Lowe`s Cos. (LOW)

Marvin Ellison President and Chief Executive Officer
Bill Boltz Executive Vice President, Merchandising
Joe McFarland Executive Vice President, Stores
Dave Denton Chief Financial Officer
Christopher Horvers JP Morgan
Simeon Gutman Morgan Stanley
Michael Lasser UBS
Brian Nagel Oppenheimer
Scot Ciccarelli RBC
Steve Forbes Guggenheim Securities
Eric Bosshard Cleveland Research
Peter Benedict Baird
Call transcript
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Good morning, everyone, and welcome to Lowe's Companies Fourth Quarter 2018 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 following the 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 Officer; Mr. Executive Ellison, Chief Marvin President and Bill President, Vice Boltz, Executive Mr. Merchandising; Joe Vice Stores; Mr. and McFarland, President, Executive Dave Denton, Chief Financial Officer. over I turn the will now to program Mr. Ellison for opening remarks. Please go ahead, sir.

Marvin Ellison

Therefore, been morning, Overall past spring for making customer's the of season we're assortment spring seeing Good Regina. you, in XXXX. fourth in the changes an in for progress results and This quarter. intense the and the paint the and pleased category six we're we categories. in and months progress service Thank our we're encouraged improved our most preparation with business fiscal everyone. evident has improvement in we're the the to over QX with early transform the work response in company by our saw was

company quarters, As the for past below XX has a delivered comps consecutive the reminder average. paint

and is average. this intense to company with quarter leveraging Sherwin-Williams during business Our exceed paint the ever allowed to above our fundamentals on transition focus our retail fourth and the us while comp area exclusive partnership expectations in

fundamentals our previous dividends categories framework business believe where stocks improved one multiple will in category, recess. pay implemented staffing is only the from entire fundamentals will for on huge area focus this remediating the While in is of issues We while XXXX. retail be we paint across first of our retail it business and

quarterly allow and you me XXXX. provide thoughts results our update few on to on to fiscal Now, with moments you a take

our geographic or We're delivered a growth also doing comps and X.X% comp every comparable positive fourth of Tampa, X.X% which from Houston XX supported in January. delivering above and product in our eight average in we Harvey. For category. quarter. comparison we Irma Hurricane market was faced with cost and place progression US believe Craftsman fundamental in markets tough XX a positive The the products improved delivered US comp the XX and comps offers comps comps sales reinforces by focus we which In and tools great in response X.X% retail we share very that in the pleased categories quarter US at delivered hardware well regions delivered across by strong of in gained and further

to to in In traffic achieved capitalize above opportunity the business. we and due addition unable These were in website comp while Black upside performance building traffic for have experienced online challenges to and We the the fully challenges delivered on XX% the outages we quarter also lumber weekend. reminder We and of to system are our strong. such in we as Friday online appliances comp lawn average and of growth paint, garden, was materials. our

exerted for omnichannel as pressure expertise online the business. weaker Chief with Officer, aggressive Information business. However Amend, quarter Mike holiday change space. the an to Ronna our confident of our comp In redirect home coming with to Halloween integration and market sales needed posted on Canada, Therefore that lead in President of lowes.com as Mike our combined focus. will a was the we we negative new Seemantini it We're of new Canadian work January with transformation in leadership XXXX. is hiring ongoing [ph] made our strategy out of season, a we knowledge that extensive someone Online obvious in improvement and Mike

Canadian operations. on weakness term. our business our million $XXX the non-cash market in is reported growing Canadian housing the We that also We goodwill over for which pressure associated anticipate with outlook pretax near charge a impairment

our we our $X.XX reported the However per per an a position Canada diluted for in adjusted ago. long-term share potential confident this a but of for increase remained X.X% in loss diluted quarter were the the same market of and earnings of year share business. $X.XX We over period

will Now channel our focus of best mission the across focus achieve as transformation. home and areas; area omnichannel chain winning in our four we've delivery by serve. remain we fulfilment supply key mission This changed, and of value initiatives via Note community our since the need driving true efficiency described products customer engagement. wide merchandising transition that in to chain, strategic every delivering transforming and with XXXX, but Analyst we service delivering tile has we improvement And to excellence, our supply including modified the and better been intensifying - Investor from optimization. that second operational our this Conference

omnichannel for customers. experience In areas fact better a key our four all deliver

the This price supported financial stock, position ageing cost investing by of as appreciation. discuss federal continued few in to in is an US gains housing on to were benefit increasing in home homes allow continue are home further rates, their industry including factors tax formations XXXX The their growth, take home moments income detail. longer household they're their me lower staying consumers homes. prices Now growth several improvement and a improved to should more from and

factors capitalize of transparent. to on and we'll All focus improve drive execution fundamentals our these home to on improvement continue in supported this be retail and environment investments To macro project.

an high inconsistent seeing executive with on are team and We're still of we expectations basis. visit execution. stores We a pockets weekly

we're areas. inconsistencies beginning in key improvements three to However see

we a pleased take of areas in were with see you signs progress where share business. our five to moment to me let So

satisfaction customers. First; we're scores service. have and customer Customer for both better delivering Pro improved DIY

pilot positive Second; our merchandise service team or MST results. showed

versus expectations key in Third; we're seeing in categories. improvement performance

see brand. with gains we customer each saw In to results we're to driven job share pro-business launch very the season. spring. in product in also strong we're to introducing for we lot this for part selling our about quantities. leveraging reset excited continue process from us category Craftsman addition better Craftsman our also paint, the We're Craftsman investment in power in in spring improved our improvement outdoor of the seeing equipment response position the And Fourth; fifth, since market positive

achieve and for focused still progress far things to to These confidence have long-term from work right also in of They Although transform on us we initiatives perfect areas outlook give do are that target. the demonstrate our company. business five the to our we're XXXX.

our change let call me and over initiative, to important the commitments, I'd With embracing close, I like spirit our for the customer. to turn Bill. that, and most associates Before their XXX,XXX thank competitive the renewed for for serving

Bill Boltz

a retail and everyone. Thanks new to brand, compelling share great a products, campaign a us Marvin improvement impactful We great strong capture good more home morning, and new see of opportunity the marketing market. With partnerships. in ahead

new stores improvement the on I also DIY McFarland pro allow outstanding with you in our our an the with customers level about of a both year, provide our our sponsorship will the This and will progress. very us Joe grand deepen exclusive to on stores our Football market official All of home our and drive to We're which experience website. as retail our ability sponsor on working deliver flows an multi-year and throughout and will We're excited our local partnership the to to national the National League. and customers. relationships Today update website. which

the we are inconsistency early action improvement. As there in underway Marvin beginning of of change still indicated, our signs are transformative stages and pockets while we're see in and system of is to

an at and [technical consuming results Team presentations or sales up endcaps Merchandizing in Early store seeing in teams Service are critical These we're show our red our stores, tasks signs day-to-day for eight as average our by and employees hour. shoulders funded vest teams freed increase The off that service helping are displays. MST out day they time to be the per so pilot responsible off from our level add positive of our to setting shelf per productivity improving responsible serve example, and execute they take they MST could reduction for in the of our improved full an of For teams These maintaining to and stocks, these pilot. difficulty] maintenance customers. store. vendors are base MST of the associates, execution

the complete of We MST staffing to the our the in nationwide first enrol program teams expect XXXX. of quarter

will our quantities, investing We in ensure key for As a historically lot is the focus job we customer pro mentioned and top for that pro we be has for that pro debts an quarter must we an steps in underfunded. presentation XXXX. customer to pro the This we've saw to why in In the impact lot increase test took discussed the by inventory position quarter, piloted fourth job markets before, been level inventory us pro at the as Marvin penetration. area fourth select the needs skews the select enable and both our sales store meet in items. selling on have and and we comps quantities improve

the season our to also We're rolling in our stores in selling the we're spring out earlier. quarter. nationwide more expanding lot first setting and pilot, and Following leveraging in successful for process we're now us our quantities reset the season. we're transitioning job efficiently investing We're the better improved position

South results season where we All with on the capture of breaks. area spring in to seasonal and our excitement positioned other the the of out have is seasonal that Craftsman. spring of when this we're seeing south we're pleased strong ensure and in and And that the categories. hand garden submission, roll early Deep continued lawn inventory to demand for comps We're

were Our data customers Lowe's not customer. XX% of a shows Craftsman previously that approximately

spring, destination Craftsman be So hand opportunity proud also Craftsman in and offering. Craftsman this brand. we're spring of the from as introducing from equipment equipment outdoor for iconic Home each traffic chain. across our is building for and brand to gained tools share exclusive of to to market garage rollout Throughout tools, tools, Center tools driving, to the We've power power mechanics range the very a the we're outdoor add since categories continue us we'll excited for and part to tools the power garden, channel the loyalty

for spring addition, have the time three and Craftsman. will In brand Lowe's the Deere, this John Husqvarna top in first

Monrovia exclusive and our to Exciting Friday. assortment grilling. compelling outdoor top addition like offerings Center we as Weber of in two and program, In spring equipment extension from the a sales and with power Home Black this expanded expect the events brands Spring to Char-Broil garden product lawn offerings and such plant in outdoor drive

let productivity fact, of well company In received improving meeting merchandizing store to on the field the that at drive every customer In lot product and also upcoming relevant product managers These all could meeting teams was needs localized expect rollout the spring this for of merchants teams. through productivity level, in will the new our delivering in sales drive season. the products them for market engagement helping quarter, for and the season. our to has manager innovative and assortments, increased excitement displaying focus the built square first see the and per store foot they inventory month, stores. a to event the we will merchandizing and earlier of our This through an customers

We out increase to to skews I'll capitalize strong a you us moving as stores the assortment working our over XXXX our there slower hard future onto work will of in in online Joe. Lowe's ahead opportunities about also and we return. position to the Thank now to We're we're and of call demand improve the dramatically and excited inventory turn for sector. very our healthy the website on to shift and

Joe McFarland

morning, our Bill optimize better and the to like labor customer spend. to we're everyone. steps in-stock service Thanks good improve discuss and I'd taking

to playbook we odd a in drive metrics communication and The our task stores, the first in priorities, key sales as step improve completion the time and fourth we've focused activities associates customer Since simplified are seen store in that on service. quarter, deliverables. critical was then, focuses more teams at significant to that now improved and level. past service weekly streamline to in Therefore to customer top moved increase

[ph] we're sales of that on reorder that service, To store forecasting stocks in risk, on In launch, high managers addition, crack in eliminated skews our demand. limited keeping on the busiest with so book have. our XX%. quantities to service. of to improve appropriate during autonomy focus ensure Since day, the pace improve assist stocks regular key within with and we've sales supply our down hours our shelves customer we selling gave replenishing items. filling with To velocity our can already and associates excellent stores the our consistently seen activities product improved providing we solely we by chain, instituted low We algorithms a to

of and customer customer we've the order engagement customer real-time coverage productivity by floor first seen hours we in first program payroll we'll customers or the providing associates increase deliver replace spend. the want. service, the actually while hire, behaviors our reducing roll also and positions This model This toolkit, stepping will customer program patterns. in evaluate facing providing demand improve a new managers data our train, rolling kind hour traffic program we'll and system experience staffing the like and department replacing As a models associates. trend ensuring smart and on further losing great which traffic, an coverage engagement with with efficiently quarter. quarter, better that and will scores. and are assistant fingertips experience coach what system. to out and leverage department new To departmental better facing labor XXX new drives satisfaction designed provide effectively will current our rolling out payroll X,XXX supervisor by will series week service. better smart peak us the day that that The device customer. to of roles doesn't required we're we without allowing and with need terminal using sales way by In of customer the our in an their ever predict smart looks half, or a devices capture the service at the time guide customer the rate they model. service quarter, result, is including smart leave In sales which mobile first a mobile company will associate complement on A to will of will the on comprehensive hand to improve the staffing over and the In day, labor status to training associates the out longer the a customer system first We're of sales over determine all smart item. that department customer new this our train improve to into floor better expense. of at be will our with price, associates and This non-customer system customer deliver to stores. experience provide and devices tools labor sales, off The the quantities outstanding the order log and store align predict to in No supervisors. will in These department sales expertise. Also focus scheduling associates

associates excellent well As delivering our as coaching service. in

to allow of pro over loaders Marvin and to and pro that the to customer to January product about consistently beginning pro the take supervisors pro momentum in we're in on the early These when work to department. bulky lot One the investment earlier pro full sector. to and resources Thank demand dedicated the in committed of turn call results that new so capitalize excited experience Dave. will us the our job improve also we're high now build we're they them resources were you these the in be level the the seeing comps at single-digit. dedicated mentioned quantity I To we're Bill us will the on Though need. the customer reallocating rely can of will stages help created ahead and healthy fully on advantage change,

Dave Denton

good morning, everyone. and Joe Thanks

the during with incurred morning that review notes charges Let me begin quarter. the major this housekeeping and we

quarter The sharing impact in no primary reclassification profit The sales. sales. this the revenue new the XXXX, on and no proprietary of income First associated our recognition of impact adopted operating of fiscal standard. SG&A we had on there's adoption reminder with program was accounting the credit impact meaningful first income comparable the a from program to

Cost of in shipping in and had from customers handling reclassification income. impact prior policy of are now fourth related decreasing million company cost versus a Secondly, and periods operating the policy this restated. for accounting accounting to changed resulted quarter quarter [ph]. cost. Again no the change the delivery margin This been sales of have gross this to our $XXX in the SG&A we included B&A products and on

plan described In we non-cash million value. the reported with fair of Lowe's the pretax exceeded consistent In eliminates impairment billion as with flow we in our XX%. reposition long-term to the currently incurred share value now generated that associated Third, associated QX, Canadian to dividends I'll and $XXX combination share accelerated starting repurchase reassessment. in and write-down performance market. XX% of our we goodwill with Canadian fourth dividend turn operation, pretax our we've charge We at both million success. of during business essentially review strategic of year, and million in capital And our to November softening press finally shares. housing release for the stands shareholders. fiscal agreement approximately cash charges related quarter returned and operations. In $XXX determined million book this $XXX this we entered allocation it's $XXX ratio to alone, all into This operating for this goodwill our given outlook the X.X of program. our of We million $X paid retiring payout with our XXXX, Canadian our nearly over repurchases dividends cash through a free a

the shares approximately repurchased open million through X.X for $X.XX We also market.

So of an price $XXX stock in total, average of our $XX.XX. at purchase will million we

approximately core our nearly business $X.X fourth the We continue billion million repurchase with invest And for share capital authorization. on remaining billion approximately our the and $XX were year. expenditures in in to $XXX have quarter we importantly,

share increased to share adjusted by billion earnings comparable compared the drove diluted $X.XX for as of our pretax and expenses over we statement, due in X% $X.XX quarter at per diluted share leverage. basis, On X.X% per earnings the earnings to total the the earnings to quarter line $X.X per Comp a recognized the was per billion $XX.X offset environment decline Now to for Canadian fourth income and the in X.X% decline share sales the by diluted in expectations we've transactions. diluted macroeconomic partially loss a of fourth share. with increase the quarter softer diluted offset of the we manage $XX.XX charges quarter of fourth $X.XX effectively transaction total increase of average slightly generated sales ticket Sales Despite last average looking year's were LY. was per in $X.XX adjusted X.X% payable weaker of driven growth partially in X.X% in by X.X% an by store ticket supported X.X%. adjusted a excluding

US Our for QX. was comp home improvement X.X%

sequential comp improvements transactions with for in While November, the quarter and X.X% the down in X.X% transactions throughout built in we've January. declined December comp quarter X.X% down positive

quarter the offset partially an Harvey season basis XX and point Hurricanes cycling approximate was demands were the comp During Florence drag by hurricane Irma Headwinds from sales. and Michael. on net the effective from

monthly in in X.X% X.X% December January. X.X% November, Now looking were comps at in trends, total and

X.X% improvement December November, our X.X% monthly Additionally X.X% were for US and comps in business home in January. in

revenue of this sales, We QX XX recognition provided last to will a fourth of position these from be holiday as We're weekend serving spring my points points XX.X% basis of season. the basis for accelerated standard as year. to advertised Friday point Now quarter Black to over margins from was are skews season. to basis forward XXX mitigate selling inventory decrease the non-GAAP on of efficient offered into our lead raising margin. shortages experienced due in Therefore a were on that The for new comparable on us necessary customers. an basis. actions pressure inventory, order adoption in bar holiday Adjusted the planning better XX substitute from well gross point benefit gross activity for clearance comments items

from We XX of also chain supply pressure cost. points experienced basis

acting through product ongoing deliveries. to the margins in we the billion potential pressure increases partially sales driven caution largely and by a to strategic proceeding. effective As before Adoption earlier Tariffs versus us diligently the changes points of pressure points. with billion are deep the to mix reform. basis These XX.X% approach. pressure. is performance increases LY. measure largely allow QX or sales We're resulted to unit LY. months. additional new compared quarter SG&A given investments income still recognition of offset impact decreased basis again margin impact and size fourth coming management. network exerted ramping Adjusted the XX X.X% that product reset from from and of increase, negative SG&A basis We're tariffs lot operational XX% job increases of other finally, capacity standard improvement the points inventory was XX Craftsman the cost in to coupled transportation quarter. This quantities. facility anticipation operating revenue adjusted of basis gross buys, in rigor spring the XX investments costs XXX versus basis And This to additional the points basis are by on to customer mitigate important is and significant gross XXX of and with delivered expense in of result Adjusted our of which analytical This point drive tax exerted unprecedented to tax $XX.X XX.X% XX.X% working added of from leverage and full new of shift XX portfolio $X.X had in for on scale points sales was to of up deleverage. is rate

we what December and XXXX. I'm at discuss I'd remains unchanged today outlook on Investor Analyst ahead, adjusted Looking our versus the providing an outlook Conference. to business basis XXXX essentially which shared from like our

standard impacts Relations disclosed associated schedule baselines also have Also our will transition we further new adopt the an take estimate and $X.X a will reassessment. this a all and result of lease provided billion operational one between prospective that fiscal this step strategic on However in increase in XXXX, with We new website as adoption accounting Investor approach. our XXXX by for assets standard release related in using of our we lease billion an total removing earnings quarter lease an as of assets liabilities increases in billion to between and increase to The billion. adjustment fiscal and the will repaying in XXXX. $X.X reported beginning $X.X difference $X.X liabilities in related be The standard XXXX, by debt-covenant impact on agreements. driven will approximately increase sales the increase a In have sales expect X% no under compliance our our comp approximately a X%. total we current for year of press

XXXX This forecasting and our We're billion billion. $X flow shares in the prospective business shareholder cash are of and We billion basis actions growth free come expect taking productivity operating A Store to of SG&A increase operating of adjusted adoptions beyond margin points. result future the billion expected well and expansion approximately as excited $X.X expenditures share. driver to capital guidance extremely primary XX and returns approximately were remain XX the of margin is long-term labor as assumes sales our from leverage. value. targeted and per $X.X and cash be $X.X approximately to cost of for more we effective about to expected repurchases a major necessary flows and operations $X.XX from $X.X effective contributors. share of $X the approximately be programs for year. tax to adjusted focused drive expect XX% and rate advertising for to on The We earnings marketing diluted will billion is approximately

ready that, now with we're for operator questions. So


Morgan. comes from of JP [Operator with first the Christopher Horvers line our Instructions] question

Christopher Horvers

curios that by in press a it's about talk and there regions, on improvement look obviously, provided any driven called you call. particular was how it and release saw the in other and comp? January Can was benefit was gross that margin have pressure categories, so January you any clearance you a month, small the to activity out pro did DIY the particular in it you seen

Marvin Ellison

comp improvement Overall, a pro factors. it driven sequential whether both was Marvin. quite by and and DIY is improvement few we this Chris saw is in

throughout quarter progression we transaction the Dave's DIY First transactions and of I reflected comments the and on pro saw that. think in

We broader quantity, comp and the also Basic the significant put supervision that just improvements. operation that things pro-business. lot on we place. job We a saw investments improvement in based is and like think in the loading staffing service

We early also feel very spring. set good about to the

mentioned stores simple found what I and through fact, clearance get so think still Bill product in year we're of big actually able they be the I, in last were comments will we did seasonal markets, that weather to holiday area, product relevant where his the and dividend. pay these a in so spring had that some managing normal

anything and news pro of us. driven. It by transaction In Yes also kind that, addition It improvement was Bill, categories in was driven or we've both. but pro-business color customer that? across the add building also correlated that. Bill tools was on improvement the multiple drove the materials DIY, and important. about and like any let was the categories I'll Craftsman either additional talked it response not a good for It widespread, was

Bill Boltz

them. on most hit You of

DIY in the one both for early made comments were there another saw response think I where around and your we that paint for the pro. was improvement the

south just getting and from and stores that. saw ready South earlier, Where spring come remarks. prepared payback Deep as the we earlier saying in to for addition my I by these In said

encouraged signs we're So in by early the that.

Marvin Ellison

that's But provide I'll the is, mentioned we're the we our not I of talked victory. of in there's inconsistency. work caveat lot only focused is we declaring pockets and of still that to the that that throughout we embedded business we're operational We've Chris, believe still in is seeing improve our a the to about merchandizing that entire processes QX we're all why period. fundamental dividends, paying believe sequentially able we philosophy, longer do, the retail areas whole

Christopher Horvers

you about talk quarters think And look do you. such the you look the can you Dave structure? the comp as inventory the And margin is you clean stores Thank anything for, the on then or little the and haves forward cadence as closed. a as that follow-up, and around bit the a are

do the So accounting you from charges behind gross clearance margin think well? us are pressure as that the and

Dave Denton

there. couple keep that maybe in So questions

But drive would positioned I the performance I about about as half shaping very first the think First somewhat year. with our implement think from maybe we're slight to the half nicely initiatives. as back of a seasonable think our I bit as a for I and seasonal perspective, the think a balanced a in half, half XXXX, bias first and first comp up? half is it bit second that

take half second from related more initiatives specifically to to our programs. driven to beginning beginning financially see some or The progress those hold

do as I And year it behind work non-productive the is I the business. inventories. that's at think as a to look us, think this us. retailer think in way we're always so shapes largely always about inventory liquidation We our

we'll don't on So any program we see focus to major going that. that perspective forward. But from continue

Christopher Horvers

Thank you.


next question Morgan Stanley. of line from comes the Your Gutman with Simeon

Simeon Gutman

My think and forma is XXXX guidance the that of the it XX points unchanged? improvement. mentioned guiding essentially is versus was Can basis it just you Can was at margin adjusted you're the of I guide you us base first help today, is maybe bridge the bridge? think effectively pro at Investor that - that I unchanged. guidance, on question off Day the

Dave Denton

of off about of investor guidance our at We range. this two when One, it our conference. in assuming - Yes ways. baselined we baseline analyst a so, midpoint think guidance we QX gave

of is that QX we that closer range. came kind to in end high the of Now done, guidance

that's the really So major change.

re-baseline guidance not referenced back provided when adjusted our our I to I remarks prepared XXXX our numbers, Secondly, numbers. during my

versus numbers the back will to So that step re-baseline our you gap. adjusted and that if bridge do compare you

So changed as sit we not today. XXXX outlook has here essentially our

Simeon Gutman

on gross is margin. follow-up my the and QX Okay

XXXX, XX us plan. You you you the basis us guidance expansion you're or entire mentioned look if it how that the or the can And margin one for versus of remind was your can so adjusted unexpected much points about. share talking or the then at drivers, you with

better up obvious if sales of high doing more end your within you gage besides to of I I'm think not? to on it's sensitivity margin If or would gross and there's lines whether just than opportunity SG&A determine, is that, margin or trying the any beat an Is degree which each the there lever. and

Dave Denton

although don't that, fees think the we [ph] we Black say requirements was the the what in Friday fully the unexpected take of do both margin the items I as anticipated on first I'll impact and as cycled somewhat to gross substitute QX. and perspective. So ourselves I'll aggressively and we secondly, it's proactive a seasonable customer to spring to recycled into XXXX. made from quarter better from the thing to change during a positioned earlier our a liquidate then a perspective to get right do more And plan,

were our standpoint. those from So expected, probably - that not but actively we managed completed

Marvin Ellison

is this Marvin. Simeon,

Boltz very So will the we in August. and until team the broader seat is, comment that make put new place really get a Bill I in basically mid didn't merchant

spring is for that And you as prior underway know, well timeframe. so to planning

period. and entering we've customers Bill had was That the holiday rather it to sure decided impact, for approach base was process accustomed that half it. disappoint a where to go into springs a the is the heading accustomed to and right substitute so we the So you thing process didn't. traditional that it's point, real traditional And to understand Dave customer. Lowe's as were we problem. Joe It that that I going a get set we're there's stated, accelerated that and Don't have have through that, would found different to is it? here aggressive I'm margin as take Would at what again alike. a in-stock than to but - to to we out, And we and Dave's are make and is

holiday advantage to addition uncommon four to so we're through and in categories as sun good lieu it of out five was Lowe's is decided spring managing the In not his mark three, be and and to things pleased actually I Bill team take those in merchandise that, going into for with these we mentioned areas reset teams and downs what week still and have obviously and plans where exerted areas pressure. to place. seeing coming we're of service our in driving

businesses We for able of that is leaders new be the lot think upon. that, have we'll a to we big guidance and Dave deliver margin outlined running something

Simeon Gutman



Lasser Michael with of line the from UBS. come will question next Your

Michael Lasser

us clearance be aggressive for to seems more you expected bit give how taking activity a is the It sense store. a like little than to promotional to but year, Can not only that reengage we'll upcoming posture be and with longer this what extend in going your also into is customers your XXXX? you going

Marvin Ellison

to versus have us of about We're we material and job our We XXXX think that any a products then going changes allow don't and get do converting bringing that traffic. think brand. promotional great to to excited we in traffic much Michael, see we cadence prior to we're year. market better that's the a

Michael Lasser

basis I would what points you Okay that rate to embed follow-up tax want and did because for you below previously XXX outlook income XXXX expected. the

did through prompted of how model? rest flow the what change that that So and the

Dave Denton

think income and we looking we're tweak Clearly just constantly continue our for at XXXX, to status I that there. so nothing as tax dramatic expectations look at our we'll

Michael Lasser

much. very Okay, thank you


Your of the Oppenheimer. Brian line comes next question with from Nagel

Brian Nagel

at discussed you've a initiatives, the initial of are comp question far fiscal to you is what's data also sales way, this done in areas the we lot you results. the we've happening into haven't. first stores where positive versus particularly I Is How you And touch how areas sort got stores then, of you? a obviously there there look way should what QX. and the to process about, have some with acceleration say a The through have, think isolate,

stores of with see could make in of some you initiatives. we the So progress the evidence the

Marvin Ellison

the a a lot be tell to a spent we who've in Bill But are, Brian's improvement. a stick - proud it's in the to home going the to better that side little we we're quite our not retail you good and Joe far to highlight We is one our about me, paint. lot that the a that great this be. I acceptance would of We would a spring. with not this But a areas We let room of you I that bit say, department. life to we're going to have had mean, took I'm seen in poll if putting work still do. obvious question. we chain, know measuring fundamental work, how We was of because really the of highlighted with the of necessary that, standpoint in can that first organization. formulate. good ways would paint started the as of as We of four adjustments attachment no more supply the the supply to didn't the specifics. were of teams. we've we'd to accessories. business Having the low - And leveraging has felt we a stores, we to think we And very, working, be management impact, staffing. the and Sherwin-Williams was no from the selling make a and said be out company we the be merchandizing we buys as we proud want very all categories stock. we But had and the late totally on just like supply on change very great were that we're relationships to we're to we go, were like to Bill because could. going paint philosophy have like not we've We time and had partner nearly make give that proper as this summer it provide would a we the really talked, product to agreed, us just we

get this, to of of focused what about chasm be this of the touching. talk that let was that so Bill and categories categories and felt we're could now kind progress making year, But other that we're like going a that more addressed try we And the the what improvement. we're some we other micro about I'll immediately progress to of about feel of on, the to we for great same level be

Bill Boltz

couple a things. think, I So of

of and a staffing early on our But just There kind worked right. finish we've stages. addressed of even we We've we're is last between number the all - changes things of happening, in around year. department model. in lot never staffing though the to that made are of the First comment paint paint. myself Joe We

now in-stock So supervision being an took the addressed addressed. for is We've the department. model [ph]. We paint staffing pokers

year. Frieson's and our So do market put the customers look like the team, soon, paint took DIY at last my paint. quantities we didn't pro that and front team in Training, new includes what's department a store between the job like we for needed of products a Don We five and any team training. gallon whole for

our now that We're on guys touched relationship? else got so training relationship about work we that paint in the We're a excited how associates. and anybody leveraging leverage pro-business as These So we're know coming do that the In out marketing to to. better order our going addressing than way all only that Marvin make this pro, and sure that through need the of partner, as done. that collectively we're we've teams' From perspective, we marketing very Sherwin-Williams. spring.

season make look team, when in happen. their look already In last as the to to able we, addition order were to loadings, And at The do chain behind to for paint. that look programs the prep and that the store of had to loyalty then the spring, on that work get ready merchant and quickly at breaks, pricing to out in pro in the quickly at to the at the be supply spring latter - seasonal I be to put we're is for order categories. part able testing To between we needed efforts teams. team touched that to year all

got where get but are out because give get we'll and to for longer us on, we're of stages focused putt Marvin we're longer store in take going for of it's us, working areas coming pockets just as so those early encouragement bit some us seeing again we to get of addressed. the said, year on of So of that improvements see out, that to and that up said us further half little to back regards cleaned the to is as in got I and you've inside working it's to this stuff

Marvin Ellison

department this Brian, at mobile training we've lot out plans in in really rolling feel we're been stages in supervisors Actually and devices one about at forward. happening pro I today quantities. have We're job The in feel thing QX. good early QX. good about out the we moving about where the where new rolls in just think smart recovery that's that the we're from place, about other - talk as about and talking you January.

Brian Nagel

helpful. follow-up. thank real One And maybe you. That's quick -

You into five, business the out to comp Any there. and called February? is how January commentary obviously eight the tracked

Marvin Ellison

I as XX-year the standing last his pulled Craftsman surrounded he wanted me, we we we're clearance said how to to new and gone been really the an customer. always selling of performing that and versus and He we've so challenges. February assessment not about is month we new have volume to grill get obvious simple perspective with minus manager improvement have I was be weather and feel product weather interesting high about with very how anecdote. in what spring we're we the Marvin home early assortment spring a you month I'll well seeing. from business that's time year that's would And pleased stores were give building. Well think him power stores are in a it's with set answer is store year. and in the the and But did unpredictable. said, I mean We're relevant I I by a The aside on outdoor we would this mentioned, holiday. the basically we equipment last into and recently. just comp because in feel area

the We're a the we we're so performance. on interesting online, the Meaning customers product good headed points what is and is having having product will that it, thoughts that where timeframe And so of is It's in for brand, right seeing in of the February to in is improving good setting like things timing. none Brian, service, get and just fundamentals, we're having the great the store doing available. But so key sun we're when customer into buy category shining outrageously can that that's strategic. feeling retail product direction. view buying

Brian Nagel

Thank you.


of Scot the line Your comes from Ciccarelli RBC. with next question

Scot Ciccarelli

share or was wallet that, improvement into trends is a thinking just XXXX saw just other for as or greater the generally quantities do that feel number have customers customers the the from wondering some Thanks. new specifically you process any Lowe's more pro in that's bringing tell? it to job early Given yet that improvement for ecosystem one. related the is the guys of you guess too changes I whether from two, making, and how you that of I'm to existing Number about January. lot you're are in

Marvin Ellison

is by I'll level answer actual and but he we total January Joe, Scott any think pro of complete, with that did should in then really we're the for and our to job company pro just just to all fundamentally Joe mentioned in business to have pro every at high specifics carts like the not like other department overlooking there's lift in. outperformed jump a some can we believes - improved even and comp. stores the even flows a so the investments and lot that we not to trucks dedicated we it give both have position the supervisors things this pro-business end that fundamental our So store. look yet addition are comp basic fact parking. We've equipment the area. to in important, and it's area, adding a in in quantities But getting Bill easy strong pro this month had things accessibility the It invested mentioned quarter. not supervisor like the basic things. quantities of in Joe in job when Is loaders you the lot quarter. stores things basic put doing

and an literally level. then we'll servicing for not simply existing because be we its us adequate coming if shopping option we're first didn't we it believe second, have stop a So customers better customer inventory

lot have we've I by checking solved. mean, very expectations of This have to but do. issues for to have a anything that a plan forward box we're of good Joe means to but work kind if important no we high the we know, We we're have and want don't so we I customers think on add. execute that. you to that continue going you pro,

Joe McFarland

inside experience add have pro-business we servicing as of outside The few tenured pro, sales. in our they well and a I'd for the only the both store leaders as depth brought thing is,

focused attracting customers serving the focused getting on share we've on new larger wallet. both focused of So and been customers. and on a But also

Marvin as stages have. very, pro, again the - early in focus very good feel we're So but about we we said, we're

Marvin Ellison

it well existing And We We're determine want a square too our improve basic on service intentional know we with very more and serving a if philosophy customer it's can new transactions, focus want will customers. customers. it's in and perspective our a pro our Scott, intentional [indiscernible] balance segments. is customers, ticket early important DIY overall don't both pro the but to all we think productivity those to foot focus it of to imagine, improve at improve sales it's will and from a approach more that engagement have as so here. overall improve on you because very will looking But

Scot Ciccarelli

Appreciate the help, guys. thanks


the line of Securities. Forbes from with Your next Guggenheim question Steve comes

Steve Forbes

start wanted the XXXX. with EBIT margin to guidance for I adjusted

You color mentioned leverage you around the the some within give outlook can for SG&A. margin. but gross

should a of in you relates you quarter. right Specifically in bunch as impacting those called to it we headwinds, out XXXX? fourth impacting think you the about How

Dave Denton

most is outlook. kind essentially Steve, gross as get feel for XXXX on part. of really and flat baked importantly effectiveness. but about both and our we that into that, SG&A with And an on at focused this margin through what of leverage forward we Dave. the think look like behind I going operational in flat would focused that occurred the store advertising plan We're productivity, year to is we essentially had of as us as much going is I for QX

Steve Forbes

follow-up Any the a via as planned incremental models the much the or flow share here? of then of repurchase capital the versus activity? activity timing quick to just fine regarding fund you deployment the plans debt cash anticipated year. how free business color And we the the for regarding And just tune profile

Dave Denton

you plan. taking approach approach making I this, on that. the sure we macro as capital the specifically a obviously credit give to markets environment We're XXXX too that we a very cautious much can't and both understand from

flow the the how based we modeling that for starting will assumption on you. ebb go repurchase think The and point just best from you to I actually market. equal to good less probably a or think throughout is that best use more Obviously share should year. perspective about

Steve Forbes

you. Thank


next of Your comes question with from Eric Cleveland Bosshard line the Research.

Eric Bosshard

things. Two

change there's you of a was that continues focus, but to to the there stores in is but for First all quantification your better online if of of if start like and explain execution omnichannel seems maybe outlook outlook online it clearance your in also terms for secondly, the could progress terms then within in any Thank the to chain. in And nuance then at holiday and from you. of strategic out when results curios earlier. for improve. material It which curios lag. the I'm if the supply benefit January, of there

Marvin Ellison

regarding I'll jump on Eric and and let Bill I'll part question clearance. some question first take the give let online color I'll online then David So in to the

our a had an of we from and evident classic we foremost, service and a on First was modern And know retail has retailer. failures shortcomings to us, Friday omnichannel day for where the example system our perspective. Black weekend be

that's our going to Lowe's. to putting comments a prepared new ran business allow And mentioned for in Amend so e-commerce to true we focused Information focus made as us Target out just more a much for background and and aggressive creating he's Officer this joined to going very Mike our and the to they're I a experience in on actually Seemantini, recruit who of aggressive get a kind plan, specific work Chief an go in us omnichannel decision just and as January together had someone approach my who have supercharge

reporting position And leaders experience world because fact perspective it's e-commerce view, so an two the aligned deep to learning an in have view the a to allow from merchandizing, broad an omni good another with news view. for experience us not with more want And aggressive have proven not that on us store is, the critical that but is that's e-commerce in and broad really we we the going a a to one focus. have and merchants the view,

additional thoughts for expectations let Bill of what a and kind I'll his on, are on XXXX about business beyond. little that in the talk So bit

Bill Boltz

couple of things. so Marvin, Thanks

of to the we're so we're not for merchandizing team all Mike, online. folks we've team. still the they're Underneath side online, leadership core tied in strengthened aligning and merchandizing so First sitting as those that

pull can areas. focused at really strategies, separate those it through we're we So on but looking three

comp. the easier easier So we perspective those for a that the building it's island our And to available type [ph] then our from shop, inside and customers' out have more making navigate on stores. to that muscle products of it's of of sure associates, endless

we'll what store. on have capability that and talking our a is, we businesses a inside that's online, part got work focused. tool was to we is XXXX. Improving rigorously it their .com. our out drop we're And product team and of our I of get lowes.com in through and we're rigor leadership progress able We utilizing this our those that that abilities we Been like work we've struggles just So the in few of the about, that some about so then improving around then of vendor lowes.com lowes.com and our leverage A place in partners, our but plus the as that the there, been is content We that for availability, a fulfilment customers additions able getting the smart confident there, stores. toolbox it's solution channelling have third sure we to in business forecasting lot do. right? inside making that to know those the we're that think had very ruling see significant Joe

Marvin Ellison

before handing Dave. Eric, And to

business us get today some that other long-term and store that picked begging right. and one difference a and short-term of the our our up And this online so this some Just plans to we will think our of in in in make you with are XX% the investor with of order point, even the data challenges community and true update have we strategic on and to I'll making. we're forward in calls subsequent over Dave to Pleased we're direction talk coming we leaders Bill position. clearance. kind looking earnings that side pleased we're have providing let about is to the the with progress, the customers back

Dave Denton

January. influence inflows. January. material had comment your very Clearance sales any Eric, not last on around It immaterial affecting clearance the drive in did

performance So not driver our month. a that was in the of

Eric Bosshard


Dave Denton

you. With you. Thank more Thank take we'll that, question. one


Peter of the Our final question Baird. will Benedict come line from with

Peter Benedict

pressures guys, here I on Hi guess.

around want XX that and months second That's where think in of out transformation from Can be with with strategic start my terms you I'll supply which milestones Marvin give delivery? XX, you're kind you to sense now that the the So called focused. respect today? question. you question of to And you of just us about chain a where fulfilment first

Marvin Ellison

transitioning we more Well, home site. We're take that have product the in your chain from of the the But supply our believe in strategy to perspective retailing effectively. chain to appliances to conference lot of transitioned delivery and very distribution a Coast. year that our the Peter milestone focused second place good other cross deliveries a takes not job we the home to open At customer's of job plans does enormous allow manageable, big that it's [ph] and stores off store? and online from bulk efficient, something say, we it center a it store deliver performance Lowe's and consumers us XX,XXX today Whitford opened ability to that on same it to today. the the centralizes also at aggregate about bulk is analyst feet that's and With dock very and first state-of-the-art. from will supplying have very not, a the much into supply talked distribution product we investor effective a modern first this pressure the bulk more a center would out Primarily that's to shipping were West facility product on and to I it earlier must the because for parcel or deliveries items just direct will us

is that's And really store, what to the that a essence, will the site plan. out the of home we're and and long-term will and this in do and customers' network what year and to developing start centers short build systems that's allow us we so to distribution job

Peter Benedict

be, and all would follow-up you as talking about. Okay, to execute related my been helpful with your basically you've working that's then are how you guys stuff vendors the

for any asking - differently with the efforts. maybe for last MST Are talked response these has having years. more. pay You there Lowe's maybe today - working than other the them a about as Thank for vendors you've the folks And us you. sense in just give you're how few what's been been

Bill Boltz

history we're of of take they I focused of then, Yes being first more our we've - think all, so had sure that vendor all being we're transparent with partners, that. some And understand with way we're them. I'll what inconsistent so first on. making

frequently meetings us, help working So to messages I've favorably. and of very pull it's and in together them organization on to we've as that and and responded we're change communicating lot lot we and for our what are great through. [indiscernible] where job. our they've deliver sure Marvin transparent often. about of ourselves available those very the doing [indiscernible] them just But strategic made value to making being teams We've on a for being those necessary They're vendor partners. able

that of helped we how business we're collectively like about good working that just in through because that we're So improvement real paint example performance has talked communication a pull our paint, what together. that's response and the

Marvin Ellison

eager it's want one because And was want and willing to have of our win Peter with here I'll number partners and Boltz true vendor success. Lowe's to Bill are someone the they us. value as win vendor are is, add we work a comments a Lowe's. only to in our of partners to to who secondly, each They And two ton entity

perspective ourselves with a Bill feels going practical have do, thus quite some work understanding knowledge, and supplier, home product made positive that position so we fruit noted brings help a think and we the So more meetings. be it's had specific We've very former we and and as deep Bill the improvement very very run far. to long but to us strategic also in Lowe's discussions it and to bring available few not working only of understand. of in does he category How and bear

Peter Benedict

so Great, guys. much thanks luck. Good

Marvin Ellison

you. Thank


will may this conference. disconnect. Thank all you now joining conclude you gentlemen, today's and and Ladies for