Retail & Restaurants: Segment reporting (ASU 2023-07)

The CODM regularly reviews operating income as the measure of each operating segment’s profit or loss, as well as significant segment expenses of our Retail Home Improvement segment to evaluate operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. Corporate expenses are allocated to the individual operating segments. The CODM also uses these measures in monitoring plan versus actual results. The CODM does not review segment assets at a different asset level or category than those disclosed in the consolidated balance sheets.

The following table presents the Company’s operating income results for its Retail Home Improvement reportable segment, including significant segment expenses:

Years Ended
January 30, 2026	January 31, 2025	February 2, 2024
(In millions, except percentage data)	Amount	% Sales	Amount	% Sales	Amount	% Sales
Net Sales	84,078	100.00	83,674	100.00	86,377	100.00
Less:
Cost of sales	55,615	66.15	55,797	66.68	57,533	66.61
Expenses:
Employee compensation and benefits	11,147	13.26	10,830	12.94	10,801	12.50
Occupancy and facility costs	1,932	2.30	1,897	2.27	1,836	2.13
Advertising	973	1.16	921	1.10	831	0.96
Other segment items 1	2,380	2.82	2,034	2.43	2,102	2.43
Selling, general and administrative:	16,432	19.54	15,682	18.74	15,570	18.02
Depreciation and amortization	1,808	2.15	1,729	2.07	1,717	1.99
Operating income	10,223	12.16	10,466	12.51	11,557	13.38

1 Other segment items primarily include financial services costs, technology service costs, insurance costs, impairment costs, and store environment initiative and display costs.