This discussion and analysis summarizes the significant factors affecting our consolidated operating results, liquidity and capital resources during the three and six months ended July 31, 2026, and August 1, 2025. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes to the consolidated financial statements that are included in our Annual Report on Form 10-K for the fiscal year ended January 30, 2026 (the Annual Report), as well as the consolidated financial statements (unaudited) and notes to the consolidated financial statements (unaudited) contained in this report. Unless otherwise specified, all comparisons made are to the corresponding period of fiscal 2025. This discussion and analysis is presented in four sections: •Executive Overview •Operations •Financial Condition, Liquidity and Capital Resources •Critical Accounting Policies and Estimates EXECUTIVE OVERVIEW The following table highlights our financial results: Three Months Ended Six Months Ended (in millions, except per share data) July 31, 2026 August 1, 2025 July 31, 2026 August 1, 2025 Net sales $ 25,956 $ 23,959 $ 49,034 $ 44,888 Net earnings 2,399 2,398 4,027 4,038 Diluted earnings per share 4.27 4.27 7.17 7.19 Adjusted diluted earnings per share 4.40 4.33 7.42 7.25 Net cash provided by operating activities $ 7,009 $ 7,610 Capital expenditures 1,063 1,013 Repurchases of common stock1 367 71 Cash dividend payments 1,346 1,290 1 Repurchases of common stock on a trade-date basis. Net sales in the second quarter of fiscal 2026 improved 8.3% to $26.0 billion compared to net sales of $24.0 billion in the second quarter of fiscal 2025. Comparable sales for the second quarter of fiscal 2026 increased 0.2%, consisting of an increase in comparable average ticket of 2.3%, partially offset by a decrease of 2.1% in comparable customer transactions. Net earnings in the second quarter of fiscal 2026 remained consistent with the second quarter of fiscal 2025 at $2.4 billion. Diluted earnings per common share of $4.27 were recognized for both the second quarter of fiscal 2026 and fiscal 2025. Included in the second quarter of 2026 results are pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of FBM and ADG. Excluding the impact of this item, adjusted diluted earnings per common share were $4.40 in the second quarter of 2026 (see the non-GAAP financial measures discussion). For the first six months of fiscal 2026, cash flows from operating activities were approximately $7.0 billion, with $1.1 billion used for capital expenditures. Continuing to deliver on our commitment to return cash to shareholders, we paid $1.3 billion in dividends and repaid $2.4 billion of bond maturities as we continued to progress toward our deleveraging commitment. The second quarter continued to reflect a dynamic home improvement environment, including persistent pressure in discretionary DIY demand, periods of challenging weather, elevated fuel prices and broader economic uncertainty. Customers remained cautious in their spending and prioritized repair, maintenance and smaller projects. Despite these conditions, we delivered sales growth and continued to advance our Total Home strategy. We drove growth in Pro, Online and Home Services through continued investments in differentiated assortment, strong in-stock positions, fulfillment capabilities, digital tools and loyalty programs. We also continued to advance the integration of FBM and ADG, which we believe will strengthen our ability to serve larger Pro customers and capture more planned Pro spend over the long term. 18 Table of Contents Our Perpetual Productivity Improvement initiatives continued to support disciplined cost management and strategic investments. During the quarter, we progressed initiatives to simplify store and field communications, improve replenishment and inventory accuracy, enhance merchandising execution and enable associates to spend more time serving customers. Looking ahead, we remain focused on delivering compelling value, serving customers across Pro, Online and Home Services, managing expenses with discipline and investing in the initiatives that position the Company for long-term growth. We believe our continued focus on execution, productivity and strategic investment positions us to strengthen our business and create long-term shareholder value as market conditions improve. Tariffs Beginning in 2025, the United States enacted significant changes to its trade policy and imposed a series of new tariffs on most imported goods. For 2026, the tariff environment remains dynamic and subject to ongoing modification, including court rulings, changes to existing tariffs and potential for additional tariffs this year. We continue to monitor and comply with these changes and evaluate potential impacts, including possible adjustments to our merchandise assortment, pricing, and global supply chain strategies. The Company is the importer of record for certain imported products and pays tariffs directly. The Supreme Court declared on February 20, 2026 that tariffs imposed under the International Emergency Economic Powers Act (IEEPA) were invalid. In the second quarter, we recognized approximately $80 million pre-tax of tariff refunds. However, uncertainty remains as to the amount and timing of future IEEPA refund collections. OPERATIONS The following table sets forth the percentage relationship to net sales of each line item of the consolidated statements of earnings (unaudited), as well as the percentage change in dollar amounts from the prior period. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited). Three Months Ended Basis Point Increase/(Decrease) in Percentage of Net Sales Six Months Ended Basis Point Increase/(Decrease) in Percentage of Net Sales July 31, 2026 August 1, 2025 July 31, 2026 August 1, 2025 Net sales 100.00 % 100.00 % N/A 100.00 % 100.00 % N/A Gross margin 33.04 33.81 (77) 32.87 33.61 (74) Expenses: Selling, general and administrative 17.17 17.42 (25) 18.10 18.31 (21) Depreciation and amortization 2.20 1.91 29 2.32 2.01 31 Operating income 13.67 14.48 (81) 12.45 13.29 (84) Interest – net 1.44 1.31 13 1.58 1.45 13 Pre-tax earnings 12.23 13.17 (94) 10.87 11.84 (97) Income tax provision 2.99 3.16 (17) 2.66 2.84 (18) Net earnings 9.24 % 10.01 % (77) 8.21 % 9.00 % (79) 19 Table of Contents The following table sets forth key metrics utilized by management in assessing business performance. This table should be read in conjunction with the following discussion and analysis and the consolidated financial statements (unaudited), including the related notes to the consolidated financial statements (unaudited). Three Months Ended Six Months Ended Other Metrics July 31, 2026 August 1, 2025 July 31, 2026 August 1, 2025 Comparable sales increase/(decrease) 1 0.2 % 1.1 % 0.4 % (0.3) % Customer transactions (in millions) 2 219 225 416 424 Average ticket 2 $ 107.90 $ 105.49 $ 107.78 $ 105.74 At end of period: Number of retail stores 1,761 1,753 Sales floor square feet (in millions) 196 196 Average retail store size selling square feet (in thousands) 3 111 112 Net earnings to average debt and shareholders’ deficit 21.3 % 25.3 % Return on invested capital 4 25.5 % 29.5 % 1 A comparable location is a retail location that has been open longer than 13 months. A location that is identified for relocation is no longer considered comparable in the month of its relocation. A location we decide to close is no longer considered comparable as of the beginning of the month in which we announce its closing. Comparable sales include online sales, which positively impacted second quarter fiscal 2026 and fiscal 2025 comparable sales by approximately 195 basis points and 85 basis points, respectively, and year-to-date fiscal 2026 and fiscal 2025 comparable sales by approximately 190 basis points and 75 basis points, respectively. Acquisitions are typically included in comparable sales after they have been owned for more than 12 months. 2 Customer transactions and average ticket represent metrics used by management to evaluate performance of our retail locations. 3 Average store size selling square feet is defined as sales floor square feet divided by the number of stores open at the end of the period. 4 Return on invested capital is calculated using a non-GAAP financial measure. See below for additional information and reconciliations of non-GAAP measures. Non-GAAP Financial Measures Adjusted Diluted Earnings Per Share Adjusted diluted earnings per share is considered a non-GAAP financial measure. The Company believes this non-GAAP financial measure provides useful insight for analysts and investors in understanding the comparison of operational performance for fiscal 2026. Adjusted diluted earnings per share excludes the impact of certain items, further described below. Fiscal 2026 Impacts During fiscal 2026, the Company recognized financial impacts from the following: •In the first quarter of fiscal 2026, the Company recognized pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of Artisan Design Group and Foundation Building Materials (Acquisitions of businesses). •In the second quarter of fiscal 2026, the Company recognized pre-tax expenses of $96 million consisting of intangible asset amortization related to the acquisitions of Artisan Design Group and Foundation Building Materials (Acquisitions of businesses). Fiscal 2025 Impacts During fiscal 2025, the Company recognized financial impacts from the following: •In the second quarter of fiscal 2025, the Company recognized pre-tax expenses of $43 million consisting of transaction costs, purchase accounting adjustments, and intangible asset amortization related to the acquisition of Artisan Design Group (Acquisitions of businesses). Adjusted diluted earnings per share should not be considered an alternative to, or more meaningful indicator of, the Company’s diluted earnings per common share as prepared in accordance with GAAP. The Company’s methods of determining non-GAAP financial measures may differ from the method used by other companies and may not be comparable. 20 Table of Contents Three Months Ended July 31, 2026 August 1, 2025 Pre-Tax Earnings Tax1 Net Earnings Pre-Tax Earnings Tax1 Net Earnings Diluted earnings per share, as reported $ 4.27 $ 4.27 Non-GAAP adjustments – per share impacts Acquisitions of businesses 0.17 (0.04) 0.13 0.08 (0.02) 0.06 Adjusted diluted earnings per share $ 4.40 $ 4.33 Six Months Ended July 31, 2026 August 1, 2025 Pre-Tax Earnings Tax1 Net Earnings Pre-Tax Earnings Tax1 Net Earnings Diluted earnings per share, as reported $ 7.17 $ 7.19 Non-GAAP adjustments – per share impacts Acquisitions of businesses 0.34 (0.09) 0.25 0.08 (0.02) 0.06 Adjusted diluted earnings per share $ 7.42 $ 7.25 1 Represents the corresponding tax benefit or expense specifically related to the item excluded from adjusted diluted earnings per share. Return on Invested Capital Return on Invested Capital (ROIC) is calculated using a non-GAAP financial measure. Management believes ROIC is a meaningful metric for analysts and investors as a measure of how effectively the Company is using capital to generate financial returns. Although ROIC is a common financial metric, numerous methods exist for calculating ROIC. Accordingly, the method used by our management may differ from the methods used by other companies. We encourage you to understand the methods used by another company to calculate ROIC before comparing its ROIC to ours. We define ROIC as the rolling 12 months’ lease adjusted net operating profit after tax (Lease adjusted NOPAT) divided by the average of current year and prior year ending debt and shareholders’ deficit. Lease adjusted NOPAT is a non-GAAP financial measure, and net earnings is considered to be the most comparable GAAP financial measure. The calculation of ROIC, together with a reconciliation of net earnings to Lease adjusted NOPAT, is as follows: Four Quarters Ended (In millions, except percentage data) July 31, 2026 August 1, 2025 Calculation of Return on Invested Capital Numerator Net Earnings $ 6,642 $ 6,858 Plus: Interest expense – net 1,528 1,295 Operating lease interest 178 176 Provision for income taxes 2,121 2,177 Lease adjusted net operating profit 10,469 10,506 Less: Income tax adjustment1 2,534 2,531 Lease adjusted net operating profit after tax $ 7,935 $ 7,975 Denominator Average debt and shareholders’ deficit2 $ 31,123 $ 27,069 Net earnings to average debt and shareholders’ deficit 21.3 % 25.3 % Return on invested capital 25.5 % 29.5 % 21 Table of Contents 1 Income tax adjustment is defined as lease adjusted net operating profit multiplied by the effective tax rate, which was 24.2% and 24.1% for the periods ended July 31, 2026, and August 1, 2025, respectively. 2 Average debt and shareholders’ deficit is defined as average current year and prior year ending debt, including current maturities, short-term borrowings, and operating lease liabilities, plus the average current year and prior year ending total shareholders’ deficit. Results of Operations Net Sales – Net sales in the second quarter of 2026 increased 8.3% to $26.0 billion. Comparable sales increased 0.2%, consisting of a 2.3% increase in comparable average ticket, partially offset by a 2.1% decline in comparable customer transactions. During the second quarter of 2026, nine of our 13 product categories experienced positive comparable store sales, led by Rough Plumbing, Electrical, and Tools & Hardware. Growth across these categories was driven by continued momentum with our Pro customer and online channels, due to ongoing strength in repair and maintenance projects, as well as in-depth brand lineups and product assortments. Net sales increased 9.2% to $49.0 billion in the first six months of 2026 compared to 2025. Comparable sales increased 0.4% over the same period. Gross Margin – For the second quarter of 2026, gross margin as a percentage of sales decreased 77 basis points compared to 2025. The gross margin decline for the quarter was driven by the operational cost structure of acquisitions during 2025 and increased fuel costs, partially offset by favorability from credit revenue and tariff refunds. Gross margin as a percentage of sales decreased 74 basis points in the first six months of 2026 compared to 2025, primarily due to the same factors that impacted gross margin for the second quarter. SG&A – For the second quarter of 2026, SG&A expense leveraged 25 basis points as a percentage of sales compared to the second quarter of 2025, primarily due to the operational cost structure of acquisitions during 2025. SG&A expense as a percentage of sales leveraged 21 basis points as a percentage of sales for the first six months of 2026 compared to 2025, primarily due to the same factor that impacted SG&A for the second quarter. Depreciation and Amortization – Depreciation and amortization deleveraged 29 basis points as a percentage of sales for the second quarter of 2026 compared to 2025, primarily due to amortization of intangible assets of acquired businesses in 2025. Depreciation and amortization deleveraged 31 basis points as a percentage of sales for the first six months of 2026 compared to 2025, primarily due to the same factor that impacted depreciation and amortization for the second quarter. Interest – Net – Net interest expense for the second quarter and first six months of 2026 deleveraged 13 basis points as a percentage of sales, primarily due to the costs related to the September 2025 debt issuance and the 2025 Term Loan. Income Tax Provision – Our effective income tax rates were 24.4% and 24.0% for the three months ended July 31, 2026 and August 1, 2025, respectively, and 24.5% and 24.0% for the six months ended July 31, 2026 and August 1, 2025, respectively. FINANCIAL CONDITION, LIQUIDITY AND CAPITAL RESOURCES Sources of Liquidity Cash flows from operations, combined with our continued access to capital markets on both a short-term and long-term basis, as needed, remain adequate to fund our operations, make strategic investments to support long-term growth, return cash to shareholders in the form of dividends, and repay debt maturities as they become due. We believe these sources of liquidity will continue to support our business for the next twelve months. As of July 31, 2026, we held $3.2 billion of cash and cash equivalents, as well as $5.0 billion in undrawn capacity on our Revolving Credit Facilities. 22 Table of Contents Cash Flows Provided by Operating Activities Six Months Ended (In millions) July 31, 2026 August 1, 2025 Net cash provided by operating activities $ 7,009 $ 7,610 Cash flows from operating activities continued to provide the primary source of our liquidity. The decrease in net cash provided by operating activities for the six months ended July 31, 2026, compared to the six months ended August 1, 2025, was primarily driven by timing of prior year income tax payments and other changes in working capital. Cash Flows Used in Investing Activities Six Months Ended (In millions) July 31, 2026 August 1, 2025 Net cash used in investing activities $ (761) $ (2,343) Net cash used in investing activities primarily consists of transactions related to capital expenditures. Our capital expenditures generally consist of investments in our strategic initiatives to enhance our ability to serve customers, improve existing stores, and support expansion plans. For fiscal 2026, our guidance for capital expenditures is approximately $2.5 billion. Capital expenditures were $1,063 million and $1,013 million for the six months ended July 31, 2026, and August 1, 2025, respectively. In addition to capital expenditures, net cash used in investing activities for the six months ended August 1, 2025, includes our acquisition of ADG. Cash Flows Used in Financing Activities Six Months Ended (In millions) July 31, 2026 August 1, 2025 Net cash used in financing activities $ (4,058) $ (2,168) Net cash used in financing activities primarily consists of transactions related to our debt, share repurchases, and cash dividend payments. Debt The 2025 Credit Agreement and the 2023 Credit Agreement (collectively the Long-Term Credit Agreements) support the Company’s commercial paper program. The amounts available to be drawn under the Long-Term Credit Agreements are reduced by the amount of borrowings under the commercial paper program. As of July 31, 2026, the Company had no outstanding borrowings under the commercial paper program. The following table includes additional information related to our debt for the six months ended July 31, 2026, and August 1, 2025: Six Months Ended (In millions) July 31, 2026 August 1, 2025 Repayment of debt (2,397) (796) Maximum commercial paper outstanding at any period 1,000 — 23 Table of Contents Share Repurchases We have a share repurchase program, authorized by the Company’s Board of Directors, that is executed through purchases made from time to time either in the open market or through private off-market transactions. We also withhold shares from employees to satisfy tax withholding liabilities on share-based payments. Shares repurchased are retired and returned to authorized and unissued status. The following table provides, on a settlement date basis, the total number of shares repurchased, average price paid per share, and the total amount paid for share repurchases for the six months ended July 31, 2026, and August 1, 2025: Six Months Ended (In millions, except per share data) July 31, 2026 August 1, 2025 Total amount paid for share repurchases1 $ 366 $ 113 Total number of shares repurchased 1.5 0.5 Average price paid per share $ 243.42 $ 243.02 1 Excludes unsettled share repurchases and unpaid excise taxes. As of July 31, 2026, we had $10.5 billion remaining available under our share repurchase program with no expiration date. Dividends are paid in the quarter immediately following the quarter in which they are declared. Dividends paid per share increased from $2.30 per share for the six months ended August 1, 2025, to $2.40 per share for the six months ended July 31, 2026. Capital Resources We expect to maintain our investment grade rating and have access to the capital markets on both a short-term and long-term basis when needed for liquidity purposes by issuing commercial paper or new long-term debt. The availability and the borrowing costs of these funds could be adversely affected, however, by a downgrade of our debt ratings or a deterioration of certain financial ratios. The table below reflects our debt ratings by Standard & Poor’s (S&P) and Moody’s as of August 27, 2026, which we are disclosing to enhance understanding of our sources of liquidity and the effect of our ratings on our cost of funds. Our commercial paper and senior debt ratings may be subject to revision or withdrawal at any time by the assigning rating organization, and each rating should be evaluated independently of any other rating. Debt Ratings S&P Moody’s Commercial Paper A-2 P-2 Senior Debt BBB+ Baa1 Senior Debt Outlook Stable Stable There are no provisions in any agreements that would require early cash settlement of existing debt or leases as a result of a downgrade in our debt rating or a decrease in our stock price. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our significant accounting policies are described in Note 1 to the consolidated financial statements presented in the Annual Report. Our critical accounting policies and estimates are described in “Item 7 - Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Annual Report. Our significant and critical accounting policies and estimates have not changed significantly since the filing of the Annual Report.