Cost of Sales and Selling, General, and Administrative Expenses

12 Months Ended

Feb. 01, 2025

Cost of Sales and Selling, General, and Administrative Expenses [Abstract]

Cost of Sales and Selling, General, and Administrative Expenses

The following table illustrates the primary items classified in each major expense category:


Cost of Sales			Selling, General, and Administrative Expenses
Merchandising cost of sales, including • Merchandise costs • Payment term cash discounts • Import costs • Freight expenses associated with moving merchandise from our vendors to and between our distribution centers and our retail stores • Vendor income that is not reimbursement of specific, incremental, and identifiable costs • Markdowns • Inventory shrink Supply chain and digital fulfillment costs, including • Compensation and benefits costs associated with operating our supply chain facilities • Outbound shipping expenses associated with sales to our guests • Compensation and benefit costs associated with shipment of merchandise from stores • Depreciation associated with supply chain facilities			Compensation and benefit costs for stores and headquarters, except ship from store costs classified as cost of sales Occupancy and operating costs of retail and headquarters facilities Advertising, offset by vendor income that is a reimbursement of specific, incremental, and identifiable costs Pre-opening and exit costs of stores and other facilities Credit cards servicing expenses Costs associated with accepting third-party bank issued payment cards Litigation and defense costs and related insurance recoveries Other administrative costs

Note: The classification of these expenses varies across the retail industry.

In 2024, we reclassified certain expenses related to our advertising and third-party digital marketplace business offerings to conform to the current year presentation. The reclassifications increased Cost of Sales by $92 million and $77 million for 2023 and 2022, respectively, with equal and offsetting decreases to SG&A Expenses. These reclassifications had no impact on Net Sales, Operating Income, Net Earnings, or Earnings Per Share.