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INCOME TAXES
 12 Months Ended
Aug. 01, 2026
Income Tax Disclosure [Abstract]  
INCOME TAXES
NOTE 14—INCOME TAXES

Income Tax Expense (Benefit)

The domestic and foreign components of income (loss) before income taxes were as follows:
(in millions)202620252024
U.S. operations$90 $(163)$(145)
Foreign operations12 9 8 
Total$102 $(154)$(137)

The income tax expense (benefit) was allocated as follows:
(in millions)202620252024
Income tax expense (benefit)
$18 $(39)$(27)
Other comprehensive income (loss)2 2 (6)
Total$20 $(37)$(33)

Total income tax expense (benefit) consisted of the following:
(in millions)202620252024
Current:
U.S. Federal$(14)$11 $15 
State and Local2 3 5 
Foreign3 3 2 
Total current
(9)17 22 
Deferred:
U.S. Federal17 (42)(41)
State and Local10 (14)(8)
Foreign— — — 
Total deferred
27 (56)(49)
Total
$18 $(39)$(27)

As a result of the adoption of ASU 2023-09, certain items in the effective tax rate reconciliation have been reclassified between categories to conform with current period presentation. These reclassifications did not have a material impact on any individual line items or the overall effective income tax rate. The reconciliation of the provision for income taxes at the U.S. federal income tax rate to the Company’s income tax provision for the fiscal years 2026, 2025 and 2024 is as follows:
202620252024
(in millions, except percentages)AmountPercentAmountPercentAmountPercent
U.S. federal statutory income tax rate$22 21.0 %$(32)21.0 %$(29)21.0 %
State and local income tax, net of federal income tax effect(1)
10 9.9 (8)4.9 (4)2.9 
Tax credits(2)
(10)(9.3)(4)2.5 (4)2.5 
Changes in valuation allowances— — 5 (3.4)2 (1.9)
Nontaxable or nondeductible items:
Compensation related items(3)
(3)(2.6)2 (1.8)5 (3.3)
Changes in unrecognized tax benefits(6)(6.3)— — — — 
Other adjustments(4)
5 4.9 (2)2.1 3 (1.5)
Effective income tax rate$18 17.6 %$(39)25.3 %$(27)19.7 %
(1)For fiscal 2026, state taxes in Virginia, California, and Pennsylvania contributed to the majority (greater than 50%) of the tax effect in this category. For fiscal 2025, state taxes in California, Maryland and Minnesota contributed to the majority (greater than 50%) of the tax effect in this category. For fiscal 2024, state taxes in California and Minnesota contributed to the majority (greater than 50%) of the tax effect in this category.
(2)Reflects all tax credits reportable as general business credits and includes investment, research and development, and employment tax credits.
(3)This category includes the impact of share-based compensation as well as other nontaxable and nondeductible compensation items.
(4)Foreign tax effects on the effective rate are included in Other adjustments due to immateriality for all periods presented and relate to Canada.

Cash Payments (Refunds) for Income Taxes, Net

Total cash payments, net of refunds received, for income taxes consisted of the following:
(in millions)202620252024
U.S. Federal$— $— $(1)
State and Local:
California2 *(2)
Illinois*1 (9)
Maryland(1)**
Minnesota1 (4)*
New York*1 *
Pennsylvania*1 (3)
Virginia— *(1)
Other state and local (1)
3 1 1 
Foreign (2)
2 4 1 
Total$7 $4 $(14)
*The amount of income taxes paid during the year does not meet the 5% disaggregation threshold.
(1)For fiscal 2026, income taxes paid to Virginia meet the 5% disaggregation threshold but are included in Other state and local taxes due to rounding. For fiscal 2025, income taxes paid to the following jurisdictions meet the 5% disaggregation threshold but are included in Other state and local taxes due to rounding: Florida, Missouri, New Hampshire, New Jersey, New York City, and Texas.
(2)Foreign cash taxes relate to Canada for all periods presented.

Uncertain Tax Positions

A reconciliation of the beginning and ending amount of gross unrecognized tax benefits is as follows:
(in millions)202620252024
Unrecognized tax benefits at beginning of period$8 $7 $11 
Unrecognized tax benefits added during the period— 2 1 
Decreases in unrecognized tax benefits due to statute expiration(1)— (3)
Decreases in unrecognized tax benefits from a prior period(5)— — 
Decreases in unrecognized tax benefits due to settlements — (1)(2)
Unrecognized tax benefits at end of period$2 $8 $7 

In addition, the Company has nothing paid on deposit to any governmental agencies to cover the above liability. The Company recognizes interest and penalties related to unrecognized tax benefits in income tax expense. For fiscal 2026, 2025 and 2024, total accrued interest and penalties was $1 million, $2 million and $2 million, respectively.

The Company is currently under examination in several taxing jurisdictions and remains subject to examination until the statute of limitations expires for the respective taxing jurisdiction or an agreement is reached between the taxing jurisdiction and the Company. As of August 1, 2026, the Company is no longer subject to comprehensive federal income tax examinations for fiscal years before 2021 and in most states is no longer subject to state income tax examinations for fiscal years before 2021.
Deferred Tax Assets and Liabilities

The tax effects of temporary differences that give rise to significant portions of the net deferred tax assets and deferred tax liabilities at August 1, 2026 and August 2, 2025 are presented below:
(in millions)August 1,
2026		August 2,
2025
Deferred tax assets:
Compensation and benefits related$28 $33 
Accounts receivable, principally due to allowances for uncollectible accounts9 9 
Accrued expenses26 39 
Capitalized research and development47 56 
Net operating loss carryforwards18 18 
Other tax carryforwards123 107 
Foreign tax credits1 1 
Intangible assets28 37 
Lease liabilities387 414 
Interest rate swap agreements— 1 
Other deferred tax assets7 3 
Total gross deferred tax assets674 718 
Less valuation allowance(20)(17)
Net deferred tax assets$654 $701 
Deferred tax liabilities:
Plant and equipment, principally due to differences in depreciation$119 $126 
Inventories22 25 
Lease right of use assets353 388 
Interest rate swap agreements2 — 
Total deferred tax liabilities496 539 
Net deferred tax assets$158 $162 

Tax Credits and Valuation Allowances

At August 1, 2026, the Company had gross deferred tax assets of approximately $674 million. The Company regularly reviews its deferred tax assets for recoverability to evaluate whether it is more likely than not that they will be realized. In making this evaluation, the Company considers the statutory recovery periods for the assets, along with available sources of future taxable income, including reversals of existing taxable temporary differences, tax planning strategies, history of taxable income, and projections of future income. The Company gives more significance to objectively verifiable evidence, such as the existence of deferred tax liabilities that are forecast to generate taxable income within the relevant carryover periods, and a history of earnings. A valuation allowance is provided when the Company concludes, based on all available evidence, that it is more likely than not that the deferred tax assets will not be realized during the applicable recovery period. The Company has reviewed these factors in evaluating the recoverability of its deferred tax assets. As of August 1, 2026, the Company anticipates sufficient future taxable income to realize all of its deferred tax assets within the applicable recovery periods with the exception of certain foreign tax credits, charitable contribution carryovers and state net operating losses. Accordingly, the Company has established valuation allowances against that portion of its charitable contribution carryovers, state net operating losses and foreign tax credits that, in the Company’s judgment, are not likely to be realized within the applicable recovery periods.

At August 1, 2026, the Company had gross disallowed charitable contribution carryforwards of approximately $97 million that are available for carryforward over five years. As of August 1, 2026, the Company anticipates sufficient future taxable income to utilize $58 million of these gross charitable contribution carryovers within the applicable five-year carryforward periods. The Company has established a valuation allowance against the gross $39 million of charitable contribution carryovers that, in the Company’s judgment, are not likely to be realized within the applicable recovery period.
The retained earnings of the Company’s non-U.S. subsidiary were subject to deemed U.S. repatriation and taxation during fiscal 2017 pursuant to the Tax Cuts and Jobs Act, and existing foreign tax credits were utilized to offset the resulting liability. We have established a deferred tax asset for the remaining U.S. foreign tax credits of $1 million. Such credits are offset by a valuation allowance.