As of February 1, 2025, our store count increased approximately 3% and selling square footage increased approximately 2% compared to the same period last year. In fiscal 2026, we expect to open 40 Marmaxx net new stores and approximately 20 new Sierra stores, which would increase selling square footage by approximately 2%.

We announced that we plan to enter Spain with our TK Maxx banner in fiscal 2027.

During fiscal 2025, we entered into a definitive agreement for a joint venture with Grupo Axo, S.A.P.I de C.V. ("Axo") to hold a 49% ownership stake in Multibrand Outlet Stores S.A.P.I. de C.V. ("MOS") which operates off-price, physical store businesses in Mexico and includes a total of over 200 stores for its Promoda, Reduced, and Urban Store banners. During fiscal 2025, we entered into a definitive agreement to acquire a 35% ownership stake in privately held Brands for Less ("BFL"), representing a non-controlling, minority position.

Our selling, general and administrative (“SG&A”) expense ratio for fiscal 2025 was 19.4%, a 0.1 percentage point increase compared to 19.3% for fiscal 2024. The increase in SG&A ratio for fiscal 2025 was due to incremental store wage and payroll costs, partially offset by a favorable year-over-year impact from a prior year reserve related to a German COVID program receivable and the year-over-year benefit from closing HomeGoods' e-commerce business last year.

Our cost of sales, including buying and occupancy costs, ratio for fiscal 2025 was 69.4%, a 0.6 percentage point decrease compared to 70.0% for fiscal 2024. The decrease in the cost of sales ratio, including buying and occupancy costs, was attributable to higher merchandise margin due to higher markon, lower freight costs and lower inventory shrink expense, partially offset by higher supply chain costs.

Our consolidated average per store inventories, including inventory on hand at our distribution centers (which excludes inventory in transit) and excluding our e-commerce sites and Sierra stores, were up 1% at the end of fiscal 2025 as compared to the prior year.

We are subject to various risks of sourcing merchandise, particularly from other countries, including risks related to moving merchandise internationally. Many of the products sold in our stores are sourced in locations (particularly in China, India and southeastern Asia) other than the location in which they will be sold.

Our business depends on our information technology (“IT”) systems, which collect and process information of customers, Associates and other persons, as well as information of our business and of our suppliers, service providers and other third parties.

We are subject to national, state, provincial, regional and local laws, rules, regulations, mandates, accounting standards, principles and interpretations, as well as government orders in various countries in which we operate that collectively affect multiple aspects of our business.

We compete on the basis of various factors affecting value (which we define as the combination of brand, fashion, price and quality). We also compete on merchandise selection and freshness; banner name recognition and appeal; both in-store and online service and shopping experience; convenience and store location.

More generally, consumer e-commerce spending may continue to increase, as it has in recent years, while our business is primarily in brick-and-mortar stores. If we fail to compete effectively, our sales and results of operations could be adversely affected.

Although we use various marketing channels (including, among others, linear television, streaming video, audio, outdoor, digital/social media and mobile) to drive customer awareness of and interest in shopping our retail banners and to increase sales, some of our competitors may spend more for their marketing programs or use different approaches than we do, which may provide them with a competitive advantage.

These centers are generally large, and built to suit our specific, off-price business model, with a combination of automated systems and manual processes to manage the variety of merchandise we acquire.

We invest in our supply chain with the goal of continuing to operate with low inventory levels, to ship more efficiently and quickly, and to more precisely and effectively allocate merchandise to each store.

Our advertising is generally focused on promoting our retail banners rather than individual products, which contributes to our advertising budget (as a percentage of sales) remaining low compared to many traditional retailers.

Our business depends on our information technology (“IT”) systems, which collect and process information of customers, Associates and other persons, as well as information of our business and of our suppliers, service providers and other third parties.

This includes successfully developing, implementing and maintaining appropriate systems; adopting new technologies (including artificial intelligence or other emerging technologies) appropriately and in a timely manner; and maintaining effective disaster recovery plans for such systems.

We also have processes in place designed to identify and mitigate risks from third party technology and service providers, including, as appropriate, pre-contractual due diligence, review of contractual terms addressing cybersecurity and data protection, and periodic re-assessment based on assessed vendor risk.

During fiscal 2025, we returned $4.1 billion to our shareholders through share repurchases and dividends. A dividend of $0.375 per share was declared in the fourth quarter of fiscal 2025 and paid in March 2025.

We expect our capital expenditures in fiscal 2026 will be in the range of approximately $2.1 billion to $2.2 billion, including approximately $1.0 billion to $1.1 billion for our offices and distribution centers (including information technology systems) to support growth, approximately $0.9 billion for store renovations and approximately $0.2 billion for new stores.

We currently plan to repurchase approximately $2 billion to $2.5 billion of stock under our stock repurchase programs in fiscal 2026. We determine the timing and amount of repurchases based on our assessment of various factors including excess cash flow, liquidity, economic and market conditions, our assessment of prospects for our business, legal requirements, and other factors.

Various stakeholders, including certain advocacy groups, investors, customers, governmental officials and Associates, have increasingly focused on social impact, environmental sustainability, human capital management, human rights and other related matters in a variety of ways that are not necessarily consistent.

We have announced certain initiatives related to our corporate responsibility efforts, which we have focused under four pillars: workplace, environmental sustainability, communities and responsible sourcing, which includes social compliance.

We monitor debt financing markets on an ongoing basis and from time to time may incur additional long-term indebtedness depending on prevailing market conditions, liquidity requirements, existing economic conditions and other factors.

Consumer confidence and discretionary spending can be affected by various economic conditions, both on a global level and in particular markets, that can, in turn, affect our business or the retail industry generally.

Changes in the import and export policies, including trade restrictions, new or increased tariffs or quotas, embargoes, sanctions and countersanctions, safeguards or customs restrictions by the U.S. and/or other foreign governments, could require us to change the way we conduct business, affect our merchandise margins, and adversely affect our financial condition, results of operations, reputation, and our relationships with customers, vendors, and Associates in the short- or long-term.

Natural or other disasters, such as hurricanes, tornadoes, floods, wildfires, earthquakes and other extreme weather; climate conditions, which have recently been increasing in severity and frequency; public health issues, such as pandemics and epidemics (such as the COVID-19 pandemic); fires or explosions; acts of war or conflict (such as the ongoing Russia-Ukraine conflict, the ongoing conflict in the Middle East and shipping disruptions in the Red Sea and surrounding waterways); domestic or foreign terrorism or other acts of violence (including riots or active shooter situations); or cyberterrorism, nation-state cyber-attacks, or other cyber events could disrupt our operations and/or have an adverse effect on our results of operations and financial condition in a number of ways.