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Lowe`s Cos. (LOW)

Participants
Kate Pearlman Vice President, Investor Relations
Marvin Ellison Chairman and CEO
Bill Boltz Executive Vice President, Merchandising
Joe McFarland Executive Vice President, Stores
David Denton Executive Vice President and CFO
Kate McShane Goldman Sachs
Mike Baker D.A. Davidson
Simeon Gutman Morgan Stanley
Scot Ciccarelli Truist Securities
Chris Horvers JPMorgan
Michael Lasser UBS
Steven Zaccone Citi
Liz Suzuki Bank of America
Eric Bosshard Cleveland Research
Call transcript
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Operator

Good morning, everyone. And welcome to Lowe’s Companies Fourth Quarter 2021 Earnings Conference Call. My name is Rob, and I’ll be your operator for today’s call.

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

Kate Pearlman

morning. good and you Thank

would Denton, Here with Executive Merchandising; Officer. website. Chairman included Chief our found and is to remind our Marvin McFarland, on President can be press today Bill Boltz, are David Stores; Officer; President, release President, Executive Lowe’s and notice I Ellison, you Executive forward-looking our Vice our and Vice Relations regarding me 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. Marvin. the of section that, Additionally, non-GAAP reconciliation Relations website. to the these we’ll I’ll in found A be With turn to financial call items Quarterly our can Investor over certain discussing of be Earnings GAAP

Marvin Ellison

Thank you, good Kate, everyone. and morning,

X.X% last Our These of earnings the of off outstanding basis. $XX.XX, cap and fiscal sales of expectations again sales quarter, XX% and two-year with financial results comparable with results for up $XX.X billion, an XX.X% up basis. and for U.S. sales X.X% X% year. growth a for the total adjusted company share U.S. the for XXXX on over comp per once on on up XX% This on basis results a resulted top XX.X% this up company the comparable beat for in total

bonus. over of together million recognition our discretionary for $XXX stores quarterly winning to of throughout associates with This million target is their payment outstanding are earned $XX associates. in these an profit $XXX of rewarded we in bonuses frontline results, XXX% the fourth work hard bonus the XXXX quarter. and the we above our Altogether, incremental $XX level awarding With frontline payout million a in million pandemic our sharing

discuss will our an commitment support call, financial in retail industry. our is Joe being As the employer frontline later of consistent the associates in choice with to of

product our Pro In the XX% the and store. we Pro on from building Pro Loyalty on of our standalone at momentum with Pro our program with redesign share both who delivered their our I’m results Strategy both DIY and quarter, on grow Home broad encouraged Lowe’s project continues both Pro, wallet Partnership they DIY we business two-year for our was a growth solution a of as XX% with than loyalty we’re particularly increasingly and our And growth We and looking as based launch new PRO online across for momentum to feedback Total And that gain desire as Rewards of Program, customers and one MVPs series a stop all categories, Our this a transactions. needs. of rely base rather express and our partnership on program. across balanced basis. a in Pro

data Our than spend and our who not shows Pros offering Loyalty in programs. Pros leverage Credit that these XXX% engaged more

throughout our updates on this a is providing excited critical to the Loyalty and the start to forward Our MVPs look year launch national Pro year. I off business about we’re Program. of this strong initiative Pro

XXXX, DIY the of grow exceptionally which we elevating XXX% XX% year. penetration. quarter brands XX.X% comp and of fourth XXX% top we will turning Bill, growth growth demand deliver our customer, two-year market assortments Lowes.com, call, of private in a in nearly grew product Home our sales represents category. of to sales top strong Later At our on in Decor on discuss continue where by share DIY Now our to how last the

as delivery Carolina in fourth to on third Florida market Network day our of the double Our area our will in Ohio on shopping growth sales we building and efforts during same in our several geographic day in our experience from past part regions the markets to piloting and strategy, years, conversion store with products model DIY Home replaces are for pleased as expanded delivery more its success distribution enhance I And us. customers the own including highly center that store several inefficient delivery we our homes. we’re intuitive than the With gained supply big customers. omnichannel quarter. experience, with of Valley model, with capabilities. the day delivery. region front and online fulfillment the directly to expanding actively mind, the of our while And we completed And in have remind, partnering This tremendous we’re transportation still assortments for that each bulky online next Solutions and opportunity have resonating GIG are Instacart over same our trend flow based our these where market and two chain we products. acts

DIY alternatives integrated discuss as customers. we online Bill continued expanded we’re to our freeing out install considerably XX,XXX greater both based a different delivery shopping than a our Pro space average store will foot omnichannel we our testing up market fulfillment In in continue square investments in few larger back experience. on minutes both rooms, are As drive and expand delivery options we’re our create competition. to which model, for and And best-in-class

adjusted initiatives Productivity in in our reflect During driving the XXX or focus ongoing XX% strategies. Improvement compared well initiatives leading points, of of prior these the per the results share new further as quarter, operating earnings discuss will and to is diluted as share in a basis as year. detail approximately leverage pricing expanded call. which earnings per These operating PPI, our discipline on later to to the Perpetual benefits Dave diluted our Joe margin increase $X.XX,

proven that have performance to where results in continues drive great lag Canada U.S. the U.S. technology The in productivity processes team leadership results our to and Canadian delivered Turning through to

share. opportunity well Before to to my to market, continue Home share our I’d I close, on like win the perspective as Improvement as

Our outlook supported price sheets, despite interest home strong, for consumer especially in is Persistent very expected continuing for to by Home an for Improvement uptick balance also solid healthy residential homes rates industry appreciation. homeowners demand remains and investment. support the

age favorable, by In formation fact, preference strengthening trends place. millennial we’re in buying will baby increasing household home encouraged Other the the boomers trends including years. to support coming and that remain

require And With XX for continue years repair upkeep step homes are the up that work approximately are the reminder, for a expecting some and we’re maintenance the extension U.S. Improvement old employees, over of permanent remote and repair and very for of cycle. supportive. XX% of two-thirds Therefore, as a as macro in environment annual will investments activity. to sales the remains Home encouraged and maintenance we’re Lowe’s generated from in

we year, continue history to number efforts donations XXXX. in my extend we frontline communities to This the to by for pleased back while Magazine recognized second the levels. that And brand our with years. that our where recognition a operate, the we and $XXX close as heartfelt In give is of sources our to Specialty supporting received appreciation million enhance in time Admired our was shareholders our row. in value Retailer recently for name we’re the associates. in our long-term reputation to one we Lowe’s As this I’d the Most total Well over pre-pandemic driving like back-to-back first year the Fortune our closing,

while to As visiting communities call commitment I’ll excellent providing over the stores, be And to their service. supporting struck Bill. our I country by with that, the every travel week to I continue customer turn

Bill Boltz

flooring, characteristics already this stylish preference affordable see to ranges, strongest flooring In WetProtect and flooring tile Marvin, selection three extending the our morning, Thanks, on everyone. departments Pro vinyl with with lifetime Pergo stain with of and was positive balanced merchandising quarter. again to departments In range basis. performance delivered once divisions in two-year warranty with own this the in the comps consumer and continue forward two-year with more resistant were laminate, XX quarter look Lowe’s wide DIY Growth comping Beginning flooring strongest Home that XX increased division, our growth and towards in year, several quarter. all comparable of and a the based we options. Decor the XX% of the across timeframe. XX.X% across all And comps dishwashers XX trusted vinyl a Merchandising full a the up fourth of sales and appliances than way including quarter, high we as appliances, in on its positive offers and customers. in basis STAINMASTER a sales products cooktops, X.X% solution. along led and including brand, products was shifting delivered vinyl. merchandising We flooring with well good U.S. broad Within

several As Home tailored our more we across to for offering private brand is style. extend product brand is consumer, XX designed continue Allen Roth to millennial while categories modern the Origin the recently our brand new in Decor. our popular, ever trendsetting + we traditional This launched

yards sell Lines, in well category, in and drove Now spaces early our for their and delivered as grills, patio as with and lawn through living standout often continue season. customers Seasonal, turning new exceptional garden. category. outdoor Hard the trim-a-tree shopped team and excellent goods to this garden as our outdoor an firepits, enhance the holiday Customers to which performance living active delivered in holiday performances, heaters, live were

With are our the and for their most out. making the of a customers serving as home inside entertainment, center homes

Kobalt, new cushions blower will enjoy assortments Deere, battery outdoor as the resistant, in existing we SKIL single expand mow equipment, as we spring, quarter for our this well collections, to XXX% to capacity. Honda, per handheld most such replacement fade cushions. as new These to UV that minute John style powered charge. leading of feet products and from battery Also in spring XX to two-year are our with convenience, innovative Origin cubic We as power well riding deck with XXX% turn blowing continued zero thrilled they that recycled one Husqvarna, on gas power EGO, clean. new mower exclusive will Both in protected, and selection the and build with to our fabricated and customers EGO reliability a Craftsman. bottles the features of gains new industry’s acres powered and and XX% equipment battery products Aaron’s, brands. our is and launch battery as position DIY brands outperform lineup drove power our easy XX-inch up made of patio we’re on EGO and Pro on Craftsman, XXX with with basis. available new power blower will plastic powerful include our their a outdoor products are share as this for This complement powerful further And four These power area a the lineup the over in over number the growth with

our Now comps and by balanced lumber, turning Products growth very the building were materials. strong, to broad electrical, Building base division, rough millwork plumbing, across driven

as building We are we with meet to the product with needs. to and project momentum the our are offerings pleased brand continued Pro, work expand their we

products. full New be a of roofing, gypsum this will CertainTeed range year insulation and

of to the leading As we offering enhance both Lowe’s manufacturer residential proud in to continue that Products we partner a strategic CertainTeed commercial an Materials and Pro add Building is construction, to category. are our important Building for as

Lufkin, technology, and introduction to program the products strong and These brands brand smallest Matabo, which Master, FLEX, battery with Fasten also SharkBite, energy Tool new which Eaton, arsenal, are Power the and DEWALT Simpson like out continue pack Bosch, SPAX, build our Lesko, MARSHALLTOWN, already POWERSTACK the is GRK, great Giant, other of Mansfield, dense Pro new battery Spyder our on ITW, Little market. Estwing, most Pro the new additions brands Werner. to Strong-Tie, includes We

of mentioned, quarter we growth XX.X% on in in the Moving to and XXX% quarter. basis as Marvin a Lowes.com, sales two-year the fourth delivered

assortment, improving We the and capabilities fulfillment. enhancing on areas, are across user experience XXXX omnichannel further expanding in enhancing focused online our our three key

meet and our First, expanding needs. design Lowes.com assortment customers lifestyle to we’re our

upgrades we products, measure needs. mobility the changing visualization products Home to our continue to offer configuration enhance the space. For their to range experience user example, of customers to the kitchen adapt within your and and visualizer time, we Livable tools a will continued Lowe’s help with like will same At

further our improve to our in their be can we buy and continue online, soon track store store enhanced for an streamline appliance delivery in up we capabilities, leveraging time as experience will to real technology the fulfillment execution Finally, our through process. customers now customers improved pick

to season. we what we of we’re are our to capitalize arrives land strong on As our with needed we flow Consistent be an well product better spring flow Through coastal product, we of look as to holding another enabling worked year, facilities, where ahead the positioned the to spring the early. able imported quickly network past of us expect our expansion to to over product spring country. spring, hard across have approach manage

As mitigate we chain. our U.S., of increases one across and importers continue of impact to the to the secure cost carrier our largest relationships scale in and work capacity the supply and to manage leverage

I Before my like turn the call continued hard to teams our chain merchants inventory and close our I’d with I’ll extend support. and and over work you supply to Thank Joe. to now their appreciation vendors along for and

Joe McFarland

awarded XXXX. we supervisor, In to the our full-time Thanks, year begin hourly managers, of by for and associates $XXX associates for would end assistant delivering thanking outstanding of in tremendous bonus discretionary their for for Bill, store and $XXX I efforts, $X,XXX part-time department results recognition $X,XXX for hourly good frontline morning, associates. like everyone.

Marvin together and discretionary for this of frontline the result in of combination As quarter. associates our mentioned, this $XXX year bonus million winning over a payout end will

how in career asset, Lowe’s, top I his impression. when Improvement a truly are a of to candidate our choice. an associate, an at is we recognition strive for retaining moment to it position Lowe’s, for employer type a understand of comes From committed started we recruiting talent, our applies to hourly valuable positive and financial creating most the as this Home that At are be meaningful who someone associates. As people our hourly

that as last of year. We that required a so in are matter accelerates processing we the have applications recently than leading technology hiring process, weeks that the rather in manual invested minutes, as process the

and to We their devices speed, hires readily on up so continue technology process, that is come available product Lowe’s them leveraging can improve handheld the quickly knowledge also our to application. that via onboarding the to our University mobile new

to are mentioned new they progress to also career. continue Labs last our need In-Store training provide we their and our Lowe’s skills build call, on that can so I their Training As in leveraging the confidence ongoing University to associates our

operations that our continue also off. of to package as we the and employer to to in or associates. I’m XXXX really our that incremental even pleased benefit to created incremental $X over ASM competitive invested year to Over and investments offer roles with billion opportunities we hiring valuable report department’s we our we last the years, we our for our are paying well Perpetual three added. perspective X,XXX last career will we positioned we than confident a Since associates Heading spring XX,XXX from to position PPI in wage be and our equity positions wage for a ensure also are have drive a have strong, better continue choice associates an that into productivity supervisory have Improvement to initiatives. Productivity Lowe’s anticipate that programs frontline and

of over reminder, that across a It our single time. scaling this not series are a is a win. stores improvements is As

In XX PPI few in this our fact, over store different initiatives. we just year. operations working To on PPI initiatives a highlight key are

interface efforts the Screen selling and spending off back the as associates the other eliminate stock We Store room. product as Technology about store. inventory to continuing all user have associates non-productive This new platform will inventory launch Home for countless throughout launched or also with our visibility to SIMS top System simplified I’m station in location, just ancient in cap store. have product. eliminate Management our to Green looking well stores. system of Inventory shelf excited includes their and Bay the our hours been gives of a the across the store stock new This real-time This in

up this First this focus customer will are introduced in at to training our reducing service wait excellent free and technology technology we’re our process platform, new implement associate front across end the new while facilitating With registers, to departments. associates other beginning floor. accelerating customer This we on sales the providing time. new cross-training

that year, are productivity we for will two PPI While million these of drive $XXX planned initiatives this deliverables expect the two just this year. these initiatives of few a alone

associates our forward we to continue again them their Dave. by and achieve and over store DIY I enabling close year. we reduce also thanking dedication turn With results continued our leverage while technology for to would it for I once work our Pro hard to associates, to to and will service deliver the Looking manual like better together tasking customers. great this that, will to

David Denton

Improvement U.S. Home you, comments Thank morning few as the with this to economy Joe. a the sector. begin relates it on I’ll

competent backdrop risen Improvement have Improvement remain backdrop, consumer favorable strong despite interest rates. Marvin solid in strong the has sector indicated, a rates As Home are interest will remains an the economic Home demand when uptick growth. we delivered as than against Historically,

But the continued rising historic housing moderately increased positioning growth personal lows. periods coming which the income, due by and home rates offset prices the mind of hiring pre-pandemic Home higher remains The for increasing consumers are interest levels, has expecting in in is higher about trillion above than equity $X.X these investments. average. keep off During consumer pre-pandemic market residential housing to Today savings quarters. rates are impact affordability affordability in costs. was borrowing supported jobs and

in Given factors, Improvement expecting all the are Home these another we year demand market. strong of

share it shareholders program. generated let our to through me repurchases $XX.X to committed by being to our results returned billion driven and we our we turn XXXX, strong operating outstanding both value comes in and In our capital flow, ability capital Now create remain shareholders dividends. allocation cash free best-in-class to billion allocation. when for through We $X to

Capital $XX.X we year, and and in the ahead shares for billion. growth in This across $X commitment for of dividends both in expected million drive share repurchased approximately to brought initiatives repurchases to full year, the million expectations quarter, the nearly and quarter $XXX billion. return better the to strategic in million performance our returns our the This $X.X were of $XX cash to total as XX billion During enhance shareholders. financial continue $XXX excess the we for reflected than and fourth invest to expenditures billion paid business.

Our our debt-to-EBITDAR well X.XX healthy, times. X.XX very times adjusted remains below balance of stands long-term target leverage at sheet

both ticket improved next rate fourth increased quarter allocation leverage X.X% our I income increase were Comparable sales As X%. leverage, like favorable by diluted comp X.X%, per XXth X.X%. share we the to two-year $XX.X our In mentioned our to I’d higher and flooring, statement. to sales basis in are but count a With earnings that, of of strategy. copper. shareholder sales and our return capital increased seasonal on driven decrease by transaction In to the XX% the comp living, outdoor Investor compared basis In reported diluted and appliances, turn focused increased commodity ticket of planning and at we expected December the gross XX years, the quarter, points growth, comparable share reflected Update, with productivity year. than average a initiatives. reflecting sales over driven transactions target to better and an earnings lumber $X.XX, last SG&A adjusted quarter margin This increase per inflation two billion, in of

points positive Lowes.com, in and sales comps Pro X.X% of November Total comparable the sales We two-year XXXX early U.S. fourth in pressure and Pro increased from increased by on Improvements sales XX disciplined January our cycled growth Product of at basis X.X% XX.X%, and December extremely XX adjust and on our were sales of from in stimulus reflected and margin roughly quarter sales inventory strong XX.X%. increase offset quarter. sales in month, year. up saw effective late increase down on basis U.S. trends fourth in up and our last We points XX.X% respectively. driven over I’d we addressing and basis. we are strategy in manage cost by XX increased January network. margin as margin XX.X% looking costs, we to in continue acceleration On XXX management two-year December basis XX.X% These to of that a was both strategy third with performance. the as our pricing and growth in XX% top strategies. pricing. spend comp supply rapidly related quarter in basis quarter, year. XXXX, and U.S. in importation points an November, lumber gross of up higher last revenue that chain X.X% DIY well like By basis prices, and last XX.X% credit moment Recall DIY by recent from to were in a have January. both year. shrink confident to as traction just of X.X% partially a government points, rate Home DIY the Gross increased benefits XX our transportation comp our benefited our carefully points growth expansion gain and our the comp increased to December basis But the

are rate we slightly lumber outlook to compressed we when in for gross to prices up planning Although, competent XXXX. in decline, margins be are be margin our for our

our LY, XX relentless focus by higher sales on points to levered basis Turning and SG&A, versus productivity. driven we

of reduction these year. million expenses generated COVID-related leverage. of incurred we XX points expenses, This COVID-related million quarter, to of $XX This expenses as $XXX basis compared SG&A in last

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

improved not basis points $X.X by by was increased quarter profit over did of XXXX, points for were pressured bonus gross this XX XXX versus we of SG&A XX% material XXX tax rate quarter, $XXX prior project the any was margin well trends up with X.X% driven generated was The expenses year-end points At $XX.X is effective billion, basis as our in and rate, largely seasonal up which XX.X% million quarter, SG&A leverage. QX versus for the as year, line our year. leverage inventory billion related for in from frontline margin related line the with with in favorable driven products the an year, over points capital invested store These operating consistent capital delivered return approximately we LY. earlier, XXX and basis disciplined to both of up performance this a and Operating Operating base effort discretionary of by LY. allocation As XX% to last increase to incur strategy, year-end from in in $XXX spring XXXX. higher million associates. the land basis on benefits

to seeing out commodity expectations financial turning we Now as trends for performance higher in comparable X% ahead continued to are sales, our our billion X%. Pro of between that the momentum we $XX are range a sales sales Investor XXXX well two-year billion XXXX of up for with raising on in as $XX to XXth the outlook inflation, year, XXXX We that And representing December are for fourth on down of outlook. expectations closed sales Update. to our based we U.S. presented comparable the our at February quarter line Month-to-date, basis. a

that outlook pricing normalized our Now will return half the the level second please that keep year. mind in of more assumes a in lumber to

sales, approximately mind DIY quarter. sales one raising XX.X% stimulus and to equates Also margin our year. gross to to up Pro to XXXX of the cycling for of to the for operating outlook billion XXX a year. XXXX. a prior as outlook which be in reminder, to $X.X to basis XX.X% a Keep of XX.X% expect compared outlook our projected to execution billion continued week, XX% slightly in margin continue in rate to We an higher to over $X points PPI the of as we a are now in initiatives, in margin improving range from XXrd expect sales. estimated first We prior includes full range outpace our XXXX we With are that gross

approximately a repurchases raising also share continue to per billion. $XX. and In billion $X to for expect $XX.XX outlook a prior XXXX, approximately we range share $XX.XX are $XX to diluted to earnings from expenditures $XX.XX of of of capital range of our We

Finally, XXXX. we to start outlook invested great approximately original closing, off return from are for a capital In X% raising above our of in to on XX outlook XX%. we’re our

operating questions. of us now market ready runway and have with expand deliver value. shareholder And significant We share, we’re ahead margins grow our meaningful that, for both long-term to

Operator

comes Our you. question Thank [Operator Sachs. from Instructions] with line Goldman Kate the first of McShane

Kate McShane

more as Good for if our Thanks wondered inflation maybe you inflation, part how bit a could comp for about morning. XXXX? of guide viewing the Hi. taking little you’re talk sales I question.

Marvin Ellison

Yeah. Kate, the morning. Thank good you for question.

As if we look X modestly our guide offsetting that in of think at down would down year X, our about be we next to almost and up ticket average you dollar-for-dollar. U.S. expect to

Kate McShane

And what two-year about year? you. January, that there just what does Thank may acceleration than really an February on have a February be on Okay. on in thinking better about into from one based said a you February, things it Is seem it saw stack? been like you seeing January should right in you’re trends

Marvin Ellison

Kate, true. it is

fourth the in on than think quarter, trends consistent you better February really seeing to solid. basis, a are But about February We two-year it, two-year January. our trends with trends the in is which need for

Kate McShane

Thank you.

Operator

Davidson. proceed your Please with is line Baker, from Our question. D.A. with Mike for question live comes your Mr. question. of next Baker line the

Mike Baker

Hi. Thanks.

Sorry.

is Pro it On talked past, you’ve the and being side, between anywhere in XX%. about the XX%

and competitor Orange can do is, on think bumped what to it basis yesterday, hard low-to-mid to? Your importantly, to talk more what do They any update you that their then in you the what on it’s I understand annual the Pro an somewhere get Pro number. to exact XX%s. penetration the XX%. say think But about used is

Marvin Ellison

We statement that business strong. Yeah. I to first just penetration your are continues and Look, is the think directionally correct know on where be very is. what

well, the two-year feel a great spent in last quarter not stores, and about And about over Loyalty business I my but mentioned, you prepared in think adding the Program. plus new think we’re our only of very comps we’re years, launch quite making seeing time know you in comments, I also XX% our service our basis. as of sales If I we pleased, products XX% the in mentioned a that XXX% Loyalty we’ve mean, levels, Pro the fulfillment as engaged Pros Program. our with investments and and bit Credit to Pro three for increase on a as and in I

And so, and Pro is the feel growth going of we significant encouraged still to year be progress. a our this by very part

Mike Baker

you as digits, fair say, up, suggest? And the what said up, in as in to DIY, up last math just it’s follow up a something low-single that strong range, year, the Okay. slightly

David Denton

DIY the That’s in obviously the as expansion correct. saw both Pro but importantly We in growth well.

Mike Baker

you. Thank

David Denton

You are welcome.

Operator

with with Our next questions Gutman your come proceed Simeon Please Stanley. of question. Morgan from the line

Simeon Gutman

on Good first margin. question is morning, EBIT everyone. My

Now that could get it looks like XXXX. in XX% to you

look and in you way past rising? years meaning know about I is it’s as think throughput model it’s sales If you given keeps XX%, the it this, anything foot driven, correct -- per the all really haven’t is past moving the out productivity at to

Marvin Ellison

Yeah.

think correct. I in we’re is back our I as lean beyond complete DIY EBIT December as blocks main for is business. as that, our as both team level, our to building management above to in we healthy the growth the think that business, to about in about progression the But, as and of I we productivity think a margins. mean, well come about outline driver yes, really continue XX% excited our and Pro

Simeon Gutman

like been Thanks. between -- it’s up, now see there’s And if if Depot inventory, we look case. try doesn’t divergence QX adjusting and to catch big there’s up the and follow is it this on a my there’s Home in you

And put Marvin, maybe when think, was got so, to first in the I inventory. the even terms second it Lowe’s spring you of you and Lowe’s, where on offensive the I guess,

you’ve in what’s are for So for of bought you so with the you even visibility and the question is, coming you for and what this year? are spring the pleased with pleased far

Marvin Ellison

a we do take a Frieson which East on Short the import And that the fashion team we only is prepared feel build a for to answer are. from quality to for it, supply we’re that make product of like we chain merchant feel We coastal into inventory. -- period get global supply product are as to good elevate know, quantities category, as possession collaborative shape. available feeling think Western sure do you that spring, establish that of both working the job we good the lot given give Pros. Dave we have I we’ve prudent have And his out in basis absolutely. we investments where ability is, to in good early, land that heading us, so about about the the really chain we but not RDCs credit facilities what for is thing significant feel also our about us comments, a make a Don the stores. of sure made on holding But and team. and inventory very have of to the in Coast, products in mentioned, levels which sales it temporary that will can a we we good the in

Simeon Gutman

Thank you.

Marvin Ellison

Thank Yeah. you.

Operator

Our next with with Scot Securities. proceed question line Ciccarelli comes question. Please of Truist from your

Scot Ciccarelli

interest are rates projecting what those Good you for morning, and what from guys. Thanks. framework of housing higher exceptional, market Obviously, but on the business projections? kind your is impact still is

David Denton

Scot, but prepared time, have impact the had of talked I my interest rates that. if periods Actually, same now. and had Yeah. the interest you an sector of to at degree, if kind the you benefited At at risen. rates time we cycle XXXX, historically Improvement some remarks, kind really of into go do has about same economic Home look in backdrop. see economic back that good we think climate And from right you

healthy, is this profile sector we’re we’re actually gain in And So to marketplace. some the of share the and number beginning we to traction, one. actually feel upon that disproportionate take going efforts like maybe the number embarking two, demand really

in solid the really really this growth of to and think future really a we’re nicely like manner. feel XXXX about deliver positioned business we a So healthy

Marvin Ellison

[Technical have trends more important so times It’s with point that historically and are I I to convincingly rates I obviously, Improvement. Difficulty] if do buying home impact combined with show interest one different. comments Improvement historical interest often that’s relative look other to do will that on rates, Home we Dave’s a positive just the that are think entirely Home sectors indicators macro what think And negative that not think combined high gets add.

make sectors. that a totally equation. there’s sure going lot different a to Now, we’re home the buying, between But two I’m of sure delineation is

Scot Ciccarelli

sales so rates? guys, higher clear, be there because to point, just in of this So interest at -- trends assumed degradation there’s no

David Denton

That’s correct.

Scot Ciccarelli

it. you. Got Thank

David Denton

welcome. You are

Operator

line Our Please with next proceed of questions. JPMorgan. question Chris comes from the with Horvers your

Chris Horvers

December? just the a what in to XXXX? level of to is, everybody. inflation Can that more outlook into how how extent in you lumber And what’s out? driving gains? what Good the are does on will versus more To higher morning, what you laid then out extent delve expecting you Thanks. are expectations about factors your assuming a and bit in you share So growth play compare comp market increase the price

David Denton

Yeah.

topline guide really believe plan growth from way, One think our there’s better. perspective. outpacing three increase we going think our things are a And do I driving going we to perspective. perform think us the that for the markets by a the market a from bit to is we’re and still in

seeing commodity in lumber, we back ticking up Secondly, in progression in has manner very December, we then, leaning are Pro seeing first strong higher through our that that demand slightly largely so the into perspective. really the And And in QX of business a business. in performance consistent levels sales that what we’re we’re consistent inflation half our in QX from Pro our helping and of really sustainable that plan third, year. been is

Marvin Ellison

roughly going lined DIY Pros us are stated it. do to robust The ever that have over on there’s talk about publicly This Pro is of going We They to out XX% Pro pace that a business. up Marvin. and on When Pro of year. commentary said we are seen we than little they’ve continue in that said they at they the home. talked they projects they know to a both DIY DIY business customers, to you and did I’m And the detail, surveys in to customers points. going and book put that cost XX% and add when more data issued said see investment then let their Chris, the just we to continued our Pro. this project Hey. have couple interesting is have a

and carry in merchandise supply that investments Some business that XXXX And in strongly. is in assortments, our is in into all good. levels, our service very That’s help I the our pretty two-year over in may again Pro think chain, comp we business our stores, XX%. projects made driving that

Chris Horvers

Understood. about also quite margin were shrink the what sort gross How you of relative a gross what’s into Thank credit December? And performance gross talked elevating you. then in and in bit, came to you expected? XXXX did than little strong better proceed that and talk about margin your the outlook the can this and margin

David Denton

foremost, the Yeah. we’re shrink with think, Listen, first a just from and pleased performance I perspective. extremely

I store of now loss teams us to of prevention opposed teams managing that. it’s a becoming for a done excellent the And have which the historic. just and headwind, bit think job an a was tailwind as

lead we as versus out cost Product have we really was largely think and about to performance effectively, build and supply about the XXXX our be a up XXXX we’ll bit in we slightly. versus about we if really the that there then our rates chain they chain full credit I think and for expect very margin headwind year, the general, to our neutral supply and little price happening. continued think -- of programs a leave both and ecosystem. margins the gross things XXXX, few shrink In the manage as charge

Chris Horvers

Best very of luck. much. Thanks

David Denton

Thank you.

Operator

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

Michael Lasser

the or taking consumer being points the got Home return in they inflation. of product Good to think, about and to yesterday, some half mentioned for comp in as mobility year elastic was a is passed through, the morning. half normalcy, start normalcy? of a other mentioned a I Thank last experience inflation benefits second in industry growth the from shifts push due Lowe’s on there’s of question. product especially back to the all earlier lot basis At what interest to you categories from that’s Marvin, response return today my Thanks increases that sales point Depot inflation. XXX you.

Marvin Ellison

just Michael, look, we I’ll trends that a philosophical of see. you the a give perspective on based more

certain confident very are will we that are trends there So sustain. that

more You have of millennial are trends robust pre-pandemic. household had anticipated than any formation much us that

You’re and that taking the are driven still that’s investments pray, price many out. to sure the whatever and going permanently we’re the that because dissipate, investments the a there merchants maintenance also millions that home XXXX as by pass you will to increase your simply doing trying are this. out we’re people at we maintained actions draw make to costs very going ensure customers, are done that will who and the pushing repair we will certain to home, seeing people from home that -- even that permanently, is the working Look, inflation, still because millions so work for of our drive to financings that toward of a and know price, in cost have sustain factors pandemic multitude think competitive drive we’re other of we’re you will and in work from hope

an to see of for balance manage -- and the and gives point Dave kind on standpoint we’ve I we’re reported in just quarter an that some just XXXX, the regarding going and specific continue a that, increase we indication think, for also forward. what you retailers more to let year one a gross for of reporting rate LME have I improve margin of on margin provide that confidence what large will gross we degree this. to going financial see can seen that we basis just

David Denton

and here, around just that increases analytical comments a that put in perspective. we this, Yeah. as monitoring would really such take and robust we’re cost tools Marvin’s measuring a very to from we I Michael, process add

a a pricing. And measure points and adjust push back we we when but to take perspective. also need then velocity consumer best when drives on from the adjusting from unit do And that value our to the we perspective, Firstly, price such importantly, what here needed, that Lowe’s. appropriate. portfolio that, approach performance We at a the economic we monitor get as

Michael Lasser

just supply or early and question the stages interesting are is, about launch, Loyalty either has the the Pro Program. that of in chain to most you. up My initiatives notably, transformation some Thank launch Lowe’s very the follow

a both factored you ahead. tested as you’ve as the year breakdown then those those the as you’ve give far each So of what the from seen of in impact could those that in you from financial of and contribution them programs,

David Denton

think I planning and are planned a well well out. contribution So maybe just the programs prospectively, these from thought

have substantial financial and model We go. that. with test We learn we a associated as

feel sight, -- for programs. our a we And line performance a like so the those of we have of good being have plan we very out two is XXXX, driven

foremost, check you’d the like. I’ll then about and if Marvin first And that chat kind programs box. So of let

Marvin Ellison

just I’ll We’ve repeat program. the Loyalty a Pro. tested what on Look, said I No.

to on our feedback some we’ve level based Pro XXXX Credit surveys customers. that weeks. loss of We our think we and happening to differentiation we’re going engaged and different and Program when XXX% of program from Pro customers that retention seeing in the to see next we of engagement Loyalty a would sales made with tweaks the it within increase and customers couple we’re based that’s be as like adoption. Pro in the going I on drive All mentioned, our and have feel And a

what and about we the created test robust I -- today put these processes will have programs of place to think for mean, we environment to deliver. of ensure a we excited in each lot visibility we’ve and again, So, learn the that

Michael Lasser

of luck. Thanks a best and lot

David Denton

you. Thank

Operator

of question. question with Please Citi. is proceed Steven from next Our your Zaccone the with line

Steven Zaccone

I Good business. DIY a Thanks my for the question. side morning. the Great. taking had question on of

like the guidance giveback picture on see still larger still seems outlook eventually contemplated this it’s most if gives sustain inflation. of that you but changed then it in on confidence your in from thesis commodity can you DIY XXXX? and a So the comment a strong. late will sounds your it and of to And But is of DIY? or then customers project DIY, there’s accelerating has are raise terms category, be in of in Pro in seeing activity What spending you purchase strength as the sizes

Marvin Ellison

question. Thanks the for Yeah.

in so we’re very DIY, XXXX. strong Our very,

last top year. had we really that even were to sales on We year-over-year So aggressive grow business tough of able comparison. some

that’s to is us related the things I’m our give Total believe bit we that brands, differentiation. how One to growth strategy some leaning in little of and of what of specifically part in Bill that we’re decor the leaning into about, going and let private there a categories. level we’re talk Boltz and brands private continued Home going as

Bill Boltz

key modern Origin we new Marvin. talked Thanks, little spring private just XX, we brand. think, about head remarks, business, in Yeah. I a will more spring, brands in And as color a we of -- the big as that. a into couple a around prepared DIY that mentioned be the our That’s which will we’re role we about play excited

So enhance last style. more you’ll so in and a our then XX the it over see categories worked that patio, hard stores. months really in you’ll traditional it see brand in + some we’ve of that’s introduced decor And to Allen Roth,

a our DIY as -- couple of over that play carpet season, as a we last we know, has that as of into and at big live role in lines our in excited we goods of business plays a was into years as STAINMASTER. same as the nursery we have really the brand, look flooring, along you expansion categories well. strong, in then acquired And really the building will largely really then large spring look characteristics. go spring but a a run year nice off ago, the and And been to very that role business STAINMASTER, use about its well. other so And opportunities we’re

we’re head half of around we the the into -- business optimistic the So first we’re as year. DIY really

Marvin Ellison

students we’re was private overcompensate one that the and category. And penetrate strategic history in of we in to and know at over mistakes Steve, brands Lowe’s of fall-related the historically

private Home national continue love Decor, on Bill customers of brands But to telling So very, overwhelmingly that his are brands. very have side, into specific the team us Pro they and been design DIY to the specifically lean side. capabilities our the on

margin that and into also a differentiation to And to we’re think so off lean and benefit, again, we’re for we going rate for great start.

Steven Zaccone

helpful. Thanks, Great. guys. Very

Marvin Ellison

you. Yeah. Thank

Operator

Thank you.

proceed Please comes line Liz America. of from with with of question next Bank question. Suzuki Our the your

Liz Suzuki

much your do you’ve some chain competitors product supply if to you. gains see in Thank the market some those you moderating? the smaller years? last three think disruptions and do you normalized get How share taken again, of of able And Great. share are

Marvin Ellison

can grow on fact share. it’s a answers tell Liz, business you, not repeat on different is I share underground market can from coming analysis to question. times, two-year that I specific fair very will XX% it’s in a great a market Yeah. over what we our taking basis this that of I couple to not we what and glean by based does have hard said a just But Improvement, It’s Home somebody. are data

of are aware chain. your are retail winners losers on that there We in also supply efficiency and the based

are We the of merchants of largest are continue that we the we and have that great relationships containers one to importers supplier foster. fortunate

Do as it’s Pro So we across we’ll a is and the think to me hard do? And continue dataset absolutely we do constant to you earlier, we we online. will. lot for we believe both specificity that give again, migrating. it said But, outlier we’re winning? We think in not of we’ll share take in-store believe market take XXXX, Dave and

David Denton

to of -- points the consistently well and And data the will suggests we that our continue our internal to XXX expectations we’re market our performing that as data, Liz, be ahead to forward outperform points market. basis basis pretty from going XXX

Liz Suzuki

just, how your Product into that do Categories much I Decor you and New Great. Thank total And you. mean, market? Home increases expansion think addressable the

Marvin Ellison

in a categories confidence + concerned about the an has with question. It’s telling a it go of we Home which receive what with and they our agnostic types Roth, that, more example, launch We brand the excited by when lot continued we more as related customers only can focus different do they quality, we Allen price. really done do in improvement And are the is that when they’re from are of gives of when with surveys feedback and to Origin Lowe’s what now and Decor great and and comes XX us we’re us groups, STAINMASTER.

can we hard customers very over more I other that would couple other really very, very and surface high sharing ideas be Home brand quality that think categories about. excited recognizable have this going you into we’ll grow mentioned, exciting Bill extend the it into be flooring, As of see some But next quarters. Improvement but we’re to

Liz Suzuki

so Thank much. Great. you

Kate Pearlman

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

Operator

question Yes. with from final That will Bosshard be Eric Research. Cleveland coming

Eric Bosshard

Two if I Good things morning. could.

two of years all, consumer been mix had in of relatively First a terms and with aggressive and promotion unique the and pretty last customer. pricing Pro

Is sounds strategy your the and historically? efforts As normalize pricing of you or had think about seen you kind mix bit largely with XXXX and a feels those we promotion last do XXXX it the like towards think couple same of like what years.

David Denton

Yeah. be to consistent. Eric, I they’re think, fairly going

Our plan fairly is versus XXXX. consistent in XXXX

Marvin Ellison

Yeah.

David Denton

will that Bill’s on comment I And let here too.

Bill Boltz

it’s Bill. Eric, Yeah.

both trying successfully been price and promotion what years, to last so, that. And over and is to do wind here marketing we’ve down of we’ve couple know, getting to the on continue provide more been a everyday to in been to of value very us as given you very now journey this an approach we’re price of journey us that’s approach what Improvement the competitive historically in and And able business the the high we unique low a that’s wanted competitive to runway in -- this and historically be everyday But of to allows through this that get and be that’s what special able so Home different on. lows special about. our off in high ways consumers, to to to offerings on that’s values, number we’re being what buys, and excited

Eric Bosshard

with your investment both negative in in reasonably growth you’d that those areas in for year you the a and a -- in think haven’t business. dollar for then offsetting or and plan guide how that the how you marry quite secondly, I’m which I outlook comp then, for to get price labor, of your had negative the curious where units. the strategy specifically, outlook to within terms manage growth, time inventory is units you’re And some up also to of Okay. with negative XXXX, unit spoke or

Marvin Ellison

that just adjustments by our talk store, about and the first Joe us ticket of let I little system department, make allows a on take will how I’ll by to real-time transaction. part and new based labor bit

purchases at less because a types that to going to heart is a understand lot purchases era of that reasons ticket, cleaning of negative not less of the see transaction, not home an customer had concern in drove purchases they’re make virus a the that You of in paint, DIY nesting have lot to the going not of of tickets, not drove why they the around We people made there’s where had lot home. lot you the unit because and staying we one were that busy. of Categories activity, lot of ticket. a a were transactions, lot a like and garden of a of pandemic lot

activities not we we sustainable. as have are year-over-year, so seen normalize And those

not with confined as staying busy different. DIY to have seen are projects and believe customers just we they were So customer We than what house the different we homes see seeing had around that namely when less different projects traffic. random ticket and we is just that’s a their though they

inputs we sales, the we or activity unique in normalizing having So issue when pandemic. customer how really no we just demand a at This we we’re concerns them, been driving what’s over that have do we of just around traffic issue. transparent to middle more the have is look a

and manage all our on can labor So I’ll we inputs. about how system let talk based those it Joe

Joe McFarland

Thanks, we notch Marvin. activity few developed just team ago, labor and And years a you remember put Eric, based. model together management workforce top a that we is just a

the and off in labor transaction. and the model well and sales exceeded standpoint taken leverage as have does this us from out balancing ticket same served have expectations So appropriate

pleased staffing very our with and we’re So XXXX. our for outlook

Eric Bosshard

you. Thank

Kate Pearlman

first you speaking joining We quarter May. our call for look Thank you earnings us all with to forward in today. on

Operator

This you will participation. your Thank conclude today’s for conference.

You time. at may lines now this disconnect your