HD 10-K & 10-Q changes, risk factors and insider trading
The Home Depot, Inc. · NYSE · Retail-Lumber & Other Building Materials Dealers · CIK 354950 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “A positive brand and reputation are critical to our business success, and, if our brand and reputation are damaged, it could negatively impact our relationships with our customers, associates and jobseekers, suppliers, service providers, vendors, shareholders, regulators, and the communities we serve, and, consequently, our business, results of operations and the price of our stock.”
New heading “A failure of one or more key elements of our technology infrastructure, including associated systems or processes, could adversely affect our business, financial results, and reputation.”
New heading “Disruptions in our customer-facing technology infrastructure could impair our interconnected experience strategy and give rise to negative customer experiences, damage our brand and reputation and adversely impact our sales.”
New heading “If our efforts to maintain the privacy and security of customer, associate, jobseeker, business partner, and Company information are not successful, we could incur substantial costs and reputational damage and could become subject to litigation and enforcement actions.”
New heading “Natural disasters, unseasonable, unexpected or extreme weather conditions, as well as other catastrophic or uncharacteristic events, could impact our operations and financial results, seasonal events such as storms may impact sales compared to prior periods, and the potential impacts of catastrophic or uncharacteristic events may lead to changes in demand or availability of products or cause business interruptions.”
Removed heading “A positive brand and reputation are critical to our business success, and, if our brand and reputation are damaged, it could negatively impact our relationships with our customers, associates and jobseekers, suppliers, vendors, shareholders, regulators, and the communities we serve, and, consequently, our business, results of operations and the price of our stock.”
Removed heading “A failure of one or more key information technology systems or processes could adversely affect our business, financial results, and reputation.”
Removed heading “Disruptions in our customer-facing technology systems could impair our interconnected retail strategy and give rise to negative customer experiences.”
Removed heading “If our efforts to maintain the privacy and security of customer, associate, job applicant, business partner, and Company information are not successful, we could incur substantial costs and reputational damage and could become subject to litigation and enforcement actions.”
Removed heading “Our business is subject to seasonal influences, and uncharacteristic or significant weather conditions, climate change, natural disasters, as well as other catastrophic or uncharacteristic events, could impact our operations and financial results.”
Largest changes
“The regulatory environment related to data privacy, cybersecurity, and AI and other emerging technologies is constantly changing, with new and increasingly rigorous requirements applicable to our business. The implementation of these requirements has also become more complex. …”see in full comparison
“Disruptions within our logistics or supply chain network, such as the industry-wide supply chain challenges that resulted from the COVID-19 pandemic, have adversely affected and may in the future adversely affect, our ability to receive and deliver inventory in a timely manner, impair our ability to meet customer demand for products, and result in lost sales, increased costs, and/or damage to our reputation. Such disruptions may result, and on occasion have resulted, from damage or destruction to our distribution or fulfillment centers or those of our supply chain service providers; …”see in full comparison
“Disruptions within our logistics or supply chain network, such as the industry-wide supply chain challenges that resulted from the COVID-19 pandemic, have in the past and may in the future adversely affect our ability to receive and deliver inventory in a timely manner, impair our ability to meet customer demand for products, and result in lost sales, increased supply chain costs, and/or damage to our reputation. Such disruptions may result, and on occasion have resulted, from damage or destruction to our distribution or fulfillment centers or those of our supply chain service providers; …”see in full comparison
“The regulatory environment related to data privacy and cybersecurity is constantly changing, with new and increasingly rigorous requirements applicable to our business. The implementation of these requirements has also become more complex. Maintaining our adherence to evolving data privacy and cybersecurity regulatory requirements, including state privacy laws, requires significant effort and cost, requires changes to our business practices, and may limit our ability to collect and use certain data for our business operations, including to support the customer experience. …”see in full comparison
“Our business, like that of most retailers, involves the collection, use, retention, management, transmission, and deletion of personal information (including identifiers, localization, internet activity, preferences, and payment information) from our customers, associates, jobseekers, and business partners, as well as confidential Company information. We also work with third-party service providers that provide technology, systems and services that we use in connection with the handling of information. …”see in full comparison
“The ever-evolving cybersecurity threat landscape means that we and our third-party service providers and business partners must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of companies we or they acquire. There is no guarantee that the measures we take will be adequate to safeguard against all threats, including vulnerabilities, data security breaches, system compromises or misuses or loss of data. …”see in full comparison
Full comparison: every changed paragraph (89)
Our business, results of operations, cash flows, financial condition and prospects are subject to numerous risks and uncertainties. In connection with any investment decision with respect to our securities, you should carefully consider the following risk factors, as well as the other information contained in this report and our other filings with the SEC. These disclosures reflect the Company’s beliefs and opinions as to factors that could materially and adversely affect the Company and its securities in the future. References to past events are provided by way of example only and are not intended to be a complete listing or a representation as to whether or not such factors have occurred in the past or their likelihood of occurring in the future. Additional risks and uncertainties not presently known to us or that we currently deem immaterial may also impact our business operations. Should any of these risks materialize, our business, results of operations, cash flows, financial condition and prospects could be negatively impacted, which in turn could affect the trading value of our securities. You should read these Risk Factors in conjunction with Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations and our consolidated financial statements and related notes in Item 8.
A positive brand and reputation are critical to our business success, and, if our brand and reputation are damaged, it could negatively impact our relationships with our customers, associates and jobseekers, suppliers, service providers, vendors, shareholders, regulators, and the communities we serve, and, consequently, our business, results of operations and the price of our stock.
Our brand and reputation are critical to attracting customers, associates and jobseekers, suppliers, service providers, and vendors to do business with us. We must continue to manage and protect our brand and reputation.
Negative incidents can erode trust and confidence quickly, and adverse publicity about us, regardless of its accuracy, the reputability of its source and whether we are involved in the incident, could damage our brand and reputation; undermine our customers’ confidence in us; reduce demand for our products and services, including as a result of boycotts; affect our ability to recruit, engage, motivate and retain associates; attract regulatory scrutiny or investigations; lead to litigation; and impact our relationships with current and potential suppliers and vendors. Third party actions, including our suppliers’, service providers’, and vendors’ business practices and positions, may also be attributed to us, regardless of the Company’s actions, meaning the actions of third parties pose similar risks to our brand and reputation. Partnerships with celebrities and social media content creators may also expose us to brand and reputational risks. Further, our actual or perceived position or lack of position on social, environmental, governance, political, public policy, regulatory, economic, geopolitical, or other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation with certain groups and attract regulatory scrutiny, investigations, litigation, or boycotts. In addition, we could be criticized for the scope or nature of initiatives or goals related to these matters, or for any revisions to or failure to achieve these goals on a timely basis or at all. If data, processes, and reporting related to these matters are incomplete or inaccurate, we could face regulatory scrutiny or investigations, litigation and/or adverse reputational impacts. Customers are also increasingly using social media to provide feedback and information about the Company, including our products and services, in a manner that can be quickly and broadly disseminated. Negative sentiment about the Company shared over social media, or misinformation from fraudulent accounts impersonating the Company, could impact our brand and reputation, whether or not it is based in fact.
Our industry is highly competitive, highly fragmented, and evolving. As a result, we face competition for customers for our products and services from a variety of retailers,retailers (including those operating reseller marketplaces), suppliers, service providers, and distributors and manufacturers that sell products directly to their respective customer bases.
These competitors range from traditional brick-and-mortar, to multichannel, to exclusively online, and they include a number of other home improvement retailers; local, regional and national hardware stores; electrical, plumbing and building materials supply houses; and lumber yards. With respect to some products and services, we also compete
These competitors range from traditional brick-and-mortar, to multichannel, to exclusively online, and they include a number of other home improvement retailers; local, regional and national hardware stores; electrical, plumbing and building materials supply houses; and lumber yards. With respect to some products and services, we also compete with specialty design stores, showrooms, discount stores, paint stores, specialty and mass digital retailers, warehouse clubs, MRO distributors, national and local wholesale supply distributors, home décor retailers, and other retailers, as well as with providers of home improvement services and tool and equipment rental. TheOnline internetand facilitatesother digital capabilities, as well as AI tools, facilitate competitive entry, price transparency, and comparison shopping, increasing the level of competition we face.
We compete primarily based on customer experience; price; quality; product availability, assortment, and innovation; and delivery options and capabilities, both in-store and online. We also compete based on store and branch location and appearance, presentation of merchandise, and ease of shopping experience throughout every step of the customer’s project, from inspiration and research to any post-purchase support. Our Pros also look for dedicated sales support, competitive credit and pricing options, project planning tools, professional and reliable deliveries, and product depth and job lot quantities, particularly for their complex purchaseproject needs. Furthermore, with respect to delivery options, customers are seeking faster and/or guaranteed delivery times, real-time updates on delivery status, low-price or free shipping, and/or convenient pickup options. Our ability to be competitive on delivery and pickup times, options and costs depends on many factors, including leveraging the momentum of our investments in our supply chain and our interconnected retail capabilities to further enhance the customer shopping experience. Failure to successfully manage these factors and offer competitive delivery and pickup options could negatively impact the demand for our products and services and our profit margins.
We use our marketing, advertising and promotional programs to drive customer traffic and compete more effectively, and we must regularly assess and adjust our efforts to address changes in the competitive landscape. Intense competitive pressures from one or more of our competitors, such as through aggressive promotional pricing or liquidation events, or our inability to adapt effectively and quickly to a changing competitive landscape, could adversely affect our prices, our margins, or demand for our products and services. If we are unable to timely and appropriately respond to these competitive pressures, including through the delivery of a superior interconnected customer experience or through maintenance of effective sales and marketing, advertising or promotional programs leveraging both our digital and physical platforms, our market share and our financial performance could be adversely affected. If we experience inflation or deflation at a level beyond our ability to respond effectively, we may not be able to adjust prices to sufficiently offset the effects without negatively impacting demand or margins, as applicable, or it may adversely affect our ability to compete based on price.
The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics; and shifts in customer preferences, expectations and needs; changes in the macroeconomic or political environment; and unexpected weather conditions, natural disasters, or public health issues (including pandemics and related impacts) that impact our customers,needs, while also managing appropriate inventory levels in our stores, branches and distribution or fulfillment centers and maintaining an excellent customer experience. These trends include those driven by changes in the macroeconomic or political environment, geopolitical tensions or conflicts, military conflicts, or civil unrest, as well as unexpected weather conditions, natural disasters, or public health issues (including pandemics or quarantines and related impacts) that impact our customers. It is difficult to successfully predict the products and services our customers will demand. As our customers expect a more personalized experience, our ability to collect, use, retain, and protect relevant customer data is important for effectively meeting their expectations. Our ability to collect and use that data, however, is subject to a number of external factors, including the impact of legislation or regulations governing data privacy, data-driven technologies such as artificial intelligence,AI, and data security, as well as customer expectations around data collection, retention, and use. In addition, each of our primary customer groups has different needs and expectations, many of which evolve as the demographics in a particular customer group change. Customer preferences and expectations related to sustainability of products and operations are also changing. If we do not successfully differentiate the shopping experience to attract our customers and meet their individual needs and expectations, it may adversely impact our sales or our market share.
Customer expectations about the methods by which they find, evaluate, purchase and receive products or services are also becoming more demanding.evolving. Customers routinely and increasingly use technology and a variety of electronic devices and digital platforms to rapidly gather inspiration, compare products and prices, read product reviews, determine real-time product availability, and purchase products,products. and newNew channels and tools to enhance the customer experience appear and change rapidly.rapidly, and some of those technologies, such as generative and agentic AI tools, may dramatically change customer shopping and buying habits. Our Pros also look for additional capabilities, including dedicated sales support, competitive credit and pricing options, project planning tools, professional and reliable deliveries, and product depth and job lot quantities, particularly for their complex purchaseproject needs. Once products are purchased, customers seek alternate options for delivery of those products, including advance ordering through digital platforms for Pros, and they often expect quick, timely, and low-price or free delivery, real-time updates on delivery status, and/or convenient pickup or delivery options. We must continually anticipate and adapt to these changes in the planning, shopping and purchasing process by continuing to adjust and enhance the online and in-store customer experience as well as our delivery options. The coordinated operation of our network of physical stores, branches, distribution facilities, and online platforms is fundamental to the success of our interconnected strategy. We cannot guarantee that our current or future fulfillment options will be maintained and implemented successfully or that we will be able to meet customer expectations on delivery or pickup times, options and costs. In addition, as our customers continue to leverage our enhanced interconnected and fulfillment options, a greater concentration of online sales with direct fulfillment could result in a reduction in the amount of traffic in our stores, which would, in turn, reduce the opportunities for cross-selling of merchandise that such traffic creates and could reduce our overall sales and adversely affect our financial performance. A greater concentration of online sales with direct fulfillment could also impact our profit margins.
stores, branches, distribution facilities, and online platforms is fundamental to the success of our interconnected strategy. We cannot guarantee that our current or future fulfillment options will be maintained and implemented successfully or that we will be able to meet customer expectations on delivery or pickup times, options and costs. In addition, as our customers continue to leverage our enhanced interconnected shopping and fulfillment options, a greater concentration of online sales with direct fulfillment could result in a reduction in the amount of traffic in our stores, which would, in turn, reduce the opportunities for cross-selling of merchandise that such traffic creates and could reduce our overall sales and adversely affect our financial performance. A greater concentration of online sales with direct fulfillment could also result in higher costs for delivery, potentially impacting our profit margins.
Failure to provide a relevant and effective customer experience in a timely manner that keeps pace with technological developments and dynamic customer expectations; to maintain appropriate inventory; to provide quick and low-pricecost-effective or free delivery alternativesalternatives, real-time updates on delivery status, and convenient pickup options; to differentiate the customer experience for our primary customer groups; to effectively implement an increasinglyappropriately localized merchandising assortment; or to otherwise timely identify or respond to changing customer preferences, expectations and home improvement needs could adversely affect our relationship with our customers, the demand for our products and services, and our market share.
A positive brand and reputation are critical to our business success, and, if our brand and reputation are damaged, it could negatively impact our relationships with our customers, associates and jobseekers, suppliers, vendors, shareholders, regulators, and the communities we serve, and, consequently, our business, results of operations and the price of our stock.
Our brand and reputation are critical to attracting customers, associates and jobseekers, suppliers and vendors to do business with us. We must continue to manage and protect our brand and reputation. Negative incidents can erode trust and confidence quickly, and adverse publicity about us, regardless of its accuracy or the reputability of its source, could damage our brand and reputation; undermine our customers’ confidence in us; reduce demand for our products and services, including as a result of boycotts; affect our ability to recruit, engage, motivate and retain associates; attract regulatory scrutiny, investigations or litigation; and impact our relationships with current and potential suppliers and vendors. Our suppliers’ and vendors’ business practices and positions may also be attributed to us, regardless of the Company’s actions, meaning the actions of third parties pose similar risks to our brand and reputation. Partnerships with celebrities and social media content creators may also expose us to brand and reputational risks. Further, our actual or perceived position or lack of position on social, environmental, governance, political, public policy, economic, geopolitical, or other sensitive issues, and any perceived lack of transparency about those matters, could harm our reputation with certain groups and attract regulatory scrutiny, investigations, litigation, or boycotts. In addition, we could be criticized for the scope or nature of initiatives or goals related to these matters, or for any revisions to or failure to achieve these goals on a timely basis or at all. If data, processes, and reporting related to these matters are incomplete or inaccurate, we could face regulatory scrutiny, litigation and/or adverse reputational impacts. Customers are also increasingly using social media to provide feedback and information about the Company, including our products and services, in a manner that can be quickly and broadly disseminated. Negative sentiment about the Company shared over social media, or misinformation from fraudulent accounts impersonating the Company, could impact our brand and reputation, whether or not it is based in fact.
The execution of initiatives to implementdeliver our interconnected retail strategyexperience could adversely impact our business operations or financial results, and these initiatives might not provide the anticipated benefits.
Over the past several years, we have made significant investments to executedeliver oura frictionless interconnected retail strategy,experience, including enhancing and expanding our supply chain, developing differentiated capabilities for our customers, including enhancements and improvements to our digital capabilities, expanding our store base, and making strategic acquisitions. These investments are designed to streamline our operations to allow our associates to continue to provide high-quality service to our customers; simplify customer interactions; provide our customers with a more interconnected shopping experience; expand our sales to Pros and better address their needs for complex purchase needsprojects; and create the fastest, most efficient, and most reliable delivery network for home improvement products. Executing our interconnected retail strategy requires continual investment in our operations and information technology systems, as well as the development and execution of new processes, systems and support. Investment in our supply chain also involves significant real estate projects as we expand our distribution network, requiring us to identify and secure available locations with appropriate characteristics needed to support the different types of facilities. In addition, our stores are a key element of our interconnected retail strategy, serving as the hub of our customers’ interconnected shopping experience. We have an aging store base that requires maintenance, investment, and space reallocation initiatives to deliver the shopping experience that our customers desire. We also need to identify and secure available locations with appropriate characteristics for new stores and branches to ensure we can continue to serve our customers effectively.
Executing our interconnected experience requires continual investment in our operations and information technology systems, as well as the development and execution of new processes, systems and support. In addition, our stores are a critical component of our interconnected experience, serving as the hub of our customers’ interconnected shopping journey. We have an aging store base that requires maintenance, investment, and space reallocation initiatives to deliver the shopping experience that our customers desire. We also need to identify and secure available locations with appropriate characteristics for new stores, branches, and supply chain facilities to ensure we can continue to serve our customers effectively.
We must effectively manage the volume, timing, nature, location, and cost of our investments, projects and changes. Failure to continue to make investments to effectively support our strategy and to implement or integrate those investments in the right manner and at the right pace could adversely impact our business operations or financial results. The cost and potential problems, defects of design, and interruptions associated with the implementation of these initiatives, including those associated with managing third-party service providers, employing new online tools and services, implementing new technologies using artificial intelligence,AI, implementing and restructuring support systems and processes, securing appropriate store and other facility locations, and addressing impacts on inventory levels, could disrupt or reduce the efficiency of our operations in the near term, lead to product availability issues, create complexity in our systems and operations and impact our profitability. Our investments to enhance our interconnected shopping experience, including investments in our store base, supply chain, and differentiated capabilities, including our digital assets, might not provide the anticipated benefits, or might take longer than expected to complete, integrate or realize anticipated benefits, eachany of which could adversely impact our competitive position and our financial condition, results of operations, or cash flows.
If we are unable to effectively manage and expand our strategic alliances and relationships with certain suppliers of both brand name and proprietary products, we may be unable to effectively execute our strategy to differentiate ourselves from our competitors.
As part of our focus on product differentiation, we have formed strategic alliances and exclusive relationships with certain suppliers to market products under a variety of well-recognized brand names. We have also developed relationships with certain suppliers to allow us to marketoffer proprietary products that are comparable to national brands. OurThese proprietary products help differentiate us from other retailers and generally carry higher margins than national brand products. If we are unable to effectively manage and expand these strategic alliances and relationships, maintain favorable terms with current suppliers, or identify alternative sources for comparable brand name and proprietary products, we may not be able to effectively execute product differentiation, which may impact our sales and gross margin. OurAdditionally, our suppliers’ business practices and positions may also be attributed to us, regardless of the Company’s actions, meaning that controversies regarding our suppliers of brand name or proprietary products could pose risks to our reputation and brand, and couldmay require us to quickly identify alternative sources for comparable products.
We regularly consider and enter into strategic transactions, including mergers, acquisitions, investments, alliances, and other growth and market expansion strategies, such as our acquisition of SRS in the second quarter of fiscal 2024.strategies. We generally expect that these transactions will result in sales increases, cost savings, synergies, enhanced capabilitiescapabilities, and/or various other benefits. Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty. For each of our acquisitions, we need to determine the appropriate level of integration of the target company’s products, services, associates, and information technology, financial, human resources, compliance, and other systems and processes, and then successfully manage that integration into our corporate structure. Integration is a complex and time-consuming process, and if the integration is not fully successful or is delayed for a material period of time, we may not achieve the anticipated synergiessynergies, cost savings, enhanced capabilities, or other benefits of the acquisition. In addition, the integration of businesses may create increased complexity in our financial systems, internal controls, technology and cybersecurity systems, and operations and may make them more difficult to manage. Even if the target companies are successfully integrated, the acquisitions may fail to further our business strategy as anticipated, expose us to increased competition or challenges with respect to our products or services, and expose us to additional or unanticipated risks and liabilities. Strategic transactions may also be subject to significant regulatory uncertainty.uncertainty, Theand changingchanges in the regulatory landscape may result in additional costs or delays that affect the anticipated outcome of a transaction, including as a result of the enforcement environment.transaction. Any failure in the execution of a strategic transaction or investment, our approach to the integration of an acquired asset or business, our ability to integrate new associates, or achievement of anticipated synergies or other benefits could result in slower growth, higher than expected costs, the recording of an impairment of goodwill or other intangible assets or restructuring costs, and other actions which could adversely affect our business, financial condition and results of operations.
A failure of one or more key elements of our technology infrastructure, including associated systems or processes, could adversely affect our business, financial results, and reputation.
We rely extensively on our technology infrastructure, including associated information technology systems, applications, processes, and related personnel to operate our day-to-day business and to collect, use, retain, manage, transmit, and protect transactions and data. Some of these systems are managed or provided by third-party service providers, including certain cloud platform providers. In managing our business, we also rely heavily on the integrity of, security of, and consistent access to, systems that provide operational and financial data and capabilities related to sales (both in store and online), customer data, supplier data, associate data, jobseeker data, partner data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment, customer service, and post-purchase support. For these information technology systems, applications, and processes to operate effectively, we or our service providers must maintain and update them. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes, as well as the actions taken to maintain, update, upgrade and patch, could, and on occasion have, impaired their operation and effectiveness or exposed us to security risks. Our technology infrastructure and the third-party systems with which we interact, as well as any systems those third parties utilize, are subject to, and on occasion have experienced, damage, interruption, or malicious activity from a number of causes, including power and other critical infrastructure outages; computer and telecommunications failures; computer viruses; data or security breaches; internal or external data theft or misuse; cyber-attacks, including the use of malicious codes, worms, phishing, smishing, vishing, spyware, denial of service attacks, and ransomware; responsive containment measures by us that may involve voluntarily taking systems offline; natural disasters and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, or other extreme weather events; public health concerns, such as pandemics and quarantines; geopolitical tensions or conflicts, military conflicts, acts of war, terrorism or civil unrest; other systems outages; inadequate or ineffective redundancy; and design or usage errors or malfeasance by our associates, contractors or third-party service providers. In addition, as more business activities have shifted online, and as certain of our support center associates work in a remote or hybrid environment, we continue to face an increased risk due to the potential failure of internal or external technology infrastructure as well as increased cybersecurity threats and attempts to breach our security networks.
Although we and our third-party service providers seek to maintain our respective technology infrastructure and related systems and processes effectively and to successfully address the risk of compromise of their integrity, security and consistent operations of these systems, such efforts are not always successful. As a result, we or our service providers could experience, and on occasion have experienced, errors, interruptions, delays or cessations of service in key portions of our technology infrastructure, which could significantly disrupt our operations or impair data security; prevent us from efficiently accepting or fulfilling orders or providing services to customers; impact our ability to operate or access communications, financial or banking systems; be costly, time-consuming and resource-intensive to remedy; and adversely impact our reputation and relationship with our customers, associates, suppliers, shareholders or regulators. We may have to expend significant resources to mitigate the impact of any errors, interruptions, delays or cessations of service and may have insufficient recourse against service providers who experience such events.
In addition, we are currently making, and expect to continue to make, substantial investments in our technology infrastructure, systems, processes, and personnel, in certain cases with the assistance of strategic partners and other third-party service providers. These investments involve replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems, and updating applications and websites; outsourcing certain technology and business processes to third-party service providers; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; designing or cost-effectively acquiring new systems with new functionality; or testing, developing and deploying AI tools, including generative AI. These efforts could result, and on occasion have resulted, in significant potential risks, including failure of the technology infrastructure to operate as designed, unexpected impacts on related systems or processes, potential loss or corruption of data, failures in security processes and internal controls, cost overruns, implementation delays or errors, disruption of operations, and the potential inability to meet business and reporting requirements. Any technology infrastructure implementation and transition difficulty may result in operational challenges, security or internal control failures, reputational harm, lost sales, increased costs, or other financial losses that could adversely affect our business, our relationships with our customers, and results of operations.
Disruptions in our customer-facing technology infrastructure could impair our interconnected experience strategy and give rise to negative customer experiences, damage our brand and reputation and adversely impact our sales.
Through our technology infrastructure, we are able to provide an improved overall shopping and interconnected experience that empowers our customers to shop and interact with us from a variety of electronic devices and digital platforms at each stage of their shopping journey. We use our digital platforms as sales channels for our products and services, as methods of providing inspiration, and as sources of product, project, and other relevant information to our customers to help drive sales. In addition to supporting our DIY and DIFM customers, we make other resources available that are designed to serve the needs of Pros, including those working on complex projects. We also have multiple online communities, digital platforms, and knowledge centers that allow us to inform, assist and interact with our customers. The retail industry is continually evolving and expanding, with a significant increase in sales initiated online and via mobile applications in recent years. We may not be successful at managing this increased volume and related delivery options without interruption in the future. Additionally, we must effectively respond to new developments and changing customer preferences with respect to a complex, evolving digital and interconnected experience, including adopting AI tools and other technology innovations to better serve our customers. We continually seek to enhance all of our online and digital platforms to provide a personalized, user-friendly interface for our customers. Disruptions, delays, failures, inaccuracies, or other performance issues in or with our customer-facing technology systems, either due to increased volumes, system or other technology modifications, cybersecurity incidents or attacks, information technology outages or other interruptions, launches of new or emerging technologies; or other factors, or a failure of these systems to meet our or our customers’ expectations, could impair the value they provide, damage our brand and reputation, and adversely impact our sales.
Disruptions within our logistics or supply chain network, such as the industry-wide supply chain challenges that resulted from the COVID-19 pandemic, have adversely affected and may in the future adversely affect, our ability to receive and deliver inventory in a timely manner, impair our ability to meet customer demand for products, and result in lost sales, increased costs, and/or damage to our reputation. Such disruptions may result, and on occasion have resulted, from damage or destruction to our distribution or fulfillment centers or those of our supply chain service providers; weather-related events; cybersecurity incidents or attacks; information technology outages or other interruptions; natural disasters; international trade disputes, trade policy changes or restrictions, or import- or export-related governmental sanctions or restrictions; customs actions, including regulatory enforcement inquiries, holds, detentions, and exclusions; quotas, tariffs or other import-related taxes; strikes, lock-outs, work stoppages or slowdowns; shortages of supply chain labor, including truck drivers; shipping capacity constraints, including shortages of related equipment; raw material or other shortages; third-party contract disputes or inability to maintain favorable contract terms; supply or shipping interruptions or costs; increased costs or unavailability of fuel; political instability; geopolitical tensions or conflicts, or military conflicts or acts of war, as well as any related sanctions or other government or private responses; acts of terrorism; civil unrest; public health issues, including pandemics or quarantines and other related impacts; or other factors beyond our control. In recent years, ports in the U.S. and elsewhere have been impacted by capacity constraints, port congestion and delays, periodic labor disputes, strikes, security issues, weather-related events, and natural or man-made disasters.
These types of disruptions place strain on the domestic and international supply chain, which has affected in some circumstances, and may in the future negatively affect, the flow or availability of certain products. Even when we are able to find alternate sources for certain products, they may cost more or require us to incur higher transportation costs, which could adversely impact our profitability and financial condition. Increased demand for online purchases of products can impact, and in the past has impacted, our fulfillment operations, as well as those of our third-party carriers, resulting in delays in delivering products to customers and increases in our out-of-stock levels.
We and our suppliers have experienced, and may experience in the future, labor shortages at some of our distribution and fulfillment centers both due to the competitive labor market and unexpected events such as pandemics and quarantines. Such labor shortages, whether temporary or sustained, may adversely impact the flow or availability of products to our stores and customers.
Any of these circumstances could impair our ability to meet customer demand for products and result in lost sales, increased costs, or damage to our reputation, any of which could negatively impact our business performance or financial condition.
Our customers and associates expect a safe and secure environment in which to shop and work, and maintaining that environment helps protect against inventory losses (also called “shrink”), including due to theft. Like other retailers, we saw heightened shrink in recent years, particularly as a result of organized retail crime. While we have a number of initiatives in place to address shrink, minimize theft, and maintain safety in and around our stores and other facilities, these efforts require operational changes that may increase costs and reduce margins, and they can negatively impact the customer or associate experience. Furthermore, an unsafe environment or negative publicity regarding the Company or regarding incidents in or around our stores and/or other facilities, such as civil unrest, raids, protests, or similar activities, may diminish trust and confidence with customers, associates, and jobseekers, which can adversely impact traffic in our stores, sales, associate recruiting, morale, and retention, and our brand and reputation.
If our efforts to maintain the privacy and security of customer, associate, jobseeker, business partner, and Company information are not successful, we could incur substantial costs and reputational damage and could become subject to litigation and enforcement actions.
Our business, like that of most retailers, involves the collection, use, retention, management, transmission, and deletion of personal information (including identifiers, localization, internet activity, preferences, and payment information) from our customers, associates, jobseekers, and business partners, as well as confidential Company information. We also work with third-party service providers that provide technology, systems and services that we use in connection with the handling of information. Our information systems, and those of our third-party service providers, are vulnerable to continually evolving data protection and cybersecurity risks. Despite our efforts, our cybersecurity risk management processes may not be fully implemented, complied with or effective in preventing or mitigating future cybersecurity risks. Unauthorized parties, including criminal threat actors, nation-states, or insiders (including associates or contractors engaged in fraudulent or malicious activities), have in the past gained access, and will continue to attempt to gain access, to these systems and data through technical vulnerabilities, breach of security policies, fraud or other means of deceiving or coercing our associates, contractors or third-party service providers, which could jeopardize the confidentiality, integrity, or availability of such information systems or data that we may handle. Hardware, software or applications we develop or obtain from third parties may contain, and on occasion have contained, exploitable vulnerabilities, bugs, or defects in design, maintenance or manufacture or other problems that could unexpectedly compromise information security. We have experienced and continue to face the ongoing risk of exploitation of our software providers and our software development and implementation process, including from coding and process vulnerabilities and the installation of so-called back doors that provide unauthorized access to systems and data, and through unauthorized access to or theft of our intellectual property. The continued availability of remote or hybrid working arrangements has also expanded the possible attack surface areas and increased risks posed by insider threats, as our interactions with associates, contractors and third-party service providers increasingly occur on information systems, networks and environments over which we have less control and which may be more difficult to monitor. In addition, the risk of cyber-attacks has increased in connection with geopolitical tensions or conflicts and ongoing trade and diplomatic tensions. In light of the conflicts in Europe, the Middle East and South America and other geopolitical events, nation-state actors or their supporters and other politically-motivated actors may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically-motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both. Nation-state actors have in the past carried out, and may in the future carry out, cyber-attacks to achieve their aims and goals, which may include espionage, monetary gain, disruption, and destruction. Similarly, there may be increased activities by organized or coordinating groups of cyber criminals who seek to attack larger organizations’ data or systems for their own aims and goals, which can include financial gain. The availability of AI may enable new types of threat actors who may not otherwise have had the capabilities to engage in malicious activity to do so, or may enhance the capabilities of nation-state actors or organizing or coordinating groups to carry out attacks, or may generally enable novel types of attacks to be developed and deployed. Because the techniques that threat actors use to obtain unauthorized access, disable or degrade service, or sabotage systems, including use of stolen passwords, social engineering, phishing, smishing, vishing, identity spoofing (including through the use of emerging technologies such as deep fakes), ransomware or other disruptive and destructive malware, supply chain compromises, insider threats, and man-in-the-middle and denial of service attacks, change frequently and may not immediately produce signs of anomalous activity or compromise, we may be unable to anticipate or detect these techniques or implement adequate preventative measures.
The ever-evolving cybersecurity threat landscape means that we and our third-party service providers and business partners must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of companies we or they acquire. There is no guarantee that the measures we take will be adequate to safeguard against all threats, including vulnerabilities, data security breaches, system compromises or misuses or loss of data. As we have experienced in the past, any significant compromise or breach of our data security, whether external or internal, or misuse of customer, associate, jobseeker, business partner, or Company data, could result in significant costs, including costs to investigate, mitigate, and remediate, as well as lost sales, fines, lawsuits, regulatory investigations, and damage to our reputation. Additionally, as we have experienced in the past, we or our third-party service providers may not discover any vulnerability, data security breach, system compromise, or data misuse or loss for a significant period of time after the occurrence of a security incident. When our systems or those of our third-party service providers on which we rely are breached or attacked, we may also suffer, and on some occasions have suffered, an outage, failure, or unavailability of data or information technology systems, cessations of service, and interruptions to our business operations while such breach or attack is being remedied; this may impact data or systems operated by us or by third-party service providers. Furthermore, our cyber insurance coverage may not be adequate for liabilities or costs actually incurred, and we cannot be certain that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage of a future claim.
Data governance failures can also adversely affect our reputation and business. Our business depends on our customers’, associates’, jobseekers’, contractors’, and business partners’ willingness to entrust us with their personal information. Events that adversely affect that trust, including inadequate disclosure to our customers, associates, jobseekers, contractors, or business partners of our uses of their information or failing to keep our information technology systems and our customers’, associates’, jobseekers’, contractors’, and business partners’ personal information secure from significant attack, theft, damage, loss or unauthorized or unintended disclosure or access, whether as a result of our action or inaction (including human error or malfeasance) or that of our service providers or other third parties, could adversely affect our brand and harm our reputation.
The regulatory environment related to data privacy, cybersecurity, and AI and other emerging technologies is constantly changing, with new and increasingly rigorous requirements applicable to our business. The implementation of these requirements has also become more complex. Maintaining our adherence to evolving data privacy and cybersecurity regulatory requirements, including state and international privacy laws, requires significant effort and cost, requires changes to our business practices, and may limit our ability to collect and use certain data for our business operations, including to support the customer experience. In addition, many regulators have indicated an intention to take more aggressive enforcement actions regarding data privacy and cybersecurity matters, and private litigation resulting from such matters is increasing and resulting in progressively larger judgments and settlements. Complying with current or contemplated information security, cybersecurity, data privacy, data protection, and data processing laws and regulations (including reporting and disclosure regimes), or any failure to comply, could cause us to incur substantial costs. As we have experienced in the past, failure to comply with applicable requirements could subject us to fines, sanctions, governmental investigations, or lawsuits, which could lead to negative publicity and reputational harm, and may cause customers to lose confidence in the effectiveness of our cybersecurity measures, data privacy practices, or our business more generally.
Our customers expect a high level of customer service and product knowledge from our associates. To meet the needs and expectations of our customers, we must attract, develop and retain a large number of highly qualified associates and maintain a productive relationship with those associates. Our ability to meet our labor needs while
Our customers expect a high level of customer service and product knowledge from our associates. To meet the needs and expectations of our customers, we must attract, develop and retain a large number of highly qualified associates, including those with specialized product and project knowledge who can help serve our Pros, and maintain a productive relationship with those associates. Our ability to meet our labor needs while controlling labor costs is subject to numerous external factors, including increased market pressures with respect to prevailing wage rates, unemployment levels, and health and other insurance costs; the impact of legislation or regulations governing labor relations, employment, immigration, minimum wage, and healthcare benefits; changing demographics and expectations among the workforce; publicsafety healthand concernssecurity in our stores and other facilities; and our brand and reputation within the labor market. We also compete with other retail businesses for many of our associates in hourly positions, and we invest significant resources in training and motivating them to maintain a high level of job satisfaction. These positions often have high turnover rates, which can lead to increased training and retention costs, particularly in a competitive labor market. We have faced and may continue to face additional challenges in recruiting and retaining associates due to wage pressure; flexible scheduling needs; health and safety concerns; and challenges related to a remote or hybrid working environment for associates who work in our store support centers. These factors, together with competition among potential employers, have resulted in and may continue to result in increased compensation costs, and/or may impair our ability to recruit and retain associates, which could have an adverse impact on our business operations, financial condition and results of operations. A limited number of our associates at SRS are represented by labor unions, and we are also subject to labor union efforts to organize groups of our associates from time to time. If successful, those organizational efforts may decrease our operational flexibility and efficiency, and/or otherwise negatively impact our operations or reputation.
increased compensation costs, and/or may impair our ability to recruit and retain associates, which could have an adverse impact on our business operations, financial condition and results of operations. A limited number of our associates are represented by labor unions, and we may be subject to future labor union efforts to organize groups of our associates from time to time. If successful, those organizational efforts may decrease our operational flexibility and efficiency, and/or otherwise negatively impact our operations or reputation.
In addition, to executedeliver our interconnected retailcustomer strategy, including our supply chain investments,experience, we must attract and retain a large number of skilled professionals, including technology professionals, to implement our ongoing technology and other investments. The market for these professionals is very competitive. AnNot inabilityproviding to providecompetitive wages and/or benefits, including remote or hybrid work flexibility, that are competitive within the markets in which we operate could adversely affect our ability to retain and attract associates.
Additionally, our ability to successfully execute organizational changes, including management transitions within the Company’s senior leadership, and to effectively motivatemotivate, integrate, and retain associates is critical to our business success. If we are unable to attract, develop or retain qualified associates, or manage leadership transitions successfully, our ability to effectively manageimplement our strategy may be negatively impacted, the quality of service we provide to our customers may decrease, and our financial performance may be adversely affected.
A failure of one or more key information technology systems or processes could adversely affect our business, financial results, and reputation.
We rely extensively on information technology systems and related personnel to collect, use, retain, manage, transmit, and protect transactions and data. Some of these systems are managed or provided by third-party service providers, including certain cloud platform providers. In managing our business, we also rely heavily on the integrity of, security of, and consistent access to, systems that provide operational and financial data and capabilities related to sales (both in store and online), customer data, supplier data, associate data, job applicant data, partner data, demand forecasting, merchandise ordering, inventory replenishment, supply chain management, payment processing, order fulfillment, customer service, and post-purchase matters. For these information technology systems, applications, and processes to operate effectively, we or our service providers must maintain and update them. Delays in the maintenance, updates, upgrading, or patching of these systems, applications or processes, as well as the actions taken to maintain, update, upgrade and patch, could, and on occasion have, impaired their operation and effectiveness or exposed us to security risks. Our systems and the third-party systems with which we interact, as well as any systems those third parties utilize, are subject to, and on occasion have experienced, damage, interruption, or malicious activity from a number of causes, including power and other critical infrastructure outages; computer and telecommunications failures; computer viruses; data or security breaches; internal or external data theft or misuse; cyber-attacks, including the use of malicious codes, worms, phishing, smishing, vishing, spyware, denial of service attacks, and ransomware; responsive containment measures by us that may involve voluntarily taking systems offline; natural disasters and catastrophic events such as fires, floods, earthquakes, tornadoes, hurricanes, or other extreme weather events; public health concerns, such as pandemics and quarantines; geopolitical or military conflicts, acts of war, terrorism or civil unrest; other systems outages; inadequate or ineffective redundancy; and design or usage errors or malfeasance by our associates, contractors or third-party service providers. In addition, as more business activities have shifted online, and as many of our store support associates continue to work in a remote or hybrid environment, we face an increased risk due to the potential failure of internal or external information technology infrastructure as well as increased cybersecurity threats and attempts to breach our security networks.
Although we and our third-party service providers seek to maintain our respective systems effectively and to successfully address the risk of compromise of the integrity, security and consistent operations of these systems, such efforts are not always successful. As a result, we or our service providers could experience, and on occasion have experienced, errors, interruptions, delays or cessations of service in key portions of our information technology
infrastructure, which could significantly disrupt our operations or impair data security; impact our ability to operate or access communications, financial or banking systems; be costly, time-consuming and resource-intensive to remedy; and adversely impact our reputation and relationship with our customers, associates, suppliers, shareholders or regulators. We may have to expend significant resources to mitigate the impact of any errors, interruptions, delays or cessations of service and may have insufficient recourse against service providers who experience such events.
In addition, we are currently making, and expect to continue to make, substantial investments in our information technology systems, infrastructure and personnel, in certain cases with the assistance of strategic partners and other third-party service providers. These investments involve replacing existing systems, some of which are older, legacy systems that are less flexible and efficient, with successor systems; outsourcing certain technology and business processes to third-party service providers; making changes to existing systems, including the migration of applications to the cloud; maintaining or enhancing legacy systems that are not currently being replaced; designing or cost-effectively acquiring new systems with new functionality; or testing the use and incorporation of artificial intelligence, including generative artificial intelligence. These efforts could result, and on occasion have resulted, in significant potential risks, including failure of the systems to operate as designed, unexpected impacts on related systems or processes, potential loss or corruption of data, failures in security processes and internal controls, cost overruns, implementation delays or errors, disruption of operations, and the potential inability to meet business and reporting requirements. Any system implementation and transition difficulty may result in operational challenges, security or internal control failures, reputational harm, lost sales, increased costs, or other financial losses that could adversely affect our business, our relationships with our customers, and results of operations.
Disruptions in our customer-facing technology systems could impair our interconnected retail strategy and give rise to negative customer experiences.
Through our information technology systems, we are able to provide an improved overall shopping and interconnected experience that empowers our customers to shop and interact with us from a variety of electronic devices and digital platforms at each stage of their shopping journey. We use our digital platforms as sales channels for our products and services, as methods of providing inspiration, and as sources of product, project, and other relevant information to our customers to help drive sales. In addition to supporting our DIY and DIFM customers, we make other resources available that are designed to help serve the needs of Pros working on complex projects. We also have multiple online communities, digital platforms, and knowledge centers that allow us to inform, assist and interact with our customers. The retail industry is continually evolving and expanding, with a significant increase in sales initiated online and via mobile applications in recent years. We may not be successful at managing this increased volume and related delivery options without interruption in the future. Additionally, we must effectively respond to new developments and changing customer preferences with respect to a complex, evolving digital and interconnected experience. We continually seek to enhance all of our online and digital platforms to provide a personalized, user-friendly interface for our customers. Disruptions, delays, failures or other performance issues with our customer-facing technology systems, either due to increased volumes, system modifications, cybersecurity incidents or attacks, information technology outages or other interruptions; or other factors, or a failure of these systems to meet our or our customers’ expectations, could impair the value they provide, adversely impact our sales, and negatively affect our relationship with our customers.
Disruptions within our logistics or supply chain network, such as the industry-wide supply chain challenges that resulted from the COVID-19 pandemic, have in the past and may in the future adversely affect our ability to receive and deliver inventory in a timely manner, impair our ability to meet customer demand for products, and result in lost sales, increased supply chain costs, and/or damage to our reputation. Such disruptions may result, and on occasion have resulted, from damage or destruction to our distribution or fulfillment centers or those of our supply chain service providers; weather-related events; cybersecurity incidents or attacks; information technology outages or other interruptions; natural disasters; international trade disputes, trade policy changes or restrictions, or import- or export-related governmental sanctions or restrictions; customs actions, including regulatory enforcement inquiries, holds, detentions, and exclusions; quotas, tariffs or other import-related taxes; strikes, lock-outs, work stoppages or slowdowns; shortages of supply chain labor, including truck drivers; shipping capacity constraints, including shortages of related equipment; raw material or other shortages; third-party contract disputes or inability to maintain favorable contract terms; supply or shipping interruptions or costs; increased costs or unavailability of fuel; geopolitical or military conflicts or acts of war, as well as any related sanctions or other government or private responses; acts of terrorism; public health issues, including pandemics or quarantines and other related impacts; civil unrest; or other factors beyond our control. In recent years, ports in the U.S. and elsewhere have been
impacted by capacity constraints, port congestion and delays, periodic labor disputes, strikes, security issues, weather-related events, and natural or man-made disasters.
As we saw during the heights of the COVID-19 pandemic, these types of disruptions place strain on the domestic and international supply chain, which affected and may in the future negatively affect the flow or availability of certain products. Even when we are able to find alternate sources for certain products, they may cost more or require us to incur higher transportation costs, which could adversely impact our profitability and financial condition. Increased demand for online purchases of products, which we experienced during the COVID-19 pandemic, can impact our fulfillment operations, as well as those of our third-party carriers, resulting in delays in delivering products to customers and increases in our out-of-stock levels.
We and our suppliers have experienced, and may continue to experience, labor shortages at some of our distribution and fulfillment centers both due to the competitive labor market and unexpected events such as pandemics and quarantines. Such labor shortages, whether temporary or sustained, may adversely impact the flow or availability of products to our stores and customers.
Any of these circumstances could impair our ability to meet customer demand for products and result in lost sales, increased supply chain costs, or damage to our reputation, any of which could negatively impact our business performance or financial condition.
Our customers and associates expect a safe environment in which to shop and work, and maintaining that environment helps protect against loss or theft of our inventory (also called “shrink”). Like other retailers, we have seen heightened shrink in recent years, particularly as a result of organized retail crime. While we have a number of initiatives underway to address shrink, minimize theft, and maintain safety in and around our stores and other facilities, these efforts require operational changes that may increase costs and reduce margins, and they may negatively impact the customer or associate experience. Furthermore, an unsafe environment or negative incidents in or around our stores and other facilities may erode trust and confidence with customers, associates, or jobseekers, which can adversely impact sales, associate morale and retention, and our brand and reputation.
If our efforts to maintain the privacy and security of customer, associate, job applicant, business partner, and Company information are not successful, we could incur substantial costs and reputational damage and could become subject to litigation and enforcement actions.
Our business, like that of most retailers, involves the collection, use, retention, management, transmission, and deletion of personal information (including identifiers, localization, internet activity, preferences, and payment information) from our customers, associates, job applicants, and business partners, as well as confidential Company information. We also work with third-party service providers that provide technology, systems and services that we use in connection with the handling of information. Our information systems, and those of our third-party service providers, are vulnerable to continually evolving data protection and cybersecurity risks. Unauthorized parties, including criminal threat actors, nation-states, or insiders (including associates or contractors engaged in fraudulent or malicious activities), have in the past gained access, and will continue to attempt to gain access, to these systems and data through technical vulnerabilities, breach of security policies, fraud or other means of deceiving or coercing our associates, contractors or third-party service providers, which could jeopardize the confidentiality, integrity, or availability of such information systems or data that we may handle. Hardware, software or applications we develop or obtain from third parties may contain, and on occasion have contained, exploitable vulnerabilities, bugs, or defects in design, maintenance or manufacture or other problems that could unexpectedly compromise information security. We have experienced and continue to face the ongoing risk of exploitation of our software providers and our software development and implementation process, including from coding and process vulnerabilities and the installation of so-called back doors that provide unauthorized access to systems and data, and through unauthorized access to or theft of our intellectual property. The continued availability of remote or hybrid working arrangements has also expanded the possible attack surface areas and increased risks posed by insider threats, as our interactions with associates, contractors and third-party service providers increasingly occur on information systems, networks and environments over which we have less control and which may be more difficult to monitor. In addition, the risk of cyber-attacks has increased in connection with geopolitical conflicts and ongoing trade and diplomatic tensions. In light of the conflicts in Europe and the Middle East and other geopolitical events, nation-state actors or their supporters and other politically-motivated actors may launch retaliatory cyber-attacks, and may attempt to cause supply chain and other third-party service provider disruptions, or take other geopolitically-motivated retaliatory actions that may disrupt our business operations, result in data compromise, or both. Nation-state actors have in the past carried out, and may in the future carry out, cyber-attacks to achieve their
aims and goals, which may include espionage, monetary gain, disruption, and destruction. Similarly, there may be increased activities by organized or coordinating groups of cyber criminals who seek to attack larger organizations’ data or systems for their own aims and goals, which can include financial gain. Because the techniques threat actors use to obtain unauthorized access, disable or degrade service, or sabotage systems, including use of stolen passwords, social engineering, phishing, smishing, vishing, identity spoofing (including through the use of emerging technologies such as deep fakes), ransomware or other disruptive and destructive malware, supply chain compromises, insider threats, and man-in-the-middle and denial of service attacks, change frequently and may not immediately produce signs of anomalous activity or compromise, we may be unable to anticipate or detect these techniques or implement adequate preventative measures.
The ever-evolving cybersecurity threat landscape means that we and our third-party service providers and business partners must continually evaluate and adapt our respective systems and processes and overall security environment, as well as those of companies we or they acquire. There is no guarantee that the measures we take will be adequate to safeguard against all threats, including vulnerabilities, data security breaches, system compromises or misuses of data. As we have experienced in the past, any significant compromise or breach of our data security, whether external or internal, or misuse of customer, associate, job applicant, business partner, or Company data, could result in significant costs, including costs to investigate, mitigate, and remediate, as well as lost sales, fines, lawsuits, regulatory investigations, and damage to our reputation. Additionally, as we have experienced in the past, we or our third-party service providers may not discover any security breach, vulnerability or compromise of information for a significant period of time after the occurrence of a security incident. When our systems or those of our third-party service providers on which we rely are breached or attacked, we may also suffer, and on some occasions have suffered, an outage, failure, or unavailability of data or information technology systems, and interruptions to our business operations while such breach or attack is being remedied; this may impact data or systems operated by us or by third-party service providers. Furthermore, our cyber insurance coverage may not be adequate for liabilities or costs actually incurred, and we cannot be certain that insurance will continue to be available to us on economically reasonable terms, or at all, or that any insurer will not deny coverage of a future claim.
Management's Discussion & Analysis (MD&A)
New heading “Tariffs and Other Trade Policy Matters”
New heading “Note: Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks. Consistent with our consolidated financial statements, periods presented only include operating results for acquisitions since their respective acquisition dates.”
Removed heading “(4)Sales per retail square foot represents sales divided by retail store square footage. Sales per retail square foot is a measure of the efficiency of sales based on the total square footage of our stores and is used by management to monitor the performance of the Company’s retail operations as an indicator of the productivity of owned and leased square footage for these retail operations.”
Removed heading “(2)Fiscal 2024 only includes operating results for SRS since the acquisition date of June 18, 2024, consistent with our consolidated financial statements.”
Largest changes
“(4)Sales per retail square foot represents sales divided by retail store square footage. Sales per retail square foot is a measure of the efficiency of sales based on the total square footage of our stores and is used by management to monitor the performance of the Company’s retail operations as an indicator of the productivity of owned and leased square footage for these retail operations.”see in full comparison
“We continue to monitor developments with respect to tariffs and other trade policy matters closely, including impacts from the recent U.S. Supreme Court decision that struck down tariffs imposed under the International Emergency Economic Powers Act. We have worked, and continue to work, diligently to diversify our global supply chain and to implement other cost mitigation initiatives. …”see in full comparison
“Note: Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks. Consistent with our consolidated financial statements, periods presented only include operating results for acquisitions since their respective acquisition dates.”see in full comparison
“(2)Fiscal 2024 only includes operating results for SRS since the acquisition date of June 18, 2024, consistent with our consolidated financial statements.”see in full comparison
“On September 4, 2025, we utilized approximately $2.0 billion of commercial paper borrowings, together with cash on hand, to fund the GMS acquisition. These borrowings were subsequently repaid with the $2.0 billion of proceeds from our September 2025 senior notes issuance. We also utilized commercial paper borrowings in fiscal 2025 to support general liquidity, including the repayment of senior note maturities.”see in full comparison
Full comparison: every changed paragraph (65)
The following discussion provides an analysis of the Company’s financial condition and results of operations from management's perspective and should be read in conjunction with the consolidated financial statements and related notes included in this report. The discussion in this Form 10-K generally focuses on fiscal 20242025 compared to fiscal 2023.2024. A discussion of our results of operations and changes in financial condition for fiscal 20232024 compared to fiscal 20222023 has been omitted from this report, but can be found in Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations of our Form 10-K for fiscal 2023.2024. For purposes of comparison, fiscal 2025 and fiscal 2023 include 52 weeks and fiscal 2024 includes 53 weeks.
We reported net sales of $164.7 billion in fiscal 2025. Net earnings were $14.2 billion, or $14.23 per diluted share.
During fiscal 2025, we generated $16.3 billion of cash flow from operations, received $4.1 billion of proceeds from commercial paper borrowings, net of repayments, and received $2.2 billion of proceeds from the issuance of long-term debt, net of discounts. This cash flow, together with cash on hand, was used to fund $9.2 billion in cash dividends, repay $5.0 billion of long-term debt, and fund $3.7 billion in capital expenditures. As described below, we also completed the GMS acquisition for aggregate cash consideration totaling approximately $5.5 billion, including the repayment of certain of GMS’s outstanding debt.
We reported net sales of $159.5 billion in fiscal 2024. Net earnings were $14.8 billion, or $14.91 per diluted share. Fiscal 2024 consisted of 53 weeks compared to 52 weeks in fiscal 2023. The 53rd week in fiscal 2024 added approximately $2.5 billion of net sales and increased diluted earnings per share by approximately $0.30.
During fiscal 2024, we opened ten new stores in the U.S. and two new stores in Mexico, resulting in a total store count of 2,347 at February 2, 2025. A total of 322 of our stores, or 13.7%, were located in Canada and Mexico. Total sales per retail square foot were $599.92 in fiscal 2024. Our inventory turnover ratio was 4.7 times at the end of fiscal 2024, compared to 4.3 times at the end of fiscal 2023. The increase in our inventory turnover ratio was primarily driven by lower average inventory levels within our Primary segment during fiscal 2024.
During fiscal 2024, we generated $19.8 billion of cash flow from operations, received approximately $10.0 billion of proceeds from the issuance of long-term debt, net of discounts, and received $316 million of proceeds from commercial paper borrowings, net of repayments. We utilized a combination of commercial paper borrowings and the issuance of long-term debt, together with cash on hand, to fund the acquisition of SRS, with cash purchase consideration totaling $17.7 billion. Specifically, in June 2024, leading up to the SRS acquisition on June 18, 2024, we raised commercial paper borrowings of over $15.0 billion to fund the transaction, of which approximately $10.0 billion was then immediately repaid with the proceeds from our issuance of long-term debt. We have subsequently repaid all of the commercial borrowings used to fund the acquisition and ended fiscal 2024 with $316 million of commercial paper borrowings outstanding.
During fiscal 2024, we also paid $8.9 billion in cash dividends, funded $3.5 billion in capital expenditures, repaid $1.5 billion of long-term debt, and funded $649 million of share repurchases, prior to pausing share repurchases in March 2024.
Our inventory turnover ratio was 4.4 times at the end of fiscal 2025, compared to 4.7 times at the end of fiscal 2024. The decrease in our inventory turnover ratio was primarily driven by higher average inventory levels during fiscal 2025.
Our ROIC was 25.7% for fiscal 2025 and 31.3% for fiscal 2024 and 36.7% for fiscal 2023.2024. The decrease in ROIC was primarily driven by higher average long-termequity debtdue to our ongoing pause in share repurchases and higher average equitylong-term debt largely due to the financing of the SRS acquisition. See the Non-GAAP Financial Measures section below for our definition and calculation of ROIC.
During fiscal 2025, we opened ten new stores in the U.S. and two new stores in Mexico, resulting in a total store count of 2,359 at February 1, 2026. A total of 324 of our stores, or 13.7%, were located in Canada and Mexico. At the end of fiscal 2025, we also operated over 1,250 locations within our SRS non-reportable operating segments throughout the U.S. and Canada.
SRSGMS Acquisition
On June 29, 2025, we entered into a definitive agreement to acquire GMS, a leading distributor of specialty building products, including drywall, ceilings, steel framing and other complementary construction products, through branches located across the U.S. and Canada. Under the terms of the merger agreement, we, through a wholly owned subsidiary, made a cash tender offer to purchase all outstanding shares of GMS common stock for $110 per share. All conditions of the offer were satisfied, including receipt of the requisite regulatory approvals, and the merger was completed on September 4, 2025. As a result of the merger, GMS became a direct subsidiary of SRS and an indirect, wholly owned subsidiary of the Company. We believe the GMS acquisition will enhance SRS's position as a leading multi-category building materials distributor, bringing differentiated capabilities, product categories and customer relationships that are highly complementary to SRS's existing business. Refer to Note 13 to our consolidated financial statements for further discussion on the acquisition.
Tariffs and Other Trade Policy Matters
We continue to monitor developments with respect to tariffs and other trade policy matters closely, including impacts from the recent U.S. Supreme Court decision that struck down tariffs imposed under the International Emergency Economic Powers Act. We have worked, and continue to work, diligently to diversify our global supply chain and to implement other cost mitigation initiatives. While we experienced increased costs as a result of tariffs in fiscal 2025, our actions, including diversification efforts and some price increases, along with our scale, vendor relationships, experienced internal teams, and other initiatives allowed us to effectively mitigate the impact on our results of operations. We plan to continue to assess our sourcing and other mitigation strategies to maintain a strong value proposition for our customers and believe we remain well positioned to manage the impact that tariffs in effect as of the date of this filing are expected to have on our business.
As trade policy discussions are ongoing and related developments continue to evolve, we cannot predict with certainty their ultimate impact on our business in future periods, including our results of operations and cash flows. For more information on these risks and uncertainties see Part I, Item 1A. “Risk Factors.”
On March 27, 2024, we entered into a definitive agreement to acquire SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor. On June 18, 2024, following the satisfaction or waiver of the applicable closing conditions, including receipt of the requisite regulatory approvals, the acquisition was completed and all merger consideration was transferred. We believe the acquisition of SRS will accelerate the Company’s growth with the Pro. The acquisition is expected to establish the Company as a leading specialty trade distributor across multiple verticals, complement our existing capabilities, and enable us to better serve complex project purchase occasions with the renovator/remodeler. Refer to Note 2 and Note 13 to our consolidated financial statements for further discussion of the impact of the acquisition on our consolidated financial statements.
Note: Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks. Fiscal 2023 and fiscal 2022 include 52 weeks. Certain percentages may not sum to totals due to rounding.
(2)Customer transactions,transactions and average ticket, and sales per retail square footticket measures do not include results from HD Supply or SRS.SRS (including GMS).
(4)Sales per retail square foot represents sales divided by retail store square footage. Sales per retail square foot is a measure of the efficiency of sales based on the total square footage of our stores and is used by management to monitor the performance of the Company’s retail operations as an indicator of the productivity of owned and leased square footage for these retail operations.
(54)The 53rd week of fiscal 2024 increased diluted earnings per share in fiscal 2024 by approximately $0.30.
We assess our sales performance by evaluating both net sales and comparable sales. Fiscal 2025 consisted of 52 weeks compared to 53 weeks in fiscal 2024. For purposes of the following discussion, comparable sales, comparable customer transactions, and comparable average ticket are based upon the comparable 52-week period from fiscal 2024.
Net Sales. Net sales for fiscal 2025 increased $5.2 billion, or 3.2%, to $164.7 billion. The increase in net sales for fiscal 2025 was primarily driven by SRS, which was acquired on June 18, 2024, and GMS, which was acquired on September 4, 2025. In aggregate, these acquisitions contributed approximately $6.3 billion of incremental net sales during fiscal 2025. Net sales also increased due to sales from new stores and the impact of a positive comparable sales environment. These increases were partially offset by the additional week in fiscal 2024 which contributed approximately $2.5 billion in net sales in fiscal 2024.
Online sales represented 15.9% of net sales during fiscal 2025 and increased by 8.7% compared to fiscal 2024. Calculated on a comparable week basis relative to fiscal 2024, online sales increased by 10.4%. Online sales consist of sales of products generated through websites and mobile applications and does not include results from HD Supply or SRS (including GMS).
We assess our sales performance by evaluating both net sales and comparable sales.
Net Sales. Fiscal 2024 consisted of 53 weeks compared to 52 weeks in fiscal 2023. Net sales for fiscal 2024 increased $6.8 billion, or 4.5%, to $159.5 billion. The increase in net sales for fiscal 2024 was primarily driven by SRS, which contributed $6.4 billion of net sales during fiscal 2024, and incremental net sales of approximately $2.5 billion attributable to the additional week in fiscal 2024. This increase in net sales was partially offset by the impact of a negative comparable sales environment, primarily driven by decreases in comparable customer transactions and comparable average ticket.
Online sales, which consist of sales generated online through our websites and mobile applications for products picked up at our stores or delivered to customer locations, represented 15.1% of net sales and increased by 6.6% during fiscal 2024 compared to fiscal 2023, including the online sales attributable to the additional week in fiscal 2024.
A stronger U.S. dollar compared to fiscal 2024 negatively impacted net sales by $298$307 million in fiscal 2024.2025.
Comparable Sales. Comparable sales is a measure that highlights the performance of our existing locations and websites by measuring the change in net sales for a period over the comparable prior period of equivalent length. Comparable sales includes sales at all locations, physical and online, open greater than 52 weeks (including remodels and relocations) and excludes closed stores. Retail stores become comparable on the Monday following their 52nd week of operation. Acquisitions are typically included in comparable sales after they have been owned for more than 52 weeks. OurFor our calculation of comparable sales results forin fiscal 20242025, exclude the 53rd week andwe compare weeks 1 through 52 in fiscal 20242025 toagainst theweeks 52-week2 periodthrough reported53 in fiscal 2024. Comparable sales is intended only as supplemental information and is not a substitute for fiscalnet 2023.sales presented in accordance with GAAP. The method of calculating comparable sales varies across the retail industry. As a result, our method of calculating comparable sales may not be the same as similarly titled measures reported by other companies.
Total comparable sales decreasedincreased 1.8%0.3% in fiscal 2024,2025, primarily reflecting a 1.4% increase in comparable average ticket, partially offset by a 1.0% decrease in comparable customer transactions and a 0.9% decrease in comparable average ticket compared to fiscal 2023.2024. The decrease inOur comparable sales results reflect customer transactionsengagement primarilywith reflectssmaller home improvement projects, which was offset by the impact of heightenedcontinued macroeconomic uncertainties and other macroeconomic factors, including the impacts of a persisting high interest rate environmentenvironment, pressuringthat continue to pressure broader home improvement demand. The decrease in comparable average ticket primarily reflects price stabilization relative to last year, slightly offset by demand for new and innovative products.
For fiscal 2024,2025, our PowerStorage & Organization, Electrical, Bath, Plumbing, Indoor Garden, Outdoor Garden, Kitchen & Blinds, Hardware, Power, Building Materials, and Building MaterialsAppliances merchandising departments within our Primary segment posted positive comparable sales compared to fiscal 2023.2024. All of ourOur other merchandising departments within our Primary segment posted negative comparable sales during fiscal 20242025 compared to fiscal 2023.2024.
Gross profit increased $2.3$1.6 billion, or 4.6%,2.9%, to $53.3$54.9 billion in fiscal 2024.2025. Gross profit as a percent of net sales, or gross profit margin, was 33.4%33.3% for bothin fiscal 20242025 andcompared to 33.4% in fiscal 2023,2024. andThe primarilydecrease reflectedin lowergross transportationprofit costsmargin and lower shrink within our Primary segment, offset byreflects the inclusion of SRS and GMS in our consolidated results.results, partially offset by lower shrink and certain supply chain benefits within our Primary segment.
Selling, General & Administrative. SG&A increased $2.2$2.0 billion, or 8.1%,6.8%, to $28.7$30.7 billion in fiscal 2024.2025. As a percent of net sales, SG&A was 18.6% in fiscal 2025 compared to 18.0% in fiscal 2024 compared to 17.4% in fiscal 2023,2024, which primarily reflects higher payroll costs,and deleveragerelated fromcosts in fiscal 2025 along with the impact of a negative comparable sales environment and lowernon-recurring legal-related benefits.benefit recognized during fiscal 2024 within our Primary segment.
Depreciation and Amortization. Depreciation and amortization increased $361$239 million, or 13.5%,7.9%, to $3.0$3.3 billion in fiscal 2024.2025. As a percent of net sales, depreciation and amortization was 2.0% in fiscal 2025 compared to 1.9% in fiscal 20242024, compared to 1.8% in fiscal 2023,which primarily reflectingreflects increased intangible asset amortization expense ofresulting $239from million,our acquisitions of whichSRS $218and million was related to SRS, as well as increased depreciation expense from ongoing investments in the business.GMS.
Interest and other, net increased $355$168 million, or 20.1%,7.9%, to $2.1$2.3 billion in fiscal 2024.2025. As a percentpercentage of net sales, interest and other, net, was 1.4% in fiscal 2025 compared to 1.3% in fiscal 2024 compared to 1.2% in fiscal 2023,2024, primarily due to higher interest expense driven by higheraverage long-term debt.debt balances and lower interest income in fiscal 2025.
Diluted earnings per share were $14.23 in fiscal 2025 compared to $14.91 in fiscal 2024 compared to $15.11 in fiscal 2023.2024. The decrease in diluted earnings per share for fiscal 20242025 was primarily driven by lower net earnings during fiscal 2024, partially offset by lower diluted shares.2025. The 53rd week of fiscal 2024 increased diluted earnings per share in fiscal 2024 by approximately $0.30 for fiscal 2024.$0.30.
Note: Fiscal 2025 and fiscal 2023 include 52 weeks. Fiscal 2024 includes 53 weeks. Consistent with our consolidated financial statements, periods presented only include operating results for acquisitions since their respective acquisition dates.
Note: Fiscal 2024 includes 53 weeks. Fiscal 2023 and fiscal 2022 include 52 weeks.
(2)Fiscal 2024 only includes operating results for SRS since the acquisition date of June 18, 2024, consistent with our consolidated financial statements.
At February 2,1, 2025,2026, we had $1.7$1.4 billion in cash and cash equivalents, of which $1.1$1.0 billion was held by our foreign subsidiaries. We believe that our current cash position, cash flow generated from operations, funds available from our commercial paper program, and access to the long-term debt capital markets should be sufficient not only for our operating requirements, any required debt payments, and satisfaction of other contractual obligations, but also to enable us to invest in the business, fund dividend payments, and fund any share repurchases through the next several fiscal years. In addition, we believe we have the ability to obtain alternative sources of financing, if necessary.necessary or appropriate.
Our material cash requirements include contractual and other obligations arising in the normal course of business. TheseOur contractual obligations primarily include long-term debt and related interest payments, operating and finance lease obligations, and purchase obligations. In addition to our cash requirements, we follow a disciplined approach to capital allocation. This approach first prioritizes investing in the business, followed by paying dividends, with the intent of then returning excess cash to shareholders in the form of share repurchases. In March 2024, we paused share repurchases in anticipationconnection ofwith the SRS acquisition of SRS and do not have plans to resume share repurchases in fiscal 2025.2026 as we seek to reduce our outstanding debt.
On July 4, 2025, the legislation commonly referred to as the One Big Beautiful Bill Act (the “OBBBA”) was signed into law in the U.S., which contains a broad range of tax provisions, including the allowance to expense 100% of the cost of qualified property and immediate expensing of domestic research and experimental expenditures. The above mentioned provisions resulted in a reduction in our fiscal 2025 cash tax payments.
During fiscal 2024,2025, we invested approximately $3.5$3.7 billion back into our business in the form of capital expenditures. In line with our expectation of approximately 2.5% of fiscal 2025 net sales, weWe plan to invest approximately $4 billion back into our business in the form of capital expenditures in fiscal 2025,2026, in line with our expectation of approximately 2.5% of projected fiscal 2026 net sales. We expect to make these investments across initiatives tosupporting improveour strategy of driving our core and culture, including building new stores and maintaining existing stores, delivering a frictionless, interconnected experience, and winning with Pros. However, as in the customer experience, including through technology and development of other differentiated capabilities, to continue to mature and build out Pro capabilities, as well as to build new stores. However,past, we may adjust our capital expenditures to support the operations of the business, to enhance long-term strategic positioning, or in response to the economic environment, as necessary or appropriate. We may also utilize strategic acquisitions to help accelerate our strategic initiatives.
In August 2023, our Board approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved in August 2022. The August 2023 authorization does not have a prescribed expiration date. As of February 2,1, 2025,2026, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available. During fiscal 2024, we made cash payments of $649 million for repurchases of our common stock through open market purchases, prior to pausing share repurchases in March 2024 as discussed above.
At the beginning of fiscal 2024,2025, we had a commercial paper program that allowed for an aggregate of $5.0 billion in borrowings. In connection with our program, we had back-up credit facilities with a consortium of banks for an aggregate of $5.0$7.0 billion in borrowings, whichand was supported by $7.0 billion of back-up credit facilities. These back-up credit facilities consisted of a five-year $3.5 billion credit facility scheduled to expire in July 20272027, a 364-day $2.0 billion credit facility scheduled to expire in May 2025, and a 364-day $1.5 billion credit facility scheduled to expire in July 2024.2025.
In May 2025, we terminated all three back-up credit facility agreements and simultaneously entered into a new five-year $3.5 billion credit facility scheduled to expire in May 2030 and a new 364-day $3.5 billion credit facility scheduled to expire in May 2026.
In MayJuly 2024,2025, we increased our commercial paper program fromby $5.0 billion to $19.5$4.0 billion in connection with the anticipated financing of the GMS acquisition of SRS (see Note 13 to our consolidated financial statements for details regarding the SRS acquisition). In MayJuly 2024,2025, in connection with the increase in the commercial paper program, we also entered into threea additionalnew three-year $3.0 billion back-up credit facilities that consisted of a 364-day $3.5 billion credit facility scheduled to expire in MayJuly 2025,2028, and a three-yearnew 364-day $1.0 billion back-up credit facility scheduled to expire in MayJuly 2027,2026, as well as amended and arestated our existing 364-day $10.0$3.5 billion credit facility scheduledto extend the maturity from May 2026 to expireJuly in2026. MayIn 2025.the Theaggregate, $10.0as of February 1, 2026, our commercial paper program allows for borrowings up to $11.0 billion credit facility also provided that the commitments and anyis borrowings under that facility would be reducedsupported by the$11.0 amountbillion of netback-up cashcredit proceeds we receive from any future debt issuance.facilities.
On September 4, 2025, we utilized approximately $2.0 billion of commercial paper borrowings, together with cash on hand, to fund the GMS acquisition. These borrowings were subsequently repaid with the $2.0 billion of proceeds from our September 2025 senior notes issuance. We also utilized commercial paper borrowings in fiscal 2025 to support general liquidity, including the repayment of senior note maturities.
In June 2024, leading up to the acquisition of SRS on June 18, 2024, we raised commercial paper borrowings of over $15.0 billion to fund the transaction. On June 25, 2024, we received the proceeds from the issuance of $10.0 billion of long-term debt, as further discussed below, and immediately used the proceeds to repay approximately $10.0 billion of these commercial paper borrowings. On June 27, 2024, we terminated the $10.0 billion back-up credit facility, and subsequently reduced our commercial paper program from $19.5 billion to $9.5 billion.
In July 2024, we completed the renewal of our 364-day $1.5 billion credit facility, extending the maturity from July 2024 to July 2025.
In December 2024, we reduced our total credit facilities and concurrently reduced our commercial paper program, each by $2.5 billion. This reduction included terminating the three-year $1.0 billion back-up credit facility that was scheduled to expire in May 2027 and reducing the aggregate commitments under the 364-day back-up credit facility that is scheduled to expire in May 2025 from $3.5 billion to $2.0 billion. As of February 2, 2025, our commercial paper program allowed for an aggregate of $7.0 billion in borrowings and is supported by $7.0 billion of back-up credit facilities.
AllDuring fiscal 2025, all of our short-term borrowings in fiscal 2024 were under our commercial paper program, and the maximum amount outstanding atduring anythat timeperiod was $15.3$5.8 billion. At February 2,1, 2025,2026, we had outstanding borrowings under our commercial paper program of $316$4.5 millionbillion with a weighted-averageweighted average interest rate of 4.4%,3.7%. At February 1, 2026, we had no outstanding borrowings under our back-up credit facilities, and we were in compliance with all of the covenants contained in our back-up credit facilities, none of which are expected to impact our liquidity or capital resources.
We also issue senior notes from time to time. As discussed above, in September 2025, we issued $2.0 billion of senior notes, which were used to repay commercial paper borrowings used to fund the GMS acquisition. Separately, during fiscal 2025, we repaid an aggregate of $4.25 billion of senior notes at maturity.
We also issue senior notes from time to time as part of our capital management strategy. As discussed above, in June 2024, we issued $10.0 billion of senior notes in connection with the funding of the acquisition of SRS. Separately, in February 2024, we repaid $1.1 billion of senior notes at maturity. At February 2,1, 2025,2026, we had an aggregate principal amount of senior notes outstanding of $51.1$48.8 billion, with $4.3$4.6 billion payable within 12 months. Future interest payments associated with these senior notes total $27.1$25.4 billion, with $2.1$2.0 billion payable within 12 months, based on current interest rates, which include the impact of our active interest rate swap agreements.
The indentures governing our senior notes do not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity. The indentures governing our notes contain various customary covenants; however,covenants, none of the covenantswhich are expected to impact our liquidity or capital resources. We were in compliance with all such covenants at February 2,1, 2025.2026. See Note 5 to our consolidated financial statements for further discussion of our debt arrangements.
We use operating and finance leases largely to obtain a portion of our real estate, including our stores, distribution centers, branches, and store support centers. At February 2,1, 2025,2026, we had aggregate remaining lease payment obligations of $15.2$15.9 billion, with $2.0$2.2 billion payable within 12 months. Aggregate lease obligations include approximately $560$675 million of obligations related to leases not yet commenced. See Note 3 to our consolidated financial statements for further discussion of our operating and finance leases.
At February 2,1, 2025,2026, we had aggregate liabilities for unrecognized tax benefits totaling $627$559 million, nonenearly all of which are expectedrecorded toas benon-current paid in the next 12 months.liabilities. The timing of payment, if any, associated with our long-term unrecognized tax benefit liabilities is unknown. See Note 6 to our consolidated financial statements for further discussion of our unrecognized tax benefits.
Net cash provided by operating activities decreased by $1.4$3.5 billion in fiscal 20242025 compared to fiscal 2023,2024, primarily due to changes in working capital. Changes in working capital were primarily driven by more normalized inventory levels during fiscal 2024 compared to strategic reductions in inventory during fiscal 2023 within our Primary segment, partially offset by the timing of vendor payments and increased inventories during fiscal 2025, along with the deferral of our fourth quarter fiscal 2024 estimated federal tax payment to the first quarter of fiscal 20252025, underresulting automaticin incomefewer estimated tax reliefpayments providedin fiscal 2024 compared to fiscal 2025. This was partially offset by a reduction to our fiscal 2025 cash tax payments resulting from the IRS for taxpayers located in certain southeastern states.OBBBA.
Net cash used in investing activities decreased by $12.1 billion in fiscal 2025 compared to fiscal 2024, primarily resulting from higher cash paid for acquisitions during fiscal 2024 compared to fiscal 2025.
Net cash used in investing activities increased by $16.3 billion in fiscal 2024 compared to fiscal 2023, primarily due to higher cash payments for businesses acquired in fiscal 2024, driven by our acquisition of SRS.
Net cash used in financing activities in fiscal 2024 primarily reflected $8.9 billion of cash dividends paid, $1.5 billion of repayments of long-term debt, and $649 million of share repurchases prior to pausing share repurchases in March 2024, largely offset by approximately $10.0 billion of net proceeds from long-term debt and $316 million of proceeds from commercial paper borrowings, net of repayments.
What changed in the latest 10-Q
Risk Factors
In addition to the information set forth in this report, you should carefully consider the factors discussed under Part I, Item 1A. “Risk Factors” and elsewhere in the 2025 Form 10-K. These risks and uncertainties could materially and adversely affect our business, consolidated financial condition, results of operations, or cash flows. Our operations could also be affected by additional factors that are not presently known to us or by factors that we currently do not consider material to our business. There have been no material changes in the risk factors discussed in the 2025 Form 10-K.
No wording changes found in this section.
Full comparison: every changed paragraph (0)
Management's Discussion & Analysis (MD&A)
New heading “FISCAL 2026 AND FISCAL 2025 SIX MONTH COMPARISONS”
New heading “Note: Certain percentages may not sum to totals due to rounding.”
New heading “(1)Customer transactions and average ticket measures do not include results from HD Supply or SRS.”
New heading “(2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance.”
New heading “Operating Expenses”
New heading “Interest and Other, net”
New heading “Provision for Income Taxes”
New heading “Diluted Earnings per Share”
Largest changes
“(2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance.”see in full comparison
“(1)Customer transactions and average ticket measures do not include results from HD Supply or SRS.”see in full comparison
We continue to monitor developmentssee in full comparisonwith respectrelated to tariffs and other trade policymatters closely,matters, includingimpactsthefromeffects of the U.S. Supreme Court decisionthat struck downinvalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”),and otherongoing litigation,as well asand the implementation of additional tariffs.WeDuringhadthenotsecondreceivedquarteranyof fiscal 2026, we began receiving IEEPA tariff refunds pursuant to the U.S. Supreme Courtrulingruling,or recorded any such refunds in our financial statementsand as ofMayAugust3,2,2026.2026,Althoughweanhadimmaterialreceivedamountapproximately $730 million in IEEPA tariff refunds, representing the vast majority of our expected refunds. Approximately $685 million of these refunds were recognized as a reduction of cost of goods sold, with the remaining amount recorded as a reduction of inventory cost, nearly all within our Primary segment. Interest received in connection with the IEEPA tariff refundshaswasbeenrecognizedreceivedwithinsinceinterest income and other, net on theendconsolidated statement ofthe first quarter of fiscal 2026, the timing of any further refunds and the total amount ultimately received or recorded remains uncertain.earnings.
“Gross profit for the first six months of fiscal 2026 increased 4.6% to $29.9 billion from $28.6 billion for the first six months of fiscal 2025. Gross profit as a percentage of net sales, or gross profit margin, was 33.4% for the first six months of fiscal 2026 compared to 33.6% for the first six months of fiscal 2025. …”see in full comparison
Full comparison: every changed paragraph (55)
For the second quarter of fiscal 2026, net sales were $47.9 billion and net earnings were $4.8 billion, or $4.79 per diluted share. For the first six months of fiscal 2026, net sales were $89.6 billion and net earnings were $8.1 billion, or $8.09 per diluted share.
We reported net sales of $41.8 billion in the first quarter of fiscal 2026. Net earnings were $3.3 billion, or $3.30 per diluted share.
During the first threesix months of fiscal 2026, we generated $6.0$11.4 billion of cash flow from operations. This cash flow, together with cash on hand, was used to fund $2.3$4.6 billion in cash dividends, repay $1.4$3.0 billion of long-term debt, andfund repay $1.0$1.7 billion of net commercial paper borrowings. In addition, we funded $844 million in capital expenditures.expenditures, and fund $1.3 billion in acquisitions.
Our inventory turnover ratio was 4.24.5 times at the end of the firstsecond quarter of fiscal 2026, compared to 4.34.6 times at the end of the firstsecond quarter of fiscal 2025. The decrease in our inventory turnover ratio was primarily driven by higher average inventory levels during the first three months of fiscal 2026.
Our ROIC for the trailing twelve-month period was 25.4%24.8% at the end of the firstsecond quarter of fiscal 2026 and 31.3%27.2% at the end of the firstsecond quarter of fiscal 2025. The decrease in ROIC was primarily driven by higher average equity due to our ongoing pause in share repurchases and higher average long-term debt largely due to the financing of the SRS acquisition.repurchases. See the Non-GAAP Financial Measures section below for our definition and calculation of ROIC.
During the firstsecond three monthsquarter of fiscal 2026, we opened onethree new storestores in the U.S. and one new store in Mexico,U.S., resulting in a total store count of 2,3612,364 at MayAugust 3,2, 2026. A total of 325 stores, or 13.8%,13.7%, were located in Canada and Mexico. At the end of the firstsecond quarter of fiscal 2026, we also operated over 1,2801,340 locations within our SRS non-reportable operating segments throughout the U.S. and Canada.
We continue to monitor developments with respectrelated to tariffs and other trade policy matters closely,matters, including impactsthe fromeffects of the U.S. Supreme Court decision that struck downinvalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), and otherongoing litigation, as well asand the implementation of additional tariffs. WeDuring hadthe notsecond receivedquarter anyof fiscal 2026, we began receiving IEEPA tariff refunds pursuant to the U.S. Supreme Court rulingruling, or recorded any such refunds in our financial statementsand as of MayAugust 3,2, 2026.2026, Althoughwe anhad immaterialreceived amountapproximately $730 million in IEEPA tariff refunds, representing the vast majority of our expected refunds. Approximately $685 million of these refunds were recognized as a reduction of cost of goods sold, with the remaining amount recorded as a reduction of inventory cost, nearly all within our Primary segment. Interest received in connection with the IEEPA tariff refunds haswas beenrecognized receivedwithin sinceinterest income and other, net on the endconsolidated statement of the first quarter of fiscal 2026, the timing of any further refunds and the total amount ultimately received or recorded remains uncertain.earnings.
Net Sales. Net sales for the firstsecond quarter of fiscal 2026 were $41.8$47.9 billion, an increase of 4.8%5.7% from $39.9$45.3 billion for the firstsecond quarter of fiscal 2025. The increase in net sales for the firstsecond quarter of fiscal 2026 was primarily driven by sales from GMS, which was acquired on September 4, 2025 and contributed $1.3$1.4 billion of incremental net sales during the firstsecond quarter of fiscal 2026.2026, Netas saleswell also increased due toas the impact of a positive comparable sales environmentenvironment. andNet sales also increased due to sales from our acquisition of Mingledorff’s as well as sales from new stores and branches.
Online sales represented 16.5%16.6% of net sales during the firstsecond quarter of fiscal 2026 and increased by 10.5%11.0% compared to the firstsecond quarter of fiscal 2025. Online sales consist of sales of products generated through websites and mobile applications and doesdo not include results from HD Supply or SRS.
A weaker U.S. dollar compared to the firstsecond quarter of fiscal 2025 positively impacted net sales by $220$105 million during the firstsecond quarter of fiscal 2026.
Total comparable sales for the firstsecond quarter of fiscal 2026 increased 0.6%,1.7%, primarily reflecting a 2.2%2.8% increase in comparable average ticket, partially offset by a 1.3%1.0% decrease in comparable customer transactions compared to the firstsecond quarter of fiscal 2025. Foreign exchange rates positively impacted comparable sales by approximately 5525 basis points for the firstsecond quarter of fiscal 2026. Our comparable sales results reflect customer engagement with smaller homerepair improvementand maintenance projects, despite the impact of consumer uncertainty and housing affordability pressure on home improvement demand.
During the firstsecond quarter of fiscal 2026, our Storage & Organization, Power,Electrical, Hardware, Power, Plumbing, Electrical, Bath, Indoor Garden, Paint, and Kitchen & BlindsBlinds, Paint, Bath, Outdoor Garden, Building Materials, Flooring, and Millwork merchandising departments within our Primary segment posted positive comparable sales compared to the firstsecond quarter of fiscal 2025.
Gross profit for the firstsecond quarter of fiscal 2026 increased 2.4%6.5% to $13.8$16.1 billion from $13.5$15.1 billion for the firstsecond quarter of fiscal 2025. Gross profit as a percentage of net sales, or gross profit margin, was 33.0%33.7% for the firstsecond quarter of fiscal 2026 compared to 33.8%33.4% for the firstsecond quarter of fiscal 2025,2025. The increase in gross profit margin during the second quarter of fiscal 2026 reflects the benefit from IEEPA tariff refunds, largely offset by incremental cost pressures related to fuel, energy, and primarilyother reflectsproduct input costs, as well as the inclusion of GMS in our consolidated results.
Selling, General & Administrative. SG&A for the firstsecond quarter of fiscal 2026 increased $429$660 million, or 5.7%,8.5%, to $8.0$8.4 billion from $7.5$7.8 billion for the firstsecond quarter of fiscal 2025. As a percentage of net sales, SG&A was 19.1%17.6% for the firstsecond quarter of fiscal 2026 compared to 18.9%17.1% for the firstsecond quarter of fiscal 2025, primarily reflecting higher operating costs relative to comparable sales performance.
Depreciation and Amortization. Depreciation and amortization for the firstsecond quarter of fiscal 2026 increased $45$46 million, or 5.7%, to $841$852 million from $796$806 million for the firstsecond quarter of fiscal 2025. As a percentage of net sales, depreciation and amortization was 2.0%1.8% for both the firstsecond quarter of fiscal 2026 and 2025.
Interest and other, net was $604$524 million for the firstsecond quarter of fiscal 2026 compared to $591$550 million for the firstsecond quarter of fiscal 2025. As a percentage of net sales, interest and other, net was 1.4%1.1% for the firstsecond quarter of fiscal 2026 compared to 1.5%1.2% for the firstsecond quarter of fiscal 2025.2025, and reflects higher interest income due to interest received from IEEPA tariff refunds during the second quarter of fiscal 2026.
Our combined effective income tax rate was 24.9%24.5% for the firstsecond quarter of fiscal 2026 compared to 24.4%24.2% for the firstsecond quarter of fiscal 2025.
Diluted earnings per share were $3.30$4.79 for the firstsecond quarter of fiscal 2026 compared to $3.45$4.58 for the firstsecond quarter of fiscal 2025. The decreaseincrease in diluted earnings per share was primarily driven by lowerhigher net earnings during the firstsecond quarter of fiscal 2026.
FISCAL 2026 AND FISCAL 2025 SIX MONTH COMPARISONS
Note: Certain percentages may not sum to totals due to rounding.
(1)Customer transactions and average ticket measures do not include results from HD Supply or SRS.
(2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance.
Sales
We assess our sales performance by evaluating both net sales and comparable sales.
Net Sales. Net sales for the first six months of fiscal 2026 were $89.6 billion, an increase of 5.3% from $85.1 billion for the first six months of fiscal 2025. The increase in net sales for the first six months of fiscal 2026 was primarily driven by sales from GMS which contributed approximately $2.8 billion of incremental net sales during the first six months of fiscal 2026, as well as the impact of a positive comparable sales environment. Net sales also increased due to sales from new stores and branches, as well as our acquisition of Mingledorff’s.
Online sales represented 16.5% of net sales during the first six months of fiscal 2026 and increased by 10.8% compared to the first six months of fiscal 2025.
A weaker U.S. dollar compared to the first six months of fiscal 2025 positively impacted net sales by $325 million during the first six months of fiscal 2026.
Comparable Sales. Total comparable sales for the first six months of fiscal 2026 increased 1.2%, primarily reflecting a 2.5% increase in comparable average ticket, partially offset by a 1.2% decrease in comparable customer transactions compared to the first six months of fiscal 2025. Foreign exchange rates positively impacted comparable sales by approximately 40 basis points for the first six months of fiscal 2026. Our comparable sales
results reflect customer engagement with smaller repair and maintenance projects, despite the impact of consumer uncertainty and housing affordability pressure on home improvement demand.
During the first six months of fiscal 2026, our Storage & Organization, Hardware, Power, Electrical, Plumbing, Indoor Garden, Bath, Paint, Kitchen & Blinds, and Outdoor Garden merchandising departments within our Primary segment posted positive comparable sales compared to the first six months of fiscal 2025.
Gross Profit
Gross profit for the first six months of fiscal 2026 increased 4.6% to $29.9 billion from $28.6 billion for the first six months of fiscal 2025. Gross profit as a percentage of net sales, or gross profit margin, was 33.4% for the first six months of fiscal 2026 compared to 33.6% for the first six months of fiscal 2025. The decrease in gross profit margin during the first six months of fiscal 2026 reflects the inclusion of GMS in our consolidated results, as well as incremental cost pressures related to fuel, energy, and other product input costs, largely offset by the benefit from IEEPA tariff refunds.
Operating Expenses
Our operating expenses are composed of SG&A and depreciation and amortization.
Selling, General & Administrative. SG&A for the first six months of fiscal 2026 increased $1.1 billion, or 7.1%, to $16.4 billion from $15.3 billion for the first six months of fiscal 2025. As a percentage of net sales, SG&A was 18.3% for the first six months of fiscal 2026 compared to 18.0% for the first six months of fiscal 2025, primarily reflecting higher operating costs relative to comparable sales performance.
Depreciation and Amortization. Depreciation and amortization for the first six months of fiscal 2026 increased $91 million, or 5.7%, to $1.7 billion from $1.6 billion for the first six months of fiscal 2025. As a percentage of net sales, depreciation and amortization was 1.9% for the first six months of both fiscal 2026 and fiscal 2025.
Interest and Other, net
Interest and other, net was $1.1 billion for the first six months of both fiscal 2026 and fiscal 2025. As a percentage of net sales, interest and other, net was 1.3% for the first six months of both fiscal 2026 and fiscal 2025.
Provision for Income Taxes
Our combined effective income tax rate was 24.7% for the first six months of fiscal 2026 compared to 24.3% for the first six months of fiscal 2025.
Diluted Earnings per Share
Diluted earnings per share were $8.09 for the first six months of fiscal 2026, compared to $8.03 for the first six months of fiscal 2025. The increase in diluted earnings per share was primarily driven by higher net earnings during the first six months of fiscal 2026.
We believe ROIC is meaningful for management, investorsinvestors, and ratings agencies because it measures how effectively we deploy our capital base. ROIC is a non-GAAP profitability measure, not a measure of financial performance under GAAP. We define ROIC as NOPAT, a non-GAAP financial measure, for the most recent twelve-month period, divided by average debt and equity. We define average debt and equity as the average of beginning and ending long-term debt (including current installments) and equity for the most recent twelve-month period.
At MayAugust 3,2, 2026, we had $1.6$2.1 billion in cash and cash equivalents, of which $1.0$1.4 billion was held by our foreign subsidiaries. We believe that our current cash position, cash flow generated from operations, funds available from our commercial paper program, and access to the long-term debt capital markets should be sufficient not only for our operating requirements, any required debt payments, and satisfaction of other contractual obligations, but also to enable us to invest in the business, fund dividend payments, and fund any share repurchases through the next several fiscal years. In addition, we believe that we have the ability to obtain alternative sources of financing, if necessary or appropriate.
During the first threesix months of fiscal 2026, we invested $844$1.7 millionbillion back into our business in the form of capital expenditures. We plan to invest approximately $4 billion back into our business in the form of capital expenditures in fiscal 2026, in line with our expectation of approximately 2.5% of projected fiscal 2026 net sales. We expect to make investments across initiatives supporting our strategy of driving our core and culture, including building new stores and maintaining existing stores, delivering a frictionless interconnected experience, and winning with Pros. However, as in the past, we may adjust our capital expenditures to support the operations of the business, to enhance long-term strategic positioning, or in response to the economic environment, as necessary or appropriate. We may also utilize strategic acquisitions to help accelerate our strategic initiatives.
In February 2026, we announced a 1.3% increase in our quarterly cash dividend from $2.30 to $2.33 per share. During the first threesix months of fiscal 2026, we paid cash dividends of $2.3$4.6 billion to shareholders. We intend to pay a dividend in the future; however, any future dividend is subject to declaration by our Board based on our earnings, capital requirements, financial condition, and other factors considered relevant by our Board.
In August 2023, our Board approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved in August 2022. The August 2023 authorization does not have a prescribed expiration date. As of MayAugust 3,2, 2026, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available.
We have a commercial paper program that allows for an aggregate of $11.0 billion in borrowings, and is supported by $11.0 billion of back-up credit facilities. TheseAt backupthe beginning of fiscal 2026, these back-up credit facilities consistconsisted of a five-year $3.5 billion credit facility scheduled to expire in May 2030, a 364-day $3.5 billion credit facility scheduled to expire in July 2026, a three-year $3.0 billion back-up credit facility scheduled to expire in July 2028, and a 364-day $1.0 billion credit facility scheduled to expire in July 2026. During the second quarter of fiscal 2026, we entered into a new 364-day $4.5 billion back-up credit facility scheduled to expire in July 2027. This facility replaced our prior 364-day $3.5 billion and 364-day $1.0 billion back-up credit facilities, which were scheduled to expire in July 2026.
During the first threesix months of fiscal 2026, all of our short termshort-term borrowings were under our commercial paper program. We utilized commercial paper borrowings to support general liquidity, including the repayment of long-term debt, and the maximum amount outstanding during the first threesix months of fiscal 2026 was $6.2 billion. At MayAugust 3,2, 2026, we had outstanding borrowings under our commercial paper program of $3.5$4.2 billion with a weighted average interest rate of 3.8%, we had no outstanding borrowings under our back-up credit facilities, and we were in compliance with all of the covenants contained in our back-up credit facilities, none of which are expected to impact our liquidity or capital resources.
We also issue senior notes from time to time. We did not have any issuances of senior notes during the first threesix months of fiscal 2026. InDuring Aprilthe first six months of fiscal 2026, we repaid ouran $1.3aggregate of $2.8 billion 3.00%of senior notes at maturity.
The indentures governing our senior notes do not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity. The indentures governing our notes contain various covenants, none of which are expected to impact our liquidity or capital resources. We were in compliance with all such covenants at MayAugust 3,2, 2026. See Note 5 to our consolidated financial statements for further discussion of our debt arrangements.
Net cash provided by operating activities increased by $1.7$2.5 billion in the first threesix months of fiscal 2026 compared to the first threesix months of fiscal 2025, primarily due to changes in working capital. Changes in working capital were primarily driven by timing of vendor payments and inventory management, along with the deferral of our fourth quarter fiscal 2024 estimated federal tax payment to the first quarter of fiscal 2025, which resulted in fewer income tax payments in the first threesix months of fiscal 2026 compared to the first threesix months of fiscal 2025.
Net cash used in investing activities increased by $178$1.1 millionbillion in the first threesix months of fiscal 2026 compared to the first threesix months of fiscal 2025, primarily resulting from a higher volumecash ofpaid immaterialfor acquisitions during the first quartersix months of fiscal 2026.2026 compared to the first six months of fiscal 2025.
Net cash used in financing activities in the first threesix months of fiscal 2026 primarily reflected $2.3$4.6 billion of cash dividends paid,paid $1.4and $3.0 billion of repayments of long-term debt, and $1.0 billion of net repayments of commercial paper borrowings.debt. Net cash used in financing activities in the first threesix months of fiscal 2025 primarily reflected $2.3$4.6 billion of cash dividends paid,paid $1.1and $1.2 billion of repayments of long-term debt, and $278 million of net repayments of commercial paper borrowings.debt.
During the first threesix months of fiscal 2026, there were no changes to our critical accounting estimates or our significant accounting policies as disclosed in the 2025 Form 10-K. Our significant accounting policies are disclosed in Note 1 to our consolidated financial statements.
HD insider buying and selling (Form 4)
Form 4 filings since 2026-04-11: 0 open-market purchases and 4 open-market sales (about $3.3M), across 14 filings with stock transactions. Awards, option exercises, tax withholding and gifts are listed but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-09-20 | Scardino Kimberly R |
Shares withheld for tax | 81 | $299.98 | $24.3K |
| 2026-09-20 | Broggi Jordan |
Shares withheld for tax | 130 | $299.98 | $39.0K |
| 2026-09-20 | Brown Angie |
Shares withheld for tax | 96 | $299.98 | $28.8K |
| 2026-09-20 | Deaton John A. |
Shares withheld for tax | 344 | $299.98 | $103.2K |
| 2026-09-20 | Mcphail Richard V |
Shares withheld for tax | 554 | $299.98 | $166.2K |
| 2026-09-20 | Smith Stephanie |
Shares withheld for tax | 130 | $299.98 | $39.0K |
| 2026-09-10 | Scardino Kimberly R |
Open-market sale | 675 | $305.95 | $206.5K |
| 2026-08-28 | Roseborough Teresa Wynn |
Open-market sale | 2,455 | $328.77 | $807.1K |
| 2026-08-26 | Rowe Michael F. |
Open-market sale | 710 | $336.76 | $239.1K |
| 2026-08-20 | Broggi Jordan |
Grant/award | 1,494 | — | — |
| 2026-08-20 | Bastek William D |
Grant/award | 1,494 | — | — |
| 2026-08-20 | Mcphail Richard V |
Grant/award | 1,494 | — | — |
| 2026-08-19 | Mcphail Richard V |
Option exercise | 5,989 | $147.36 | $882.5K |
| 2026-08-19 | Mcphail Richard V |
Open-market sale | 5,989 | $348.40 | $2.1M |
| 2026-05-21 | Brown J Frank |
Grant/award | 796 | — | — |
| 2026-05-20 | Bell Franziska |
Grant/award | 51,516 | — | — |
Well-known investors holding HD (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| D. E. Shaw & Co. | 2026-06-30 | 4,315,830 | $1.5B | 0.94% | Added 15% |
| Lone Pine Capital (Stephen Mandel) | 2026-06-30 | 2,603,189 | $918.1M | 5.61% | New position |
| Citadel Advisors (Ken Griffin) | 2026-06-30 | 1,518,105 | $535.4M | 0.31% | Added 4% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 1,473,050 | $514.3M | 0.18% | Added 396% |
| Point72 Asset Management (Steve Cohen) | 2026-06-30 | 1,101,813 | $388.6M | 0.59% | Reduced 2% |
| Gates Foundation Trust | 2026-06-30 | 1,000,000 | $352.7M | 1.02% | New position |
| Markel Group (Tom Gayner) | 2026-06-30 | 922,500 | $325.3M | 2.48% | No change |
| Viking Global Investors (Andreas Halvorsen) | 2026-06-30 | 920,595 | $324.7M | 0.93% | Added 83% |
| Baillie Gifford | 2026-06-30 | 148,072 | $52.2M | 0.05% | Reduced 3% |
| Gotham Asset Management (Joel Greenblatt) | 2026-06-30 | 110,517 | $39.0M | 0.09% | Added 126% |
| Millennium Management (Israel Englander) | 2026-06-30 | 98,688 | $34.8M | 0.02% | Reduced 85% |
| First Eagle Investment Management | 2026-06-30 | 52,776 | $18.6M | 0.03% | Added 4% |
| Fundsmith (Terry Smith) | 2026-06-30 | 28,611 | $9.4M | — | Sold out |
| Dodge & Cox | 2026-06-30 | 22,382 | $7.9M | 0.0% | No change |
| Two Sigma Investments | 2026-06-30 | 13,648 | $4.8M | 0.0% | New position |