What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-30 compared with 2024-11-27 · 119 added, 108 removed, 174 unchanged (57% of the section changed)

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Financial Summary

Third quarter 2024 included the following notable items:

• GAAP and adjusted diluted earnings per share (Adjusted EPS) were $1.85.

• Total revenue was $25.7 billion, an increase of 1.1 percent from the comparable prior-year period, reflecting a total sales increase of 0.9 percent and a 11.5 percent increase in other revenue.

• Comparable sales increased 0.3 percent, reflecting a 2.4 percent increase in traffic and a 2.0 percent decrease in average transaction amount.

First quarter 2025 included the following notable items:

• GAAP diluted earnings per share were $2.27 and Adjusted EPS 1 were $1.30.

• Net Sales were $23.8 billion, a decrease of 2.8 percent from the comparable prior-year period.

• Comparable sales decreased 3.8 percent, reflecting a 2.4 percent decrease in traffic and a 1.4 percent decrease in average transaction amount.

◦ Comparable stores-originated sales declined 5.7 percent.

◦ Comparable digitally-originated sales increased 4.7 percent.

• Operating income of $1.2 billion was 11.2 percent lower than the comparable prior-year period.

Earnings Per Share Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 Change November 2, 2024 October 28, 2023 Change

GAAP and Adjusted EPS $ 1.85 $ 2.10 (11.9) % $ 6.45 $ 5.96 8.3 %

Adjusted EPS, a non-GAAP metric, excludes the impact of certain items when applicable.

However, there are no adjustments in any period presented.

• Operating income of $1.5 billion, including $593 million of pretax net gains related to interchange fee settlements further described in Note 3 to the Financial Statements.

Earnings Per Share Three Months Ended

May 3, 2025 May 4, 2024 Change

GAAP diluted earnings per share $ 2.27 $ 2.03 11.7 %

Adjustments (0.97) —

Adjusted diluted earnings per share $ 1.30 $ 2.03 (35.9) %

Amounts may not foot due to rounding.

1 Adjusted diluted earnings per share (Adjusted EPS), a non-GAAP metric, excludes the impact of certain items.

Management believes that Adjusted EPS is useful in providing period-to-period comparisons of the results of our operations.

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We report after-tax return on invested capital (ROIC) because we believe ROIC provides a meaningful measure of our capital allocation effectiveness over time.

For the trailing twelve months ended November 2, 2024, after-tax ROIC was 15.9 percent , compared with 13.9 percent for the trailing twelve months ended October 28, 2023.

For the trailing twelve months ended May 3, 2025, after-tax ROIC was 15.1 percent , compared with 15.4 percent for the trailing twelve months ended May 4, 2024.

The calculation of ROIC is provided on page 20 .

Business Environment

Our financial results for the quarter ended May 3, 2025, reflected several challenges, including recent declines in consumer confidence, uncertainty regarding the impact of potential tariffs, the reaction to updates we shared in January on our approach to belonging, as well as the continued trend of reduced consumer spending in discretionary categories.

While we believe each of these factors played a meaningful role in our first quarter performance, we can't reasonably estimate the impact of each one separately.

Recently, the United States (U.S.) imposed a range of tariffs on all products manufactured in foreign countries and jurisdictions, and subsequently imposed incremental tariffs, paused, modified, or issued specific exceptions to recently imposed tariffs, and indicated that the U.S.

is actively negotiating country-specific agreements that it expects will result in changes to imposed tariff rates.

Approximately one-half of the merchandise we offer is sourced from outside the U.S., either directly or indirectly, with China as our single largest source of merchandise we import.

We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed, including, but not limited to, vendor negotiations, assortment changes, movements in country of production, adjustments in order unit quantities and timing, and pricing strategies.

Additionally, we are working closely with industry associations and government leaders, all with a goal to continue delivering the products our guests expect and minimizing the impact of tariffs on our guests.

The collective interaction of tariffs, sourcing strategies, pricing actions, consumer response and behaviors, and other factors, could materially impact our sales and results of operations in future periods.

TARGET CORPORATION

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Analysis of Results of Operations

Summary of Operating Income Three Months Ended Nine Months Ended

(dollars in millions) November 2, 2024 October 28, 2023 Change November 2, 2024 October 28, 2023 Change

Sales $ 25,228 $ 25,004 0.9 % $ 74,392 $ 74,336 0.1 %

Other revenue 440 394 11.5 1,259 1,157 8.8

Total revenue 25,668 25,398 1.1 75,651 75,493 0.2

Cost of sales 18,375 18,149 1.2 53,623 54,333 (1.3)

SG&A expenses 5,486 5,316 3.2 16,046 15,525 3.4

Summary of Operating Income Three Months Ended

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

Net sales $ 23,846 $ 24,531 (2.8) %

Cost of sales (a)

17,128 17,471 (2.0)

SG&A expenses (a)

4,591 5,146 (10.8)

Depreciation and amortization (exclusive of depreciation included in cost of sales) 655 618 6.0

Operating income $ 1,472 $ 1,296 13.6 %

Rate Analysis Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

Gross margin rate 27.2 % 27.4 % 27.9 % 26.9 %

SG&A expense rate 21.4 20.9 21.2 20.6

Rate Analysis Three Months Ended

May 3, 2025 May 4, 2024

Gross margin rate (a)

28.2 % 28.8 %

SG&A expense rate (a)

Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) 2.7 2.5

Operating income margin rate 6.2 5.3

Gross margin rate is calculated as gross margin (sales less cost of sales) divided by sales.

All other rates are calculated by dividing the applicable amount by total revenue.

Sales include all merchandise sales, net of expected returns, and our estimate of gift card breakage.

We use comparable sales to evaluate the performance of our stores and digital channel sales by measuring the change in sales for a period over the comparable prior-year period of equivalent length.

Comparable sales include all sales, except sales from stores open less than 13 months, digital acquisitions we have owned less than 13 months, stores that have been closed, and digital acquisitions that we no longer operate.

(a) Reflects the impact of a reclassification of prior year amounts, which were not material, to conform with current year presentation.

Gross margin (GM) is calculated as Net Sales less Cost of Sales.

All rates are calculated by dividing the applicable amount by Net Sales.

We updated the prior period gross margin rate to conform to the current year calculation, which resulted in an approximate 1 percentage point increase in our gross margin rate for the 2024 period presented.

Net sales includes all Merchandise Sales and revenues from other sources, most notably advertising revenue and credit card profit-sharing income.

Merchandise Sales are net of expected returns, and our estimate of gift card breakage.

Comparable sales include all Merchandise Sales, except sales from stores open less than 13 months or that have been closed.

We use comparable sales to evaluate the performance of our stores and digital channels by measuring the change in sales for a period over the comparable, prior-year period of equivalent length.

Comparable sales measures vary across the retail industry.

As a result, our comparable sales calculation is not necessarily comparable to similarly titled measures reported by other companies.

Digitally originated sales include all sales initiated through mobile applications and our websites.

Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pickup or Drive Up, and delivery via Shipt.

Digitally originated sales include all Merchandise Sales initiated through mobile applications and our websites.

Our stores fulfill the majority of digitally originated sales, including shipment from stores to guests, store Order Pickup or Drive Up, and Same Day Delivery.

Digitally originated sales may also be fulfilled through our distribution centers, our vendors, or other third parties.

Sales growth—from both comparable sales and new stores—represents an important driver of our long-term profitability.

We expect that comparable sales growth will drive the majority of our total sales growth.

Merchandise Sales growth—from both comparable sales and new stores—represents an important driver of our long-term profitability.

We expect that comparable sales growth will drive a significant portion of our total sales growth.

We believe that our ability to successfully differentiate our guests’ shopping experience through a careful combination of merchandise assortment, price, convenience, guest experience, and other factors will over the long-term drive both increasing shopping frequency (number of transactions, or "traffic") and the amount spent each visit (average transaction amount).

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ANALYSIS OF RESULTS OF OPERATIONS Index to Notes

Comparable Sales Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

Comparable Sales Three Months Ended

May 3, 2025 May 4, 2024

Comparable sales change (3.8) % (3.7) %

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Average transaction amount (1.4) (1.9)

Comparable Sales by Channel Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

Comparable Sales by Channel Three Months Ended

May 3, 2025 May 4, 2024

Stores originated comparable sales change (5.7) % (4.8) %

Digitally originated comparable sales change 4.7 1.4

Sales by Channel Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

Merchandise Sales by Channel Three Months Ended

May 3, 2025 May 4, 2024

Stores originated 80.2 % 81.7 %

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Total 100 % 100 %

Sales by Fulfillment Channel Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

Merchandise Sales by Fulfillment Channel Three Months Ended

May 3, 2025 May 4, 2024

Stores 97.6 % 97.7 %

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Total 100 % 100 %

Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Shipt.

Sales by Product Category Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

Merchandise Sales fulfilled by stores include in-store purchases and digitally originated sales fulfilled by shipping merchandise from stores to guests, Order Pickup, Drive Up, and Same Day Delivery.

Merchandise Sales by Product Category Three Months Ended

May 3, 2025 May 4, 2024

Apparel & accessories 16 % 16 %

Beauty 13 12 13 12

Food & beverage 25 24

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The collective interaction of a broad array of macroeconomic, competitive, and consumer behavioral factors, as well as sales mix and the transfer of sales to new stores, makes further analysis of sales metrics infeasible.

We monitor the percentage of purchases that are paid for using Target Circle Cards™ (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on our Target Circle Cards are also incremental sales for Target.

Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target.

For the three months ended May 3, 2025 and May 4, 2024, total Target Circle Card Penetration was 17.4 percent and 18.0 percent, respectively.

TARGET CORPORATION

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ANALYSIS OF RESULTS OF OPERATIONS Index to Notes

We monitor the percentage of purchases that are paid for using Target Circle Cards™ (Target Circle Card Penetration) because our internal analysis has indicated that a meaningful portion of the incremental purchases on Target Circle Cards are also incremental sales for Target.

Guests receive a 5 percent discount on virtually all purchases when they use a Target Circle Card at Target.

For the three months ended November 2, 2024 and October 28, 2023, total Target Circle Card Penetration was 17.7 percent and 18.3 percent, respectively.

For the nine months ended November 2, 2024 and October 28, 2023, total Target Circle Card Penetration was 17.8 percent and 18.6 percent, respectively.

Gross Margin Rate

Quarter-to-Date

For the three months ended November 2, 2024, our gross margin rate was 27.2 percent compared with 27.4 percent in the comparable prior-year period.

For the nine months ended November 2, 2024, our gross margin rate was 27.9 percent compared with 26.9 percent in the comparable prior-year period.

For both the three and nine months ended November 2, 2024, the changes reflected the net impact of

• higher digital fulfillment & supply chain costs due to

• costs of managing elevated inventory levels during the third quarter, including the impact of receipt timing;

• an increase in digital volume;

• new supply chain facilities coming online;

• lower book to physical inventory adjustments compared to the prior-year period;

• merchandising activities, including cost improvements which more than offset higher promotional and clearance markdown rates.

TARGET CORPORATION

Q3 2024 Form 10-Q 17

MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

ANALYSIS OF RESULTS OF OPERATIONS Index to Notes

For the three months ended May 3, 2025, our gross margin rate was 28.2 percent compared with 28.8 percent in the comparable prior-year period.

For the three months ended May 3, 2025, the changes reflected the net impact of

• merchandising activities, including higher markdown rates, partially offset by growth in advertising and other revenues;

• higher supply chain and digital fulfillment costs due to new supply chain facilities coming online and an increase in digital penetration;

• lower inventory shrink.

Selling, General, and Administrative Expense Rate

For the three months ended November 2, 2024, our SG&A expense rate was 21.4 percent compared with 20.9 percent for the comparable prior-year period.

For the nine months ended November 2, 2024, our SG&A expense rate was 21.2 percent compared with 20.6 percent for the comparable prior-year period.

The increases reflected the net impact of cost increases across our business, including higher team member pay and benefits and higher general liability expenses, partially offset by the benefit of lower store remodel-related expenses.

Change in Number of Stores Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

For the three months ended May 3, 2025, our SG&A expense rate was 19.3 percent compared with 21.0 percent for the comparable prior-year period.

The decrease reflected a favorable impact of interchange fee settlements of approximately 2.5 percentage points, as further described in Note 3 , partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs.

Change in Number of Stores Three Months Ended

May 3, 2025 May 4, 2024

Beginning store count 1,978 1,956

Opened 13 10 23 21

Closed (1) (9) (1) (13)

Ending store count 1,981 1,963

Number of Stores and Number of Stores Retail Square Feet (a)

Retail Square Feet November 2, 2024 February 3, 2024 October 28, 2023 November 2, 2024 February 3, 2024 October 28, 2023

Retail Square Feet May 3, 2025 February 1, 2025 May 4, 2024 May 3, 2025 February 1, 2025 May 4, 2024

170,000 or more sq.

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(a) In thousands;

reflects total square feet less office, supply chain facilities, and vacant space.

reflects total square feet less office, supply chain facility, and vacant space.

TARGET CORPORATION

Q1 2025 Form 10-Q 17

MANAGEMENT'S DISCUSSION AND ANALYSIS Table of Contents

OTHER PERFORMANCE FACTORS

Index to Notes

Other Performance Factors

Net Interest Expense

N et interest expense was $105 million and $321 million for the three and nine months ended November 2, 2024, respectively, compared with $107 million and $395 million in the comparable prior-year periods.

The decrease in net interest expense was primarily due to an increase in interest income.

For the three months ended May 3, 2025, net interest expense was $116 million compared with $106 million in the comparable prior-year period.

The increase was primarily due to a decrease in interest income.

Provision for Income Taxes

Our effective income tax rates for the three and nine months ended November 2, 2024, were 21.7 percent and 22.5 percent, respectively, compared with 21.3 percent and 21.5 percent in the comparable prior-year periods.

The increase in both periods reflects the impact of lower discrete tax benefits compared to the prior-year.

Our effective income tax rate for the three months ended May 3, 2025, was 25.0 percent compared with 22.7 percent in the comparable prior-year period.

The increase primarily reflects discrete tax expense in the current year related to share-based compensation.

TARGET CORPORATION

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Reconciliation of Non-GAAP Financial Measures to GAAP Measures

To provide additional transparency, we disclose non-GAAP Adjusted EPS.

When applicable, this metric excludes certain discretely managed items.

However, there are no adjustments in any period presented.

To provide additional transparency, we disclose non-GAAP adjusted diluted earnings per share (Adjusted EPS).

This metric excludes certain items presented below.

We believe this information is useful in providing period-to-period comparisons of the results of our operations.

This measure is not in accordance with, or an alternative to, U.S.

This measure is not in accordance with, or an alternative to, generally accepted accounting principles in the U.S.

The most comparable GAAP measure is diluted earnings per share.

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Other companies may calculate Adjusted EPS differently, limiting the usefulness of the measure for comparisons with other companies.

Reconciliation of Non-GAAP Adjusted EPS Three Months Ended Nine Months Ended

November 2, 2024 October 28, 2023 November 2, 2024 October 28, 2023

GAAP and Adjusted EPS $ 1.85 $ 2.10 $ 6.45 $ 5.96

Reconciliation of Non-GAAP Adjusted EPS Three Months Ended Three Months Ended

May 3, 2025 May 4, 2024

(millions, except per share data) Pretax Net of Tax Per Share Pretax Net of Tax Per Share

GAAP diluted earnings per share $ 2.27 $ 2.03

Interchange fee settlements (a)

$ (593) $ (441) $ (0.97) $ — $ — $ —

Adjusted EPS $ 1.30 $ 2.03

Amounts may not foot due to rounding.

(a) Note 3 to the Financial Statements provides additional information.

Earnings before interest expense and income taxes (EBIT) and earnings before interest expense, income taxes, depreciation, and amortization (EBITDA) are non-GAAP financial measures.

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Other companies may calculate EBIT and EBITDA differently, limiting the usefulness of the measures for comparisons with other companies.

EBIT and EBITDA Three Months Ended Nine Months Ended

(dollars in millions) November 2, 2024 October 28, 2023 Change November 2, 2024 October 28, 2023 Change

EBIT and EBITDA Three Months Ended

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

Net earnings $ 1,036 $ 942 10.0 %

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+ Total depreciation and amortization (a)

754 722 4.2 2,215 2,072 6.8

EBITDA $ 2,285 $ 2,043 11.9 %

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Trailing Twelve Months

Numerator November 2, 2024 (a)

October 28, 2023

Numerator May 3, 2025 May 4, 2024 (a)

Operating income $ 5,742 $ 5,675

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Net operating profit after taxes $ 4,636 $ 4,593

Denominator November 2, 2024 October 28, 2023 October 29, 2022

Denominator May 3, 2025 May 4, 2024 April 29, 2023

Current portion of long-term debt and other borrowings $ 1,139 $ 2,614 $ 200

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$ 30,757 $ 29,737

After-tax return on invested capital 15.9 % 13.9 %

(a) The trailing twelve months ended November 2, 2024, consisted of 53 weeks compared with 52 weeks in the prior-year period.

(b) Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases were owned or accounted for as finance leases.

After-tax return on invested capital (f)

15.1 % 15.4 %

(a) The trailing twelve months ended May 4, 2024, consisted of 53 weeks compared with 52 weeks in the current-year period.

(b) Represents the add-back to operating income driven by the hypothetical interest expense we would incur if the property under our operating leases was owned or accounted for under finance leases.

Calculated using the discount rate for each lease and recorded as a component of rent expense within Operating Income.

Operating lease interest is added back to Operating Income in the ROIC calculation to control for differences in capital structure between us and our competitors.

(c) Calculated using the effective tax rates, which were 22.5 percent and 20.3 percent for the trailing twelve months ended November 2, 2024 and October 28, 2023, respectively.

For the trailing twelve months ended November 2, 2024 and October 28, 2023, includes tax effect of $1.4 billion and $1.0 billion, respectively, related to EBIT and $35 million and $22 million, respectively, related to operating lease interest.

(c) Calculated using the effective tax rates, which were 22.8 percent and 22.2 percent for the trailing twelve months ended May 3, 2025 and May 4, 2024, respectively.

For the trailing twelve months ended May 3, 2025, and May 4, 2024, includes tax effect of $1.3 billion related to EBIT and $38 million and $30 million, respectively, related to operating lease interest.

(d) Total short-term and long-term operating lease liabilities included within Accrued and Other Current Liabilities and Noncurrent Operating Lease Liabilities, respectively.

(e) Average based on the invested capital at the end of the current period and the invested capital at the end of the comparable prior period.

(f) For the trailing twelve months ended May 3, 2025, includes the impact of after-tax net gains on interchange fee settlements, which increased after-tax ROIC by 1.4 percentage points.

Note 3 to the Financial Statements provides additional information.

TARGET CORPORATION

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and finally, we return any excess cash to shareholders by repurchasing shares within the limits of our credit rating goals.

Our cash and cash equivalents balance was $3.4 billion, $3.8 billion, and $1.9 billion as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively.

Our cash and cash equivalents balance includes short-term investments of $2.5 billion, $2.9 billion, and $1.0 billion as of November 2, 2024, February 3, 2024, and October 28, 2023, respectively.

Our cash and cash equivalents balance was $2.9 billion, $4.8 billion, and $3.6 billion as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively.

Our cash and cash equivalents balance includes short-term investments of $2.0 billion, $3.9 billion, and $2.7 billion as of May 3, 2025, February 1, 2025, and May 4, 2024, respectively.

Our investment policy is designed to preserve principal and liquidity of our short-term investments.

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Operating Cash Flows

Cash flows provided by operating activities were $4.1 billion and $5.3 billion for the nine months ended November 2, 2024, and October 28, 2023, respectively.

The operating cash flow decrease is primarily due to increased inventory levels and slightly lower accounts payable leverage, in addition to higher income tax and incentive compensation payments.

Inventory was $15.2 billion as of November 2, 2024, compared with $11.9 billion and $14.7 billion as of February 3, 2024, and October 28, 2023, respectively.

The increase from February 3, 2024, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period.

The increase from October 28, 2023, primarily reflects the impact of lower-than-expected sales in certain discretionary categories during the three months ended November 2, 2024, as well as an improved in-stock position.

Cash flows provided by operating activities were $0.3 billion and $1.1 billion for the three months ended May 3, 2025, and May 4, 2024, respectively.

The operating cash flows reflect the net earnings impact of gains on interchange fee settlements, offset by lower sales, as well as increased inventory levels and lower accounts payable leverage in the current year period.

Inventory was $13.0 billion as of May 3, 2025, compared with $12.7 billion and $11.7 billion as of February 1, 2025, and May 4, 2024, respectively.

The balance as of May 3, 2025, reflects the impact of lower-than-expected sales across all core merchandise categories, with the most significant impacts within Apparel & Accessories, Hardlines, and Home Furnishings & Décor.

Investing Cash Flows

Cash required for investing activities decreased to $1.9 billion for the nine months ended November 2, 2024, compared to $3.9 billion for the nine months ended October 28, 2023, due to lower capital investments.

We paid dividends totaling $516 million ($1.12 per share) and $1.5 billion ($3.32 per share) for the three and nine months ended November 2, 2024, respectively, and $507 million ($1.10 per share) and $1.5 billion ($3.26 per share) for the three and nine months ended October 28, 2023, respectively, a per share increase of 1.8 percent.

We declared dividends totaling $521 million ($1.12 per share) during the third quarter of 2024 and $513 million ($1.10 per share) during the third quarter of 2023, a per share increase of 1.8 percent.

Cash required for investing activities increased to $0.8 billion for the three months ended May 3, 2025, compared to $0.7 billion for the three months ended May 4, 2024, due to higher capital investments.

We paid dividends totaling $510 million ($1.12 per share) for the three months ended May 3, 2025, and $508 million ($1.10 per share) for the three months ended May 4, 2024, a per share increase of 1.8 percent.

We declared dividends totaling $515 million ($1.12 per share) during the first quarter of 2025 and $516 million ($1.10 per share) during the first quarter of 2024, a per share increase of 1.8 percent.

We have paid dividends every quarter since our 1967 initial public offering, and it is our intent to continue to do so in the future.

Share Repurchase

We deployed $509 million to repurchase shares during the nine months ended November 2, 2024.

We deployed $251 million to repurchase shares during the three months ended May 3, 2025.

See Part II, Item 2, Unregistered Sales of Equity Securities and Use of Proceeds of this Quarterly Report on Form 10-Q and Note 8 to the Financial Statements for more information.

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Our continued access to these markets depends on multiple factors, including the condition of debt capital markets, our operating performance, and maintaining strong credit ratings.

As of November 2, 2024, our credit ratings were as follows:

As of May 3, 2025, our credit ratings were as follows:

Credit Ratings Moody’s Standard and Poor’s Fitch

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Each of the credit rating agencies reviews its rating periodically, and there is no guarantee our current credit ratings will remain the same as described above.

In September 2024, we issued $750 million of debt.

In March 2025, we issued $1.0 billion of debt, and in April 2025, we repaid $1.5 billion of debt.

Note 6 to the Financial Statements provides additional information.

We have the ability to obtain short-term financing from time to time under our commercial paper program and credit facilities.

In October 2024, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2025 and terminated our prior 364-day credit facility.

This credit facility and our $3.0 billion unsecured revolving credit facility that will expire in October 2028 backstop our commercial paper program.

Our committed $1.0 billion 364-day and $3.0 billion unsecured revolving credit facilities that will expire in October 2025 and October 2028, respectively, provide a liquidity backstop to our commercial paper program.

No balances were outstanding under either credit facility at any time during 2025 or 2024.

There was no commercial paper outstanding as of either November 2, 2024 or October 28, 2023.

There was no commercial paper outstanding as of either May 3, 2025, or May 4, 2024.

Note 6 to the Financial Statements provides additional information.

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We are, and expect to remain, in compliance with these covenants.

Additionally, as of November 2, 2024, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

Additionally, as of May 3, 2025, no notes or debentures contained provisions requiring acceleration of payment upon a credit rating downgrade, except that certain outstanding notes allow the note holders to put the notes to us if within a matter of months of each other we experience both (i) a change in control and (ii) our long-term credit ratings are either reduced and the resulting rating is non-investment grade, or our long-term credit ratings are placed on watch for possible reduction and those ratings are subsequently reduced and the resulting rating is non-investment grade.

We believe our sources of liquidity, namely operating cash flows, credit facility capacity, and access to capital markets, will continue to be adequate to meet our contractual obligations, working capital, and planned capital expenditures, finance anticipated expansion and strategic initiatives, fund debt maturities, pay dividends, and execute purchases under our share repurchase program for the foreseeable future.

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis