1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington,D.C.20549FORM 10-K(Mark One)ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the fiscal year ended January 28,2024or TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXC

2、HANGE ACT OF 1934For the transition period from to Commission file number 1-8207THE HOME DEPOT,INC.(Exact name of registrant as specified in its charter)Delaware95-3261426(State or other jurisdiction of incorporation or organization)(I.R.S.Employer Identification No.)2455 Paces Ferry RoadAtlanta,Geo

3、rgia30339(Address of principal executive offices)(Zip Code)Registrants telephone number,including area code:(770)433-8211 Securities registered pursuant to Section 12(b)of the Act:Title of each classTrading SymbolName of each exchange on which registeredCommon Stock,$0.05 Par Value Per ShareHDNew Yo

4、rk Stock ExchangeSecurities registered pursuant to section 12(g)of the Act:NoneIndicate by check mark if the registrant is a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.Yes No Indicate by check mark if the registrant is not required to file reports pursuant to Section 13

5、or Section 15(d)of the Act.Yes No Indicate by check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 duringthe preceding 12 months(or for such shorter period that the registrant was required to file such reports),an

6、d(2)has been subject to such filing requirements forthe past 90 days.Yes No Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 ofRegulation S-T(232.405 of this chapter)during the preceding 12 months(or

7、for such shorter period that the registrant was required to submit such files).Yes No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,a smaller reporting company,or anemerging growth company.See the definitions of“large accelera

8、ted filer,”“accelerated filer,”“smaller reporting company,”and“emerging growth company”inRule 12b-2 of the Exchange Act.Large accelerated filer Accelerated filer Non-accelerated filer Smaller reporting company Emerging growth company If an emerging growth company,indicate by check mark if the regist

9、rant has elected not to use the extended transition period for complying with any new orrevised financial accounting standards provided pursuant to Section 13(a)of the Exchange Act.Indicate by check mark whether the registrant has filed a report on and attestation to its managements assessment of th

10、e effectiveness of its internal controlover financial reporting under Section 404(b)of the Sarbanes-Oxley Act(15 U.S.C.7262(b)by the registered public accounting firm that prepared or issued itsaudit report.If securities are registered pursuant to Section 12(b)of the Act,indicate by check mark wheth

11、er the financial statements of the registrant included in the filingreflect the correction of an error to previously issued financial statements.Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received b

12、yany of the registrants executive officers during the relevant recovery period pursuant to 240.10D-1(b).Indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Act).Yes No The aggregate market value of voting common stock held by non-affiliates of the registr

13、ant on July 28,2023 was$331.5 billion.The number of shares outstanding of the registrants common stock as of February 28,2024 was 991,015,773 shares.DOCUMENTS INCORPORATED BY REFERENCEPortions of the registrants proxy statement for the 2024 Annual Meeting of Shareholders are incorporated by referenc

14、e in Part III of this Form 10-K to the extentdescribed herein.TABLE OF CONTENTSCommonly Used or Defined TermsiiForward-Looking StatementsiiiPART IItem 1.Business.1Item 1A.Risk Factors.10Item 1B.Unresolved Staff Comments.22Item 1C.Cybersecurity.22Item 2.Properties.23Item 3.Legal Proceedings.25Item 4.

15、Mine Safety Disclosures.25PART IIItem 5.Market for Registrants Common Equity,Related Stockholder Matters and Issuer Purchases of Equity Securities.26Item 6.Reserved.27Item 7.Managements Discussion and Analysis of Financial Condition and Results of Operations.27Item 7A.Quantitative and Qualitative Di

16、sclosures About Market Risk.34Item 8.Financial Statements and Supplementary Data.35Item 9.Changes in and Disagreements With Accountants on Accounting and Financial Disclosure.66Item 9A.Controls and Procedures.66Item 9B.Other Information.68Item 9C.Disclosure Regarding Foreign Jurisdictions that Preve

17、nt Inspections.68PART IIIItem 10.Directors,Executive Officers and Corporate Governance.68Item 11.Executive Compensation.69Item 12.Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.69Item 13.Certain Relationships and Related Transactions,and Director Indep

18、endence.69Item 14.Principal Accountant Fees and Services.69PART IVItem 15.Exhibit and Financial Statement Schedules.70Item 16.Form 10-K Summary.74SIGNATURES75Fiscal 2023 Form 10-KiTable of ContentsCOMMONLY USED OR DEFINED TERMSTermDefinitionASUAccounting Standards UpdateBODFSBuy Online,Deliver From

19、StoreBOPISBuy Online,Pickup In StoreBORISBuy Online,Return In StoreBOSSBuy Online,Ship to StoreCDPThe not-for-profit organization formerly known as the Carbon Disclosure ProjectComparable salesAs defined in the Results of Operations section of MD&ADIFMDo-It-For-MeDIYDo-It-YourselfEH&SEnvironmental,H

20、ealth,and SafetyEPAU.S.Environmental Protection AgencyESGEnvironmental,social,and governanceESPPEmployee Stock Purchase PlanExchange ActSecurities Exchange Act of 1934,as amendedFASBFinancial Accounting Standards Boardfiscal 2020Fiscal year ended January 31,2021(includes 52 weeks)fiscal 2021Fiscal y

21、ear ended January 30,2022(includes 52 weeks)fiscal 2022Fiscal year ended January 29,2023(includes 52 weeks)fiscal 2023Fiscal year ended January 28,2024(includes 52 weeks)fiscal 2024Fiscal year ending February 2,2025(includes 53 weeks)GAAPU.S.generally accepted accounting principlesIRSInternal Revenu

22、e ServiceLIBORLondon interbank offered rateMD&AManagements Discussion and Analysis of Financial Condition and Results of OperationsMROMaintenance,repair,and operationsNOPATNet operating profit after taxNYSENew York Stock ExchangePLCCPrivate label credit cardProProfessional customerRestoration PlansH

23、ome Depot FutureBuilder Restoration Plan and HD Supply Restoration PlanROICReturn on invested capitalSECSecurities and Exchange CommissionSecurities ActSecurities Act of 1933,as amendedSG&ASelling,general,and administrative expensesSOFRSecured Overnight Financing RateFiscal 2023 Form 10-KiiTable of

24、ContentsFORWARD-LOOKING STATEMENTSCertain statements contained herein,as well as in other filings we make with the SEC and other written and oral information we release,regarding our performance or other events or developments in the future constitute“forward-looking statements”as defined in the Pri

25、vateSecurities Litigation Reform Act of 1995.Forward-looking statements may relate to,among other things,the demand for our products andservices,including as a result of macroeconomic conditions;net sales growth;comparable sales;the effects of competition;our brand andreputation;implementation of in

26、terconnected retail,store,supply chain and technology initiatives;inventory and in-stock positions;the state ofthe economy;the state of the housing and home improvement markets;the state of the credit markets,including mortgages,home equity loans,and consumer credit;the impact of tariffs;issues rela

27、ted to the payment methods we accept;demand for credit offerings;management ofrelationships with our associates,potential associates,suppliers and service providers;cost and availability of labor;costs of fuel and otherenergy sources;events that could disrupt our business,supply chain,technology inf

28、rastructure,or demand for our products and services,suchas international trade disputes,natural disasters,climate change,public health issues,cybersecurity events,geopolitical conflicts,and militaryconflicts or acts of war;our ability to maintain a safe and secure store environment;our ability to ad

29、dress expectations regarding environmental,social and governance matters and meet related goals;continuation or suspension of share repurchases;net earnings performance;earningsper share;future dividends;capital allocation and expenditures;liquidity;return on invested capital;expense leverage;change

30、s in interest rates;changes in foreign currency exchange rates;commodity or other price inflation and deflation;our ability to issue debt on terms and at ratesacceptable to us;the impact and expected outcome of investigations,inquiries,claims,and litigation,including compliance with relatedsettlemen

31、ts;the challenges of operating in international markets;the adequacy of insurance coverage;the effect of accounting charges;theeffect of adopting certain accounting standards;the impact of legal and regulatory changes,including changes to tax laws and regulations;storeopenings and closures;financial

32、 outlook;and the impact of acquired companies on our organization and the ability to recognize the anticipatedbenefits of any acquisitions.Forward-looking statements are based on currently available information and our current assumptions,expectations and projections about futureevents.You should no

33、t rely on our forward-looking statements.These statements are not guarantees of future performance and are subject tofuture events,risks and uncertainties many of which are beyond our control,dependent on the actions of third parties,or currently unknown tous as well as potentially inaccurate assump

34、tions that could cause actual results to differ materially from our historical experience and ourexpectations and projections.These risks and uncertainties include,but are not limited to,those described in Part I,Item 1A.Risk Factors,andelsewhere in this report and also as may be described from time

35、 to time in future reports we file with the SEC.You should read such informationin conjunction with our consolidated financial statements and related notes and Part II,Item 7.Managements Discussion and Analysis ofFinancial Condition and Results of Operations in this report.There also may be other fa

36、ctors that we cannot anticipate or that are not describedherein,generally because we do not currently perceive them to be material.Such factors could cause results to differ materially from ourexpectations.Forward-looking statements speak only as of the date they are made,and we do not undertake to

37、update these statements otherthan as required by law.You are advised,however,to review any further disclosures we make on related subjects in our filings with the SEC andin our other public statements.Fiscal 2023 Form 10-KiiiTable of ContentsPART IItem 1.Business.INTRODUCTIONThe Home Depot,Inc.is th

38、e worlds largest home improvement retailer based on net sales for fiscal 2023.We offer our customers a wideassortment of building materials,home improvement products,lawn and garden products,dcor products,and facilities maintenance,repair andoperations products.We also provide a number of services,i

39、ncluding home improvement installation services and tool and equipment rental.Asof the end of fiscal 2023,we operated 2,335 stores located throughout the U.S.(including the Commonwealth of Puerto Rico and the territoriesof the U.S.Virgin Islands and Guam),Canada,and Mexico.The Home Depot stores aver

40、age approximately 104,000 square feet of enclosedspace,with approximately 24,000 additional square feet of outside garden area.We also maintain a network of distribution and fulfillmentcenters,as well as a number of e-commerce websites in the U.S.,Canada and Mexico.When we refer to“The Home Depot,”t

41、he“Company,”“we,”“us”or“our”in this report,we are referring to The Home Depot,Inc.and its consolidated subsidiaries.The Home Depot,Inc.is a Delaware corporation that was incorporated in 1978.Our Store Support Center(corporate headquarters)is located at2455 Paces Ferry Road,Atlanta,Georgia 30339.Our

42、telephone number at that address is(770)433-8211.OUR BUSINESSOUR STRATEGYThe retail landscape has changed rapidly over the past several years,with a complex macroeconomic environment and customer expectationscontinually evolving.In fiscal 2023,we experienced a year of moderation after the unpreceden

43、ted growth of the prior three years,as wenavigated the continued shift in consumer consumption trends away from goods and towards services and the impact of a rising interest rateenvironment.Our ability to operate successfully and meet the needs of our customers in an efficient and cost-effective wa

44、y was due in significantpart to our investments over the past several years aimed at creating an interconnected,frictionless shopping experience that enables ourcustomers to seamlessly blend the digital and physical worlds.Going forward,we will continue to leverage the momentum of these investmentsa

45、nd invest in our business in support of the following goals:We intend to provide the best customer experience in home improvement and develop differentiated capabilities for our customers;We intend to extend our position as the low-cost provider in home improvement;andWe intend to be the most effici

46、ent investor of capital in home improvement.We believe that these goals will help us grow faster than the market and deliver value to our shareholders.We are steadfast in this commitment,while also recognizing that exercising corporate responsibility and being informed by the needs of our other stak

47、eholders,including ourcustomers,associates,supplier partners,and communities,creates value for all stakeholders,including our shareholders.DELIVER SHAREHOLDER VALUEWe deliver on our objective to create shareholder value through our disciplined approach to capital allocation.Our capital allocation pr

48、inciplesare as follows:First,we intend to reinvest in our business to drive growth faster than the market.Second,after meeting the needs of the business,we look to pay a quarterly dividend.Third,after reinvesting in our business and paying our dividend,we intend to return excess cash to our sharehol

49、ders through sharerepurchases.In fiscal 2023,we invested$3.2 billion in capital expenditures to support our business,advance our goals,and continue to build aninterconnected customer experience.We also focused on driving productivity throughout the business by lowering our product and transportation

50、costs and initiating a plan to reduce our fixed cost structure by approximately$500 million,which we expect will be realized in fiscal 2024.Thecombination of reinvesting in the business to drive higher sales and supporting productivity to lower costs allows us to improve our customerexperience,incre

51、ase our competitiveness in the market,and deliver shareholder value.Fiscal 2023 Form 10-K1Table of ContentsIn fiscal 2023,we returned over$16 billion to shareholders in the form of cash dividends and share repurchases.Our capital allocation isdiscussed further in Part II,Item 7.Managements Discussio

52、n and Analysis of Financial Condition and Results of Operations.OUR CUSTOMERSWe serve two primary customer groups consumers(including both DIY and DIFM customers)and professional customers and havedeveloped varying approaches to meet their diverse needs:DIY CustomersThese customers are typically hom

53、eowners who purchase products and complete their own projects and installations.Our associates assistthese customers both in our stores and through online resources and other media designed to provide product and project knowledge.We alsooffer a variety of clinics and workshops both to share this kn

54、owledge and to build an emotional connection with our DIY customers.As thepreferences and behaviors of our DIY customers are changing,we are investing in capabilities to better serve the needs of those customers.Professional Customers(or“Pros”)These customers are primarily professional renovators/re

55、modelers,general contractors,maintenance professionals,handymen,propertymanagers,building service contractors and specialty tradespeople,such as electricians,plumbers and painters.These customers build,renovate,remodel,repair,and maintain residential properties,multifamily properties,hospitality pro

56、perties,and commercial facilities,includingeducation,healthcare,government,institutional,and office buildings.We have a number of initiatives designed to drive growth with Pros,including those working on both simple and complex projects.We remainfocused on providing a customized online experience,a

57、dedicated sales force,a broad assortment of Pro-focused products and brands,anextensive delivery network,our Pro Xtra loyalty program,and enhanced credit offerings.Building on our historical strength as a destination forurgent purchase needs,we are investing in differentiated capabilities that will

58、help us better serve our Pros complex purchase needs,includingexpanded supply chain capabilities,additional trade credit offerings,more showroom space,and an enhanced order management system.We serve the MRO marketplace through our subsidiary HD Supply,a leading national distributor and provider of

59、MRO products and relatedvalue-added services to multifamily,hospitality,healthcare,and government housing facilities,among others.Our MRO operations use adistribution center-based model that sells products primarily through a professional sales force and through e-commerce platforms and printcatalog

60、s.In October 2023,we announced changes to our leadership structure,aligning our outside sales and service business with our global storeorganization to better serve our Pros by leveraging our full ecosystem and newest capabilities.We recognize the great value our Pros provide totheir clients,and we

61、strive to make their jobs easier and help them grow their businesses,from expanded capabilities to improve their businessand customer experience to the Path to Pro network we are building for Pros to connect with jobseekers to help address the skilled laborshortage.We believe that investments aimed

62、at deepening our relationships with our Pros are yielding increased engagement and will continueto translate into incremental sales to these customers.DIFM CustomersIntersecting our DIY customers and our Pros are our DIFM customers.These customers are typically homeowners who use Pros to completethe

63、ir project or installation.Currently,we offer installation services in a variety of categories,such as flooring,water heaters,bath,garage doors,cabinets,cabinet makeovers,countertops,sheds,furnaces and central air systems,and windows.DIFM customers can purchase these servicesin our stores,online,or

64、in their homes through in-home consultations.In addition to serving our DIFM customer needs,we believe our focus onthe Pros who perform services for these customers helps us drive higher product sales.OUR PRODUCTS AND SERVICESA typical The Home Depot store stocks approximately 30,000 to 40,000 items

65、 during the year,including both national brand name andproprietary products.Our online product offerings complement our stores by serving as an extended aisle,and we offer a significantly broaderproduct assortment through our websites and mobile applications,including ,our primary website;homedepot.

66、ca .mx,our websites in Canada and Mexico,respectively;,our website for our MRO products and related services;our websites for custom window coverings including , and ;and ,ourwebsite featuring textiles and dcor products.Fiscal 2023 Form 10-K2Table of ContentsWe believe our merchandising organization

67、 is a key competitive advantage,delivering product innovation,assortment and value,whichreinforces our position as the product authority in home improvement.In fiscal 2023,we continued to invest in merchandising resets in our storesto refine assortments,optimize space productivity,introduce innovati

68、ve new products to our customers,and improve visual merchandising todrive a better shopping experience.At the same time,we remain focused on offering everyday values in our stores and online.To help ourmerchandising organization keep pace with changing customer expectations and increasing desire for

69、 innovation,localization,andpersonalization,we are continuing to invest in tools to better leverage our data and drive a deeper level of collaboration with our supplierpartners.As a result,we have continued to focus on enhanced merchandising information technology tools to help us:(1)build aninterco

70、nnected shopping experience that is tailored to our customers shopping intent and location;(2)provide the best value in the market;and(3)optimize our product assortments.Our merchandising team leverages technology and works closely with our inventory and supply chainteams,as well as our supplier par

71、tners,to manage our assortments,drive innovation,manage the cost environment,and adjust inventory levelsto respond to fluctuations in demand.To complement our merchandising efforts,we offer a number of services for our customers,including installation services for our DIY and DIFMcustomers,as noted

72、above.We also provide tool and equipment rentals at locations across the U.S.and Canada,providing value andconvenience for both Pros and consumers.To improve the customer experience and continue to grow this differentiated service offering,we arecontinuing to invest in more locations(including conti

73、nuing to pilot rental locations in Mexico),more tools,and better technology.Sourcing and Quality AssuranceWe maintain a global sourcing program to obtain high-quality and innovative products directly from manufacturers in the U.S.and around theworld.During fiscal 2023,in addition to our U.S.sourcing

74、 operations,we maintained sourcing offices in Mexico,Canada,China,India,Vietnamand Europe.To ensure that suppliers adhere to our high standards of social and environmental responsibility,we also have a global responsiblesourcing program.Under our supplier contracts,our suppliers are obligated to ens

75、ure that their products comply with applicable international,federal,state and local laws.These contracts also require compliance with our responsible sourcing standards,which cover a variety ofexpectations across multiple areas of social compliance,including supply chain transparency,compliance wit

76、h applicable laws and regulationsaddressing prohibitions on child and forced labor,health and safety,environmental matters,compensation,and hours of work.To driveaccountability with our suppliers,our standard supplier buying agreement includes a factory audit right related to these standards,and wec

77、onduct factory audits and compliance visits with non-Canada and non-U.S.suppliers of private branded and direct import products.Our 2023Responsible Sourcing Report,available on our website at https:/ under“Responsibility Sourcing Responsibly,”provides more information about this program.In addition,

78、we have both quality assurance and engineering resources dedicated to establishingcriteria and overseeing compliance with safety,quality and performance standards for our private branded products.Intellectual PropertyOur business has one of the most recognized brands in North America.As a result,we

79、believe that The Home Depot trademark has significantvalue and is an important factor in the marketing of our products,e-commerce,stores and business.We have registered or applied forregistration of trademarks,service marks,copyrights and internet domain names,both domestically and internationally,f

80、or use in our business,including our proprietary brands such as HDX,Husky,Hampton Bay,Home Decorators Collection,Glacier Bay,Vigoro,Everbilt andLifeproof.The duration of trademark registrations varies from country to country.However,trademarks are generally valid and may be renewedindefinitely as lo

81、ng as they are in use and/or their registrations are properly maintained.We also maintain patent portfolios relating to our business operations,retail services,and products,and we seek to patent or otherwise protectinnovations we incorporate into our business.Patents generally have a term of twenty

82、years from the date they are filed.As our patent portfoliohas been built over time,the remaining terms of the individual patents across our patent portfolio vary.Although our patents have value,nosingle patent is essential to our business.We continuously assess our merchandising departments and prod

83、uct lines for opportunities to expandthe assortment of products offered within The Home Depots portfolio of proprietary and exclusive brands.COMPETITION AND SEASONALITYOur industry is highly competitive,fragmented,and evolving.As a result,we face competition for customers for our products and servic

84、es from avariety of retailers,suppliers,service providers,and distributors and manufacturers that sell products directly to their respective customer bases.These competitors range from traditional brick-and-mortar,to multichannel,to exclusively online,and they include a number of other homeimproveme

85、nt retailers;local,Fiscal 2023 Form 10-K3Table of Contentsregional and national hardware stores;electrical,plumbing and building materials supply houses;and lumber yards.With respect to someproducts and services,we also compete with specialty design stores,showrooms,discount stores,paint stores,spec

86、ialty and mass digitalretailers,warehouse clubs,MRO distributors,home dcor retailers,and other retailers,as well as with providers of home improvement servicesand tool and equipment rental.The internet facilitates competitive entry,price transparency,and comparison shopping,increasing the level ofco

87、mpetition we face.Both in-store and online,we compete primarily based on customer experience,price,quality,product availability and assortment,and deliveryoptions.We also compete based on store location and appearance,presentation of merchandise,and ease of shopping experience.Our Prosalso look for

88、dedicated sales support,competitive credit and pricing options,project planning tools,and product depth and job lot quantities,particularly for their complex purchase needs.Furthermore,with respect to delivery options,customers are seeking faster and/or guaranteeddelivery times,low-price or free shi

89、pping,and/or convenient pickup options.Our ability to be competitive on delivery and pickup times,optionsand costs depends on many factors,including the success of our supply chain investments,described more fully under“Our Supply Chain”below.Our business is subject to seasonal influences.Generally,

90、our highest volume of sales occurs in our second fiscal quarter,as we move into thespring season in the regions in which we operate.INTERCONNECTED SHOPPING EXPERIENCEWe continue to enhance our capabilities to provide our customers with a frictionless interconnected shopping experience across our sto

91、res,online,on the job site,and in their homes,focusing on continued investments in our website and mobile apps to enhance the digital customerexperience.Digital ExperienceEnhancements to our digital properties are critical for our increasingly interconnected customers,who often research products and

92、 checkavailable inventory online before going into one of our stores to view products in person or talk to an associate and then making their purchaseeither in store or online.While in the store,customers may also go online to access ratings and reviews,compare prices,view our extendedassortment,and

93、 purchase additional products.Our investments in a truly interconnected experience are focused on bringing together the powerof our physical retail presence and the frictionless interaction of our digital capabilities.A significant majority of the traffic in our digital channels is on mobile devices

94、.Mobile customers expect more simplicity and relevancy in theirdigital interactions.As a result,we have made investments in our digital properties to improve the overall presentation and ease of navigation forthe user.We have also enhanced the“shopability”of an online product by including more infor

95、mation on the products landing page,includingrelated products and/or parts of a collection,as well as various fulfillment options.We believe our focus on improving search capabilities,sitefunctionality,category presentation,product content,speed to checkout,and fulfillment options has yielded higher

96、 traffic,better conversion andcontinued sales growth.Further,we do not view the interconnected shopping experience as a specific transaction;rather,we believe it encompasses an entire journeyfrom inspiration and know-how,to purchase and fulfillment,to post-purchase care and support.Customers expect

97、more personalizedmessaging,so we are continuing to focus on connecting marketing activities with the online and in-store experiences to create seamlessengagement across channels.From the inspirational point of the purchase journey to providing product know-how,we continue to invest in theinfrastruct

98、ure and capabilities needed to deliver the most relevant marketing messages to our customers based on what is important to themtoday.Store ExperienceOur stores remain the hub of our business,and we continue to invest to improve the customer shopping experience through easier navigationand increased

99、convenience and speed of checkout.In fiscal 2023,we continued to leverage the investments made in our stores over the pastseveral years to operate effectively and meet customer expectations.These investments included wayfinding signage and store refreshpackages;self-service lockers,online order stor

100、age areas and curbside service to enable convenient online order pickup options;electronic shelflabel capabilities;and the re-design of front-end areas,including reconfigured service desks,improved layouts in checkout areas,and expandedand enhanced self-checkout options.We have also empowered our cu

101、stomers with additional self-help tools,including mobile app-enabled storenavigation.Our app provides store-specific maps,which allow customers to pinpoint the exact location of an item on their mobile devices.Finally,we have also invested in compensation enhancements for our front-line associates,w

102、hich we believe are contributing to lower attrition,increased associate engagement,and fewer safety incidents in our stores.We believe these investmentsFiscal 2023 Form 10-K4Table of Contentsare driving higher customer satisfaction scores,and we will continue to invest to improve the customer experi

103、ence.In addition,we haveidentified areas that have experienced significant population growth or where market voids exist,and in fiscal 2023 we initiated a plan to openapproximately 80 new stores over a five-year period to address those opportunities.These new stores will help relieve pressure at exi

104、sting high-volume stores and add stores in areas with less store coverage,helping us to improve the customer experience and drive revenue growth.Investing in Associate Productivity.We continually strive to improve our store operations to remove complexity and inefficient processes,allowing our assoc

105、iates to spend more of their time serving our customers.To this end,we have continued to focus on process improvementslike optimizing product flow to improve on-shelf product availability and thus decrease the amount of time store associates spend locatingproducts;creating a simpler order management

106、 system;expanding in-aisle,real-time mobile learning tools for our associates own developmentand to assist with customer questions;and using labor model tools to better align associate activity with customer needs.For a number of years,our associates have used web-enabled handheld devices to help th

107、em more efficiently meet the needs of the business and serve customers.Our current generation of these digital“hdPhone”devices offers enhanced functionality that allows associates to readily query inventory,accessapplications that support customer service,and assist with locating products.Our hdPhon

108、es also give our U.S.store associates access toSidekick,an application that directs associates to bays where product is low or out of stock and helps our associates prioritize the highest valuetasks more effectively.To further support productivity,in fiscal 2023 we rolled out Computer Vision in our

109、U.S.stores,which provides greatervisibility into where product is located,including both on the shelves and in the overhead space,enabling strategically-directed tasking andimproving on-shelf availability.Investing in Safety.We remain committed to maintaining a safe shopping and working environment

110、for our customers and associates.Weaccomplish this by creating a strong culture of safety,building on our core value of Taking Care of Our People,that starts from the top withengaged leaders who empower associates to make decisions that prioritize the safety of everyone.We use data to identify areas

111、 of greatest risk,including emerging risks,and invest in tools,equipment and technology to reduce those risks in our packaging,processes,and behaviors.Ourassociate training and awareness initiatives target individual roles and responsibilities,integrating with overall strategies that promote physica

112、land psychological safety and mental wellness.We empower trained EH&S associates to continuously evaluate,develop,implement and enforce policies,processes and programs in ourstores,facilities and offices across the Company.Our EH&S policies are woven into our everyday operations for site,district an

113、d regional teams,and integrate with operating platforms to provide safety line-of-sight to all leaders and associates.Common program elements include daily storeinspection checklists;routine follow-up audits from our store-based safety team members;preventative maintenance programs to promoteequipme

114、nt and physical space safety;and departmental merchandising safety standards.OUR SUPPLY CHAINWe continue to focus on building best-in-class competitive advantages in our supply chain to be responsive to our customers expectations forhow,when and where they choose to receive our products and services

115、.As part of enhancing the interconnected shopping experience,wecontinue to invest in our supply chain network,with the goal of achieving the fastest,most efficient and most reliable delivery capabilities in homeimprovement.Our efforts are focused on ensuring product availability and increasing the s

116、peed and reliability of delivery for our customers whilemanaging our costs.Our supply chain investments have helped us to operate effectively and meet our customers needs,even with thechallenging environment over the past few years.We centrally forecast and replenish the vast majority of our store p

117、roducts through sophisticated inventory management systems and utilize ournetwork of distribution centers to serve both our stores and customers needs.Our supply chain includes multiple distribution center platforms inthe U.S.,Canada,and Mexico tailored to meet the needs of our stores and customers

118、based on types of products,location,transportation,anddelivery requirements.These include rapid deployment centers,stocking distribution centers,bulk distribution centers,flatbed distributioncenters,and direct fulfillment centers,among others.Over the past several years,we have invested to further a

119、utomate and mechanize ourrapid deployment center network to drive greater efficiency and faster movement of product.We are also continuing to enhance our supply chain network,with our expanded fulfillment facilities designed to drive speed and reliability ofdelivery for our customers.In many markets

120、 we offer same day or next day delivery of a multitude of products through our stores and fulfillmentcenters.We also have omni-channel fulfillment centers,which deliver product directly to customers,and market delivery operations,whichfunction as local hubs to consolidate freight for dispatch to cus

121、tomers for the final mile of delivery,with a focus on appliances.We met our goalsto control more of our appliance delivery end-to-end and manage all of our appliance delivery volume through our market delivery operations infiscal 2022,and in fiscal 2023,we continued to invest in these capabilities,F

122、iscal 2023 Form 10-K5Table of Contentsincluding expansion of our last mile delivery capacity.We have also opened additional flatbed distribution centers,which handle large items likelumber and building materials that are transported on flatbed trucks.Our network is designed to create a competitive a

123、dvantage with unique,industry-leading capabilities for home improvement needs for both our Pros and consumers.We will continue to invest in our supply chainnetwork as needed to support our business.In addition to our distribution and fulfillment centers,we leverage our stores as a network of conveni

124、ent customer pickup,return,and deliveryfulfillment locations.Our premium real estate footprint provides a distinct structural and competitive advantage.For customers who shop onlineand want to pick up or return merchandise at a store,or have it delivered from a store,we have four interconnected reta

125、il programs:BOSS,BOPIS,BODFS,and BORIS.We also provide curbside pickup to complement our BOPIS offerings,in addition to the self-service lockers at thefront entrance of many of our stores.We also offer car and van delivery service from the majority of our U.S.stores.For fiscal 2023,approximately 50%

126、of our U.S.online orders were fulfilled through a store.We also continue to focus on developing new capabilities to improveboth efficiency and customer experience for delivery from our stores.Our strategic intent is to have a portfolio of efficient,timely and reliablesources and methods of delivery

127、to choose from,optimizing order fulfillment and delivery based on customer needs,inventory locations,andavailable transportation options.CORPORATE RESPONSIBILITY AND HUMAN CAPITAL MANAGEMENTWe view corporate responsibility matters through the lens of our business,with an understanding that if we sup

128、port our associates,ourcustomers,our supplier partners,and the communities we serve,we also support our business and create long-term value for our shareholders.As a result,we believe that what is commonly called ESG today is fundamentally embedded in our operations and culture.We organize oureffort

129、s around three pillars:(1)Focus on Our People,(2)Operate Sustainably,and(3)Strengthen Our Communities.Highlights of each of thesepillars are set forth below.For further information on our three pillars and other ESG-related matters,see our annual ESG Report,available onour website at https:/ on Our

130、PeopleOur culture and our associates provide intangible and hard-to-replicate competitive advantages,which have been key to helping us navigatechallenging market conditions.Our associates are essential to providing the experience and service that our customers demand.To preserveand protect that cust

131、omer experience,we focus on cultivating a compelling associate experience,which we believe supports our ability to attractand retain our associates.This includes investing in competitive wages and benefits while also providing the culture,tools,training anddevelopment opportunities that make working

132、 at The Home Depot an enjoyable and rewarding experience.These actions are the foundation ofour key tenets of putting customers first and taking care of our associates.Culture and Values.The Home Depot has a strong commitment to ethics and integrity,and we are a values-and culture-centric business.O

133、urcommitment to our core values drives our approach to human capital management.Our culture is based on our servant leadership philosophyrepresented by the inverted pyramid,which puts primary importance on our customers and our associates by positioning them at the top,withsenior management at the b

134、ase in a support role.We bring our culture to life through our core values,which serve as the foundation of ourbusiness and as the guiding principles behind the decisions we make every day.Our values also guide our efforts to create an environment that will help us attract and retain skilled associa

135、tes in the competitive marketplace fortalent.We empower our associates to deliver a superior customer experience by living our values,and we position our associates to embody ourcore values by integrating the importance of our culture into ongoing development programs and rewards programs.Leaders pa

136、rticipate inprograms designed toFiscal 2023 Form 10-K6Table of Contentsbuild and strengthen our culture,such as training on leadership skills,cross-functional collaboration,inclusiveness,and associate engagement,and associates receive training on unconscious bias.Our core values are at the root of o

137、ur human capital management programs.Our Workforce.At the end of fiscal 2023,we employed approximately 463,100 associates,of whom approximately 46,200 were salaried,withthe remainder compensated on an hourly basis.Set forth below is the geographic makeup of our workforce:Geographic LocationNumber of

138、 Associates%of Total WorkforceUnited States411,200 88.8%Canada33,8007.3%Mexico17,8003.8%Other 3000.1%Total463,100100%(1)Includes associates in our sourcing organization located in China,Vietnam,India,Italy,Poland and Turkey.Talent Attraction and Development.As we attract and hire new associates,we s

139、trive to create a customer-like experience for jobseekers byfocusing on speed and personalization as they progress through the steps of our recruiting process.We employ targeted marketing practicesthrough our careers website,which personalizes the users experience based on jobseeker location and sea

140、rching behavior.Jobseekers canalso apply for roles from anywhere using desktop or mobile devices.Once a jobseeker has applied for a role and has been selected to moveforward in the recruiting process,we provide self-service for many of our positions by allowing candidates to schedule or reschedule p

141、re-hireactivities directly from their mobile device.Lastly,we created a quick hiring process for select roles by matching candidates to jobs that fit theirneeds.We offer all of our associates the opportunity to benefit from robust development opportunities.Our Home Depot University,or“HDU,”program,i

142、s a key part of this development,offering relevant content through multiple platforms,including instructor-led classes,e-learning,mobilelearning,and additional online resources.We also invest in ongoing growth and development by providing coaching through continuous leadersupport and empowering our

143、associates to learn new skills at their own pace through mobile applications our associates can access at any time.We equip our leaders with the tools they need to develop themselves and their teams through several programs designed to help them leadinclusively,empower their teams,and serve as mento

144、rs for our associates.We also continue to work to ensure our store leadership structure supports both associate development and engagement as well as alignmentacross our organization.In fiscal 2023,we continued to refine the updated store leadership structure established in fiscal 2022,which created

145、new management positions in our stores focused on the customer service experience,increasing the number of managers on the floor at anygiven time.This structure frees up time for other store leaders to devote to associate training and development.The result is an improvedcustomer and associate exper

146、ience,while also providing new career paths for associates.In fiscal 2023,we also announced changes to oursenior leadership structure to better align the outside sales and service team with the global store organization,so that both outside sales andstore associates can better serve our Pros.Associa

147、te Engagement.Associate engagement is the emotional commitment associates have to The Home Depot.It is vital to our culture andto our success.We create an engaging workplace by continuously listening to and acting on associate feedback.We provide several pulsecheck surveys to associates throughout t

148、he year that help us determine how emotionally connected those associates are to our customers,theCompany,their jobs,fellow associates,and leaders.In addition,our annual Voice of the Associate survey,which includes all associates,servesas our primary means of gauging associates level of engagement w

149、ithin their roles.We use the feedback from these surveys to help improvethe overall associate experience.We also maintain a digital associate engagement platform that links associates with common interests andfuels connections to co-workers and Company leaders.Additionally,we have a number of progra

150、ms to recognize stores and individualassociates for exceptional customer service and demonstrating our core values.Diversity,Equity and Inclusion.Guided by our core values and grounded in our culture,we believe that having a diverse,equitable andinclusive Company is key to our success.We strive to m

151、aintain a Company where our associates are valued and respected and feel a sense ofbelonging in the workplace,so that they can provide the customer experience that supports our business and the communities we serve.OurOffice of Diversity,Equity and Inclusion(“DEI”)supports our DEI engagement efforts

152、 with our associates,suppliers,and communities.(1)Fiscal 2023 Form 10-K7Table of ContentsBelow is the fiscal 2023 demographic data for our U.S.associates:Associate PopulationRace/EthnicityGender%Minority%White%Undisclosed%Female%Male%UndisclosedU.S.Workforce49%49%2%37%62%1%U.S.Managers&Above 39%60%1

153、%35%65%1%U.S.Officers25%74%1%31%68%1%(1)Does not include officers.Note:Certain percentages may not sum to totals due to rounding.As a Company,we have identified several priorities designed to guide our efforts to enhance diversity,equity and inclusion.We believe theseassociate-,supplier-and communit

154、y-focused priorities will further enhance our customers experience and make a sustainable difference withinthe workplace,marketplace,and community:Associate EngagementConsider inclusivity throughout our organization and create an environment where every associate feels included and valued forwho the

155、y arePromote equal opportunity in recruitment,hiring,training,development and advancementSupplier DiversityIncrease visibility into our spend with diverse suppliers,including diverse subcontractorsIncrease the pipeline of diverse suppliers to be considered for engagementCommunity EngagementPartner w

156、ith organizations on programs designed to close the wealth gapSupport programs that advance education for allCompensation and Benefits.Consistent with our core values,we take care of our people by offering competitive compensation andcomprehensive benefits programs.We continuously make wage investme

157、nts to ensure our compensation packages reflect the evolvingcircumstances across our markets.Our profit-sharing program for hourly associates also provides semi-annual cash awards for performanceagainst our business plan.Our associates can take advantage of a range of benefits,including healthcare a

158、nd wellness programs,vacation andleave of absence benefits including parental leave and paid sick/personal time off,a 401(k)match,our ESPPs,personal finance education andadvisory services,assistance programs to help with managing personal and work-life challenges,family support programs,and educatio

159、nalassistance.Operate SustainablyWe have a long-standing commitment to reduce the impact that our operations and products have on the environment,which we believe helpsmake our business stronger,more agile,and more resilient.This approach extends from the products and services we offer to our custom

160、ers;toour store construction,maintenance and operations;to our supply chain and packaging initiatives;to our ethical sourcing program.As we striveto operate sustainably,we have focused on efforts that help protect the climate,reduce our environmental impact,and source productsresponsibly,and we have

161、 set goals to drive progress in these areas.Our 2023 ESG Report,available on our website at https:/ more information on our goals,aswell as specific initiatives we have in place to help achieve these goals.In order to progress against our goals to reduce our environmentalfootprint,we have a number o

162、f environmentally focused programs and initiatives.Science-Based Targets for Emissions Reductions.In fiscal 2023,we submitted new reduction goals to the Science Based Targets initiative(SBTi)to reduce Scope 1,2 and 3 emissions in line with the Paris Agreement goals,and we further enhanced our goal f

163、or Scope 3 emissionsreductions in early fiscal 2024.We now plan to reduce our combined absolute Scope 1 and 2 emissions and our absolute Scope 3 Category 11(“Use of Sold Products”)emissions by 42%,each by the end of fiscal 2030 from a fiscal 2020 base year.The SBTi has validated that ourenhanced goa

164、ls conform with its criteria and has determined that our Scope 1 and 2 target is in line with a 1.5-degree Celsius trajectory.Adoption of these SBTi-approved goals builds on and supersedes our previous science-based goals to reduce Scope 1 and 2 carbon emissionsby 2.1%per year,to achieve a 40%reduct

165、ion by the end of fiscal 2030 and a 50%reduction by the end of fiscal 2035.(1)Fiscal 2023 Form 10-K8Table of ContentsStore Operations and Renewable/Alternative Energy.We have reduced U.S.store electricity consumption through initiatives such as LEDlighting upgrades;installation of energy-efficient H

166、VAC systems;and participation in demand mitigation.We have also invested in on-sitealternative or renewable energy projects such as fuel cells and solar panels and contracts with off-site wind and solar power providers.We havecontinued to work toward our goal to produce or procure renewable electric

167、ity equivalent to the electricity needs for all Home Depot facilities bythe end of fiscal 2030.Product Offerings.Through our Eco Actions program,we have helped our customers more easily identify products related to five areas:carbon emissions,circularity,responsible chemistry,sustainable forestry,an

168、d water use.Under our Eco Actions program,we sell ENERGYSTAR certified appliances;WaterSense-labeled bath faucets,showerheads,aerators,toilets,and irrigation controllers;LED light bulbs;tankless water heaters;and many other products.These products,through proper use,help our customers save money on

169、their utility bills andreduce their environmental impact,and in fiscal 2023 we set new goals for customer savings on energy costs and reduced water usage throughpurchases of these products.In fiscal 2023,we also announced a goal that by the end of fiscal 2028,85%of our U.S.and Canada in-store andonl

170、ine sales of push mowers and handheld outdoor power equipment will be powered by rechargeable battery technology.Through Eco Actions,we also provide customers with resources,such as project tutorials,to take individual action on environmental issues.In-Store Recycling Programs.We offer customer-faci

171、ng recycling programs in the U.S.,including in-store recycling programs for compactfluorescent light bulbs,rechargeable batteries,and lead acid batteries.Chemical Strategy.We are committed to increasing our assortment of products that meet high environmental standards,and we encourage oursuppliers t

172、o invest in developing environmentally innovative products.We periodically evaluate our Chemical Strategy to ensure our approachand goals are appropriate.In fiscal 2023,we updated our Chemical Strategy to include a new goal to not allow added PFAS(Perfluoroalkyl andPolyfluoroalkyl Substance)chemical

173、s in our new private-brand patio and home dcor products sold in our U.S.and Canada stores by the end offiscal 2025.Sustainable Packaging.In addition to our goal related to eliminating expanded polystyrene foam(EPS)and polyvinyl chloride(PVC)film fromnew packaging for our private-brand products sold

174、in U.S.and Canada stores and online,we are continually working with our suppliers to findways to make product packaging more recyclable or simply use less material,such as through the reduction of single-use plastics.In fiscal 2023,we also announced a new goal that all private brand fiber packaging

175、for new SKUs in our U.S.and Canada stores and online will becompostable,recyclable or recycled content by the beginning of fiscal 2027.Supply Chain Optimization.Through our supply chain initiatives such as space sharing and optimization technology,we are working tomaximize our use of every mile to m

176、ake our supply chain more efficient.CDP Participation.We are a long-standing participant in the annual CDP Climate Change disclosure process.CDP is an independent,international,not-for-profit organization providing a global system for companies and cities to measure,disclose,manage,and shareenvironm

177、ental information.In February 2024,we received a score of“A-”from CDP on our Climate Change submission,reflecting leadershipand an improved level of action on climate change.We began participating in CDPs Forests disclosure process in fiscal 2023,receiving a scoreof“C”on our first submission,indicat

178、ing awareness of how these issues intersect with our business.Over the past several years,our commitment to sustainable operations has resulted in a number of environmental awards and recognitions.In2023,we received the following awards:an EPA WaterSense Partner of the Year Award for our commitment

179、to offering and promoting water-efficient products;an EPA Safer Choice Partner of the Year Award,which recognizes achievement in products with safer chemicals that furthersinnovative source reduction;and an EPA ENERGY STAR Partner of the Year Award for our contribution to promoting energy efficiency

180、.Strengthen our CommunitiesOne of our core values is“Giving Back,”and we support our communities in a number of ways.The Home Depot Foundation focuses onimproving the homes and lives of U.S.veterans,assisting communities affected by natural disasters,and training skilled tradespeople to fill thelabo

181、r gap.The Company and The Home Depot Foundation are partnering with industry leaders on training programs to train the next generationof skilled tradespeople and help them find careers in the home improvement industry through our Path to Pro program,which includes a careernetworking site to connect

182、skilled tradespeople to industry Pros.Our Team Depot associate volunteers also extend the mission of The HomeDepot Foundation in communities across the country,donating thousands of volunteer hours each year to serve the needs of our communities.TMFiscal 2023 Form 10-K9Table of ContentsWe partner wi

183、th a variety of suppliers and organizations to further support our DEI efforts.As noted above,our Office of DEI partners withcommunity organizations on programs designed to close the wealth gap and enhance education outcomes across a broad range ofcommunities.We are working to cultivate a supplier b

184、ase that creates long-lasting growth and mutual business success,while strengthening thecommunities in which our customers and associates live.Please see our 2023 ESG Report for additional information about our efforts to support the communities we serve.GOVERNMENT REGULATIONAs a company with both U

185、.S.and international operations,we are subject to the laws of the U.S.and foreign jurisdictions in which we operateand the rules and regulations of various governing bodies,which may differ among jurisdictions.Compliance with these laws,rules andregulations has not had,and is not expected to have,a

186、material effect on our capital expenditures,results of operations,or competitive positionas compared to prior periods.AVAILABLE INFORMATIONOur internet website is .We make available on the Investor Relations section of our website,free of charge,our AnnualReports to shareholders,Annual Reports on Fo

187、rm 10-K,Quarterly Reports on Form 10-Q,Current Reports on Form 8-K,Proxy Statements,andForms 3,4 and 5,and amendments to those reports,as soon as reasonably practicable after filing such documents with,or furnishing suchdocuments to,the SEC.We include website addresses throughout this report for ref

188、erence only.The information contained on these websites is not incorporated byreference into this report.Item 1A.Risk Factors.Our business,results of operations,and financial condition are subject to numerous risks and uncertainties.In connection with any investmentdecision with respect to our secur

189、ities,you should carefully consider the following risk factors,as well as the other information contained in thisreport and our other filings with the SEC.Additional risks and uncertainties not presently known to us or that we currently deem immaterial mayalso impair our business operations.Should a

190、ny of these risks materialize,our business,results of operations,financial condition and futureprospects could be negatively impacted,which in turn could affect the trading value of our securities.You should read these Risk Factors inconjunction with Part II,Item 7.Managements Discussion and Analysi

191、s of Financial Condition and Results of Operations and our consolidatedfinancial statements and related notes in Item 8.STRATEGIC RISKSStrong competition could adversely affect prices and demand for our products and services and could decrease our market share.Our industry is highly competitive,high

192、ly fragmented,and evolving.As a result,we face competition for customers for our products and servicesfrom a variety of retailers,suppliers,service providers,and distributors and manufacturers that sell products directly to their respective customerbases.These competitors range from traditional bric

193、k-and-mortar,to multichannel,to exclusively online,and they include a number of other homeimprovement retailers;local,regional and national hardware stores;electrical,plumbing and building materials supply houses;and lumber yards.With respect to some products and services,we also compete with specia

194、lty design stores,showrooms,discount stores,paint stores,specialtyand mass digital retailers,warehouse clubs,MRO distributors,home dcor retailers,and other retailers,as well as with providers of homeimprovement services and tool and equipment rental.The internet facilitates competitive entry,price t

195、ransparency,and comparison shopping,increasing the level of competition we face.We compete primarily based on customer experience;price;quality;product availability,assortment,and innovation;and delivery options,bothin-store and online.We also compete based on store location and appearance,presentat

196、ion of merchandise,and ease of shopping experiencethroughout every step of the project,from inspiration and research to any post-purchase support.Our Pros also look for dedicated sales support,competitive credit and pricing options,project planning tools,product depth and job lot quantities,particul

197、arly for their complex purchase needs.Furthermore,customers are increasingly shopping online and seeking faster and/or guaranteed delivery times,low-price or free shipping,and/orconvenient pickup options.Our ability to be competitive on delivery and pickup times,options and costs depends on many fac

198、tors,includingleveraging the momentum of our investments in our supply chain and our interconnected retail capabilities to further enhance the customershopping experience.Failure to successfully manage these factors and offer competitive delivery and pickup options could negatively impact ourprofit

199、margins and the demand for our products.Fiscal 2023 Form 10-K10Table of ContentsWe use our marketing,advertising and promotional programs to drive customer traffic and compete more effectively,and we must regularlyassess and adjust our efforts to address changes in the competitive landscape.Intense

200、competitive pressures from one or more of ourcompetitors,such as through aggressive promotional pricing or liquidation events,or our inability to adapt effectively and quickly to a changingcompetitive landscape,could adversely affect our prices,our margins,or demand for our products and services.If

201、we are unable to timely andappropriately respond to these competitive pressures,including through the delivery of a superior interconnected customer experience orthrough maintenance of effective sales and marketing,advertising or promotional programs leveraging both our digital and physical platform

202、s,our market share and our financial performance could be adversely affected.In fiscal 2023 we also continued to operate in an inflationary andrising interest rate environment,and the long-term outlook is difficult to predict.If we experience inflation or deflation at a level beyond our abilityto re

203、spond effectively,we may not be able to adjust prices to sufficiently offset the effects without negatively impacting consumer demand ormargins,as applicable,or it may adversely affect our ability to compete based on price.We may not timely identify or effectively respond to consumer needs,expectati

204、ons or trends,which could adversely affect ourrelationship with our customers,the demand for our products and services,and our market share.The success of our business depends in part on our ability to identify and respond promptly to evolving trends in demographics;shifts inconsumer preferences,exp

205、ectations and needs;changes in the macroeconomic environment;and unexpected weather conditions,naturaldisasters,or public health issues(including pandemics and related impacts)that impact our customers,while also managing appropriateinventory levels in our stores and distribution or fulfillment cent

206、ers and maintaining an excellent customer experience.It is difficult to successfullypredict the products and services our customers will demand.As our customers expect a more personalized experience,our ability to collect,use,retain,and protect relevant customer data is important to our ability to e

207、ffectively meet their expectations.Our ability to collect and use thatdata,however,is subject to a number of external factors,including the impact of legislation or regulations governing data privacy,data-driventechnologies such as artificial intelligence,and data security,as well as customer expect

208、ations around data collection,retention,and use.Inaddition,each of our primary customer groups has different needs and expectations,many of which evolve as the demographics in a particularcustomer group change.Customer preferences and expectations related to sustainability of products and operations

209、 are also changing.Inaddition,as the impacts of COVID-19 have subsided,customers have shifted more of their spending back to travel,dining and otherexperiences,compared to the historic levels of home improvement spending we saw during the heights of the pandemic.If we do notsuccessfully differentiat

210、e the shopping experience to attract our customers and meet their individual needs and expectations,it may adverselyimpact our sales or our market share.Customer expectations about the methods by which they purchase and receive products or services are also becoming more demanding.Customers routinel

211、y and increasingly use technology and a variety of electronic devices and digital platforms to rapidly compare products andprices,read product reviews,determine real-time product availability,and purchase products,and new channels and tools to expand thecustomer experience appear and change rapidly.

212、Our Pros also look for additional capabilities,including dedicated sales support,competitivecredit and pricing options,project planning tools,and product depth and job lot quantities,particularly for their complex purchase needs.Onceproducts are purchased,customers seek alternate options for deliver

213、y of those products,including advance ordering through digital platforms forPros,and they often expect quick,timely,and low-price or free delivery and/or convenient pickup options.We must continually anticipate andadapt to these changes in the shopping and purchasing process by continuing to adjust

214、and enhance the online and in-store customerexperience as well as our delivery options.The coordinated operation of our network of physical stores,distribution facilities,and onlineplatforms is fundamental to the success of our interconnected strategy.We cannot guarantee that our current or future f

215、ulfillment options will bemaintained and implemented successfully or that we will be able to meet customer expectations on delivery or pickup times,options and costs.In addition,as our customers continue to leverage our enhanced interconnected shopping and fulfillment options,a greater concentration

216、 ofonline sales with direct fulfillment could result in a reduction in the amount of traffic in our stores,which would,in turn,reduce the opportunitiesfor cross-selling of merchandise that such traffic creates and could reduce our overall sales and adversely affect our financial performance.Agreater

217、 concentration of online sales with direct fulfillment could also result in higher costs for delivery,potentially impacting our profit margins.Failure to provide a relevant and effective customer experience in a timely manner that keeps pace with technological developments anddynamic customer expect

218、ations;to maintain appropriate inventory;to provide quick and low-price or free delivery alternatives and convenientpickup options;to differentiate the customer experience for our primary customer groups;to effectively implement an increasingly localizedmerchandising assortment;or toFiscal 2023 Form

219、 10-K11Table of Contentsotherwise timely identify or respond to changing consumer preferences,expectations and home improvement needs could adversely affect ourrelationship with our customers,the demand for our products and services,and our market share.A positive brand and reputation are critical t

220、o our business success,and,if our brand and reputation are damaged,it could negativelyimpact our relationships with our customers,current and potential associates,suppliers,vendors,and shareholders,and,consequently,our business and results of operations or the price of our stock.Our brand and reputa

221、tion are critical to attracting customers,current and potential associates,suppliers and vendors to do business with us.Wemust continue to manage and protect our brand and reputation.Negative incidents can erode trust and confidence quickly,and adverse publicityabout us could damage our brand and re

222、putation;undermine our customers confidence in us;reduce demand for our products and services;affect our ability to recruit,engage,motivate and retain associates;attract regulatory scrutiny;and impact our relationships with current andpotential suppliers and vendors.Our suppliers and vendors busines

223、s practices and positions may also be attributed to us,regardless of ourCompanys actions,meaning the actions of third parties pose similar risks to our brand and reputation.Further,our actual or perceived positionor lack of position on social,environmental,governance,political,public policy,economic

224、,geopolitical,or other sensitive issues,and anyperceived lack of transparency about those matters,could harm our reputation with certain groups.In addition,we could be criticized for thescope or nature of ESG-related initiatives or goals,or for any revisions to or failure to achieve these goals on a

225、 timely basis or at all.If our ESG-related data,processes and reporting are incomplete or inaccurate,we could face regulatory scrutiny,litigation and/or adverse reputationalimpacts.Customers are also increasingly using social media to provide feedback and information about our Company,including our

226、productsand services,in a manner that can be quickly and broadly disseminated.Negative sentiment about the Company shared over social media,ormisinformation from fraudulent accounts impersonating the Company,could impact our brand and reputation,whether or not it is based in fact.The execution of in

227、itiatives to implement our interconnected retail strategy could adversely impact our business operations orfinancial results,and these initiatives might not provide the anticipated benefits.Over the past several years,we have made significant investments to execute our interconnected retail strategy

228、,including enhancing andexpanding our supply chain,developing differentiated capabilities for our customers,expanding our store base,and making strategicacquisitions.These investments are designed to streamline our operations to allow our associates to continue to provide high-quality service toour

229、customers;simplify customer interactions;provide our customers with a more interconnected shopping experience;expand our sales tolarger Pros and better address their complex purchase needs;and create the fastest,most efficient,and most reliable delivery network for homeimprovement products.Executing

230、 our interconnected retail strategy requires continual investment in our operations and information technologysystems,as well as the development and execution of new processes,systems and support.Investment in our supply chain also involvessignificant real estate projects as we expand our distributi

231、on network,requiring us to identify and secure available locations with appropriatecharacteristics needed to support the different types of facilities.In addition,our stores are a key element of our interconnected retail strategy,serving as the hub of our customers interconnected shopping experience

232、.We have an aging store base that requires maintenance,investment,and space reallocation initiatives to deliver the shopping experience that our customers desire.We also need to identify and secure availablelocations with appropriate characteristics for new stores to ensure we can continue to serve

233、our customers effectively.We must effectively manage the volume,timing,nature,location,and cost of our investments,projects and changes.Failure to continue to makeinvestments to effectively support our strategy and to implement or integrate those investments in the right manner and at the right pace

234、 couldadversely impact our business operations or financial results.The cost and potential problems,defects of design,and interruptions associatedwith the implementation of these initiatives,including those associated with managing third-party service providers,employing new online toolsand services

235、,implementing new technologies such as artificial intelligence,implementing and restructuring support systems and processes,securing appropriate store and facility locations,and addressing impacts on inventory levels,could disrupt or reduce the efficiency of ouroperations in the near term,lead to pr

236、oduct availability issues,create complexity in our systems and operations and impact our profitability.Ourinvestments to enhance our interconnected shopping experience,including investments in our store base,supply chain,and capabilities,mightnot provide the anticipated benefits,or might take longer

237、 than expected to complete,integrate or realize anticipated benefits,each of which couldadversely impact our competitive position and our financial condition,results of operations,or cash flows.Fiscal 2023 Form 10-K12Table of ContentsIf we are unable to effectively manage and expand our alliances an

238、d relationships with certain suppliers of both brand name andproprietary products,we may be unable to effectively execute our strategy to differentiate ourselves from our competitors.As part of our focus on product differentiation,we have formed strategic alliances and exclusive relationships with c

239、ertain suppliers to marketproducts under a variety of well-recognized brand names.We have also developed relationships with certain suppliers to allow us to marketproprietary products that are comparable to national brands.Our proprietary products differentiate us from other retailers and generally

240、carryhigher margins than national brand products.If we are unable to manage and expand these alliances and relationships,maintain favorable termswith current suppliers,or identify alternative sources for comparable brand name and proprietary products,we may not be able to effectivelyexecute product

241、differentiation,which may impact our sales and gross margin results.Our suppliers business practices and positions may alsobe attributed to us,regardless of our Companys actions,meaning that controversies regarding our suppliers of brand name or proprietaryproducts pose risks to our reputation and b

242、rand,and could require us to quickly identify alternative sources for comparable products.Our strategic transactions involve risks,which could have an adverse impact on our business,financial condition and results ofoperations,and we may not realize the anticipated benefits of these transactions.We

243、regularly consider and enter into strategic transactions,including mergers,acquisitions,investments,alliances,and other growth and marketexpansion strategies.We generally expect that these transactions will result in sales increases,cost savings,synergies,enhanced capabilities orvarious other benefi

244、ts.Assessing the viability and realizing the benefits of these transactions is subject to significant uncertainty.For each of ouracquisitions,we need to determine the appropriate level of integration of the target companys products,services,associates,and informationtechnology,financial,human resour

245、ces,compliance,and other systems and processes,and then successfully manage that integration into ourcorporate structure.Integration can be a complex and time-consuming process,and if the integration is not fully successful or is delayed for amaterial period of time,we may not achieve the anticipate

246、d synergies or benefits of the acquisition.In addition,the integration of businesses maycreate increased complexity in our financial systems,internal controls,technology and cybersecurity systems,and operations and may makethem more difficult to manage.Even if the target companies are successfully i

247、ntegrated,the acquisitions may fail to further our business strategyas anticipated,expose us to increased competition or challenges with respect to our products or services,and expose us to additional risks andliabilities.Strategic transactions may also be subject to significant regulatory uncertain

248、ty.The changing enforcement landscape may result inadditional costs or delays that affect the anticipated outcome of a transaction.Any failure in the execution of a strategic transaction orinvestment,our approach to the integration of an acquired asset or business,or achievement of synergies or othe

249、r benefits could result in slowergrowth,higher than expected costs,the recording of an impairment of goodwill or other intangible assets,and other actions which couldadversely affect our business,financial condition and results of operations.OPERATIONAL RISKSOur success depends upon our ability to a

250、ttract,develop and retain highly qualified associates to provide excellent customer serviceand to support our strategic initiatives while also controlling our labor costs.Our customers expect a high level of customer service and product knowledge from our associates.To meet the needs and expectation

251、s of ourcustomers,we must attract,develop and retain a large number of highly qualified associates and maintain a productive relationship with thoseassociates.Our ability to meet our labor needs while controlling labor costs is subject to numerous external factors,including increased marketpressures

252、 with respect to prevailing wage rates,unemployment levels,and health and other insurance costs;the impact of legislation orregulations governing labor relations,employment,immigration,minimum wage,and healthcare benefits;changing demographics andexpectations among the workforce;public health concer

253、ns;and our reputation within the labor market.We also compete with other retailbusinesses for many of our associates in hourly positions,and we invest significant resources in training and motivating them to maintain a highlevel of job satisfaction.These positions often have high turnover rates,whic

254、h can lead to increased training and retention costs,particularly in acompetitive labor market.We have faced and may continue to face additional challenges in recruiting and retaining associates due to wagepressure;flexible scheduling needs;health and safety concerns;and challenges related to a remo

255、te or hybrid working environment forassociates who work in our store support centers.We are also subject to labor union efforts to organize groups of our associates from time totime and,if successful,those organizational efforts may decrease our operational flexibility and efficiency,and/or otherwis

256、e negatively impact ouroperations or reputation.These factors,together with competition among potential employers,have resulted in and may continue to result inincreased salaries,benefits,or other employee-related costs,and/or may impair our ability to recruit and retainFiscal 2023 Form 10-K13Table

257、of Contentsassociates,which could have an adverse impact on our business operations,financial condition and results of operations.In addition,to execute our interconnected retail strategy,including our supply chain investments,we must attract and retain a large number ofskilled professionals,includi

258、ng technology professionals,to implement our ongoing technology and other investments.The market for theseprofessionals is very competitive.An inability to provide wages and/or benefits,including remote or hybrid work flexibility,that are competitivewithin the markets in which we operate could adver

259、sely affect our ability to retain and attract associates.Further,changes in marketcompensation rates may adversely affect our labor costs.Additionally,our ability to successfully execute organizational changes,including management transitions within the Companys seniorleadership,and to effectively m

260、otivate and retain associates is critical to our business success.If we are unable to locate,attract or retainqualified associates,or manage leadership transitions successfully,our ability to effectively manage our strategy may be negatively impacted,the quality of service we provide to our customer

261、s may decrease,and our financial performance may be adversely affected.A failure of a key information technology system or process could adversely affect our business.We rely extensively on information technology systems and related personnel to collect,use,retain,manage,transmit,and protect transac

262、tionsand data.Some of these systems are managed or provided by third-party service providers,including certain cloud platform providers.Inmanaging our business,we also rely heavily on the integrity of,security of,and consistent access to,systems that provide operational andfinancial data and capabil

263、ities related to sales(both in store and online),customer data,supplier data,associate data,job applicant data,partnerdata,demand forecasting,merchandise ordering,inventory replenishment,supply chain management,payment processing,order fulfillment,customer service,and post-purchase matters.For these

264、 information technology systems,applications,and processes to operate effectively,weor our service providers must maintain and update them.Delays in the maintenance,updates,upgrading,or patching of these systems,applications or processes,as well as the actions taken to maintain,update,upgrade and pa

265、tch,could,and on occasion have,impaired theireffectiveness or exposed us to security risks.Our systems and the third-party systems with which we interact,as well as any systems those thirdparties utilize,are subject to and on occasion have experienced damage,interruption,or malicious activity from a

266、 number of causes,includingpower and other critical infrastructure outages;computer and telecommunications failures;computer viruses;data or security breaches;internalor external data theft or misuse;cyber-attacks,including the use of malicious codes,worms,phishing,smishing,vishing,spyware,denial of

267、service attacks,and ransomware;responsive containment measures by us that may involve voluntarily taking systems offline;natural disastersand catastrophic events such as fires,floods,earthquakes,tornadoes,hurricanes,or other extreme weather events;public health concerns,such as pandemics and quarant

268、ines;geopolitical or military conflicts,acts of war,terrorism or civil unrest;other systems outages;inadequate orineffective redundancy;and design or usage errors or malfeasance by our associates,contractors or third-party service providers.In addition,asmore business activities have shifted online,

269、and as many of our store support associates continue to work in a remote or hybrid environment,we face an increased risk due to the potential failure of internal or external information technology infrastructure as well as increasedcybersecurity threats and attempts to breach our security networks.A

270、lthough we and our third-party service providers seek to maintain our respective systems effectively and to successfully address the risk ofcompromise of the integrity,security and consistent operations of these systems,such efforts are not always successful.As a result,we or ourservice providers co

271、uld experience and on some occasions have experienced errors,interruptions,delays or cessations of service in keyportions of our information technology infrastructure,which could significantly disrupt our operations or impair data security;impact our ability tooperate or access communications,financ

272、ial or banking systems;be costly,time-consuming and resource-intensive to remedy;and adverselyimpact our reputation and relationship with our customers,associates,suppliers,shareholders or regulators.We may have to expend significantresources to mitigate the impact of any errors,interruptions,delays

273、 or cessations of service and may have insufficient recourse against serviceproviders who experience such events.In addition,we are currently making,and expect to continue to make,substantial investments in our information technology systems,infrastructure and personnel,in certain cases with the ass

274、istance of strategic partners and other third-party service providers.These investmentsinvolve replacing existing systems,some of which are older,legacy systems that are less flexible and efficient,with successor systems;outsourcing certain technology and business processes to third-party service pr

275、oviders;making changes to existing systems,including themigration of applications to the cloud;maintaining or enhancing legacy systems that are not currently being replaced;designing or cost-effectively acquiring new systems with new functionality;or testing the use and incorporation of artificialFi

276、scal 2023 Form 10-K14Table of Contentsintelligence,including generative artificial intelligence.These efforts could result,and on occasion have resulted,in significant potential risks,including failure of the systems to operate as designed,unexpected impacts on related systems or processes,potential

277、 loss or corruption ofdata,failures in security processes and internal controls,cost overruns,implementation delays or errors,disruption of operations,and thepotential inability to meet business and reporting requirements.Any system implementation and transition difficulty may result in operationalc

278、hallenges,security failures,reputational harm,and increased costs that could adversely affect our business operations,our relationships withour customers,and results of operations.Disruptions in our customer-facing technology systems could impair our interconnected retail strategy and give rise to n

279、egativecustomer experiences.Through our information technology systems,we are able to provide an improved overall shopping and interconnected experience thatempowers our customers to shop and interact with us from a variety of electronic devices and digital platforms at each stage of their shoppingj

280、ourney.We use our digital platforms as sales channels for our products and services,as methods of providing inspiration,and as sources ofproduct,project,and other relevant information to our customers to help drive sales.We also have multiple online communities,digital platforms,and knowledge center

281、s that allow us to inform,assist and interact with our customers.The retail industry is continually evolving and expanding,with a significant increase in sales initiated online and via mobile applications in recent years.We may not be successful at managing thisincreased volume and related delivery

282、options without interruption in the future.Additionally,we must effectively respond to new developmentsand changing customer preferences with respect to a complex,evolving digital and interconnected experience.We continually seek to enhanceall of our online and digital properties to provide a person

283、alized,user-friendly interface for our customers.Disruptions,delays,failures or otherperformance issues with our customer-facing technology systems,either due to increased volume,system modifications,or other factors,or afailure of these systems to meet our or our customers expectations,could impair

284、 the value they provide,adversely impact our sales,andnegatively affect our relationship with our customers.Disruptions in our supply chain and other factors affecting the availability and distribution of our merchandise could adversely impactour business.Disruption within our logistics or supply ch

285、ain network,such as the industry-wide supply chain challenges that resulted from the COVID-19pandemic,have in the past and may in the future adversely affect our ability to receive and deliver inventory in a timely manner,impair our abilityto meet customer demand for products,and result in lost sale

286、s,increased supply chain costs,and/or damage to our reputation.Such disruptionsmay result from damage or destruction to our distribution or fulfillment centers or those of our supply chain service providers;weather-relatedevents;cybersecurity incidents or attacks;natural disasters;international trad

287、e disputes,trade policy changes or restrictions,or import-orexport-related governmental sanctions or restrictions;customs actions,including regulatory enforcement inquiries,holds,detentions,andexclusions;quotas,tariffs or other import-related taxes;strikes,lock-outs,work stoppages or slowdowns;short

288、ages of supply chain labor,including truck drivers;shipping capacity constraints,including shortages of related equipment;raw material or other shortages;third-partycontract disputes or inability to maintain favorable contract terms;supply or shipping interruptions or costs;increased costs or unavai

289、lability offuel;geopolitical or military conflicts or acts of war,as well as any related sanctions or other government or private responses;acts of terrorism;public health issues,including pandemics or quarantines and other related impacts;civil unrest;or other factors beyond our control.In recentye

290、ars,ports in the U.S.and elsewhere have been impacted by capacity constraints,port congestion and delays,periodic labor disputes,securityissues,weather-related events,and natural disasters.As we saw during the heights of the COVID-19 pandemic,these types of disruptions place strain on the domestic a

291、nd international supply chain,which affected and may in the future negatively affect the flow or availability of certain products.Even when we are able to find alternate sourcesfor certain products,they may cost more or require us to incur higher transportation costs,which could adversely impact our

292、 profitability andfinancial condition.Increased demand for online purchases of products,which we experienced during the COVID-19 pandemic,can impact ourfulfillment operations,as well as those of our third-party carriers,resulting in delays in delivering products to customers and increases in our out

293、-of-stock levels.We and our suppliers have experienced,and may continue to experience,labor shortages at some of our distribution and fulfillment centers bothdue to unexpected events such as the COVID-19 pandemic and to the competitive labor market.Such labor shortages,whether temporary orsustained,

294、may adversely impact the flow or availability of products to our stores and customers.Fiscal 2023 Form 10-K15Table of ContentsAny of these circumstances could impair our ability to meet customer demand for products and result in lost sales,increased supply chain costs,or damage to our reputation,any

295、 of which could negatively impact our business performance or financial condition.Failure to maintain a safe and secure store environment may adversely impact sales,costs,the customer and associate experience,orour brand and reputation.Our customers and associates expect a safe store environment in

296、which to shop and work,and maintaining that environment helps protectagainst loss or theft of our inventory(also called“shrink”).Like other retailers,we have seen an increase in shrink in recent years,particularly asa result of organized retail crime.While we have a number of initiatives underway to

297、 address shrink,minimize theft,and maintain safety in andaround our stores,these efforts require operational changes that may increase costs and reduce margins,and they may negatively impact thecustomer experience.Furthermore,an unsafe environment or negative incidents in or around our stores may er

298、ode trust and confidence withcustomers,associates,or potential associates,which can adversely impact sales,associate morale and retention,and our brand and reputation.If our efforts to maintain the privacy and security of customer,associate,job applicant,business partner,and Company informationare n

299、ot successful,we could incur substantial costs and reputational damage and could become subject to litigation and enforcementactions.Our business,like that of most retailers,involves the collection,use,retention,management,transmission,and deletion of personal information(including identifiers,local

300、ization,internet activity,preferences,and payment information)from our customers,associates,job applicants,andbusiness partners,as well as confidential Company information.We also work with third-party service providers that provide technology,systemsand services that we use in connection with the h

301、andling of information.Our information systems,and those of our third-party service providers,are vulnerable to continually evolving data protection and cybersecurity risks.Unauthorized parties have in the past gained access,and willcontinue to attempt to gain access,to these systems and data throug

302、h fraud or other means of deceiving or coercing our associates or third-party service providers,which could jeopardize the confidentiality,integrity,or availability of such information systems or our information.Hardware,software or applications we develop or obtain from third parties may contain ex

303、ploitable vulnerabilities,bugs,or defects in design,maintenance or manufacture or other problems that could unexpectedly compromise information security.We have experienced and continue toface the ongoing risk of exploitation of our software providers and our software development and implementation

304、process,including from codingand process vulnerabilities and the installation of so-called back doors that provide unauthorized access to systems and data.The increased useof a remote workforce has also expanded the possible attack surface areas.In addition,the risk of cyber-attacks has increased in

305、 connectionwith geopolitical conflicts and ongoing trade and diplomatic tensions.In light of the conflicts in Europe and the Middle East and other geopoliticalevents,nation-state actors or their supporters may launch retaliatory cyber-attacks,and may attempt to cause supply chain and other third-par

306、tyservice provider disruptions,or take other geopolitically-motivated retaliatory actions that may disrupt our business operations,result in datacompromise,or both.Nation-state actors have in the past carried out,and may in the future carry out,cyber-attacks to achieve their aims andgoals,which may

307、include espionage,monetary gain,disruption,and destruction.To achieve their objectives,nation-state actors and other cybercriminals have used and may continue to use numerous attack vectors and methods,including use of stolen passwords,social engineering,phishing,smishing,vishing,identity spoofing,r

308、ansomware or other disruptive and destructive malware,supply chain compromises,and man-in-the-middle and denial of service attacks.The methods used to obtain unauthorized access,disable or degrade service,or sabotage systems areconstantly changing and evolving,increasing in frequency and sophisticat

309、ion,and may be difficult to anticipate or detect for long periods of time.The ever-evolving cybersecurity threat landscape means that we and our third-party service providers and business partners must continuallyevaluate and adapt our respective systems and processes and overall security environmen

310、t,as well as those of companies we or they acquire.There is no guarantee that the measures we take will be adequate to safeguard against all threats,including vulnerabilities,data securitybreaches,system compromises or misuses of data.As we have experienced in the past,any significant compromise or

311、breach of our datasecurity,whether external or internal,or misuse of customer,associate,job applicant,business partner,or Company data,could result insignificant costs,including costs to investigate and remediate,as well as lost sales,fines,lawsuits,regulatory investigations,and damage to ourreputat

312、ion.Because the techniques used to obtain unauthorized access,disable or degrade service,or sabotage systems change frequently andmay not immediately produce signs of anomalous activity or compromise,we may be unable to anticipate these techniques or to implementadequate preventative measures.Additi

313、onally,as we have experienced in the past,we or our third-party service providers may not discover anysecurity breach,vulnerability or compromise of information for a significant period of time after the occurrence of a security incident.Furthermore,our cyber insurance coverage may not beFiscal 2023

314、 Form 10-K16Table of Contentsadequate for liabilities or costs actually incurred,and we cannot be certain that insurance will continue to be available to us on economicallyreasonable terms,or at all,or that any insurer will not deny coverage of a future claim.Data governance failures can also advers

315、ely affect our reputation and business.Our business depends on our customers,associates,jobapplicants and business partners willingness to entrust us with their personal information.Events that adversely affect that trust,includinginadequate disclosure to our customers,associates,job applicants,or b

316、usiness partners of our uses of their information or failing to keep ourinformation technology systems and our customers,associates,job applicants and business partners personal information secure fromsignificant attack,theft,damage,loss or unauthorized disclosure or access,whether as a result of ou

317、r action or inaction(including human erroror malfeasance)or that of our service providers or other third parties,could adversely affect our brand and harm our reputation.The regulatory environment related to data privacy and cybersecurity is constantly changing,with new and increasingly rigorous req

318、uirementsapplicable to our business.The implementation of these requirements has also become more complex.Maintaining our adherence to evolvingdata privacy and cybersecurity regulatory requirements,including state privacy laws,requires significant effort and cost,requires changes to ourbusiness prac

319、tices,and may limit our ability to collect and use certain data to support the customer experience.In addition,many regulatorshave indicated an intention to take more aggressive enforcement actions regarding data privacy and cybersecurity matters,and private litigationresulting from such matters is

320、increasing and resulting in progressively larger judgments and settlements.Failure to comply with applicablerequirements could subject us to fines,sanctions,governmental investigations,or lawsuits,which could lead to negative publicity andreputational harm,and may cause customers to lose confidence

321、in the effectiveness of our cybersecurity measures,data privacy practices,orour business more generally.We are subject to payment-related risks that could increase our operating costs,expose us to fraud or theft,subject us to potentialliability,and potentially disrupt our business.We accept payments

322、 using a variety of methods,including credit and debit cards,our private label credit cards,cash,electronic payments,checks,digital wallets,loan programs including installment loans,trade credit,and gift cards,and we may offer new payment options over time.Acceptance of these payment options subject

323、s us to rules,regulations,contractual obligations and compliance requirements,including paymentnetwork rules and operating guidelines,data security standards and certification requirements,and rules governing electronic funds transfers.These requirements may change over time or be reinterpreted,maki

324、ng compliance more difficult,costly,or uncertain.For certain paymentmethods,including credit and debit cards,we pay interchange fees and other costs to accept these payments,and we may also incur losses,allof which may increase over time and raise our operating costs.We rely on third parties to prov

325、ide payment processing services,including theprocessing of credit cards,debit cards,and other forms of electronic payment.If these companies become unable to provide these services tous,or if their systems are compromised,it could potentially disrupt our business.The payment methods that we offer,an

326、d the selling channels inwhich we operate,also subject us to potential fraud and theft by threat actors,who are becoming increasingly more sophisticated,seeking toobtain unauthorized access to or exploit weaknesses that may exist in our sales,payments and payment processing systems.If we fail tocomp

327、ly with applicable rules or requirements for the payment methods we accept,or if payment-related data is compromised due to a breach ormisuse of data,we may be liable for costs incurred by payment card issuing banks and other third parties or we may be subject to fines andhigher transaction fees,or

328、our ability to accept or facilitate certain types of payments may be impaired.We anticipate expanding our trade creditas we grow our capabilities to support Pro complex purchase needs.If we fail to offer attractive terms or services,or employ underwriting criteriathat are not competitive,our ability

329、 to grow our sales to these Pros may be adversely impacted.If trade credit continues to grow and our Pros areunable to make their payments,we may experience an increase in our losses.In addition,our customers could lose confidence in certainpayment types,or may expect or demand payment methods that

330、we do not currently offer,which could result in competitive disadvantages orrequire a shift to other payment types or potential changes to our payment systems that may result in higher costs.As a result,our business andoperating results could be adversely affected.Our business is subject to seasonal

331、 influences,and uncharacteristic or significant weather conditions,climate change,naturaldisasters,as well as other catastrophic events,could impact our operations.Natural disasters,such as hurricanes,tropical storms,fires,floods,droughts or water scarcity,tornadoes,and earthquakes;unseasonable,unex

332、pected or extreme weather conditions,whether as a result of climate change or otherwise;acts of terrorism or violence,including activeshooter situations;public health concerns,such as pandemics and quarantines and related impacts;civil unrest;geopolitical or military conflictsor acts of war,as wellF

333、iscal 2023 Form 10-K17Table of Contentsas any related sanctions or other government or private responses;or similar disruptions and catastrophic events could have and have onoccasion had an adverse effect on our operations or financial performance in a number of ways.These types of events can affect consumerspending and confidence and consumers disposable income,particularly with respect to home i