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SEGMENT REPORTING AND NET SALES | 9 Months Ended
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Oct. 27, 2024
Segment Reporting [Abstract] |
Segment Reporting And Net Sales | SEGMENT REPORTING AND NET SALES The Company defines its segments on the basis of the way in which internally reported financial information is regularly reviewed by the chief operating decision maker (“CODM”), our President and Chief Executive Officer, to analyze financial performance, make decisions, and allocate resources. The Company is engaged in the operation of retail stores and sells a wide assortment of building materials, home improvement products, lawn and garden products, décor products, and facilities maintenance, repair and operations products both in stores and online. We also provide a number of services, including home improvement installation services and tool and equipment rental. We currently conduct these operations in the U.S. (including the Commonwealth of Puerto Rico and the territories of the U.S. Virgin Islands and Guam), Canada, and Mexico, each of which represents an operating segment. For disclosure purposes, we aggregate these three operating segments into one reportable segment (the “Primary segment”) due to the similar nature of their operations and economic characteristics. As discussed in Note 10, in June 2024, we acquired SRS, a leading residential specialty trade distribution company across several verticals serving the professional roofer, landscaper and pool contractor through its branches located throughout the U.S. SRS is organized as three different lines of business: roofing and complementary building products, landscape, and pool. We have determined that each of these three lines of business represents an operating segment, none of which meets the thresholds prescribed under Topic 280 to be deemed a reportable segment. The following table presents a reconciliation of the results of our Primary segment to our consolidated totals:
| Three Months Ended |  | Nine Months Ended
| October 27, 2024 |  | October 27, 2024
in millions | Primary Segment |  | Other |  | Consolidated |  | Primary Segment |  | Other |  | Consolidated
Net sales | $ | 37,289 |  |  | $ | 2,928 |  |  | $ | 40,217 |  |  | $ | 115,608 |  |  | $ | 4,202 |  |  | $ | 119,810 |
Operating income (1) | 5,218 |  |  | 200 |  |  | 5,418 |  |  | 16,759 |  |  | 272 |  |  | 17,031 |
Interest income and other, net |  |  |  |  | (30) |  |  |  |  |  |  | (171) |
Interest expense |  |  |  |  | 625 |  |  |  |  |  |  | 1,683 |
Earnings before provision for income taxes |  |  |  |  | $ | 4,823 |  |  |  |  |  |  | $ | 15,519 |
————— (1)Includes intangible asset amortization expense of $52 million and $155 million for the three and nine months ended October 27, 2024, respectively, in our Primary segment, and intangible asset amortization expense of $86 million and $125 million for the three and nine months ended October 27, 2024, respectively, in Other. “Other” in the table above represents our SRS operations and is reflective of results beginning from the acquisition date of June 18, 2024. Net sales in the Other category relate to the sale of products by SRS, with roofing and related products accounting for approximately 68% and 67% of sales in Other during the three and nine months ended October 27, 2024, respectively. Prior to the SRS acquisition, our total Company consolidated results represented our Primary segment. Therefore, a reconciliation to our consolidated totals is not applicable for the three and nine months ended October 29, 2023. The following table presents our Primary segment major product lines and the related merchandising departments (and related services):
Major Product Line |  | Merchandising Departments
Building Materials |  | Building Materials, Electrical, Lumber, Millwork, and Plumbing
Décor |  | Appliances, Bath, Flooring, Kitchen & Blinds, Lighting, and Paint
Hardlines |  | Hardware, Indoor Garden, Outdoor Garden, Power, and Storage & Organization
The following table presents net sales by major product line (and related services), as well as Other net sales:
| Three Months Ended |  | Nine Months Ended
in millions | October 27, 2024 |  | October 29, 2023 |  | October 27, 2024 |  | October 29, 2023
Building Materials | $ | 13,479 |  |  | $ | 13,646 |  |  | $ | 40,028 |  |  | $ | 40,907 |
Décor | 12,682 |  |  | 13,091 |  |  | 38,617 |  |  | 39,658 |
Hardlines | 11,128 |  |  | 10,973 |  |  | 36,963 |  |  | 37,318 |
Primary segment net sales | 37,289 |  |  | 37,710 |  |  | 115,608 |  |  | 117,883 |
Other net sales (1) | 2,928 |  |  | — |  |  | 4,202 |  |  | — |
Net sales | $ | 40,217 |  |  | $ | 37,710 |  |  | $ | 119,810 |  |  | $ | 117,883 |
————— (1) Represents SRS net sales since the acquisition date of June 18, 2024. See discussion above for information on the components of Other net sales. Note: During the first quarter of fiscal 2024, we made certain changes to our merchandising department structure that realign certain merchandising departments across our major product lines. As a result, prior-year amounts have been reclassified to conform with the current-year presentation. These changes had no impact on consolidated net sales. The following table presents net sales, classified by geography:
| Three Months Ended |  | Nine Months Ended
in millions | October 27, 2024 |  | October 29, 2023 |  | October 27, 2024 |  | October 29, 2023
Net sales – in the U.S. | $ | 37,135 |  |  | $ | 34,544 |  |  | $ | 110,217 |  |  | $ | 108,242 |
Net sales – outside the U.S. | 3,082 |  |  | 3,166 |  |  | 9,593 |  |  | 9,641 |
Net sales | $ | 40,217 |  |  | $ | 37,710 |  |  | $ | 119,810 |  |  | $ | 117,883 |
The following table presents net sales by products and services:
| Three Months Ended |  | Nine Months Ended
in millions | October 27, 2024 |  | October 29, 2023 |  | October 27, 2024 |  | October 29, 2023
Net sales – products | $ | 38,692 |  |  | $ | 36,156 |  |  | $ | 115,375 |  |  | $ | 113,405 |
Net sales – services | 1,525 |  |  | 1,554 |  |  | 4,435 |  |  | 4,478 |
Net sales | $ | 40,217 |  |  | $ | 37,710 |  |  | $ | 119,810 |  |  | $ | 117,883 |
Deferred Revenue For products and services sold in stores or online, payment is typically due at the point of sale. When we receive payment before the customer has taken possession of the merchandise or the service has been performed, the amount received is recorded as deferred revenue until the sale or service is complete. Such performance obligations are part of contracts with expected original durations of typically three months or less. As of October 27, 2024 and January 28, 2024, deferred revenue for products and services was $1.6 billion and $1.7 billion, respectively. We further record deferred revenue for the sale of gift cards and recognize the associated revenue upon the redemption of those gift cards, which generally occurs within six months of gift card issuance. As of October 27, 2024 and January 28, 2024, our performance obligations for unredeemed gift cards were $1.0 billion and $1.1 billion, respectively. Gift card breakage income, which is our estimate of the portion of our outstanding gift card balance not expected to be redeemed, is recognized in net sales and was immaterial during the three and nine months ended October 27, 2024 and October 29, 2023.

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- Definition The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 9 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-9 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 10 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-10 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 15 -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-15 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (a) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (b) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (c) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (d) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 8: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 12 -Subparagraph (e) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-12 Reference 9: http://www.xbrl.org/2003/role/disclosureRef -Topic 606 -SubTopic 10 -Name Accounting Standards Codification -Section 50 -Paragraph 13 -Subparagraph (b)(2) -Publisher FASB -URI https://asc.fasb.org/1943274/2147479806/606-10-50-13 Reference 10: http://www.xbrl.org/2003/role/disclosureRef -Name Accounting Standards Codification -Topic 606 -Publisher FASB -URI https://asc.fasb.org/606/tableOfContent + Details
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