Changes in Laws and Regulations
In fiscal 2025, the United States enacted significant changes to its trade policy and imposed substantial tariffs on imported goods from most countries. In February 2026, the U.S. Supreme Court invalidated tariffs imposed under the International Emergency Economic Powers Act (“IEEPA”), and subsequently, tariffs were imposed on a temporary basis pursuant to alternative statutory authority. These tariffs expired in July 2026 and were subsequently replaced by new tariffs under Section 301 of the Trade Act of 1974.
In April 2026, the U.S. Customs and Border Protection launched a platform for importers of record to submit claims for IEEPA tariff refunds that were previously collected. During the second quarter of fiscal 2026, we submitted eligible IEEPA tariff refund claims of approximately $512 million and recognized a corresponding reduction to cost of goods sold and occupancy expenses on the Condensed Consolidated Statements of Operations for the 13 and 26 weeks ended August 1, 2026. This was partially offset by our commitment of appreciation for certain vendors of approximately $95 million, which was recorded within current liabilities on the Condensed Consolidated Balance Sheets. As of August 1, 2026, we received tariff refunds of approximately $95 million with the remaining $417 million recorded within other current assets on the Condensed Consolidated Balance Sheets. Additionally, we received approximately $5 million of related interest on the refund amounts.
As there continues to be ongoing legal and regulatory developments to trade policy and tariffs, we will continue to consider the impact of these developments on the assumptions and estimates used when preparing our quarterly financial statements.