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Lowe`s Cos. (LOW)

Participants
Kate Pearlman Vice President of Investor Relations
Marvin Ellison Chairman, President and Chief Executive Officer
Bill Boltz Executive Vice President, Merchandising
Joe McFarland Executive Vice President, Stores
David Denton Executive Vice President and Chief Financial Officer
Simeon Gutman Morgan Stanley
Michael Lasser UBS
Christopher Horvers JPMorgan
Chuck Grom Gordon Haskett
Steven Forbes Guggenheim
Brian Nagel Oppenheimer
Elizabeth Suzuki Bank of America
Call transcript
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Operator

Good morning, everyone and welcome to Lowe's Company’s Third Quarter 2021 Earnings Conference Call. My name is Sherry and I will be your operator for today's call.

As a reminder, this call is being recorded. I will now turn the call over to Kate Pearlman, Vice President of Investor Relations.

Kate Pearlman

Thank you. morning. good And

would Denton, today Executive me Merchandising; Ellison, Officer. website. President included and our found Chairman, is to remind our McFarland, President on Here can be press Bill are Boltz, Chief David Stores; President, Officer; release Executive President, Lowe's and notice I Executive you our forward-looking and Vice our with Vice Relations regarding Marvin Chief like Financial our which Investor Executive statements Joe in that this Vice morning,

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

measures. U.S. the of section Additionally, non-GAAP reconciliation Relations website. these we'll in found A be to financial items quarterly our can Investor certain discussing of be earnings GAAP

Marvin. the financial will to in uncertain call speak turn host XXXX the X time. turn will to priorities Home and our session. Before we would X greater Total our With initiatives to Wednesday, prepared I like third event while Financial expectations assist XXth, results, XXXX operating remarks, Strategy, Eastern After like this transparency Virtual will quarter that, that on December from will our with growth in Lowe's AM Investor hosting announce a our we Outlook Marvin our We targets environment. a be would to XXXX around key to your over to provide Dave outline to we I'll Q&A still modeling.

Marvin Ellison

Thank you, Kate, good everyone. morning, and

us the year. Company, X.X% this continued sales up resulted our by Total outstanding X.X% of total they grow destination Company quarter DIY and with project XX% XX% to in right wallet execution for for X-year on basis. Lowe's comp total as on as which of of over the driven and results our all and were a their the momentum share U.S. U.S., needs. of customers the These top with growth confidence XX.X% This gain Pro up for disciplined allowed in Home Strategy, last Our for sales for comparable both

these the Later teams build Our categories, in-stock to who chain benefited positions After the how results despite will in returned scale order children Day, are call meet merchants home we increase our global an also disruption on as supply from discuss the high we key leveraged and activity by work in in weekends the continued DIY slowed demand navigating Labor delivered down demand saw travel Bill chain. improvement school. for in great demand products. competitive to a unprecedented the supply we to and carrier as in challenges strong our relationships inventory widespread in

consumers once in result, projects homes. spending on time more a As again were their

contributing XX% to consumers, performance in and in XX% in $XXX. consumer continued appliances Our offerings an across product making growth The and our Total confidence strengthening the resonating decor elevated resulting DIY of over over and We're categories basis. sales. home early over particularly as Strategy. reflects higher are this X-year increase once Home growing reflects tickets strong in ticket outpaced their with the flooring, assortment investment on homes quarter, success XX% again, also Pro Pro a and sound a our progress Pro, significant with

with national intuitive store on of layout Pro focused a improving relentlessly have increased we the brands. online quantities, deeper in number inventory stores years, X our an offering better Pro service past and combined with the Over levels, more

discuss Pro stores. Later enhance continue will experience. our growth, discuss and continuing our product operating Bill As to will we our Joe leverage efforts Pro sales increase the will to we higher our we how shopping expand then continue to across offerings. productivity call, Pro drive And in

For perhaps are the own of interested place and the in for past XX boomer This AARP. announce months, and Home especially delighted Livable the homes. of in home a in who increasingly we customers baby in our aging all services has with Lowe's in collaboration to are importance installation increased for their our morning, launch us, product unique

ramps. stair These We nonslip will walk-in grab cabinets, and bathtub, solutions fit down help homes like on-trend customers lifestyle their pulled modify to our lifts, their solutions bars, offer affordable will needs. floors, wheelchair

our approach expertise educate to collaboration Our this as in and you customers on to with updating We trusted brand help how initiative calls. place. on forward their very we aging AARP to future on exciting leverage will look

grew sales growth represents on in quarter Lowes.com, quarter which of the sales XXX% XXX%. penetration of two-year third to turning this a Now, XX% X% a top comp and XXXX, of

omnichannel One as a .com we our integrated expect in modernize continue to consumers experience. shopping made I'm Lowe's And we Roof to offering, we've strides of indication recently upgrading announce Media we network. further with have As the a seamless pleased who gain our launched platform, traction increasingly that

shift as Our list the movement, Retailer, the on home. of towards the are sentiment our at partners in Specialty Year rapidly Age's Ad helping excited X behavior the as vendor participate well-positioned and that the of forefront Most lifestyle segment and time recognition in to first of inclusion for them advertising. one growing means home this the in digital to of top annual consumer Marketers We're in Fortune's XX years the capitalize our put Admired we to

$X.XX, per to leading per share increase diluted as to earnings operating the compared earnings share basis in year. XX% quarter, the prior During margin adjusted XXX expanded a approximately of which is points, diluted

call. the the our in Dave of details on system Improvement initiatives will as operating Our initiative, the execution or our as benefits team, success reflect Productivity management Joe to performance PPI. continues great of these Perpetual improved price of provide and the and well the both new later further

to in lumber. The remains our towards weighted now to team the more our our shopping take omni-channel leadership for by leveraging on U.S. in consumer like business a productivity driving results that Canadian to to and turning processes the we're ever-increasing is Canada the demand meet focused U.S. lagged heavily capabilities yielded performance the already moment discuss technology fulfillment Canadian solutions. have strong where how Now, I'd as expanding results

quarter, big we gained the This our we delivery building to completed the on for Valley bulky Ohio of region, geographic the model products, Florida. success area, in the conversion second market-based and

for This model relies to on delivery reminder, delivery big in as delivery store This distribution model rollout appliances, improved months. node the consumers own our function We XX inefficient to the complete market-based inventory, new chain from bypassing reduced US its model, higher together. on-time and which in higher plus is sales a these the and entire over legacy each directly and homes next As plan the supply rates. store all margins, highly products. across products, bulky delivery replaces is stores the already the to driving operating for

let's all culture of homeless and year, centennial around in talk our updating million the Now Lowe's. celebrating for importance centers, addressing communities with youth unique renovating the projects investment shelters, $XX at the about needs ranging XXX a we're country across from This country. with communities

see projects. Company's long-standing of to service. our a and our This go customers to appreciation for list and paying our way commitment community XXX expressing the full is can loyal to You of Lowes.com all community tribute

this in community, relationship to military through and active-duty demonstrated of members. our the commitment year addition military of we veterans at support $X country with in the This by our Lowe's service more in in discounts our our program In Joe we're will families is that this call. the later discount our program. proud and military discuss to detail billion give

quarter, Bill. XXX% the our earned I'm for I country payout I'm visiting $XX by to appreciation our above our front-line our the hourly our hourly of that stores, now close, for associates the profit-sharing across resilience the commitment very pleased announce will seventh This and communities. to level, to the a our call workforce. serving and our hard like extend to Before is for our and million that, would million payment appreciation I'm I Every travel over consecutive associate’s with front-line and associates. week, customers target of to Winning fortunate my impressed work to $XXX turn And bonus. And Together stores I reflects

Bill Boltz

and our customers. Total as Marvin, sales quarter, the comparable traction everyone. to and Home In basis third U.S. morning, X.X% Pro with X-year Thanks, strategy gain DIY good increased on continues a XX.X% and our

appliances were quarter, from that on This flooring, on an These Decor category washable, wet of like Building Allen a leveraged of families top Lines indoor is appearance Roth cycled busy own dryers drove growth freezers, compared in-stock lumber. delivered Growth rugs performing period but and product, continued and updated our to which makes them to for as up which our to more as Allen for see product to demand the basis remains DIY and and broad-based with in X-year customers, are product flooring Within rugs. refrigerators, our as product extremely new Home pleased a protect hose exclusive categories performances with slightly categories our strong year. Home divisions. performance Roth the we and strong. down appliances, in top the particularly we positive the to washers division, resonating And Hard the be brand + offerings sales Pergo, high of than year and vinyl timeframe. these Comps last they + rug, lifestyle pets. have divisions prior our Products over of in In with comps the comps were positive in innovative In like Decor standout deliver kids we XX% positions supported the competitive Lowe's. ideal assortments we're XX% by all new flooring across

performance were than outdoor are in as through positive living their as early in tracking sales as upgrading decorating. in XX% spaces, holiday we resulting our comps getting and also Halloween as ahead living as sold homes well, jumpstart in our years, a are lines yards, strong previous lawn earlier hard over We in for driving well holiday consumers with invested holiday in our also seasonal to outdoor our Turning their and and in pleased division, entertainment performance on trim-a-tree category. of garden, X-year their each comps much customers outdoor decorations and in and

brands. our seen supply our customers products the enjoying cold we're are customers we've disruptions, throwers quarter, X as the equipment. stores. looking sales they past. snow in of in seeing SKIL potential over In we earlier power to like equipment Both purchasing of in early products, available outdoor also purchase XX% available and also rechargeable in many weather battery-operated With awareness to zero-emission, soon addition consumers broader growth position In than as years holiday, chain to global Pro Kobalt, deliver power number in leveraged DIY the outdoor Craftsman, our EGO, and products are

positive Craftsman. continue John good and in expand and brands assortment, we're brand of include to powerful comps Husqvarna, gaining product the product and despite products, needs. rough traction the building due continue in on comps our strong build to electrical Deere, customer assortments sales, DIY plumbing comps Honda, down and tailored building that were we We about decline materials. lumber as a Aaron's, our We in In that slightly Pro are their to the feel building to double-digit out lineup with that

SPAX our screws. is leader of in This launch SPAX construction the Fastener completed the multi-material the stores. we program in market quarter,

Spyder program accessory from We our Tool continue Power build also with new DeWalt. launches to out and Pro

Elite Mansfield. This to saw like also are FLEX, projects. quarter, includes be of tackle to SharkBite, And be DeWalt, Fasten blades, jobs, productivity are are to new And new which DeWalt Matabo, our Strong-Tie, offering a and designed additions tough Lowe's. will launching maximize launching SPAX circular ITW, Master, recent lesko. these new Bosch, Estwing, programs the X to program which and Spyder These Tarantula MARSHALLTOWN construction to variety additions Simpson heavy-duty will Lufkin, blades, strong lineup, Series options products all which of wider Spyder, Eaton, exclusive Lowe's. new GRK, exclusive will saw And great be for circular their of their

sales Lowes.com, XX% quarter we a of delivered XXX% a growth the Now, and on X-year shifting basis. to in

we QX, introduction the Following the customer quarter. Lowes.com search our with our experience Lowe's the of third virtual visualizer design omnichannel in on in launch kitchen and visual of paint enhanced

to continually and working friction online the fully in-store to are We the and experience. process integrate remove shopping buying from

navigating I the to Before the I'd like are impacting close, that global chain we across are how discuss the industry. retail disruptions unprecedented supply

production our and relationships As taking to by our the impact work in one largest cost through of growing hold the Once XXXX. We're either the past, and network in inventory delays years we're transportation U.S., needed. to our bulk and fortunate including until very there, carrier in than so to distribution U.S., gives time This able are secure centers the holding the to orders. to and upstream or importers any unforeseen the centers of minimize both approach in product quickly our we manage earlier more of XXXX can we able it's capacity, and regional shipping buys to a the scale us flow to for be leverage the increases. also leverage right coastal we lands of seasonal From country. proactive ordering distribution the the areas facilities the of our product product from can that distribution

different and seasonal flex to shopping our made to thank hard merchants our product. work habits trim-a-tree in rapidly the to that the supply spring us ready pads to seeing and reset chain The early you. Looking now. last Thank partners changing season investments through to changing winter turn we're the the And right stores sell expanded this capabilities we buying for ahead, a now year, our variety that our and has like support, consumer and operating of Once respond like I'll vendor over us which are U.S. allowed we I'd through has the we after again, manage offerings allowed our call Joe. to team environment. to early

Joe McFarland

everyone. morning, good And Bill. Thanks,

stores our would to As of Marvin our a of bonus, million associates like only hourly payout XXX% for front-line Winning our their profit-sharing Together to quarter in earned resulting this associates. mentioned, to during their severe commitment their not $XXX current for weather outstanding I continue labor demand. the the to hiring align and execution communities we competitive this but across remains to meet quarter environment events The the numerous country. thank

addressing us associates. associate's system labor to lifestyle seekers a the is geared management career of that for Our opportunity development. has towards while the demands a foster of needs we our serve and offers job allowed unique as our customers Lowe's culture skill

we During across standard with all Lowe's provides Leadership the opportunities, Curriculum new the all addition development learning our expanded boarding quarter, stores. on associates and U Lowe's of in University courses. to

store training the Learning in their it program improved Our digestible all Lowe's in our centers. how development. distribution customer available newly as centers, tailored lessons product smart University associates The devices mobile role. for - provides well improve sales our to contact continue leadership knowledge on and into we the to that existing is associate’s via and their to stores. supports Labs floor the small or created U our additional expand And is knowledge Lowe's and compliments and as our service

Improvement also an a which drive addition payroll initiatives, opportunities, through to I'd to like our In leverage Productivity an and wages update workforce. career you and quarter. competitive to Perpetual on play in rewarding will to provide Lowe's pivotal efforts retain benefits the our and role with engaged experienced continued

an reminder, large that One instead initiatives single simplified ongoing of introduced over allowed to time year customer area experience. and PPI last the in interface the project. of process and training a improve checkout is one As the that we series which is example a us scale process accelerate cashier a

and kitchens new of stations including cumbersome perimeter the is simplified Technology We introducing begun Spring to selling replace appliances, the bath, and the learn. store, throughout will interface difficult This millwork. that interface other to have and Greens

With focus project. the starting more Intuitive is customer, Associates to platform Self-checkout Lowe's and improving our is adoption customer associate examples the able fantastic to to on again Leveraging XX% use another rates. productivity better to consultative tasking basis. modern on selling. PPI all this Homegrown entire are this capture over for now results Shifting the initiatives labor scale driving Pro, and home productivity seeing for This the the over designed as higher are of about. while for time. which we option, thank team is was that X-year drive associate for already is we I Pro so it over will that shopper, are experience. to and initiative drive a the two new like improvement XX% technology delivering These easier use outstanding customer comps labor PPI Pro to specifically increased much time reduce once the quarter what would of quarter, to

customer, of is and This Time spend view make Pro the them stops of Our this Pro our stores appreciation helping Pro they the cut new down the future recently money which out helps We survey, in on how features, and customers week. time are number what busy expressing including the trailer and mind, phone for inaugural refilling on with for get we're the parking, on in-store they job Pro's conveniences is tires. they completed on additional insight need free business convenience stations, for to site. provides into stations quickly air so maximize our charging Pulse them during great focused our their opportunities. that

more pipelines. learn future Veterans honor In about updating service. for to across our I encouraged job on initiatives strong like Company. look XX,XXX very thank are on you outlook to calls their Lowe's their share their Day, ongoing at to my customer. grow to optimistic strong We fellow of veterans with and important this would our forward I

also we thanking to reflects veterans appreciation for single our once and continued the As dedication, veteran, this improving and and pandemic. and this and discount to XX% store to wanted limit. again and mention that, commitment for the this where their delivered great At better live, associates I'm particularly do others support like will is purchase remain members, responders. results there it quarter. no a I during to the recognition heartfelt our we quarter. offered turn serving ongoing their Lowe's over the first way to for work associates responders than Lowe's, would our our time that proud to communities first with first no by of I active-duty the our Every discount families. focused close service day hard the Dave. their commitment With they for our And to This work I on

David Denton

the invest we I'll we capital flow, with In to better-than-expected billion this allocation results. the $X.X totaled drive morning in in generated free through as cash We in quarter, Joe. Company's on by of driven business expenditures growth. few to operating $X.X a you, QX, program. comments Thank combination $XXX begin Capital initiatives shareholders a both our as and repurchases. long-term our returned billion strategic share well as million support dividends, the disciplined

During in dividends at the paid quarter, we per $XXX $X.XX million share.

million excited for $XX.X and that we to incremental I'm are XX.X over to $X.X we repurchase planning share billion an on shares And authorization. our now Additionally, today, repurchased have billion of full repurchases remaining of billion to bring QX. our shares driving approximately a $X $XX commitment the long-term for value billion year, in share This to total clear shareholders. our for repurchases will reflection our announce

Balance cash target stated EBITDA cash well very Sheet below and times, in Our debt X.XXx. long-term quarter-end. at billion to equivalents at healthy our at X.XX stands $X.X Adjusted remains with

not $XX.X per This execution sales approximations Now compared total quarter, a point quarter, in offset adjusted sales I X.X% a of that Comparable In diluted period by copper. limited. share as applicable. product ticket include ticket would to lifted from the smaller forward better-than-expected strong due points. well approximately increase comparable by like have SG&A of increased inflation cycled sales where quarter, declined and inflation. Keep on reported margin deflation by quarter, Year-to-date, as by leverage primarily this mind as X.X%. earnings has earnings $X.XX, to flooring, XX% driven sales. of comp including the basis comments the as categories, did in material billion higher the in commodity our to ticket largely of appliances the lumber was will other as increase again billion $X.X unit was business. commodity DIY count driven gross impact X.X% turn where share average with sales lower QX per inflation was and of DIY were comparable as last improved customers sales XXX In across statement. In growth, once by consumer and in inflation well of improved transaction we lower growth items, My to a result In mobility year. diluted a lumber increase over sales an rate, Income to comp we sales

increased two-year many XX.X% So of a working smaller resulted on of last X.X%. home were improvement DIY which year, transaction customers transactions our increase comp projects. in Comp

our quarter was Pro, of delivered alike a XX% for home We positive increasingly as increased customers across Home Lowes.com, DIY and Pro both U.S. growth on X-year solution continue Strategy, Total basis. We XX.X% on all look project over to one-stop and momentum gain in in to to their and needs. comps comp categories. in a XX% up sales decor X.X% Lowe's the

X.X% through comp monthly up X.X% with moved sales improved were up in Day. Trends U.S. Our and post-Labor weekend as October. we August, in traffic September, stronger the down X.X% in quarter

seeing are buying As retail some we seasonal trends. indications consistent with broader of mentioned, early Bill

XX comp at ending rate in August the to last Product points the after prices from basis. steep comp the the transaction on of increased X-year particularly basis was a points. September early basis pressured, 'XX, higher-cost increased improved XXXX margin U.S. inventory year. sales growth lumber up sold X-year XX.X%, basis of layers drop XX.X% and through a margins quarter Lumber XX.X%, up the October sales towards of were count U.S. beginning third each July. from the double-digits quarter, XX%. Gross declined month increased in quarter, XX margin we in Looking October on as

of benefited there of acute due U.S. pressures X mitigated in more As margin was and last pricing product categories. were These Canadian management our other strategies favorable the a margins data-driven product year. by cost lumber, largely is in concentrated basis across pressure of mix the than lower percentage more also business heavily points Gross from product third sales our quarter to lumber many versus

to these We the management. and -channel margins The COVID-related of XXX s contributed transportation rising expansion sales benefits expect that higher while we We're our costs, basis XX expense these are of to XX as expenses These as in addition, distribution costs importation minimize costs, this year. well absorb shrink continue of quarter we quarter. basis of impact by of compared in relationships network our -related basis XX increased COVID higher LY million disciplined levered scale reduction we In basis however, the forward. leverage. at will $XXX last and XXX due expenses distribution by sales, benefited in points benefits costs to chain versus cost in leveraging points basis going XX.X% higher incurred credit million SG&A were offset our of supply immune omni $XX of million as improved points SG&A better-than-expected to expenses of our revenue points the points, and partially these due $XXX to capabilities. to not generated carrier higher

million the $XXX to quarter expenses related last stores year. incurred in we of Additionally, U.S. third reset of the

solid As expense points are from profits, growth of driving related our leverage income rate. our SG&A to finally, as expanding generated we approximately favorable project did while operating this PPIinitiatives. material not year, significantly generated with to operating this compared very XX We're XX and we've we of basis SG&A pleased basis LY. points incur leverage And performance this operating any margin

or the quarter consumer At basis shift and were was $XXX QX. including not due largely rate LY, The margin for a million quarter categories, $X of demand XXX impact -related QX higher improved there and rate in-stock driven the Inflation of adding and above at other sales leverage over billion, the XX.X% lumber the expense of in XX% by that XXXX, the margin rate. inflation the deflation have increased as benefited material effective supply our SG&A prior-year of end offset strong is was is approximately increase $X.X over constraints. XX.X%. on last For to This levels, inventory gross billion, copper. which pressured COVID tax by a was $XX.X when inventory timing higher points was did where positions were the Operating year. of a profit than quarter, quarter, billion third operating

Our than ability limits modestly. approach push spring significantly product near-term. to position inventory to has land normal our in our the inventory this turns increased And earlier also improve

in global However, as relatively and ongoing both positions current supply in-stock environment advantage a strong indicated, the our chain constraints. the Marvin competitive given create Bill have

I like level to on our trends business financial seeing Now materially and comparable a reflected improved comment in better-than-expected our before with performance close, November, consistent sales continued basis. momentum I'd month outlook. U.S. our October current in are trends XXXX to-date, We're results as on X-year

As we continue trends. spending to see early holiday

Our represents a XX% basis. comparable improved This billion $XX of for XX%. growth sales sales for X-year sales, X-year growth our approximately representing on include approximately approximately expectations sales comparable compares prior which XXXX approximately to of year, the expectations of of $XX billion

from margin to rate margin slightly and our for higher levels. taking outlook full income XX.X% hold, gross efforts versus levels, operating we With projected be year. XXXX expect raising are continue sales the our to $XX.X% for up We productivity to

And several I performance. to QX. as in repurchases share This the to mentioned from excess than XXth. will closing, years. $X return is financial benefit am In And bring expect planning of announced original results capital now that confident shareholders to will year. with $X our the you XXXX tailwinds the the Kate as next I allocation shareholder we billion our to expect better-than-anticipated long-term for strong look to meaningful, over our the expectations capital expenditures to secular operating ready earlier, earlier, which value. now ahead questions. we're expectations, operating strategies of continue are are in providing and via to combination due $X higher we that, share We additional our for of of $XX billion drive With repurchases total on we forward outlook our to capital billion full up approximately shareholder-focused December for year, billion an

Operator

Thank you.

limit please questions order to for and Instructions]. one ready [Operator yourself many follow-up. are now. as questions to In allow possible, as for question We one individuals

from proceed. first with question is Our Gutman Stanley, please Morgan Simeon

Simeon Gutman

morning, through then is any than gross wary the first anything the it just color business performed the know on see good why you flow-through, the margin, like QX question, SG&A stacks of, how guidance. anything quarter? is business a the everyone. different the quarter? crystal And on be of it's And I sounds any now. ball to the could on on question hold anything Hey, in is terms Are reason holding us there third stacks reasons for on not there stacks but won't in the margin, Dave, My there gave -- the

David Denton

Simeon, is on we view and clearly, we those in performance, look practice is profit that over on have our sales of there's develop two of year-to-date focus uncertain as an and we the obviously Dave. really and that to you quarter. really is you no, marketplace that would the sales I the I in a managing One can that of our is short future are do December And And believe operating uncertainty, answer QX, enter that drive a the just the just Company as outlook, plans to would volume really things. QX compressed best environment performance. profit observation items plans about those the that start follow-through a our in lowest gaining access it's performance. say typically said, this year think this and we're that the time. our we very the with two despite focused well versus here Company's is quarter difference we our share continues both these control. QX in views XXXX. achieving so obviously, that our focused just this make no performance I and And we demonstrates that The so also And strongly really which on both understand in can to performance better objectives. forward and talk to share investors, as solid improving both and as off for we

Simeon Gutman

then, it December make guess but follow-up December to and XXth on I'm a So, point that, I talk is to I my thanks Dave. about the going is for think of try anyway. XXth,

as for and there favorable maybe expedite don't Dave. Marvin next up then And the that's to Anything margin this investment you Dave, that stays this cadence so part you reason you, as and for flow. year, shouldn't business the want continue any And grows the for environment business philosophically is let far where come why assuming the is margins into grow? you, that for to

David Denton

we it's would perspective Look, a think plan to X, we the rate. on The good 'XX. how margin think operating a and execute longer doing to to we that plan estimate We we'll continue an harder our believe that, the over that market that. really I on to nice you to Simeon, tailwinds go really have Company a set within do give expand sight bit improve are I from question. really focused of the how a a really the outlook specific short our December answer expect going do probably very improvement. term, financial XXth, believe in as the we're And we perform little But is, we've near-term constructive Number home to continue we'll into how long-term longer-term, plan to line market. exactly to market's macro in to depth through perform. we very of

Marvin Ellison

just changes to announce plans for this set everyone, our no to big to we Simeon, expectations is any have Marvin strategy. and

an we and We We companies today's larger in that times we're have -- announce to other operating other share This no transparency, public to is retail plans acquisition. have not uncertain about any know very outlook. point. decided and

as because we set to So, next models your for you want to are trying that as all transparent can year. know we we be

December. outlook is of for to update going on what of our for of provide intent intent the provide of to our do exactly December me the sole to investor the where is says, initiatives strategic Dave view and XXXX, then and that's think will best on deliver outlook So, we the Dave XXth growth the the

Simeon Gutman

in quarter. the luck good fourth you, Thank

Operator

question with next is please Michael from Our proceed. Lasser UBS,

Michael Lasser

a smaller is for next whatever or back a the of as -- under like proxy good declining quite inflation this my you because inflation looks over have barometer And could you same-store is be do for you're perhaps to unfold how non-commodity-related down been even lap related your those to performance to to traffic it part from where you return few a the a quarter headwinds? running for sales to going quarters, is? DIY extent thanks double-digit important the have growth, projects given of traffic that good you to taking morning, and -- support Do can in pressure comp this have stimulus, think a traffic some prolonged how see your question. be recently Good been this has period as non-commodity that the you as we face the give to quarter-to-date. of Thanks. in lot The in that traffic road drag us a obviously new much we And is time DIY going is down normal sense as the being a as some and can your to the contributed normalcy.

Marvin Ellison

the not in we one the related significant And number most in supplies, And country. low and was other but history of unique for XXXX for around-the-house cleaning our projects. for transactions saw of periods, only a dollar globe. our PPE of retail,

their great and as to of level, it performance his micro Lowe's create Strategy our in Home great our like improvement. as on as true feel great we and at traffic is, look they're Pro is Joe based initiatives, traffic us X-year business feel our in to we trends Total Pulse can a as a mentioned DIY At relates when for continue initiatives look X-year unique that a on support about their prepared for We customers basis. Company. the confidence home candidly understanding have quite So, get reality everything and to demand. enormous to revenue to on DIY going we comes think our see support a the year And about last a the indicators was our at such of to Dave look that ongoing comments, that Because growth what seeing The with customers way at to numbers and only when give operating basis. survey anomaly and Pro, pipeline the cited high it our our they're business in we expenses. a Livable trends we Home really we strategy

Michael Lasser

this bit to some My follow-up more drivers given helping flavor won't significant extent can that and that offset to margin strategic very couple because that the as supply got some unique of gross chain that you're a question over like quarters, be sounds of have Thanks. the continue third is, to it these what experience To will helpful you've quarters, next forward. benefit in portfolio discounting. quarter you experienced challenges credit are for your be the going pricing idiosyncratic over approach of of the especially a next it to moving couple

David Denton

same we're Hey, margin operating in the maintain that in Michael, essentially were From perspective that to capabilities the expectation margin time, as gross margin that from we've flattish, margin a it we with our slightly mind and XXXX, as it's going in investing relieve expands stores essentially that gross Keep of here. perspective, is compress we indicated chain doing product a expect lot and improving to time. margin a we're over previously, this longer-term income. rate. At Dave our but supply gross managing what here expand gross is SG&A year

perspective the and we that think manage have algorithm should that that in and we're to place will tools us allow the a putting in processes about feel So, place very lens, you and financial that with from strongly objective. to

Michael Lasser

a Thank you good very holiday. have much, and

Operator

is J.P. proceed. Morgan. Christopher with Our from next Please question Horvers

Christopher Horvers

for my and question Thanks taking good morning.

quarter-to-date low obviously, double-digit like say, running back, jumping acceleration. just So really seems strong trend, clear,

--if of flattish I seasonal of CAGR low double-digit this is to able buying Are guess trying early deceleration. the project November comp in and like how and some you understand the the a of embedded you're and to sell-through about so the holiday and a like estimate? some a XQ. mean, implying I about like maybe just trend, seasonal - decelerating sort in could really to thinking timeframe? talked [divi ](ph) running create forward that in risk look then quantitatively So here of pull-forward sort you're of You December relative would prudent at much how

David Denton

QX. the strongly quarter. But Hey, set feel a and Dave, for really are and We've ahead weeks holiday coming totally Chris, start. it's perspective. realistic not forward on here achievable get bigger A us, our few very that let's to of a of off we're great a we over-indexed from forecast focused

through quarter into and as merchant move maintain flex up momentum to other the to holiday store are to XXXX. and throughout really ops the be us well set positioned sell to we think team product, we categories for a I strong flex as really able

Marvin Ellison

environment Chris, said. it to this is And Marvin. appreciate difficult and provide precise what a I'll look, can you repeat I've how forecast just this is in

because Boltz have to that, about which outlooks, think so We prepared about. of transition is where bit we're plans. talk do area provided provide sells seeing want to to for those we're trying Bill level I to the to transparency Bill some so to don't flex excited to a and of areas, for we're around I certain punished about retailers any be want headed. we're that we we talk seasonal robust hadn't business the little other wanted that prepared a plans

Bill Boltz

to Marvin. spring big in sell-through very benefit holiday, Look our especially really And our put things to storage. tools pack comes it across that, winter that also business, just sell little we've and good that's Thanks, where really is and you very, later. away, floor the event for frame, built in successful, we holiday so become plans country. that we've us. and And winter spring, [Indiscernible] that's stuff-up this a then will flooring events North deep relevant markets and how got on make rotate seasonally then South plans the a bath the to transition a gifting to do And through understand obviously about whenever think and and program have shift I we can everybody important of our so it's a quickly for early also early, the excited moved into to time but robust space. into certainly transition We with

Christopher Horvers

That of negative seeing a about makes in of price bit just so sort that and you and Is elasticity just price you as ticket, there (ph) it. forth. your any [AUR/EPT] terms mix sense maybe can little through that average in disaggregate the talk you're Got assortment area increases? into pass

David Denton

go little This everyday as has just perform competitive very but of well appliance been that both business. historically moving for in know, continue to quite profile Dave, load we we price our you I a bottom-line. one been and That's and say to business. won't high it's specifically, top-line detail an has that into more business us, performance a to We've category continues been that probably a area really solid but would see that

Christopher Horvers

Got a it. you. Thank great holiday. Have

Operator

from proceed. Grom is next Our with Chuck question Gordon Please Haskett.

Chuck Grom

great Thanks quarter. light that bit stood a as a little was lot, The inventory, is counter-intuitive. just being to one out us which

but, right you You to heavy. usually now, light be be to want want

XQ. just your thinking about you're ability So balance the quarter how in and about chase wondering your inventory sales here throughout to

David Denton

we chain very but from little speaking, at Spring we perspective some very around, others would relatively 'XX. from perspective that perspective. in global inventory, stand the feel feel we constraints where there has the of QX our cycle and inventory good like areas from be a an as deeper like depth we into in-stock have strong our This a to in position -- that bit we Dave, a feel positioned if and relative nicely Obviously, marketplace, is we an look to nicely are we we love feel really about you that we're supply are positioned

Chuck Grom

you bigger that And think grow do backlog. than it? penetration it? Just you And Marvin s much you to you third on want just is depot, grow particular, color hearing And wondering that in the that's great. quarter. can you then the do guys could Pro In Okay, picture, what thoughts Pro over you're pulse lower on some conducted wondering from survey front. the share if just on in Thanks. some time

Marvin Ellison

Thanks for the question.

that versus So, survey. I The here from about of to question the when customer. to I'll provide past the penetration customer segments, being mistakes I bit learned lot tend pulse for the customer we Joe to importance what we let the from will just talk is And take - on the support thing make learned decisions targets of a is target, detail you of support decisions centric. then the you a what needs set little penetration

time number least equates expectation is gives every to is a penetration you that direction. deliver business comp at confidence have Any right X-year a a in that XX% going which it the on to growth that XX% grow. you number, we So, basis, headed the

it when we So, setting productivity high we're but know space and penetration chase. to it store level, grows, to expect grow. throughout at a provides not targets that operating the We great we're leverage whole to trying

me let detail of little the survey. just from let bit a Joe some learnings give key on So, the of pulse

Joe Mcfarland

thanks for insights put Chuck, for XXXX. the survey some That question. great Listen, we really and got this responses profile and out

a planning continue time on so improvement of feel is lot pro the so, will and We've really into we their saying holiday all advantage are pros the pros applied and our this have about year what insight XXXX improve is from tool are of purchase, they're of lot take the of we us. good the pros increased the capabilities the that be projects going to X than in And A focused deals and demand got of like in the greatly purchases, telling teams XXXX. XX% to expect They on. reliant top in pandemic on increase are approach seen ever. into the more things

Chuck Grom

you. Thank Great, good luck.

Operator

Steven Our with Please next from Guggenheim. question is proceed. Forbes

Steven Forbes

to progressing is of trying last are year. frame still time an And provided ahead understanding original initiatives much just to on the curious from expand to you productivity. initiatives. your PPI We're wanted how I I of during morning. can if Dave, quarter leverage basis on of the right get the the how OpEx points you think us. Good mentioned focus XX -- relative is opportunity idea,

David Denton

to continue that next the in that that we I XX -- over to Hey, -- our and drive Steven. market area over where labor along indicated enhancing roll that to XX improvement. the to SG&A, from the on of we his that really fairly perspective, have working is months. area our an we that today really put we're say over efforts will to consistent we're Keep about that think, markets a operational, really relieves flow-through. lot years program. the In probably we bullish have today, bit margin, plan dampen And next the the from general, about optimistic XXXX. remarks couple with but of operating that biggest OpEx a roll-out. mind, are out is feel our of of X stand we X the in where really with ultimately in months, gross improve, for tracking That's opportunities the the markets would a remainder XX delivery store around fully and now will in Marvin over outlook really as next When our profit lot PPI leaning

Steven Forbes

And just inventory quick was opportunity then Thanks. correctly, another large If a management follow-up. store I remember systems.

So rolling store maybe sight business level. out just the on provide the an into update line in and where the location of inventory is optimizing at

Marvin Ellison

going just this excited. that Joe to and key it. team you inventory give our we're team Joe give to new or his and we're to management why system of customers I'm work let gain and done X about the inventory. to just visibility excited of we're points couple have productivity so from a X the see, to you better Yes, great IT our our going associates with

Joe Mcfarland

in in team with to them. about productivity giving locations well feel continue going accuracy team we online years overstock that's it's that associates, product very, for And greatly different home for drive. multiple we've in just store our on and Where the are up for use products customers on-hands through Listen, big the as the I It we're the the is want is the when laser-focused challenge the remember where can to a of in store. operations improve is? one, of Marvin. the And been great last and pleased, tools pick to searching as Thanks, the the the trying they the our adoption store. product of XX helps improvement, ease we're really store? partnership number very enhancement IP to And good

Marvin Ellison

day, home daily on a products. in activity overhead when system what is surveyed for that location a put is the call our one And, found looking locations as has we activities team said, and improvement of for Joe Because during the of off-shelf happens associate’s that it most out Joe a to events the historically lot basis Steve, difficult we non-productive and very attachments. and

going incredible have sale think the we it's do service customer Now, that associates. and we unlock also ability and for to to small benefits productivity our

Steven Forbes

Thank you. Best of luck.

Operator

Brian with proceed. next question Our from Please is Oppenheimer. Nagel

Brian Nagel

congratulations. quarter, Hi. Good morning. Great

say first order question is even it probe customers? have, comments. prepared have had look more offering really several your the I the or make you you over now, twitch I The as basically of the question to infrastructure still and from at talked there's to professional past regard you built the to in compelling quarters to you're in lot clearly about the emphasis the to management with Pro make the a efforts the improve So, team offer, just

Marvin Ellison

the really It's Brian, is built. of good answer say that the would a foundation is I question, short the infrastructure

fundamentals out. and in basic the team can simple the the things checkout loading Pro it, we desk. Pro. Pro retail ability point-of-sale started you where staffing the desk, think at with at check with something actually about We as call even having had his the Pro terminals Pro started to for we no And desk like assistance, what at as Joe If

Joe national Then supply been then on things in problematic. improving And his those Bill tirelessly to with just so and quantities. work the on have Bill and partnership And started working job-like and were of brands. chain things number like team

to know with national them diluted attracted brands, brands. of coming brands, Lowe's supplementing XX and more prior propriety the past assortment, most the national Over years, pros out we to that of here, their had are

we're and Bill to that And so, on list at Bill gave -- and build that. we're his continuing team the

we're fulfillment our are to we CRM we're platform. platform. building And building now building platform, going now our Now be loyalty and

pros trust or terrible, show so and So, is in and earn to out because place, we service to foundation the allow couldn't out-of-stock, we them and to many business. respect, up, have quickly were get grow would was we they years for in their the just

credit lot out that in it's execution where consistent thus Joe, and reaching we we Now I all customers. for the place, And and about give engaging us the of our Pro far. and a Bill have getting foundational elements teams are

Brian Nagel

then either supply you The that's margins. out look helpful. incremental gross have, question ongoing chain. headwinds as regard the And and Marvin, have I by the moving sales there very appreciate well, been second of I different into Lowe's risks was extraordinarily as chain with evidenced the supply around has to are I the it. follow-up question just managing see 'XX? that you all pieces world, potentially prices you move or the is,

Marvin Ellison

short because said the prepared good Merchant we have in looking standpoint, the the Bill from scale news that he's or the to have is that product I you the supply another it than strategic been you've carrier and no and Bill T coastal his and Well, who's of then land early, any supply these at in needed. answer that don't that's demand it our yes, to And risk get like than risk. talked broader that, looking anything our know I way, as it risk just Bill Don mentioned is when when similar more size also are and leverage risks heard able talked different a I of that initiatives distribute where pronounced to holding about about talked marketplace. facilities country, but of the because spring, is been we've leader, at discussed chain we comments, about in relationships

in. it. do that us can possession for to immune. that, land it worked And it we're to early, but and to that prouder your of point also we're going supply in I operated of gives have again, So, any team's but global margin, the so of we has complex midst us have increase early, couldn't not the gross that ability environment sustained competitive increased the operating to in-stocks continue to of us, buy chain most be efforts income, the

Joe Mcfarland

about Pro of all to just optimistic pulse that issues are very, and But X Pro XXXX as chain We their customers supply survey, also projects. over add our they're per-basis Brian, XX% And a the very mentioned citing thing. challenge.

David Denton

is Thank we this Dave. Sherry, question. for you, have X Sherry, more Brian. time

Operator

from America. next Please of proceed. question is Liz Bank Our with Suzuki

Elizabeth Suzuki

me Right. you Thank squeezing for in.

years, for categories next LED And years several Just ago on like its LVT few the subject to the you of the what product changers could category. or take category? game exciting that highest-growth in or be next think what's over the innovation, that's the are was going most lighting innovative product product flooring

Marvin Ellison

of you it outlet to Bill, deal, tell excited and a power lot power give in I'll what innovation we're is, just about I'll tools, flooring, highlight. outdoor equipment really

about that's our Sorry coming that, way.

Bill Boltz

Yes.

think Marvin, the there's innovation across store, So, there's across store. the -- I all thanks,

Wetprotect new new that's You Pergo. light think of brand smart technology, in from tools, in FLEX flooring launch general in that's the and about just whether lithium in even battery bulbs, products product, whether smart that's appliances, with think whether power lighting, innovation in home or and you our about

it outdoor battery. but innovation and wall, there's into has technology innovation building operate battery all materials dry think excited so you and innovation not there's Riding expand with to the building categories wall, into may in in, that continues coming and their there's found Zero-Turn private Allen was we're the rugs. to get I that in Literally, very There's the of for Lifestyle Then you you pleased and innovation We take able brands new. on mention very to across with about innovation ZIP store, EGO think have that's + you products. probe done categories in merchants Mowers the go You with as Roth off in can what the Performance power and you a continue done think you that our pretty what kids, about you and with your cool down. hose these hose spills, a When about crayons, hose think garden garden stuff. you hose, and think can rugs about off just pet

on. So, a stuff lot of going

David Denton

And Liz, we'll be talking more.

Operator

you, concludes this conference. today's Thank

thank you disconnect You your and your at this for participation. lines time, may