Share-based Compensation

12 Months Ended

Jan. 31, 2026

Share-Based Payment Arrangement, Noncash Expense [Abstract]

Plan Summary

In 2021, the Board approved the Company’s 2021 Stock Option and Performance Incentive Plan (“2021 Plan”). In 2024, the Company’s stockholders approved an amendment to the 2021 Plan to increase the number of shares available for issuance under the plan by 5 million shares. The 2021 Plan provides for the grant of incentive stock options, nonstatutory stock options, stock appreciation rights, restricted shares, restricted share units, performance share units, unrestricted shares, converted awards, replacement awards and substitute awards.

Under the amended 2021 Plan, 15 million options, restricted shares and unrestricted shares have been authorized to be granted to employees and directors. There were 6 million options and shares available for grant as of January 31, 2026.

Income Statement Impact

The following table provides share-based compensation expense included in the Consolidated Statements of Income for 2025, 2024 and 2023:


	2025		2024		2023
	(in millions)
Costs of Goods Sold, Buying and Occupancy	$	19	$	20	$	17
General, Administrative and Store Operating Expenses	36		40		39
Total Share-based Compensation Expense	$	55	$	60	$	56

The tax benefit associated with recognized share-based compensation expense was $8 million for 2025, $11 million for 2024 and $9 million for 2023.

Restricted Stock

Restricted stock, including restricted stock units and performance share units, generally vests (the restrictions lapse) on a graded basis over a three-year period or at the end of a three-year period. The fair value of restricted stock awards is generally based on the market value of an unrestricted share on the grant date adjusted for anticipated dividend yields, if applicable.

During 2025, 2024 and 2023, the Company granted certain performance share unit awards that include a specified market condition which determines, in part, the number of shares that vest under the award. The market condition compares the Company’s total shareholder return over the performance period to that of a designated peer group. The performance share unit awards were valued using a Monte Carlo simulation model, which requires certain assumptions, including a risk-free interest rate, which was 4.0% for 2025, 4.5% for 2024 and 4.0% for 2023, and expected volatility, which was 62.5% for 2025, 45.4% for 2024 and 47.1% for 2023. The risk-free interest rate assumption is based on U.S. treasury constant maturity yields on the grant date with a term corresponding to the length of the remaining performance period. The expected volatility assumption is based on the historical volatility of the Company’s common stock corresponding to the length of the performance period of the award. There was no dividend yield utilized in the Monte Carlo simulation model as the Company has not paid any cash dividends since becoming an independent, publicly traded company.

The following table provides the Company’s restricted stock activity for the fiscal year ended January 31, 2026:


	Number of Shares	Weighted-Average Grant Date Fair Value
	(in thousands)
Unvested as of February 1, 2025	5,655	$	25.03
Granted	3,399	21.50

Vested	(2,020)	27.17
Cancelled	(1,462)	25.63
Unvested as of January 31, 2026	5,572	$	21.88

The weighted-average estimated fair value of restricted stock awards granted was $21.50 per share for 2025, $19.05 per share for 2024 and $28.60 per share for 2023.

The Company’s total intrinsic value of restricted stock awards that vested was $44 million for 2025, $30 million for 2024 and $35 million for 2023. The Company’s total fair value at grant date of restricted stock awards that vested was $55 million for 2025, $52 million for 2024 and $44 million for 2023. The tax benefit realized from tax deductions associated with restricted stock awards that vested was $8 million for 2025, $6 million for 2024 and $7 million for 2023.

As of January 31, 2026, there was $46 million of total unrecognized compensation cost, net of estimated forfeitures, related to unvested restricted stock. That cost is expected to be recognized over a weighted-average period of 1.6 years.