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Lowe`s Cos. (LOW)

Participants
Marvin Ellison President, Chief Executive Officer
Bill Boltz Executive Vice President, Merchandising
Joe McFarland Executive Vice President, Stores
David Denton Executive Vice President, Chief Financial Officer
Kate Pearlman Vice President, Investor Relations
Simeon Gutman Morgan Stanley
Michael Lasser UBS
Seth Sigman Credit Suisse
Greg Melich Evercore ISI
Eric Bosshard Cleveland Research
Kate McShane Goldman Sachs
Christopher Horvers JPMorgan
Call transcript
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Operator

Good day everyone and welcome Lowe’s Companies first quarter 2020 earnings conference call. My name is Michelle and I will be your operator for today’s call.

As a reminder, this conference is being recorded.

I will now turn the call over to Kate Pearlman, Vice President of Investor Relations. Thank you, you may begin.

Kate Pearlman

morning good and you, everyone. Thank

Executive today Here Executive and - Vice Ellison, Stores; our President President and Officer. Marvin Executive with Merchandising; Dave Officer; our McFarland, President me Chief Vice Bill our Executive - Financial are Boltz, Denton, President Vice Chief Joe and our

remind that on notice press which be found regarding this would release statements is I morning, you like forward-looking investor relations website. Lowe’s to our our included in can

forward-looking, be and from factors, will various expectations making our implied we including call, Risk report are results materially our and including Form fiscal that differ as other this the of in those annual on Factors, Actual XXXX. important our During filings. discussed risks, uncertainties of for SEC and comments MD&A sections or XX-K those a may result expressed other

non-GAAP we in be measures. financial A discussing reconciliation morning’s can our this relations be press on Additionally, these GAAP found to and investor will U.S. certain items of release website.

turn I’ll to the over that, With Marvin. call

Marvin Ellison

Good unprecedented and health ongoing morning wishes I’d extending the we best to health to and safety start as an families. of like impacts my time is economic, social the out global for navigate to by all your and you This everyone. COVID-XX.

quarter we retailers, our began on most executing Like internal the focused plan our while first financial meeting QX strategy. retail

task a reprioritizing COVID-XX COVID-XX, in and late changed objectives. cross-functional everything opening February. command the by pivoted However, caused to immediately by crisis QX due establishing health global a our We center force, company-wide

three and support and customers; functioning our from first our providers in third, retailer as supporting store creating unprecedented our company, to plan community, this healthcare focus a key to for our associates achieve associates a first, operating shifted including for a safe business essential and providing during a priorities: responders; environment our financially second, our As pandemic with running an financial time.

support our we first responders first associates, result and to $XXX priorities healthcare in communities. invested these million new As the workers, of quarter, a

do In in charitable time committed need. of of to part our $XX communities our addition, this we million contribution for

I’d the on to in COVID-XX, few of efforts. like will more detail actions took to later begin by the that highlighting call in provide we these a Joe response and operational

early we three closing our hours hours In increase each and pm could operating at store party X:XX we shortened March, cleaning so by restock day earlier third shelves. routines

tracking customers. stores that operational the During average our were of changes we garden stores centers, our develop of safety our distancing To square the our several analysis, XXX,XXX customers team strategic our patterns implemented outside safety hours and took procedures, in to approach, Based space. three a Including implemented open, our data-driven and social associates ensure the identifying and we historical on feet paint desk. congregate. the to point-of-sale and social this distancing where garden, protocols safety customer distinct areas: additional traffic checkout, tend areas

service even store end Our safety a the is commitment improved quarter. to executing unprecedented of in accomplishment and team and year-over-year first XXX an implementing incredible customer of truly points reflection enhanced scores This was customer our guidelines basis at service so our effective environment. this that

do absolutely Also and stores deserved negatively for closed we Sunday. sales This distribution ones, centers was with spend Easter to families associates. right our decision day operating the their loved thing their associates our much and to valued with all but a income provide on and off impacted to

would past committed crisis, our we when resilient XX over with under it’s have operates for customers have success are functional been running. pleased model business their they communities a and first without their Whether to conditions. well safe tornado and home to provide essential of businesses outstanding working there and quarter associates commitment need or agility of us we a stores being our products our our global possible the that have our unique that None unprecedented established am most. health hurricane, the and to customer, in flood, the We a keep need the the months I

also regional during merchants support presidents, vice each the leaders managers to Division routines provide and visiting spent field and themselves district distinguished field leaders. managers frontline presidents, normal and our for week stores quarter. abandoned Our guidance and time leadership their store

out their importance hour an a As I of someone of the seeing the retail $X.XX front who started during the lines a understand store crisis. associate, company out as on part-time the leaders career

Let home the quarter reflected and in results, model. which improvement fundamental our of of the me now overall first business our our improvement turn strength strategy, execution, to benefits our retail

For the first XX.X%. total quarter, growing sales comp company we with delivered strong sales growth

both U.S. May. home demand from DIY Our Overall month the and we quarter moved that was has the demand sales strengthened strong due pro continued momentum of customers. XX.X% as and to into improvement through comp

and work on outdoor projects, comps of spring DIY slightly to activity driven long-deferred ranging other geographies, and demand the and concentrated landscaping saw southern many quarter, pro heavily project uptick the as customer essential home projects outpaced schedules. by arrival a the the as in list given to-do indoor busy weather mindset previously home. For the was customers was broad-based repair partly well in comp, that western and beautification hadn’t their from DIY that We tackled and maintenance

retail that delivery, fundamentals, pro flexible focus more on by lot in improved the put including XXXX. sales we in for and place quantities, service job were Comp our strong, supported model

categories total cleaning COVID-related contributed appliances of to comp the basis bath basis acceleration points sales, sales DIY approximately XXX of homes. XXX point expect, basis the and increased points product reluctant In customer. we impact freezers. offsetting company were kitchen that in and such which refrigerator primarily estimate XX demand people their to indoor softness our product, supplies you as growth, points includes basis customers in in net of projects XX and freezer of total, as for and invite Partly COVID-related these we gains was cleaning as As into saw like and refrigerators insulation would such heavy

there sales through uptick shop in also more was to sharp a quarter, lowes.com As we the customers as on online. began more and moved

Google with migration increased site to and the Our and to investments traffic. the improved in us Cloud online handle allowed effectively infrastructure date greatly progress stability

quarter, the to overall Online even X% with for sales For pro up total rates lowes.com growth customers. of sales. penetration stronger our increased XX% were

From Louis outperformed our perspective, Atlanta, once Houston, we Angeles, positive Dallas, broad-based comps a XX three again all were geographic had total geographic growth the Seattle, divisions. all with that west and company Los top geographic division. and Charlotte, regions Nashville, St. and performing comps Regions was in U.S. the

The performance stores quarter of also in U.S. located. our crisis the store of a our in role less disruption areas COVID-XX country created where our of footprint QX. geographic approximately played in the rural in is strong The sales base one

in XX% over U.S. classified XXX base comp urban average Conversely, XXX crisis. comp of and QX stores points. stores Our more store rural outperformed stores COVID-XX company our basis basis experienced is more by as demand our on of the the Approximately by points. subset the this disruption company than urban, from underperformed

In sales restrictions. as was posted adversely Canada, negative operating and we impacted performance comp closures by other store regulatory-related

have business. of the in confident in and Canadian remain We improve performance place our long-term potential initiatives to

appreciation highlighting by the and our associates. During our our for efforts messaging limiting communities our we marketing and dramatically shifted commitment frontline instead quarter, to our our promotional

we sponsor associates support and and campaign responders and thank record-setting fact, of a ran communities the to time a in as the their our NFL presenting ESPN Draft, how they for a crisis. In on spotlight viewership, first which posted

sales and limited Although promotions, like our Easter, customers. limiting fundamental stores paint actions commitment hours they reducing of a and garden our associates areas three the on each key to like and customer culture quarter, to reflection are closing in safety our our to closing the day, early of and access the

allowed had this opportunity in-store in to we Our and rediscover were business Lowe’s and over QX made they the customer in XX results demand. that consumers an last quarter, to us also showed the online, while meet our improvements sheltering place months both

also time am during of the season. has store pleased associates I Lowe’s country, of for in high spring unemployment levels that over XXX,XXX our hired this

this assist Retail Association. Industry to shared with safely operating Leaders retailers our other practices the addition, challenging environment, In in best we in exceptionally

the we’re right virus. is In COVID-XX focused now only competitive fact, threat on the

Although essential to to and am need. our that communities our is future execute confident in current the services continue I and environment unpredictable, and provide products our ability

express want pandemic up to also In closing, our and like again vendor associates to I for would our of to appreciation heartfelt this their dedication. for tremendously my proud to I thank challenges their am step that presented. has their and efforts partners work hard great the

that to to our Joe turn that, actions customers, the our taken discuss and I keep operate With to we’ve effectively, associates support call safe. the over will

Joe McFarland

network. done good begin and Marvin’s that Marvin, I’d crisis work across appreciation distribution stores Thanks the tremendous for our morning echoing and to our have like during this by associates everyone.

in to is we customers. priority and now associates to I’ll changes the review highest that operational our a take always, As health this our COVID-XX. response of moment safety quarter and the implemented

an We new and in to to best immediate to available ambassadors customers with traffic, quickly requirements, the monitor and especially devices removing store up traffic store customer of then implement our signage acted to operations began with social technology and distancing social flow, additional facilitate markers, distancing following: manage how assessment adding floor traffic leveraging product our smart additional the help for free high limit areas. store regulatory space on from customers, in to handheld line stores in based footprint our helping to managers on

the average process garden on congregate, areas data-driven mentioned, therefore customers XXX,XXX registers, square our are to tend implement including center, as paint the Marvin and where we also safety in garden desk. our point-of-sale to the a size, center, feet additional As measures in deployed stores such

centers out, we one-way and center to set customers and at we remove entering any For at services utilized the one entrance the garden customers time. teams, or example, merchandising encourage spread our to garden our flows product traffic in limited shelving up to of and number MSTs,

more ensure allow hours more added closed we for procedures, and operating To our activities. three our stores clean, at party X:XX safe for to restocking service, increased pm stringent hours cleaning a early environment, cleaning and implemented cleaning third

X:XX stores We also hours pm keeping the until for operating day of our during allowed to customer concentrations traffic. enough that determined open minimize

first in Plexiglas one stores. all point-of-sale to install areas retailers was Lowe’s shields the at of the

also wear and distributed their shifts. during We to our gloves associates to masks

help assistance, our and quarter. to March with incremental time one full consisting $XXX with part additional As time investment a for hourly totaling $XXX reflection of we and associates payment and of payments in unexpected special in million the each May, our provided one seasonal commitment to $XXX expenses, two with to associates, financial We made associates. in them for in first

of For April, all temporary increase associates. month the we for of hour hourly wage $X per a instituted

our of associates those for and from for show additional at vacation To emergency leave further up leave weeks. families. protect offered two to days of COVID-XX, To with managers, health illness and the we weeks paid of risk dedicated spend them, provided needed them time all frontline higher of and have those offered recharge an severe it, who around support paid with emergency four to we their our paid XX we associates of to

We they also in their services and families, telemedicine to all associates were Lowe’s whether enrolled or plans. not medical extended

and frontline we million in $XX this worth our NXX part protecting of our medical do To million $XX masks. workers to including approximately support of first including essential communities responders, year, committed products, protective

As associates increased, and allowed fulfill to orders efficiently. devices more Online online in parcel shipping Buy Pick-up demand smart Store

This we been rolled in quarter deployed without rapid possible in pick-up days. we a of this fact, have technology response not out would the XXXX. matter In curbside

customized versus and stores on capacity customer-centric associate traffic also Our sets system level. scheduling tools of tiered allowed effectiveness priorities scheduling deliver for based store to us availability their and new monitor

forward, look investing remain our for strategy growth. retail fundamental committed and to we we As future

customers time to a communities challenging incredibly adapted and how In we and as closing, They associates remain our of to proud valuable our environment. served asset. supporting this tremendous them our and most need, in responded I’m of committed

Winning I’m above XXX% an this level. this $XX our $XX Together the stronger stores Based announce represents million. that payment frontline on our sharing bonuses really than of expected quarter, million associates target totaling incremental their pleased earned performance, to store to profit payment

I’ll call the over now and Bill. you, Thank to turn

Bill Boltz

Thanks Joe, everyone. and good morning

saw first DIY growth categories. and sales refrigerators, of such limited home installation very essential positive and weakness we We to product in quarter, and Marvin home freezers, in with demand comps other strong home with products merchandising for departments outperformance essential generated pro necessities the heavy cleaning in of COVID-related repair DIY posted mentioned, XX.X% XX U.S. as comparable driven As bath. Fourteen by improvement products. along kitchens

their which in maintenance homes engaged critical in isolated drove projects they a categories, paint As comps customers this of double-digit core in categories. and quarter, spring-related repair variety other and

categories rough plumbing, along and pumps, lot in benefited pipe from double-digit with in our pro comps job this rough quantities. plumbing, for in continues hardware, lot both quarter, air we filtration, performed and customers, as DIY which well in lumber, expansion pro other with growth double-digit strong investments water by During the our be Core unit categories off double-digit of driven job posted pay and and we but filtration. essential demand to also comps improved tools. in Within delivered to in like fittings area growth continues quantities

the strength general these the Our DIY customer. categories, Cobalt both great XTR hardware program, heavy and ONE saw we the but and a pro critical and In for power continue we pro our recognizing both from by also the brands are from pro launch platform new and categories product are of customer the the fasteners completers DIY tool in tools, like of to see quality strong project product. Pro GRK, and our FastenMaster, as benefited performance this business our the XX-volt quickly strength supported Power to addition response the hardware customer as of Craftsman

of Within were pro brands power nice our all DeWalt number through we results of the growth are and with such the key the exclusive pleased to compact power tool addition in as brand we across one industry, DeWalt, XX-volt see continued tools. seeing we tool line segments the our

improved innovative investment service quantities to the existing our business. with our trial Lastly, share Cobalt Metabo new showcase model tools of of our pro lot tool increasing and driving and brands Spider, strength our are to build from Bosch, new continue These Lufkin, job HPT, with we customers. wallet with customer our along combined in and products pro and in

XXXX execute well As quarter. us progress in Marvin and positioned made we Joe indicated, our initiatives the this to on strategic

and For demand. currently to am in meet season and allowed changing are year us partnerships both customer fully to the rapidly example, our operating spring brand of recent we for plan facing. having have better our entire which of for merchants the allowed vendor also place proud to requirements the introductions, our I us the respond

to take to of operating our this to stocked challenging their like extraordinary a quarter the keep products effort building made moment despite stores some suppliers I’d who an Within suppliers a that few of well categories, own home mention environments. our our were above décor, Old Pipe, business and standouts, their and Kilman Group. special XM, MTD a Sharkbite, Charlotte are our deserve shout-out and Monopy ECMD, and Samsung beyond and lines Bonnie, Castle Forest just Idaho went responsiveness. in true In hard Products [ph],

big Finally, our Zone, Zep to I’d put by be remiss if I went didn’t provide you hand give these thank Products, Safety sanitizer to gloves and beyond frontline with and as us a the suppliers and for above Cleaning forth Medline efforts three associates.

two changing quarter. to stores field back merchandising in the being during our played the the and critical teams Turning our our with a helping associates, role U.S. tornadoes the adjust to of ground to XX on impacted environment, earthquakes parts to along that respond

also to MST ready our they was significant whatever were increases help demand. needed quarter to do respond above during or in and team, service to merchandising the went as stores Our beyond

were This associates. quarter support the our social time-consuming on to key of these distancing. vest in reconfigure of they The our invaluable our ability are to the on because support our off the MSTs red tasks boots quickly shoulders the in ground taking focused teams stores

in rollout growth, future time nationwide and assortment in fulfill fasteners. helping saving investments place, all framing quarter continue products their about pros available needs them drive an on ahead, Simpson we pro and stores with to lowes.com, one Tie make hardware These Looking and hardware be money. in of we expanded trusted will second are excited to our Strong the to

Honda, our the position proud leading two to help leverage country, arrived Weber across Craftsman projects. top U.S. in customers in complete our such now as and grilling, outdoor power to time, of to the destination provide number has will our the products the continue Charbroil. selection we Deere, to outdoor with one we’re spring Aaron’s, outstanding as and equipment offer an them brands for same As the their At brands customers with Husqvarna, John

focused Cloud quickly experience a on and the will next over in to that that previously, remained the three strong customer discussed digital build ensure and completing teams our lowes.com, are we’ve to capabilities further add we quarter second infrastructure this to working we’ve platform. the lowes.com to Google grow for As the continue to quarters on enhance migration sales

communities of the public In while remain as they health committed closing, to we ahead to them the and even customers better work our in challenge serve capabilities COVID-XX, building to future. serve our navigate the

turn I’ll and call over to you, now Thank the Dave.

David Denton

morning morning our by quarter provide during everyone. actions and begin the an we I’ll that good and you reviewing capital took on this priorities. the Bill, update Thank liquidity allocation

to capacity economic credit unforeseen QX, liquidity than the of we we $X revolving After potential now facility we equivalents capacity and Given in $XXX We revolving scenarios uncertain as decided repaying on any April due could on have of billion by in of which credit facility cash raised in and that for cash plan through million of manage we $X we believe senior $X liquidity. undrawn be sheet senior bolster In the unanticipated the outlook, available of any notes notes needs in that $XXX liquidity disruptions. our for to more XXXX, billion any million. the billion our as adequate can to facing. have a increased be balance well made

remain we beyond decided do We look program for drive share halt term. committed quarter. the of for Furthermore, and, dividend the this as average in X.X to to executed million $XXX through returning repurchased doing over value ways more to During $XX.XX shareholders long million year to we what not shareholder any our share. shares In we repurchase an we our we QX, capital anticipate the also program. always, per repurchases quarter, share at price

framework, year. consistent quarter, future In the and capital total spend capital the need reprioritized some we remain the capability, capital through projects expectations are XXXX the capital to we our billion $X.X we for In with expenditures expenditures in in continuing growth. but are prioritize focus certain unchanged. investments this term improve planning total have cases, a business Also, for our $XXX for of omnichannel million still to our allocation on to totaled in near

In $X.XX beginning increase there statement. of $X.XX with our share quarter, to In an turn first operating year, on performance, to forward earnings share income of compared per this announced the XX%. QX, related will a of in operating now the to comments I’ll the per impact income diluted comparisons GAAP where review restructuring. Canadian we the from generated last a include of certain non-GAAP was modest point applicable. My very previously quarter

In due diluted for of in of particularly basis rate, share while X.X% latter per These than an ticket of increase on to delivered were prior of compared QX, first largely growth period, year. XX.X% an to the grew half exceeded comparable the the adjusted margin we the $XX.X average $X.XX, gross X.X%. versus total and transactions sales a expected of results expectations stronger increase quarter. Sales quarter earnings with prior year the billion, by XX%

see performance both quarter were DIY XX.X% geographies. and to across U.S. and across comp our pro encouraged and in sales up were customers the strength in we all

line March, expectations, accelerate of declined to significantly increasingly lowes.com work customers month, meaningfully lowes.com April. XX% in Sales COVID-related unwilling X.X% but online options. increased a customers national April as month. sales was also large as delayed while continued in quarter Also, with were moved comps beginning place. approximately by and mid sales their largely March they on utilized in comps activities sales our installation sales ticked XXX% many step-up with our the with to projects as in homes. February, over the saw X.X% monthly up and with in into in in shopping prep we more as working March we allow installed in sheltered impacted long February’s customers increased U.S. XX.X% through in Our performance

and have continued and pro we broad-based categories in across with and nearly that into strong merchandising The strength saw across all April May, both geographies. all trends DIY

to regions. month date, strong at all trending sales geographic May double-digit comp For across have U.S. been comps results above with or April

throughout to sales driven margin rate Gross to and margin of last XX.X% from improve the actions an product that as took by XX and basis both QX basis activities of our XXX of benefit performance, lower increase well improved promotional last first quarter. point we points compared Gross in the year points, was year. as pricing cost a XXX the lower quarter, basis promotional

effort mentioned, the the mix. favorable promotional XX back limit also approximately nation. points pulled benefited to non-essential margin traffic from orders an given Marvin to related stay-at-home basis in on company across marketing the As Gross product

basis assistance COVID-related our sales, $XXX prior points for million of QX quarter of other pandemic-related incurred the contributions. frontline million of related cleaning the over million included and SG&A in was to XX.X% during in improvement an operating year. expenses million $XXX XX $XX charitable financial with $XX to expenses, This and approximately approximately associates,

points. COVID-related of leverage sales points, the store efficiencies, million basis offset XX employee resulted points, in basis leverage by basis points more $XXX SG&A insurance of than payroll of was of and of by impact driven XX advertising higher basis XXX deleverage XXX improved leverage and the While expenses

sales. income results. margin from excluded of XX.XX% points that operating basis to not increased Adjusted expenses Note our XXX are adjusted COVID-related

to of adjusted was rate of change year. rate from effective XX.X% last the above quarter effective operations. related was the The The tax a prior The our in prior tax year Mexico XX.X% approach benefited exit XX%, rate year compared XX.X%. to

inventory billion, the $XX.X is lower than levels. prior slightly year At

guidance outcomes into result per business range this environment, we limited in our potential the Now XXXX operating prior unprecedented which future Despite like unusually solid trends, income, strong into are sales, address performance business visibility performance. before an companies continuing and have operating momentum financial me year our and XXXX share. of In earnings May, full our other our let for outlook. wide for sales withdrawing this we quarter I close, XXXX

it regarding expectation we would that updates provide more we my frequent forward quarter. results performance, periodic on so like going giving will transparency be the to our our throughout is second additional However,

we closing, future drive to the continue confident of our value. to our about In long-term ability sustainable shareholder remain business and

I’d this extend meet across risen crisis. global to have challenges appreciation the health like world at Finally, the the to associates to my Lowe’s who of

Operator, now we are ready questions. for

Operator

[Operator instructions]

comes Simeon line Morgan proceed of with Stanley. question. Please the Gutman from question with your first Our

Simeon Gutman

Thanks, good a not so everyone. on impossible year? there’s position and back morning I and much how your question to looks a leveling My first comps. perspective, share of inventory from an pretty is to question expectations, be answer it’s into if theoretically the you’re surge know reasonable, the guidance, sustainability you’re what really could and about planning and are but thinking then going you of now provide the surge a right now, off, should half then your what recession

Marvin Ellison

I’ll Marvin. and the that second is This let first Dave of I’ll piece. take part take the

You’re and we transitioned in very right but mentioned continued is you and in, April - comments, May. what this is prepared in That Dave that sales can and, a unprecedented that had comps we that May. includes into also very his April lowes.com, strong that unique triple-digit from has tell we’re into as momentum environment

a the going point this back latter in interesting and is this we’re that is we anticipate in recession. about do some see of to see that not housing What’s We to but comps, moderate year. to this half start of don’t sales quarter the negative anticipate going at we’re the part environment

directly - seeing in This was house. our so back around and and and business is you impacted. improvement strength the homeowners from recession XXXX If the a home housing XXXX, they’re they’re we’re in finding to obviously sustained you’re projects place those still sheltering because go different,

going have said limited environment, there, in we we out as Having results good out a do this. we have in unprecedented out really very even and QX plan happen other like the feel to reflected months what’s company think every but in the and execution we that, visibility this quarters, though to

let I’ll add additional-- Dave any

David Denton

demand I’d for managing couple essential one, products increased these that. points. Simeon, they’re add seeing stores, so time and working to our just tactically time the One, real that a consumers in responding we’re we’re for real on

we’re importantly long term playbook. our Secondly, still running

we’ve drive years, to that both can making We’re lean allow the from able variety non-discretionary a to labor type merchandising in secondly have expense half profile playbook. tools shareholder be value flex all have deviated slightly put operating Three, in in date to and developed environment. place manage that of not from the over items a operationally softer to out your into investments to flex to our able and we us back long-term demand so perspective required, being with plans the to if we a

Simeon Gutman

up? pipeline of DIY there--I about Okay, sounds far is to my the that’s or the with you is starting hearing comps, at customer their talk and pacing up, it type moment. running, yellow doubt and refill anything pro Can also if follow sounds in you’re as as the then of backlog and DIY it plus-XX jobs type flag, like you’re what anything the like is

Marvin Ellison

strength even pro and this to reminder, call delayed Also, strength as has so what’s pro. industrial and pro is forced pro pipeline downturn larger, not smaller, though than cancelled, continues. more see up. is we Well, the pick transitioned still jobs interesting quarter in Their was pro strong DIY, primarily and that the not as the you’re starting the customer the those and pro, was is in robust really less for our now That growth a in more pro that projects. what think us our truck but customer customer remains the impacted remains pick-up healthy, outside was I DIY, to as

states hope to point data comp a competitive sustain in but a our interesting locations, Another to a performance point, out reopen, stores we are is able data we’re it’s those which the the that total there when beginning to that in us company are there. outperform seeing even broader our glimmer landscape is of

of lot playbooks we but Joe know, and Boltz uncertainty, that lot really as and in transition lot expense have can XXXX management a Dave how a to is our experienced McFarland there old there pull to and perspective, had if a very requirement, don’t from again, But that operators maintenance have that from more do to Bill Simeon, levers and we make pivot. we so said, detailed know can type we is the an repair of a when strategy. a that period that, XXXX - merchants We is of a team have of we life

Simeon Gutman

Thanks, good luck.

Operator

you. Thank

line question with with your of next comes proceed Michael from Our UBS. question. the Lasser Please

Michael Lasser

Marvin, if morning. forward negative? should that a we Thanks lot pulling for but basis negative that’s why go points expecting and demand wouldn’t COVID-related sales case, comps the comps, question. look my Good of XXX from you’re not of know simply taking periods, at future I

Marvin Ellison

business, two-thirds of we don’t see don’t things on so reminder, we list that pull essential forward I to to-do that what it the What lot they Michael, in it we the see customers and projects were get in time mean, just and simply these to. they we is are was as because a as as sell retail have a non-discretionary. that didn’t all. a coming saw customer’s forward pull we fixing at had delayed, were

Look, we’re be open. blessed to

buying, just don’t place. sheltering in we shift we based and see don’t us landscape in it, in is we most a demand see on we’re what see occurred we QX, thankful as look what at that open, We but look are in, very challenging the without forward. competitive environment based the sustainability of as the ever worked have of question a April pull what the this customers it at We’re when customers any and occurred on unique

Michael Lasser

have Dave. quick two-parter I for Understood. a

lost everything and if is gross benefit part from quarter first saw lost lower? that just the looks you margin, last be that from to structurally strip of is haven’t in will gross recoup everything point we advertising, margin out in or At you be able still we the to it like less promotions, what favorable mix it you recouped going you in First year.

commentary repurchases? would or indicated going what your if well? to very you’re then to happens you And around perform share repurchases conditions What V-shape a this there’s for share the continues year. that business be Under not recovery resume

much. Thank you very

David Denton

guidance. prior - talked year the Yes the of was that that gross we recover rate by that we’ve to end Michael, expectation listen our the about, our it’s would baseline margin our

working like day-out. against actually and say to and pleased to the we We’re I’m push made merchandising there right on effort, in progress I really that we’re making team that and a we stead performance. investments improve forward. feel our really finance largely there’s focused with continue the we’re I’d and between and day-in good combined

from share listen perspective, a see. repurchase and we’ll wait - Secondly

I think our up the the good perspective. robust news moment, flow We’ve is shored sheet very and our a at liquidity strong. from is balance cash very

balance of market, and year. we it just through as of nature given We’ll watch and we Let’s the watch see just this dynamic the stand. this see, where carefully go

Michael Lasser

you and much, luck. Thank very good

Marvin Ellison

you. Thank

Operator

Thank you.

Suisse. question next with line Sigman Please the from of Seth Credit proceed Our question. comes with your

Seth Sigman

SG&A. guys, very Hey morning. I Thanks good leverage the good a in wanted to question. on for bit Obviously quarter. little focus taking the

wondering elaborate You discussed offsets. you in some are but I’m you as the quarter? those on some those had incremental just look of if how costs sustainable you obviously, offsets can positive the some second quarter, into

that about thinking should costs, regarding how the Then be of incremental we $XXX well? bucket Thanks. as million just

Marvin Ellison

the I’ll part take first Joe I’ll and of this it hand McFarland. to over then Seth,

the of the I schedule the to performance store ability heroic labor have our demands ability effectively business and to by system. could management the this have to make the but location, and think at new was time, department associates the our Timing during is large that a was by leverage sure we incredibly look part. scheduling of to everything the been key

what that initiatives let labor from to system expense-related in about drove McFarland addition in were I’ll benefit Joe able operations. talk we they other to scheduling some the

Joe McFarland

Yes, thanks. This is Joe.

productivity we’ve are our well and our we way working again from that shift As labor XX/XX to selling, in our XX/XX, on transition. tasking our to been is

the had to we to mentioned would to things associates schedule, able and were set done really suffering, were the smartphone the allowed that staffing dot-com If like associate of ability areas for in associates sustain really quarter Marvin departments the comps store the customer-centre dial on not based that the delivery. and lifting, of in - up you we curbside our and be XXX% were smartphones, our the April app that been doable in the also about things month able not Pick XX% that labor in have applications to think reallocate for the the

leverage. to centralized the initiatives our of throughout allowed quarter were focused receiving, things there continued the on, a operational a to that we stay gain lot us Seth, - that number so of things

David Denton

just lot and add Yes a teams this I’ll very efficiencies all and quarter. to to be focused of shout-out a drive ops the Seth, really really

a balance ambassadors in costs, However, this there $XX from incremental traffic our cleaning, will ongoing be in incurred we the queues we as million probably new in manage and first so of incurred incur additional costs cleaning, of flow for about put that we We perspective, those the will stores year. to the goes social for operating model costs distancing which quarter, are some the through forward.

Seth Sigman

of the the is about first past how that $XXX much million, ongoing What quarter?

Marvin Ellison

is our to our associates. goal of care take Seth,

proud invested communities. associates $XXX QX that roughly our we really and customers million in We’re our and in

of we we an else, to we’ll about another We’re care for target our May. June, of of unique in and Joe for special for that’s make the us drive in difficult in the interest. to in wage $X payments as our month the million looked month pandemic in associates best appropriate but project when is the associates this March, April, of going it’s of be, we going Like of as that above the make payments over month $XX a example, their for continue environment take continues make anything $XX and Winning increase our on to special the the associate to paid based at going we’re sure think out payment in the month what stores. to talked that Together our we’ve so decision to needs and million-plus

Seth Sigman

Okay, thank for you that.

of May seeing improve categories starting that seeing trend. Any DIY here you quarter-to-date easing you. and and on Just kitchen change and bath? Are more weaker a are all as heavy like those restrictions that here? Thank growth installation signs in the you the follow-up between are to of are those pro, at composition a some pick-up

Marvin Ellison

and I’ll part let the first take piece. Joe talk about install the

as remember and I we answer weeks and almost healthy but see be the in locations. healthy because truck we to in states urban days urban are pro less short I progress the outperformed strong. XXX basis mentioned our pro also very, improving, reopening, smaller points. that factors, is by strength but macroeconomic that throughout see yes. and mentioned very our in remains said as they’re is impacted pick-up first Remember what is dramatically stores business was getting pro tends stores our pro, that quarter, The year, remote - even strength the that I more Pro so by in these store DIY

positive We’re those a improve mentioned, as there’s urban we’re starting as that seeing. so to markets broad see to double-digit Dave start performance geographic well, and

the can a about piece. little Joe install bit talk

Joe McFarland

that for From categories bath. heavy install down, referenced quarter were kitchen the install related mentioned as the significantly in negative Marvin piece, our and for our comps

very back have very week, As dashboard at week seeing future we through quickly, have like we’re pleased installation so things that progressed very, come that and that we’re exterior quarter the a looked really the really projects includes by robust so and business we look we leads, there. in

in and the more interior that and allowing be our more projects, tempered installers comfortable in their are but be their feel making and We on home slow that our as will our home. pros will consumers progress

Seth Sigman

of Best thanks luck. guys. Okay,

Operator

you. Thank

next with the Greg Evercore ISI. comes question from Our proceed question. line Melich Please your with of

Greg Melich

had had out follow-up. extra might XXX any Dave, or the that that. of Then the of did--sorry, basically accrual this like was Hi, XXX vacation, get a something on Dave that follow-up paid and a then that on year, later on thanks. Marvin, for basically one I I quarter? costs COVID, that in strategy, is Marvin, you

David Denton

some QX. the largely paid, on It’s was that in things quarter. actually expenses in when this cost accruals always based largely get There’s but are incurred

Greg Melich

comfortable from you want results more would--it If on down X. to are the be X.X leverage you’re sounds ratio sheet? the balance that strong, to like Perfect, and you just falls conservative

David Denton

correct. That’s

you If over today, we’re time, on our we you at bit X.X sit probably well below cash we’re we sheet, that at our but leverage ratio that. the in if balance net look have little this as a point

of given conservative the for to the balance just think while we’re until see year. for environment how here just operating going out be the this plays we’re unprecedented I in, we a

Greg Melich

or by Marvin, using you’re frequently talking lowes.com? more since you Makes in any Could geography used that and digital total around even multi-channel might be about experience the customers they the surge or and now it, sense. by customer. more and the changes how about the us differently metrics you’re are improvements new some and it’s making also give happening that behaving

Marvin Ellison

starting that we’re modernizing we’ve dividends. to is into pleased that stabilizing What put I Greg, is you, the lowes.com tell just pay can work and

and put calls have that this we is allowed impossible in mentioned In prepared to would curbside, process we’re up We’ll decade-old so be Joe to we last in customers to on for because the been back of customers started comments, we last the from do time that to choose couple want of on requests in accommodate mean, Cloud. site that. days. have that we’re year we mentioned and to. entire his past, I it that As a the dot-com in quarter. we last way didn’t get take to couldn’t the when platform, seeing three they going the transitioning infrastructure. that year, the was complete the us Google shop demand, That what this simply

and the us and drive we to for have team balance done of has about work has Boltz of Bill some job the dot-com have merchant business really of merchants also a year. that of Bill the adding allowed the the talk let I’ll done SKUs, place the dot-com nice the some and additional in future drive to work that

Bill Boltz

Bill. is this Yes,

lowes.com. continuing team to to to be of schedule of is and deliveries, of core in along go online, get to continuing able merchants the that just able I from to to the comments, our delivery as enhance will the continue improvement locations, on work product lots support a that SKUs operations that go the ship work store. be balance in on lot in place year, through that relevant as from so put to operations, opening of many all being work the work that, well of to capabilities the of online But addition to the relevant to the my Just inside categories team as goes on mentioned

Marvin Ellison

significant I the would us and because anytime store, a store, operating or up the helps pick roughly dot-com Greg, other a say it the that’s are sales at that of make, customer platform. fulfilled defer cost our I’d to us point XX% up can picked of for at the

and excited will having The triple-digit we’re only get the and month we’re we’re something mentioned, for and we is of I that balance that’s in growth as customer future. April, lowes.com improved the every we’re to week, the and that good about can each date, news growth sustain and for better triple-digit year, for the functionally

Greg Melich

Great Good luck. job, guys.

Marvin Ellison

Thank you.

Operator

you. Thank

Our Research. next of Cleveland line with your the Please comes proceed with from question. Bosshard Eric question

Eric Bosshard

things. Two

was give in-store, all, the how the terms from it at but in in store? store, is of of much getting just quarter? delivered at how First up said online, the fulfilled us that what in know of much pick-up mail the you I fulfilled of is the Can store, and you getting that number this picked

Joe McFarland

Joe. it’s Eric,

are is our Just over in store. XX% fulfilled then of picked and up orders the incremental through primarily store,

Eric Bosshard

you a merchandising around and of promotions the was for on the X reduced that, did Day planning secondly, question Fourth and Bill, strategy or and look effort and are you Friday, that? and negative strategy I Memorial sales to seeing, managed July, Black to bridge for from you terms as for Day how you XQ, the and of events in end that how how curious, then material promotion drive spring to up well. Then on guess how the Okay, think then Memorial back you July traffic, impact as about

Marvin Ellison

the Bill is let QX. this about I’ll and Friday take Eric, Day Memorial I’ll and Black spring Marvin. talk

all Friday, media, all media, traffic when Due minimal pulling were print from from event sales event. other of the tap of incremental the to in were the at for pulled, but other sales process unsuccessful minimal. received the benefit at Black look driving we distribution distribution, spring forms we so the mechanisms we on that look were When we

we audience at sure for look the print Let how I media. just broader me make define

a Lowe’s is a so is that by benefit best. minimal have, to sales medium was of lot for the contribution discussion the marketing quarter it was total as print at in X.X%, said, effective Friday incrementally I spring was but, we and least Print I that generation us there Black know

Easter take we and forecasting Bill no million sales to would day. we decision to that, the When for idea down that at you know, I Boltz and closed as plus-$XXX to a be addition and Joe and had close, we were In Denton, make Dave Easter, sat time the McFarland, the we we best made interests that right how up, we hit, was financial to a of like term, but was felt felt associates their would thing that for day and decision. it the off, in better But for a just it of give our and families them to simply culturally lack we do.

all environment for into Easter both a you mechanisms negative a turned take Black for us. for other perspective driving closed pulling and take So traffic events Friday, from in being you spring sales when

spring in mirror, I’ll rear That looking summarizes about Easter QX. and Friday, view and Bill let the Black talk kind of

Bill Boltz

an from competitive and Memorial the as pricing being very the the been program. and more cadence in started everyday to the back Day work Eric, we’ve going has Memorial for and the again strategy, to intention X it is get consistent the That’s we’re we QX, for before, we price really at dad more X. to how being year be plays, a half normal going strategy of approach of XXXX, that and the change quarter. strategy--you of July to you and into Lowe’s Day, so and Day, in relevant Father’s relevant the we implement operated July a with pricing pieces holiday QX how trying into get know, to be shared to always That Yes regards with as pricing look at ago, our continues to

Marvin Ellison

to the we value-oriented the last Dave want will we want of and close be Eric, be comment, but retailer, point at with I a day to a don’t is think promotional. the I’ll end make,

has that point first here. from that’s day his Bill think the very said I

where you risk, of really customers get value customers, one a put traffic those an operating the value in time because driving see unique But we’re not environment footsteps them may and people for that we’re when we not media see that incremental come that’s shelves may there on us environment times. You something that be to traffic in, needed this driving this to going want the of at using but ever in will is that conscious and store balance is the very well. cognizant if in, in we to

David Denton

in versus down look and of lot this we the that and that of point, that number sell, look promotion you obviously the just mirror stores, the sold in you we’re our we items rear and value XX%. of our items items Yes, about on view if stores, Marvin’s we there’s the year a number last year, at promoted to

Eric Bosshard

helpful. that’s you. Okay, Thank

Operator

you. Thank

question of line McShane Our Kate your comes with Goldman question. next with proceed from Sachs. the Please

Kate McShane

good Thanks acquired have quarter, do taking customer broke and to the pro repeat you morning. Hi, and wondered seen idea customers? with during any purchasing regards question. for you customers my acquisition, I how just down between DIY from first have newly an of these

Marvin Ellison

associates comments, provide sure really and a and Candidly, a COVID-XX so financial and communities Kate, at. more address a was we that our of that first the focused looking started on set company I needed. that my we and not the the customers, were That’s tell we said that What health challenges our time into we we the that such moment foremost, will good for of this products essential unique performance and making of looking became and ton is is became prepared is trying focused this on associates of Marvin. as our the a and quarter spent in our less customers to I to were customers, the focused data you on, question. safety

I’m we attention our safe, we focused sure are customers, for this business, were quarter. communities pay lot that didn’t and serve to and data serve there share it. sure this keep our so a lot run can of of our get associates sets team can it but I’m you, the we on probably just that to we data can get Relations Investor trying a

Kate McShane

Okay.

realize are of in you follow-up strong, by trends signs and unrelated, categories seeing stronger as are the the pro? a still Just comps any best but categories, and the versus very the been there trade-down I have better good and

Marvin Ellison

No. Average strong. ticket remains

have no seen We trade-down.

as and, can fact. basis been strong, are have know But on We can so consistent, earlier, hour-by-hour to Our continuing, patterns stated imagine, resilient again, the for customer Lowe’s. surprisingly we has as segment track a customers I make day-by-day, have been very it and we a adjustments. been rediscovered that necessary you they’ve

Kate McShane

Thank you.

David Denton

Michelle, please. more we’re going to take one question,

Operator

Thank you.

your Our question. final comes Morgan. proceed Christopher question JP from with Please line the of Horvers with

Christopher Horvers

Two morning. questions. margin good Thanks,

say, First, Dave, the How and to on lower where play mix hypothetically flat out gross the let’s plan, relative promotions the or, goes your think did about up and the environment, category strong in year-over-year, flexibility the down you’ve an underlying single the lingers the XXX back Thank deleverage that expansion then benefit. low you environment year over given because months? recession the about you. dollar that longer, sort SG&A the think payroll the or shown growth do of past digits in half of how you margin in XX

David Denton

I’ll so SG&A. Joe gross to about flip I’ll take a Sure, bit margin and talk to

really my prepared obviously think I comments, nice as in perspective, a from margin progress. we gross made

improve we to way at I our worked playbook, is the were cost we our so actively look maybe merchandising between think best running complement, year, February, the when it to in not our as to into had if deeply little with bit our entered and finance to and more vendors of effectively, promotional our February. I probably we manage plan, in largely went think cadence partner hitting plan a were advance we we more

a think term. term right work the out have in we’re I have due short of in got improve is not like driving this both had expansion feel from bit margin do, back we pieces perspective but still that a to elements performance, margin solid I place really quarter, performance turbocharged the COVID we in and to a put to marathon, Obviously long the gross play and done the half sprint, together there, we not - of but underlying the our we a the

Joe SG&A. talk Now a I’ll to flip to about bit it

Joe McFarland

From an nice as obviously the standpoint, SG&A in did really mentioned. Chris. had QX, Dave a Thanks team job

in to confident continued built, that sales sales, on putting we that between in, engine new the rule on it the and mix of As we ticket labor team outperformance and we’re transactions, the a hard forward, the payroll done be very strong engineered continue but addition would our but has standards ability ops look leverage, in thumb the have to team labor based leverage and SG&A. work

David Denton

in you today healthy. very and talking for Lowe’s. Thank calling Great. much stay and Please safe about

Operator

you. This concludes today’s teleconference. Thank

you for your You may have Thank day. disconnect lines and wonderful at your this a participation time.