The following discussion provides an analysis of the Company’s financial condition and results of operations from management’s perspective and should be read in conjunction with the consolidated financial statements and related notes included in this report and in the 2025 Form 10-K and with our MD&A included in the 2025 Form 10-K. TABLE OF CONTENTS Executive Summary 15 Results of Operations 16 Liquidity and Capital Resources 20 Critical Accounting Estimates 22 EXECUTIVE SUMMARY For the second quarter of fiscal 2026, net sales were $47.9 billion and net earnings were $4.8 billion, or $4.79 per diluted share. For the first six months of fiscal 2026, net sales were $89.6 billion and net earnings were $8.1 billion, or $8.09 per diluted share. During the first six months of fiscal 2026, we generated $11.4 billion of cash flow from operations. This cash flow, together with cash on hand, was used to fund $4.6 billion in cash dividends, repay $3.0 billion of long-term debt, fund $1.7 billion in capital expenditures, and fund $1.3 billion in acquisitions. In February 2026, we announced a 1.3% increase in our quarterly cash dividend to $2.33 per share. Our inventory turnover ratio was 4.5 times at the end of the second quarter of fiscal 2026, compared to 4.6 times at the end of the second quarter of fiscal 2025. Our ROIC for the trailing twelve-month period was 24.8% at the end of the second quarter of fiscal 2026 and 27.2% at the end of the second quarter of fiscal 2025. The decrease in ROIC was primarily driven by higher average equity due to our ongoing pause in share repurchases. See the Non-GAAP Financial Measures section below for our definition and calculation of ROIC. During the second quarter of fiscal 2026, we opened three new stores in the U.S., resulting in a total store count of 2,364 at August 2, 2026. A total of 325 stores, or 13.7%, were located in Canada and Mexico. At the end of the second quarter of fiscal 2026, we also operated over 1,340 locations within our SRS non-reportable operating segments throughout the U.S. and Canada. Tariffs and Other Trade Policy Matters We continue to monitor developments related to tariffs and other trade policy matters, including the effects of the U.S. Supreme Court decision invalidating tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), ongoing litigation, and the implementation of additional tariffs. During the second quarter of fiscal 2026, we began receiving IEEPA tariff refunds pursuant to the U.S. Supreme Court ruling, and as of August 2, 2026, we had received approximately $730 million in IEEPA tariff refunds, representing the vast majority of our expected refunds. Approximately $685 million of these refunds were recognized as a reduction of cost of goods sold, with the remaining amount recorded as a reduction of inventory cost, nearly all within our Primary segment. Interest received in connection with the IEEPA tariff refunds was recognized within interest income and other, net on the consolidated statement of earnings. As tariff and trade policy discussions are ongoing and related matters continue to evolve, we cannot predict with certainty their ultimate impact on our business in future periods, including our results of operations and cash flows. For more information on these risks and uncertainties see Part I, Item 1A. “Risk Factors” of our 2025 Form 10-K. Fiscal Q2 2026 Form 10-Q 15 Table of Contents RESULTS OF OPERATIONS The following table presents the percentage relationship between net sales and major categories in our consolidated statements of earnings. FISCAL 2026 AND FISCAL 2025 THREE MONTH COMPARISONS Three Months Ended August 2, 2026 August 3, 2025 dollars in millions $ % of Net Sales $ % of Net Sales Net sales $ 47,861 $ 45,277 Gross profit 16,115 33.7 % 15,125 33.4 % Operating expenses: Selling, general and administrative 8,424 17.6 7,764 17.1 Depreciation and amortization 852 1.8 806 1.8 Total operating expenses 9,276 19.4 8,570 18.9 Operating income 6,839 14.3 6,555 14.5 Interest and other (income) expense: Interest income and other, net (59) (0.1) (25) (0.1) Interest expense 583 1.2 575 1.3 Interest and other, net 524 1.1 550 1.2 Earnings before provision for income taxes 6,315 13.2 6,005 13.3 Provision for income taxes 1,549 3.2 1,454 3.2 Net earnings $ 4,766 10.0 % $ 4,551 10.1 % ————— Note: Certain percentages may not sum to totals due to rounding. Three Months Ended Selected financial and sales data: August 2, 2026 August 3, 2025 % Change Comparable sales (% change) 1.7 % 1.0 % N/A Comparable customer transactions (% change) (1) (1.0) % (0.4) % N/A Comparable average ticket (% change) (1) (2) 2.8 % 1.4 % N/A Customer transactions (in millions) (1) 443.2 446.8 (0.8) % Average ticket (1) (2) $ 92.50 $ 90.01 2.8 % Diluted earnings per share $ 4.79 $ 4.58 4.6 % ————— (1)Customer transactions and average ticket measures do not include results from HD Supply or SRS. (2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance. Sales We assess our sales performance by evaluating both net sales and comparable sales. Net Sales. Net sales for the second quarter of fiscal 2026 were $47.9 billion, an increase of 5.7% from $45.3 billion for the second quarter of fiscal 2025. The increase in net sales for the second quarter of fiscal 2026 was primarily driven by sales from GMS, which was acquired on September 4, 2025 and contributed $1.4 billion of incremental net sales during the second quarter of fiscal 2026, as well as the impact of a positive comparable sales environment. Net sales also increased due to sales from our acquisition of Mingledorff’s as well as sales from new stores and branches. Online sales represented 16.6% of net sales during the second quarter of fiscal 2026 and increased by 11.0% compared to the second quarter of fiscal 2025. Online sales consist of sales of products generated through websites and mobile applications and do not include results from HD Supply or SRS. Fiscal Q2 2026 Form 10-Q 16 Table of Contents A weaker U.S. dollar compared to the second quarter of fiscal 2025 positively impacted net sales by $105 million during the second quarter of fiscal 2026. Comparable Sales. Comparable sales is a measure that highlights the performance of our existing locations and websites by measuring the change in net sales for a period over the comparable prior period of equivalent length. Comparable sales includes sales at locations, physical and online, open greater than 52 weeks (including remodels and relocations) and excludes closed stores. Acquisitions are typically included in comparable sales after they have been owned for more than 52 weeks. Comparable sales is intended only as supplemental information and is not a substitute for net sales presented in accordance with GAAP. The method of calculating comparable sales varies across the retail industry. As a result, our method of calculating comparable sales may not be the same as similarly titled measures reported by other companies. Total comparable sales for the second quarter of fiscal 2026 increased 1.7%, primarily reflecting a 2.8% increase in comparable average ticket, partially offset by a 1.0% decrease in comparable customer transactions compared to the second quarter of fiscal 2025. Foreign exchange rates positively impacted comparable sales by approximately 25 basis points for the second quarter of fiscal 2026. Our comparable sales results reflect customer engagement with smaller repair and maintenance projects, despite the impact of consumer uncertainty and housing affordability pressure on home improvement demand. During the second quarter of fiscal 2026, our Storage & Organization, Electrical, Hardware, Power, Plumbing, Indoor Garden, Kitchen & Blinds, Paint, Bath, Outdoor Garden, Building Materials, Flooring, and Millwork merchandising departments within our Primary segment posted positive comparable sales compared to the second quarter of fiscal 2025. Gross Profit Gross profit for the second quarter of fiscal 2026 increased 6.5% to $16.1 billion from $15.1 billion for the second quarter of fiscal 2025. Gross profit as a percentage of net sales, or gross profit margin, was 33.7% for the second quarter of fiscal 2026 compared to 33.4% for the second quarter of fiscal 2025. The increase in gross profit margin during the second quarter of fiscal 2026 reflects the benefit from IEEPA tariff refunds, largely offset by incremental cost pressures related to fuel, energy, and other product input costs, as well as the inclusion of GMS in our consolidated results. Operating Expenses Our operating expenses are composed of SG&A and depreciation and amortization. Selling, General & Administrative. SG&A for the second quarter of fiscal 2026 increased $660 million, or 8.5%, to $8.4 billion from $7.8 billion for the second quarter of fiscal 2025. As a percentage of net sales, SG&A was 17.6% for the second quarter of fiscal 2026 compared to 17.1% for the second quarter of fiscal 2025, primarily reflecting higher operating costs relative to comparable sales performance. Depreciation and Amortization. Depreciation and amortization for the second quarter of fiscal 2026 increased $46 million, or 5.7%, to $852 million from $806 million for the second quarter of fiscal 2025. As a percentage of net sales, depreciation and amortization was 1.8% for both the second quarter of fiscal 2026 and 2025. Interest and Other, net Interest and other, net was $524 million for the second quarter of fiscal 2026 compared to $550 million for the second quarter of fiscal 2025. As a percentage of net sales, interest and other, net was 1.1% for the second quarter of fiscal 2026 compared to 1.2% for the second quarter of fiscal 2025, and reflects higher interest income due to interest received from IEEPA tariff refunds during the second quarter of fiscal 2026. Provision for Income Taxes Our combined effective income tax rate was 24.5% for the second quarter of fiscal 2026 compared to 24.2% for the second quarter of fiscal 2025. Diluted Earnings per Share Diluted earnings per share were $4.79 for the second quarter of fiscal 2026 compared to $4.58 for the second quarter of fiscal 2025. The increase in diluted earnings per share was primarily driven by higher net earnings during the second quarter of fiscal 2026. Fiscal Q2 2026 Form 10-Q 17 Table of Contents FISCAL 2026 AND FISCAL 2025 SIX MONTH COMPARISONS Six Months Ended August 2, 2026 August 3, 2025 dollars in millions $ % of Net Sales $ % ofNet Sales Net sales $ 89,626 $ 85,133 Gross profit 29,896 33.4 % 28,584 33.6 % Operating expenses: Selling, general and administrative 16,383 18.3 15,294 18.0 Depreciation and amortization 1,693 1.9 1,602 1.9 Total operating expenses 18,076 20.2 16,896 19.8 Operating income 11,820 13.2 11,688 13.7 Interest and other (income) expense: Interest income and other, net (66) (0.1) (49) (0.1) Interest expense 1,194 1.3 1,190 1.4 Interest and other, net 1,128 1.3 1,141 1.3 Earnings before provision for income taxes 10,692 11.9 10,547 12.4 Provision for income taxes 2,637 2.9 2,563 3.0 Net earnings $ 8,055 9.0 % $ 7,984 9.4 % ————— Note: Certain percentages may not sum to totals due to rounding. Six Months Ended Selected financial and sales data: August 2, 2026 August 3, 2025 % Change Comparable sales (% change) 1.2 % 0.4 % N/A Comparable customer transactions (% change) (1) (1.2) % (0.5) % N/A Comparable average ticket (% change) (1) (2) 2.5 % 0.7 % N/A Customer transactions (in millions) (1) 834.3 841.6 (0.9) % Average ticket (1) (2) $ 92.62 $ 90.34 2.5 Diluted earnings per share $ 8.09 $ 8.03 0.7 % ————— (1)Customer transactions and average ticket measures do not include results from HD Supply or SRS. (2)Average ticket represents the average price paid per transaction and is used by management to monitor the performance of the Company, as it represents a primary driver in measuring sales performance. Sales We assess our sales performance by evaluating both net sales and comparable sales. Net Sales. Net sales for the first six months of fiscal 2026 were $89.6 billion, an increase of 5.3% from $85.1 billion for the first six months of fiscal 2025. The increase in net sales for the first six months of fiscal 2026 was primarily driven by sales from GMS which contributed approximately $2.8 billion of incremental net sales during the first six months of fiscal 2026, as well as the impact of a positive comparable sales environment. Net sales also increased due to sales from new stores and branches, as well as our acquisition of Mingledorff’s. Online sales represented 16.5% of net sales during the first six months of fiscal 2026 and increased by 10.8% compared to the first six months of fiscal 2025. A weaker U.S. dollar compared to the first six months of fiscal 2025 positively impacted net sales by $325 million during the first six months of fiscal 2026. Comparable Sales. Total comparable sales for the first six months of fiscal 2026 increased 1.2%, primarily reflecting a 2.5% increase in comparable average ticket, partially offset by a 1.2% decrease in comparable customer transactions compared to the first six months of fiscal 2025. Foreign exchange rates positively impacted comparable sales by approximately 40 basis points for the first six months of fiscal 2026. Our comparable sales Fiscal Q2 2026 Form 10-Q 18 Table of Contents results reflect customer engagement with smaller repair and maintenance projects, despite the impact of consumer uncertainty and housing affordability pressure on home improvement demand. During the first six months of fiscal 2026, our Storage & Organization, Hardware, Power, Electrical, Plumbing, Indoor Garden, Bath, Paint, Kitchen & Blinds, and Outdoor Garden merchandising departments within our Primary segment posted positive comparable sales compared to the first six months of fiscal 2025. Gross Profit Gross profit for the first six months of fiscal 2026 increased 4.6% to $29.9 billion from $28.6 billion for the first six months of fiscal 2025. Gross profit as a percentage of net sales, or gross profit margin, was 33.4% for the first six months of fiscal 2026 compared to 33.6% for the first six months of fiscal 2025. The decrease in gross profit margin during the first six months of fiscal 2026 reflects the inclusion of GMS in our consolidated results, as well as incremental cost pressures related to fuel, energy, and other product input costs, largely offset by the benefit from IEEPA tariff refunds. Operating Expenses Our operating expenses are composed of SG&A and depreciation and amortization. Selling, General & Administrative. SG&A for the first six months of fiscal 2026 increased $1.1 billion, or 7.1%, to $16.4 billion from $15.3 billion for the first six months of fiscal 2025. As a percentage of net sales, SG&A was 18.3% for the first six months of fiscal 2026 compared to 18.0% for the first six months of fiscal 2025, primarily reflecting higher operating costs relative to comparable sales performance. Depreciation and Amortization. Depreciation and amortization for the first six months of fiscal 2026 increased $91 million, or 5.7%, to $1.7 billion from $1.6 billion for the first six months of fiscal 2025. As a percentage of net sales, depreciation and amortization was 1.9% for the first six months of both fiscal 2026 and fiscal 2025. Interest and Other, net Interest and other, net was $1.1 billion for the first six months of both fiscal 2026 and fiscal 2025. As a percentage of net sales, interest and other, net was 1.3% for the first six months of both fiscal 2026 and fiscal 2025. Provision for Income Taxes Our combined effective income tax rate was 24.7% for the first six months of fiscal 2026 compared to 24.3% for the first six months of fiscal 2025. Diluted Earnings per Share Diluted earnings per share were $8.09 for the first six months of fiscal 2026, compared to $8.03 for the first six months of fiscal 2025. The increase in diluted earnings per share was primarily driven by higher net earnings during the first six months of fiscal 2026. NON-GAAP FINANCIAL MEASURES To provide clarity on our operating performance, we supplement our reporting with certain non-GAAP financial measures. However, this supplemental information should not be considered in isolation or as a substitute for the related GAAP measures. Non-GAAP financial measures presented herein may differ from similar measures used by other companies. Return on Invested Capital We believe ROIC is meaningful for management, investors, and ratings agencies because it measures how effectively we deploy our capital base. ROIC is a non-GAAP profitability measure, not a measure of financial performance under GAAP. We define ROIC as NOPAT, a non-GAAP financial measure, for the most recent twelve-month period, divided by average debt and equity. We define average debt and equity as the average of beginning and ending long-term debt (including current installments) and equity for the most recent twelve-month period. Fiscal Q2 2026 Form 10-Q 19 Table of Contents The following table presents the calculation of ROIC, together with a reconciliation of NOPAT to net earnings (the most comparable GAAP financial measure): Twelve Months Ended (2) dollars in millions August 2, 2026 August 3, 2025 Net earnings $ 14,227 $ 14,629 Interest and other, net 2,275 2,344 Provision for income taxes 4,520 4,628 Operating income 21,022 21,601 Income tax adjustment (1) (5,115) (5,189) NOPAT $ 15,907 $ 16,412 Average debt and equity $ 64,124 $ 60,305 ROIC 24.8 % 27.2 % ————— (1)Income tax adjustment is defined as operating income multiplied by our effective tax rate for the trailing twelve months. (2)The fourth quarter of fiscal 2024 includes 14 weeks. All other quarters include 13 weeks. Consistent with our consolidated financial statements, periods presented only include operating results for acquisitions since their respective acquisition dates. LIQUIDITY AND CAPITAL RESOURCES At August 2, 2026, we had $2.1 billion in cash and cash equivalents, of which $1.4 billion was held by our foreign subsidiaries. We believe that our current cash position, cash flow generated from operations, funds available from our commercial paper program, and access to the long-term debt capital markets should be sufficient not only for our operating requirements, any required debt payments, and satisfaction of other contractual obligations, but also to enable us to invest in the business, fund dividend payments, and fund any share repurchases through the next several fiscal years. In addition, we believe that we have the ability to obtain alternative sources of financing, if necessary or appropriate. Our material cash requirements include contractual and other obligations arising in the normal course of business. Our contractual obligations include long-term debt and related interest payments, operating and finance lease obligations, and purchase obligations. In addition to our cash requirements, we follow a disciplined approach to capital allocation. This approach first prioritizes investing in the business, followed by paying dividends, with the intent of then returning excess cash to shareholders in the form of share repurchases. In March 2024, we paused share repurchases in connection with the SRS acquisition and do not have plans to resume share repurchases in fiscal 2026 as we seek to reduce our outstanding debt. During the first six months of fiscal 2026, we invested $1.7 billion back into our business in the form of capital expenditures. We plan to invest approximately $4 billion back into our business in the form of capital expenditures in fiscal 2026, in line with our expectation of approximately 2.5% of projected fiscal 2026 net sales. We expect to make investments across initiatives supporting our strategy of driving our core and culture, including building new stores and maintaining existing stores, delivering a frictionless interconnected experience, and winning with Pros. However, as in the past, we may adjust our capital expenditures to support the operations of the business, to enhance long-term strategic positioning, or in response to the economic environment, as necessary or appropriate. We may also utilize acquisitions to help accelerate our strategic initiatives. In February 2026, we announced a 1.3% increase in our quarterly cash dividend from $2.30 to $2.33 per share. During the first six months of fiscal 2026, we paid cash dividends of $4.6 billion to shareholders. We intend to pay a dividend in the future; however, any future dividend is subject to declaration by our Board based on our earnings, capital requirements, financial condition, and other factors considered relevant by our Board. In August 2023, our Board approved a $15.0 billion share repurchase authorization that replaced the previous authorization of $15.0 billion, which was approved in August 2022. The August 2023 authorization does not have a prescribed expiration date. As of August 2, 2026, approximately $11.7 billion of the $15.0 billion share repurchase authorization remained available. Fiscal Q2 2026 Form 10-Q 20 Table of Contents DEBT We have a commercial paper program that allows for an aggregate of $11.0 billion in borrowings, and is supported by $11.0 billion of back-up credit facilities. At the beginning of fiscal 2026, these back-up credit facilities consisted of a five-year $3.5 billion credit facility scheduled to expire in May 2030, a 364-day $3.5 billion credit facility scheduled to expire in July 2026, a three-year $3.0 billion credit facility scheduled to expire in July 2028, and a 364-day $1.0 billion credit facility scheduled to expire in July 2026. During the second quarter of fiscal 2026, we entered into a new 364-day $4.5 billion back-up credit facility scheduled to expire in July 2027. This facility replaced our prior 364-day $3.5 billion and 364-day $1.0 billion back-up credit facilities, which were scheduled to expire in July 2026. During the first six months of fiscal 2026, all of our short-term borrowings were under our commercial paper program. We utilized commercial paper borrowings to support general liquidity, including the repayment of long-term debt, and the maximum amount outstanding during the first six months of fiscal 2026 was $6.2 billion. At August 2, 2026, we had outstanding borrowings under our commercial paper program of $4.2 billion with a weighted average interest rate of 3.8%, we had no outstanding borrowings under our back-up credit facilities, and we were in compliance with all of the covenants contained in our back-up credit facilities, none of which are expected to impact our liquidity or capital resources. We also issue senior notes from time to time. We did not have any issuances of senior notes during the first six months of fiscal 2026. During the first six months of fiscal 2026, we repaid an aggregate of $2.8 billion of senior notes at maturity. The indentures governing our senior notes do not generally limit our ability to incur additional indebtedness or require us to maintain financial ratios or specified levels of net worth or liquidity. The indentures governing our notes contain various covenants, none of which are expected to impact our liquidity or capital resources. We were in compliance with all such covenants at August 2, 2026. See Note 5 to our consolidated financial statements for further discussion of our debt arrangements. CASH FLOWS SUMMARY Operating Activities Cash flow generated from operations provides us with a significant source of liquidity. Our operating cash flows result primarily from cash received from our customers, offset by cash payments we make for products and services, associate compensation, operations, occupancy costs, and income taxes. Cash provided by or used in operating activities is also subject to changes in working capital. Working capital at any point in time is subject to many variables, including seasonality, inventory management and category expansion, the timing of cash receipts and payments, vendor payment terms, and fluctuations in foreign exchange rates. Net cash provided by operating activities increased by $2.5 billion in the first six months of fiscal 2026 compared to the first six months of fiscal 2025, primarily due to changes in working capital. Changes in working capital were primarily driven by timing of vendor payments and inventory management, along with the deferral of our fourth quarter fiscal 2024 estimated federal tax payment to the first quarter of fiscal 2025, which resulted in fewer income tax payments in the first six months of fiscal 2026 compared to the first six months of fiscal 2025. Investing Activities Net cash used in investing activities increased by $1.1 billion in the first six months of fiscal 2026 compared to the first six months of fiscal 2025, primarily resulting from higher cash paid for acquisitions during the first six months of fiscal 2026 compared to the first six months of fiscal 2025. Financing Activities Net cash used in financing activities in the first six months of fiscal 2026 primarily reflected $4.6 billion of cash dividends paid and $3.0 billion of repayments of long-term debt. Net cash used in financing activities in the first six months of fiscal 2025 primarily reflected $4.6 billion of cash dividends paid and $1.2 billion of repayments of long-term debt. Fiscal Q2 2026 Form 10-Q 21 Table of Contents CRITICAL ACCOUNTING ESTIMATES During the first six months of fiscal 2026, there were no changes to our critical accounting estimates or our significant accounting policies as disclosed in the 2025 Form 10-K. Our significant accounting policies are disclosed in Note 1 to our consolidated financial statements. ADDITIONAL INFORMATION For information on accounting pronouncements that have impacted or may materially impact our consolidated financial condition, results of operations, or cash flows, see Note 1 to our consolidated financial statements.