The following discussion and analysis is intended to promote an understanding of the results of operations and financial condition of the Company and is provided as a supplement to, and should be read in conjunction with, our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q, as well as the audited consolidated financial statements and the related notes thereto in our Annual Report on Form 10-K for fiscal year 2025. The following discussion may contain forward-looking statements that reflect our plans, estimates and assumptions. Our actual results could differ materially from those discussed in the forward-looking statements. Factors that could cause such differences are discussed in the sections of this Quarterly Report on Form 10-Q titled “Forward-Looking Statements” and in Part I. “Item 1A. Risk Factors” in our Annual Report on Form 10-K for fiscal year 2025 and subsequent filings with the SEC. We report on the basis of a 52- or 53-week fiscal year, which ends on the Saturday closest to January 31. Accordingly, references herein to “fiscal year 2026” relate to the 52 weeks ending January 30, 2027, and references herein to “fiscal year 2025” relate to the 52 weeks ended January 31, 2026. The second quarter of fiscal year 2026 ended on August 1, 2026, and the second quarter of fiscal year 2025 ended on August 2, 2025, and both included thirteen weeks. Overview BJ’s Wholesale Club is a leading operator of membership warehouse clubs concentrated primarily in the eastern half of the United States. We deliver significant value to our members, consistently offering up to 25% savings on a representative basket of manufacturer-branded groceries compared to traditional supermarket competitors. We provide a curated assortment focused on groceries, fresh foods, general merchandise, gasoline, and other ancillary services to deliver a differentiated shopping experience that is further enhanced by our digital capabilities. Additionally, we provide access to coupons and promotions to deliver further value to our members. Since pioneering the warehouse club model in New England in 1984, we have grown our footprint to 267 large-format, high-volume warehouse clubs and 206 gas stations spanning 22 states as of the date of this filing. In our originating New England market, which has high population density and generates a disproportionate part of U.S. gross domestic product (“GDP”), we operate nearly three times the number of clubs compared to the next largest warehouse club competitor. In addition to shopping in our clubs, members are able to shop when and how they want through our website, bjs.com, and our highly rated mobile app, which allows them to use our BOPIC service, curbside delivery, same-day delivery or traditional ship-to-home service, as well as through the DoorDash and Instacart marketplaces. We also offer Same-Day Select, which offers BJ’s members the ability to pay a one-time fee for unlimited same-day deliveries over a one-year period. Additionally, members may use ExpressPay® to skip checkout lines when they shop in club and pay via their mobile devices. Our goal is to offer our members significant value and a meaningful return in savings on their annual membership fee. We have approximately 8.5 million members paying annual fees to gain access to savings on groceries, general merchandise, services, and gasoline. The annual membership fee for our Club membership is generally $60, and the annual membership fee for our Club+ membership, which offers additional value-enhancing features, is generally $120. Prior to January 1, 2025, the Club and Club+ membership fees were $55 and $110 per year, respectively. We believe that members can save over ten times their $60 Club membership fee versus what they would otherwise pay at traditional supermarket competitors when they spend $2,500 or more per year at BJ’s on manufacturer-branded groceries. In addition to providing significant savings on a representative basket of manufacturer-branded groceries, we accept all manufacturer coupons and also carry our own exclusive brands that enable members to save on price without compromising on quality. Our two private label brands, Wellsley Farms® and Berkley Jensen®, represented approximately 27% of our total net sales, excluding gasoline, for fiscal year 2025. Our customers recognize the relevance of our value proposition across economic environments, as demonstrated by over 25 consecutive years of membership fee income growth. Our membership fee income was $524.0 million for the trailing twelve-months ended August 1, 2026. Our business is subject to some seasonality. Historically, our business has generally realized a slightly higher portion of net sales and cash flows from operations in the second and fourth fiscal quarters, attributable primarily to the impact of the summer and year-end holiday season, respectively. Our quarterly results have been, and will continue to be, affected by the timing of new club openings and their associated pre-opening expenses. As a result of these factors, our financial results for any single quarter or for periods of less than a year are not necessarily indicative of the results that may be achieved for a full fiscal year. 21 Factors Affecting Our Business Overall economic trends The overall economic environment and related changes in consumer behavior have a significant impact on our business. In general, positive conditions in the broader economy promote customer spending in our clubs, while economic weakness, which generally results in a reduction of customer spending, may have a different or more extreme effect on spending at our clubs. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include, among others, employment rates, changes to the SNAP, government stimulus programs, tax legislation, business conditions, changes in the housing market, the availability of credit, interest rates and inflation, tariffs, tax rates, and fuel and energy costs. In addition, unemployment rates and benefits may cause us to experience higher labor costs. Size and loyalty of membership base The membership model is a critical element of our business. Members drive our results of operations through their membership fee income and their purchases. The majority of members renew within six months following their renewal date. Therefore, our renewal rate is a trailing calculation that captures renewals during the period seven to eighteen months prior to the reporting date. We have grown our membership fee income each year for over 25 consecutive years and the quality of our membership mix is strong as evidenced by our higher tier penetration growth in the first twenty-six weeks of fiscal year 2026. Our tenured membership renewal rate, a key indicator of membership engagement, satisfaction and loyalty, was 90% at the end of fiscal year 2025. Effective sourcing and distribution of products and consumer demands Our net sales and gross profit are affected by our ability to purchase our products in sufficient quantities at competitive prices. Further, our ability to maintain our appeal to existing customers and attract new customers primarily depends on our ability to originate, develop, and offer a compelling product assortment responsive to customer preferences. As a result, our level of net sales could be adversely affected due to constraints in our supply chain, including our inability to procure and stock sufficient quantities of some merchandise in a manner that is able to match market demand from our customers. Infrastructure investment Our historical operating results reflect the impact of our ongoing investments to support our growth. We have made significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe that expanding our club footprint, bringing substantially all of our end-to-end perishable supply chain in-house, enhancing our information systems, including our distribution center and transportation management systems, and investing in hardware, software, and digitally enabled shopping capabilities for convenience, such as BOPIC, curbside pickup, same-day delivery, ExpressPay, and a digital coupon gallery will enable us to replicate our profitable club format and provide a differentiated shopping experience. We expect these infrastructure investments to support our successful operating model across our club operations. Gasoline prices The market price of gasoline impacts our net sales and comparable club sales, and large fluctuations in the price of gasoline have a short-term impact on our sales and margins. Retail gasoline prices are driven by daily crude oil and wholesale commodity market changes and are volatile, as they are influenced by factors that include changes in demand and supply of oil and refined products, global geopolitical events, regional market conditions, and supply interruptions caused by severe weather conditions. The change in crude oil prices impacts the purchase price of wholesale petroleum fuel products, which in turn impacts retail gasoline prices at the pump. During times when prices are particularly volatile, differences in pricing and procurement strategies between the Company and its competitors lead to temporary margin contraction or expansion, depending on whether prices are rising or falling, and this impact affects our overall results for a fiscal quarter. In addition, the relative level of gasoline prices from period to period leads to differences in our net sales between those periods. Further, because we generally attempt to maintain a fairly stable gross profit per gallon on an absolute dollar basis, this variance in net sales, which may be substantial, may or may not have a significant impact on our operating income. Inflation and deflation trends Our financial results can be directly impacted by substantial changes in product costs due to commodity cost fluctuations or general inflation, disinflation, or deflation, which could lead to a reduction in our sales, as well as greater margin pressure, as 22 costs may not be able to be passed on to consumers. Changes in commodity prices and changes in inflation rates have impacted several categories of our business and may continue to do so. Inflationary volatility can be attributed to macroeconomic factors including supply chain disruptions, government stimulus, interest rates, tariffs, and other factors. In response to general inflationary volatility, we seek to minimize the impact of such events by sourcing our merchandise from different vendors, changing our product mix, or increasing our pricing when necessary. Results of Operations The following table summarizes key components of our results of operations for the periods indicated: Statement of Operations Data Thirteen Weeks Ended Twenty-six Weeks Ended (dollars in thousands, except per share amounts) August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 Net sales $ 6,090,975 $ 5,256,907 $ 11,620,120 $ 10,290,001 Membership fee income 135,604 123,333 267,959 243,722 Total revenues 6,226,579 5,380,240 11,888,079 10,533,723 Cost of sales 5,116,580 4,374,065 9,750,179 8,558,049 Selling, general and administrative expenses 851,206 786,358 1,657,216 1,547,238 Pre-opening expenses 6,436 3,287 20,414 8,261 Operating income 252,357 216,530 460,270 420,175 Interest expense, net 13,083 10,393 25,450 21,492 Income before income taxes 239,274 206,137 434,820 398,683 Provision for income taxes 65,407 55,432 118,227 98,210 Net income $ 173,867 $ 150,705 $ 316,593 $ 300,473 Weighted-average shares outstanding—basic 127,208 131,799 127,929 131,684 Basic EPS(a) $ 1.37 $ 1.14 $ 2.47 $ 2.28 Weighted-average shares outstanding—diluted 127,738 132,517 128,561 132,633 Diluted EPS(a) $ 1.36 $ 1.14 $ 2.46 $ 2.27 Operational Data: Total clubs at end of period 267 255 267 255 Comparable club sales (b) 11.9% (0.3)% 9.2% 0.6% Merchandise comparable club sales (b) 3.1% 2.3% 2.3% 3.1% Adjusted net income (b) $ 173,867 $ 151,456 $ 316,593 $ 302,331 Adjusted EPS (b) 1.36 1.14 2.46 2.28 Adjusted EBITDA (b) 347,196 303,861 645,266 589,697 Net cash provided by operating activities 401,481 249,864 541,439 457,957 Adjusted free cash flow (b) 265,528 87,291 223,482 154,887 (a) Basic and diluted EPS are calculated using net income. (b) See “Non-GAAP Financial Measures” and “Liquidity and Capital Resources” within Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations for definitions. 23 Net Sales Net sales are derived from direct retail sales to our customers, net of merchandise returns and discounts. Fluctuations in net sales are impacted by opening new clubs and gas stations and comparable club sales. Net sales for the second quarter of fiscal year 2026 were $6.09 billion, a 15.9% increase from net sales reported for the second quarter of fiscal year 2025 of $5.26 billion. Net sales for the first six months of fiscal year 2026 were $11.62 billion, a 12.9% increase from net sales reported for the first six months of fiscal year 2025 of $10.29 billion. The increase for both comparative periods was due primarily to growth in traffic and ticket in each of the general merchandise and services division and the perishables, grocery, and sundries division, as well as a net increase of twelve clubs from the prior year period. Additionally, net sales for both comparative periods were positively impacted by an increase in the average retail price-per-gallon of gasoline sold compared to the second quarter and first six months of fiscal year 2025, as well as an increase in comparable gallons sold. Comparable Club Sales and Merchandise Comparable Club Sales We believe net sales are an important driver of our profitability, particularly comparable club sales. Comparable club sales, a key performance indicator, also known as same-store sales in the retail industry, includes all clubs that were open for at least 13 months at the beginning of the period and were in operation during the entirety of both periods being compared, including relocated clubs and expansions. Comparable club sales allow us to evaluate how our club base is performing by measuring the change in period-over-period net sales in clubs that have been open for the applicable period. Various factors affect comparable club sales, including customer preferences and trends, product sourcing, promotional offerings and pricing, shopping frequency from new and existing members and the amount they spend on each visit, weather, and holiday shopping period timing and length. Sales comparisons can be influenced by certain factors that are beyond our control such as changes in the cost of gasoline and macro-economic factors such as inflation. The higher comparable club sales, the more we can leverage certain of our selling, general and administrative (“SG&A”) expenses, reducing them as a percentage of sales and enhancing profitability. Thirteen Weeks Ended Twenty-six Weeks Ended August 1, 2026 August 1, 2026 Merchandise comparable club sales 3.1 % 2.3 % Gasoline comparable sales 8.8 % 6.9 % Comparable club sales 11.9 % 9.2 % Merchandise comparable club sales represents comparable club sales from all merchandise other than our gasoline operations for the applicable period. Merchandise comparable club sales increased 3.1% and 2.3% in the second quarter and the first six months of fiscal year 2026, respectively, compared to the same periods in fiscal year 2025. The general merchandise and services division generated a sales increase of 5.3% and 6.1% for the second quarter and the first six months of fiscal year 2026, while sales in the perishables, grocery, and sundries division increased by 2.8% and 1.8%, respectively. General merchandise and services exhibited growth in each of the second quarter and the first six months of fiscal year 2026 compared to the prior year periods, primarily due to strength in consumer electronics and home categories. In the perishables, grocery, and sundries division, growth was led by beverages and active nutrition, candy, and snack categories as well as fresh meat and produce compared to the second quarter and the first six months of fiscal year 2025. Growth in both periods was partially offset by a decrease in dairy, primarily driven by continued deflation in the price of eggs. The impact of gasoline sales is a result of an increase in retail prices year-over-year, as well as an increase in comparable gallons sold for both comparative periods. Membership fee income Membership fee income was $135.6 million in the second quarter of fiscal year 2026 compared to $123.3 million in the second quarter of fiscal year 2025, a 9.9% increase. 24 Membership fee income was $268.0 million in the first six months of fiscal year 2026 compared to $243.7 million in the first six months of fiscal year 2025, a 9.9% increase. The increase for both comparative periods was primarily driven by strength in membership acquisition, retention and higher-tier membership penetration across both new and existing clubs. Cost of sales Cost of sales consists primarily of the direct cost of merchandise and gasoline sold at our clubs, including costs associated with operating our distribution centers, including payroll, payroll benefits, occupancy costs, and depreciation; freight expenses associated with moving merchandise from vendors to our distribution centers and from distribution centers to our clubs; and vendor allowances, rebates, and cash discounts. Cost of sales was $5.12 billion, or 84.0% of net sales, in the second quarter of fiscal year 2026 compared to $4.37 billion, or 83.2% of net sales, in the second quarter of fiscal year 2025. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased by approximately 20 basis points compared to the prior year period. Cost of sales was $9.75 billion, or 83.9% of net sales, in the first six months of fiscal year 2026 compared to $8.56 billion, or 83.2% of net sales, in the first six months of fiscal year 2025. Merchandise gross margin rate, which excludes gasoline sales and membership fee income, decreased by approximately 10 basis points compared to the first six months of fiscal year 2025. The decrease in merchandise gross margin rate for both comparative periods was primarily driven by the Company’s continued investments in pricing partially offset by tariff refunds recognized. Selling, general and administrative expenses SG&A consists of various expenses related to supporting and facilitating the sale of merchandise in our clubs, including the following: payroll and payroll benefits for team members; rent, depreciation, and other occupancy costs for retail and corporate locations; share-based compensation, advertising expenses; tender costs, including credit and debit card fees; amortization of intangible assets; and consulting, legal, insurance, restructuring charges, and other professional services expenses. SG&A includes both fixed and variable components and, therefore, is not directly correlated with net sales. We expect that our SG&A will increase in future periods due to investments to drive comparable club sales growth and our expanding footprint as we open new clubs and distribution centers. In addition, any future increases in wages or stock-based grants or modifications will increase our SG&A. SG&A increased by 8.2% to $851.2 million in the second quarter of fiscal year 2026 from $786.4 million in the second quarter of fiscal year 2025. SG&A increased by 7.1% to $1.66 billion in the first six months of fiscal year 2026 from $1.55 billion in the first six months of fiscal year 2025. The increase in SG&A for both comparative periods was primarily driven by increased labor, occupancy, and operational costs mainly as a result of new club and gas station openings. Additionally, an increase in the number of owned clubs has resulted in increased depreciation expense year-over-year. These increases were partially offset by a gain recognized in connection with a sale-leaseback transaction in the second quarter of fiscal year 2026. Pre-opening expenses Pre-opening expenses include startup costs for new clubs and distribution centers and costs for relocated clubs. Expenses will vary based on the number of club openings, geography of the club, whether the club is owned or leased, and timing of the opening relative to our period end. Pre-opening expenses were $6.4 million in the second quarter of fiscal year 2026 compared to $3.3 million in the second quarter of fiscal year 2025. 25 Pre-opening expenses were $20.4 million in the first six months of fiscal year 2026 compared to $8.3 million in the first six months of fiscal year 2025. Pre-opening expenses fluctuated due to timing of spend and the number of club openings year-over-year. Interest expense, net Interest expense, net was $13.1 million in the second quarter of fiscal year 2026 compared to $10.4 million in the second quarter of fiscal year 2025. Interest expense, net was $25.5 million in the first six months of fiscal year 2026 compared to $21.5 million in the first six months of fiscal year 2025. The increase for both comparative periods was primarily due to incremental interest expense on finance leases and higher outstanding borrowings on our ABL Revolving Facility, partially offset by lower interest rates year-over-year. Provision for income taxes The effective income tax rate was 27.3% and 26.9% for the second quarter of fiscal years 2026 and 2025, respectively. The increase in the effective tax rate was primarily attributable to lower tax gains on transferable tax credits, partially offset by higher tax benefits from stock-based compensation in the current year period. The effective income tax rate was 27.2% and 24.6% for the first six months of fiscal years 2026 and 2025, respectively. The increase compared to the prior year period was primarily attributable to lower tax benefits from stock-based compensation compared to the prior year period. Non-GAAP Financial Measures The accompanying condensed consolidated financial statements, including the related notes, are presented in accordance with GAAP. In addition to relevant GAAP measures we also provide non-GAAP measures, including adjusted net income, adjusted net income per diluted share (“adjusted EPS”), adjusted EBITDA, adjusted free cash flow, and other key performance indicators, including comparable club sales, because management believes these metrics are useful to investors and analysts by excluding items that we do not believe are indicative of our core operating performance. These measures are customary for our industry and commonly used by competitors. These non-GAAP financial measures should not be reviewed in isolation or considered as an alternative to any other performance measure derived in accordance with GAAP and should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. In addition, adjusted net income, adjusted EPS, adjusted EBITDA, adjusted free cash flow, and comparable club sales may not be comparable to similarly titled measures used by other companies in our industry or across different industries. See Results of Operations above for our comparable club sales and merchandise comparable club sales results. Adjusted free cash flow is discussed within the Liquidity and Capital Resources section below. Adjusted Net Income and Adjusted EPS The adjusted net income and adjusted EPS metrics are important measures used by management to compare the performance of core operating results between periods. We define adjusted net income as net income as reported, adjusted for non-recurring, infrequent, or unusual charges, including restructuring charges, and other adjustments that the Company believes appropriate, net of the tax impact of such adjustments. We define adjusted EPS as adjusted net income divided by the weighted-average diluted shares outstanding. We believe adjusted net income and adjusted EPS are useful metrics to investors and analysts because they present more accurate year-over-year comparisons for our net income and net income per diluted share because adjusted items are not the result of our normal operations. We also use adjusted EPS in connection with establishing long-term incentive compensation. 26 Thirteen Weeks Ended Twenty-six Weeks Ended (in thousands, except per share amounts) August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 Net income as reported $ 173,867 $ 150,705 $ 316,593 $ 300,473 Adjustments: Restructuring (a) — 1,043 — 2,580 Tax impact of adjustments to net income (b) — (292) — (722) Adjusted net income $ 173,867 $ 151,456 $ 316,593 $ 302,331 Weighted-average diluted shares outstanding 127,738 132,517 128,561 132,633 Adjusted EPS (c) $ 1.36 $ 1.14 $ 2.46 $ 2.28 (a)Represents charges related to the restructuring of certain corporate and club functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees. (b)Represents the tax effect of the above adjustments at a statutory tax rate of approximately 28%. (c)Adjusted EPS is measured using weighted-average diluted shares outstanding. Adjusted EBITDA Adjusted EBITDA is defined as net income before interest expense, net, provision for income taxes, and depreciation and amortization, adjusted for the impact of certain other items, including stock-based compensation expense, restructuring, and other adjustments. We believe that adjusted EBITDA is helpful in highlighting trends in our core operating performance compared to other measures, which can differ significantly depending on long-term strategic decisions regarding capital structure, the tax jurisdictions in which companies operate and capital investments. We use adjusted EBITDA to supplement GAAP measures of performance in the evaluation of the effectiveness of our business strategies; to make budgeting decisions; and to compare our performance against that of other peer companies using similar measures. We also use adjusted EBITDA in connection with establishing annual incentive compensation. The following is a reconciliation of our net income to adjusted EBITDA for the periods presented: Thirteen Weeks Ended Twenty-six Weeks Ended (in thousands) August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 Net income $ 173,867 $ 150,705 $ 316,593 $ 300,473 Interest expense, net 13,083 10,393 25,450 21,492 Provision for income taxes 65,407 55,432 118,227 98,210 Depreciation and amortization 78,883 71,933 155,335 141,598 Stock-based compensation expense 15,460 13,945 28,740 24,599 Restructuring (a) — 1,043 — 2,580 Other adjustments (b) 496 410 921 745 Adjusted EBITDA $ 347,196 $ 303,861 $ 645,266 $ 589,697 (a) Represents charges related to the restructuring of certain corporate and club functions, including costs for severance, retention, outplacement, consulting fees, and other third-party fees. (b) Other non-cash items, including non-cash accretion on asset retirement obligations and obligations associated with our post-retirement medical plan. Liquidity and Capital Resources Our primary sources of liquidity are cash flows generated from club operations and borrowings from our ABL Revolving Facility. As of August 1, 2026, cash and cash equivalents totaled $30.0 million and we had $962.3 million of unused capacity under our ABL Revolving Facility. Our principal liquidity needs for the next twelve months and beyond are to fund normal 27 recurring operational expenses and anticipated capital expenditures, fund share repurchases, and meet debt service and principal repayment obligations. We believe that our current resources, together with anticipated cash flows from operations and borrowing capacity under our ABL Revolving Facility, will be sufficient to finance our operations for at least the next twelve months. During the twenty-six weeks ended August 1, 2026, we repurchased 3,498,278 shares under the 2024 Repurchase Program for a total purchase price of $330.7 million, inclusive of associated costs. We continue to prioritize disciplined capital allocation, balancing reinvestment in growth, and returns to shareholders through share repurchases. We do not have any off-balance sheet arrangements that have, or are, in the opinion of management, reasonably likely to have, a current or future material effect on our results of operations or financial position. We do, however, enter into letters of credit and purchase obligations in the normal course of our operations. Summary of Cash Flows A summary of our cash flows from operating, investing and financing activities is presented in the following table: Twenty-six Weeks Ended (in thousands) August 1, 2026 August 2, 2025 Net cash provided by operating activities $ 541,439 $ 457,957 Net cash used in investing activities (321,739) (306,156) Net cash used in financing activities (235,963) (132,800) Net (decrease) increase in cash and cash equivalents $ (16,263) $ 19,001 Net Operating Cash Flows Net cash provided by operating activities was $541.4 million for the twenty-six weeks ended August 1, 2026 compared to $458.0 million for the twenty-six weeks ended August 2, 2025. The increase was primarily due to a $16.1 million increase in net income, inclusive of a $13.7 million increase in depreciation and amortization. Also positively impacting net operating cash flows were fluctuations in working capital including $109.8 million related to accounts payable as a result of timing and volume of inventory purchases and vendor payments, $89.1 million related to accrued expenses, primarily driven by accruals for vendor invoices and the timing of membership payments. These positive working capital fluctuations were partially offset by $52.5 million related to accounts receivable due to timing of vendor, customer, and other cash receipts, and $49.9 million related to merchandise inventories, primarily driven by an increase in the number of clubs, and gas inventory due primarily to increased cost per gallon and an increase in the number of gas stations. Our net cash from operating activities can fluctuate from period to period due to several factors, including: the timing and mix of sales, the timing and volume of inventory purchases as the Company prepares for holiday seasons, lease-related activity, income tax and other payments. Net Investing Cash Flows Net cash used in investing activities was $321.7 million for the twenty-six weeks ended August 1, 2026 compared to $306.2 million for the twenty-six weeks ended August 2, 2025. This fluctuation is primarily driven by an increase in capital spending of $53.3 million, partially offset by $41.4 million of net proceeds from the assignment of a purchase option and related sale-leaseback of our new ambient distribution center in Ohio. The increase in capital spend reflects our continued investment in new club openings and enhancements across our distribution network, including a new ambient distribution center. Net Financing Cash Flows Net cash used in financing activities for the twenty-six weeks ended August 1, 2026 was $236.0 million compared to $132.8 million used in financing activities for the twenty-six weeks ended August 2, 2025. The increase in cash used is primarily due to a $265.9 million increase in the acquisition of treasury stock compared to the prior year period, partially offset by $110.0 million of net borrowings on our ABL Revolving Facility for the twenty-six weeks ended August 1, 2026 compared to net payments of $70.0 million in the twenty-six weeks ended August 2, 2025. 28 Adjusted Free Cash Flow We present adjusted free cash flow, a non-GAAP measure, because we believe it assists investors and analysts in evaluating our liquidity. Adjusted free cash flow should not be considered as an alternative to cash flows from operations as a liquidity measure. We define adjusted free cash flow as net cash provided by operating activities less additions to property and equipment, net of disposals, plus proceeds from sale-leaseback transactions. The following is a reconciliation of our net cash provided by operating activities to adjusted free cash flow for the periods presented: Thirteen Weeks Ended Twenty-six Weeks Ended (in thousands) August 1, 2026 August 2, 2025 August 1, 2026 August 2, 2025 Net cash provided by operating activities $ 401,481 $ 249,864 $ 541,439 $ 457,957 Less: Additions to property and equipment, net of disposals (177,335) (165,568) (359,339) (306,065) Plus: Proceeds from sale-leaseback transactions — 2,995 — 2,995 Plus: Proceeds from assignment of purchase option 122,100 — 122,100 — Less: Payment upon exercise of purchase option (80,718) — (80,718) — Adjusted free cash flow $ 265,528 $ 87,291 $ 223,482 $ 154,887 Adjusted free cash flow increased to $265.5 million during the second quarter of fiscal year 2026 compared to $87.3 million for the second quarter of fiscal year 2025. Adjusted free cash flow increased to $223.5 million for the first six months of fiscal year 2026 compared to $154.9 million for the first six months of fiscal year 2025. The increase for both periods is primarily the result of higher cash flows from operating activities driven by higher net income and net proceeds from the assignment of a purchase option and related sale-leaseback of our new ambient distribution center in Ohio. Debt and Borrowing Capacity Our primary source of borrowing capacity is the ABL Revolving Facility, which is further discussed in “Note 4. Debt and Credit Arrangements,” included in this Quarterly Report on Form 10-Q. On July 28, 2022, we entered into the ABL Revolving Facility with an aggregate ABL Revolving Commitment of $1.20 billion pursuant to that certain credit agreement with Bank of America, N.A., as administrative agent and collateral agent, and other lenders party thereto. The maturity date of the ABL Revolving Facility is July 28, 2027. On November 4, 2024, we entered into the Fifth Amendment of the First Lien Term Loan with Nomura Corporate Funding Americas, LLC, as administrative agent and collateral agent, and the lenders party thereto. The Fifth Amendment, among other things, provided for a new tranche of term loans in an aggregate principal amount of $400.0 million, which refinanced and replaced in full the existing Tranche B term loans outstanding under the First Lien Term Loan Credit Agreement immediately prior to the effectiveness of the Fifth Amendment. In addition, the Fifth Amendment reduced applicable margin in respect of the interest rate from SOFR plus 200 basis points per annum to SOFR plus 175 basis points per annum. The maturity date of the First Lien Term Loan is February 3, 2029. At August 1, 2026, there was $230.0 million outstanding in loans under the ABL Revolving Facility and $7.7 million in outstanding letters of credit. The interest rate on the revolving credit facility was 4.83% and unused capacity was $962.3 million. At August 1, 2026, the interest rate for the First Lien Term Loan was 5.41% and there was $400.0 million outstanding. 29 Material Cash Commitments Our material cash commitments consist primarily of debt obligations, interest payments, leases, and purchase orders for merchandise inventory, agreements for capital items, gasoline, products and services used in our business, information technology, executive employment, transferable tax credits, and other agreements. These material cash commitments impact our short-term and long-term liquidity and capital needs. As of August 1, 2026, other than cash commitments of approximately $93 million, the majority of which is expected to be paid in the first quarter of fiscal year 2027, related to the purchase of transferable tax credits, and those items related to the ordinary course of operations of our business such as inventory purchases, agreements for capital items, and new leases and lease amendments, there were no material changes to our material cash commitments from those described in our Annual Report on Form 10-K for fiscal year 2025. Critical Accounting Policies and Use of Estimates This discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which we have prepared in accordance with GAAP. The preparation of our financial statements and related disclosures requires us to make estimates, assumptions and judgments that affect the reported amount of assets, liabilities, revenue, costs and expenses, and related disclosures. There were no material changes in critical accounting policies and estimates during the period covered by this Quarterly Report on Form 10-Q. Refer to “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations— Critical Accounting Policies and Estimates,” in our Annual Report on Form 10-K for fiscal year 2025 for a complete list of our Critical Accounting Policies and Estimates. Recent Accounting Pronouncements Our accounting policies are set forth in the audited financial statements included in the Company’s Annual Report on Form 10-K for fiscal year 2025. There have been no material changes to these accounting policies and no accounting pronouncements adopted that had a material impact on the Company’s financial statements aside from the adoption of ASU 2025-12, which impacts the accounting for treasury shares upon retirement. Refer to “Note 2. Summary of Significant Accounting Policies” included in this Quarterly Report on Form 10-Q for additional information regarding recently issued and recently adopted accounting pronouncements.