���������ƽ��

To my fellow shareholders,

���������ƽ�� is a company designed to deliver long-term profitable growth. For decades, we have invested in the scale, strategy and capabilities that allow our team to navigate a fast evolving retail landscape and meet the needs of today’s consumers.

We entered 2024 with a commitment to stay nimble and generate profitable growth, and even in a challenging retail environment, our team delivered. However, those results came with an unexpectedly high level of variability throughout the year, which we aim to continue mitigating moving forward. By controlling what we can control, listening closely to consumers and staying focused on what differentiates ���������ƽ��, we are confident we can continue to create value for our stakeholders, as we have for more than 50 years.

Creating Today’s Tarzhay

���������ƽ�� occupies a unique space in U.S. retail—something our guests have coined “Tarzhay.” It’s a term that captures the blend of affordability, style and newness we deliver at the intersection of product and experience. Paired with ongoing investments in our team, technology and operations, our distinct approach inspires consumers to choose ���������ƽ�� and drives growth.

Today’s Tarzhay starts with product. Our mix of only-at-���������ƽ�� owned brands, well-known national brands and partnerships with world-famous designers and small independent brands stands out in a competitive retail landscape.

In 2024, we lowered prices on more than 10,000 items to deliver even more affordability to value-conscious consumers, particularly through our $31 billion owned brand portfolio. At the same time, we leveraged ���������ƽ��’s deep ties to fashion, entertainment, sports and culture to not only adopt trends but create them. We’re building on our history of working with great brands like Ulta Beauty, Apple, Disney and Starbucks while adding new partners like Champion and Warby Parker. And our billion-dollar third-party marketplace ���������ƽ�� Plus adds breadth to our assortment and is growing at a double-digit pace.

In addition to the products we offer, our team is focused on creating an experience—in store and online—that elevates everyday shopping. We opened 23 new stores in 2024, expect to open about 20 this year and will remodel many more. We’ve also built a $20 billion first-party digital business that delivers incremental profit to our bottom-line as it grows, and this business continues to expand, with double digit growth last year in same-day services like Drive Up and same-day delivery with ���������ƽ�� Circle 360.

���������ƽ�� Circle 360 is part of our broader loyalty platform, ���������ƽ�� Circle, which we relaunched in 2024 to help members save more and deepen their connection with our brand. Our offer is resonating—with active ���������ƽ�� Circle members spending three times more on average compared with nonmembers, and those who added a ���������ƽ�� Circle 360 subscription spending an average of eight times more.

The insights we gain from ���������ƽ�� Circle help to power our media business, Roundel. With a focus on connecting the right products to the right guests in a way that enhances the overall experience for consumers, Roundel delivered nearly $2 billion in value last year and is expected to double in size by 2030.

Our path to growth

���������ƽ�� continually invests in the key elements that set us apart from other retailers—our assortment and our experience—to stay ahead of emerging industry trends and evolving consumer behavior.

Over the past five years, this differentiated strategy delivered nearly $30 billion in topline growth. Importantly, that growth was fueled by traffic, with 350 million more guest trips in 2024 compared to 2019. Growth rates varied widely over this five-year span as consumer demand for discretionary categories shifted through the pandemic and during the period of high inflation that followed. Gains in our discretionary business over the recent holiday season, combined with continued growth in our frequency categories, position our topline for continued growth in the years ahead.

Propelled by the strength of our strategy, we expect to continue growing over time. We’ll continue to build on the investments we’ve made in stores, supply chain and technology with plans to invest more than $4 billion this year to bring additional speed, efficiency and reliability to our operations. These efforts complement the more than $2 billion we’ve saved over the past two years through ongoing efficiency work, which allows us to reinvest in our products, experience and team. And with our scale, cross-category momentum and significant growth potential in areas like same-day delivery, we believe we can grow our business by more than $15 billion within five years.

Thank you for your investment in ���������ƽ��. More than 400,000 team members are ready to navigate near-term challenges in order to deliver on our company’s long-term ambitions. The steady drumbeat of everyday discovery and delight we offer to consumers through our products and experience has been the catalyst for growth since our founding, and our team looks forward to building on that legacy as we guide ���������ƽ�� into its next chapter of growth.

Brian Cornell
Chair and CEO