the long-lived assets should be evaluated, as this represented the lowest level for which identifiable cash flows were largely independent of the cash flows of other groups of assets and liabilities.

The carrying value of the Canada asset group included substantially all assets and liabilities of the Canadian retail business, including accounts receivable, inventory, property, operating and finance lease right-of-use assets, definite-lived intangible assets, operating liabilities including accounts payable and accrued compensation, and operating and finance lease liabilities.

A market approach of orderly transaction under current market conditions was used in determining the estimated fair value of the Canada asset group, which was based on the proposed transaction price, inclusive of performance-based contingent consideration.

The estimated fair value of the Canada asset group was determined to be $ 421 million.

As a result, the Company recorded $ 2.1 billion of long-lived asset impairment within SG&A expense in the consolidated statements of earnings, which reflected the full carrying value of the long-lived assets of the Canada asset group as of October 28, 2022.

As of February 3, 2023, the Company finalized the sale of the Canadian retail business.

Refer to Note 6 for details of the divestiture.

The following table presents the Company’s impairment losses resulting from non-financial assets measured at estimated fair value on a nonrecurring basis included in earnings for the fiscal year ended February 3, 2023:

(In millions) February 3, 2023

Canada asset group:

Property, less accumulated depreciation $ 1,258

Operating lease right-of-use assets 621

Other assets 182

Total $ 2,097

For the fiscal years ended January 31, 2025, and February 2, 2024, the Company had no material measurements of assets and liabilities at fair value on a nonrecurring basis subsequent to their initial recognition.

Other Fair Value Disclosures

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The fair values of the Company’s mortgage notes were estimated using discounted cash flow analyses, based on the future cash outflows associated with these arrangements and discounted using the applicable incremental borrowing rate.

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Carrying amounts and the related estimated fair value of the Company’s long-term debt, excluding finance lease obligations, are as follows:

February 2, 2024 February 3, 2023

January 31, 2025 February 2, 2024

(In millions) Carrying Amount Fair Value Carrying Amount Fair Value

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Property is summarized by major class in the following table:

(In millions) Estimated Depreciable Lives, In Years February 2, 2024 February 3, 2023

(In millions) Estimated Depreciable Lives, In Years January 31, 2025 February 2, 2024

Land N/A $ 6,811 $ 6,785

2 unchanged sentences

Equipment 2 - 15

10,988 10,238

Construction in progress N/A 616 708

4 unchanged sentences

The related amortization expense for right-of-use assets under finance leases is included in depreciation and amortization expense.

The Company recognized depreciation and amortization expense, inclusive of amounts presented in cost of sales, of $ 1.9 billion in 2023 and 2022, and $ 1.8 billion in 2021.

The Company recognized depreciation and amortization expense, inclusive of amounts presented in cost of sales, of $ 2.0 billion in 2024, and $ 1.9 billion in 2023 and 2022.

The lease-related assets and liabilities recorded on the balance sheet are summarized in the following table:

(In millions)

Classification February 2, 2024 February 3, 2023

Classification January 31, 2025 February 2, 2024

Operating lease assets Operating lease right-of-use assets $ 3,738 $ 3,733

6 unchanged sentences

Total lease liabilities $ 4,666 $ 4,733

1 Finance lease assets are recorded net of accumulated amortization of $ 326 million as of February 2, 2024, and $ 244 million as of February 3, 2023.

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1 Finance lease assets are recorded net of accumulated amortization of $ 373 million as of January 31, 2025, and $ 326 million as of February 2, 2024.

The table below presents the lease costs for finance and operating leases:

(In millions)

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Finance lease cost

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1 Includes short-term leases and sublease income, which are immaterial.

The future minimum rental payments required under operating and finance lease obligations as of February 2, 2024, having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:

The future minimum rental payments required under operating and finance lease obligations as of January 31, 2025, having initial or remaining non-cancelable lease terms in excess of one year are summarized as follows:

(In millions)

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Present value of lease liabilities 4

1 Operating lease payments include $ 402 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $ 179 million of minimum lease payments for leases signed but not yet commenced.

$ 4,191 $ 475 $ 4,666

1 Operating lease payments include $ 469 million related to options to extend lease terms that are reasonably certain of being exercised and

exclude $ 205 million of minimum lease payments for leases signed but not yet commenced.

2 Finance lease payments exclude $ 2 million of minimum lease payments for leases signed but not yet commenced.

3 Calculated using the lease-specific incremental borrowing rate.

Lease Term and Discount Rate February 2, 2024 February 3, 2023

4 Includes the current portion of $ 563 million for operating leases and $ 87 million for finance leases.

Lease Term and Discount Rate January 31, 2025 February 2, 2024

Weighted-average remaining lease term (years)

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(In millions)

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Cash paid for amounts included in the measurement of lease liabilities

4 unchanged sentences

Leased assets obtained in exchange for new operating lease liabilities 1

1 Excludes $ 179 million of leases signed but not yet commenced as of February 2, 2024.

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1 Excludes $ 205 million of leases signed but not yet commenced as of January 31, 2025.

Divestiture of the Canadian Retail Business

3 unchanged sentences

home improvement business.

During the fiscal year ended January 31, 2025, the Company recognized a pre-tax gain on sale of $ 177 million associated with performance-based contingent consideration received.

During the fiscal year ended February 2, 2024, the Company recognized a pre-tax gain on sale of $ 79 million associated with performance-based consideration received, as well as final adjustments to the selling price.

During the fiscal year ended February 3, 2023, the Company recorded $ 2.5 billion of pre-tax costs associated with the sale, inclusive of long-lived asset impairment, loss on sale, and other closing costs.

The cumulative foreign currency translation adjustment previously included in accumulated other comprehensive income was reclassified to earnings and included in the loss on sale.

During the fiscal year ended February 2, 2024, the Company recognized a gain on sale of $ 79 million associated with performance-based contingent consideration received and final adjustments to the selling price.

A summary of the significant activity included within SG&A expense in the consolidated statements of earnings associated with the sale of the Canadian retail business is as follows:

(In millions) February 2, 2024 February 3, 2023

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Long-lived asset impairment $ — $ — $ 2,061

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Commercial Paper Program

In September 2023, the Company entered into an amended and restated $ 2.0 billion five-year unsecured revolving credit agreement (2023 Credit Agreement), which amended and restated the Company’s $ 2.0 billion five-year unsecured revolving credit agreement entered into in March 2020, and as amended (2020 Credit Agreement), to extend the term until September 2028.

The 2023 Credit Agreement, along with the $ 2.0 billion five-year unsecured third amended and restated credit agreement entered into in December 2021, and as amended (Third Amended and Restated Credit Agreement), support the Company’s commercial paper program.

The Company’s commercial paper program is supported by the $ 2.0 billion five-year unsecured revolving credit agreement entered into in September 2023 (2023 Credit Agreement), and the $ 2.0 billion five-year unsecured third amended and restated credit agreement entered into in December 2021, and as amended (Third Amended and Restated Credit Agreement).

The amounts available to be drawn under the 2023 Credit Agreement and the Third Amended and Restated Credit Agreement are reduced by the amount of borrowings under the commercial paper program.

1 unchanged sentence

The Credit Agreements contain customary representations, warranties, and covenants for transactions of these type.

The Company was in compliance with those financial covenants as of February 2, 2024.

There were no borrowings under the Company’s commercial paper program, Third Amended and Restated Credit Agreement, or the 2023 Credit Agreement as of February 2, 2024.

Total combined availability under the Credit Agreements was $ 4.0 billion as of February 2, 2024.

Outstanding borrowings under the Company’s commercial paper program were $ 499 million, with a weighted average interest rate of 4.78 %, as of February 3, 2023.

There were no outstanding borrowings under the Company’s Third Amended and Restated Credit Agreement or the 2020 Credit Agreement as of February 3, 2023.

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The Company was in compliance with those financial covenants as of January 31, 2025.

There were no borrowings under the Company’s commercial paper program, Third Amended and Restated Credit Agreement, or the 2023 Credit Agreement as of January 31, 2025, and February 2, 2024.

Total combined availability under the Credit Agreements was $ 4.0 billion as of January 31, 2025.

Long-Term Debt

1 unchanged sentence

(In millions, except percentage data)

Weighted-Average Interest Rate as of February 2, 2024 February 2, 2024 February 3, 2023

Weighted-Average Interest Rate as of January 31, 2025 January 31, 2025 February 2, 2024

Secured debt:

13 unchanged sentences

Long-term debt, excluding current maturities $ 32,901 $ 35,384

1 Real properties with an aggregate book value of $ 12 million as of February 2, 2024, were pledged as collateral for secured debt.

1 Real properties with an aggregate book value of $ 11 million as of January 31, 2025, were pledged as collateral for secured debt.

Principal amount of debt maturities, exclusive of unamortized original issue discounts, unamortized debt issuance costs, fair-value hedge adjustments, and finance lease obligations, for the next five fiscal years and thereafter are as follows:

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The notes contain certain restrictive covenants, none of which are expected to impact the Company’s capital resources or liquidity.

The Company was in compliance with all financial covenants of these agreements as of February 2, 2024.

The Company was in compliance with all financial covenants of these agreements as of January 31, 2025.

During 2023, the Company issued $ 3.0 billion of unsecured fixed rate notes (collectively, the 2023 Notes) as follows:

6 unchanged sentences

March 2023 $ 500 April 2063 5.850 % $ 5

Interest on the March 2023 Notes with April maturity dates is payable semiannually in arrears in April and October of each year until maturity.

Interest on the March 2023 Notes with July maturity dates is payable semiannually in arrears in January and July of each year until maturity.

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During 2022, the Company issued $ 9.8 billion of unsecured fixed rate notes (collectively, the 2022 Notes) as follows:

Issue Date Principal Amount

(in millions) Maturity Date Interest Rate Discount

(in millions)

March 2022 $ 750 April 2027 3.350 % $ 3

March 2022 $ 1,500 April 2032 3.750 % $ 7

March 2022 $ 1,500 April 2052 4.250 % $ 14

March 2022 $ 1,250 April 2062 4.450 % $ 12

September 2022 $ 1,000 September 2025 4.400 % $ 3

September 2022 $ 1,250 April 2033 5.000 % $ 9

September 2022 $ 1,500 April 2053 5.625 % $ 18

September 2022 $ 1,000 September 2062 5.800 % $ 16

Interest on the September 2022 Notes and March 2022 Notes with April maturity dates is payable semiannually in arrears in April and October of each year until maturity.

Interest on the September 2022 Notes with September maturity dates is payable semiannually in arrears in March and September of each year until maturity.

The indentures governing the 2023 and 2022 Notes contain a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued interest, if any, up to the date of redemption.

The indentures also contain a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs.

Interest on the 2023 Notes with April maturity dates is payable semiannually in arrears in April and October of each year until maturity.

Interest on the 2023 Notes with July maturity dates is payable semiannually in arrears in January and July of each year until maturity.

The indenture governing the 2023 Notes contains a provision that allows the Company to redeem these notes at any time, in whole or in part, at specified redemption prices, plus accrued interest, if any, up to the date of redemption.

The indenture also contains a provision that allows the holders of the notes to require the Company to repurchase all or any part of their notes if a change of control triggering event occurs.

If elected under the change of control provisions, the repurchase of the notes will occur at a purchase price of 101 % of the principal amount, plus accrued interest, if any, on such notes up to the date of purchase.

The indentures governing the notes do not limit the aggregate principal amount of debt securities that the Company may issue and do not require the Company to maintain specified financial ratios or levels of net worth or liquidity.

However, the indentures include various restrictive covenants, none of which is expected to impact the Company’s liquidity or capital resources.

The indenture governing the notes does not limit the aggregate principal amount of debt securities that the Company may issue and does not require the Company to maintain specified financial ratios or levels of net worth or liquidity.

However, the indenture includes various restrictive covenants, none of which is expected to impact the Company’s liquidity or capital resources.

The discounts associated with these issuances, which include the underwriting and issuance discounts, are recorded in long-term debt and are being amortized over the respective terms of the notes using the effective interest method.

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The notional amounts of the Company’s material derivative instruments are as follows:

(In millions) February 2, 2024 February 3, 2023

Cash flow hedges:

Forward interest rate swap agreements $ — $ 1,290

(In millions) January 31, 2025 February 2, 2024

Fair value hedges:

1 unchanged sentence

See Note 3 for the gross fair values of the Company’s outstanding derivative financial instruments and corresponding fair value classifications.

In connection with the issuance of our March 2023 Notes, we settled forward interest rate swap contracts with a combined notional amount of $ 2.0 billion and received a payment of $ 247 million.

The cash flows related to settlement of the Company’s hedging derivatives financial instruments are classified in the consolidated statements of cash flows based on the nature of the underlying hedged items.

The Company accounts for the fixed-to-floating interest rate swap agreements as fair value hedges using the shortcut method of accounting under which the hedges are assumed to be perfectly effective.

Thus, the change in fair value of the derivative instruments offsets the change in fair value on the hedged debt, and there is no net impact in the consolidated statements of earnings from the fair value of the derivatives.

In connection with the issuance of our 2023 Notes, we settled forward interest rate swap contracts with a combined notional amount of $ 2.0 billion and received a payment of $ 247 million.

In connection with the issuance of the March 2022 Notes, the Company settled forward interest rate swap contracts with a combined notional amount of $ 1.5 billion and received a payment of $ 143 million.

1 unchanged sentence

The (loss)/gain from forward interest rate swap derivatives, both matured and outstanding, designated as cash flow hedges recorded in other comprehensive (loss)/income and earnings for 2024, 2023, and 2022, including its line item in the financial statements, is as follows:

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(In millions) February 2, 2024 February 3, 2023 January 28, 2022

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Other comprehensive (loss)/income:

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Shareholders’ Deficit

Authorized shares of preferred stock were 5.0 million ($ 5 par value) as of February 2, 2024, and February 3, 2023, none of which have been issued.

Authorized shares of preferred stock were 5.0 million ($ 5 par value) as of January 31, 2025, and February 2, 2024, none of which have been issued.

The Board of Directors may issue the preferred stock (without action by shareholders) in one or more series, having such voting rights, dividend and liquidation preferences, and such conversion and other rights as may be designated by the Board of Directors at the time of issuance.

Authorized shares of common stock were 5.6 billion ($ 0.50 par value) as of February 2, 2024, and February 3, 2023.

Authorized shares of common stock were 5.6 billion ($ 0.50 par value) as of January 31, 2025, and February 2, 2024.

The Company has a share repurchase program that is executed through purchases made from time to time either in the open market or through private off-market transactions.

1 unchanged sentence

On December 7, 2022, the Company announced that its Board of Directors authorized $ 15.0 billion of share repurchases under the program.

As of February 2, 2024, the Company had $ 14.6 billion remaining under the program.

During the year ended February 2, 2024, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 15.4 million shares of the Company’s common stock for $ 3.3 billion.

As of January 31, 2025, the Company had $ 10.8 billion remaining under the program.

During the year ended January 31, 2025, the Company entered into Accelerated Share Repurchase (ASR) agreements with third-party financial institutions to repurchase a total of 6.1 million shares of the Company’s common stock for $ 1.5 billion.

At inception, the Company paid the financial institutions using cash on hand and took initial delivery of shares.

6 unchanged sentences

The forward stock purchase contracts were considered indexed to the Company’s own stock and were classified as equity instruments.

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The terms of each ASR agreement entered into during the last three fiscal years, structured as outlined above, are as follows (in millions):

Agreement Execution Date ASR Settlement Date ASR Agreement Amount Minimum Notional Amount 1

Maximum Notional Amount 1

Cash Payment Received at Settlement 1

Initial Shares Delivered Additional Shares Delivered at Settlement Total Shares Delivered

Agreement Execution Date ASR Settlement Date ASR Agreement Amount Initial Shares Delivered Additional Shares Delivered at Settlement Total Shares Delivered

Q1 2022 Q1 2022 750 2.8 0.6 3.4

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Q4 2024 Q4 2024 400 1.2 0.4 1.6

1 The Company entered into variable notional ASR agreements with third-party financial institutions to repurchase between a minimum notional amount and a maximum notional amount.

At inception of each transaction, the Company paid the maximum notional amount and received shares.

When the Company finalized each transaction, it received additional shares as well as a cash payment from the third-party financial institution equal to the difference between the prepayment amount (maximum notional amount) and the final notional amount.

During the year ended February 2, 2024, the Company also repurchased shares of its common stock through the open market totaling 13.8 million shares for a cost of $ 2.9 billion.

During the year ended January 31, 2025, the Company also repurchased shares of its common stock through the open market totaling 9.3 million shares for a cost of $ 2.3 billion.

The Company also withholds shares from employees to satisfy either the exercise price of stock options exercised or the statutory withholding tax liability resulting from the vesting of restricted stock awards and performance share units.

Total shares repurchased for 2024, 2023, and 2022 were as follows:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(In millions) Shares Cost Shares Cost Shares Cost

9 unchanged sentences

Both of these plans contain a non-discretionary anti-dilution provision that is designed to equalize the value of an award as a result of any stock dividend, stock split, recapitalization, or any other similar equity restructuring.

A total of 80.0 million shares were authorized for grants of share-based awards to key employees and non-employee directors under the Company’s currently active Incentive Plan, of which there were 24.6 million shares remaining available for grants as of February 2, 2024.

A total of 80.0 million shares were authorized for grants of share-based awards to key employees and non-employee directors under the Company’s currently active Incentive Plan, of which there were 23.5 million shares remaining available for grants as of January 31, 2025.

The 2020 Employee Stock Purchase Plan (the ESPP) permits a maximum of 20.0 million shares to be offered for purchase.

As of February 2, 2024, there were 18.1 million s hares remaining available for purchase.

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As of January 31, 2025, there were 17.5 million s hares remaining available for purchase.

The Company recognized share-based payment expense within SG&A expense in the consolidated statements of earnings of $ 221 million, $ 210 million, and $ 224 million in 2024, 2023, and 2022, respectively.

The total associated income tax benefit recognized, exclusive of excess tax benefits, was $ 42 million, $ 30 million, and $ 36 million in 2024, 2023, and 2022, respectively.

Total unrecognized share-based payment expense for all share-based payment plans was $ 248 million as of February 2, 2024, of which $ 147 million will be recognized in 2024, $ 85 million in 2025, and $ 16 million thereafter.

Total unrecognized share-based payment expense for all share-based payment plans was $ 281 million as of January 31, 2025, of which $ 163 million will be recognized in 2025, $ 101 million in 2026, and $ 17 million thereafter.

This results in these amounts being recognized over a weighted-average period of 1.4 years.

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The weighted average assumptions used in the Black-Scholes option-pricing model and weighted-average grant date fair value for options granted in 2024, 2023, and 2022 are as follows:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Weighted-average assumptions used:

5 unchanged sentences

The total intrinsic value of options exercised, representing the difference between the exercise price and the market price on the date of exercise, was approximately $ 45 million, $ 28 million, and $ 41 million in 2024, 2023, and 2022, respectively.

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Transactions related to stock options for the fiscal year ended February 2, 2024, are summarized as follows:

Transactions related to stock options for the fiscal year ended January 31, 2025, are summarized as follows:

(in thousands, except per share and years data) Shares Weighted-Average Exercise Price Per Share Weighted-Average Remaining Term Aggregate Intrinsic Value

3 unchanged sentences

Exercised ( 312 ) 106.62

Outstanding as of February 2, 2024 1,830 $ 136.74 6.43 $ 151,472

Vested and expected to vest as of February 2, 2024 1

Outstanding as of January 31, 2025 1,625 $ 150.23 5.84 $ 178,457

Vested and expected to vest as of January 31, 2025 1

1,613 $ 149.69 5.82 $ 177,957

Exercisable as of February 2, 2024 1,308 $ 111.67 5.58 $ 141,018

Exercisable as of January 31, 2025 1,249 $ 130.47 5.11 $ 161,887

1 Includes outstanding vested options as well as outstanding nonvested options after a forfeiture rate is applied.

2 unchanged sentences

In general, these awards vest ratably over a three-year period from the date of grant.

Certain awards vest 50 % at the end of a two-year period from the date of grant and 50 % at the end of a three-year period from the date of grant, or vest 100 % at the end of a three-year period from the date of grant.

Certain awards vest 50 % at the end of a two-

year period from the date of grant and 50 % at the end of a three-year period from the date of grant, or vest 100 % at the end of a three-year period from the date of grant.

All awards are expensed on a straight-line basis over a three-year period, which is considered to be the requisite service period.

2 unchanged sentences

The total fair value of restricted stock awards vesting each year was approximately $ 158 million, $ 208 million, and $ 203 million in 2024, 2023, and 2022, respectively.

Transactions related to restricted stock awards for the fiscal year ended February 2, 2024, are summarized as follows:

Transactions related to restricted stock awards for the fiscal year ended January 31, 2025, are summarized as follows:

(in thousands, except per share data) Shares Weighted-Average Grant-Date Fair Value Per Share

3 unchanged sentences

Canceled or forfeited ( 129 ) 222.85

Nonvested as of February 2, 2024 1,378 $ 199.88

Nonvested as of January 31, 2025 1,277 $ 224.15

Deferred Stock Units

3 unchanged sentences

Deferred stock units granted to non-employee Directors in 2024, 2023, and 2022 are as follows:

(In thousands, except per share data) February 2, 2024 February 3, 2023 January 28, 2022

(In thousands, except per share data) January 31, 2025 February 2, 2024 February 3, 2023

Deferred shares granted to non-employee Directors 12 11 12

2 unchanged sentences

The Company issues performance share units classified as equity awards.

Expense is recognized on a straight-line basis over the requisite service period, based on the probability of achieving the performance condition, with changes in expectations

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recognized as an adjustment to earnings in the period of the change.

Expense is recognized on a straight-line basis over the requisite service period, based on the probability of achieving the performance condition, with changes in expectations recognized as an adjustment to earnings in the period of the change.

Compensation cost is not recognized for performance share units that do not vest because service or performance conditions are not satisfied, and any previously recognized compensation cost is reversed.

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The weighted-average assumptions used in the Monte Carlo simulations for these awards granted in 2024, 2023, and 2022 are as follows:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Weighted-average assumptions used:

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The weighted-average grant-date fair value per unit of performance share units classified as equity awards granted was $ 273.37 , $ 209.50 , and $ 200.06 in 2024, 2023, and 2022, respectively.

The total fair value of performance share units vesting was approximately $ 105 million and $ 74 million in 2023 and 2022, respectively.

There were no performance share units vesting in 2021.

Transactions related to performance share units classified as equity awards for the fiscal year ended February 2, 2024, are summarized as follows:

The total fair value of performance share units vesting was approximately $ 55 million, $ 105 million and $ 74 million in 2024, 2023 and 2022, respectively.

Transactions related to performance share units classified as equity awards for the fiscal year ended January 31, 2025, are summarized as follows:

(in thousands, except per share data) Units 1

4 unchanged sentences

Canceled or forfeited ( 15 ) 225.08

Nonvested as of February 2, 2024 437 $ 206.23

Nonvested as of January 31, 2025 454 $ 227.46

1 The number of units presented is based on achieving the targeted performance goals as defined in the performance share unit agreements.

As of February 2, 2024, the maximum number of nonvested units that could vest under the provisions of the agreements was 0.9 million.

As of January 31, 2025, the maximum number of nonvested units that could vest under the provisions of the agreements was 0.9 million.

Restricted Stock Units

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The Company uses historical data to estimate the timing and amount of forfeitures.

The weighted-average

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grant-date fair value per share of restricted stock units granted was $ 188.22 , $ 192.46 , and $ 184.40 in 2023, 2022, and 2021, respectively.

The weighted-average grant-date fair value per share of restricted stock units granted was $ 236.96 , $ 188.22 , and $ 192.46 in 2024, 2023, and 2022, respectively.

The total fair value of restricted stock units vesting was approximately $ 56 million, $ 67 million, and $ 73 million in 2024, 2023, and 2022, respectively.

Transactions related to restricted stock units for the fiscal year ended February 2, 2024, are summarized as follows:

Transactions related to restricted stock units for the fiscal year ended January 31, 2025, are summarized as follows:

(in thousands, except per share data) Shares Weighted-Average Grant-Date Fair Value Per Share

3 unchanged sentences

Canceled or forfeited ( 58 ) 211.92

Nonvested as of February 2, 2024 476 $ 188.84

Nonvested as of January 31, 2025 452 $ 213.52

The purchase price of the shares under the ESPP equals 85 % of the closing price on the date of purchase.

1 unchanged sentence

The ESPP is considered a liability award and is measured at fair value at each reporting date, and the share-based payment expense is recognized over the six-month offering period.

Under the ESPP, the Company issued 0.7 million shares of common stock in 2023 and 2022, and 0.6 million shares of common stock in 2021, and recognized $ 21 million of share-based payment expense in 2023 and $ 20 million of share-based payment expense in 2022 and 2021.

Under the ESPP, the Company issued 0.6 million shares of common stock in 2024, and 0.7 million shares of common stock in 2023 and 2022, and recognized share-based payment expense of $ 22 million, $ 21 million, and $ 20 million in 2024, 2023, and 2022, respectively.

Employee Retirement Plans

11 unchanged sentences

The Company recognized expense associated with these employee retirement plans of $ 172 million, $ 167 million, and $ 174 million in 2024, 2023, and 2022, respectively.

Table of Content s

The following is a reconciliation of the federal statutory tax rate to the effective tax rate:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

Statutory federal income tax rate 21.0 % 21.0 % 21.0 %

6 unchanged sentences

The components of the income tax provision/(benefit) are as follows:

(In millions) February 2, 2024 February 3, 2023 January 28, 2022

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Federal $ 1,764 $ 1,955 $ 2,226

5 unchanged sentences

Total deferred 1

5 ( 188 ) 140

Total income tax provision $ 2,196 $ 2,449 $ 2,599

1 unchanged sentence

The tax effects of cumulative temporary differences that gave rise to the deferred tax assets and liabilities were as follows:

(In millions) February 2, 2024 February 3, 2023

(In millions) January 31, 2025 February 2, 2024

Deferred tax assets:

14 unchanged sentences

Net deferred tax assets $ 244 $ 248

Table of Content s

As of February 2, 2024, and February 3, 2023, the Company had Canadian net operating loss carryforwards of $ 1.3 billion and $ 1.6 billion, respectively.

As of January 31, 2025, and February 2, 2024, the Company had Canadian net operating loss carryforwards of $ 1 billion and $ 1.3 billion, respectively.

The net operating losses expire in 2025 through 2042.

As of February 2, 2024, and February 3, 2023, the Company had capital loss carryforwards of $ 2.7 billion and $ 2.5 billion, respectively, for Canadian tax purposes which do not expire.

A valuation allowance of $ 1.1 billion was recorded as of February 2, 2024, and February 3, 2023.

As of January 31, 2025, and February 2, 2024, the Company had capital loss carryforwards of $ 2.5 billion and $ 2.7 billion, respectively, for Canadian tax purposes which do not expire.

A valuation allowance of $ 1.0 billion and $ 1.1 billion was recorded as of January 31, 2025, and February 2, 2024, respectively.

A reconciliation of the beginning and ending balances of unrecognized tax benefits is as follows:

(In millions) February 2, 2024 February 3, 2023 January 28, 2022

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Unrecognized tax benefits, beginning of year $ 37 $ 37 $ 38

2 unchanged sentences

Unrecognized tax benefits, end of year $ 37 $ 37 $ 37

The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate were $ 37 million as of February 2, 2024, and February 3, 2023.

The unrecognized tax benefits that, if recognized, would favorably impact the effective tax rate were $ 37 million as of January 31, 2025, and February 2, 2024.

The net interest expense recognized by the Company related to uncertain tax positions was $ 1 million for 2024, $ 1 million for 2023, and $ 3 million for 2022.

The Company had $ 14 million of accrued interest related to uncertain tax positions as of February 2, 2024, and February 3, 2023.

No penalties were recognized related to uncertain tax positions for 2023 or 2022.

There was $ 4 million in penalties recognized related to uncertain tax positions for 2021.

The Company had $ 4 million of accrued penalties related to uncertain tax positions as of February 2, 2024, and February 3, 2023.

The Company had $ 15 million and $ 14 million of accrued interest related to uncertain tax positions as of January 31, 2025, and February 2, 2024, respectively.

No penalties were recognized related to uncertain tax positions for 2024, 2023, and 2022.

The Company had $ 4 million of accrued penalties related to uncertain tax positions as of January 31, 2025, and February 2, 2024, respectively.

The Company is subject to examination by various foreign and domestic taxing authorities.

7 unchanged sentences

Under the two-class method, net earnings are allocated to each class of common stock and participating security as if all of the net earnings for the period had been distributed.

The Company’s participating securities consist of share-based payment awards that contain a nonforfeitable right to receive dividends and, therefore, are considered to participate in undistributed earnings with common shareholders.

The Company’s participating securities consist of share-based payment awards that contain a non-forfeitable right to receive dividends and, therefore, are considered to participate in undistributed earnings with common shareholders.

Basic earnings per common share excludes dilution and is calculated by dividing net earnings allocable to common shares by the weighted-average number of common shares outstanding for the period.

1 unchanged sentence

The following table reconciles earnings per common share for 2024, 2023, and 2022:

(In millions, except per share data) February 2, 2024 February 3, 2023 January 28, 2022

(In millions, except per share data) January 31, 2025 February 2, 2024 February 3, 2023

Basic earnings per common share:

5 unchanged sentences

Basic earnings per common share $ 12.25 $ 13.23 $ 10.20

Table of Content s

(In millions, except per share data) February 2, 2024 February 3, 2023 January 28, 2022

Diluted earnings per common share:

10 unchanged sentences

The Company is, from time to time, party to various legal proceedings considered to be in the normal course of business, none of which, individually or in the aggregate, are expected to be material to the Company’s financial statements.

In evaluating liabilities associated with its various legal proceedings, the Company has accrued for probable liabilities associated with these matters.

In evaluating liabilities associated with its various legal proceedings, the Company has accrued for probable liabilities associated with these

The amounts accrued were not material to the Company’s consolidated financial statements in any of the years presented.

Reasonably possible losses for any of the individual legal proceedings which have not been accrued were not material to the Company’s consolidated financial statements.

As of February 2, 2024, the Company had non-cancellable commitments of $ 2.3 billion related to certain marketing and information technology programs, and purchases of merchandise inventory.

As of January 31, 2025, the Company had non-cancellable commitments of $ 2.3 billion related to certain marketing and information technology programs, and purchases of merchandise inventory.

These commitments include agreements to purchase goods or services that are enforceable, are legally binding, and specify all significant terms, including fixed or minimum quantities to be purchased;

10 unchanged sentences

Total $ 2,306

As of February 2, 2024, the Company held standby and documentary letters of credit issued under banking arrangements which totaled $ 512 million.

As of January 31, 2025, the Company held standby and documentary letters of credit issued under banking arrangements which totaled $ 488 million.

The majority of the Company’s letters of credit were issued to support the Company’s warranty program.

2 unchanged sentences

The Company purchased services from this vendor in the amount of $ 240 million in 2024, $ 217 million in 2023, and $ 228 million in 2022.

Amounts payable to this vendor were insignificant to the Company as of February 2, 2024, and February 3, 2023.

A former member of the Company’s Board of Directors also serves on the Board of Directors of a vendor that provides branded consumer packaged goods to the Company.

The Company purchased products from this vendor in the amount of $ 203 million in 2021.

This was no longer considered a related party relationship as of January 28, 2022.

Table of Content s

Amounts payable to this vendor were insignificant to the Company as of January 31, 2025, and February 2, 2024.

Other Information

Interest – net is comprised of the following:

(In millions) February 2, 2024 February 3, 2023 January 28, 2022

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Long-term debt $ 1,452 $ 1,438 $ 1,108

4 unchanged sentences

Interest on tax uncertainties 1 1 3

Other 9 19 26

Interest – net $ 1,313 $ 1,382 $ 1,123

Supplemental disclosures of cash flow information:

(In millions) February 2, 2024 February 3, 2023 January 28, 2022

(In millions) January 31, 2025 February 2, 2024 February 3, 2023

Cash paid for interest, net of amount capitalized $ 1,475 $ 1,464 $ 976

4 unchanged sentences

Sales by product category:

February 2, 2024 February 3, 2023 January 28, 2022

January 31, 2025 February 2, 2024 February 3, 2023

(In millions, except percentage data) Total Sales % Total Sales % Total Sales %

16 unchanged sentences

Product category sales for prior periods have been reclassified to conform to the current year presentation.

Table of Content s

Segment Information

The Company’s home improvement operations represent a single operating segment designed to enable customers to purchase products and services seamlessly through all channels.

The Company’s chief operating decision maker (CODM) is the Chairman, President, and Chief Executive Officer.

The CODM has the ultimate decision-making authority for resource allocation and assessing the performance of the Company.

Thereby, the CODM regularly reviews consolidated net earnings as the measure of segment profit or loss, as well as significant segment expenses included in the below table, to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital.

The CODM also uses these measures in monitoring plan versus actual results.

The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets.

The following presents the Company’s operating results, including significant segment expenses.

January 31, 2025 February 2, 2024 February 3, 2023

(In millions, except percentage data) Amount % Sales Amount % Sales Amount % Sales

Net sales $ 83,674 100.00 % $ 86,377 100.00 % $ 97,059 100.00 %

Cost of sales 55,797 66.68 57,533 66.61 64,802 66.77

Selling, general and administrative:

Employee compensation and benefits 10,830 12.94 10,801 12.50 12,059 12.42

Occupancy and facility costs 1,897 2.27 1,836 2.13 2,127 2.19

Advertising 921 1.10 831 0.96 869 0.90

Impairment and (gain)/loss on sale of Canadian retail business ( 169 ) ( 0.20 ) ( 57 ) ( 0.07 ) 2,536 2.61

Other SG&A items 1

2,203 2.63 2,159 2.50 2,741 2.82

Depreciation and amortization 1,729 2.07 1,717 1.99 1,766 1.82

Interest – net 1,313 1.57 1,382 1.60 1,123 1.16

Income tax provision 2,196 2.63 2,449 2.83 2,599 2.68

Net earnings $ 6,957 8.31 % $ 7,726 8.95 % $ 6,437 6.63 %

1 Other SG&A items primarily include financial services costs, technology service costs, insurance costs, and store environment initiative and display costs.

Item 9 - Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

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 8. Financial Statements and Supplementary Data