What changed in this filing

/stocks — the workspaceLOADING

Item 2. Management’s Discussion and Analysis

2025-11-26 compared with 2025-08-29 · 106 added, 91 removed, 234 unchanged (46% of the section changed)

1 unchanged sentence

Financial Summary

Second quarter 2025 included the following notable items:

• GAAP diluted earnings per share and Adjusted EPS 1 were $2.05.

Third quarter 2025 included the following notable items:

• GAAP diluted earnings per share were $1.51 and Adjusted EPS 1 were $1.78.

• Net Sales were $25.3 billion, a decrease of 1.5 percent from the comparable prior-year period.

3 unchanged sentences

• Operating income of $0.9 billion was 18.9 percent lower than the comparable prior-year period.

Earnings Per Share Three Months Ended Six Months Ended

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

Earnings Per Share Three Months Ended Nine Months Ended

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

GAAP diluted earnings per share $ 1.51 $ 1.85 (18.2) % $ 5.84 $ 6.45 (9.6) %

1 unchanged sentence

Adjusted diluted earnings per share $ 1.78 $ 1.85 (3.9) % $ 5.13 $ 6.45 (20.5) %

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.

2 unchanged sentences

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 August 2, 2025, after-tax ROIC was 14.3 percent , compared with 16.6 percent for the trailing twelve months ended August 3, 2024.

For the trailing twelve months ended November 1, 2025, after-tax ROIC was 13.4 percent , compared with 15.9 percent for the trailing twelve months ended November 2, 2024.

The calculation of ROIC is provided on page 23 .

1 unchanged sentence

In April 2025, the U.S.

imposed a range of tariffs on the vast majority of 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.

The Gross Margin Rate section below provides additional information about the impact of such actions.

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.

has indicated that it is actively negotiating or expects to negotiate 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 through our vendors, with China as the single largest source of merchandise we import.

We are closely monitoring the evolving consumer and regulatory landscape and adjusting plans as needed.

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.

Business Transformation Initiatives

In May 2025, we announced a multi-year initiative to transform various aspects of our business—including our organizational structure, processes, and technology—to enable greater agility and optimize the use of the Company's assets.

The three months ended November 1, 2025, included costs and charges related to our business transformation initiatives, including a reduction in our headquarters workforce.

Note 4 to the Financial Statements provides additional information.

We may incur additional business transformation costs and charges in future periods, which may adversely affect our results of operations and financial condition;

however, we cannot reasonably estimate the amount of such costs and charges at this time.

TARGET CORPORATION

3 unchanged sentences

Analysis of Results of Operations

Summary of Operating Income Three Months Ended Six Months Ended

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

Summary of Operating Income Three Months Ended Nine Months Ended

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

Net sales $ 25,270 $ 25,668 (1.5) % $ 74,327 $ 75,651 (1.7) %

1 unchanged sentence

18,137 18,402 (1.4) 53,168 53,700 (1.0)

SG&A expenses (a)

SG&A expenses (a)(b)

5,536 5,459 1.4 15,486 15,969 (3.0)

Depreciation and amortization (exclusive of depreciation included in cost of sales) 649 639 1.7 1,936 1,883 2.8

Operating income $ 1,317 $ 1,635 (19.4) % $ 2,789 $ 2,931 (4.8) %

Rate Analysis Three Months Ended Six Months Ended

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

Operating income (b)

$ 948 $ 1,168 (18.9) % $ 3,737 $ 4,099 (8.8) %

Rate Analysis Three Months Ended Nine Months Ended

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

Gross margin rate (a)

28.2 % 28.3 % 28.5 % 29.0 %

SG&A expense rate (a)

SG&A expense rate (a)(b)

21.9 21.3 20.8 21.1

Depreciation and amortization expense rate (exclusive of depreciation included in cost of sales) 2.6 2.5 2.6 2.5

Operating income margin rate 5.2 6.4 5.7 5.9

Operating income margin rate (b)

3.8 4.6 5.0 5.4

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

(b) SG&A Expenses and Operating Income for the three and nine months ended November 1, 2025, include certain business transformation costs described in Note 4 to the Financial Statements.

For the nine months ended November 1, 2025, SG&A Expenses and Operating Income also include gains related to interchange fee settlements described in Note 3 .

These discretely managed items resulted in a net impact to the SG&A Expense Rate of 0.6 and (0.6) percentage points for the three and nine months ended November 1, 2025, respectively, with an inverse impact on the Operating Income Margin Rate in the respective periods.

The Reconciliation of Non-GAAP Adjusted EPS tables provide additional information.

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

10 unchanged sentences

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

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).

TARGET CORPORATION

2 unchanged sentences

ANALYSIS OF RESULTS OF OPERATIONS Index to Notes

Comparable Sales Three Months Ended Six Months Ended

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

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.

Comparable Sales Three Months Ended Nine Months Ended

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

Comparable sales change (2.7) % 0.3 % (2.8) % (0.5) %

2 unchanged sentences

Average transaction amount (0.5) (2.0) (0.9) (1.6)

Comparable Sales by Channel Three Months Ended Six Months Ended

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

Comparable Sales by Channel Three Months Ended Nine Months Ended

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

Stores originated comparable sales change (3.8) % (1.9) % (4.2) % (2.0) %

Digitally originated comparable sales change 2.4 10.8 3.8 6.9

Merchandise Sales by Channel Three Months Ended Six Months Ended

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

Merchandise Sales by Channel Three Months Ended Nine Months Ended

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

Stores originated 80.7 % 81.5 % 80.7 % 81.8 %

1 unchanged sentence

Total 100 % 100 % 100 % 100 %

Merchandise Sales by Fulfillment Channel Three Months Ended Six Months Ended

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

Merchandise Sales by Fulfillment Channel Three Months Ended Nine Months Ended

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

Stores 97.7 % 97.7 % 97.7 % 97.8 %

2 unchanged sentences

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 Six Months Ended

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

Merchandise Sales by Product Category Three Months Ended Nine Months Ended

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

Apparel & accessories 16 % 16 % 16 % 16 %

5 unchanged sentences

Total 100 % 100 % 100 % 100 %

Note 2 to the Financial Statements provides additional product category sales information.

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.

TARGET CORPORATION

2 unchanged sentences

ANALYSIS OF RESULTS OF OPERATIONS Index to Notes

Note 2 to the Financial Statements provides additional product category sales information.

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 August 2, 2025, and August 3, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively.

For the six months ended August 2, 2025, and August 3, 2024, total Target Circle Card Penetration was 17.1 percent and 17.9 percent, respectively.

For the three months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 16.9 percent and 17.7 percent, respectively.

For the nine months ended November 1, 2025, and November 2, 2024, total Target Circle Card Penetration was 17.0 percent and 17.8 percent, respectively.

TARGET CORPORATION

4 unchanged sentences

Quarter-to-Date

For the three months ended August 2, 2025, our gross margin rate was 29.0 percent compared with 30.0 percent in the comparable prior-year period.

For the three months ended November 1, 2025, our gross margin rate was 28.2 percent compared with 28.3 percent in the comparable prior-year period.

The decrease reflected the net impact of

• merchandising, including higher markdown rates and purchase order cancellation costs 1 , partially offset by growth in advertising and other revenues;

• changes in category sales mix;

• merchandising, primarily due to higher markdown rates partially offset by growth in advertising and other revenues;

• lower inventory shrink;

For the six months ended August 2, 2025, our gross margin rate was 28.6 percent compared with 29.4 percent in the comparable prior-year period.

• lower supply chain and digital fulfillment costs, reflecting the comparison over costs in 2024 related to timing of receipts and elevated inventory, combined with the benefit of productivity improvements at supply chain facilities and in digital fulfillment, partially offset by the deleveraging impact of lower sales.

For the nine months ended November 1, 2025, our gross margin rate was 28.5 percent compared with 29.0 percent in the comparable prior-year period.

The decrease reflected the net impact of

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

• higher supply chain and digital fulfillment costs, partially due to to new supply chain facilities;

• changes in category sales mix;

• higher supply chain and digital fulfillment costs, partially due to the combined impact of investments in new supply chain facilities and the deleveraging impact of lower sales;

• lower inventory shrink.

1 The Business Environment section provides additional information.

TARGET CORPORATION

3 unchanged sentences

Selling, General, and Administrative Expense Rate

For the three months ended August 2, 2025, our SG&A expense rate was 21.3 percent compared with 21.1 percent for the comparable prior-year period, reflecting the deleveraging impact of lower Net Sales.

Higher remodel-related expenses during the three months ended August 2, 2025, were offset by the net impact of cost savings.

For the six months ended August 2, 2025, our SG&A expense rate was 20.3 percent compared with 21.0 percent for the comparable prior-year period.

The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 1.2 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 Six Months Ended

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

For the three months ended November 1, 2025, our SG&A expense rate was 21.9 percent compared with 21.3 percent for the comparable prior-year period.

The increase reflected business transformation costs of approximately 0.6 percentage points.

The deleveraging impact of lower Net Sales was offset by a reduction in other costs, including lower incentive compensation expense.

For the nine months ended November 1, 2025, our SG&A expense rate was 20.8 percent compared with 21.1 percent for the comparable prior-year period.

The decrease reflected a favorable impact of interchange fee settlements during the first quarter of 2025 of approximately 0.8 percentage points.

This rate benefit was partially offset by the deleveraging impact of lower Net Sales, and the net impact of other costs, including 0.2 percentage points related to business transformation costs.

Interchange fee settlements and business transformation costs are further described in Notes 3 and 4 , respectively, to the Financial Statements.

Change in Number of Stores Three Months Ended Nine Months Ended

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

Beginning store count 1,982 1,966 1,978 1,956

3 unchanged sentences

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

Retail Square Feet August 2, 2025 February 1, 2025 August 3, 2024 August 2, 2025 February 1, 2025 August 3, 2024

Retail Square Feet November 1, 2025 February 1, 2025 November 2, 2024 November 1, 2025 February 1, 2025 November 2, 2024

170,000 or more sq.

14 unchanged sentences

Net Interest Expense

Net interest expense was $116 million and $232 million f or the three and six months ended August 2, 2025, respectively, compared with $110 million and $216 million in the comparable prior-year periods.

Net interest expense was $115 million and $346 million f or the three and nine months ended November 1, 2025, respectively, compared with $105 million and $321 million in the comparable prior-year periods.

The increase was primarily due to higher average debt levels.

Provision for Income Taxes

Our effective income tax rates for the three and six months ended August 2, 2025, were 23.2 percent and 24.2 percent, respectively, compared with 22.9 percent and 22.8 percent in the comparable prior-year periods.

For the three month period, the increase is driven by the impact of Pillar Two global minimum taxes.

For the six month period, the increase reflects discrete tax expense in the current year, primarily related to share-based compensation, and the impact of Pillar Two global minimum taxes.

On July 4, 2025, the U.S.

enacted new legislation that includes several U.S.

corporate tax provisions, including restoring immediate deductibility of certain capital expenditures, restoring full expensing of domestic research and development costs, and changes in the computations of U.S.

taxation on international earnings.

We expect the provisions of the legislation to result in a favorable timing shift in our U.S.

cash tax payments, with no material impact on our income tax expense.

Our effective income tax rates for the three and nine months ended November 1, 2025, were 19.8 percent and 23.1 percent, respectively, compared with 21.7 percent and 22.5 percent in the comparable prior-year periods.

For the three month period, the decrease primarily reflects benefits from tax credits in the current year.

For the nine month period, the increase reflects discrete tax expense in the current year related to share-based compensation and global minimum taxes, partially offset by benefits from tax credits.

TARGET CORPORATION

10 unchanged sentences

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 Three Months Ended

August 2, 2025 August 3, 2024

Reconciliation of Non-GAAP Adjusted EPS Three Months Ended

November 1, 2025 November 2, 2024

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

GAAP and Adjusted EPS $ 2.05 $ 2.57

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

August 2, 2025 August 3, 2024

GAAP diluted earnings per share $ 1.51 $ 1.85

Business transformation costs (a)

$ 161 $ 120 $ 0.26 $ — $ — $ —

Adjusted EPS $ 1.78 $ 1.85

Reconciliation of Non-GAAP Adjusted EPS Nine Months Ended

November 1, 2025 November 2, 2024

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

GAAP diluted earnings per share $ 5.84 $ 6.45

Interchange fee settlements (a)

Business transformation costs (a)

$ 161 $ 120 $ 0.26 $ — $ — $ —

Interchange fee settlements (b)

(593) (441) (0.97) — — —

Adjusted EPS $ 5.13 $ 6.45

Amounts may not foot due to rounding.

(a) Note 4 to the Financial Statements provides additional information.

(b) 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.

4 unchanged sentences

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 Six Months Ended

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

EBIT and EBITDA Three Months Ended Nine Months Ended

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

Net earnings $ 689 $ 854 (19.3) % $ 2,660 $ 2,988 (11.0) %

16 unchanged sentences

Trailing Twelve Months

Numerator August 2, 2025 August 3, 2024 (a)

Numerator November 1, 2025 November 2, 2024 (a)

Operating income $ 5,204 $ 5,964

4 unchanged sentences

Net operating profit after taxes $ 4,230 $ 4,823

Denominator August 2, 2025 August 3, 2024 July 29, 2023

Denominator November 1, 2025 November 2, 2024 October 28, 2023

Current portion of long-term debt and other borrowings $ 1,133 $ 1,635 $ 1,112

9 unchanged sentences

13.4 % 15.9 %

(a) The trailing twelve months ended August 3, 2024, consisted of 53 weeks compared with 52 weeks in the current-year period.

(a) The trailing twelve months ended November 2, 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.

1 unchanged sentence

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 22.9 percent and 22.4 percent for the trailing twelve months ended August 2, 2025, and August 3, 2024, respectively.

For the trailing twelve months ended August 2, 2025, and August 3, 2024, includes tax effect of $1.3 billion and $1.4 billion, respectively, related to EBIT and $38 million and $33 million, respectively, related to operating lease interest.

(c) Calculated using the effective tax rates, which were 22.6 percent and 22.5 percent for the trailing twelve months ended November 1, 2025, and November 2, 2024, respectively.

For the trailing twelve months ended November 1, 2025, and November 2, 2024, includes tax effect of $1.2 billion and $1.4 billion, respectively, related to EBIT and $38 million and $35 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 August 2, 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.

(f) For the trailing twelve months ended November 1, 2025, includes the impact of after-tax net gains on interchange fee settlements and business transformation costs, which had a net impact on after-tax ROIC of 1.0 percentage point.

Notes 3 and 4 to the Financial Statements provide additional information.

TARGET CORPORATION

9 unchanged sentences

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 $4.3 billion, $4.8 billion, and $3.5 billion as of August 2, 2025, February 1, 2025, and August 3, 2024, respectively.

Our cash and cash equivalents balance includes short-term investments of $3.3 billion, $3.9 billion, and $2.5 billion as of August 2, 2025, February 1, 2025, and August 3, 2024, respectively.

Our cash and cash equivalents balance was $3.8 billion, $4.8 billion, and $3.4 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.

Our cash and cash equivalents balance includes short-term investments of $2.9 billion, $3.9 billion, and $2.5 billion as of November 1, 2025, February 1, 2025, and November 2, 2024, respectively.

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

2 unchanged sentences

Operating Cash Flows

Cash flows provided by operating activities were $2.4 billion and $3.3 billion for the six months ended August 2, 2025, and August 3, 2024, respectively.

The decrease reflects lower accounts payable leverage and the net earnings impact of lower sales, partially offset by gains on interchange fee settlements discussed in Note 3 to the Financial Statements.

Inventory was $12.9 billion as of August 2, 2025, compared with $12.7 billion and $12.6 billion as of February 1, 2025, and August 3, 2024, respectively.

The increase compared to August 3, 2024, reflects higher merchandise costs and continued investment in frequency categories.

Cash flows provided by operating activities were $3.5 billion and $4.1 billion for the nine months ended November 1, 2025, and November 2, 2024, respectively.

The decrease reflects lower net earnings, as well as the net impact of lower accounts payable leverage and inventory purchases in the current year.

Inventory was $14.9 billion as of November 1, 2025, compared with $12.7 billion and $15.2 billion as of February 1, 2025, and November 2, 2024, respectively.

The increase from February 1, 2025, primarily reflects the seasonal inventory build ahead of the November and December holiday sales period.

The decrease compared to November 2, 2024, reflects alignment of inventory with sales trends, partially offset by higher merchandise costs.

Investing Cash Flows

Cash required for investing activities increased to $1.9 billion for the six months ended August 2, 2025, compared to $1.3 billion for the six months ended August 3, 2024, due to higher capital expenditures.

We paid dividends totaling $509 million ($1.12 per share) and $1,019 million ($2.24 per share) for the three and six months ended August 2, 2025, respectively, and $509 million ($1.10 per share) and $1,017 million ($2.20 per share) for the three and six months ended August 3, 2024, respectively, a per share increase of 1.8 percent.

We declared dividends totaling $529 million ($1.14 per share) during the second quarter of 2025 and $527 million ($1.12 per share) during the second quarter of 2024, a per share increase of 1.8 percent.

Cash required for investing activities increased to $2.8 billion for the nine months ended November 1, 2025, compared to $1.9 billion for the nine months ended November 2, 2024, due to higher capital expenditures.

We paid dividends totaling $518 million ($1.14 per share) and $1.5 billion ($3.38 per share) for the three and nine months ended November 1, 2025, respectively, and $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, a per share increase of 1.8 percent.

We declared dividends totaling $526 million ($1.14 per share) during the third quarter of 2025 and $521 million ($1.12 per share) during the third 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 $251 million to repurchase shares during the six months ended August 2, 2025.

We deployed $403 million to repurchase shares during the nine months ended November 1, 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 10 to the Financial Statements for more information.

7 unchanged sentences

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 August 2, 2025, our credit ratings were as follows:

Credit Ratings Moody’s Standard and Poor’s Fitch

As of November 1, 2025, our credit ratings were as follows:

Credit Ratings Moody’s S&P

Long-term debt A2 A A

5 unchanged sentences

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

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.

In October 2025, we obtained a new committed $1.0 billion 364-day unsecured revolving credit facility that will expire in October 2026 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 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 August 2, 2025, or August 3, 2024.

There was no commercial paper outstanding as of either November 1, 2025, or November 2, 2024.

Note 8 to the Financial Statements provides additional information.

2 unchanged sentences

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

Additionally, as of August 2, 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.

Additionally, as of November 1, 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.

9 unchanged sentences

The principal forward-looking statements in this report include statements regarding:

our future financial and operational performance, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.

our future financial and operational performance, changes in the consumer landscape, evolution in tariffs and global trade policy, the impacts of business transformation efforts, the adequacy of and costs associated with our sources of liquidity, the funding of debt maturities, the execution of our share repurchase program, our expected capital expenditures and new lease commitments, the expected compliance with debt covenants, the expected impact of new accounting pronouncements, our intentions regarding future dividends, the expected return on plan assets, the expected outcome of, and adequacy of our reserves for, claims, litigation, and the resolution of tax matters, and changes in our assumptions and expectations.

All such forward-looking statements are intended to enjoy the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, as amended.

5 unchanged sentences

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