Merchandising cost of sales, including • Merchandise costs • Payment term cash discounts • Tariffs/duties • Other import costs • Freight expenses associated with moving merchandise from our vendors to and between our distribution centers and our retail stores • Vendor income that is not reimbursement of specific, incremental, and identifiable costs • Markdowns • Inventory shrink
Supply chain and digital fulfillment costs, including • Compensation and benefits costs associated with operating our supply chain facilities • Outbound shipping expenses associated with sales to our guests • Compensation and benefit costs associated with shipment of merchandise from stores • Depreciation associated with supply chain facilities
| Compensation and benefit costs for stores and headquarters, except ship from store costs classified as cost of sales Occupancy and operating costs of retail and headquarters facilities Advertising, offset by vendor income that is a reimbursement of specific, incremental, and identifiable costs Pre-opening and exit costs of stores and other facilities Credit cards servicing expenses Costs associated with accepting third-party bank issued payment cards Litigation and defense costs and related insurance recoveries Other administrative costs |