Leases

12 Months Ended

Feb. 01, 2025

Leases [Abstract]

Leases

Leases

We lease certain retail stores, supply chain facilities, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the Consolidated Statements of Financial Position; we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease and nonlease components for new and reassessed leases.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Certain of our lease agreements require reimbursement of real estate taxes, common area maintenance, and insurance, as well as rental payments based on a percentage of retail sales over contractual levels, and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate to third parties. Our lease and sublease portfolio consists mainly of operating leases with CVS Pharmacy Inc. (CVS) for space within our stores.

Leases (millions)	Classification	February 1, 2025		February 3, 2024
Assets
Operating	Operating Lease Assets	$	3,763	$	3,362
Finance	Property and Equipment, Net (a)	1,557		1,470
Total leased assets		$	5,320	$	4,832
Liabilities
Current
Operating	Accrued and Other Current Liabilities	$	353	$	329
Finance	Current Portion of Long-term Debt and Other Borrowings	136		119
Noncurrent
Operating	Noncurrent Operating Lease Liabilities	3,582		3,279
Finance	Long-term Debt and Other Borrowings	2,025		1,894
Total lease liabilities		$	6,096	$	5,621

(a)Finance lease assets are recorded net of accumulated amortization of $857 million and $743 million as of February 1, 2025, and February 3, 2024, respectively.

Lease Cost (millions)	Classification	2024		2023		2022
Operating lease cost (a)	SG&A Expenses (b)	$	641	$	550	$	467
Finance lease cost
Amortization of leased assets	Depreciation and Amortization (b)	146		136		133
Interest on lease liabilities	Net Interest Expense	77		71		68
Sublease income (c)	Net Sales	(15)		(20)		(19)
Net lease cost		$	849	$	737	$	649

(a)2024, 2023, and 2022 include $132 million, $115 million, and $101 million, respectively, of short-term and variable lease costs.

(b)Supply chain-related amounts are included in Cost of Sales.

(c)Sublease income excludes rental income from owned properties of $48 million in 2024, and $49 million for each of 2023 and 2022, which is also included in Net Sales.

Maturity of Lease Liabilities	Operating		Finance
(millions)	Leases (a)		Leases (b)		Total
2025	$	510	$	205	$	715
2026	507		203		710
2027	497		204		701
2028	469		206		675
2029	430		204		634
Thereafter	2,800		1,824		4,624
Total lease payments	$	5,213	$	2,846	$	8,059
Less: Interest	1,278		685
Present value of lease liabilities	$	3,935	$	2,161

(a)Operating lease payments include $777 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $186 million of legally binding minimum lease payments for leases signed but not yet commenced.

(b)Finance lease payments include $245 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $128 million of legally binding minimum lease payments for leases signed but not yet commenced.

Lease Term and Discount Rate	February 1, 2025		February 3, 2024
Weighted average remaining lease term (years)
Operating leases	11.8		12.0
Finance leases	13.9		14.6
Weighted average discount rate
Operating leases	4.51	%	4.22	%
Finance leases	3.88	%	3.69	%

Other Information (millions)	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	490	$	479	$	364
Operating cash flows from finance leases	76		70		63
Financing cash flows from finance leases	139		147		100

Leases

Leases

We lease certain retail stores, supply chain facilities, office space, land, and equipment. Leases with an initial term of 12 months or less are not recorded on the Consolidated Statements of Financial Position; we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease and nonlease components for new and reassessed leases.

Most leases include one or more options to renew, with renewal terms that can extend the lease term from one to 50 years or more. The exercise of lease renewal options is at our sole discretion. Certain leases also include options to purchase the leased property. The depreciable life of leased assets and leasehold improvements are limited by the expected lease term, unless there is a transfer of title or purchase option reasonably certain of exercise. We use our incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments.

Certain of our lease agreements require reimbursement of real estate taxes, common area maintenance, and insurance, as well as rental payments based on a percentage of retail sales over contractual levels, and others include rental payments adjusted periodically for inflation. Our lease agreements do not contain any material residual value guarantees or material restrictive covenants.

We rent or sublease certain real estate to third parties. Our lease and sublease portfolio consists mainly of operating leases with CVS Pharmacy Inc. (CVS) for space within our stores.

Leases (millions)	Classification	February 1, 2025		February 3, 2024
Assets
Operating	Operating Lease Assets	$	3,763	$	3,362
Finance	Property and Equipment, Net (a)	1,557		1,470
Total leased assets		$	5,320	$	4,832
Liabilities
Current
Operating	Accrued and Other Current Liabilities	$	353	$	329
Finance	Current Portion of Long-term Debt and Other Borrowings	136		119
Noncurrent
Operating	Noncurrent Operating Lease Liabilities	3,582		3,279
Finance	Long-term Debt and Other Borrowings	2,025		1,894
Total lease liabilities		$	6,096	$	5,621

(a)Finance lease assets are recorded net of accumulated amortization of $857 million and $743 million as of February 1, 2025, and February 3, 2024, respectively.

Lease Cost (millions)	Classification	2024		2023		2022
Operating lease cost (a)	SG&A Expenses (b)	$	641	$	550	$	467
Finance lease cost
Amortization of leased assets	Depreciation and Amortization (b)	146		136		133
Interest on lease liabilities	Net Interest Expense	77		71		68
Sublease income (c)	Net Sales	(15)		(20)		(19)
Net lease cost		$	849	$	737	$	649

(a)2024, 2023, and 2022 include $132 million, $115 million, and $101 million, respectively, of short-term and variable lease costs.

(b)Supply chain-related amounts are included in Cost of Sales.

(c)Sublease income excludes rental income from owned properties of $48 million in 2024, and $49 million for each of 2023 and 2022, which is also included in Net Sales.

Maturity of Lease Liabilities	Operating		Finance
(millions)	Leases (a)		Leases (b)		Total
2025	$	510	$	205	$	715
2026	507		203		710
2027	497		204		701
2028	469		206		675
2029	430		204		634
Thereafter	2,800		1,824		4,624
Total lease payments	$	5,213	$	2,846	$	8,059
Less: Interest	1,278		685
Present value of lease liabilities	$	3,935	$	2,161

(a)Operating lease payments include $777 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $186 million of legally binding minimum lease payments for leases signed but not yet commenced.

(b)Finance lease payments include $245 million related to options to extend lease terms that are reasonably certain of being exercised and exclude $128 million of legally binding minimum lease payments for leases signed but not yet commenced.

Lease Term and Discount Rate	February 1, 2025		February 3, 2024
Weighted average remaining lease term (years)
Operating leases	11.8		12.0
Finance leases	13.9		14.6
Weighted average discount rate
Operating leases	4.51	%	4.22	%
Finance leases	3.88	%	3.69	%

Other Information (millions)	2024		2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from operating leases	$	490	$	479	$	364
Operating cash flows from finance leases	76		70		63
Financing cash flows from finance leases	139		147		100