​ General ​ This discussion and analysis is based on, should be read with, and is qualified in its entirety by, the accompanying unaudited consolidated financial statements and related notes, as well as our consolidated financial statements and the related Management’s Discussion and Analysis of Financial Condition and Results of Operations as contained in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026. It also should be read in conjunction with the disclosure under “Cautionary Disclosure Regarding Forward-Looking Statements” in this report. ​ Executive Overview ​ We are the largest discount retailer in the United States by number of stores, with 21,148 stores located in 48 U.S. states and Mexico as of July 31, 2026, with the greatest concentration of stores in the southern, southwestern, midwestern and eastern United States. We offer a broad selection of merchandise, including consumable products such as food, paper and cleaning products, health and beauty products and pet supplies, and non-consumable products such as seasonal merchandise, home decor and domestics, and basic apparel. Our merchandise includes national brands from leading manufacturers, as well as our own private brand selections with prices often at substantial discounts to national brands. We offer our customers these national brand and private brand products at everyday low prices (typically $10 or less) from our convenient small-box locations. ​ We believe our convenient store formats, locations, and broad selection of high-quality products at compelling values have driven our substantial growth and financial success over the years and through a variety of economic cycles. We are mindful that the majority of our customers are value-conscious, and many have low and/or fixed incomes. As a result, we are intensely focused on helping our customers make the most of their spending dollars. The primary macroeconomic factors that affect our core customers include unemployment and underemployment rates, inflation (including, but not limited to, high or rising gas prices), wage growth, changes in federal and state tax policies, interest rates, changes in U.S. and global trade policy (including resulting price increases), and changes in U.S. government policy and assistance programs (including cost of living adjustments and work requirements), such as SNAP, unemployment benefits, and economic stimulus programs. Finally, significant unseasonable or unusual weather patterns or extreme weather can impact customer shopping behaviors. ​ Uncertainty remains regarding the potential impact of tariffs on consumer behavior and our business. Tariff rates on both direct imports and domestic purchases did not materially impact our financial results for the second quarter of 2026. The tariff environment remains dynamic, and the specific tariffs applicable to goods imported by us and our suppliers into the U.S. may continue to evolve. Tariff rate increases or expansions of tariff coverage affecting the products that we sell could have a significant impact on our business and on our customers’ budgets. We continue to monitor developments and will evaluate the impact of any tariff rate changes on our business and take action to mitigate such impact. There can be no assurance we will be successful in our efforts, or that pricing actions, including any future price increases, will not adversely affect customer behavior. During the second quarter of 2026, we began receiving cash refunds related to IEEPA tariffs that we had previously paid. We received the majority of the expected refunds during the quarter and reinvested a substantial portion of the refunds in our customer value proposition through targeted promotional activities and lower everyday prices. ​ Our core customers are often among the first to be affected by negative or uncertain economic conditions and among the last to feel the effects of improving economic conditions, particularly when trends are inconsistent and of an uncertain duration. Our customers continue to feel constrained in the current macroeconomic environment and to experience elevated expenses that generally comprise a large portion of their household budgets, such as rent, healthcare, energy and fuel prices, as well as cost inflation in frequently purchased household products (including food), which we expect will continue to pressure our customers’ spending overall. ​ We remain committed to our long-term operating priorities as we consistently strive to improve our performance while retaining our customer-centric focus. These priorities include: 1) driving profitable sales growth, 2) capturing growth opportunities, 3) enhancing our position as a low-cost operator, and 4) investing in the growth and development of our teams. ​ 20 ​ We seek to drive profitable sales growth through initiatives aimed at increasing customer traffic and average transaction amount. Historically, sales in our consumables category, which tend to have lower gross margins, have been key drivers of net sales and customer traffic, while sales in our non-consumables categories, which tend to have higher gross margins, have been key drivers of more profitable sales growth and average transaction amount. Our sales mix remains heavily weighted towards consumables, although non-consumables have outpaced consumables in same-store sales growth for the last six consecutive quarters. Certain of our initiatives are intended to better optimize our sales mix; however, there can be no assurances that these efforts will be successful. ​ As we work to provide everyday low prices and meet our customers’ affordability needs, we remain focused on enhancing our margins through inventory shrink and damage reduction initiatives (which helped to partially mitigate our significant fuel costs), as well as pricing and markdown optimization, the DG Media Network (our platform that connects brand partners with our customers), effective category management and inventory reduction efforts, distribution and transportation efficiencies, private brands penetration and global sourcing strategies. Several of our strategic and other sales-driving initiatives are also designed to capture growth opportunities. ​ Inventory shrink has significantly improved from elevated levels in recent years, and although damages remain elevated, we made progress reducing damages in the second quarter of 2026. We continue to implement actions designed to drive sustained improvement in both shrink and damages. ​ We continue to implement and invest in certain strategic initiatives intended to drive profitable sales growth with both new and existing customers and capture long-term growth opportunities. Such initiatives include providing our customers with a variety of shopping access points and even greater value and convenience by leveraging and developing digital tools and technology, such as our Dollar General app, which contains a variety of tools to enhance the shopping experience. We remain focused on enhancing both the in-store and digital shopping experience, while driving operational efficiency. The delivery component of our digital initiatives contributes meaningfully to our comparable store sales performance. Third-party delivery services and myDG® Delivery are available in the majority of our stores, providing added convenience and incremental sales. We believe these digital efforts will contribute to the continued growth of our DG Media Network. ​ We have continued our efforts to improve the performance and profitability of our mature stores through our remodel program, which includes both full remodels under Project Renovate and partial remodels under Project Elevate. Together, these remodel programs are designed to refresh and optimize merchandising and store presentation, enhance the shopping experience for our customers, and potentially mitigate future repairs and maintenance expense. ​ We also remain focused on capturing growth opportunities. In 2026, we plan to open approximately 450 new stores (as well as approximately 10 stores in Mexico), remodel approximately 2,000 stores through Project Renovate, remodel approximately 2,250 stores through Project Elevate, and relocate approximately 20 stores, for a total of 4,730 real estate projects. As part of this plan, in the second quarter of 2026 we opened a total of 126 new stores, including 1 store in Mexico, remodeled 665 stores through Project Renovate and 711 stores through Project Elevate, relocated 5 stores and closed 33 stores. ​ We expect store format innovation to allow us to capture additional growth opportunities as we continue to utilize the most productive of our various Dollar General store formats based on the specific market opportunity. In 2026, we are utilizing store formats averaging approximately 8,500 square feet of selling space for the significant majority of new stores. These formats allow for expanded high-capacity-cooler counts, an extended queue line, and a broader product assortment, including an enhanced non-consumable offering, a larger health and beauty section, and produce in select stores. ​ Finally, pOpshelf, our unique retail concept focused on categories such as seasonal and home décor, health and beauty, home cleaning supplies, and party and entertainment goods, represents an additional potential growth opportunity. At the end of the second quarter of 2026, we operated 179 standalone pOpshelf stores. We continue to take focused actions designed to improve the performance of pOpshelf stores, although there can be no assurances that our efforts will be successful. ​ We always seek ways to reduce or control costs that do not affect our customers’ shopping experiences. We plan to continue enhancing our position as a low-cost operator over time while employing ongoing cost discipline to reduce certain expenses as a percentage of sales. Nonetheless, we seek to maintain flexibility to invest in the business as 21 ​ necessary to enhance our long-term competitiveness and profitability. From time to time, our strategic initiatives, including without limitation those discussed above, have required and may continue to require us to incur upfront expenses for which there may not be an immediate return in terms of sales or enhanced profitability. ​ Certain of our operating expenses, such as wage rates and occupancy costs, have continued to increase in recent years due primarily to market forces such as labor availability, increases in minimum wage rates, inflation, property rents and interest rates. Significant or rapid increases to federal, state or local minimum wage rates or salary levels could significantly adversely affect our earnings if we are not able to otherwise offset these increased labor costs elsewhere in our business. ​ We believe ongoing inflationary pressures could continue to affect our vendors and customers and our operating results. Both inflation and higher interest rates have significantly increased new store opening costs and occupancy costs in recent years and, while new store returns remain strong, these increased costs have negatively impacted our projected new store returns and influenced our new store growth plans. Furthermore, we incurred significantly higher fuel costs in the second quarter of 2026, and we expect this trend to continue for an uncertain duration. ​ Our teams are a competitive advantage, and we proactively seek ways to continue investing in their development. Our goal is to create an environment that attracts, develops, and retains talented personnel, particularly at the store manager level, as employees who are promoted from within our company generally have longer tenures and are greater contributors to improvements in our financial performance. We are taking actions designed to continue reducing our store manager turnover, including enhancing training execution, improving store conditions and simplifying in-store activities. ​ To further enhance shareholder returns, we pay a quarterly cash dividend. The declaration and amount of future dividends are subject to Board discretion and approval, although we currently expect to continue paying quarterly cash dividends. Consistent with our capital allocation framework and supported by the progress we have made in strengthening our balance sheet and cash flow, we currently expect to resume share repurchases under our existing Board-approved share repurchase program during the second half of 2026. ​ Key Performance Indicators ​ We utilize key performance indicators, which are defined below, in the management of our business including same-store sales, average sales per square foot, and inventory turnover. We use these measures to maximize profitability and for decisions about the allocation of resources. Each of these measures is commonly used by investors in retail companies to measure the health of the business. ​ Same-store sales are calculated based upon our stores that were open at least 13 full fiscal months and remain open at the end of the reporting period. We include stores that have been remodeled, expanded or relocated in our same-store sales calculation. Changes in same-store sales are calculated based on the comparable 52 calendar weeks in the current and prior years. The method of calculating same-store sales varies across the retail industry. As a result, our calculation of same-store sales is not necessarily comparable to similarly titled measures reported by other companies. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Weeks Ended ​ 26 Weeks Ended ​ ​ ​ July 31, ​ August 1, ​ July 31, ​ August 1, ​ ​ ​ ​ ​ 2026 ​ 2025 ​ 2026 ​ 2025 ​ Same-store sales ​ 3.5 % ​ ​ ​ 2.8 % ​ ​ ​ 2.7 % ​ ​ ​ 2.6 % ​ ​ ​ Average sales per square foot is calculated based on total sales for the preceding four quarters as of the ending date of the reporting period divided by the average selling square footage as of the end of the most recent five quarters. ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ July 31, ​ August 1, ​ ​ ​ ​ 2026 ​ 2025 Average sales per square foot ​ $ 273 ​ ​ ​ $ 266 ​ 22 ​ Inventory turnover is calculated based on total cost of goods sold for the preceding four quarters as of the ending date of the reporting period divided by the average inventory balance as of the end of the most recent five quarters. ​ ​ ​ ​ ​ ​ ​ ​ July 31, ​ August 1, ​ ​ ​ ​ 2026 ​ 2025 Inventory turnover ​ 4.6 ​ ​ ​ 4.3 ​ Results of Operations ​ Accounting Periods. We utilize a 52-53 week fiscal year convention that ends on the Friday nearest to January 31. The following text contains references to years 2026 and 2025, which represent the 52-week fiscal years ending or ended January 29, 2027 and January 30, 2026, respectively. References to the second quarter accounting periods for 2026 and 2025 contained herein refer to the 13-week accounting periods ended July 31, 2026 and August 1, 2025, respectively. ​ Seasonality. The nature of our business is somewhat seasonal. Primarily because of sales of Christmas-related merchandise, operating profit in our fourth quarter (November, December and January) has historically been higher than operating profit achieved in each of the first three quarters of the fiscal year. Expenses, and to a greater extent operating profit, vary by quarter. Results of a period shorter than a full year may not be indicative of results expected for the entire year. Furthermore, the seasonal nature of our business may affect comparisons between periods. ​ The following tables contain results of operations data for the second 13-week periods and the 26-week periods of 2026 and 2025, and the dollar and percentage variances among those periods. Basis point amounts referred to below are equal to 0.01% as a percentage of net sales: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Weeks Ended ​ 26 Weeks Ended ​ (amounts in millions, except ​ July 31, ​ ​ ​ August 1, ​ ​ ​ % ​ ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ % ​ per share amounts) ​ 2026 ​ 2025 ​ Change ​ 2026 ​ 2025 ​ Change ​ Net sales ​ $ 11,290.4 ​ $ 10,727.7 ​ 5.2 % $ 22,077.3 ​ $ 21,163.7 ​ 4.3 % ​ Cost of goods sold ​ 7,609.5 ​ 7,366.1 ​ 3.3 ​ 14,986.0 ​ ​ 14,570.8 ​ 2.8 ​ ​ Gross profit ​ 3,680.9 ​ 3,361.7 ​ 9.5 ​ 7,091.4 ​ ​ 6,593.0 ​ 7.6 ​ ​ Selling, general and administrative expenses ​ 2,911.8 ​ 2,766.2 ​ 5.3 ​ 5,683.7 ​ ​ 5,421.4 ​ 4.8 ​ ​ Operating profit ​ 769.2 ​ 595.4 ​ 29.2 ​ 1,407.7 ​ ​ 1,171.5 ​ 20.2 ​ ​ Interest expense, net ​ 42.9 ​ 57.7 ​ (25.7) ​ 90.1 ​ ​ 122.3 ​ (26.3) ​ ​ Income before income taxes ​ 726.3 ​ 537.7 ​ 35.1 ​ 1,317.6 ​ ​ 1,049.2 ​ 25.6 ​ ​ Income tax expense ​ 176.0 ​ 126.3 ​ 39.4 ​ 323.1 ​ ​ 245.9 ​ 31.4 ​ ​ Net income ​ $ 550.3 ​ $ 411.4 ​ 33.8 % $ 994.4 ​ $ 803.4 ​ 23.8 % ​ Diluted earnings per share ​ $ 2.48 ​ $ 1.86 ​ 33.3 % $ 4.49 ​ $ 3.64 ​ 23.4 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Weeks Ended ​ 26 Weeks Ended ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ Basis Point ​ ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ Basis Point (Percent of Net Sales) ​ 2026 ​ 2025 ​ Change ​ 2026 ​ 2025 ​ Change Net sales ​ 100.00 % 100.00 % ​ ​ 100.00 % 100.00 % ​ Cost of goods sold ​ 67.40 ​ 68.66 ​ (127) ​ 67.88 ​ 68.85 ​ (97) Gross profit ​ 32.60 ​ 31.34 ​ 127 ​ 32.12 ​ 31.15 ​ 97 Selling, general and administrative expenses ​ 25.79 ​ 25.79 ​ - ​ 25.74 ​ 25.62 ​ 13 Operating profit ​ 6.81 ​ 5.55 ​ 126 ​ 6.38 ​ 5.54 ​ 84 Interest expense, net ​ 0.38 ​ 0.54 ​ (16) ​ 0.41 ​ 0.58 ​ (17) Income before income taxes ​ 6.43 ​ 5.01 ​ 142 ​ 5.97 ​ 4.96 ​ 101 Income tax expense ​ 1.56 ​ 1.18 ​ 38 ​ 1.46 ​ 1.16 ​ 30 Net income ​ 4.87 % 3.84 % 104 ​ 4.50 % 3.80 % 71 ​ ​ 23 ​ 13 WEEKS ENDED JULY 31, 2026 AND AUGUST 1, 2025 ​ Net Sales. For the 2026 period, net sales increased 5.2% to $11.29 billion. The net sales increase in the 2026 period was primarily due to a same-store sales increase of 3.5% compared to the 2025 period and sales from new stores, partially offset by the impact of store closures. The increase in same-store sales reflects a 2.0% increase in customer traffic and a 1.5% increase in average transaction amount. The increase in average transaction amount was driven by higher average retail prices partially offset by a decrease in items per transaction. Same-store sales increased in the consumables, seasonal, home products, and apparel categories. For the 2026 period, there were 20,476 same-stores, which accounted for sales of $11.00 billion. ​ The amount of net sales represented by each of our product categories for the 13 weeks ended July 31, 2026, and August 1, 2025, as well as the percentage change between such periods, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Weeks Ended ​ ​ ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ % ​ ​ ​ ​ (amounts in millions) ​ 2026 ​ 2025 ​ Change ​ ​ Net sales by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumables ​ $ 9,263.0 ​ $ 8,819.9 ​ 5.0 % ​ Seasonal ​ 1,187.7 ​ 1,106.1 ​ 7.4 ​ ​ Home products ​ 536.6 ​ 511.8 ​ 4.8 ​ ​ Apparel ​ 303.1 ​ 289.9 ​ 4.5 ​ ​ Net sales ​ $ 11,290.4 ​ $ 10,727.7 ​ 5.2 % ​ ​ The percentage of net sales represented by each of our product categories for the 13 weeks ended July 31, 2026, and August 1, 2025, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 13 Weeks Ended ​ ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ ​ ​ 2026 ​ 2025 ​ Net sales by category: ​ ​ ​ ​ ​ Consumables ​ 82.05 % 82.22 % Seasonal ​ 10.52 ​ 10.31 ​ Home products ​ 4.75 ​ 4.77 ​ Apparel ​ 2.68 ​ 2.70 ​ Net sales ​ 100.00 % 100.00 % ​ Gross Profit. For the 2026 period, gross profit increased by 9.5%, and as a percentage of net sales increased by 127 basis points to 32.6%, compared to the 2025 period. The increase in the gross profit rate was driven primarily by tariff refunds, a lower LIFO provision, and lower distribution costs, partially offset by increased markdowns and increased transportation costs. We estimate the gross profit benefit of tariff refunds after related reinvestments, primarily through promotional and permanent markdowns, was approximately 81 basis points. ​ Selling, General & Administrative Expenses (“SG&A”). SG&A was 25.8% as a percentage of net sales in the 2026 period compared to 25.8% in the comparable 2025 period. The primary expense that was a higher percentage of net sales in the current year period was depreciation and amortization, offset by rent, which was lower as a percentage of net sales. ​ Interest Expense, net. Interest expense, net decreased by $14.8 million to $42.9 million in the 2026 period primarily due to lower average outstanding borrowings. ​ Income Taxes. The effective income tax rate for the 2026 period was 24.2% compared to a rate of 23.5% for the 2025 period. The tax rate for the 2026 period was higher than the comparable 2025 period primarily due to expired federal tax credits, partially offset by a reduced state effective tax rate. 24 ​ ​ 26 WEEKS ENDED JULY 31, 2026 AND AUGUST 1, 2025 ​ ​ Net Sales. For the 2026 period, net sales increased 4.3% to $22.08 billion. The net sales increase in the 2026 period was primarily due to a same-store sales increase of 2.7% compared to the 2025 period and sales from new stores, partially offset by the impact of store closures. The increase in same-store sales reflects a 1.7% increase in customer traffic and a 1.0% increase in average transaction amount. The increase in average transaction amount was driven by higher average retail prices partially offset by a decrease in items per transaction. Same-store sales increased in the consumables, seasonal, home products, and apparel categories. For the 2026 period, there were 20,476 same-stores which accounted for sales of $21.49 billion. ​ The amount of net sales represented by each of our product categories for the 26 weeks ended July 31, 2026, and August 1, 2025, as well as the percentage change between such periods, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 26 Weeks Ended ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ % (amounts in millions) ​ 2026 ​ 2025 ​ Change Net sales by category: ​ ​ ​ ​ ​ ​ ​ ​ ​ Consumables ​ $ 18,155.5 $ 17,456.6 4.0 % Seasonal ​ 2,272.0 ​ ​ 2,129.0 ​ 6.7 ​ Home products ​ 1,059.6 ​ ​ 1,019.0 ​ 4.0 ​ Apparel ​ 590.3 ​ ​ 559.1 ​ 5.6 ​ Net sales ​ $ 22,077.3 ​ $ 21,163.7 ​ 4.3 % ​ The percentage of net sales represented by each of our product categories for the 26 weeks ended July 31, 2026, and August 1, 2025, were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ 26 weeks ended ​ ​ ​ July 31, ​ ​ ​ August 1, ​ ​ ​ 2026 ​ 2025 ​ Net sales by category: ​ ​ ​ ​ ​ Consumables ​ 82.24 % 82.49 % Seasonal ​ 10.29 ​ 10.06 ​ Home products ​ 4.80 ​ 4.81 ​ Apparel ​ 2.67 ​ 2.64 ​ Net sales ​ 100.00 % 100.00 % ​ ​ Gross Profit. For the 2026 period, gross profit increased by 7.6%, and as a percentage of net sales increased by 97 basis points to 32.1%, compared to the 2025 period. The increase in the gross profit rate was driven primarily by tariff refunds, higher inventory markups, a lower LIFO provision, lower inventory damages and lower shrink, partially offset by increased markdowns and increased transportation costs. We estimate the gross profit benefit of tariff refunds after related reinvestments, primarily through promotional and permanent markdowns, was approximately 41 basis points. ​ Selling, General & Administrative Expenses. SG&A was 25.7% as a percentage of net sales in the 2026 period compared to 25.6% in the comparable 2025 period, an increase of 13 basis points. The primary expense that was a higher percentage of net sales in the current year period was depreciation and amortization, partially offset by lower incentive compensation. ​ Interest Expense, net. Interest expense, net decreased by $32.2 million to $90.1 million in the 2026 period primarily due to lower average outstanding borrowings. ​ Income Taxes. The effective income tax rate for the 2026 period was 24.5% compared to a rate of 23.4% for the 2025 period. The tax rate for the 2026 period was higher than the comparable 2025 period primarily due to expired federal tax credits, partially offset by a reduced state effective tax rate. ​ ​ 25 ​ ​ ​ Liquidity and Capital Resources ​ We believe our cash flow from operations and existing cash balances, combined with availability under the unsecured revolving credit facility (the “Revolving Facility”), the unsecured commercial paper notes (the “CP Notes”) and access to the debt markets, will provide sufficient liquidity to fund our current obligations, projected working capital requirements, capital spending, and anticipated dividend payments and share repurchases for a period that includes the next twelve months as well as the next several years. However, our ability to maintain sufficient liquidity may be affected by numerous factors, many of which are outside of our control. Depending on our liquidity levels, conditions in the capital markets and other factors, we may from time to time consider the issuance of debt, equity or other securities, the proceeds of which could provide additional liquidity for our operations. All of our material borrowing arrangements are described in greater detail in Note 5 to the unaudited consolidated financial statements. ​ Our borrowing availability under the Revolving Facility may be effectively limited by our CP Notes as further described in Note 5 to the unaudited consolidated financial statements. For the remainder of fiscal 2026, we anticipate potential combined borrowings under the Revolving Facility and our CP Notes to be a maximum of approximately $400 million outstanding at any one time. ​ Current Financial Condition / Recent Developments ​ Our inventory balance represented approximately 42% of our total assets, exclusive of operating lease assets, goodwill and other intangible assets, as of July 31, 2026. Our ability to effectively manage our inventory balances can have a significant impact on our cash flows from operations during a given fiscal year, as discussed under “Changes in Cash Flows” below. Inventory purchases are often somewhat seasonal in nature, such as the purchase of warm-weather or Christmas-related merchandise. Efficient management of our inventory has been and continues to be an area of focus for us. ​ From time to time, we are involved in various legal matters as discussed in Note 7 to the unaudited consolidated financial statements, some of which could potentially result in material cash payments. Adverse developments in these matters could materially and adversely affect our liquidity. ​ Our current credit ratings, as well as future rating agency actions, could (i) impact our ability to finance our operations on satisfactory terms; (ii) affect our financing costs; and (iii) affect our insurance premiums and collateral requirements necessary for our self-insured programs. There can be no assurance that we will maintain or improve our current credit ratings, particularly, if we are unable to maintain or improve our financial ratios to levels deemed acceptable to the rating agencies. The credit ratings for our borrowings are as follows: ​ ​ ​ ​ Rating Agency ​ Senior unsecured debt rating ​ Commercial paper rating ​ Outlook Moody’s ​ Baa3 ​ P-3 ​ Stable outlook Standard & Poor’s ​ BBB ​ A-2 ​ Stable outlook ​ Changes in Cash Flows ​ Unless otherwise noted, all references to the 2026 and 2025 periods in the discussion of cash flows from operating, investing and financing activities below refer to the 26-week periods ended July 31, 2026 and August 1, 2025, respectively. ​ 26 ​ Cash flows from operating activities. Cash flows from operating activities were $1.5 billion in the 2026 period, which represents a $318.2 million decrease compared to the 2025 period. Net income increased $191.1 million in the 2026 period compared to the 2025 period. Changes in accounts payable resulted in a $275.5 million increase in the 2026 period compared to a $111.2 million increase in the 2025 period, due primarily to the timing of inventory receipts and related payments. Changes in merchandise inventories resulted in a $249.0 million decrease in the 2026 period as compared to an increase of $44.7 million in the 2025 period as further discussed below. Changes in prepaid expenses and other current assets resulted in a $169.4 million decrease in the 2026 period as compared to a decrease of $25.7 million in the 2025 period, due primarily to an increase in vendor receivables. Changes in accrued expenses resulted in a $74.7 million increase in the 2026 period compared to a $167.3 million increase in the 2025 period, due primarily to the timing of accruals and payments for incentive compensation. Changes in income taxes in the 2026 period compared to the 2025 period are primarily due to the amount of income tax accrued and timing of payments. ​ On an ongoing basis, we closely monitor and manage our inventory balances, which may fluctuate from period to period based on new store openings, the timing of purchases, and other factors. Total merchandise inventories increased 3% in the 2026 period compared to a decrease of 2% in the 2025 period. Percent changes in our four inventory categories for the 2026 period compared to the 2025 period were as follows: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 26 Weeks Ended ​ ​ ​ July 31, ​ ​ August 1, ​ Increase (decrease) ​ ​ ​ 2026 ​ ​ 2025 Consumables ​ 5 % ​ (1) % Seasonal ​ (1) ​ ​ (2) ​ Home products ​ 7 ​ ​ (3) ​ Apparel ​ (9) ​ ​ (4) ​ ​ On a per store basis, inventories at July 31, 2026, decreased by 2.7% compared to the balances at August 1, 2025. ​ Cash flows from investing activities. Significant components of property and equipment purchases included the following approximate amounts: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 26 Weeks Ended ​ ​ ​ July 31, ​ August 1, ​ (amounts in millions, except store count amounts) ​ ​ ​ 2026 ​ 2025 Existing stores improvements, upgrades, remodels, and relocations ​ $ 414.5 ​ $ 365.4 ​ Distribution and transportation-related capital expenditures ​ ​ 168.2 ​ ​ 151.1 ​ New stores primarily for leasehold improvements, fixtures and equipment ​ 132.7 ​ 142.8 ​ Information systems upgrades and technology-related projects ​ 31.1 ​ 32.2 ​ Other ​ 12.0 ​ 2.4 ​ Total purchases of property and equipment ​ $ 758.5 ​ $ 693.9 ​ ​ ​ ​ ​ ​ ​ ​ ​ Store Counts ​ ​ ​ ​ ​ ​ ​ New stores ​ ​ 321 ​ ​ 360 ​ Remodeled or relocated (a) ​ ​ 2,757 ​ ​ 2,586 ​ ​ (a) Remodeled store counts include 1,324 stores through Project Renovate and 1,422 stores through Project Elevate. ​ The timing of new, remodeled and relocated store openings along with other factors may affect the relationship between such openings and the related property and equipment purchases in any given period. ​ Capital expenditures for 2026 are currently projected to be approximately $1.4 billion to $1.5 billion. We anticipate funding 2026 capital requirements with a combination of some or all of the following: existing cash balances, cash flows from operations, availability under our Revolving Facility and/or the issuance of additional CP Notes. We plan to continue to invest in store growth and development of new stores and the remodel or relocation of existing stores, including remodeling stores through Project Renovate and Project Elevate. Capital expenditures in 2026 are anticipated to support our store growth as well as our remodel and relocation initiatives, including capital outlays for leasehold improvements, fixtures and equipment; the construction of new stores; costs to support and enhance our supply chain 27 ​ initiatives for existing distribution center facilities and replacement of certain transportation related assets; technology initiatives; as well as routine and ongoing capital requirements. ​ Cash flows from financing activities. During the 2026 and 2025 periods, we paid cash dividends of $260.3 million and $259.7 million, respectively. ​ Share Repurchase Program ​ As of July 31, 2026, our common stock repurchase program had a total remaining authorization of approximately $1.38 billion. The authorization allows repurchases from time to time in open market transactions, including pursuant to trading plans adopted in accordance with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, or in privately negotiated transactions. Although to preserve our investment grade credit rating and maintain financial flexibility we have not repurchased shares under this program since 2022, it remains an important part of our broader capital allocation strategy, and we anticipate resuming share repurchases in the second half of fiscal 2026. The repurchase authorization has no expiration date, and future repurchases will depend on a variety of factors, including price, market conditions, compliance with the covenants and restrictions under our debt agreements, cash requirements, excess debt capacity, results of operations, financial condition and other factors. The repurchase program may be modified or terminated from time to time at the discretion of our Board of Directors. For more about our share repurchase program, see Note 9 to the unaudited consolidated financial statements contained in Part I, Item 1 of this report. ​