Albertsons Companies, Inc.: Form 10-Q for the period ended Nov 29, 2025

FORWARD-LOOKING STATEMENTS AND FACTORS THAT IMPACT OUR OPERATING RESULTS AND TRENDS

This Form 10-Q contains "forward-looking statements" within the meaning of the federal securities laws. The "forward-looking statements" include our current expectations, assumptions, estimates and projections about our business and our industry. They include statements relating to our future operating or financial performance which the Company believes to be reasonable at this time. You can identify forward-looking statements by the use of words such as "outlook," "may," "should," "could," "estimates," "predicts," "potential," "continue," "anticipates," "believes," "plans," "expects," "future" and "intends" and similar expressions which are intended to identify forward-looking statements.

These statements are not guarantees of future performance and are subject to numerous risks and uncertainties which are beyond our control and difficult to predict and could cause actual results to differ materially from the results expressed or implied by the statements. Risks and uncertainties that could cause actual results to differ materially from such statements and may adversely impact our financial condition and results of operations include:

• changes in macroeconomic conditions such as rates of food price inflation or deflation, fuel and commodity prices and macroeconomic uncertainty, including in international trade and current and potential future tariffs;
• changes in consumer behavior and spending patterns resulting from macroeconomic conditions, including shifts in state and federal assistance programs;
• changes in wage rates and our ability to negotiate acceptable contracts with labor unions, including the outcome of pending union negotiations;
• changes in price of goods sold in our stores and cost of goods used in our food products, as well as limitations in our ability to provide certain services, due to changes in various state and federal government legislation, regulation and executive orders;
• uncertainty regarding the geopolitical environment;
• our ability to succeed in a competitive environment;
• our inability to execute on our standalone business and value-creating strategies following the termination of the merger agreement with Kroger due to prolonged uncertainties and restrictions on our business during the pendency of the merger;
• litigation in connection with the previously pending merger and the termination of the merger agreement, resulting in ongoing costs that we may be required to pay in connection with the lawsuit against Kroger, or our inability to collect the $600 million termination fee from Kroger, and negative reactions from the financial markets and our suppliers, customers, and associates as a result of the litigation;
• our ability to recruit and retain qualified or specialized associates who are critical to the success of our Customers for Life strategy;
• failure to achieve productivity initiatives, including those related to artificial intelligence, unexpected changes in our objectives and plans, inability to implement our strategies, plans, programs and initiatives, or enter into strategic transactions, investments or partnerships in the future on terms acceptable to us, or at all;
• challenges with our supply chain;
• operational and financial effects resulting from cyber incidents at the Company or at a third party, including outages in the cloud environment and the effectiveness of business continuity plans during a ransomware or other cyber incident; and
• changes in tax rates, tax laws, and regulations that directly impact our business or our customers.

All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by these cautionary statements and risk factors. Forward-looking statements contained in this Form 10-Q reflect our view only as of the date of this Form 10-Q. We undertake no obligation, other than as required by law, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

In evaluating our financial results and forward-looking statements, you should carefully consider the risks and uncertainties more fully described in the "Risk Factors" section or other sections in our reports filed with the SEC including the most recent annual report on Form 10-K and any subsequent periodic reports on Form 10-Q and current reports on Form 8-K.

As used in this Form 10-Q, unless the context otherwise requires, references to "Albertsons," the "Company," "we," "us" and "our" refer to Albertsons Companies, Inc. and, where appropriate, its subsidiaries.

NON-GAAP FINANCIAL MEASURES

We define EBITDA as GAAP earnings (net loss) before interest, income taxes, depreciation and amortization. We define Adjusted EBITDA as earnings (net loss) before interest, income taxes, depreciation and amortization, further adjusted to eliminate the effects of items management does not consider in assessing our ongoing core performance. We define Adjusted net income as GAAP Net income adjusted to eliminate the effects of items management does not consider in assessing our ongoing core performance. We define Adjusted net income per Class A common share as Adjusted net income divided by the weighted average diluted Class A common shares outstanding, as adjusted to reflect all RSUs outstanding at the end of the period. See "Results of Operations" for further discussion and a reconciliation of Adjusted EBITDA, Adjusted net income and Adjusted net income per Class A common share.

EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted net income per Class A common share (collectively, the "Non-GAAP Measures") are performance measures that provide supplemental information we believe is useful to analysts and investors to evaluate our ongoing results of operations, when considered alongside other GAAP measures such as net income, operating income, gross margin and net income per Class A common share. These Non-GAAP Measures exclude the financial impact of items management does not consider in assessing our ongoing core operating performance, and thereby provide useful measures to analysts and investors of our operating performance on a period-to-period basis. Other companies may have different definitions of Non-GAAP Measures and provide for different adjustments, and comparability to our results of operations may be impacted by such differences. We also use Adjusted EBITDA for board of director and bank compliance reporting. Our presentation of Non-GAAP Measures should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items.

Non-GAAP Measures should not be considered as measures of discretionary cash available to us to invest in the growth of our business. We compensate for these limitations by relying primarily on our GAAP results and using Non-GAAP Measures only for supplemental purposes.

THIRD QUARTER OF FISCAL 2025 OVERVIEW

We are one of the largest food retailers in the United States, with 2,243 stores across 35 states and the District of Columbia as of November 29, 2025. We operate 22 well known banners including Albertsons, Safeway, Vons, Pavilions, Randalls, Tom Thumb, Carrs, Jewel-Osco, ACME, Shaw's, Star Market, United Supermarkets, Market Street, Haggen, Kings Food Markets and Balducci's Food Lovers Market, with approximately 280,000 talented and dedicated employees, as of November 29, 2025, who serve on average 36.4 million customers each week. Additionally, as of November 29, 2025, we operated 1,708 pharmacies, 1,241 in-store branded coffee shops, 404 associated fuel centers, 22 dedicated distribution centers, 19 manufacturing facilities and various digital platforms.

During the third quarter of fiscal 2025, we continued to execute on our Customers for Life strategy, which is centered around driving customer growth and engagement through digital connection, expanding our Media Collective, enhancing the customer value proposition, modernizing capabilities through technology and driving transformational productivity. We continue to invest in growth through our four digital platforms of eCommerce, Loyalty, Pharmacy & Health and the use of our mobile app in our stores. This integrated ecosystem is accelerating our ability to innovate, optimize marketing spend, and unlock new revenue streams.

Identical sales, excluding fuel, increased 2.4% during the third quarter of fiscal 2025. Our digital investments are driving engagement, customer acquisition and retention. During the third quarter of fiscal 2025, digital sales, which include Drive Up & Go curbside pickup and home delivery, increased 21% compared to the third quarter of fiscal 2024. In loyalty, membership grew 12% to 49.8 million in the third quarter of fiscal 2025 compared to the third quarter of fiscal 2024, while program enhancements and simplification continue to fuel deeper engagement. Most recently, we again extended the value of our loyalty platform beyond grocery with the launch of a new offering with Uber One, offering members exclusive benefits and savings.

In our customer value proposition, we continued to invest in value through loyalty enhancements, personalized promotions, and selective price investments in key categories. These actions, in addition to partnering with vendors and Own Brands innovation, are driving engagement and value creation. We also continue to carefully manage cost inflation to help stretch customers' wallets.

Technology remains central to our long-term growth strategy, and this technology-first approach is enabling us to innovate faster, operate more efficiently and deliver greater value at lower cost. Our modern, cloud-native platform continues to power key operations across eCommerce, stores, pharmacy, supply chain, merchandising and Media Collective operations, and is positioning us to rapidly scale AI to enhance our core business functions and unlock new levels of speed, intelligence and personalization. In our integrated mobile app, AskAI delivers a conversational search experience for cross-category discovery and personalized recommendations, and we recently launched innovations like autonomous shopping assistants.

Our capital allocation strategy balances investing for the future, strengthening our balance sheet and returns to shareholders through a combination of dividends and opportunistic share repurchases. Capital expenditures were approximately $1,413 million for the first 40 weeks of fiscal 2025, primarily including the completion of 74 remodels, the opening of five new stores and continued investment in our digital and technology platforms. Capital returns to shareholders during the first 40 weeks of fiscal 2025 included $246.7 million of common stock dividends ($0.45 per common share) and the investment of $1,361.6 million for the repurchase of common stock, inclusive of the $750.0 million ASR Agreement.

Third quarter of fiscal 2025 highlights

In summary, our financial and operating highlights for the third quarter of fiscal 2025 include:

• Identical sales increased 2.4%
• Digital sales increased 21%
• Loyalty members increased 12% to 49.8 million
• Net income of $293 million, or $0.55 per Class A common share
• Adjusted net income of $390 million, or $0.72 per Class A common share
• Adjusted EBITDA of $1,039 million

Stores

The following table shows stores operating, opened and closed during the periods presented:

The following table summarizes our stores by size:

(1) In millions, reflects total square footage of retail stores operating at the end of the period.

RESULTS OF OPERATIONS

Comparison of the Third Quarter of Fiscal 2025 and the First 40 weeks of Fiscal 2025 to the Third Quarter of Fiscal 2024 and the First 40 weeks of Fiscal 2024.

The following tables and related discussion set forth certain information and comparisons regarding the components of our Condensed Consolidated Statements of Operations for the 12 and 40 weeks ended November 29, 2025 ("third quarter of fiscal 2025" and "first 40 weeks of fiscal 2025") and 12 and 40 weeks ended November 30, 2024 ("third quarter of fiscal 2024" and "first 40 weeks of fiscal 2024") (dollars in millions, except per share data).

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Net Sales and Other Revenue

Net sales and other revenue increased 1.9% to $19,123.7 million for the third quarter of fiscal 2025 from $18,774.5 million for the third quarter of fiscal 2024. The increase in Net sales and other revenue was primarily driven by a 2.4% increase in identical sales, with strong growth in pharmacy sales being the primary driver of the identical sales increase. We also continued to grow our digital sales during the third quarter of fiscal 2025. These increases in Net sales and other revenue were partially offset by a net reduction in sales driven by store closures since the third quarter of fiscal 2024 and lower fuel sales.

Net sales and other revenue increased 2.2% to $62,920.3 million for the first 40 weeks of fiscal 2025 from $61,591.4 million for the first 40 weeks of fiscal 2024. The increase in Net sales and other revenue was primarily driven by a 2.5% increase in identical sales, with strong growth in pharmacy sales being the primary driver of the identical sales increase. We also continued to grow our digital sales during the first 40 weeks of fiscal 2025. These increases in Net sales and other revenue were partially offset by lower fuel sales.

Identical Sales, Excluding Fuel

Identical sales include stores operating during the same period in both the current year and the prior year, comparing sales on a daily basis. Direct to consumer digital sales are included in identical sales, and fuel sales are excluded from identical sales. Acquired stores become identical on the one-year anniversary date of the acquisition. Identical sales for the 12 and 40 weeks ended November 29, 2025 and the 12 and 40 weeks ended November 30, 2024, respectively, were:

The following table represents Net sales and other revenue by product type (dollars in millions):

(1) Digital related sales are included in the categories to which the revenue pertains.

(2) Consists primarily of general merchandise, grocery, dairy and frozen foods.

(3) Consists primarily of produce, meat, deli and prepared foods, bakery, floral and seafood.

(4) Consists primarily of wholesale revenue to third parties, commissions, rental income, media advertising revenue and other miscellaneous revenue.

Gross Margin

Gross margin rate decreased to 27.4% during the third quarter of fiscal 2025 compared to 27.9% during the third quarter of fiscal 2024. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 55 basis points compared to the third quarter of fiscal 2024. This decrease in gross margin rate was driven by increases in delivery and handling costs related to the continued growth in our digital sales, and strong growth in pharmacy sales, which carries an overall lower gross margin rate. We also continue to make incremental investments in our customer value proposition which were funded by the benefits from our productivity initiatives.

Gross margin rate decreased to 27.2% during the first 40 weeks of fiscal 2025 compared to 27.8% during the first 40 weeks of fiscal 2024. Excluding the impact of fuel and LIFO expense, gross margin rate decreased 69 basis points compared to the first 40 weeks of fiscal 2024. This decrease in gross margin rate was driven by strong growth in pharmacy sales, which carries an overall lower gross margin rate, and increases in delivery and handling costs related to the continued growth in our digital sales. We also continue to make incremental investments in our customer value proposition which were funded by the benefits from our productivity initiatives.

Selling and Administrative Expenses

Selling and administrative expenses decreased to 24.9% of Net sales and other revenue during the third quarter of fiscal 2025 compared to 25.1% during the third quarter of fiscal 2024. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue decreased 33 basis points compared to the third quarter of fiscal 2024. This decrease in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable to the sales leveraging of employee costs and lower merger-related costs, partially offset by an increase in business transformation costs. The benefits from our productivity initiatives continue to partially offset increasing wage rates and other inflationary pressures on our operating expenses.

Selling and administrative expenses decreased to 25.3% of Net sales and other revenue during the first 40 weeks of fiscal 2025 compared to 25.6% of Net sales and other revenue for the first 40 weeks of fiscal 2024. Excluding the impact of fuel, Selling and administrative expenses as a percentage of Net sales and other revenue decreased 50 basis points compared to the first 40 weeks of fiscal 2024. This decrease in Selling and administrative expenses as a percentage of Net sales and other revenue was primarily attributable to lower Merger-related costs and the sales leveraging of employee costs, partially offset by an increase in business transformation costs. The benefits from our productivity initiatives continue to partially offset increasing wage rates and other inflationary pressures on our operating expenses.

(Gain) Loss on Property Dispositions and Impairment Losses, Net

For the third quarter of fiscal 2025, net gain on property dispositions and impairment losses was $1.2 million, primarily driven by $1.3 million of net gains primarily from the sale of real estate assets. For the third quarter of fiscal 2024, net loss on property dispositions and impairment losses was $10.2 million, primarily driven by $6.0 million of retail store impairment losses and $4.2 million of net losses from the sale of real estate assets and equipment disposals.

For the first 40 weeks of fiscal 2025, net gain on property dispositions and impairment losses was $28.7 million, primarily driven by $48.8 million of net gains primarily from the sale of real estate assets, partially offset by $11.7 million from the impairment and disposal of certain technology assets and $8.4 million of retail store impairment losses. For the first 40 weeks of fiscal 2024, net loss on property dispositions and impairment losses was $59.4 million, primarily driven by $62.7 million of asset impairments including impairment losses of $39.8 million primarily related to equipment from the closing of our micro-fulfillment centers, $19.5 million of retail store impairment losses and $3.5 million related to certain technology assets, partially offset by $3.3 million of net gains from the sale of real estate assets.

Interest Expense, Net

Interest expense, net was $116.0 million during the third quarter of fiscal 2025 compared to $109.0 million during the third quarter of fiscal 2024. The increase in Interest expense, net was primarily attributable to higher average outstanding borrowings. The weighted average interest rate during the third quarter of fiscal 2025 was 5.5%, excluding amortization and write-off of deferred financing costs and original issue discount, compared to 5.6% during the third quarter of fiscal 2024.

Interest expense, net was $363.1 million during the first 40 weeks of fiscal 2025 compared to $358.3 million during the first 40 weeks of fiscal 2024. The increase in Interest expense, net was primarily attributable to higher average outstanding borrowings. The weighted average interest rate during the first 40 weeks of fiscal 2025 was 5.5%, excluding amortization and write-off of deferred financing costs and original issue discount, compared to 5.6% during the first 40 weeks of fiscal 2024.

Other (Income) Expense, Net

For the third quarter of fiscal 2025, other income, net was $4.0 million compared to $5.6 million for the third quarter of fiscal 2024. Other income, net during the third quarter of fiscal 2025 was primarily driven by non-service cost components of net pension and post-retirement income and realized gains from non-operating investments, partially offset by unrealized losses from non-operating investments. Other income, net during the third quarter of fiscal 2024 was primarily driven by unrealized gains from non-operating investments and non-service cost components of net pension and post-retirement expense.

For the first 40 weeks of fiscal 2025, other income, net was $37.6 million compared to other expense, net of $0.3 million for the first 40 weeks of fiscal 2024. Other income, net during the first 40 weeks of fiscal 2025 was primarily driven by non-service cost components of net pension and post-retirement income, including $26.8 million of pension settlement income, and realized gains from non-operating investments, partially offset by unrealized losses from non-operating investments. Other expense, net during the first 40 weeks of fiscal 2024 was primarily driven by non-service cost components of net pension and post-retirement expense and unrealized gains and losses from non-operating investments.

Income Taxes

Income tax expense was $84.4 million during the third quarter of fiscal 2025, representing a 22.3% effective tax rate. Income tax expense was $14.5 million during the third quarter of fiscal 2024, representing a 3.5% effective tax rate. The increase in the effective income tax rate was primarily driven by the recognition of $81.0 million of discrete state income tax benefits related to the settlement of audits during the third quarter of fiscal 2024.

Income tax expense was $210.6 million during the first 40 weeks of fiscal 2025, representing a 23.2% effective tax rate. Income tax expense was $124.7 million during the first 40 weeks of fiscal 2024, representing a 13.7% effective tax rate. The increase in the effective income tax rate was primarily driven by the recognition of $81.0 million of discrete state income tax benefits related to the settlement of audits during the third quarter of fiscal 2024.

Net Income and Adjusted Net Income

Net income was $293.3 million, or $0.55 per Class A common share, during the third quarter of fiscal 2025 compared to $400.6 million, or $0.69 per Class A common share, during the third quarter of fiscal 2024. The third quarter of fiscal 2024 included the $81.0 million or $0.14 per share benefit related to certain discrete state income tax benefits related to the settlement of audits. Adjusted net income was $390.3 million, or $0.72 per Class A common share, during the third quarter of fiscal 2025 compared to $420.3 million, or $0.71 per Class A common share, during the third quarter of fiscal 2024.

Net income was $698.2 million, or $1.25 per Class A common share, during the first 40 weeks of fiscal 2025 compared to $786.8 million, or $1.35 per Class A common share, during the first 40 weeks of fiscal 2024. The first 40 weeks of fiscal 2024 included the $81.0 million or $0.14 per share benefit related to certain discrete state income tax benefits related to the settlement of audits. Adjusted net income was $957.6 million, or $1.69 per Class A common share, during the first 40 weeks of fiscal 2025 compared to $1,112.9 million, or $1.88 per Class A common share, during the first 40 weeks of fiscal 2024.

Adjusted EBITDA

For the third quarter of fiscal 2025, Adjusted EBITDA was $1,038.7 million, or 5.4% of Net sales and other revenue, compared to $1,065.1 million, or 5.7% of Net sales and other revenue, for the third quarter of fiscal 2024. For the first 40 weeks of fiscal 2025, Adjusted EBITDA was $2,998.1 million, or 4.8% of Net sales and other revenue, compared to $3,149.6 million, or 5.1% of Net sales and other revenue for the first 40 weeks of fiscal 2024.

Reconciliation of Non-GAAP Measures

The following table reconciles Net income to Adjusted net income and Adjusted EBITDA (in millions):

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The following tables reconcile diluted net income per Class A common share to Adjusted net income per Class A common share (in millions, except per share data):

(1) Primarily includes costs associated with third-party consulting fees related to our Customers for Life strategy and costs related to employee terminations, as follows (see table below):

(2) The 12 and 40 weeks ended November 29, 2025 primarily relates to litigation costs and retention program expense related to the terminated merger. The 12 and 40 weeks ended November 30, 2024 primarily includes third-party legal and advisor fees and retention program expense related to the Merger.

(3) Miscellaneous adjustments include the following (see table below):

(i) Includes adjustments for the financial impact of other items not considered in our core performance.

(4) See reconciliation of Net income to Adjusted net income above for further details.

(5) Represents incremental unvested RSUs to adjust the diluted weighted average Class A common shares outstanding during each respective period to the fully outstanding RSUs as of the end of each respective period.

(6) Reflects the per share impact of Non-GAAP adjustments for each period. See the reconciliation of Net income to Adjusted net income above for further details.

Non-GAAP adjustment classifications within the Condensed Consolidated Statements of Operations:

(a) Cost of sales

(b) Selling and administrative expenses

(c) Interest expense, net

(d) Depreciation and amortization:

(e) Miscellaneous adjustments:

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LIQUIDITY AND CAPITAL RESOURCES

The following table sets forth the major sources and uses of cash and cash equivalents and restricted cash for each period (in millions):

Net Cash Provided by Operating Activities

Net cash provided by operating activities was $1,649.6 million for the first 40 weeks of fiscal 2025 compared to $1,922.1 million for the first 40 weeks of fiscal 2024. The decrease in cash flow from operating activities during the first 40 weeks of fiscal 2025 compared to the first 40 weeks of fiscal 2024 was primarily driven by a decrease in Adjusted EBITDA and changes in working capital related to inventory and accounts payable, as well as increases in business transformation costs and cash paid for insurance claims, partially offset by lower Merger-related costs and contributions to our defined benefit pension plans.

Net Cash Used in Investing Activities

Net cash used in investing activities was $1,285.4 million for the first 40 weeks of fiscal 2025 compared to $1,416.5 million for the first 40 weeks of fiscal 2024.

For the first 40 weeks of fiscal 2025, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $1,412.8 million, partially offset by proceeds from the sale of assets of $85.2 million, primarily related to real estate. Payments for property, equipment and intangibles in the first 40 weeks of fiscal 2025 included the completion of 74 remodels, the opening of five new stores and continued investment in our digital and technology platforms. For the first 40 weeks of fiscal 2024, cash used in investing activities consisted primarily of payments for property, equipment and intangibles of $1,446.7 million, partially offset by proceeds from the sale of assets of $24.1 million, primarily related to real estate. Payments for property, equipment and intangibles in the first 40 weeks of fiscal 2024 included the completion of 84 remodels, the opening of nine new stores and continued investment in our digital and technology platforms.

Net Cash Used in Financing Activities

Net cash used in financing activities was $461.2 million during the first 40 weeks of fiscal 2025 compared to $492.3 million during the first 40 weeks of fiscal 2024.

Net cash used in financing activities during the first 40 weeks of fiscal 2025 consisted primarily of the repurchase of common stock, dividends paid on our Class A common stock, payments for debt financing costs, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $2,100.0 million of issuances and subsequent $1,350.0 million of redemptions of senior unsecured notes (as further discussed below under the caption Debt Management). Proceeds from the issuance of long-term debt also includes $485.0 million of net proceeds from the ABL Facility, including the $750.0 million of borrowings related to the ASR Agreement and subsequent repayment using proceeds from the issuance of senior unsecured notes in the third quarter of fiscal 2025. Net cash used in financing activities during the first 40 weeks of fiscal 2024 consisted primarily of the $250.0 million repayment of the ABL Facility, dividends paid on our Class A common stock, payments of obligations under finance leases and tax withholding payments on vesting of RSUs, partially offset by $50.0 million of proceeds from the issuance of long-term debt under the ABL Facility.

Debt Management

As of November 29, 2025, there was $485.0 million outstanding under our ABL Facility and total availability of $3,504.8 million (net of letter of credit usage). On August 27, 2025, the existing ABL Facility was amended and restated to, among other things, extend the maturity date of the facility to August 27, 2030. The new ABL Facility has an interest rate of term SOFR plus a margin ranging from 1.25% to 1.50% and also provides for a LOC sub-facility of $1,500.0 million.

On March 11, 2025, the Company and the Subsidiary Co-Issuers completed the issuance of $600.0 million in aggregate principal amount of 6.250% senior unsecured notes due March 15, 2033 (the "2033 Notes"). The 2033 Notes are guaranteed on a senior unsecured basis by all of our existing and future direct and indirect domestic subsidiaries (other than the Subsidiary Co-Issuers) that are obligors under the ABL Facility. Interest on the 2033 Notes is payable semi-annually in arrears on March 15 and September 15 of each year, with the first payment commencing on September 15, 2025. On March 17, 2025, proceeds from the 2033 Notes, together with approximately $5.7 million of cash on hand, were used to (i) redeem in full the $600.0 million outstanding of 7.500% senior unsecured notes due March 15, 2026 (the "March Refinancing") and (ii) pay fees and expenses related to the March Refinancing and the issuance of the 2033 Notes.

On November 10, 2025, the Company and the Subsidiary Co-Issuers completed the issuance of $700.0 million in aggregate principal amount of 5.500% senior unsecured notes due March 31, 2031 (the "2031 Notes") and $800.0 million in aggregate principal amount of 5.750% senior unsecured notes due March 31, 2034 (the "2034 Notes" and together with the 2031 Notes, the "Notes"). The Notes are guaranteed on a senior unsecured basis by all of our existing and future direct and indirect domestic subsidiaries (other than the Subsidiary Co-Issuers) that are obligors under the ABL Facility. Interest on the Notes is payable semi-annually in arrears on May 15 and November 15 of each year, with the first payment commencing on May 15, 2026. During the third quarter of fiscal 2025, proceeds from the Notes were used to (i) redeem in full the $750.0 million outstanding of our 3.250% senior unsecured notes due March 15, 2026 (the "November Refinancing"); (ii) repay a portion of the borrowings under the ABL Facility; and (iii) pay fees and expenses related to the November Refinancing and the issuance of the Notes.

Dividends

We have established a dividend policy pursuant to which we intend to pay a quarterly dividend on our Class A common stock. Cash dividends paid on our Class A common stock were $246.7 million ($0.45 per common share) and $208.5 million ($0.36 per common share) during the first 40 weeks of fiscal 2025 and first 40 weeks of fiscal 2024, respectively. On January 7, 2026, we announced the next quarterly dividend payment of $0.15 per share of Class A common stock to be paid on February 6, 2026 to stockholders of record as of the close of business on January 23, 2026.

Common Stock Repurchase Program

The Board has authorized a multi-year share repurchase program of up to $2.75 billion of our common stock. The share repurchase program could include open market repurchases, accelerated share repurchase programs, tender offers, block trades, potential privately negotiated transactions, or trading plans in compliance with the federal securities laws. On October 14, 2025, we entered into the ASR Agreement with JPMorgan to repurchase $750 million of shares of our common stock. The ASR Agreement was funded with $750.0 million of borrowings under the ABL Facility. Pursuant to the ASR Agreement, on October 15, 2025, we paid JPMorgan $750.0 million in cash and received an initial delivery of 35.4 million shares of common stock with a value equal to $600.0 million as of the date the ASR Agreement was executed, representing an estimated 80% of the total shares initially underlying the

ASR Agreement. The delivery of any remaining shares will occur at the final settlement of the transactions under the ASR Agreement, which is expected to occur in the first calendar quarter of 2026. The number of shares to be delivered upon final settlement will be based on the average of the volume-weighted average share price of our common stock on specified dates during the term of the ASR Agreement, less a discount.

During the first 40 weeks of fiscal 2025, we repurchased an aggregate of 64.1 million shares of common stock for a total of $1,211.6 million, inclusive of the $600.0 million of shares initially delivered under the ASR Agreement.

Liquidity

Based on current operating trends, we believe that we have significant sources of cash to meet our liquidity needs for the next 12 months and for the foreseeable future, including cash on hand, cash flows from operating activities and other sources of liquidity, including the ABL Facility. We estimate our liquidity needs over the next 12 months to be in the range of $5.5 billion to $6.0 billion. This includes $485.0 million related to the outstanding borrowings under our ABL Facility for which we may, at our discretion, elect to pay all or a portion of the outstanding balance within the next 12 months, and anticipated requirements for working capital, capital expenditures, pension obligations, interest payments and scheduled principal payments of debt, operating leases, finance leases, quarterly dividends on Class A common stock and common stock repurchases. In addition, we may enter into refinancing and sale leaseback transactions from time to time. We believe we have adequate cash flow to continue to maintain our current debt ratings and to respond effectively to competitive conditions.

CRITICAL ACCOUNTING POLICIES

The preparation of Consolidated Financial Statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the Consolidated Financial Statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a fair and consistent manner. See the Critical Accounting Policies section included in our Annual Report on Form 10-K for the fiscal year ended February 22, 2025, filed with the SEC on April 21, 2025, for a discussion of our significant accounting policies.

RECENTLY ISSUED AND RECENTLY ADOPTED ACCOUNTING STANDARDS

See Note 1 - Basis of Presentation and Summary of Significant Accounting Policies of our unaudited interim Condensed Consolidated Financial Statements located elsewhere in this Form 10-Q.

There have been no material changes in our exposure to market risk from the information provided in our Annual Report on Form 10-K for the fiscal year ended February 22, 2025, filed with the SEC on April 21, 2025.

Based on their evaluation of our disclosure controls and procedures (as defined in Rules 13a-15 and 15d-15 under the Securities Exchange Act of 1934 (the "Exchange Act")) as of the end of the period covered by this Form 10-Q, our Principal Executive Officer and Principal Financial Officer concluded our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms and is accumulated and communicated to management, including our Principal Executive Officer and Principal Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the third quarter of fiscal 2025 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

There have been no material changes to the risk factors previously included in our Annual Report on Form 10-K for the fiscal year ended February 22, 2025, filed with the SEC on April 21, 2025, under the heading "Risk Factors".