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Lowe`s Cos. (LOW)

Participants
Robert Niblock Chairman, President and CEO
Rick Damron COO
Marshall Croom CFO
Richard Maltsbarger Chief Development Officer and President, International
Mike McDermott Chief Customer Officer
Peter Benedict Robert Baird
David Bellinger Oppenheimer
Kate McShane Citi
Christopher Horvers JPMorgan
Andrew Minora Gordon Haskett
Michael Lasser UBS
Simeon Gutman Morgan Stanley
Eric Bosshard Cleveland Research
David Schick Consumer Edge Research
Call transcript
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Operator

Good morning, everyone, and welcome to Lowe’s Companies Third Quarter 2017 Earnings Conference Call. This call is being recorded. [Operator Instructions] Also, supplemental reference slides are available on Lowe’s Investor Relations website within the investor packet.

While management will not be speaking directly to the slides, these slides are meant to facilitate your review of the company’s results and to be used as a reference document to the following call.

During this call, management will be using certain non-GAAP financial measures. include most these measures. directly slides reconciliation and reference the to comparable supplemental information measures about a The GAAP financial made Litigation will in call during statements Statements defined as include the Act Reform forward-looking Securities of XXXX. Private this those correct. reflected and can assurance and no subject will they company are in expectations to statements Management’s prove give that opinions risks, the to be with the are earnings release filings described its Commission. Exchange in company’s the risks and Those in Securities and be will Mr. conference today’s Hosting Executive Officer; Chief Niblock, and Robert Chairman, Mr. President, Chief Damron, and Rick Operating Mr. Officer; Financial Croom, Marshall Officer. Chief

President-International; Joining the Mr. during Officer. the Richard Mr. go Maltsbarger, Q&A turn Mr. sir. opening session over program will Chief be Development Mike for Officer and now Please Niblock Customer Chief McDermott, to I will remarks. and ahead,

Robert Niblock

in interest Lowe’s. your for thanks and morning, Good

tested largest we've the our This they natural extremely of were quarter, mounted, ever the the teams response met proud way I'm and disaster challenge. by

Our and merchant, customers storm right ensure and the products worked their to seamlessly repair teams together vendor, logistics to homes. protect had

communities, natural employees work and closely support non-profit for our I'd Following to over by relief running disaster support the quickly, long-term committing chance team the in in a of giving and to X,XXX to to areas. moment generously employees teams, colleagues numerous our provided additional through stores cash over continue customers focus serve and their own impacted with support, efforts in a million support remarkable need financial like face worked get efforts. to volunteered our to their their Lowe's time providing storms, employees recovery And customers tirelessly to employee $X.X and immediate the impacted of up relief serve donations. to provide hurricanes product their disasters. our partners on their help to to and both and thank operations on has also take we

in X.X% growth. to driven and comp Hurricane-related of contributed Turning points delivered We comparable growth of sales X.X%. a now to by comp transaction our growth third increase X.X%, sales average basis quarter results. XXX ticket

Our regions in demand, categories. U.S. and and Appliances and growth and comps, product plumbing X.X%, offering, prep comps, comp also Pro by positive and comps with product led electrical. rough above-average building all category cleanup supported in materials our all improvement inflation. driven Lumber hurricane was with posted best-in-class we home comps by double-digit achieved double-digit and omni-channel

offerings pleased customer, are service comps progress we've to product We delivering quarter made above the for enhance pro average. with company our another of the and the

Supply about track, Maintenance to Wholesalers services and acquisitions products the be on serve and further provide expand continue Headquarters Central Our and remains industry. our integration to housing we excited of opportunities multi-family these to

through to During customer whenever, intended wherever our and seeing we experience however to the they omni-channel growth. assets, also at customer critical response quarter, our comp positive online to customers us. meet We're advanced engage XX% with capabilities omni-channel evolving every driving the choose moment,

branded RONA business believe e-commerce momentum our drive our with and to a in made of rollout RONA, the consistent offer comps are of In for including our Lowe's Mexico continued with we comp purpose, in in engaged of fact, Magazine and do. Canada to progress the the well-positioned We're store engage distinction by at as highlights most Internationally, excited converting of in big-box high the everything continuing growth local recognized the and single-digit top performance, XX continue put of success store currency. customer strong and to customers experiences with Forbes were companies. double-digit we we We second with Canada. integration appliances, one center commitment further we platform. delivered our recently the growth This a

sales drive improving to We in investing on growth. our key to while capabilities focus profitability continue

of $X.XX, on share excess For adjusted and earnings dividends. the commitment with to our quarter, expectation. earnings our increase cash line share to a we over stock of under $XXX in in $XXX in our program last paid diluted repurchase shareholders, Delivering million and year's XX.X% quarter, repurchased per we million return per diluted drove the

improvement power to we appreciation housing as spending. engage continue projects, Turning economic price remains repair believe see a bright remain discretionary to encouraging gains spot. and industry incomes. demand credit we expected to income is job revolving is supply, stronger consumers, to continue this ongoing that And growth, and the to favorable by Household will improvement as with in outpaces encouraging, homeowners maintenance poised spending. formation year solid supporting in landscape. should supplement The home to and consumer survey also home Housing continue to see addition We trends. usage spending generated

quarter Sentiment view Survey an third highlighted Our national that increasingly personal to situation positive favorably. have of the continue financial economy view Consumer consumers their and

mission of remains provided a strong. half efforts over discretionary were strategic to We associate fully our further further employees We customer a store work. which deliver their for We Once to challenging thank marketing Lowe's. benefits before we moment an like anticipate and committed in will results. delivered, and leverage our again, third profitability, homeowners communities balancing to believe optimized are I with to take by strategy our to leadership the faced our capabilities live team traffic him and The improved strength strong and turn customers purpose-driven strong in upon on by foundation over for and communities. improvement home to serving developing support contributions to projects finally, continued serve our that our thank circumstances for pleased call commitment innumerable to and quarter, Rick, management omni-channel discipline the customers' to I on which unwavering Given integrated and trends optimization to to Lowe's. provides execution, traffic price they our experience. Reflecting want their making in growth, needs and improve to values the demonstrating optimizing by we would increasing, while and model, And new capitalize in accountability investments promotional engage build with customer-facing our messaging investments and look better operating their I core improve our remain our productivity driven hours quarter home evolving intent experience. to this his

aspect has morning as Rick will Officer will and As company, currently Officer. upon the Chief February. relationship, will of with our be as you announced understanding transition best all been and implementation retirement. our worked with know, over and Richard of last the retirement we great Chief across retiring Development the leader strategy. that development to in and succeed International, I and Richard and operations and our positively his the President, would instrumental a keen Lowe's working business expect this five XX to his wish in Rick in And Richard Rick I that, employees. has a with Rick. proven impacting Rick is serves after be our Operating our We call him years industry. of who have turn customers seamless. has He every Maltsbarger, a the like

Rick Damron

experience I and the forward the career. ensure customer few new the company's with management work working propel Thanks, organization that our Richard Lowe's you team I'm Richard confident growth my will I'm to beside Lowe's stepping transition and stages retirement. look thrilled months Robert. honor of this he been a It's will through from to next that role, will be of be closely my and levels sidelines to and further cheering seamless into success. to the various an operations over and of and on incredible

comp, appliance we continued in in leveraging product experience, online regions messaging achieving a homes. During online. comps desire on to backdrop positive invest investment comps increased in with their in-store quarter, We the comp quarters, omni-channel customer in-store delivered customers' traffic seven capitalizing double-digit drove and our drove and experiences, and appliances, our and We all in macroeconomic supportive best X.X% a both and compelling posting in categories. integrated all

our that one same brands; our Vendor selection repairs service or relationships Year. proudly Our and with best-in-class as delivery and Whirlpool Partners we partners strategic strong the leading of of of our facilitation as XXXX advantages away; of and and of haul and announced such maintenance; next-day

We and and hurricane-related demand strong materials Lumber comps prepared DIY materials properties drove insulation. customers above-average and work plumbing hurricanes pressure-treated building and in to inflation Pro they demand, in And areas, to plywood, Irma truckloads products growth, of comps our double-digit and their electrical. fencing, building and achieved impacted Pro XX,XXX as storms for lumber singles, as and both benefited repair supporting also afterwards. and and over lumber, the from robust for drywall Harvey sent teams

cleanup; first, Florida and Account causes experienced Pro impact third, Irma. and the ProServices, have added made quarter, customer, preparation the For of storms recovery actually third replaced. and damaged incremental to we distinct storm; when Texas four to In are the most demand. in Executive storm initial Harvey damage; and AEPs, impact and second, some also repairs from the preparation, when or phases; advance fourth, the support Hurricanes we cleanup items Historically, markets are

We expect hurricane recovery quarter fourth extend the into and in XXXX. to begin

of pro will more magnitude the and water the the Irma surpass and wind of period for of event event, more that was was a Houston that Harvey we recovery our that expect destination of and Given benefit a drive and sales Florida. quarter as above-average in is category. plumbing of capture evidence Rough revolving portfolio the electrical of this to brand performance the continued power comps brands

driven continues Our serve optimize customer. well the the as macro comps backdrop efforts to and thrive our average, to offering by better above continued service with company to as favorable our product pro business a pro

to enhanced growth multi-family customer. for pro all lowesforpros.com our Pro In of management Wholesalers we're of team. with Save Supply across platform channels including our the throughout Ways while with addition with to across our X categories to brands, to with relationship our expanding through Maintenance important offerings customers service as our proposition, value capabilities and this Headquarters ProServices the expands connect the our well capabilities strengthening addition strong serve further The product and with our seamlessly and future our outstanding also advancing country portfolio property growing as customer Central

this In early with with efforts. catalogue to out the new And and an are MSH improve we'll a fact, of and working our product pleased expanded professional, central are from terms integration with we the prices. maintenance, build which spring. suppliers the teams operations offering we're best roll and leveraging results to repair practices The

customer including in serving our to areas. teams the hurricane-impacted managers multi-family ProServices collaborating property Finally, needs, are serve

awareness pro to wallet existing while customers. pro pro of pros as build targeted also of to well share continue marketing base grow We expanding our our with as with exclusive offers

inspiration, for manage leveraging strategic expert for continue capabilities specialists our projects. engage results. on Customers home project great We who our achieve design, our homes with support; advice, them and centers omni-channel on customers in-store contact our execute our work their and project priorities, content help to lowes.com to improvement for can associate’s including to plan in with our their ongoing

reviews; lowes.com, store are deliver leveraging assortments XX%. up product in functionality growth algorithms; fulfillment expanded an online to including earned video for and Along store of buy content and our online from mobile and our with options content. flexible informed in comp We with combined providing pick refined online marketing, shopping our our by touch deliver investments upgraded an product and enhanced experience; of effort recommendations; digital buy and improved views, drive enhanced online, optimized screen digital devices to display optimized experience search

to inventory to We visibility experience. advance our and more will such as platform, order the status continue adding functionality improve online customer

We're strategy project needs a a engage making bit capability for project for project markets loyalty Our We're by exterior we're more expanding interior serving process online our also our services working Lowes.com, projects. in and DIFM XXXX for and efficiency another to with experiences. allowing expected other platform. this more and throughout category centralize it categories brand their the quotes, and all omni-channel be even of remainder request customers for the important and customer and our help MyLowes out consistent to driving in-home We're greater to are U.S. the customer providing to our element of XXXX. on easier rolling through flooring capability in capturing for differentiated QX specialists specialists navigating year, and who with installation in the demand

we after X.X we've off customer allows simplified receive offered offering QX. benefits and parcel We've seen great MyLowes free customers with recognition through day. XX% military members. also every seen personnel Our since for MyLowes purchases exclusively MyLowes. increase response program memberships in those and shipping duty register expanded new registering spend to their for million We're veterans their by the And XX% active

productivity driving was hours of store This which model, in leverage the oversight points the leadership primarily on to new our streamlines profitability continue in drove leverage We focus and better to store result of and and XX quarter. basis provide payroll accountability. management

our resources call, this our As provide to we're areas resources to quarter worked optimize an second we ensure to associate hours more to to excellent on associates. the need are continue quarter increase utilized necessary greater of delivering we and trends will traffic experience, all in discussed allocation through customer hours improve and to incremental order the on fully and ensure to and training continue We conversion. capitalize began the strong our labor in traffic quarter adding

drive procurement. We spend, also scale indirect efficiencies made our leveraging progress in to centralizing in

to end We XX% at XXXX. spend the have now indirect centralized of XX% compared of

for to even options customers. streamline supply productivity we Our fulfillment is chain opportunities area, offering improve costs as another focus

are shipments of efficiency centers the drive significantly reducing to and optimize flow allowing inventory, and both For of stores, other working freight distribution arriving for at domestic labor freight the number in consolidate areas. and to us import we example, our to greater trucks reinvest

appliance the We'll our continue assets the integrated capitalizing holiday omni-channel decor on we holiday experience, solutions ideas online assortments. as are cohesive look including leverage and highlight across Cyber to and well compelling unique our we'll in-store as gift our create and enthusiastic experiences, the and forward of holiday of events. providing nostalgia fourth As and all we season Friday decorating about Black to offerings, for quarter, our and project plans Monday our an exciting expertise best-in-class kitchen to

online We introduction XXXX. and to the of second in are half announce the Products in-store Craftsman of excited

product to Pro ability offering allowing partnership brands Black of across Stanley are our committed DIY DIY Decker home customers for & project. the our Pro bring products of to on and customer home We a both even product to selection value-oriented improvement offerings strengthens will omni-channel experience, greater the wide categories. some and expectations access next and and innovative customers trust, Lowe's deliver into most between shopping many high-quality, improvement Craftsman The

you Lowe's, be are forward XXXX. and We Craftsman's now brand the channel with I the to proud in sharing over call additional will Thank home for choice you to the to center turn look for your information in in and the partner Marshall. of interest

Marshall Croom

ticket approximately stores growth billion, ticket shift basis X.X% XX acquisitions it by The comp average million X.X% and X.X% third supported total on quarter in Rick, basis increased for but growth the of MSH sales, to Thanks, Central XXrd growth the growth quarter by Sales Comp and quarter, decrease XXXX customer total points. week points. basis of good third to XX The driven were X.X%. in fiscal sales contributed and an impact X.X% calendar did $XX X.X%, increase or sales of transaction and morning, no from had transaction everyone. the by of $XX.X while points $XX.XX. total contributed growth new average XX of the of

X.X% Looking indicated, drove And messaging strategic in capitalizing in-store August, and optimized and we continued September October. in in desire omni-channel as homes. our at on online in invest integrated experiences, monthly X.X% with to Rick trends, X.X% comps their in customers' investments traffic and were

the sales the rate of both margin And third third also grown teams mix as estimate Harvey comp that generated decrease quarter this basis have impacted market of responded to share the in Our sales, a Gross quarter impacted a by margins of been gross basis perspective. positively for our points we've year. XX.XX% XX demand appliances, and the XXX from last storms points. quarter, approximately we and by was and hurricanes Irma from

quarter to points non-cash from well a leverage benefits of sales, year's to the improvement basis new we the amortization points actions, was basis rate partially XXX the third XXX and rate $X.XX optimization last of the supplemental third charges per quarter summary was non-cash accounted to take over in $XXX were XX our for Additionally, the In Operating The points. $X.XX. which competitive X.XX% million, points. basis million, in by a Please The leverage, those million year tax And last quarter leadership in operating for a The points. for impact for for capital year XX long-term the SG&A income. $XXX compared And lastly, value XX.X% reported drove year. prior of of year's XX basis of results Depreciation mix charges. points is was from was points which hurricane-related in store The venture of which was our was higher quarter early in XXX increase the for main which basis basis of demand. result primarily last the earnings increased we share by leveraged as earnings of leveraged which as of offset the there with sales. third leveraged expectation. fiscal effective payroll which continue XX.X% from this non-cash XX income XX.X% was charges, the quarter line efforts. XX.XX% pricing a of our points expense basis remaining of $XXX per slides Page XXX loss. driver X leverage for joint share model. refer for driven the quarter, basis Interest XXXX. This was was charge, quarter, adjusted to increase

balance acquisitions attributable X.XX, Now quarter also XX.X% an to increased quarter five $XX.X the Cash $XXX Inventory the the investments turning sheet. tools year. categories by the and MSH as third quarter the and the investments of key $X.X last in at at of such This as addition versus cash driven to billion across end is of over billion well points is primarily or increase Part third as was year. appliances Inventory was equivalents Central. the million. basis the and and categories. of Pro of turnover increase last

X.XX. $X.X $X.X timing At the represented Asset terms XX.X%. improvement. purchases debt and turnover points third increased of billion was payable to of year invested due of last X.XXx, EBITDAR or return billion third capital XX end lease on quarter XX.X% the basis to was and of the Accounts over the adjusted to increase quarter,

the $X.X flows. the flow and billion operating generated We statement strong free Now looking in at cash of quarter $X.X of respectively. and billion, cash

strategic home profitable on generate and and capital our priorities allocation our returns. expand anticipate reach, Our first with growth customer align and to develop investments needs support to focuses strategy that substantial capabilities improvement

Maintenance example, slightly further approximately grow investment For this strategic is year. our serve investments, our expanding a ability entered $XXX the Pro to million dividends. acquisition a we we quarter, of transaction which in accelerated to be to In accretive X.X earnings to million $XXX by after Supply is to expected Headquarters look August, repurchase excess the in And business shares. strategic industry. multi-family quarter settled The housing to In for shareholders. million cash the into return we paid share our agreement,

for also quarter. through We In open-market. total, of the $XXX million $XXX X.X we the in repurchased repurchased million million stock shares approximately

$X.X repurchase approximately remaining authorization. share on our billion have We

ahead, I'd Looking like on of detailed Lowe's' to address items outlook. several the business

our year. the are guidance We for reaffirming

associate generated incremental on the hurricane-related by marketing enhanced quarter, fully capitalize expect optimize efforts. trends investments in customer-facing continue we to fourth hours While we our traffic strong the our sales to in

is again we sales in Also, weather share year expectations. for by X%, a in of earnings the you total $X.XX With our quarter a of that are quarter driven and of line also number was with factors. tough as fourth per year, unpredictable. third increase in We know, approximately a comparison, expect the backdrop, the facing prior

of comp we First, forecasting are increase X.X%. sales approximately

full in acquisitions of keep reduced expected months X.X% to to seven mind, due be and new from acquisition results a of versus results Second, add total operating XXXX. an pressure drive we for will in roughly is to versus X% expected XX related growth anticipating Also, roughly full XX of is in seven year RONA estimated an MSH sales weeks last of Central approximately the about points. the of operating roughly Also, margin XX approximately comparison RONA to points XXXX. and expect we increase RONA to stores by X%. be XX% XX XXXX. basis margin basis, weeks effective The year basis to for XXX to by a will XXXX months On XXXX. year GAAP XX tax are to Remember, rate growth

basis, earnings as Again, refer $X.XX. to supplemental Page year, share XX we summary to of $X.XX to the XXXX per slides our expect For for adjustments GAAP on a please in a compare XXXX. of you

approximately approximately of This cash $X.X are from of cash forecasting billion and free estimated billion in XXXX. billion. be to flows flow results for We approximately expenditures capital $X.X operations $X.X

approximately assumes guidance XXXX. in for repurchases $X.X now ready Our billion questions. for share we're Christie,

Operator

go question first [Operator with Instructions] ahead. Please comes from Benedict Baird. Peter Your

Peter Benedict

Hey question. guys. Thanks for taking the

help there? area? my better relative us key First drive the is quarter did third first to that the you in taking with around That's efforts to the your Can conversion. actions How here maybe expectations do you're question.

Rick Damron

Sure, know, Peter. Several we actions think as taking traffic stores. that able about been tracking have as inside conversion, we you to we're the our begin

real solid year-over-year inside what's stores. time first to it's our understand got really of the optimization we've which through We're comparison, us allows the working data on happening hours. So of a

we and from opportunity the generating. investment traffic and in we talked that seeing our we invested marketing that to able hours it's maximize to really incremental spend to the the As QX, convert or QX be traffic about

demands to see traffic to during we our continue to hours And and and we we During to that training continue now those always, of opportunity of the on QX, the to more by deploying utilization to and as of quarter. meet achieve increase hours on peak of holistically. we're conversion hours, the as our the those the added customers. worked throughout development deploy we our end quarter the able we work those And better work employees the fully times incremental when

a that to. it at that in committed we I'm if job the adding So, hours perspective, from solid done we've looking

our continue of and Now the and employees customer we're the working to to customers. to on needs to continue to training traffic of meet work development hours optimize those

Robert Niblock

you hurricane-affected highlighted that add thing Rick The we resources in is this that would through the this areas impacted on Robert. as to effort, I comments our need into and I Peter, making my by somewhat about. took spoke was we're is progress redeploy only

So, the kind be continued fourth and to on us I’ve quarter. got that and as said focused made behind of so progress throughout

Peter Benedict

some helpful, maybe about your to delivery where these. that's to they then stuff, And omni-channel over talk of today, your you Okay, thanks. need capabilities just take you shifting where stand, think also you And pick and Thank deliver buy in commentary sit store where where you from – updated just store, those online, and and with around you. going? up you see those

Rick Damron

Yes, Peter.

it – have online its pickup in start delivery and with As aspects two of of delivery omni-channel platform our Those original part from XXXX. to I'll relates the store. launch Lowes.com been since

familiar an product in item. with. it's very of dot-com of are pick XX% sales when XX% arrive they up So, store, that up customers to with those something we're currently our picked incremental execution buying standpoint, From their

to XX% parcel. being store, delivered Another XX% to with the XX% remaining from XX% is

how customers of tells role that of story to in the in environment stores fulfillment utilize our the for the a our options omni-channel strategy. and store us, for continue omni-channel great So, our

a customers. delivery to we changing we nimble the in-house both order want know, out the it grow of be to continue operate needs meet in you As be as to model capacity enough our that able to to relates delivery to holistically, third-party and

teams to think, is our meet We business delivery And are strong how as that, our growth our in offerings, category. execute we continue pleased drive be by, and those programs very I are a to able demands highlighted, which our drive which evidenced sales. and able teams appliances, that of the against delivery to to continue with is those

with where So, are. we we're comfortable

options look to continue at fulfillment. We for

QX our in XXXX from Nashville, perspective. from we'll parcel look center shift year in parcel, our to we in this direct be a opening and continue you at first If fulfillment of fulfillment stores

Peter Benedict

– the great. then to delivery about are And And about How thinking about anything – Pros? just we how that's that?

Robert Niblock

meet needs has the feel executing our been ability from with the different various part we've the Delivery We our of of comfortable very Pro the ongoing to Pros initiative. Pros fulfillment against been since options. programs Sure. from

our We in are time run Pros windows we process through to to two-hour able a for narrow program. delivery frame the the when

ongoing the are to team we Tummillo that one meet continue a both confident to party improve an within and model Pro the-third we feel continue on that Mike work to needs fulfillment basis, So, able our models. of perspective. their in-house on to from options

to ongoing continue good versus well building dynamic our execute options to as that strategic the marketplace. So, as to Pro we ability their feel out meet needs existing about we're a our in

Peter Benedict

helpful. That's guys. much very Okay. Thanks

Robert Niblock

Thanks Peter.

Operator

next Nagel Your Brian from ahead. go comes question Oppenheimer. Please with

David Bellinger

This is Bellinger Good morning. for on Brian. David

couple a of questions So, us. from

$XXX million change on from coming also, you're X.X% what And led in in to was you Was addition more one lift there and the quarter, ticket? versus August. that? off internal of of strong throughout in progression the traffic you hurricanes? the the gain comps give the And First slowed on more to what Can the us improvements July, in September October? and type X.X% drove made, there that's some to detail

Marshall Croom

associate August. drive in where on and mentioned, from I'll for And working part. customer-facing ultimately we're we we what in-store better take actually it first We us most hours our areas help with in were increasing online seeing in need the the conversion. pleased were investing as traffic Rick to

So quarter, as bit that a played in we pickup soft August. but little the out to in in began that September, see

David Bellinger

forecast? with is into the and then you can in how Or just that your on sticking conservatism simply that? comps QX into Okay. November slowing guidance X.X%. in outlook? at something below looking implies comment anything looks year X%, read your we that X%. early and that trends and what's And are Should implied up compares to It for just year-to-date about the to the the comp like And

Marshall Croom

the and our guidance our that look think as invest We and Certainly. Okay. capabilities. balanced business the we to to continue for running the invest year in for is quarter appropriate ongoing in

today. ability benefit comparisons like into been in to into again, But of some the from [Indiscernible]. the hours optimizing selling tough We are traffic as in QX our the hurricanes one in confident again, expect we drive year. move to stores. where do we've have our We things QX, we last We are QX. we recognize and XXXX. But

So, kind can we in the mentioned, wildcard fourth be as of quarter. weather

those keep just So in QX. head we mind into as

for where slightly ahead our quarter-to-date, expectations of As we quarter. as the we're far are just

Robert Niblock

is Robert. this David, I on would layer this.

talks in Louisiana also Marshall and last the benefit in mind keep we're year the quarter fourth tough year, Hurricane the of of flooding. prior Matthew As the about that cycling for comparison

into so. at, that what So, we've year looking And X.X% approximately tried take for to reiterate, the we're just to is all seeing guidance. comps our we're

David Bellinger

it. you Got very Thank much.

Operator

from comes question next Kate Your with McShane go ahead. Citi. Please

Kate McShane

my wondered of multi-family through Thanks My for to going could break in rolls how you is you acquisitions is the out was going you that business your you. the made. around centered out that all I taking Lowe's stores question integration do lift It much expect you forward. for it stores. of question. contribution to morning. if Thank But Good the helpful walk a how once and the

Robert Niblock

Sure, that is to Kate. as the companies. aspects talked work integration, as The going some work to in that our about initial leverage move our terms extremely organizational continue integrate to the we're pricing have merchants seeing through and continue forward. and well. our my we're comments, And and to our continue leverage business working merch’s organization to case from make sure implemented been two opening I we design with The strong to of to with harmonize able

into of currently both continue to work existing is to on model. companies operating the focus one Our integration

Currently, integration forward, a will out the experience across further really the on which we are work to that plans effectively heavily today. highlighted, continue it's building as but customer integration, two. new I we of then integration And continue improve is the focused verticals. both the the out product in-store – move current to we catalog, will the As in teams for than are

Kate McShane

Thank on categories Great. saw the above you driven that just of help drove you. for ticket And question that bigger Was was second Okay. growth that $XXX. down break appliances? Or growth? my majority can that the us you some of by the

Mike McDermott

McDermott. This is Kate. Sure, Mike

obviously one see and and leveraging communicating that values to progress great number business, in we're continue We great our the portfolio our to the position share brand customers. appliance

significant driving Pro the and ticket. company also in to certainly see growth big also We outpace continue average, is Pro

to categories. across project regard So, interior really business and to our $XXX. across drive specialists refresh continue a number remodel the we tickets different and exterior, above momentum business in And of to see continue

Kate McShane

Thank you.

Operator

Christopher from Please with comes ahead. JPMorgan. question next go Your Horvers

Christopher Horvers

Canada lifted to talk as Thanks, and in quarter Mexico? a improve It think the about for much they quarter. from the period. seems you partial FX like comp good last the Did RONA about I contribute trends how can comps only you the in was And Can the talk did total reported it morning. comp? well? and that

Richard Maltsbarger

quarter. banners. noted Canada, Robert of strong The had the there's Chris. This high different a that comments, his across to comp as Again, very we very within single-digit in a is Richard. strong and had all -- we a contribution

in point, for quarter. had quarter small RONA Just we a this actually entire our comp the

quarter strong will all we're the had as where are this very making pleased very comp we're that the sales first be our of So, progress their rolled And comparisons. -- Robert we there. into with said,

RONA the box brand big with two from evolutions the brand into Now. more underway out first our Canada. from Western brought We're several live have We Lowe's

our path We have above track more in terms the share Pro those results Pro in focused our in appliance higher business The the the strong both rollout, of And also, Very begun really three XX very laid for recently our market different that business in our the in our our Mexico the years. in banners, in strong out Pro us and mix and seeing to we're west. plan out Canada, there. as, the we on in Quebec stores, year, stores to given goals to noted, across Canada. and of proud across the team mix on specifically path again, given down last Monterey, including of team market to double double-digit plan well had two than Similarly, Mexico. comps good opportunity Robert putting opened appliance the expanded expansion new has having of that on

Christopher Horvers

the follow-up. Got And FX then it. And then had contribution? I a

Richard Maltsbarger

operational by fairly and quarter. for Canada driven was largely from results Mexico. was minor That the It

Christopher Horvers

and then you type the Understood. rate Okay. the about curious U.S. And the about in X%-ish year-to-date. show how census market growth categories I thought was growth

understand sort in market You're do have you estimation into persisted, a is in about rate key insights market you trends we that running questions is relative the States share from your per just year-to-date comp the is growth census of to XQ, of in census playing to think one but how benchmark. Because get trying not gap, categories. investors that of the gap the the the share out fair five. do And se United the

Richard Maltsbarger

growth from health indicators the a home from We specifically Chris, gains, which perfect supportive that. match. home more probably certainly, remain I improvements. revolving driving really housing important, We good and driving most and make increased the not both disposable at feel look leading continuing be income about usage indicators favorable income strong consumer think as of just and certainly appreciation, market; of spending, housing is we mean the price to well. it's then mentioned We leading credit to overall job indicator a in

at engage look macro feel that, from values Survey. their markets views We home. environment. their about their feel well the increasing as to of by housing So, as about intention Consumer Sentiment good as the Homeowners and projects We housing. about things at of of we driven in use good feel looking we about the overall will around good home, like our

our excited put Mike about progression pleased And said, trajectory of performance at improving that And ahead So through we of our the execution. our we the year, the have look look of is we team with good us. focus feel quarterly we about it. the growth and as behind our the opportunity we're overall, and to comp at

Christopher Horvers

Thanks very much.

Operator

Your next Please from ahead. question Charles comes Gordon go with Grom Haskett.

Andrew Minora

the I I question Andrew impacts. from have quantify one gross on the and Hi, Minora on margin on you good for SG&A morning. hurricane And guys follow-up. one hurricanes? have Can is Chuck. profit impact This

Marshall Croom

it rate gross hurt on the company obviously below ultimately, mix average So our impact is because margin. gross

our So that the a net-net, positive, was expenses, certain all while told, wasn't quarter. have incremental an We for it driver had earnings did but slightly to it impact. SG&A

Andrew Minora

I quarters. there two then would you it's the a helpful. but you last the bit well That's comments, that little pro difficult, just on be above above is Any last Is comp better a you. company are overall growth to more saying quarters? average company business? the a Okay. the of seeing Thank color Thank the mean helpful. slowdown in Or function two you. average And Pro the guys were from tried doing

Mike McDermott

continue this Mike. the represents in tied of the to variety great very highlighted be our balance Yeah XX% business, good segments business, performance strength still DIY. the we which Pro is we customer Pro see may to What expanded about a engaging Pro doing continue is job of a different across in and performance, feel about between I we our our see seems marketplace. to the and penetration. DIY

Andrew Minora

much. very you Thank

Operator

question comes with next Please Lasser Your UBS. ahead. go Michael from

Michael Lasser

for give morning. into of taking Are you close a along lot my quantification pricing some been far you you the Good Can us taking? Thanks are actions competitive being how to done? question. you've

Mike McDermott

also McDermott promotional is intensity on react again. this I and great is of about strategy are done feel leveraging feel pricing to perception. make we tools we're recognized SOS to as I when to that job also values which a quarter analytics have an first May of Recognize the stock positive taking two and to value to the as customers. are sure competitive timeframe, that in both a delivering action around the our price, our team continue and we Michael in pricing new we're Mike impact. improve great drove good the effectiveness. our Seems pricing market the well to the those across opportunity the going refining our about base optimizing strategy out our took categories to we loyalty marketplace. having we coming the Obviously, actions, good actions make sure

ability discounts launched enjoy And military and our top veteran day. offering of XX% active both members. for The on we simplified delivery the every free first was parcel approach that, recognition, MyLowes to to military personnel

seeing to loyalty both those as impact from performance. and we're and that So, actions, have margin they customer gross some will growth our

Michael Lasser

seeing And you take are actions? respond price competitive as you

Richard Maltsbarger

Yeah.

into And look fourth it's our in think you, at third the think expectations. competitive. marketplace versus quarter go again, I second consistent I XQ. as I were I with with what quarter, tell the quarter, we would And we consistent remains where I as

Michael Lasser

much. very you Thank

Operator

Morgan from comes question go next Simeon with Stanley. Gutman Your ahead. Please

Your line is open.

Simeon Gutman

Hello. Can me? you hear

Richard Maltsbarger

Yeah. We hear now. you

Simeon Gutman

Sorry.

the different the what we going question. And follow-up thing? you on first described the them was around on in this Mike, gross different can the – can you in quarter, was one same Are deck, what's say the and to descriptions? that, investments Michael's follow-up described I It's quarter, margin called A discuss marketplace they line. pricing out as competitive these second you in quarter slide was the promotional the activity, headwind of margin. describe to broadly? Okay. gross If And just called to just on ways then, actions.

Mike McDermott

of some what and the promotional I those translate tell about Yeah, the that loyalty. I when would you the as promoting about Simeon, as highlighted same you should of of well as around descriptions advertising actions think is you activity both actually value customer think

consistent with the would our there in to, it and same competitive So, bucket as environment, again, the expectations. relates be

Simeon Gutman

some Okay. and the hours inconsistency back merchants And to some There you've then and – regarding about we change. some execution, marketing, XX been labor management we've added between talked then there's over the of was months talked past stores. some

more still getting talk and about bumps performed you QX are going less can where think better? be you or you you about in be you or how out? the could ironed And If should forward, where

Robert Niblock

start future. up set others Yeah, made and of in. to the Simeon, certainly, jump we've yeah, a lot the I'll let Yeah, changes for us

As I work hours to add pleased the and try in done niche that. that's the model with being – seeing said, the of pleased I'm store we're back our we're out stores. and leadership what with

we right – bit certainly people little of the kind in demand. hours on focus quarter. had on profit redeploy the those to areas indicated, As as getting to was the in if times focus of a Rick to part There we'll the impact with customer to to you wanted better day continue an match hurricane-affected high

focus on earlier, to to corporate pleased In some and of kind organizational business indicated the together organizational to our the changes -- driving structure, improve office structure forward, the here, we responded addition span we've as control, there we of to so. team is and working the the we're way with that, flatten made

Simeon Gutman

Okay. Thank you.

Operator

question with Bosshard comes Research. go Please Eric next from ahead. Your Cleveland

Eric Bosshard

Good you. things morning. Two for

were growth what's past bit to making a compares your us And that are that would to online little that curious all, know of two improvement inside helpful. be also, the if year are you component a could a First the categories ago. if of leading there color driving quarters, in more changes I step-up you But is that. some ease give that

Robert Niblock

that. take I'll Eric,

for progress the great as we our the it see relates quarter. to with digital continue comp saw We XX% to performance

optimize continue We our to online platform.

well, content We process, essentially visibility driving additional inventory checkout order think around about and continue fashion to to online. appliances, I and add-on fixtures outdoor for the our status functionality, investment a online of continue more simple relates perform and our living the to to the adding from performance. customer When seamless seasonal as that everything categories an approach it improving and led way

into team's that overall stores. bringing a omni-channel done and it great to our traffic So, our and experience job, to life driving additional connecting platform

Eric Bosshard

comp it all more talk shift with to leaning on a market balanced now. the little like the way feels productivity Feels later focus bit the this with started on you productivity. the you're X% curious in to are X.X% Secondly, and the you is year it now, coming stronger, I'm was But in And about emphasis focusing just how that seems like curious It and initiative? roughly it's which trying with a on a I'm profitability. within what ago year more the to sales. you're year within thinking this, a initiatives, on out focus little where XQ the about productivity started like especially

Marshall Croom

Eric, this yes productivity sales SG&A Marshall. out. both, want and productivity yes, we Actually, cost is and

efforts But continue from within actions of sales about omni-channel the to you some moving again, be sight payroll this needle making centralized changes along for we've on distribution made think we made spend, the from processes reduce to leadership the that the productivity, that supply line of of those pain and we're think along stores. stores much drive good capabilities, we're staff that chain this with the we earlier couple burden spend, indirect got and year, we a with So be those center changes we those with investments highlighted the eliminate into focus year. to Rick drivers of about to in the want we've doing so better to indirect customer how one will services, employee from points. the some experience area things model, trying the customer took to

and up and a knowing into adjusted of amount moving to after of operating on in that investments XXXX from that basis for keep able productivity all made XXXX an margin wrapped and getting standpoint we've future So, to flat drive be we've beyond. to opportunity XXXX to XXXX got and

Eric Bosshard

Thank you. Great.

Robert Niblock

time one for we think I Christy, more question. have

Operator

Your next question Consumer ahead. comes Research. from Edge Schick with Please David go

David Schick

Thanks morning. for Good taking Hi. the question.

You any the introducing category about skew that talked of versus now to metric you give amount know Craftsman, there can around Is you're merchandising Pro. and the I past? newness or been on work there's

Robert Niblock

we new brand our at you what I relates can is portfolio, merchants to value. iconic tell high and Dave, every across and strategic the assortment. that way don't value. refine brand work partners that the Yes, with continue really to to make our innovation sure look assortments But we're as to know, welcome with it Lowe's we that excited expand customers category quality Craftsman very to the Obviously, it and

Pro brands propel more adding the over done of forward both customers and that know really if think in Craftsman, back those it years, continue when think I about So, DIY us last segments. brands launches the will with trust, you all to brand that customers the portfolio, to and in four XXXX, work we've XX than

David Schick

on wage would you're that -- Great. just serving wage thinking Thanks. be in nationally any your regionally the comments pressures we're potential helpful? business, the or economy, And then about how on whether

Robert Niblock

some we been there's as that, think about Again, obviously, wage pressure.

in are of looking how DCs things offset, providing the throughout make and our sure that to and mix best offices then that stores better the productivity And rightsizing experience challenge, hours our balance, and corporate the non-selling of of and properly designed care Just one we we're getting help we're are chain. of and flowing continuing in always staff along the the the processes stores again, with efforts the to corporate can. to we taking freight, supply that to customers from selling productivity

Richard Maltsbarger

I'll pay to try David, rate And knowledge and add we experiences that model associates, we hourly product of and already our based average on marketplace. higher required a just a the create that the

the rate helps that us do that because than understanding a industry. fact we mitigate have itself, the the just So of model also that higher

Robert Niblock

it we to rate competitive from look benefits And but on just marketplace. outland a in be and the not take base incentives the at

David Schick

Thank Okay. you.

Robert Niblock

look Wednesday, your speaking quarter for to great Lowe's. report you thanks continued always, we Have when XX. as fourth with day. in a our results interest And Thanks. forward again We February on

Operator

conference call. concludes This today's

disconnect. may You now