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Washington, D.C. 20549

(Mark one)

ý						QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

(Exact name of registrant as specified in its charter)

Securities registered pursuant to Section 12(b) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ý     Accelerated filer o Non-accelerated filer o Smaller reporting company ☐

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes ☐ No ☒

The number of shares of Common Stock, with $.01 par value, outstanding on August 15, 2025 was 325,226,266.

Form 10-Q

Table of Contents

Three and Six Months Ended August 2, 2025 and August 3, 2024

(Unaudited)

Basis of presentation. The accompanying unaudited interim condensed consolidated financial statements have been prepared from the records of Ross Stores, Inc. and subsidiaries (the “Company”) without audit and, in the opinion of management, include all adjustments (consisting of only normal, recurring adjustments) necessary to present fairly the Company’s financial position as of August 2, 2025 and August 3, 2024, and the results of operations, comprehensive income, and stockholders’ equity for the three and six month periods ended August 2, 2025 and August 3, 2024, and the cash flows for the six month periods ended August 2, 2025 and August 3, 2024. The Condensed Consolidated Balance Sheet as of February 1, 2025, presented herein, has been derived from the Company’s audited consolidated financial statements for the fiscal year then ended.

Certain information and disclosures normally included in the notes to annual consolidated financial statements prepared in accordance with Generally Accepted Accounting Principles in the United States of America (“GAAP”) have been condensed or omitted for purposes of these interim condensed consolidated financial statements. The interim condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements, including notes thereto, contained in the Company’s Annual Report on Form 10-K for the year ended February 1, 2025.

The results of operations, comprehensive income, and stockholders’ equity for the three and six month periods ended August 2, 2025 and August 3, 2024, and the cash flows for the six month periods ended August 2, 2025 and August 3, 2024 presented herein are not necessarily indicative of the results to be expected for the full fiscal year. The fiscal years ending January 31, 2026 and February 1, 2025 are referred to as fiscal 2025 and fiscal 2024, respectively, and are both 52-week years. The three month periods ended August 2, 2025 and August 3, 2024 are referred to as the second quarter of fiscal 2025 and fiscal 2024, respectively.

Use of accounting estimates. The preparation of financial statements in conformity with GAAP requires the Company to make estimates and assumptions that affect the reported amounts of assets, liabilities, and disclosures of contingent assets and liabilities at the date of the condensed consolidated financial statements, and the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from the Company’s estimates. The Company’s significant accounting estimates include valuation reserves for inventory, packaway and other inventory carrying costs, useful lives of fixed assets, insurance reserves, reserves for uncertain tax positions, and legal claims.

Segment reporting. The Company has one reportable segment. Refer to Note G: Segment Reporting for additional information.

Cash and cash equivalents. Cash equivalents consist of highly liquid, fixed income instruments purchased with an original maturity of three months or less. The institutions where these instruments are held could potentially subject the Company to concentrations of credit risk. The Company manages its risk associated with these instruments by primarily holding its cash and cash equivalents across a highly diversified set of banks and other financial institutions.

Restricted cash and cash equivalents. Restricted cash and cash equivalents serve as collateral for certain insurance obligations. These restricted funds are invested in bank deposits, money market mutual funds, and U.S. Government and agency securities and cannot be withdrawn from the Company’s account without the prior written consent of the secured parties. The classification between current and long-term is based on the timing of expected payments of the obligations.

The Company uses standby letters of credit in addition to a funded trust to collateralize certain insurance obligations. The standby letters of credit are collateralized by restricted cash. As of August 2, 2025, February 1, 2025, and August 3, 2024, the Company had $1.0 million, $1.8 million, and $2.2 million, respectively, in standby letters of credit outstanding. As of August 2, 2025, February 1, 2025, and August 3, 2024, the Company had $65.3 million, $63.9 million, and $62.4 million, respectively, in a collateral trust.

The following table provides a reconciliation of cash, cash equivalents, and restricted cash and cash equivalents in the Condensed Consolidated Balance Sheets, that reconcile to the amounts shown on the Condensed Consolidated Statements of Cash Flows:

Property and equipment. As of August 2, 2025 and August 3, 2024, the Company had $32.7 million and $33.9 million, respectively, of property and equipment purchased but not yet paid. These purchases are included in Property and equipment, Accounts payable, and Accrued expenses and other in the accompanying Condensed Consolidated Balance Sheets. Depreciation and amortization expense on property and equipment for the three and six month periods ended August 2, 2025 and August 3, 2024 were as follows:

Operating leases. Operating lease assets obtained in exchange for operating lease liabilities (includes new leases and remeasurements or modifications of existing leases) for the six month periods ended August 2, 2025 and August 3, 2024 were $427.4 million and $440.6 million, respectively.

Supply chain finance program. The Company facilitates a voluntary supply chain finance program (“SCF program”) to provide certain suppliers with the opportunity to sell their receivables due from the Company to participating financial institutions at the sole discretion of both the suppliers and the financial institutions. A third-party financial institution administers the SCF program. The Company’s responsibility is limited to making payments on the terms originally negotiated with each supplier, regardless of whether a supplier sells its receivable to a financial institution. The Company is not a party to the agreements between the participating financial institutions and the suppliers in connection with the SCF program, and does not receive financial incentives from the suppliers or the financial institutions. The Company does not provide guarantees under the SCF program, and the Company’s rights and obligations to its suppliers are not affected by the SCF program. The range of payment terms negotiated with a supplier is consistent, irrespective of whether a supplier participates in the SCF program.

All outstanding payments owed under the SCF program are recorded within Accounts payable in the Condensed Consolidated Balance Sheets. The Company accounts for all payments made under the SCF program as a reduction to operating cash flows in Accounts payable within the Condensed Consolidated Statements of Cash Flows. The amounts owed to participating financial institutions under the SCF program and included in Accounts payable were $186.8 million, $159.2 million, and $182.5 million as of August 2, 2025, February 1, 2025, and August 3, 2024, respectively.

Cash dividends. On August 20, 2025, the Company’s Board of Directors declared a quarterly cash dividend of $0.4050 per common share, payable on September 30, 2025. The Company’s Board of Directors declared a quarterly cash dividend of $0.4050 per common share in March and May 2025, and $0.3675 per common share in March, May, August, and November 2024.

Stock repurchases. In March 2024, the Company’s Board of Directors approved a two-year stock repurchase program to repurchase up to $2.1 billion of the Company’s common stock through fiscal 2025. During the six month period ended August 2, 2025, the Company repurchased 3.9 million shares of common stock for $525.0 million (excluding excise tax) under this program. As of August 2, 2025, there was $525.0 million available for repurchase under this program. During the six month period ended August 3, 2024, the Company repurchased 3.7 million shares of common stock for $525.0 million (excluding excise tax) under this program.

Stock repurchased for tax withholding is considered treasury stock which is available for reissuance. During the three and six month periods ended August 2, 2025, shares purchased by the Company for tax withholding totaled 32,000 and 518,000, respectively. During the three and six month periods ended August 3, 2024, shares purchased by the Company for tax withholding totaled 9,000 and 494,000, respectively.

Litigation, claims, and assessments. Like many retailers, the Company has been named in class/representative action lawsuits, primarily in California, alleging violations by the Company of wage and hour laws. Class/representative action litigation remains pending as of August 2, 2025.

The Company is also party to various other legal and regulatory proceedings arising in the normal course of business. Actions filed against the Company may include commercial, product and product safety, consumer, intellectual property, environmental, and labor and employment-related claims, including lawsuits in which private plaintiffs or governmental agencies allege that the Company violated federal, state, and/or local laws. Actions against the Company are in various procedural stages. Many of these proceedings raise factual and legal issues and are subject to uncertainties.

In the opinion of management, the resolution of currently pending class/representative action litigation and other currently pending legal and regulatory proceedings will not have a material adverse effect on the Company’s financial condition, results of operations, or cash flows.

Revenue recognition. The following sales mix table disaggregates revenue by merchandise category for the three and six month periods ended August 2, 2025 and August 3, 2024:

Interest income, net. The table below shows the components of interest income, net for the three and six month periods ended August 2, 2025 and August 3, 2024:

Recently issued accounting standards. In November 2024, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2024-03, Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses. The ASU is intended to enhance transparency of income statement disclosures primarily through additional disaggregation of relevant expense captions. The standard is effective for annual reporting periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027, with prospective or retrospective application permitted. The Company is currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures. The ASU is intended to enhance the transparency and decision usefulness of income tax disclosures. It requires the Company to disclose disaggregated jurisdictional and categorical information for the tax rate reconciliation and the amount of income taxes paid as well as additional income tax related amounts. The new guidance is effective for annual reporting periods beginning after December 15, 2024, with retrospective application permitted. The Company is currently evaluating the impact of this guidance on its disclosures in the consolidated financial statements.

Accounting standards pertaining to fair value measurements establish a three-tier fair value hierarchy which prioritizes the inputs used in measuring fair value. The inputs used to measure fair value include: Level 1, observable inputs such as quoted prices in active markets; Level 2, inputs other than quoted prices in active markets that are either directly or indirectly observable; and Level 3, unobservable inputs in which little or no market data exists. This fair value hierarchy requires the Company to develop its own assumptions, maximize the use of observable inputs, and minimize the use of unobservable inputs when measuring fair value. Corporate and U.S. government and agency securities are classified within Level 1 because these securities are valued using quoted market prices.

The fair value of the Company’s financial instruments are as follows:

The underlying assets in the Company’s nonqualified deferred compensation program as of August 2, 2025, February 1, 2025, and August 3, 2024 (included in Other long-term assets and in Other long-term liabilities) primarily consist of participant-directed money market, stock, and bond funds. The fair value measurement for funds with quoted market prices in active markets (Level 1) are as follows:

Restricted stock awards. The Company grants shares of restricted stock or restricted stock units to directors, officers, and key employees. The fair value of shares of restricted stock and restricted stock units at the date of grant is amortized to expense over the vesting period of generally three to five years.

Performance share awards. The Company has a performance share award program for senior executives. A performance share award represents a right to receive shares of restricted stock on a specified settlement date based on the Company’s attainment of a performance goal during the performance period, which is the Company’s fiscal year. If attained, the restricted stock then vests over a service period, generally three years from the date the performance award was granted.

In fiscal 2024, the Company granted a performance-conditioned restricted stock unit award (“PRSU”) in connection with the hiring of its current Chief Executive Officer. The PRSU is subject to vesting based on both service and market-based conditions, over a period that ends in March 2029.

Restricted stock awards and performance awards (including the PRSU) are collectively referred to as stock awards.

A summary of stock awards activity for the six month period ended August 2, 2025, is presented below:

The 51,164 PRSU shares awarded in fiscal 2024 all remain unvested as of August 2, 2025. The weighted-average grant date fair value of the PRSU shares was $135.83.

The unamortized stock awards compensation expense at August 2, 2025 was $278.2 million, which is expected to be recognized over a weighted-average remaining period of 1.9 years. The unamortized stock award compensation expense at August 3, 2024 was $235.7 million, which was expected to be recognized over a weighted-average remaining period of 1.9 years.

Employee stock purchase plan. Under the Employee Stock Purchase Plan (“ESPP”), eligible employees participating in the quarterly offering period can choose to have up to the lesser of 10% of their annual base earnings or the IRS annual share purchase limit of $25,000 in aggregate market value withheld to purchase the Company’s common stock. The purchase price of the stock is 85% of the closing market price on the date of purchase. Purchases occur on a quarterly basis (on the last trading day of each calendar quarter). The Company recognizes expense for ESPP purchase rights equal to the value of the 15% discount given on the purchase date.

For the three and six month periods ended August 2, 2025 and August 3, 2024, the Company recognized stock-based compensation expense as follows:

Total stock-based compensation expense recognized in the Company’s Condensed Consolidated Statements of Earnings for the three and six month periods ended August 2, 2025 and August 3, 2024 is as follows:

The tax benefits related to stock-based compensation expense for the three and six month periods ended August 2, 2025 were $7.2 million and $13.8 million, respectively. The tax benefits related to stock-based compensation expense for the three and six month periods ended August 3, 2024 were $7.1 million and $15.0 million, respectively.

The Company computes and reports both basic earnings per share (“EPS”) and diluted EPS. Basic EPS is computed by dividing net earnings by the weighted-average number of common shares outstanding for the period. Diluted EPS is computed by dividing net earnings by the sum of the weighted-average number of common shares and dilutive common stock equivalents outstanding during the period. Diluted EPS reflects the total potential dilution that could occur from outstanding equity plan awards and unvested shares of both performance and non-performance based awards of restricted stock and restricted stock units.

Shares are excluded from the calculation of diluted EPS if their effect would have been anti-dilutive to the calculation of diluted EPS. For the three and six month periods ended August 2, 2025, approximately 28,000 and 57,000 weighted-average shares were excluded from the calculation of diluted EPS, respectively. For the three and six month periods ended August 3, 2024, approximately 2,000 and 3,000 weighted-average shares were excluded from the calculation of diluted EPS, respectively.

The following is a reconciliation of the number of shares (denominator) used in the basic and diluted EPS computations:

Senior Notes. Unsecured senior debt (the “Senior Notes”), net of unamortized discounts and debt issuance costs, consisted of the following:

Interest on all Senior Notes is payable semi-annually and the Senior Notes are subject to prepayment penalties for early payment of principal.

In April 2025, the Company repaid at maturity the $700 million principal amount of the 4.600% Senior Notes.

The aggregate fair value of the remaining five outstanding series of Senior Notes was approximately $1.4 billion as of August 2, 2025. The aggregate fair value of the six then outstanding series of Senior Notes was approximately $2.1 billion as of February 1, 2025. The aggregate fair value of the seven then outstanding series of Senior Notes was approximately $2.4 billion as of August 3, 2024. The fair value is estimated by obtaining comparable market quotes, which are considered to be Level 1 inputs under the fair value measurements and disclosures guidance.

Revolving credit facilities. In June 2025, the Company entered into a new, $1.3 billion senior unsecured revolving credit facility (the “2025 Credit Facility”), which replaced its previous $1.3 billion unsecured credit facility. The 2025 Credit Facility expires in June 2030 and may be extended at the Company’s request for up to two additional one-year periods subject to customary conditions. The 2025 Credit Facility contains a $300 million sublimit for issuance of standby letters of credit. It also contains an option allowing the Company to increase the size of its Credit Facility by up to an additional $700 million, with the agreement of the committing lenders. Interest on borrowings under this Credit Facility is a term rate based on the Secured Overnight Financing Rate (“Term SOFR”) (or an alternate benchmark rate, if Term SOFR is no longer available) plus an applicable margin, and is payable quarterly and upon maturity.

The 2025 Credit Facility is subject to a quarterly Consolidated Adjusted Debt to Consolidated EBITDAR financial leverage ratio covenant. As of August 2, 2025, the Company was in compliance with the financial covenant, had no borrowings or standby letters of credit outstanding under the Credit Facility, and the $1.3 billion Credit Facility remained in place and available.

The Company’s effective tax rate is impacted by changes in tax laws and accounting guidance, location of new stores, level of earnings, tax effects associated with stock-based compensation, and the resolution of tax positions with various tax authorities. The Company’s effective tax rates for the three month periods ended August 2, 2025 and August 3, 2024 were approximately 24% and 25%, respectively. The one percent decrease in the effective tax rate for the three month period ended August 2, 2025 compared to the three month period ended August 3, 2024 was primarily due to the resolution of tax positions with various tax authorities. The Company’s effective tax rates for the six month periods ended August 2, 2025 and August 3, 2024 were approximately 25% and 24%, respectively. The one percent increase in the effective tax rate for the six month period ended August 2, 2025 compared to the six month period ended August 3, 2024 was primarily due to the tax effects associated with stock-based compensation.

As of August 2, 2025, February 1, 2025, and August 3, 2024, the reserves for unrecognized tax benefits were $66.5 million, $62.2 million, and $63.2 million, inclusive of $8.9 million, $7.9 million, and $8.0 million of related interest and penalties, respectively. The Company accounts for interest and penalties related to unrecognized tax benefits as a part of its provision for taxes on earnings. If recognized, $52.8 million would impact the Company’s effective tax rate. It is reasonably possible that certain federal and state tax matters may be concluded or statutes of limitations may lapse during the next 12 months. Accordingly, the total amount of unrecognized tax benefits may decrease by up to $9.7 million. The difference between the total amount of unrecognized tax benefits and the amounts that would impact the effective tax rate relates to amounts attributable to deferred income tax assets and liabilities. These amounts are net of federal and state income taxes.

The Company is open to audit by the Internal Revenue Service under the statute of limitations for fiscal years 2021 through 2024. The Company’s state income tax returns are generally open to audit under the various statutes of limitations for fiscal years 2020 through 2024. Certain state tax returns are currently under audit by various tax authorities. The Company does not expect the results of these audits to have a material impact on the condensed consolidated financial statements.

In July 2025, “An Act to provide for reconciliation pursuant to title II of H. Con. Res. 14.”, also known as “One Big Beautiful Bill Act” (“OBBBA”), was signed into law. The OBBBA made several changes to business tax provisions including the reinstatement of 100% bonus depreciation and immediate expensing of domestic research and development expenditures. As of August 2, 2025, the OBBBA resulted in an increase to the Company’s deferred tax liability balance of approximately $30 million primarily due to the reinstatement of 100% bonus depreciation.

The Company has two operating segments: Ross and dd’s DISCOUNTS. Each operating segment’s operations include only activities related to off-price retailing in stores throughout the United States and its territories. The Company determined that the two operating segments share similar economic and other qualitative characteristics and are therefore aggregated into one reportable segment.

The Company considers operating income, defined as earnings before interest and taxes, to be the measure of profit or loss for its reportable segment. The measure of segment assets is reported on the Condensed Consolidated Balance Sheets as Total assets. Segment information is prepared on the same basis that the Company’s Chief Executive Officer, who is the Chief Operating Decision Maker (CODM), manages the segments. The CODM uses operating income to monitor budget versus actual results, make key operating decisions, perform competitive analysis to the Company’s peers, and make resource allocation decisions.

The financial information below, including the significant expense categories regularly provided to the CODM, is presented for the Company’s reportable segment for the three and six month periods ended August 2, 2025 and August 3, 2024:

To the Board of Directors and Stockholders of Ross Stores, Inc.:

We have reviewed the accompanying condensed consolidated balance sheets of Ross Stores, Inc. and subsidiaries (the “Company”) as of August 2, 2025 and August 3, 2024, the related condensed consolidated statements of earnings, comprehensive income, and stockholders’ equity, for the three and six month periods ended August 2, 2025 and August 3, 2024, and cash flows for the six month periods ended August 2, 2025 and August 3, 2024, and the related notes (collectively referred to as the “interim financial information”). Based on our reviews, we are not aware of any material modifications that should be made to the accompanying interim financial information for it to be in conformity with accounting principles generally accepted in the United States of America.

We have previously audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheet of the Company as of February 1, 2025, and the related consolidated statements of earnings, comprehensive income, stockholders’ equity, and cash flows for the year then ended (not presented herein); and in our report dated March 31, 2025, we expressed an unqualified opinion on those consolidated financial statements. In our opinion, the information set forth in the accompanying condensed consolidated balance sheet as of February 1, 2025, is fairly stated, in all material respects, in relation to the consolidated balance sheet from which it has been derived.

This interim financial information is the responsibility of the Company’s management. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our reviews in accordance with standards of the PCAOB. A review of interim financial information consists principally of applying analytical procedures and making inquiries of persons responsible for financial and accounting matters. It is substantially less in scope than an audit conducted in accordance with the standards of the PCAOB, the objective of which is the expression of an opinion regarding the financial statements taken as a whole. Accordingly, we do not express such an opinion.

This section and other parts of this Form 10-Q contain forward-looking statements that involve risks and uncertainties. Our actual results may differ materially from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed below under the caption “Forward-Looking Statements” and also those in Part II, Item 1A (Risk Factors) of this Form 10-Q, and Part I, Item 1A (Risk Factors) of our Annual Report on Form 10-K for fiscal 2024. The following discussion should be read in conjunction with the condensed consolidated financial statements and notes thereto included elsewhere in this Quarterly Report on Form 10-Q and in conjunction with the consolidated financial statements and notes thereto in our Annual Report on Form 10-K for fiscal 2024. All information is based on our fiscal calendar.

Ross Stores, Inc. operates two brands of off-price retail apparel and home fashion stores—Ross Dress for Less® (“Ross”) and dd’s DISCOUNTS®. Ross is the largest off-price apparel and home fashion chain in the United States, with 1,873 locations in 44 states, the District of Columbia, Guam, and Puerto Rico as of August 2, 2025. Ross offers first-quality, in-season, name brand and designer apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 60% off department and specialty store regular prices every day. We also operate 360 dd’s DISCOUNTS stores in 22 states as of August 2, 2025 that feature a more moderately-priced assortment of first-quality, in-season, name brand apparel, accessories, footwear, and home fashions for the entire family at savings of 20% to 70% off moderate department and discount store regular prices every day.

The macroeconomic environment continues to be uncertain. Tariffs remain at elevated levels, and we continue to expect broad-based inflationary pressures across the retail industry. Through these ongoing pressures and uncertainty, we continue to remain focused on offering our customers a wide assortment of high-quality, branded merchandise at outstanding values. We expect to continue to make necessary adjustments with our flexible off-price business model to navigate through this uncertain environment and believe we are well-positioned to capture market share while mitigating the impact from these macroeconomic challenges. Despite the ongoing uncertainty in the external environment, we believe that our merchandising and operational strategies enable us to deliver the values our customers have come to expect from us.

We opened 31 new stores in the second quarter of fiscal 2025, which included expansion in new and existing markets. New market entries included several stores in the New York Metro area, as well as our three inaugural stores in Puerto Rico. We opened a total of 50 new stores in the first six months of fiscal 2025 and remain on track to open a total of approximately 90 new stores this year, comprised of about 80 Ross and 10 dd’s DISCOUNTS locations.

Our long-term strategy is to open additional stores based on market penetration, local demographic characteristics, competition, expected store profitability, and the ability to leverage overhead expenses. We continually evaluate opportunistic real estate acquisitions and opportunities for potential new store locations. We also evaluate our current store locations and determine store closures based on similar criteria. We continue to believe that customers’ focus on value and convenience provide opportunities for us to gain market share.

Comparable store sales (“comp store sales”) is a metric used by management and across the retail industry to evaluate the performance of existing stores by measuring the change in net sales for a particular period over the comparable prior period of equivalent length. We define comp store sales to be sales from stores that have been open for 14 complete months.

Sales excluded from comp store sales (“non-comp store sales”) consist primarily of sales from new stores that have been open for less than 14 complete months. Non-comp store sales also include sales from stores that are permanently closed (beginning in the month prior to closure) and temporarily closed (i.e., stores that do not have sales for at least two weeks within a fiscal month).

The calculation of comp store sales varies across the retail industry; therefore, our measure of comp store sales may differ from other retailers.

Metrics relating to customer purchasing behavior, such as “traffic” (defined as the number of transactions) and “basket” (defined as average transaction value), may provide additional insight into our comp store sales results (see Sales discussion).

The following table summarizes our financial results for the three and six month periods ended August 2, 2025 and August 3, 2024:

Sales. Sales for the three month period ended August 2, 2025 increased $0.2 billion, or 5%, compared to the three month period ended August 3, 2024. This was primarily due to an increase in non-comp store sales of $0.1 billion and the 2% increase in comp store sales of $0.1 billion. The 2% increase in comp store sales reflects an approximate 1% increase in basket and 1% increase in traffic.

Sales for the six month period ended August 2, 2025 increased $0.4 billion, or 4%, compared to the six month period ended August 3, 2024. This was primarily due to an increase in non-comp store sales of $0.3 billion and the 1% increase in comp store sales, or $0.1 billion. The 1% increase in comp store sales is primarily due to an increase in basket.

Our sales mix for the three and six month periods ended August 2, 2025 and August 3, 2024 is shown below:

Cost of goods sold. Cost of goods sold for the three and six month periods ended August 2, 2025 increased $210 million and $301 million, respectively, compared to the three and six month periods ended August 3, 2024 primarily due to the increases in sales.

Cost of goods sold as a percentage of sales for the three month period ended August 2, 2025 increased approximately 70 basis points compared to the three month period ended August 3, 2024, primarily due to a 55 basis point increase in distribution costs mainly due to the deleveraging effect from the opening of our eighth distribution center in Buckeye, Arizona in May 2025 and tariff-related processing costs. Merchandise margin decreased 30 basis points which included the impact of tariffs, and occupancy costs deleveraged 10 basis points. Partially offsetting these higher costs were lower domestic freight costs of 15 basis points and lower buying costs of 10 basis points from lower incentive compensation expense.

Cost of goods sold as a percentage of sales for the six month period ended August 2, 2025 increased approximately 35 basis points compared to the six month period ended August 3, 2024, primarily due to a 35 basis point decrease in merchandise margin which included the impact of tariffs. Distribution costs increased by 30 basis points mainly due to the deleveraging effect from the opening of our eighth distribution center in Buckeye, Arizona in May 2025 and tariff-related processing costs. Occupancy costs deleveraged by 10 basis points. Partially offsetting these higher costs were lower buying costs of 25 basis points from lower incentive compensation expense and lower domestic freight costs of 15 basis points.

Selling, general and administrative expenses. For the three and six month periods ended August 2, 2025, selling, general and administrative expenses (“SG&A”) increased $52 million and $73 million, respectively, compared to the three and six month periods ended August 3, 2024, primarily due to higher store related costs mainly from the increase in sales.

SG&A as a percentage of sales for the three and six month periods ended August 2, 2025 increased by 25 basis points and 15 basis points, respectively, compared to the three and six month periods ended August 3, 2024, primarily due to costs associated with our Chief Executive Officer transition.

Operating income. Operating income as a percentage of sales for the three and six month periods ended August 2, 2025 decreased by 95 basis points and 50 basis points, respectively, compared to the three and six month periods ended August 3, 2024, as both cost of goods sold and SG&A increased as a percentage of sales period over period.

Operating income as a percentage of sales for the second quarter of fiscal 2025 included an approximate 90 basis point negative impact from tariff-related costs. Moving into the second half of fiscal 2025, we expect tariff-related costs will continue to have a negative impact to operating income as a percentage of sales. We also expect continued cost of goods sold deleverage from the opening of our eighth distribution center in Buckeye, Arizona in May 2025.

Interest income, net. For the three and six month periods ended August 2, 2025, interest income, net decreased $11 million and $23 million, respectively, compared to the three and six month periods ended August 3, 2024, primarily due to decreased interest income both from lower average interest rates and from lower average cash balances, which decreased largely due to our repayment at maturity of $700 million of Senior Notes in April 2025 and $250 million of Senior Notes in September 2024. The decrease in interest income was partially offset by lower interest expense due to the repayment of those Senior Notes.

The table below shows the components of interest income, net for the three and six month periods ended August 2, 2025 and August 3, 2024:

Taxes on earnings. Our effective tax rate is impacted by changes in tax laws and accounting guidance, location of new stores, level of earnings, tax effects associated with stock-based compensation, and the resolution of tax positions with various tax authorities. Our effective tax rates for the three month periods ended August 2, 2025 and August 3, 2024 were approximately 24% and 25%, respectively. The one percent decrease in the effective tax rate for the three month period ended August 2, 2025 compared to the three month period ended August 3, 2024 was primarily due to the resolution of tax positions with various tax authorities. Our effective tax rates for the six month periods ended August 2, 2025 and August 3, 2024 were approximately 25% and 24%, respectively. The one percent increase in the effective tax rate for the six month period ended August 2, 2025 compared to the six month period ended August 3, 2024 was primarily due to the tax effects associated with stock-based compensation.

In July 2025, the OBBBA was signed into law. The OBBBA made several changes to business tax provisions including the reinstatement of 100% bonus depreciation and immediate expensing of domestic research and development expenditures. As of August 2, 2025, the OBBBA resulted in an increase to our deferred tax liability balance of approximately $30 million primarily due to the reinstatement of 100% bonus depreciation.

Earnings per share. Diluted earnings per share for the three month period ended August 2, 2025 was $1.56 compared to $1.59 for the three month period ended August 3, 2024. The $0.03 decrease in the diluted earnings per share for the three month period ended August 2, 2025 was primarily attributable to an approximately 4% decrease in net earnings, partially offset by a 2% reduction in weighted-average diluted shares outstanding largely due to stock repurchases under our stock repurchase program.

Diluted earnings per share for the six month period ended August 2, 2025 was $3.03 compared to $3.05 for the six month period ended August 3, 2024. The $0.02 decrease in the diluted earnings per share for the six month period ended August 2, 2025 was primarily attributable to an approximately 3% decrease in net earnings, partially offset by a 2% reduction in weighted-average diluted shares outstanding largely due to stock repurchases under our stock repurchase program.

Earnings for both the three and six month periods ended August 2, 2025 included approximately an $0.11 per share negative impact from tariff-related costs.

Stores. The following table summarizes the stores opened and closed during the three and six month periods ended August 2, 2025 and August 3, 2024:

The primary sources of funds for our business activities are cash flows from operations and short-term trade credit. Our primary ongoing cash requirements are for merchandise inventory purchases, payroll, operating and variable lease costs, taxes, capital expenditures related to new and existing stores, and investments in distribution centers, information systems, and buying and corporate offices. We also use cash to repurchase stock under active stock repurchase programs, repay debt as it becomes due, and pay dividends. We repaid at maturity $700 million of our Senior Notes in April 2025. The $500 million principal amount of 0.875% Senior Notes is due in April 2026.

Net cash provided by operating activities was $1.1 billion for the six month period ended August 2, 2025. This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by the payment of fiscal 2024 incentive bonuses. Net cash provided by operating activities was $961 million for the six month period ended August 3, 2024. This was primarily driven by net earnings excluding non-cash expenses for depreciation, amortization, and stock-based compensation, partially offset by the payment of fiscal 2023 incentive bonuses.

The increase in cash flow provided by operating activities for the six month period ended August 2, 2025 compared to the same period in the prior fiscal year was primarily driven by lower income taxes paid and lower incentive compensation payments.

Accounts payable leverage (defined as accounts payable divided by merchandise inventory) was 85% and 89% as of August 2, 2025 and August 3, 2024, respectively. The decrease in accounts payable leverage was primarily due to the timing of inventory receipts and related payments versus last year.

As a regular part of our business, packaway inventory levels will vary over time based on availability of compelling merchandise purchase opportunities in the marketplace and our decisions on the timing for release of that inventory to our stores. Packaway merchandise is purchased with the intent that it will be stored in our warehouses until a later date. The timing of the release of packaway inventory to our stores is principally driven by the product mix and seasonality of the merchandise, and its relation to our store merchandise assortment plans. As such, the aging of packaway varies by merchandise category and seasonality of purchase, but typically packaway remains in storage for less than six months. We expect to continue to take advantage of packaway inventory opportunities to maximize our ability to deliver bargains to our customers.

Changes in packaway inventory levels affect our operating cash flow. As of August 2, 2025 and February 1, 2025, packaway inventory was 38% and 41% of total inventory.

Net cash used in investing activities was $409 million and $334 million for the six month periods ended August 2, 2025 and August 3, 2024, respectively, and was related to our capital expenditures. Our capital expenditures include costs to open new stores and improve existing stores, build, expand, and improve distribution centers, and for various other expenditures related to our information technology systems and buying and corporate offices.

The change in cash used in investing activities for the six month period ended August 2, 2025, compared to the same period in the prior fiscal year, was primarily due to higher capital expenditures in the current year related to the construction of our next distribution center in Randleman, North Carolina and the opening of new stores.

Capital expenditures for fiscal 2025 are currently projected to be approximately $800 million. Our planned capital expenditures for fiscal 2025 are for costs to open new stores and improve existing stores, investments in our supply chain to support long-term growth, including construction of our next distribution center, investments in our information technology systems, and for various other expenditures related to our stores, distribution centers, and buying and corporate offices. We expect to fund capital expenditures with available cash.

Net cash used in financing activities was $1.6 billion for the six month period ended August 2, 2025 primarily resulting from the repayment at maturity of the $700 million principal amount of 4.600% Senior Notes in April 2025, stock repurchases under our stock repurchase program, and dividend payments. Net cash used in financing activities was $830 million for the six month period ended August 3, 2024 primarily resulting from stock repurchases under our stock repurchase program and dividend payments.

Revolving credit facilities. In June 2025, we entered into a new, $1.3 billion 2025 Credit Facility, which replaced our previous $1.3 billion unsecured credit facility. As of August 2, 2025, we had no borrowings or standby letters of credit outstanding under the 2025 Credit Facility, our 2025 Credit Facility remained in place and available, and we were in compliance with the financial covenant. Refer to Note E: Debt in the Notes to Condensed Consolidated Financial Statements for additional information.

Senior notes. As of August 2, 2025, we had approximately $1.5 billion of outstanding unsecured Senior Notes, of which $499 million was classified in Current Liabilities on our Condensed Consolidated Balance Sheet for the period ended August 2, 2025. Refer to Note E: Debt in the Notes to Condensed Consolidated Financial Statements for additional information.

Other financing activities. In March 2024, our Board of Directors approved a two-year program to repurchase up to $2.1 billion of our common stock through fiscal 2025. During the six month period ended August 2, 2025, we repurchased 3.9 million shares of common stock for $525 million (excluding excise tax) under this program. As of August 2, 2025, there was $525 million available for repurchase under this program.

During the six month periods ended August 2, 2025 and August 3, 2024, we also acquired 0.5 million shares of treasury stock in each period to cover employee tax withholding obligations under our employee equity compensation programs, for aggregate purchase prices of approximately $64 million and $72 million, respectively.

On August 20, 2025, our Board of Directors declared a quarterly cash dividend of $0.4050 per common share, payable on September 30, 2025. The Board of Directors declared a quarterly cash dividend of $0.4050 per common share in March and May 2025, and $0.3675 per common share in March, May, August, and November 2024.

For the six month periods ended August 2, 2025 and August 3, 2024, we paid cash dividends of $265.6 million and $245.8 million, respectively.

Short-term trade credit represents a significant source of financing for merchandise inventory. Trade credit arises from customary payment terms and trade practices with our vendors. We regularly review the adequacy of credit available to us from all sources, and expect to be able to maintain adequate trade credit, bank credit, and other credit sources to meet our capital and liquidity requirements.

We ended the second quarter of fiscal 2025 with $3.8 billion of unrestricted cash balances, which were held primarily in overnight money market funds invested in U.S. treasury and government instruments across a highly diversified set of banks and other financial institutions. We also have $1.3 billion available under our new 2025 Credit Facility. We estimate that existing cash and cash equivalent balances, cash flows from operations, our bank credit facility, and trade credit are adequate to meet our operating cash needs and to fund our common stock repurchases, planned capital investments, quarterly dividend payments, debt repayments, and interest payments, for at least the next 12 months.

As of August 2, 2025, there have been no material changes to our contractual obligations as disclosed in our Annual Report on Form 10-K as of February 1, 2025, other than those which occur in the ordinary course of business.

Standby letters of credit and collateral trust. We use standby letters of credit outside of our revolving credit facility and a funded trust to collateralize some of our insurance obligations. As of August 2, 2025, February 1, 2025, and August 3, 2024, we had $1.0 million, $1.8 million, and $2.2 million, respectively, in standby letters of credit outstanding. As of August 2, 2025, February 1, 2025, and August 3, 2024, we had $65.3 million, $63.9 million, and $62.4 million, respectively, held in a collateral trust. The standby letters of credit are collateralized by restricted cash and the collateral trust consists of restricted cash and cash equivalents.

During the second quarter of fiscal 2025, there were no significant changes to the critical accounting estimates discussed in our Annual Report on Form 10-K for the year ended February 1, 2025.

This report contains a number of forward-looking statements regarding, without limitation, projected sales, costs and earnings, planned new store growth, capital expenditures, liquidity, and other matters. These forward-looking statements reflect our then-current beliefs, plans, and estimates with respect to future events and our projected financial performance, operations, and competitive position. The words “plan,” “expect,” “target,” “anticipate,” “estimate,” “believe,” “forecast,” “projected,” “guidance,” “outlook,” “looking ahead,” and similar expressions identify forward-looking statements.

Future impact from tariffs, inflation, interest rate changes, ongoing military conflicts and economic sanctions, climate change, extreme weather, pandemics, natural disasters, and other economic, regulatory, consumer spending, and industry trends that could potentially adversely affect our revenue, profitability, operating conditions, and growth are difficult to predict. Our forward-looking statements are subject to risks and uncertainties which could cause our actual results to differ materially from those forward-looking statements and our previous expectations, plans, and projections. Such risks and uncertainties are not limited to but may include:

•Changes in U.S. tax, tariff, or trade policy regarding apparel, shoes, and home-related merchandise produced in China and other countries could significantly and adversely affect our business. While we directly import only a small portion of our merchandise, more than half of the goods we sell originate from China. Elevated tariff levels on goods imported into the United States from China and other countries may disrupt our merchandise purchasing patterns, increase our costs, and put pressure on our margins and profitability.

•Uncertainties arising from the macroeconomic environment, including inflation and the price of necessities, high interest rates, housing costs, energy and fuel costs, financial and credit market conditions, recession concerns, geopolitical conditions, government policies and enforcement practices with respect to immigration, and public health and public safety issues may affect consumer confidence, consumer disposable income, and shopping behavior, as well as our costs.

•Unexpected changes in the level of consumer spending on, or preferences for, apparel and home-related merchandise could adversely affect us.

•Competitive pressures in the apparel and home-related merchandise retailing industry.

•Our need to effectively manage our inventories, markdowns, and inventory shortage in order to achieve our planned gross margins.

•Risks associated with importing and selling merchandise produced in China and other countries, including risks from supply chain disruption, shipping delays, and higher than expected ocean freight costs.

•Unseasonable weather or extreme temperatures that may affect shopping patterns and consumer demand for seasonal apparel and other merchandise.

•Our dependence on the market availability, quantity, and quality of attractive brand name merchandise at desirable discounts, and on the ability of our buyers to anticipate consumer preferences and to purchase merchandise to enable us to offer customers a wide assortment of merchandise at competitive prices.

•Information or data security breaches, including cyber-attacks on our transaction processing and computer information systems, which could disrupt our operations, and result in theft or unauthorized disclosure of confidential and valuable business information, such as customer, credit card, employee, or other private and valuable information that we handle in the ordinary course of our business.

•Disruptions in our supply chain or in our information systems, including from ransomware or other cyber-attacks could impact our ability to process sales and to deliver product to our stores in a timely and cost-effective manner.

•Our need to obtain acceptable new store sites with favorable consumer demographics to achieve our planned store openings.

•Our need to expand in existing markets and enter new geographic markets in order to achieve planned growth and market penetration.

•Consumer problems or legal issues involving the quality, safety, or authenticity of products we sell could harm our reputation, result in lost sales, and/or increase our costs.

•An adverse outcome in various legal, regulatory, or tax matters, or the adoption of new federal or state tax legislation that increases tax rates or adds new taxes could increase our costs.

•Damage to our corporate reputation or brands could adversely affect our sales and operating results.

•Our need to continually attract, train, and retain associates with the retail talent necessary to execute our off-price retail strategies.

•Our need to effectively advertise and market our business.

•Possible volatility in our revenues and earnings.

•A public health or public safety crisis, or a natural or man-made disaster in California or another region where we have a concentration of stores, offices, or a distribution center could harm our business.

•Our need to maintain sufficient liquidity to support our continuing operations and our new store openings.

The factors underlying our forecasts are dynamic and subject to change. As a result, any forecasts or forward-looking statements speak only as of the date they are given and do not necessarily reflect our outlook at any other point in time. We disclaim any obligation to update or revise these forward-looking statements.

We are exposed to market risks, which primarily include changes in interest rates. We do not engage in financial transactions for trading or speculative purposes.

We may occasionally use forward contracts to hedge against fluctuations in foreign currency prices. We had no outstanding forward contracts as of August 2, 2025.

Interest that is payable on our 2025 Credit Facility is based on variable interest rates and is therefore affected by changes in market interest rates. As of August 2, 2025, we had no borrowings outstanding under the 2025 Credit Facility.

As of August 2, 2025, we had outstanding five series of unsecured Senior Notes. Interest that is payable on all series of our Senior Notes is based on fixed interest rates, and is therefore unaffected by changes in market interest rates.

We receive interest payments on our cash and cash equivalents and restricted cash and cash equivalents. Changes in interest rates may impact the interest income we recognize in the future.

A hypothetical 100 basis point increase or decrease in prevailing market interest rates would not have had a material negative impact on our financial position, results of operations, cash flows, or the fair values of our cash and cash equivalents and restricted cash and cash equivalents as of and for the three month or six month periods ended August 2, 2025. We do not consider the potential losses in future earnings and cash flows from reasonably possible, near-term changes in interest rates to be material.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, conducted an evaluation of the effectiveness of our “disclosure controls and procedures” (as defined in Exchange Act Rule 13a-15(e)) as of the end of the period covered by this report. Our disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at that reasonable assurance level as of the end of the period covered by this report.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events.

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, also conducted an evaluation of our internal control over financial reporting to determine whether any change occurred during the second fiscal quarter of 2025 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. Based on that evaluation, our management concluded that there was no such change during the second fiscal quarter of 2025.