# ADVANCE AUTO PARTS INC (AAP) Informational only - not investment advice. CIK: 0001158449 SIC: 5531 Retail-Auto & Home Supply Stores SIC breadcrumb: [Retail Trade](/division/G/) > [SIC Major Group 55](/major-group/55/) > [SIC 5531 Retail-Auto & Home Supply Stores](/industry/5531/) Latest 10-K filed: 2026-02-13 SEC page: https://www.sec.gov/edgar/browse/?CIK=1158449 Filing source: https://www.sec.gov/Archives/edgar/data/1158449/000119312526051305/aap-20260103.htm ## Selected Fundamentals | Metric | Value | Unit | FY | Filed | | --- | ---: | --- | ---: | --- | | Revenue | 8601000000 | USD | 2026 | 2026-02-13 | | Net income | 44000000 | USD | 2026 | 2026-02-13 | | Assets | 11826000000 | USD | 2026 | 2026-02-13 | ## Financials Annual standardized facts from SEC companyfacts as of latest extracted filing date 2026-02-13. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001158449.json. Derived margins are computed from the extracted annual SEC facts. | Metric | 2015 | 2016 | 2017 | 2018 | 2019 | 2021 | 2022 | 2023 | 2024 | 2026 | | --- | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | ---: | | Revenue | | 9,567,679,000 | 9,373,784,000 | 9,580,554,000 | 9,709,003,000 | 10,106,321,000 | 9,148,874,000 | 9,209,000,000 | 9,094,000,000 | 8,601,000,000 | | Net income | 493,825,000 | 459,622,000 | 475,505,000 | 423,847,000 | 486,896,000 | 493,021,000 | 464,402,000 | 30,000,000 | -336,000,000 | 44,000,000 | | Operating income | 851,710,000 | 787,598,000 | 570,212,000 | 604,275,000 | 677,180,000 | 749,907,000 | 524,618,000 | 39,000,000 | -713,000,000 | -43,000,000 | | Gross profit | 4,453,613,000 | 4,255,915,000 | 4,085,049,000 | 4,219,413,000 | 4,254,746,000 | 4,481,614,000 | 4,232,870,000 | 3,860,000,000 | 3,409,000,000 | 3,733,000,000 | | Diluted EPS | 6.71 | 6.20 | 6.42 | 5.73 | 6.84 | 7.14 | 7.65 | 0.50 | -5.61 | 0.73 | | Assets | 7,962,358,000 | 8,315,033,000 | 8,482,301,000 | 9,040,648,000 | 11,248,525,000 | 11,839,636,000 | 11,986,447,000 | 12,276,326,000 | 10,798,000,000 | 11,826,000,000 | | Liabilities | | | | | | 8,280,124,000 | 9,387,255,000 | 9,756,598,000 | 8,628,000,000 | 9,628,000,000 | | Stockholders' equity | 2,002,912,000 | 2,916,192,000 | 3,415,196,000 | 3,550,813,000 | 3,549,081,000 | 3,536,961,000 | 2,599,000,000 | 2,520,000,000 | 2,170,000,000 | 2,198,000,000 | | Cash and cash equivalents | 104,671,000 | 135,178,000 | 546,937,000 | 896,527,000 | 418,665,000 | 834,992,000 | 270,805,000 | 488,049,000 | 1,869,000,000 | 3,123,000,000 | | Net margin | | 4.80% | 5.07% | 4.42% | 5.01% | 4.88% | 5.08% | 0.33% | -3.69% | 0.51% | | Operating margin | | 8.23% | 6.08% | 6.31% | 6.97% | 7.42% | 5.73% | 0.42% | -7.84% | -0.50% | ## Quarterly Quarterly standardized facts from SEC companyfacts as of latest extracted filing date 2025-02-26. Source: https://data.sec.gov/api/xbrl/companyfacts/CIK0001158449.json. Flow metrics use discrete quarter-length periods from 10-Q/10-Q/A filings. Q4 revenue and net income are derived only when annual FY and nine-month YTD facts exist for the same fiscal year; derived Q4 values are labeled. EPS Q4 is not derived. | Quarter | End date | Revenue | Net income | Diluted EPS | Method | | --- | --- | ---: | ---: | ---: | --- | | 2013-Q4 | 2013-12-28 | | 49,267,000 | | derived Q4 = FY annual - nine-month YTD | | 2014-Q4 | 2015-01-03 | | 84,434,000 | | derived Q4 = FY annual - nine-month YTD | | 2015-Q4 | 2016-01-02 | | 54,819,000 | | derived Q4 = FY annual - nine-month YTD | | 2016-Q4 | 2016-12-31 | | 62,365,000 | | derived Q4 = FY annual - nine-month YTD | | 2017-Q4 | 2017-12-30 | | 184,500,000 | | derived Q4 = FY annual - nine-month YTD | | 2018-Q4 | 2018-12-29 | 2,105,072,000 | 53,442,000 | | derived Q4 = FY annual - nine-month YTD | | 2019-Q4 | 2019-12-28 | 2,112,614,000 | 95,907,000 | | derived Q4 = FY annual - nine-month YTD | | 2020-Q4 | 2021-01-02 | 2,365,131,000 | 111,997,000 | | derived Q4 = FY annual - nine-month YTD | | 2021-Q4 | 2022-01-01 | 2,396,975,000 | 81,669,000 | | derived Q4 = FY annual - nine-month YTD | | 2022-Q4 | 2022-12-31 | 2,473,745,000 | 106,696,000 | | derived Q4 = FY annual - nine-month YTD | | 2023-Q4 | 2023-12-30 | 2,464,869,000 | -60,510,000 | | derived Q4 = FY annual - nine-month YTD | | 2024-Q4 | 2024-12-28 | 1,996,025,000 | -414,777,000 | | derived Q4 = FY annual - nine-month YTD | ## Macro Cross-References - [CPIAUCSL](/indicator/CPIAUCSL/): Consumer Price Index for All Urban Consumers: All Items in U.S. City Average - [UNRATE](/indicator/UNRATE/): Unemployment Rate - [FEDFUNDS](/indicator/FEDFUNDS/): Federal Funds Effective Rate - [CES0500000003](/indicator/CES0500000003/): Average Hourly Earnings of All Employees, Total Private - [DFEDTARU](/indicator/DFEDTARU/): Federal Funds Target Range - Upper Limit - [DFEDTARL](/indicator/DFEDTARL/): Federal Funds Target Range - Lower Limit - [DGS3MO](/indicator/DGS3MO/): Market Yield on U.S. Treasury Securities at 3-Month Constant Maturity - [DGS2](/indicator/DGS2/): Market Yield on U.S. Treasury Securities at 2-Year Constant Maturity - [DGS10](/indicator/DGS10/): Market Yield on U.S. Treasury Securities at 10-Year Constant Maturity - [DGS30](/indicator/DGS30/): Market Yield on U.S. Treasury Securities at 30-Year Constant Maturity - [T10Y2Y](/indicator/T10Y2Y/): 10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity - [CPILFESL](/indicator/CPILFESL/): Consumer Price Index for All Urban Consumers: All Items Less Food and Energy - [CPIUFDSL](/indicator/CPIUFDSL/): Consumer Price Index for All Urban Consumers: Food - [CPIENGSL](/indicator/CPIENGSL/): Consumer Price Index for All Urban Consumers: Energy - [CUSR0000SAH1](/indicator/CUSR0000SAH1/): Consumer Price Index for All Urban Consumers: Shelter - [PCEPI](/indicator/PCEPI/): Personal Consumption Expenditures: Chain-type Price Index - [PCEPILFE](/indicator/PCEPILFE/): Personal Consumption Expenditures Excluding Food and Energy: Chain-type Price Index - [PPIACO](/indicator/PPIACO/): Producer Price Index by Commodity: All Commodities - [T10YIE](/indicator/T10YIE/): 10-Year Breakeven Inflation Rate - [U6RATE](/indicator/U6RATE/): Total Unemployed, Plus All Marginally Attached Workers Plus Total Employed Part Time for Economic Reasons - [PAYEMS](/indicator/PAYEMS/): All Employees, Total Nonfarm - [CIVPART](/indicator/CIVPART/): Labor Force Participation Rate - [EMRATIO](/indicator/EMRATIO/): Employment-Population Ratio - [UNEMPLOY](/indicator/UNEMPLOY/): Unemployed - [CE16OV](/indicator/CE16OV/): Employment Level - [ICSA](/indicator/ICSA/): Initial Claims - [JTSJOL](/indicator/JTSJOL/): Job Openings: Total Nonfarm - [JTSQUR](/indicator/JTSQUR/): Quits: Total Nonfarm - [GDPC1](/indicator/GDPC1/): Real Gross Domestic Product - [A191RL1Q225SBEA](/indicator/A191RL1Q225SBEA/): Real Gross Domestic Product: Percent Change from Preceding Period - [INDPRO](/indicator/INDPRO/): Industrial Production: Total Index - [TCU](/indicator/TCU/): Capacity Utilization: Total Index - [HOUST](/indicator/HOUST/): New Privately-Owned Housing Units Started: Total Units - [PERMIT](/indicator/PERMIT/): New Privately-Owned Housing Units Authorized in Permit-Issuing Places: Total Units - [RSAFS](/indicator/RSAFS/): Advance Retail Sales: Retail Trade - [PCE](/indicator/PCE/): Personal Consumption Expenditures - [DSPIC96](/indicator/DSPIC96/): Real Disposable Personal Income - [PSAVERT](/indicator/PSAVERT/): Personal Saving Rate - [M2SL](/indicator/M2SL/): M2 - [BOPGSTB](/indicator/BOPGSTB/): U.S. International Trade in Goods and Services: Balance - [MSPUS](/indicator/MSPUS/): Median Sales Price of Houses Sold for the United States - [HSN1F](/indicator/HSN1F/): New One Family Houses Sold: United States - [RHORUSQ156N](/indicator/RHORUSQ156N/): Homeownership Rate in the United States - [TTLCONS](/indicator/TTLCONS/): Total Construction Spending: Total Construction in the United States - [RRVRUSQ156N](/indicator/RRVRUSQ156N/): Rental Vacancy Rate in the United States - [TOTALSL](/indicator/TOTALSL/): Total Consumer Credit Owned and Securitized - [REVOLSL](/indicator/REVOLSL/): Revolving Consumer Credit Owned and Securitized - [DRCCLACBS](/indicator/DRCCLACBS/): Delinquency Rate on Credit Card Loans, All Commercial Banks - [GDP](/indicator/GDP/): Gross Domestic Product - [GPDI](/indicator/GPDI/): Gross Private Domestic Investment - [GCE](/indicator/GCE/): Government Consumption Expenditures and Gross Investment - [PCEC](/indicator/PCEC/): Personal Consumption Expenditures - [NETEXP](/indicator/NETEXP/): Net Exports of Goods and Services - [GFDEBTN](/indicator/GFDEBTN/): Federal Debt: Total Public Debt - [GFDEGDQ188S](/indicator/GFDEGDQ188S/): Federal Debt: Total Public Debt as Percent of Gross Domestic Product - [FYFSD](/indicator/FYFSD/): Federal Surplus or Deficit - [FGRECPT](/indicator/FGRECPT/): Federal Government Current Receipts - [FGEXPND](/indicator/FGEXPND/): Federal Government: Current Expenditures - [MANEMP](/indicator/MANEMP/): All Employees, Manufacturing - [USCONS](/indicator/USCONS/): All Employees, Construction - [USTRADE](/indicator/USTRADE/): All Employees, Retail Trade - [USFIRE](/indicator/USFIRE/): All Employees, Financial Activities - [USGOVT](/indicator/USGOVT/): All Employees, Government - [AWHAETP](/indicator/AWHAETP/): Average Weekly Hours of All Employees, Total Private - [DGORDER](/indicator/DGORDER/): Manufacturers' New Orders: Durable Goods - [NEWORDER](/indicator/NEWORDER/): Manufacturers' New Orders: Nondefense Capital Goods Excluding Aircraft - [BUSINV](/indicator/BUSINV/): Total Business Inventories - [EXPGS](/indicator/EXPGS/): Exports of Goods and Services - [IMPGS](/indicator/IMPGS/): Imports of Goods and Services - [IR](/indicator/IR/): Import Price Index (End Use): All Commodities - [PPIFIS](/indicator/PPIFIS/): Producer Price Index by Commodity: Final Demand ## Latest quarter (10-Q) Latest 10-Q source: https://www.sec.gov/Archives/edgar/data/1158449/000119312526234388/aap-20260425.htm Extracted between Part I Item 2 and the next Item 3/4 or Part II heading after HTML sanitization. Confidence: high Filing date: 2026-05-21 Report date: 2026-04-25 ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS The following discussion and analysis of financial condition and results of operations should be read in conjunction with the audited consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended January 3, 2026 (filed with the SEC on February 13, 2026) which the Company refers to as the “2025 Form 10-K”), and the Company’s unaudited condensed consolidated financial statements and the notes to those statements that appear elsewhere in this report. The results of operations for the interim periods are not necessarily indicative of the operating results to be expected for the full year. Consistent with the previous fiscal year, the Company’s first quarter of the year contained sixteen weeks. The Company’s remaining three quarters each consist of twelve weeks. First Quarter Fiscal 2026 Management Overview The Company’s financial results for the first quarter of 2026 includes: • Net sales during the first quarter of fiscal 2026 were $2.6 billion, an increase of 1.2% compared with the first quarter of fiscal 2025. Comparable store sales increased by 3.5%. • Gross profit margin for the first quarter of 2026 was 45.1% of net sales, an increase of 221 basis points compared with the first quarter of fiscal 2025. • Selling, general and administrative expenses, exclusive of restructuring and related expenses for the first quarter of fiscal 2026 were 41.3% of net sales, a decrease of 216 basis points compared with the first quarter of fiscal 2025. • The Company generated a diluted earnings per share of $0.39 during the first quarter of fiscal 2026, compared with a diluted earnings per share of $0.40 for the comparable period of 2025. Business and Risks Update The Company continues to make progress on the various elements of its business plan, which is focused on improving the customer experience, margin expansion, and driving consistent execution for both professional and DIY customers. On February 20, 2026, the U.S. Supreme Court overturned certain U.S. tariffs imposed under the International Emergency Economic Powers ("IEEPA") Act. During fiscal 2025, the Company incurred product costs directly related to the IEEPA tariffs. Tariffs directly paid by the Company are subject to direct refund via the IEEPA tariff refund process. Given the significant uncertainty around the recovery of tariffs that were previously paid, the Company has not recognized any amounts related to IEEPA tariff recoveries within its condensed consolidated financial statements as of April 25, 2026. The Company will continue to assess the recoverability of these tariffs, and will recognize any recoveries when realized or realizable, the amounts of which could be material to the Company’s condensed consolidated financial statements. The recent geopolitical events in the Middle East have caused significant disruption in the normal flow of oil, refined petroleum products and related commodities, which has increased the price of oil and non-petroleum products. Although the length and impact of these events are highly unpredictable, they could lead to market disruptions, including significant volatility in prices, supply, credit and capital market, consumer behavior and supply chain disruptions. These items, along with actual or perceived weakness in the economic and business climate, could have an adverse impact on our financial condition and results of operations in future periods. Industry Update Operating within the automotive aftermarket industry, the Company is influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry. In addition to the “Business and Risk Update” section 17 Table of Contents included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, these factors include, but are not limited to: • Significant changes in U.S trade policies, including the global trade tariffs • Inflationary pressures, including logistics and labor • Global supply chain disruptions • Cost of fuel • Changes in the number of miles driven • Unemployment rates • Interest rates • Consumer confidence and purchasing power • Competition • Changes in new car sales • Economic and geopolitical uncertainty • Foreign currency exchange volatility While these factors tend to fluctuate, the Company remains confident in the long-term growth prospects for the automotive parts industry. Stores The key factors used in selecting sites and market locations in which the Company operates include population, demographics, traffic count, vehicle profile, number and strength of competitors’ stores and the cost of real estate. During the sixteen weeks ended April 25, 2026, four stores were opened and one store was closed, resulting in a total of 4,308 stores as of the end of the first fiscal quarter compared with a total of 4,305 stores as of January 3, 2026. Results of Operations Sixteen Weeks Ended ($ in millions) April 25, 2026 April 19, 2025 Change(1) Basis Points Net sales $ 2,614 100.0 % $ 2,583 100.0 % $ 31 — Cost of sales 1,434 54.9 1,474 57.1 40 (221 ) Gross profit 1,180 45.1 1,109 42.9 71 221 Selling, general and administrative expenses, exclusive of restructuring and related expenses 1,079 41.3 1,122 43.4 43 (216 ) Restructuring and related expenses 32 1.2 118 4.6 86 (334 ) Selling, general and administrative expenses 1,111 42.5 1,240 48.0 129 (550 ) Operating income (loss) 69 2.6 (131 ) (5.1 ) 200 771 Interest expense (65 ) (2.5 ) (27 ) (1.0 ) (38 ) (144 ) Other income, net 31 1.2 27 1.0 4 14 Income tax expense (benefit) 11 0.4 (155 ) (6.0 ) (166 ) 642 Net income $ 24 0.9 % $ 24 0.9 % $ — — 18 Table of Contents (1) Represents favorable (unfavorable) year over year change. Note: Sums may not equal totals due to rounding. Net Sales For the sixteen weeks ended April 25, 2026, net sales increased 1.2% and comparable store sales increased 3.5% compared with the same period in 2025. Net sales increased due to higher average sales prices, partially offset by lower transaction volume and the reduction in sales resulting from store closures during the sixteen weeks ended April 19, 2025 associated with our 2024 Restructuring Plan. The Company calculates comparable store sales based on the change in store or branch sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Comparable store sales is intended only as supplemental information and is not a substitute for Net sales presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Gross Profit For the sixteen weeks ended April 25, 2026 and April 19, 2025, gross profit was $1.2 billion, or 45.1% of net sales, and $1.1 billion, or 42.9% of net sales, respectively. The increase in gross profit as a percentage of net sales compared to the prior comparative period was driven by expansion in product margin and the impact of lower margin liquidation sales related to our 2024 Restructuring Plan, which negatively impacted gross profit margin in the sixteen weeks ended April 19, 2025. Selling, General and Administrative Expenses, Exclusive of Restructuring and Related Expenses For the sixteen weeks ended April 25, 2026, SG&A expenses, exclusive of restructuring and related expenses, were $1.1 billion, or 41.3% of net sales, compared with $1.1 billion, or 43.4% of net sales, for the sixteen weeks ended April 19, 2025. Overall SG&A expenses decreased in the sixteen weeks ended April 25, 2026, as compared to prior comparative periods, as a result of operating costs eliminated for stores closed during the sixteen weeks ended April 19, 2025 as a result of our 2024 Restructuring Plan. Restructuring and Related Expenses For the sixteen weeks ended April 25, 2026, restructuring and related expenses were $32 million, or 1.2% of net sales, compared to $118 million, or 4.6% of net sales, in the prior year comparable period. The decrease in expenses as compared to the same period in fiscal 2025, relates to timing of the Company’s 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024, with the majority of costs being incurred by the end of first quarter of fiscal 2025 following the closure of all stores under the Plan. Substantially all of the costs under the restructuring plans have been incurred as of April 25, 2026. The Company estimates that it will incur additional expenses of approximately $20 million to $30 million through the remainder of fiscal 2026 related to the active restructuring plans. See Note 11. Restructuring, of the Notes to the Condensed Consolidated Financial Statements included in Part I, Item 1. Interest Expense For the sixteen weeks ended April 25, 2026, interest expense increased as compared to the same periods in fiscal 2025, due to an increase in the principal amount of interest bearing long-term debt from the debt issuance completed in the third quarter of fiscal 2025. Other Income, Net For the sixteen weeks ended April 25, 2026, other income, net increased as compared to the same period in fiscal 2025, due to higher interest income earned from higher cash and cash equivalent balances held due to the net proceeds received from the issuance of $1.95 billion in Senior Unsecured Notes in the third quarter of fiscal 2025. This was partially offset by lower interest rates and a reduction in income recognized from the transition services (“TSA Services”) agreement with Worldpac. 19 Table of Contents Income Tax Expense (Benefit) For the sixteen weeks ended April 25, 2026, the Company’s provision for income taxes reflected an expense of $11 million compared with an income tax benefit of $155 million for the same period in 2025. The income tax benefit in fiscal 2025 resulted from a net discrete tax benefit in the first quarter of fiscal 2025 of $126 million, related to an internal legal entity restructuring event completed in the fiscal year treated as a taxable stock disposition for U.S. federal income tax purposes. As a result, the Company recognized a capital loss deduction which was utilized against capital gain income. Liquidity and Capital Resources Overview The Company’s principal sources of liquidity are cash and cash equivalents and borrowing availability under the ABL facility. The Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, such as restructuring and asset optimization plans. In addition, cash is required to pay the Company’s dividends and to pay interest and principle on the Company’s long-term debt when due. The following table presents selected financial information related to the Company’s liquidity (in millions): April 25, 2026 January 3, 2026 Change Cash and cash equivalents $ 2,956 $ 3,123 $ (167 ) ABL Facility borrowing availability 896 896 — The decrease in cash and cash equivalents was primarily due to the final working capital payment made related to the Company's sale of Worldpac totaling $55 million, $55 million used for purchases of property and equipment, net of proceeds from sales, the payment of $30 million in dividends and net cash used in operating activities of $19 million, primarily as a result of changes in net working capital. The Company believes that its cash and cash equival [Excerpt truncated for page length; source filing is linked above.] ## Latest 10-K MD&A Extracted between Item 7 and the next Item 7A/8 heading after HTML sanitization. Confidence: high Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations. The following discussion and analysis of financial condition and results of operations should be read in conjunction with the Company’s consolidated financial statements and related notes that appear elsewhere in this Annual Report. The Company’s discussion contains forward-looking statements based upon current expectations that involve risks and uncertainties, such as the Company’s plans, objectives, expectations and intentions. Actual results and the timing of events could differ materially from those anticipated in these forward-looking statements as a result of a number of factors, including those set forth under the section titled “Part I. Item 1A. Risk Factors” of this Annual Report. The discussion of the Company’s financial condition and changes in the Company’s results of operations, liquidity and capital resources for the fiscal year ended December 28, 2024 (“2024”) compared with the fiscal year ended December 30, 2023 (“2023”) has been omitted from this Form 10-K, but are included in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of the Company’s Annual Report on Form 10-K for 2024, filed with the Securities and Exchange Commission (“SEC”) on February 26, 2025. Amounts are presented in millions, except per share data, unless otherwise stated. Management Overview The Company's results from continuing operations for the fiscal year ended January 3, 2026 included the benefit of one additional week (the "53rd week") as compared to the fiscal year ended December 28, 2024, which contained 52 weeks. A high-level summary of the Company’s financial results and other highlights from 2025 includes: • Net sales from continuing operations during fiscal 2025 were $8.6 billion, a decrease of 5.4% compared with fiscal 2024, driven by lower sales as a result of store closures executed under the 2024 Restructuring Plan, partially offset by the impact of the 53rd week. Comparable store sales increased 0.8%. • Gross profit margin from continuing operations for fiscal 2025 was 43.4% of net sales, an increase of 592 basis points compared with fiscal 2024, primarily due to the adverse impact on gross profit margin in fiscal 2024 from inventory-related charges under the 2024 Restructuring Plan. • Operating loss from continuing operations for 2025 was $43 million, an improvement of $670 million as compared to fiscal 2024. As a percentage of net sales, operating loss was (0.5)%, an improvement of 734 basis points compared with fiscal 2024. This change was primarily attributable to lower restructuring and related expenses in fiscal 2025 compared to 2024, including inventory-related charges related to the 2024 Restructuring Plan. • Cash flows used in operating activities from continuing operations was $46 million during fiscal 2025, a decrease of 132.6% compared with fiscal 2024, primarily attributable to a reduction in our accounts payable and cash charges related to the 2024 Restructuring Plan. • Diluted earnings per share (“Diluted EPS”) from continuing operations resulted in earnings of $1.13 during 2025 compared with a loss of $9.80 in 2024. Refer to “Results of Operations” and “Liquidity and Capital Resources” of this Annual Report for further details on the Company’s results. Business and Risk Update The Company continues to make progress on the various elements of its business plan, which is focused on improving the customer experience, margin expansion, and driving consistent execution for both professional and DIY customers. To achieve these improvements, the Company has undertaken planned strategic actions to help build a foundation for long-term success across the organization, which include: • Completion of the optimization of our U.S. asset footprint under the 2024 Restructuring Plan; • Issuance of $1.95 billion in Senior Unsecured Notes (as defined below) and redemption of the Company's 5.90% Senior Notes due March 9, 2026; • Termination of the Company's prior revolving credit facility (the "2021 Credit Agreement"), which was replaced by a new asset-based loan revolving credit facility (the "ABL Facility"); • Performed an assessment and began initiatives to improve the productivity of all assets, including Company-owned stores and Carquest Independents; • Reducing costs to remain competitive while reinvesting in the frontline; 24 Table of Contents • Making organizational changes to position the Company for success; • Consolidating the Company’s supply chain and converting distribution centers and stores to market hubs to create economies of scale, improve service and parts availability and optimize transportation routes; and • Finalization of the sale of Worldpac in fiscal 2024 and the subsequent finalization of customary working capital adjustments in January 2026. In the third quarter of fiscal 2025, one of the Company’s vendors, a leading auto parts supplier for the automotive aftermarket industry, filed voluntary petitions for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of Texas. The vendor has secured short-term financing through a debtor-in-possession (“DIP”) loan, however, Chapter 11 proceedings carry inherent risks with respect to a company’s ability to continue operations and maintain adequate liquidity to satisfy current and future obligations. As a result of these events, the Company recorded a non-cash charge of $28 million to cost of sales in the third quarter of fiscal 2025, reflecting estimated future credit losses on certain vendor receivables due from the vendor. The estimate was developed utilizing a probability weighted cash-flow model adjusted for risks associated with credit risk deterioration for companies that enter Chapter 11 bankruptcy proceedings. The Company may continue to source some products from the vendor, but such purchases are not material to the Company. In early fiscal 2025, new global trade tariffs were imposed on imports to the U.S., including additional tariffs on various countries from which the Company directly or indirectly imports and/or sources merchandise, including Canada, China and Mexico, among others. Since the initial announcement in the first quarter of fiscal 2025, various modifications and delays to the U.S. tariffs have been announced and further changes are expected to be made in the future, which may include additional sector-based tariffs or other measures. In response to the tariffs, certain of our suppliers have increased prices. However, the impact of such increases to-date has not been material to the Company’s business, financial condition and results of operations, in-part as a result of certain price increases being passed-through to our customers. On November 1, 2024, the Company completed the sale of the Worldpac business for net proceeds of approximately $1.44 billion (excluding the impact of taxes) after transaction costs and application of the final working capital adjustment recorded in the fourth quarter of fiscal 2025. On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan which is designed to improve the Company’s profitability and growth potential and streamline its operations. This plan is supplemental to other ongoing initiatives to simplify the Company's business and improve profitable growth and included, among other items, certain store and independent location closures, streamlining product assortment and headcount reductions and organizational design changes to align the Company’s workforce to the expected needs of the Company's business. The Company is also pursuing efficiencies in procurement, pricing and professional and outside services, in addition to operational efficiencies. Refer to "Liquidity and Capital Resources" herein and Note 3. Restructuring, of the Notes to the Consolidated Financial Statements of this Annual Report for further details. 25 Table of Contents Industry Update Operating within the automotive aftermarket industry, the Company is influenced by a number of general macroeconomic factors, many of which are similar to those affecting the overall retail industry. In addition to the “Business and Risk Update” section included within this Management’s Discussion and Analysis of Financial Condition and Results of Operations, these factors include, but are not limited to: • Inflationary pressures, including logistics and labor • Global trade tariffs • Global supply chain disruptions • Cost of fuel • Miles driven • Unemployment rates • Interest rates • Consumer confidence and purchasing power • Competition • Changes in new car sales • Economic and geopolitical uncertainty • Increased foreign currency exchange volatility While these factors tend to fluctuate, the Company remains confident in the long-term growth prospects for the automotive parts industry. Results of Operations The following table sets forth certain of the Company’s operating data from continuing operations expressed as a percentage of net sales for the periods indicated: Year Ended ($ in millions) January 3, 2026 December 28, 2024 Change(1) Basis Points Net sales $ 8,601 100.0 % $ 9,094 100.0 % $ (493 ) — Cost of sales(2) 4,868 56.6 5,685 62.5 817 (592 ) Gross profit 3,733 43.4 3,409 37.5 324 592 Selling, general and administrative expenses, exclusive of restructuring and related expenses 3,572 41.5 3,813 41.9 241 (40 ) Restructuring and related expenses 204 2.4 309 3.4 105 (103 ) Selling, general and administrative expenses 3,776 43.9 4,122 45.3 346 (142 ) Operating loss (43 ) (0.5 ) (713 ) (7.8 ) 670 734 Interest expense (139 ) (1.6 ) (81 ) (0.9 ) (58 ) (73 ) Other income, net 91 1.1 26 0.3 65 77 Income tax benefit (159 ) (1.8 ) (181 ) (2.0 ) (22 ) 14 Net income (loss) $ 68 0.8 % $ (587 ) (6.5 )% $ 655 725 (1) Represents favorable (unfavorable) year over year change (2) Cost of sales in fiscal 2024 includes $431 million of inventory-related charges attributable to the location closures and streamlining product assortment resulting from the 2024 Restructuring Plan. Note: Table amounts may not foot due to rounding. Net Sales For the fifty-three weeks ended January 3, 2026, net sales decreased 5.4% and comparable store sales increased 0.8% compared with the fifty-two weeks ended December 28, 2024. The decline in net sales as compared with the prior period, was due to lower sales as a result of store closures executed under the 2024 Restructuring Plan, partially offset by the impact of the 53rd week. 26 Table of Contents Comparable store sales for the fourth quarter and year ended January 3, 2026 excludes net sales for the 53rd week. For example, our comparable sales results for 2025 compares weeks 1 through 52 in fiscal 2025, to the 52-week period reported for fiscal 2024. The Company calculates comparable store sales based on the change in store sales starting once a location has been open for approximately one year and by including e-commerce sales and excluding sales fulfilled by distribution centers to independently owned Carquest locations. The Company includes sales from relocated stores in comparable store sales from the original date of opening. Closed stores are not included in the comparable store sales calculation. Comparable store sales is intended only as supplemental information and is not a substitute for net sales presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). Gross Profit For the fifty-three weeks ended January 3, 2026, and the fifty-two weeks ended December 28, 2024, gross profit was $3.7 billion, or 43.4% of net sales, and $3.4 billion or 37.5% of net sales, respectively. The increase in gross profit as a percentage of net sales compared to the fifty-two weeks prior comparative period was due to $431 million of inventory-related charges and liquidation sales associated with the 2024 Restructuring Plan, which negatively impacted the comparative period, as well as more favorable product margins in fiscal 2025, driven by strategic sourcing and pricing initiatives and lower supply chain and other related costs. This was partially offset by lower-margin liquidation sales associated with the 2024 Restructuring Plan in the first quarter of fiscal 2025 and a $28 million non-cash charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28 2025. Total gross profit dollars were also impacted year-over-year as a result of store closures during the year under our 2024 Restructuring Plan offset by favorability from the 53rd week. Selling, General and Administrative Expenses, Exclusive of Restructuring and Related Expenses For the fifty-three weeks ended January 3, 2026, selling, general and administrative ("SG&A") expenses, exclusive of restructuring and related expenses, were $3.6 billion, or 41.5% of net sales, compared with $3.8 billion, or 41.9% of net sales, for the fifty-two weeks ended December 28, 2024. Overall SG&A expenses decreased for the fifty-three weeks ended January 3, 2026, as compared to the fifty-two weeks ended December 28, 2024, as a result of store closures executed under the 2024 Restructuring Plan reducing overhead and operating costs, offset by higher medical, insurance and marketing costs. SG&A expenses as a percentage of net sales for the fifty-two weeks ended December 28, 2024, benefited from a net gain on asset sales, see Note 9. Leases and Other Commitments, of the Notes to the Consolidated Financial Statements in this Annual Report. Restructuring and Related Expenses For the fifty-three weeks ended January 3, 2026, restructuring and related expenses were $204 million or 2.4% of net sales, compared to $309 million, or 3.4% of net sales, for the fifty-two weeks ended December 28, 2024. The decrease in expenses as compared to the same period in fiscal 2024, relates to the timing of the Company's 2024 Restructuring Plan which was announced during the fourth quarter of fiscal 2024. The expenses principally relate to lease terminations, professional services, severance and termination costs and other exit costs. The Company estimates that it will incur additional expenses of approximately $30 million to $40 million through fiscal 2026, substantially all of which is expected to be cash expenses, primarily composed of lease and termination costs associated with closed stores and distribution center leases. See Note 3. Restructuring, of the Notes to the Consolidated Financial Statements of this Annual Report. Interest Expense For the fifty-three weeks ended January 3, 2026, interest expense increased as compared to the fifty-two weeks ended December 28, 2024, due to an increase in the principal amount of interest bearing long-term debt in the third quarter of fiscal 2025. For further information see Note 7. Long-term Debt and Fair Value of Financial Instruments, of the Notes to the Consolidated Financial Statements and Liquidity and Capital Resources of this Annual Report. Other Income, net For the fifty-three weeks ended January 3, 2026, other income, net increased as compared to the fifty-two weeks ended December 28, 2024, due to higher interest income earned from higher cash and cash equivalent balances held, driven by the proceeds received from the sale of the Worldpac business in the fourth quarter of fiscal 2024 and the issuance of $1.95 billion in 27 Table of Contents Senior Unsecured Notes with net proceeds of $1.6 billion, after the redemption of the Company’s 5.90% Senior Notes due March 2026, in the third quarter of fiscal 2025. Other income, net also includes $9 million of recognized losses on extinguishments of debt and income recognized from the transition services (“TSA Services”) agreement with Worldpac that commenced in the fourth quarter of fiscal 2024. TSA Services and related income are expected to be negligible for fiscal 2026. Provision for Income Taxes For the fifty-three weeks ended January 3, 2026, the Company's provision for income taxes was a benefit of $159 million compared with a benefit of $181 million for the fifty-two weeks ended December 28, 2024. The decrease in tax benefit for the fifty-three weeks ended January 3, 2026, was a result of a decrease in the loss before taxes from continuing operations, partially offset by a net discrete tax benefit in the first quarter of fiscal 2025 of $126 million, related to an internal legal entity restructuring event completed in the fiscal year treated as a taxable stock disposition for U.S. federal income tax purposes. As a result, the Company recognized a capital loss deduction which was utilized against capital gain income. See Note 13. Income Taxes, of the Notes to the Consolidated Financial Statements of this Annual Report. Discontinued Operations For the fifty-three weeks ended January 3, 2026, the Company recorded a loss of $24 million, net of taxes from discontinued operations, reflecting an adjustment to the previously recognized gain on divesture of Worldpac in fiscal 2024 after finalizing customary working capital adjustments. Reconciliation of Non-GAAP Financial Measures Management’s Discussion and Analysis of Financial Condition and Results of Operations, includes certain financial measures not derived in accordance with GAAP. Non-GAAP financial measures, including Adjusted Operating income, Adjusted Net income (loss), Adjusted Cost of sales, Adjusted Diluted Earnings (Loss) Per Share ("Adjusted EPS"), and Adjusted Selling, general and administrative ("Adjusted SG&A"), should not be used as a substitute for GAAP financial measures, or considered in isolation, for the purpose of analyzing operating performance, financial position or cash flows. The Company has presented these non-GAAP financial measures as the Company believes that the presentation of the financial results that exclude (1) transformation expenses under the Company’s turnaround plans, inclusive of the Worldpac divestiture (2) other significant expenses and (3) nonrecurring tax expense are useful and indicative of the Company's base operations because the expenses vary from period to period in terms of size, nature and significance. The income tax impact of these non-GAAP adjustments is adjusted for using the estimated tax rate in effect for the respective non-GAAP adjustments. These measures assist in comparing the Company’s current operating results with past periods and with the operational performance of other companies in the industry. The disclosure of these measures allows investors to evaluate the Company’s performance using the same measures management uses in developing internal budgets and forecasts and in evaluating management’s compensation. Included below is a description of the expenses the Company has determined are not normal, recurring cash operating expenses necessary to operate the Company’s business and the rationale for why providing these measures is useful to investors as a supplement to the GAAP measures. Transformation Expenses Expenses incurred in connection with the Company's turnaround plan and specific transformative activities related to asset optimization that the Company does not view to be normal cash operating expenses. These expenses primarily include: • Restructuring and other related expenses: Expenses relating to strategic initiatives, including severance expense, retention bonuses offered to store-level employees to help facilitate the closing of stores, incremental reserves related to the collectibility of receivables resulting from contract terminations with certain independents associated with the 2024 Restructuring Plan and fees for third-party professionals assisting in the development and execution of the strategic initiatives. • Inventory write-down: Expenses relating to the incremental write-down of inventory to net realizable value due to liquidation sales and streamlining inventory assortment due to store and distribution center closures associated with the 2024 Restructuring Plan. 28 Table of Contents • Impairment and write-down of long-lived assets: Expenses relating to the impairment of operating lease right-of-use ("ROU") assets and property and equipment, incremental depreciation as a result of accelerating long-lived assets over a shorter useful life, ROU asset amortization after store closure, and incremental lease abandonment expenses as a result of accelerating ROU asset amortization for leases the Company expects to exit before the end of the contractual term, net of gains on lease terminations, in connection with the 2024 Restructuring Plan and Other Restructuring Plan. • Distribution network optimization: Expenses primarily relating to the conversion of the stores and distribution centers to market hubs, including realized losses on liquidated inventory, temporary labor, nonrecurring professional service fees and team member severance. Other Expenses Expenses incurred by the Company that are not viewed as normal cash operating expenses and vary from period to period in terms of size, nature, and significance. These expenses primarily include: • Other professional service fees: Expenses relating to nonrecurring services rendered by third-party vendors engaged to perform a strategic business review, including the Company’s transformation initiatives. • Worldpac post transaction-related expenses: Expenses primarily relating to non-recurring separation activities provided by third-party professionals subsequent to the sale of Worldpac. • Executive turnover: Expenses associated with executive level reorganization, including expenses for executive severance, the hiring search for leadership positions and certain compensation benefits. • Material weakness remediation: Incremental expenses associated with the remediation of the Company’s previously-disclosed material weaknesses in internal control over financial reporting. • Cybersecurity incident: Expenses related to the response and remediation of a cybersecurity incident. • Other: Includes a non-cash charge related to expected future credit losses on vendor receivables due from a vendor that filed voluntary petitions for Chapter 11 bankruptcy protection. • Other tax adjustments: Certain tax items that are unrelated to the fiscal year in which they are recorded are excluded in order to provide a clearer understanding of the Company’s ongoing Non-GAAP tax rate and after-tax earnings. 29 Table of Contents The following table includes a reconciliation of this information to the most comparable GAAP measures (in millions): Year Ended Classification January 3, 2026 December 28, 2024 December 30, 2023 Net income (loss) from continuing operations (GAAP) $ 68 $ (587 ) $ (30 ) Cost of sales adjustments: Transformation expenses: Inventory write-down Restructuring — 431 — Distribution network optimization Restructuring 12 — — Expected future credit loss related to other receivables(1) Non-restructuring 28 — — Selling, general and administrative adjustments: Transformation expenses: Restructuring and other related expenses(2) Restructuring 88 61 8 Impairment and write-down of long-lived assets(3) Restructuring 83 204 — Distribution network optimization Restructuring 20 20 — Other expenses: Other professional service fees Non-restructuring(6) 14 15 — Worldpac post transaction-related expenses Restructuring 8 7 — Executive turnover Restructuring 5 2 8 Material weakness remediation Non-restructuring 1 5 1 Cybersecurity incident Non-restructuring — 3 — Other income adjustments: TSA services (9 ) (3 ) — Loss on extinguishment of debt 9 — — Provision for income taxes on adjustments(4) (64 ) (185 ) (4 ) Other tax (benefit) expense adjustments(5) (126 ) 10 — Adjusted net income (loss) (Non-GAAP) $ 137 $ (17 ) $ (17 ) Diluted earnings (loss) per share from continuing operations (GAAP) $ 1.13 $ (9.80 ) $ (0.50 ) Adjustments, net of tax 1.13 9.51 0.22 Adjusted diluted earnings (loss) per share (Non-GAAP) $ 2.26 $ (0.29 ) $ (0.28 ) (1) Reflects a charge for expected future credit losses related to vendor receivables due from a vendor that filed petitions for Chapter 11 bankruptcy protection on September 28, 2025. (2) Restructuring and other related expenses for the fifty-three weeks ended January 3, 2026 includes $38 million of nonrecurring services rendered by third party vendors assisting with the 2024 Restructuring Plan, $18 million of severance and other related costs, $7 million for reserves on independent loans and $25 million of other related expenses associated with location closures, including the transfer of assets. Restructuring and other related expenses for the fifty-two weeks ended December 28, 2024 includes $25 million of incremental receivable reserves resulting from contract terminations with certain independents as part of the 2024 Restructuring Plan, $15 million of severance and other labor related costs as part of the 2024 Restructuring Plan, and $21 million of nonrecurring services rendered by third party vendors assisting with the 2024 Restructuring Plan. (3) The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $60 million and impairment charges for ROU assets and property and equipment of $23 million, net of gains on sale, for the fifty-three weeks ended January 3, 2026. The Company recorded incremental accelerated depreciation and amortization for property and equipment and ROU assets of $171 million and impairment charges for ROU assets and property and equipment of $33 million, net of gains on sale, for the fifty-two weeks ended December 28, 2024. (4) The income tax impact of Non-GAAP adjustments is calculated using the estimated tax rate in effect for the respective Non-GAAP adjustments. (5) Income tax (benefit) expenses included a discrete non-recurring tax benefit associated with capital loss deductions effectuated in the first quarter of fiscal 2025. The benefit has been excluded from Non-GAAP results in order to provide a clearer understanding of ongoing Non-GAAP tax rate and after-tax earnings. (6) Other professional service fees in fiscal 2024 were classified as restructuring and related expenses based on the underlying activity to which they are related. 30 Table of Contents Liquidity and Capital Resources Overview The Company’s principal sources of liquidity are cash and cash equivalents and borrowing availability under the ABL Facility. The Company’s primary cash requirements necessary to maintain the Company’s current operations include payroll and benefits, inventory purchases, contractual obligations, capital expenditures, payment of income taxes, funding of initiatives and other operational priorities, such as restructuring and asset optimization plans. In addition, cash is required to pay the Company’s dividends and to pay interest and principle on the Company’s long-term debt when due. The following table presents selected financial information related to the Company’s liquidity (in millions): January 3, 2026 December 28, 2024 Change Cash and cash equivalents $ 3,123 $ 1,869 $ 1,254 2021 Credit Facility borrowing availability — 1,000 (1,000 ) ABL Facility borrowing availability 896 — 896 The increase in cash and cash equivalents in fiscal 2025 was primarily due to the issuance of $1.95 billion in Senior Unsecured Notes with net proceeds of $1.6 billion, after giving effect to the redemption of the Company’s 5.90% Senior Notes due 2026 with the proceeds and direct transaction and closing costs in the third quarter of fiscal 2025, offset by net cash used in operating activities of $46 million, primarily as a result of changes in net working capital, inclusive of cash payments made in the period related to the Company’s 2024 Restructuring Plan, $231 million used for purchases of property and equipment, net of proceeds from sales, and the payment of $60 million in dividends. Historically, the Company has funded its cash requirements primarily through cash generated from operations, supplemented by proceeds raised through the issuance of long-term debt as needed. The Company believes that funds generated from the Company’s expected results of operations, available cash and cash equivalents and other sources of liquidity are expected to satisfy the Company's working and other capital requirements (as further detailed below) for at least the next 12 month and thereafter for the foreseeable future. On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan which is designed to improve the Company’s profitability and growth potential and streamline its operations. This plan contemplated the closure of approximately 500 stores, approximately 200 independent locations and four distribution centers by mid-2025, as well as headcount reductions. The Company completed the closure of all of these locations during the first quarter of 2025. As a result of the 2024 Restructuring Plan, the Company incurred $159 million and $680 million of restructuring expenses in 2025 and 2024, respectively. Certain expenses, primarily related to closed store and closed distribution center leases are expected to continue into fiscal year 2026. As further described in Note 17. Supplier Finance Programs, of the Notes to the Consolidated Financial Statements in this Annual Report, certain of the Company's suppliers may elect at their own discretion to participate in certain supplier finance programs to obtain enhanced receivables options. Bank participation and Company utilization of those programs may vary based on a number of factors, including the Company's credit ratings. If bank participation is insufficient to cover planned utilization, whether due to declines in the Company's credit rating or otherwise, the Company may experience shorter payable terms for inventory than anticipated, which could materially impact its cash flows, capital resources and capital allocation decisions. Capital Expenditures The Company’s primary capital requirements have been the funding of the Company’s investments in information technology, supply chain, e-commerce, new greenfield store and distribution center sites and enhancements and/or major renovation projects of existing stores. The Company leases approximately 80% of the Company’s stores. The Company’s capital expenditures were $252 million in 2025, an increase of $71 million from 2024, driven by increased capital spending for store renovations. The Company’s future capital requirements will depend in large part on the timing or number of the investments the Company makes in information technology and supply chain network initiatives and existing stores and new store development 31 Table of Contents (leased and owned locations) within a given year. In 2026, the Company currently anticipates that the Company’s capital expenditures related to such investments will be approximately $300 million, reflecting continued investment in store infrastructure upgrades and the growth of our store and market hub footprint, but this amount may vary depending on business conditions and other factors. Analysis of Cash Flows In the fourth quarter of fiscal 2024, the Company completed the sale of Worldpac. As a result, the Company classified the results of operations and cash flows of Worldpac as discontinued operations in its consolidated statements of operations and consolidated statements of cash flows for prior periods presented. The Company’s cash flows from operating, investing and financing activities were as follows (in millions): Year ended January 3, 2026 December 28, 2024 Net cash (used in) provided by operating activities of continuing operations $ (46 ) $ 141 Net cash used in operating activities of discontinued operations — (56 ) Net cash used in investing activities of continuing operations (239 ) (167 ) Net cash provided by investing activities of discontinued operations — 1,522 Net cash provided by (used in) financing activities 1,538 (75 ) Effect of exchange rate changes on cash 1 1 Net increase in cash and cash equivalents $ 1,254 $ 1,366 Operating Activities In fiscal 2025, cash flows from operating activities decreased $187 million to negative $46 million. The net decrease in cash flows provided by operating activities was primarily attributable to working capital changes driven by a reduction in accounts payable and cash payments for restructuring and related expenses, partially offset by accounts receivable collections. Refer to “Results of Operations” for further details on the Company’s results. Investing Activities In fiscal 2025, cash flows used in investing activities increased $72 million to $239 million compared with fiscal 2024. This increase was attributable to increased capital spend related to store renovations. Financing Activities In fiscal 2025, cash flows provided by financing activities increased by $1.6 billion to $1.5 billion compared with fiscal 2024. The net increase in cash provided by financing activities was attributable to the issuances of senior unsecured notes in 2025 partially offset by the redemption of the 5.90% 2026 Notes. The Company’s Board of Directors has declared a quarterly cash dividend since 2006. Any payments of dividends in the future will be at the discretion of the Company’s Board of Directors and will depend upon the Company’s results of operations, cash flows, capital requirements and other factors deemed relevant by the Company’s Board of Directors. Similar to the 2021 Credit Agreement, the Company’s new ABL Facility, as detailed further below, has certain restrictions that may limit the Company’s ability to increase the amount of the Company’s cash dividends above its current levels. Restructuring Activities On November 13, 2024, the Company’s Board of Directors approved the 2024 Restructuring Plan which is designed to improve the Company’s profitability and growth potential and streamline its operations. As a result of the 2024 Restructuring Plan, the Company incurred $159 million and $680 million of restructuring expenses in fiscal 2025 and fiscal 2024, respectively. Substantially all of the costs under the restructuring plans have been incurred as of January 3, 2026. The Company estimates that it will incur additional expenses of approximately $30 million to $40 million through fiscal 2026, substantially all of which is expected to be cash expenses, primarily composed of lease and termination costs associated with closed stores and closed 32 Table of Contents distribution center leases. This represents a material decrease in both cash and non-cash expenses as compared to the activity in fiscal 2025. See Note 3. Restructuring, of the Notes to the Consolidated Financial Statements of this Annual Report. Long-Term Debt As of January 3, 2026 and December 28, 2024, the Company had outstanding principal of long-term debt totaling $3.5 billion and $1.8 billion, respectively. On August 4, 2025, the Company issued (i) $975 million in aggregate principal amount of 7.000% Senior Notes due 2030 (the “2030 Notes”) and (ii) $975 million in aggregate principal amount of 7.375% Senior Notes due 2033 (collectively, the “2025 Senior Unsecured Notes”) in a private transaction exempt from the registration requirements of the Securities Act of 1933, as amended (the “Act”). Net proceeds from the issuance of the 2025 Senior Unsecured Noted were approximately $1.9 billion after direct transaction and closing costs. As of January 3, 2026 and December 28, 2024, the Company's outstanding principal amount of long-term debt consisted of the following: January 3, 2026 December 28, 2024 5.90% Senior Unsecured Notes due March 9, 2026 $ — $ 300 1.75% Senior Unsecured Notes due October 1, 2027 350 350 5.95% Senior Unsecured Notes due March 9, 2028 300 300 3.90% Senior Unsecured Notes due April 15, 2030 500 500 7.00% Senior Unsecured Notes due August 1, 2030 975 — 3.50% Senior Unsecured Notes due March 15, 2032 350 350 7.375% Senior Unsecured Notes due August 1, 2033 975 — Total principal amount of long-term debt and current maturities of long-term debt $ 3,450 $ 1,800 Future interest payable based on the contractual maturities for the Company's long-term debt was $1.1 billion as of January 3, 2026. Following the closing of the issuance of the 2025 Senior Unsecured Notes, the Company utilized a portion of the net proceeds to redeem in full its outstanding $300 million in aggregate principal amount of 5.90% Senior Notes due 2026 and recorded a loss of $3 million on redemption in the third quarter of fiscal 2025 associated with this extinguishment. The remaining proceeds from the issuance are available for general corporate purposes, and as further discussed under "Credit Facilities" below, as of January 3, 2026, approximately $2.3 billion of cash and cash equivalents, was designated as qualified cash and is subject to customary springing control agreements, as described in the ABL Facility Agreement. For further details related to terms and activity for the Company's long term debt see Note 7. Long-term Debt and Fair Value of Financial Instruments, of the Notes to the Consolidated Financial Statements of this Annual Report. Credit Facilities On August 12, 2025, the Company’s $1 billion revolving credit facility comprising the 2021 Credit Agreement was terminated and replaced by the new ABL Facility. The ABL Facility provides for a five-year senior secured first lien asset-based revolving credit facility of up to $1 billion with an uncommitted accordion feature that provides for additional credit extensions up to $500 million. As of January 3, 2026, the Company had no outstanding borrowings, $896 million of borrowing availability and $104 million letters of credit outstanding under the ABL Facility. As of December 28, 2024, the Company had no outstanding borrowings, $1 billion of borrowing availability and no letters of credit outstanding under the 2021 Credit Agreement. The Company was in compliance with its covenants related to the ABL Facility as of January 3, 2026. In accordance with the ABL Facility, the Company is required to hold cash and cash equivalents in designated accounts with lenders, referred to as Qualified Cash Accounts as defined in the ABL Facility. As of January 3, 2026, $2.3 billion was designated as Qualified Cash. As of December 28, 2024, the Company had $91 million of bilateral letters of credit issued separately from the 2021 Credit Agreement, none of which were drawn upon. These bilateral letters of credit generally have a term of one year or less and 33 Table of Contents primarily serve as collateral for the Company’s self-insurance policies. As of January 3, 2026, the Company had no bilateral letters of credit issued separately from the ABL Agreement. For further details, see Note 7. Long-term Debt and Fair Value of Financial Instruments, of the Notes to the Consolidated Financial Statements of this Annual Report. Share Repurchase Program In August 2019, the Company’s Board of Directors approved a share repurchase program. Under the program, the Company is able to periodically repurchase shares of common stock at market prices through open market purchases effected through a broker dealer and in privately negotiated transactions. The Board of Directors is able to increase or otherwise modify, renew, suspend or terminate the share repurchase program without prior notice. In February 2022, the Company’s Board of Directors authorized an additional $1.0 billion toward the Company’s share repurchase program, an increase to the $1.7 billion that had previously been authorized under the program. During fiscal 2025 and fiscal 2024, the Company did not purchase any shares of its common stock under the share repurchase program. Amendment No. 5 to the 2021 Credit Agreement, which was terminated on August 12, 2025 and replaced by the ABL Facility, generally prohibited open market share repurchases. As of January 3, 2026 the Company had $0.9 billion remaining available for repurchases of shares under the share repurchase program. Share repurchases are generally permitted under the Company's ABL Facility; however, under certain circumstances, the Company's ability to repurchase shares may be restricted. Other Contractual and Off Balance Sheet Obligations The Company enters into operating leases for certain store locations, distribution centers, office spaces, equipment and vehicles. The Company’s property leases generally contain renewal and escalation clauses and other concessions. These provisions are considered in the Company’s calculation of the Company’s minimum lease payments that are recognized as expense on a straight-line basis over the applicable lease term. Any lease payments that are based upon an existing index or rate are included in the Company’s minimum lease payment calculations. As of January 3, 2026, the Company’s operating lease obligations were $2.6 billion, of which $0.5 billion falls due within the next 12 months. Refer to Note 9. Leases and Other Commitments, included in this Annual Report in Notes to the Consolidated Financial Statements for further information. As part of the Company’s normal operations, the Company enters into purchase commitments primarily for the purchase of goods or services that are enforceable, legally binding and specify all significant terms, including fixed or minimum quantities to be purchased; fixed, minimum or variable price provisions; and the approximate timing of the transaction. As of January 3, 2026, other than for expected material uses of cash and cash equivalents discussed above within this section "Liquidity and Capital Resources", the Company does not consider it to be reasonably likely that such purchase commitments entered into will have a material current or future effect on the Company's financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, cash requirements or capital resource, as such commitments are entered into as part of the Company's normal operations and are reflected in the results of operations and trending discussions within Part II, Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report. Critical Accounting Estimates The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses, and disclosure of contingent amounts. We base our estimates on historical and anticipated results and trends and on various other assumptions that we believe are reasonable under the circumstances, including assumptions as to future events. By their nature, estimates are inherently subject to a degree of uncertainty. Although we believe that our estimates and the assumptions supporting our assessments are reasonable, actual results could differ materially from our estimates. 34 Table of Contents In addition to our critical accounting policies and estimates below, refer to Note 2. Significant Accounting Policies, included in this Annual Report in Notes to the Consolidated Financial Statements for further information. If the impact of changes in our critical accounting estimates is material or considered necessary to understand our financial condition or results of operations for the periods presented, then such information is disclosed within Part II, Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, of this Annual Report. Vendor Incentives The Company receives incentives in the form of reductions to amounts owed and/or payments from vendors related to volume rebates and other promotional considerations. Advertising allowances provided as a reimbursement of specific, incremental and identifiable costs incurred to promote a vendor’s products are included as an offset to SG&A when the cost is incurred. Volume rebates and allowances that do not meet the requirements for offsetting in SG&A are initially recorded as a reduction to inventory, as volume rebates and allowances are earned based on inventory purchases, and subsequently recorded as a reduction to cost of sales as the inventory is sold. Certain of the Company’s vendor agreements contain purchase volume incentives that provide for increased funding when graduated purchase volumes are met, which is subject to uncertainty and require estimation. Amounts accrued throughout the year could be impacted if actual purchase volumes differ from projected annual purchase volumes. In the third quarter of fiscal 2025, one of the Company’s vendors, a leading auto parts supplier for the automotive aftermarket industry, filed voluntary petitions for Chapter 11 bankruptcy protection with the U.S. Bankruptcy Court for the Southern District of Texas. As a result, the Company recorded a non-cash charge of $28 million to cost of sales, within the consolidated statement of operations, reflecting estimated future credit losses on certain vendor receivables due from the vendor. Historically, the change in the Company’s reserve for receivables related to vendor funding has not been significant. Self-Insurance Reserves The Company’s self-insurance reserves consist of the estimated exposure for claims filed, claims incurred but not yet reported and projected future claims, and are established using actuarial methods followed in the insurance industry and the Company’s historical claims experience. Specific factors include, but are not limited to, assumptions about health care costs, the severity of accidents, the incidence of illness and the average size of claims. Generally, claims for automobile and general liability and workers’ compensation take several years to settle. The Company classifies the portion of the Company’s self-insurance reserves that is not expected to be settled within one year in other long-term liabilities. Our self-insurance reserve estimate totaled $156 million and $141 million as of January 3, 2026, and December 28, 2024, respectively. Further, while the Company does not expect the amounts ultimately paid to differ significantly from the Company’s estimates, the Company’s self-insurance reserves and corresponding expense classification within cost of sales and SG&A could be affected if future claim experience differs significantly from historical trends and actuarial assumptions. A 10% change in the Company’s self-insurance liabilities at January 3, 2026 would result in a change in expense of approximately $16 million for 2025. Excess and Obsolete Inventory Reserves The Company’s excess and obsolete inventory reserve assessment includes analyzing the Company’s inventory at the SKU level by assessing each SKU quantity based on years on hand, the stage within the product lifecycle the SKU is assigned and sales history. From this data analysis, the Company’s excess and obsolete inventory is identified, analyzed and compared against the Company’s reserve. Additionally, from time to time, specific SKUs may be identified as excess and/or obsolete for which a reserve will be recognized. The Company classifies each product into a product lifecycle category: introduction, expansion, saturation, reduction and disposition. This assessment is routinely performed and includes, but is not limited to, the analysis of anticipated, historical and actual demand; and changes in customer preferences, which are subject to uncertainty and requires estimation. Although we believe these estimates are reasonable, any significant changes in customer demand or customer preferences that are less favorable than our previous estimates may require additional inventory write-downs and would be reflected in cost of sales, resulting in a negative impact to our gross margin in that period. Our excess and obsolete inventory reserve totaled $68 million and $302 million as of January 3, 2026, and December 28, 2024, respectively. The reserve as of January 3, 2026, and December 28, 2024 35 Table of Contents included $18 million and $256 million, respectively, related to impairments of inventory as a result of the 2024 Restructuring Plan. Restructuring and Related Expenses The Company records restructuring and transformation activities when management commits to and approves a restructuring plan. The components of a restructuring plan require significant management judgments and estimates that would materially impact reported performance if different assumptions were used and have significant uncertainty in measurements. Impairment of inventory is recognized when the cost of inventory exceeds its net realizable value. There are significant assumptions required by management to estimate the net realizable value associated with inventory located at the stores and distribution centers to be closed, including the anticipated sell through rate and estimated sales proceeds less costs to sell. Asset impairment charges associated with operating lease ROU assets are recognized when the ROU carrying value exceeds its fair value. There are significant assumptions required by management to estimate the fair value of ROU assets, including the market rental rates and discount rates utilized in the discounted cash flow model. Severance and retention costs associated with workforce reductions are recognized at the time of communication to employees, unless future service is required, in which case the costs are recognized ratably over the future service period. Employee termination benefits are recognized as a liability when it is probable that a liability exists, and the amount is reasonably estimable. Other exit-related costs, including non-recurring professional fees, are recognized as incurred. Restructuring expenses are recognized in cost of sales or selling, general and administrative expenses within the consolidated statements of operations and related liabilities are recorded within accounts payable and accrued expenses in the consolidated balance sheets. The Company periodically evaluates and, if necessary, adjusts its estimates based on currently available information. Restructuring and related expenses were $204 million, $309 million and $16 million in fiscal 2025, 2024 and 2023, respectively. Refer to Note 3. Restructuring, of the Notes to the Consolidated Financial Statements of this Annual Report for additional detail. New Accounting Pronouncements For a description of recently adopted and issued accounting standards, including the expected dates of adoption and estimated effects, if any, on the consolidated financial statements, see “Recently Issued Accounting Pronouncements” in Note 2. Significant Accounting Policies, of the Notes to the Consolidated Financial Statements of this Annual Report.