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SEGMENT REPORTING AND NET SALES | 3 Months Ended
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May 04, 2025
Segment Reporting [Abstract] |
Segment Reporting and Net Sales | SEGMENT REPORTING AND NET SALES Segment Reporting The Company defines its segments based on how 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. Primary Segment. We are engaged in the operation of retail stores and sell 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 geographic operating segments into one reportable segment (the “Primary segment”) due to the similar nature of their operations and economic characteristics. Other. 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. Therefore, results from our SRS operating segments are presented in “Other” beginning from the acquisition date of June 18, 2024. Segment Information. Assets are reviewed by our CODM on a total company consolidated basis and not by segment. The accounting policies of our Primary segment are the same as those described in our summary of significant accounting policies. The following table presents net sales, significant expenses, and operating income for our Primary segment:
| Three Months Ended
in millions | May 4, 2025 |  | April 28, 2024
Net sales | $ | 37,287 |  |  | $ | 36,418 |
Cost of sales | 24,384 |  |  | 23,985 |
Selling, general and administrative | 7,164 |  |  | 6,667 |
Depreciation and amortization | 693 |  |  | 687 |
Primary segment operating income | $ | 5,046 |  |  | $ | 5,079 |
The following table presents a reconciliation of certain Primary segment information to our consolidated totals:
|  |  | Three Months Ended
|  |  | May 4, 2025
in millions |  |  |  |  |  |  | Primary Segment |  | Other |  | Consolidated
Net sales |  |  |  |  |  |  | $ | 37,287 |  |  | $ | 2,569 |  |  | $ | 39,856 |
Operating income |  |  |  |  |  |  | 5,046 |  |  | 87 |  |  | 5,133 |
Interest income and other, net |  |  |  |  |  |  |  |  |  |  | (24) |
Interest expense |  |  |  |  |  |  |  |  |  |  | 615 |
Earnings before provision for income taxes |  |  |  |  |  |  |  |  |  |  | $ | 4,542 |
Depreciation and amortization (1) |  |  |  |  |  |  | $ | 831 |  |  | $ | 147 |  |  | $ | 978 |
————— (1)Includes depreciation and finance lease amortization in cost of sales. Also includes intangible asset amortization expense of $52 million in our Primary segment and $87 million in Other. Net sales presented in Other relate to the sale of products by SRS, with roofing and related products accounting for approximately 63% of net sales in Other during the three months ended May 4, 2025. 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 months ended April 28, 2024. Net Sales 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) within our Primary segment, as well as Other net sales:
|  |  | Three Months Ended
in millions |  |  |  |  | May 4, 2025 |  | April 28, 2024
Building Materials |  |  |  |  | $ | 12,931 |  |  | $ | 12,602 |
Décor |  |  |  |  | 12,479 |  |  | 12,535 |
Hardlines |  |  |  |  | 11,877 |  |  | 11,281 |
Primary segment net sales |  |  |  |  | 37,287 |  |  | 36,418 |
Other net sales (1) |  |  |  |  | 2,569 |  |  | — |
Net sales |  |  |  |  | $ | 39,856 |  |  | $ | 36,418 |
————— (1) See above for further discussion of Other net sales. Note: During the first quarter of fiscal 2025, we made changes that realigned certain product categories across our merchandising departments and major product lines within our Primary segment. As a result, prior-year amounts have been updated to conform with the current-year presentation. These changes had no impact on our consolidated net sales. The following table presents net sales, classified by geography:
|  |  | Three Months Ended
in millions |  |  |  |  | May 4, 2025 |  | April 28, 2024
Net sales – in the U.S. |  |  |  |  | $ | 37,224 |  |  | $ | 33,569 |
Net sales – outside the U.S. |  |  |  |  | 2,632 |  |  | 2,849 |
Net sales |  |  |  |  | $ | 39,856 |  |  | $ | 36,418 |
The following table presents net sales by products and services:
|  |  | Three Months Ended
in millions |  |  |  |  | May 4, 2025 |  | April 28, 2024
Net sales – products |  |  |  |  | $ | 38,512 |  |  | $ | 35,078 |
Net sales – services |  |  |  |  | 1,344 |  |  | 1,340 |
Net sales |  |  |  |  | $ | 39,856 |  |  | $ | 36,418 |
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 May 4, 2025 and February 2, 2025, deferred revenue for products and services was $1.8 billion and $1.5 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 May 4, 2025 and February 2, 2025, 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 months ended May 4, 2025 and April 28, 2024.

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- Definition The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments. + References Reference 1: http://www.xbrl.org/2003/role/exampleRef -Topic 280 -SubTopic 10 -Name Accounting Standards Codification -Section 55 -Paragraph 48 -Publisher FASB -URI https://asc.fasb.org/1943274/2147482785/280-10-55-48 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Topic 280 -SubTopic 10 -Name Accounting Standards 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