Lowe's Companies, Inc.
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Item 1 - Business
General Information
Lowe’s Companies, Inc. and subsidiaries (the Company or Lowe’s) is a Fortune® 100 company and the world’s second largest home improvement retailer. As of January 30, 2026, Lowe’s operated 1,759 home improvement stores and outlets in the United States, representing approximately 196 million square feet of retail selling space. In addition, Lowe’s operated over 540 branch locations in the United States and Canada, which include our current year acquisitions of Foundation Building Materials (FBM) and Artisan Design Group (ADG).
Lowe’s was founded in 1921 with the opening of its first hardware store in North Wilkesboro, North Carolina. The Company was incorporated in North Carolina in 1952 and has been publicly held since 1961. The Company’s common stock is listed on the New York Stock Exchange - ticker symbol “LOW”.
For additional information about the Company’s performance and financial condition, see Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations”, of this Annual Report.
Our Strategy
Lowe’s is an omnichannel retailer whose focus is on helping customers solve problems and fulfill dreams for their homes by providing an excellent customer experience, creating a great place to work for our associates, and improving our communities, which we believe will create long-term, sustainable value for our shareholders. In fiscal 2025, we continued to execute on our Total Home strategy that was introduced in fiscal 2020, by focusing on serving the professional customer (Pro customer), accelerating our online business, expanding installation services, improving localization efforts and elevating our product assortment. In December 2024, we updated our Total Home strategy, aligned with the key drivers of home improvement demand, to help our customers solve their home improvement needs with more value and exceptional service. The five pillars of our Total Home strategy are as follows:
Drive Pro penetration | Accelerate online sales | Expand home services | Create a loyalty ecosystem | Increase space productivity |
•We continue to transform our Pro offerings to drive Pro penetration by continuing to enhance our Pro product assortment, including expanding our offerings to the larger Pro customer through our acquisitions of FBM and ADG, investing in inventory of high-volume Pro products, leveraging our redesigned loyalty program, improving job site delivery capabilities, expanding our Pro extended aisle, and building a comprehensive interior solutions platform.
•We are investing in our omnichannel retail capabilities to accelerate our online business through expansion of our product offerings, enhanced fulfillment capabilities, and a simplified user experience.
•We are expanding our installation services to create a high value simplified installation solution, which are provided by our network of independent installers or outsourced to our third-party model that sells, furnishes, and installs both smaller refresh projects and more complex projects.
•We are creating a loyalty ecosystem that drives brand preference and includes building out our MyLowe’s Rewards infrastructure for both Pro and do-it-yourself (DIY) customers.
•Finally, we are increasing space productivity by optimizing our assortments and tailoring them to the local markets, and balancing our value-oriented private brands with our national brands.
Our Customers and Market
The home improvement market in which we operate is highly fragmented. Our retail stores and online focus on serving individual homeowners and renters completing a wide array of projects, that vary along the spectrum of DIY and do-it-for-me (DIFM). In addition, we focus on Pro customers that are primarily the small to medium sized Pro, which includes three broad categories: tradespeople, repair and remodelers, and property managers. With the acquisitions of FBM and ADG in 2025, we are taking an important step in our Total Home strategy to serve larger Pro customers in the residential and commercial markets.
There are many variables that affect consumer demand for the home improvement products and services we offer. Key indicators we monitor include home price appreciation, age of the housing stock, real disposable personal income, housing turnover, and residential and commercial construction. We also monitor demographic and societal trends that shape home improvement industry growth over time as the U.S. population moves through major life stages and events.
Our Competition
The home improvement industry includes a broad competitive landscape that continues to evolve. We compete with national and regional home improvement warehouse chains and lumber yards in most of the markets we serve. We also compete with traditional hardware, plumbing, electrical, drywall and home supply retailers and distributors, as well as paint stores, lumber yards, garden centers, and maintenance and repair organizations. In addition, we compete with general merchandise retailers, home goods specialty stores, warehouse clubs, online retailers, other specialty retailers, providers of equipment and tool rental, service providers that install home improvement products, and wholesalers that provide home-related products and services to homeowners, renters, businesses, and the government.
Location of stores and branches, product assortment, product pricing, fulfillment capabilities, and customer service continue to be key competitive factors in our industry, while the evolution of technology, including artificial intelligence (AI) and machine learning technologies and customer expectations also underscore the importance of omnichannel capabilities as a competitive factor. See further discussion of competition in Item 1A, “Risk Factors”, of this Annual Report.
Our Omnichannel Capabilities
We are committed to meeting customer demand to shop however, whenever, and wherever they choose. Our omnichannel retail network provides a single view of the customer, no matter where they place their order, whether in-store, online, on-site, or through the contact center. This allows our customers to move from channel to channel with simple and seamless transitions even within the same transaction. For example, for many projects, the majority of our customers conduct research online before making an in-store purchase. For purchases made on Lowes.com, customers may pick up their purchase in-store at the customer service desk, curbside, or from touchless lockers, or have their purchase delivered to their home or business. In addition, flexible fulfillment options are available for in-store purchases and those made through the contact center. Regardless of the channels through which customers choose to engage with us, we strive to provide them with a seamless experience across channels and an extended aisle of products, enabled by our flexible fulfillment capabilities. Our ability to sell products in-store, online, on-site, through one of our branch locations, or through our contact centers speaks to our leverage of our existing infrastructure with the omnichannel capabilities we continue to introduce.
In-Store
Our 1,759 Lowe’s-branded retail home improvement stores and outlet stores are generally open seven days per week and average approximately 112,000 square feet of retail selling space, plus approximately 32,000 square feet of outdoor garden center selling space. Our retail home improvement stores offer similar products and services, with certain variations based on localization, along with a dedicated team of knowledgeable and friendly frontline associates available to assist our customers. We continue to develop and implement productivity tools, including freight flow optimization and advanced AI customer service tools, to enhance the efficiency of our sales associates and improve the customer experience. Our 16 Lowe’s Outlet stores have a smaller format and offer value to our customers through incremental savings on discontinued, overstocked, or scratch and dent items.
Online
Through our websites and mobile applications, we seek to empower consumers by providing a 24/7 shopping experience, expanded product assortment, product information, customer ratings and reviews, buying guides, how-to videos, and other information. These tools help consumers make more informed purchasing decisions and give them increased confidence to undertake home improvement projects. We enable customers to choose from a variety of fulfillment options, including buying online and picking up in-store, curbside pick-up, same-day delivery through our gig network, and shipment to their homes or
businesses. Further, we also offer digital inspiration, design, and project management tools across multiple home improvement categories.
On-Site
We have on-site specialists available for our customers to assist them in selecting products and services for their projects. Our Pro sales managers meet with Pro customers at their place of business or on a job site and leverage nearby stores and our distribution network to ensure we meet customer needs for products and resources. In addition, our In-Home Sales program is available in the majority of our stores to discuss various exterior projects such as windows, doors, and fencing, whose characteristics lend themselves to an in-home consultative sales approach.
Branches
Lowe’s has over 540 branch locations that serve larger Pro customers. Our nationwide branch locations specialize in the delivery and installation of building materials for residential and commercial projects, while providing reliable local service and trusted expertise. Services delivered by these locations include distribution of product to large residential and commercial professionals in both new construction and repair and remodel applications, as well as providing design, distribution and installation services to home builders and property managers.
Contact Centers
Lowe’s operates contact centers utilizing a combination of internal staffing and third-party providers. These contact centers enable an omnichannel customer experience by tendering sales, assisting with order management, coordinating deliveries, managing after-sale installations, and answering general customer questions via phone, mail, e-mail, live chat, and social media.
Our Products
Product Selection
To meet customers’ varying needs, we offer a complete line of products for construction, maintenance, repair, remodeling, and decorating. We offer home improvement products in the following categories: Appliances, Seasonal & Outdoor Living, Lumber, Lawn & Garden, Hardware, Kitchens & Bath, Building Materials, Rough Plumbing, Paint, Millwork, Tools, Electrical, Flooring, and Décor. A typical Lowe’s-branded home improvement store stocks approximately 37,000 items, with additional items available through our online selling channel. Our product assortments offered in-store strive to meet the needs of the local market for the Pro and DIY customer. See Note 17 of the Notes to Consolidated Financial Statements included in Item 8, “Financial Statements and Supplementary Data”, of this Annual Report for historical revenues by product category for each of the last three fiscal years.
We are committed to offering a wide selection of national brand-name merchandise complemented by our selection of high-value private brands. We are balancing our value-oriented private brands with our national power brands, intensifying our localization efforts and expanding our rural assortment. In addition, we are dedicated to selling products sourced in a socially responsible, efficient, and cost-effective manner.
Supply Chain
We source our products from vendors worldwide and believe that alternative and competitive suppliers are available for virtually all of our products. Whenever possible, we purchase directly from manufacturers to provide savings for customers and improve our gross margin.
To efficiently replenish our stores and meet our customers’ expectations for fast fulfillment and delivery, we own and operate more than 120 supply chain facilities in our network. These facilities include regional distribution centers, flatbed distribution centers, import distribution centers, bulk distribution centers, cross-dock terminals, and Fulfillment Centers. Each one of these distribution nodes plays a critical role in our Total Home strategy and collectively enable our products to get to their destination as efficiently as possible.
We continue to modernize our network to unlock our omnichannel capabilities while keeping our organization’s sustainability goals top of mind. Through our market-based delivery model, we have been focused on improving the speed of our delivery capabilities for our customers. Most parcel-eligible items fulfilled by Lowe’s can be ordered by a customer and delivered within two business days. Also, the nationwide expansion of our gig provider network enables same-day delivery of certain products from our stores, and as of fiscal 2025, we have the ability to deliver major appliances next-day to the majority of zip codes in the United States. Customer needs and buying patterns are constantly changing, and our supply chain will continue to evolve to meet their needs. We are building an omnichannel supply chain that positions the right products in the right quantities in the right places, and operates with greater network capacity with better flow management and optimization.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals. Values reported in .
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Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity and capital resources during the three months ended May 1, 2026, and May 2, 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026 (the Annual Report), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of fiscal 2025. This discussion and analysis is presented in four sections:
EXECUTIVE OVERVIEW
The following table highlights our financial results:
| Three Months Ended | |||||||||||||||||||
| (in millions, except per share data) | May 1, 2026 | May 2, 2025 | |||||||||||||||||
| Net sales | $ | 23,078 | $ | 20,930 | |||||||||||||||
| Net earnings | 1,628 | 1,641 | |||||||||||||||||
| Diluted earnings per share | $ | 2.90 | $ | 2.92 | |||||||||||||||
| Adjusted diluted earnings per share | $ | 3.03 | N/A | ||||||||||||||||
| Net cash provided by operating activities | $ | 3,350 | $ | 3,379 | |||||||||||||||
| Capital expenditures | 521 | 518 | |||||||||||||||||
Repurchases of common stock1 | 365 | 72 | |||||||||||||||||
| Cash dividend payments | 674 | 645 | |||||||||||||||||
1 Repurchases of common stock on a trade-date basis.
Net sales in the first quarter of fiscal 2026 improved 10.3% to $23.1 billion compared to net sales of $20.9 billion in the first quarter of fiscal 2025. Comparable sales for the first quarter of fiscal 2026 increased 0.6%, consisting of an increase in comparable average ticket of 1.5%, partially offset by a decrease of 0.9% in comparable customer transactions. Net earnings in the first quarter of fiscal 2026 remained consistent with the first quarter of fiscal 2025 at $1.6 billion. Diluted earnings per common share were $2.90 in the first quarter of fiscal 2026 compared to $2.92 in the first quarter of fiscal 2025. Included in the first quarter of 2026 results are pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of ADG and FBM. Excluding the impact of this item, adjusted diluted earnings per common share were $3.03 in the first quarter of 2026 (see the non-GAAP financial measures discussion).
For the first three months of fiscal 2026, cash flows from operating activities were approximately $3.4 billion, with $521 million used for capital expenditures. Continuing to deliver on our commitment to return cash to shareholders, during the first quarter of fiscal 2026, we paid $674 million in dividends and repaid $2.4 billion of bond maturities as we continued to progress toward our deleveraging commitment.
The first quarter of fiscal 2026 continued to reflect a challenging macroeconomic environment. In addition, winter storms impacted the start of the quarter and delayed the beginning of the spring selling season. As weather improved, customers responded to our seasonal offerings, and we were encouraged by the improvement in demand.
Despite these conditions, we delivered solid first quarter results through disciplined execution and continued progress against our Total Home strategy. We continued to drive growth in Pro, Online and Home Services, supported by our loyalty program, expanded fulfillment options and ongoing investments in technology and productivity initiatives. We remain focused on disciplined execution, productivity and strategic investments that position Lowe’s for sustainable long-term growth.
Tariffs
Beginning in 2025, the United States enacted significant changes to its trade policy and imposed a series of new tariffs on most imported goods. For 2026, the tariff environment remains dynamic and subject to ongoing modification, including court rulings, changes to existing tariffs and potential for additional tariffs this year. We continue to monitor and comply with these changes and evaluate potential impacts, including possible adjustments to our merchandise assortment, pricing, and global supply chain strategies. The Company is the importer of record for certain imported products and pays tariffs directly. The Supreme Court declared on February 20, 2026 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were invalid. Significant uncertainty remains as to the refund of IEEPA tariffs, including potential for appeal, timing of eligibility in future refund phases, and ultimate amounts to be received.
OPERATIONS
The following table sets forth the percentage relationship to net sales of each line item of the consolidated statements of earnings (unaudited), as well as the percentage change in dollar amounts from the prior period. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).
| Three Months Ended | Basis Point Increase/(Decrease) in Percentage of Net Sales | ||||||||||||||||||||||||||||
| May 1, 2026 | May 2, 2025 | ||||||||||||||||||||||||||||
| Net sales | 100.00 | % | 100.00 | % | N/A | ||||||||||||||||||||||||
| Gross margin | 32.68 | 33.38 | (70) | ||||||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||||||||
| Selling, general and administrative | 19.16 | 19.33 | (17) | ||||||||||||||||||||||||||
| Depreciation and amortization | 2.45 | 2.13 | 32 | ||||||||||||||||||||||||||
| Operating income | 11.07 | 11.92 | (85) | ||||||||||||||||||||||||||
| Interest – net | 1.73 | 1.61 | 12 | ||||||||||||||||||||||||||
| Pre-tax earnings | 9.34 | 10.31 | (97) | ||||||||||||||||||||||||||
| Income tax provision | 2.29 | 2.47 | (18) | ||||||||||||||||||||||||||
| Net earnings | 7.05 | % | 7.84 | % | (79) | ||||||||||||||||||||||||
The following table sets forth key metrics utilized by management in assessing business performance. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited).
| Three Months Ended | |||||||||||||||||||||
| Other Metrics | May 1, 2026 | May 2, 2025 | |||||||||||||||||||
Comparable sales increase/(decrease) 1 | 0.6 | % | (1.7) | % | |||||||||||||||||
Customer transactions (in millions) 2 | 197 | 199 | |||||||||||||||||||
Average ticket 2 | $ | 107.65 | $ | 105.12 | |||||||||||||||||
| At end of period: | |||||||||||||||||||||
| Number of retail stores | 1,759 | 1,750 | |||||||||||||||||||
| Sales floor square feet (in millions) | 196 | 195 | |||||||||||||||||||
Average retail store size selling square feet (in thousands) 3 | 112 | 112 | |||||||||||||||||||
| Net earnings to average debt and shareholders’ deficit | 22.5 | % | 26.7 | % | |||||||||||||||||
Return on invested capital 4 | 26.8 | % | 31.0 | % | |||||||||||||||||
1 A comparable location is a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. A location we decide to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Comparable sales include online sales, which positively impacted first quarter fiscal 2026 and fiscal 2025 comparable sales by approximately 185 basis points and 65 basis points, respectively. Acquisitions are typically included in comparable sales after they have been owned for more than 12 months.
2 Customer transactions and average ticket represent metrics used by management to evaluate performance of our retail locations.
3 Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period.
4 Return on invested capital is calculated using a non-GAAP financial measure. See below for additional information and reconciliations of non-GAAP measures.
Non-GAAP Financial Measures
Adjusted Diluted Earnings Per Share
Adjusted diluted earnings per share is considered a non-GAAP financial measure. The Company believes this non-GAAP financial measure provides useful insight for analysts and investors in understanding the comparison of operational performance for fiscal 2026. Adjusted diluted earnings per share excludes the impact of a certain item, further described below.
Fiscal 2026 Impacts
During fiscal 2026, the Company recognized financial impacts from the following:
•In the first quarter of fiscal 2026, the Company recognized pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of Artisan Design Group and Foundation Building Materials (Acquisition of businesses).
Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company’s diluted earnings per common share as prepared in accordance with GAAP. The Company’s methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable.
| Three Months Ended | |||||||||||||||||||||||||||||||||||||||||
| May 1, 2026 | |||||||||||||||||||||||||||||||||||||||||
| Pre-Tax Earnings | Tax1 | Net Earnings | |||||||||||||||||||||||||||||||||||||||
| Diluted earnings per share, as reported | $ | 2.90 | |||||||||||||||||||||||||||||||||||||||
| Non-GAAP adjustments – per share impacts | |||||||||||||||||||||||||||||||||||||||||
| Acquisition of businesses | 0.17 | (0.04) | 0.13 | ||||||||||||||||||||||||||||||||||||||
| Adjusted diluted earnings per share | $ | 3.03 | |||||||||||||||||||||||||||||||||||||||
1 Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share.
Return on Invested Capital
Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Management believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate financial returns. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly, the method used by our management may differ from the methods used by other companies. We encourage you to understand the methods used by another company to calculate ROIC before comparing its ROIC to ours.
We define ROIC as the rolling 12 months’ lease adjusted net operating profit after tax (Lease adjusted NOPAT) divided by the average of current year and prior year ending debt and shareholders’ deficit. Lease adjusted NOPAT is a non-GAAP financial measure, and net earnings is considered to be the most comparable GAAP financial measure. The calculation of ROIC, together with a reconciliation of net earnings to Lease adjusted NOPAT, is as follows:
| Four Quarters Ended | |||||||||||
| (In millions, except percentage data) | May 1, 2026 | May 2, 2025 | |||||||||
| Calculation of Return on Invested Capital | |||||||||||
Numerator | |||||||||||
| Net Earnings | $ | 6,641 | $ | 6,843 | |||||||
| Plus: | |||||||||||
| Interest expense – net | 1,468 | 1,299 | |||||||||
| Operating lease interest | 178 | 176 | |||||||||
| Provision for income taxes | 2,104 | 2,166 | |||||||||
| Lease adjusted net operating profit | 10,391 | 10,484 | |||||||||
| Less: | |||||||||||
Income tax adjustment1 | 2,500 | 2,520 | |||||||||
| Lease adjusted net operating profit after tax | $ | 7,891 | $ | 7,964 | |||||||
| Denominator | |||||||||||
Average debt and shareholders’ deficit2 | $ | 29,486 | $ | 25,661 | |||||||
| Net earnings to average debt and shareholders’ deficit | 22.5 | % | 26.7 | % | |||||||
| Return on invested capital | 26.8 | % | 31.0 | % | |||||||
1 Income tax adjustment is defined as lease adjusted net operating profit multiplied by the effective tax rate, which was 24.1% and 24.0% for the periods ended May 1, 2026, and May 2, 2025, respectively.
2 Average debt and shareholders’ deficit is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total shareholders’ deficit.
Results of Operations
Net Sales – Net sales in the first quarter of 2026 increased 10.3% to $23.1 billion. Comparable sales increased 0.6%, consisting of a 1.5% increase in comparable average ticket, partially offset by a 0.9% decline in comparable customer transactions.
During the first quarter of 2026, nine of our 13 product categories experienced positive comparable store sales, led by Rough Plumbing, Lawn & Garden, and Appliances. Strength in these categories reflects continued growth with our Pro customer and online, as well as our broad assortment of appliances available next-day to our customers in the majority of the United States.
Gross Margin – For the first quarter of 2026, gross margin as a percentage of sales decreased 70 basis points compared to 2025. The gross margin decline for the quarter was driven by the operational cost structure of acquisitions during 2025, partially offset by favorability from credit revenue.
SG&A – For the first quarter of 2026, SG&A expense leveraged 17 basis points as a percentage of sales compared to the first quarter of 2025, primarily due to the operational cost structure of acquisitions during 2025.
Depreciation and Amortization – Depreciation and amortization deleveraged 32 basis points as a percentage of sales for the first quarter of 2026 compared to 2025, primarily due to amortization of intangible assets of acquired businesses in 2025.
Interest – Net – Net interest expense for the first quarter of 2026 deleveraged 12 basis points as a percentage of sales primarily due to the costs related to the September 2025 debt issuance and the 2025 Term Loan.
Income Tax Provision – Our effective income tax rates were 24.5% and 23.9% for the three months ended May 1, 2026 and May 2, 2025, respectively.
FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES
Sources of Liquidity
Cash flows from operations, combined with our continued access to capital markets on both a short-term and long-term basis, as needed, remain adequate to fund our operations, make strategic investments to support long-term growth, return cash to
shareholders in the form of dividends, and repay debt maturities as they become due. We believe these sources of liquidity will continue to support our business for the next twelve months. As of May 1, 2026, we held $0.8 billion of cash and cash equivalents, as well as $4.6 billion in undrawn capacity on our Revolving Credit Facilities.
Cash Flows Provided by Operating Activities
| Three Months Ended | |||||||||||
| (In millions) | May 1, 2026 | May 2, 2025 | |||||||||
| Net cash provided by operating activities | $ | 3,350 | $ | 3,379 | |||||||
Cash flows from operating activities continued to provide the primary source of our liquidity. The decrease in net cash provided by operating activities for the three months ended May 1, 2026, compared to the three months ended May 2, 2025, was primarily driven by changes in working capital and lower net earnings.
Cash Flows Used in Investing Activities
| Three Months Ended | |||||||||||
| (In millions) | May 1, 2026 | May 2, 2025 | |||||||||
| Net cash used in investing activities | $ | (501) | $ | (533) | |||||||
Net cash used in investing activities primarily consists of transactions related to capital expenditures. Our capital expenditures generally consist of investments in our strategic initiatives to enhance our ability to serve customers, improve existing stores, and support expansion plans. Capital expenditures were $521 million and $518 million for the three months ended May 1, 2026, and May 2, 2025, respectively. For fiscal 2026, our guidance for capital expenditures is approximately $2.5 billion.
Cash Flows Used in Financing Activities
| Three Months Ended | |||||||||||
| (In millions) | May 1, 2026 | May 2, 2025 | |||||||||
| Net cash used in financing activities | $ | (3,045) | $ | (1,553) | |||||||
Net cash used in financing activities primarily consists of transactions related to our debt and cash dividend payments.
Debt
The 2025 Credit Agreement and the 2023 Credit Agreement (collectively the Long-Term Credit Agreements) support the Company’s commercial paper program. The amounts available to be drawn under the Long-Term Credit Agreements are reduced by the amount of borrowings under the commercial paper program. As of May 1, 2026, the Company had outstanding borrowings under the commercial paper program of $380 million.
The following table includes additional information related to our debt for the three months ended May 1, 2026, and May 2, 2025:
| Three Months Ended | |||||||||||
| (In millions) | May 1, 2026 | May 2, 2025 | |||||||||
| Repayment of debt | (2,376) | (778) | |||||||||
| Net change in commercial paper | 378 | — | |||||||||
| Maximum commercial paper outstanding at any period | 1,000 | — | |||||||||
| Weighted-average interest rate of short-term borrowings outstanding | 3.84 | % | — | % | |||||||
Share Repurchases
We have a share repurchase program, authorized by the Company’s Board of Directors, that is executed through purchases made from time to time either in the open market or through private off-market transactions. We also withhold shares from employees to satisfy tax withholding liabilities on share-based payments. Shares repurchased are retired and returned to authorized and unissued status. The following table provides, on a settlement date basis, the total number of shares repurchased, average price paid per share, and the total amount paid for share repurchases for the three months ended May 1, 2026, and May 2, 2025:
| Three Months Ended | |||||||||||
| (In millions, except per share data) | May 1, 2026 | May 2, 2025 | |||||||||
Total amount paid for share repurchases1 | $ | 363 | $ | 112 | |||||||
| Total number of shares repurchased | 1.5 | 0.5 | |||||||||
| Average price paid per share | $ | 243.36 | $ | 243.44 | |||||||
1 Excludes unsettled share repurchases and unpaid excise taxes.
As of May 1, 2026, we had $10.5 billion remaining available under our share repurchase program with no expiration date.
Dividends are paid in the quarter immediately following the quarter in which they are declared. Dividends paid per share increased from $1.15 per share for the three months ended May 2, 2025, to $1.20 per share for the three months ended May 1, 2026.
Capital Resources
We expect to maintain our investment grade rating and have access to the capital markets on both a short-term and long-term basis when needed for liquidity purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of May 28, 2026, which we are disclosing to enhance understanding of our sources of liquidity and the effect of our ratings on our cost of funds. Our commercial paper and senior debt ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating.
| Debt Ratings | S&P | Moody’s | ||||||
| Commercial Paper | A-2 | P-2 | ||||||
| Senior Debt | BBB+ | Baa1 | ||||||
| Senior Debt Outlook | Stable | Stable |
There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a result of a downgrade in our debt rating or a decrease in our stock price.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
Our significant accounting policies are described in Note 1 to the consolidated financial statements presented in the Annual Report. Our critical accounting policies and estimates are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. Our significant and critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.
Next expected filings
- ~2026-08-27 10-Q expected by 2026-09-09 (in 73 days)
- ~2026-11-25 10-Q expected by 2026-12-08 (in 163 days)
- ~2027-03-22 10-K expected by 2027-03-30 (in 280 days)
- ~2027-05-27 10-Q expected by 2027-06-09 (in 346 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-05-28 10-Q Quarterly Report
- 2026-05-20 8-K Earnings Release; Financial Statements and Exhibits
- 2026-04-16 DEF 14A Proxy Statement
- 2026-03-23 10-K Annual Report
- 2026-02-25 8-K Earnings Release; Financial Statements and Exhibits
- 2025-11-26 10-Q Quarterly Report
- 2025-11-19 8-K Earnings Release; Financial Statements and Exhibits
- 2025-10-09 8-K Completion of Acquisition/Disposition; Material Financial Obligation; Regulation FD Disclosure; Financial Statements and Exhibits
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