“In terms of GAAP EPS, our updated range is about a $1 higher, from $8 to $10, due to gains we recognize from the litigation settlements.”

Why this grade

Management had guided GAAP EPS to run about $1.00 above adjusted EPS due to litigation settlement gains. By the November call, that premium was revised down to about $0.70, as business transformation costs partially offset the settlement benefit, before the year closed.

Deviation basis: percent change in the guided GAAP-to-adjusted EPS spread ($1.00 to $0.70)

In context

“nd some additional costs to adjust inventory and receipts with continued benefits from lower shrink and productivity gains. In the back half of the year, we will be lapping easier comparisons from 2024 and expect to have inventory and receipt adjustment costs behind us. For the full year, we believe it's prudent to plan for a low single-digit decline in our sales, in line with our first quarter performance. Based on these lower expected sales, we anticipate downward pressure on profitability with meaningful offsets from lower shrink and cost initiatives. Altogether, we've updated our adjusted EPS guidance to an expected range of about $7 to $9 for the full year. This wider range reflects the expected impact of tariffs and heightened uncertainty regarding the economy and consumer spending. In terms of GAAP EPS, our updated range is about a $1 higher, from $8 to $10, due to gains we recognize from the litigation settlements. Importantly, our updated full-year adjusted EPS range includes a number of near-term costs that we don't expect to repeat in future years, including actions in response to tariff announcements and inventory and receipt adjustment costs on softer than expected sales. The expected impact of these headwinds is similar in magnitude to the offsetting GAAP EPS benefit from the litigation settlements. As such, we believe this year's expected GAAP EPS range is a better reflection of the ongoing profitability of our business. In the near term, given the challenges we're facing, we're managing the business with two overarching priorities for the year. The first is to ensure that we deliver solid performance in 2025, with shrink and productivity improvements offsetting the impact of softer than expe”