Leases

3 Months Ended

May 02, 2026

Leases [Abstract]

Leases

4. Leases

We lease certain property and equipment used in our operations. Our typical store lease has an initial term of 20 to 25 years and four to eight five-year renewal options.

Lease assets represent our right to use an underlying asset for the lease term. Lease assets are recognized at commencement date based on the value of the lease liability and are adjusted for any lease payments made to the

lessor at or before commencement date, minus any lease incentives received and any initial direct costs incurred by the lessee.

Lease liabilities represent our contractual obligation to make lease payments and include renewal options that are reasonably certain of being exercised. At the commencement date, the lease liabilities equal the present value of minimum lease payments over the accounting lease term. As the implicit interest rate is not readily identifiable in our leases, we estimate our collateralized incremental borrowing rate to calculate the present value of lease payments.

Leases with a term of 12 months or less are excluded from the balance; we recognize lease expense for these leases on a straight-line basis over the lease term. We combine lease and non-lease components for new and modified leases.

The following tables summarize our operating and finance leases, which are predominately store related, and where they are presented in our Consolidated Financial Statements:

Consolidated Balance Sheets		Quarter Ended
(Dollars in Millions)	Classification	May 2, 2026	January 31, 2026	May 3, 2025
Assets
Operating leases	Operating leases	$2,318	$2,338	$2,374
Finance leases	Property and equipment, net	1,526	1,553	1,632
Total operating and finance leases		$3,844	$3,891	$4,006
Liabilities
Current
Operating leases	Current portion of operating leases	95	94	99
Finance leases	Current portion of finance leases and financing obligations	79	76	71
Noncurrent
Operating leases	Operating leases	2,624	2,650	2,687
Finance leases	Finance leases and financing obligations	1,895	1,919	1,982
Total operating and finance leases		$4,693	$4,739	$4,839

Consolidated Statement of Operations		Quarter Ended
(Dollars in Millions)	Classification	May 2, 2026	May 3, 2025
Operating leases	Selling, general, and administrative	$68	$67
Finance leases
Amortization of leased assets	Depreciation and amortization	30	27
Interest on leased assets	Interest expense, net	29	30
Total operating and finance leases		$127	$124

Consolidated Statement of Cash Flows	Quarter Ended
(Dollars in Millions)	May 2, 2026	May 3, 2025
Cash paid for amounts included in the measurement of leased liabilities
Operating cash flows from operating leases	$75	$69
Operating cash flows from finance leases	28	29
Financing cash flows from finance leases	24	19

The following table summarizes future lease payments by fiscal year:

	May 2, 2026
(Dollars in Millions)	Operating Leases	Finance Leases	Total
2026	$193	$138	$331
2027	265	189	454
2028	261	184	445
2029	261	182	443
2030	259	175	434
After 2030	3,514	2,526	6,040
Total lease payments	$4,753	$3,394	$8,147
Amount representing interest	(2,034)	(1,420)	(3,454)
Lease liabilities	$2,719	$1,974	$4,693

Total lease payments include $3.6 billion related to options to extend operating lease terms that are reasonably certain of being exercised and $2.6 billion related to options to extend finance lease terms that are reasonably certain of being exercised.

The following table summarizes weighted-average remaining lease term, weighted-average remaining contractually obligated lease term, and weighted-average discount rate:

	May 2, 2026	January 31, 2026	May 3, 2025
Weighted-average remaining term (years)
Operating leases	18	18	19
Finance leases	18	18	19
Weighted-average remaining contractually obligated term (years)
Operating leases	4	4	4
Finance leases	4	4	5
Weighted-average discount rate
Operating leases	6%	6%	6%
Finance leases	6%	6%	6%

The remaining contractually obligated term represents only the remaining noncancelable portion of the leases.

Other lease information is as follows:

	Quarter Ended
(Dollars in Millions)	May 2, 2026	May 3, 2025
Property and equipment acquired (disposed) through exchange of:
Finance lease liabilities	$2	($10)
Operating lease liabilities	3	5

Financing Obligations

Historical failed sale-leasebacks that did not qualify for sale-leaseback accounting upon adoption of ASC 842 continue to be accounted for as financing obligations.

The following tables summarize our financing obligations, which are all store related, and where they are presented in our Consolidated Financial Statements:

Consolidated Balance Sheets
(Dollars in Millions)	Classification	May 2, 2026	January 31, 2026	May 3, 2025
Assets
Financing obligations	Property and equipment, net	$35	$36	$38
Liabilities
Current	Current portion of finance leases and financing obligations	10	9	9
Noncurrent	Finance leases and financing obligations	443	446	451
Total financing obligations		$453	$455	$460

Consolidated Statement of Operations		Quarter Ended
(Dollars in Millions)	Classification	May 2, 2026	May 3, 2025
Amortization of financing obligation assets	Depreciation and amortization	$1	$1
Interest on financing obligations	Interest expense, net	18	18
Total financing obligations		$19	$19

Consolidated Statement of Cash Flows	Quarter Ended
(Dollars in Millions)	May 2, 2026	May 3, 2025
Cash paid for and proceeds from amounts included in the measurement of financing obligations
Operating cash flows from financing obligations	$18	$18
Financing cash flows from financing obligations	2	2
Proceeds from financing obligations	—	3

The following table summarizes future financing obligation payments by fiscal year:

	May 2, 2026
(Dollars in Millions)	Financing Obligations
2026	$60
2027	80
2028	77
2029	76
2030	75
After 2030	1,017
Total financing obligation payments	$1,385
Non-cash gain on future sale of property	115
Amount representing interest	(1,047)
Financing obligation liability	$453

Total financing obligation payments include $1.0 billion related to options to extend terms that are reasonably certain of being exercised.

The following table summarizes the weighted-average remaining term, weighted-average remaining contractually obligated term, and weighted-average discount rate for financing obligations:

	May 2, 2026	January 31, 2026	May 3, 2025
Weighted-average remaining term (years)	14	15	15
Weighted-average remaining contractually obligated term (years)	5	5	5
Weighted-average discount rate	16%	16%	16%

The remaining contractually obligated term represents only the remaining noncancelable portion of the financing obligations.