AI interpretation based on checked source excerpts. Issuer assertions and evidence limitations remain explicit.
Policy quality-scores-3: six equally weighted categories. The overall score requires full coverage. Missing inputs are not zero. Qualitative grades are sourced interpretations, not probabilities. 6/6 · 31/10/2026
Moat31
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
structural advantage · 1/4 · The store footprint, distribution network and manufacturer relationships establish substantial operating capabilities. However, buying-power superiority is management's assertion, and disclosed low entry barriers and better-resourced competitors weaken protection. The passages do not demonstrate a relative delivered-cost advantage or exclusive access.
durability · 1/4 · Existing infrastructure supports continued operation, but low entry barriers and competition across many retail formats limit durable protection. The facility opening demonstrates implementation; improved network resilience and growth benefits remain expectations. Neither scale nor planned investment establishes sustained competitive insulation.
customer dependency · 1/4 · Customers have broad retail alternatives, and management attributes loyalty to convenience, value and discovery rather than switching friction. Positive comparable sales demonstrate demand, but first-half traffic declined. These observations support weak dependency without proving customer-level loyalty or an inability to substitute.
erosion resilience · 2/4 · Executed pricing initiatives, lower shrink and freight improvements demonstrate adaptation, including first-quarter improvement before second-quarter tariff refunds. Nevertheless, refunds explain most first-half cost-of-sales improvement, while higher tariffs, markdowns and constrained cost pass-through remain pressures. This supports mixed resilience rather than durable protection.
Pricing power50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
realized pricing · 2/4 · Targeted price changes contributed to higher average ticket, and first-quarter results show improved merchandise mark-on from those initiatives. Second-quarter traffic increased, supporting some acceptance. However, multi-price assortment mix also raised ticket, first-half traffic declined, and the isolated price contribution is undisclosed.
retention · 2/4 · Indirect demand evidence is mixed: first-quarter traffic declined 1.0%, second-quarter traffic increased 0.4%, and first-half traffic fell 0.3% despite comparable-sales growth. Demand persisted through price changes, but transaction trends cannot establish repeat-customer retention, cohort loyalty or meaningful switching friction.
margin resilience · 2/4 · First-quarter cost of sales improved from 64.4% to 63.2% through pricing, freight and shrink benefits despite tariffs and markdowns. First-half improvement was predominantly refund-driven. Together with the pricing model's cost-pass-through constraint, this demonstrates partial resilience without establishing sustained insulation from input inflation.
contractual freedom · 2/4 · Executed retail price changes demonstrate practical discretion to reset merchandise prices, while multiple price points broaden that discretion. The value model nevertheless constrains cost pass-through economically. Customer price commitments are not disclosed, so observed repricing supports a mixed assessment rather than proof of unrestricted contractual freedom.
Predictability81
5 consecutive published annual periods. Equal weights: nondeclining revenue frequency; revenue-growth volatility (5–40pp); positive FCF frequency; FCF-margin volatility (3–20pp). Stability indicator, not a growth forecast.
- Nondeclining revenue years (%)
- 75.00
- Revenue growth volatility (pp)
- 22.22
- Positive FCF years (%)
- 100.00
- FCF margin volatility (pp)
- 1.81
- observedAnnualPeriods
- 5.00
Financial strength72
Equal-weight grades: debt/FCF (1–8x), net debt/earnings before interest and tax (0–5x), interest service (1–12x), current ratio (0.75–2x). Earnings use reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or reported pretax profit plus reported gross interest expense. Reported EBIT is distinct from GAAP operating income and gross interest. Interest service uses earnings/interest expense; if unavailable, it uses reported operating cash flow/cash interest paid, without relabeling cash paid as accrued expense. Nonpositive cash flow/earnings score 0 for their service component; reported zero interest with a positive numerator scores 100. Net cash scores 100 for net leverage. Missing disclosures remain unavailable. General nonfinancial-company rubric, not a credit rating; exceptional and nonoperating gains are not normalized out. IFRS finance-cost and cash-flow classifications retain their reported scope.
- debtFcfGrade
- 81.41
- netDebtEbitGrade
- 79.26
- interestCoverageGrade
- 100.00
- currentRatioGrade
- 25.39
- Debt / FCF (x)
- 2.30
- Net debt / operating income (x)
- 1.04
- Current ratio (x)
- 1.07
- cashInterestPaid
- 125.40
- cashInterestCoverage
- 17.47
Capital allocation64
Three-year equal-weight indicators: pretax return on average invested capital (0–25%; equity + debt − cash, each year and its prior year), share-count growth (0–5%, lower better), share-based cost/revenue (2–20%, lower better), consolidated FCF/net income (0–1x). Return uses reported operating income, an original issuer-reported unadjusted EBIT reconciled to net income, income tax and signed net interest, or EBIT calculated from reported pretax profit plus reported gross interest expense; the issuer-reported EBIT is distinct from GAAP operating income and gross interest; exceptional/nonoperating gains are not normalized out. Share-based cost uses the reported cash-flow add-back or, if absent, separately reported recognized compensation expense; the latter never becomes an FCF adjustment. Nonpositive net income scores 0 for cash conversion; absent income/FCF stays unavailable. ROIC remains undefined for nonpositive invested capital; the explicit asset-return alternative does not change the ROIC chart. Missing financial inputs alone never trigger an alternative. Does not establish acquisition quality or buyback timing.
- 3-year pre-tax operating return (%)
- 14.06
- 3-year average dilution (%)
- -2.66
- 3-year average SBC / revenue (%)
- 0.41
- cashConversionGrade
- 0.00
Management50
Equal-weight average of four evidence-backed rubric grades (0–4), scaled to 100.
capital discipline · 1/4 · Family Dollar impairments and disposal losses demonstrate poor historical capital outcomes, without assigning them solely to current leadership. The sale generated cash and investment continued, but $1.2 billion of repurchases alongside a new $500 million loan does not establish superior allocation. Cash-flow improvement also benefited from refunds, taxes and working capital.
incentive alignment · 2/4 · Actual 2025 awards combine three-year performance goals, a relative shareholder-return modifier and service vesting; mandatory clawback adds accountability. Discretionary metric adjustments accompanied a 162.4% incentive payout. Ownership guidelines count unvested awards, and covered executives remained in their grace periods, limiting demonstrated ownership alignment.
execution · 2/4 · The distribution facility opening, realized pricing benefits and positive comparable sales demonstrate implementation progress. Demand assessment remains indirect and first-half traffic declined. Tariff refunds and temporary Family Dollar transition-services income contributed materially to reported improvement, limiting conclusions about repeatable execution and enduring investment returns.
governance · 3/4 · Independent board and committee leadership, majority director elections, mandatory clawback and the shareholder-approved 15% special-meeting threshold establish strong mechanisms. Shareholders rejected written consent in June. September amendments changed special-meeting procedures and expanded nomination disclosures; their practical effect remains uncertain. These structures do not prove exceptional oversight effectiveness.
Evidence
The Company operates 9,150 stores across 48 states and the District of Columbia and approximately 285 stores across seven Canadian provinces as of August 1, 2026.
2026-08-27 filed 10-Q, Note 8: store footprint as of August 1, 2026 · Filed 27/08/2026
We also operate 17 distribution centers in the United States.
2026-08-27 filed 10-Q, Note 8: U.S. distribution network · Filed 27/08/2026
We believe our substantial buying power and our flexibility in making sourcing decisions contributes to our successful purchasing strategy, which includes targeted merchandise margin goals by category.
2026-03-16 filed 10-K, business: management assertion about purchasing power · Filed 16/03/2026
Direct relationships with manufacturers permit us to select from a broad range of products and customize packaging, product sizes and package quantities that best meet our customers’ needs.
2026-03-16 filed 10-K, business: direct manufacturer relationships · Filed 16/03/2026
Our stores receive approximately 90% of their inventory from our distribution centers.
2026-03-16 filed 10-K, business: inventory supplied through distribution centers · Filed 16/03/2026
There are no significant economic barriers for others to enter our retail sector.
2026-03-16 filed 10-K, competition: economic entry barriers · Filed 16/03/2026
We compete with discount stores and many other retailers, including mass merchandise, warehouse club, grocery, drug, convenience, variety, online retailers, and certain specialty stores.
2026-03-16 filed 10-K, competition: competing retail formats · Filed 16/03/2026
Some of our current or potential competitors have greater financial, distribution, marketing and other resources than we do.
2026-03-16 filed 10-K, competition: competitors' resources · Filed 16/03/2026
We primarily buy products on an order-by-order basis and have no material long-term purchase contracts or other assurances of continued product supply or guaranteed product cost.
2026-03-16 filed 10-K, merchandise supply risk: purchasing arrangements · Filed 16/03/2026
Our ability to pass along labor and other related costs to our customers is constrained by our pricing model, and we may not be able to offset such increased costs elsewhere in our business.
2026-03-16 filed 10-K, cost risk: pricing-model constraint · Filed 16/03/2026
Although our multi-price assortment has grown, the majority of our products are priced at $1.25, and 85% of products in the average Dollar Tree store are currently priced at $2.00 or less, and we generally have fewer price bands for our goods than other retailers.
2026-03-16 filed 10-K, pricing model: price points and assortment scope · Filed 16/03/2026
We believe the convenience and value we offer, as well as the “thrill-of-the-hunt” shopping experience where customers discover new celebratory and seasonal items every week, are key factors in serving and growing our base of loyal customers.
2026-03-16 filed 10-K, business: management explanation of customer loyalty · Filed 16/03/2026
Comparable store net sales increased 3.7% in the 13 weeks ended August 1, 2026, as a result of a 3.3% increase in average ticket and a 0.4% increase in customer traffic.
2026-08-27 filed 10-Q, results: comparable sales, ticket and traffic for 13 weeks ended August 1, 2026 · Filed 27/08/2026
The increase in average ticket was as a result of targeted retail price changes executed during the second and third quarters of fiscal year 2025 and higher mix of multi-price penetration.
2026-08-27 filed 10-Q, results: price changes and mix contributing to average ticket · Filed 27/08/2026
Comparable store net sales increased 3.6% in the 26 weeks ended August 1, 2026, as a result of a 3.9% increase in average ticket, partially offset by a 0.3% decrease in customer traffic.
2026-08-27 filed 10-Q, results: comparable sales, ticket and traffic for 26 weeks ended August 1, 2026 · Filed 27/08/2026
Comparable store net sales increased 3.5%, driven by a 4.5% increase in average ticket, partially offset by a 1.0% decline in traffic.
2026-05-28 filed first-quarter earnings release, results: comparable sales, ticket and traffic · Filed 28/05/2026
The cost of sales rate decreased to 63.2% during the 13 weeks ended May 2, 2026 from 64.4% during the same period last year primarily due to
23
Table of Contents
improved mark-on from pricing initiatives executed during the second and third quarters of fiscal year 2025, lower import freight costs, and lower shrink from favorable inventory count results, partially offset by higher tariff costs and higher markdowns.
2026-05-28 filed 10-Q, results: cost-of-sales rate and drivers for 13 weeks ended May 2, 2026 · Filed 28/05/2026
The cost of sales rate decreased to 60.2% during the 26 weeks ended August 1, 2026 from 65.0% during the same period last year primarily due to a 375 basis point benefit from the receipt of $368.7 million in tariff refunds, pricing initiatives executed during the second and third quarters of fiscal 2025, lower shrink from favorable inventory count results, and lower import freight costs, partially offset by higher tariff costs, higher markdowns including approximately $22.0 million related to our tariff reinvestment initiative, and a $13.0 million charge recorded for antidumping and countervailing duties related to the imports of paper plates and aluminum pans.
2026-08-27 filed 10-Q, results: cost-of-sales rate, tariff refunds and other drivers for 26 weeks ended August 1, 2026 · Filed 27/08/2026
In May 2026, we celebrated the grand opening of this 1.0 million square foot facility with outbound deliveries to approximately 700 stores across Arizona, Colorado, Nevada, New Mexico, and Utah.
2026-08-27 filed 10-Q, supply-chain initiatives: facility opening and delivery scope · Filed 27/08/2026
These investments are expected to support long-term growth and improve network resilience, though they may modestly impact gross margin in the near-to-mid term as capacity ramps up.
2026-08-27 filed 10-Q, supply-chain initiatives: expected benefits and ramp costs · Filed 27/08/2026
66 Table of Contents The following table summarizes the results of operations of the Family Dollar business that are being reported as discontinued operations: Year Ended (in millions) January 31, 2026 February 1, 2025 February 3, 2024 Net sales $ 5,625.5 $ 13,252.1 $ 13,811.3 Other revenue 4.5 15.0 11.4 Total revenue 5,630.0 13,267.1 13,822.7 Cost of sales 3,931.6 9,894.5 10,510.6 Selling, general and administrative expenses, excluding Goodwill impairment 1,218.4 4,706.9 4,899.4 Goodwill impairment — 490.5 1,069.0 Selling, general and administrative expenses 1,218.4 5,197.4 5,968.4 Operating income (loss) 480.0 (1,824.8) (2,656.3) Interest income 2.7 5.5 5.7 Loss on held for sale and disposal of discontinued operations 407.7 3,438.8 — Income (loss) from discontinued operations before income taxes 75.0 (5,258.1) (2,650.6) Provision for income taxes 17.8 (1,185.5) (386.4) Income (loss) from discontinued operations, net of tax $ 57.2 $ (4,072.6) $ (2,264.2) Depreciation expense related to discontinued operations was $430.6 million and $418.5 million for the years ended February 1, 2025 and February 3, 2024, respectively.
2026-03-16 filed 10-K, discontinued operations: Family Dollar results, impairments and disposal losses · Filed 16/03/2026
Total cash generated from the sale approximated $793 million, consisting of approximately $680 million of net proceeds, including from settlement of net working capital and net indebtedness, and approximately $113 million monetized primarily through a reduction of net working capital prior to the date of sale.
2026-08-27 filed 10-Q, sale and separation of Family Dollar: cash generated · Filed 27/08/2026
The following table compares our cash flows for the 26 weeks ended August 1, 2026 and August 2, 2025:
26 Weeks Ended
(in millions)
August 1, 2026
August 2, 2025
Net cash provided by (used in):
Operating activities of continuing operations
$
1,565.5
$
639.2
Investing activities of continuing operations
$
(499.8)
$
(21.2)
Financing activities of continuing operations
$
(723.8)
$
(1,636.0)
Net cash provided by operating activities increased $926.3 million primarily due to higher income from continuing operations, net of non-cash items, including the receipt of $383 million of tariff refunds, increases in accounts payable in the current year compared to decreases in the prior year, lower income tax payments in the current year, and reductions in merchandise inventories compared to a prior year increase.
2026-08-27 filed 10-Q, liquidity: continuing-operations cash flows and operating cash drivers for 26 weeks ended August 1, 2026 · Filed 27/08/2026
Capital expenditures were relatively unchanged from the prior year as we continue to invest in opening new stores and our supply chain network including the construction at our new distribution centers in Phoenix, Arizona and Marietta, Oklahoma.
2026-08-27 filed 10-Q, liquidity: capital expenditure comparison and investment scope · Filed 27/08/2026
We repurchased 11,136,764 shares of common stock on the open market and in a block trade transaction at a cost of $1.2 billion, including applicable excise tax, during the 26 weeks ended August 1, 2026.
2026-08-27 filed 10-Q, repurchases: shares and cost for 26 weeks ended August 1, 2026 · Filed 27/08/2026
27 Table of Contents At August 1, 2026, our long-term borrowings were $3.0 billion, including our new $500.0 million Term Loan which we entered into on March 19, 2026 as discussed further in Note 4 to the unaudited condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.
2026-08-27 filed 10-Q, liquidity: long-term borrowings and March 19, 2026 term loan · Filed 27/08/2026
Transition services agreement income, net was $38.8 million in the 26 weeks ended August 1, 2026 and $8.0 million in the same period last year, resulting from services provided to Family Dollar following the sale.
2026-08-27 filed 10-Q, results: Family Dollar transition-services income for 26 weeks ended August 1, 2026 · Filed 27/08/2026
The Company has continuing involvement with Family Dollar under a transition services agreement, through which the Company and Family Dollar continue to provide certain services to each other for a period of 18 months following the date of sale.
2026-08-27 filed 10-Q, discontinued operations: duration of mutual transition services · Filed 27/08/2026
2025 Executive Compensation Program Element Vehicle Description & Strategic Role Base Salary • Helps attract and retain executives through market-competitive base pay • Based on individual performance, experience and scope of responsibility Management Incentive Compensation Plan • Encourages achievement of short-term financial performance metrics that create shareholder value • Cash bonus incentives in 2025 were based 70% on adjusted operating income and 30% on adjusted total revenue goals which are designed to promote profitable growth Long-Term Equity Incentive Awards • Long-term incentive compensation composed of equity awards: 50% in PSUs and 50% in RSUs • PSUs incentivize executives to drive financial performance toward long-term objectives and strengthen alignment with shareholders • PSUs awarded in 2025 were based on a three-year cumulative goal for adjusted earnings per share, with a three-year relative TSR modifier (+/- 25%) • RSU awards create a retention incentive through multi-year vesting and robust stock ownership guidelines In addition, we provide certain perquisites to our executives, principally to allow them to devote more time to our business and to promote their health and safety.
2026-05-01 filed proxy, compensation: actual fiscal 2025 incentive program and equity awards · Filed 01/05/2026
The Committee determined that it was appropriate to make symmetrical adjustments to operating income and total revenue that increased operating income by $148.8 million related to tariffs and decreased total revenue by $259.4 million.
2026-05-01 filed proxy, compensation: adjustments to incentive performance measures · Filed 01/05/2026
During its March 2026 meeting, the Compensation Committee determined the following Company performance for fiscal 2025: Metric 2025 Target ($ millions) 2025 Achievement ($ millions) % of Target Achieved % of Payout per Metric Weighting (%) Total Weighted Payout (%) Adjusted Operating Income(1) 1,696.5 1,880.1 110.8% 186.6% 70% 130.6% Adjusted Total Revenue(2) 19,095.8 19,152.4 100.3% 106.0% 30% 31.8% Total 100% 162.4% (1) The definition of adjusted operating income provided above allows for adjustments of certain items within the discretion of the Compensation Committee.
2026-05-01 filed proxy, compensation: March 2026 determination of fiscal 2025 incentive achievement and payout · Filed 01/05/2026
The Company has a robust clawback policy that requires mandatory reimbursement of excess incentive compensation from any current or former executive officer if the Company’s financial statements are restated due to material noncompliance with financial reporting requirements under the securities laws.
2026-05-01 filed proxy, compensation governance: mandatory restatement clawback · Filed 01/05/2026
The stock ownership guidelines for our executive officers are as follows:
Current Position
Multiple of Salary
Chief Executive Officer
6x
Chief Financial Officer
3x
Chief Merchandising Officer
3x
Other Chief-Level Officers
2x
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The types of stock ownership that qualify toward the ownership guidelines under our policy include direct stock ownership, shares held in trust or by a spouse or dependents, shares held in retirement accounts, PSUs where performance has been certified, unvested RSUs and unvested restricted stock.
2026-05-01 filed proxy, executive ownership: salary multiples and qualifying holdings · Filed 01/05/2026
As of April 1, 2026, all of our named executive officers subject to the guidelines are within the five-year grace period.
2026-05-01 filed proxy, executive ownership: grace-period status as of April 1, 2026 · Filed 01/05/2026
•
Independent Board Leadership—Our Board is led by an Independent Chairman, and each of our standing committees is composed entirely of independent directors.
2026-05-01 filed proxy, governance: independent chairman and standing committees · Filed 01/05/2026
•
Majority Election Standard—In uncontested elections, director nominees must receive the affirmative vote of a majority of the votes cast to be elected, and any incumbent director who fails to receive majority support is subject to our resignation policy.
2026-05-01 filed proxy, governance: majority election standard and resignation policy · Filed 01/05/2026
At the Company’s 2022 annual meeting of shareholders, holders of over 86% of the Company’s outstanding shares and over 99% of votes, upon recommendation of the Board of Directors, approved an amendment to our Articles of Incorporation (“Articles”) providing that a special meeting will be called upon the written request of shareholders owning 15% or more of the Company’s outstanding stock.
2026-05-01 filed proxy, governance: shareholder-approved 15% special-meeting threshold · Filed 01/05/2026
•revise certain procedures applicable to shareholder-requested special meetings, including with respect to a process for setting the record date for determining shareholders entitled to call a special meeting, the nomination deadline for special meetings at which directors are to be elected, and revocation of special meeting requests by shareholders;
2026-09-25 filed 8-K, September bylaw amendments: shareholder-requested special-meeting procedures · Filed 25/09/2026
•consolidate and update the advance notice bylaws for shareholder nominations and other business for annual meetings, including certain notice timing provisions, expanding disclosure requirements to cover affiliates, associates and others acting in concert, and the deadline for shareholder nominees to submit questionnaires;
2026-09-25 filed 8-K, September bylaw amendments: nomination notices and expanded disclosure requirements · Filed 25/09/2026
Votes For
Votes Against
Abstain
163,833,056
12,526,088
40,221
4.The shareholders did not approve the shareholder proposal requesting a shareholder right to act by written consent.
2026-06-23 filed 8-K, annual-meeting results: rejection of shareholder written-consent proposal · Filed 23/06/2026
