HD - Earnings call transcript Q2 2020

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Operator

Greetings. And welcome to The Home Depot Second Quarter 2020 Earnings Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure your my Isabel now is to host, introduce Janci. It ahead. go Please

Isabel Janci

you, everyone. morning, and Thank good Christine,

Joining our President and Chief President; Richard us Chairman, Executive Financial Ted Menear, on McPhail, Decker, call Officer. today Executive President Vice Vice of and Craig Merchandising; and are CEO

to will as question Following prepared unable a please during we limit to one Questions reminder, one question call to follow-up. analysts are open for will Relations please to our limited be and with the If our the call questions. Department remarks, your be get investors. And yourself XXX-XXX-XXXX. at call, Investor

our defined Before that the Reform Litigation of over today’s results call made that Private to XXXX. you and are Today’s our Reconciliation our and the measures Act expectations are subject also actual and cause These release these risks uncertainties in me and and to filings These as the to, and presentations remind differ non-GAAP certain include on in will include I release is to in turn of identified Commission. Exchange limited press website. could executives risks by materially factors Securities Securities not provided Craig, from the projections. the our but presentations with statements let statements forward-looking include, measures. uncertainties the

Now, over let call me the Craig. to turn

Craig Menear

its care we directly times all right forced challenging, COVID-XX. for and important way thoughts and that these have our values, COVID-XX to joining the our we and navigated us impacted been to you with continue each call We thing of healthy, by and been do our take some crisis quarter, have and in our ones loved decisions live, our actions The of as your you people. unquestionably be thanks to are of hope have prayers with aligning of by those pandemic morning. Thank that the Though interact you, and first safe to most mentioned have impact Isabel and change all and this this the work other. we and tough

on customers, the focus and and and to as plexiglass change the at distancing, that ever our Our we been key customers and physical associates well adjust in the to a the priorities, and based safety store learnings to to and providing did of this like of as stores being markings, two adapt signage changing environment. services they floor well and limiting incidents, environment on our changes number by and our our first with continues we hours, we the to In products time. and quarter, second and customers this an promoted implementing operational driving continue social need quarter, had has traffic store In eliminating be shields.

team continues work promote safe to a Our to shopping environment.

made the in adjustments quarter operating to We our have several approach.

restrictive hours. from in bottlenecks First, taken operating p.m. while under the some operating was our action day stores, we p.m. more This X end of we expanded relieve we to hours to observed were X

field quarter by limits approach the the customer we relying implement that limit safety customers a we as first are and managers number modified teams and Second, in more on national needed. and the stores store approach our had localized in monitor of to taking now closely to

in facilities. are other stores coverings Third, we our and and all announced that required masks customers U.S. for associates or facial

on approximately pay weekly we people by to have current the care extending enhanced of response complexity Given bonuses the on and stores ongoing continued associate associates second of and we’ve in in COVID-XX. focus our billion $X.X the hourly for centers. quarter, our to spent Through and demands taking benefits distribution environment,

program sharing of values by company’s payout resulted of our that our performance for our lived incredibly our have communities during half associates serving I’m first record customers, unprecedented ways the a in for they success associates. many time. the hourly our Additionally, profit and for this proud other sharing, each

to also sales. ongoing XX.X% year, strength the results Sales this share executing up demonstrated dynamic operate up were has from positive broad based record driven effectively geographies. These $XX.X with $X.XX second U.S. breaking earnings while across record XX.X% of last deliver stores environment, year. flexibilities to comps in Diluted and were for were were in quarter quarter. by from last Comp per XX%. our team sales Our billion, second the

we healthy Ted customers. in the will our saw and both Pro from double-digit As detail and both transactions were growth quarter DIY up ticket and

we’re repairs During throughout tear. the the the remaining being quarter, first into projects tremendous of improvement with the and duration deck projects, of homes. given work From year, to cautious quarter, a to we due on the Clearly home the virus. uncertainty landscape to impacts discussed face meaningful continued and engaged wear customers forecast a for we the amount the in of home That with from saw to their first year we our the said, of customers increase in and building extrapolate way. as regards particularly trends painting half take

know important. So while our customers, never can’t has we home the the more predict that been for half for back many of trajectory the the we sales do year, of

a elements and continued customer indoor customers they visit both have retailers us in take projects before. willingness Customers physical recent than blending outdoor on and the to experience shopping are the survey the Our consolidating are that digital of and of ever number the work more tells near-term.

Home an As Depot a relevant. result, the strategy never distinct have overarching of competitive One advantages and benefits more been interconnected

orders on unique our interconnected the accelerated and the order their has digital our in of across our XX% to is consistent online strong reduction or The coupled different The of showcase approximate primarily times we the not have fulfills with of particularly may of this a which our engage a relieve a store. strategy in which the conversion with center very are past being us also accelerated, in increased digital at opportunity than what and standpoint. leverage The technology timeframe to recently our Home This digital in a delivery from to cross-functional offerings rate made fulfillment months. delivery across make a of platforms its condensed the customers not step the provides alignment weeks. That organization the the The customers We’ve have opted that supported which This better. deeper fulfillment for given up time been continue pick enabled growth the and the in underlying change the supply opportunity Depot interconnected The as without in several platforms to said, we experience. able to a and to on capabilities traffic challenges, in to systems made MDCs investments network infrastructures our of direct us quarter fulfillment for network. enhance that offer lead with us temporarily a supporting just DFC, from and net customers our our shopping flexibility customers investments at the was for demand us to few flowing leveraging or Sales we and have have chain we during orders. our personalization customers is we know web scale aware direct the centers pressure. of. a record basis even result market transitioned one did some fully is MDC, a level and when authenticating opened is our short XXX% journey retail interconnected underlying quarter, infrastructure new more Our ways critical exactly been to with further

the resiliency more and call associates of to these for the customers continued could team execute long-term. communities. are demonstrated position incredible the agile work flexible that, At I thank I supplier will share over and We strength current circumstances focused turn I’d of of we continue same remain and that our interconnected it experience shopping capture we momentum over navigate ourselves together. continuing lead against want the demands serve like all, And to proud with not to with of environment. their the and hard and for to our investments the to the has our Through extraordinary to the time, we dedication on as our to must know strategic and enhance Ted. partners we values and be the

Ted Decker

good everyone. associates Thanks, our Craig, our thank supplier and relentless morning, customers. serving focus I want their all too to for partners on and

and of levels from quarter, engagement DIY our customers. both second we Pro saw the During unprecedented

Our the strong safety. team agile and in manner, while a flexible working by prioritizing demand also together satisfied

for want more our As events our event to Day as traffic even already an like crowded into areas and didn’t drive and cancel to Memorial garden we example, Annual adjust paints. spring store, other decided we

to merchandising support removed displays our most of also social order distancing. We off-shelf in

We incredibly social Our in changes. teams flexible worked flow, allocation. product altered were coordinate and and marketing to selection cross-functional plans, media space a product manner

Our suppliers, marketers, remained our store and execution the throughout agile chain, and customers. supply merchants, team merchandising focused on quarter

alternative analytics to adjustments partners supplier make and In business, the introduced effectively. real-time together could fortunate the products best assortments work to many partners have our the most reduced we tools our are in demand that we We leveraging SKUs highest instances, and assortments. to to supply our

heard the products, last flexible suppliers As in on sizes demand work to fragrances. the over in-stock product products, be items with as than decade, ever to to us flowing high investments chain you example, support to as in made from allowed Craig, production geographies. we’ve our the cleaning for such levels an we And and key right streamline supply more

posted bath quarter comps. by our XX the posted department, During high single-digit merchandising our lumber double-digit of departments and the kitchen our quarter, XX comps second in department led

The in to the as and comp increased was an customers comp trading size, driven quarter, increased new XX.X% innovative our basket items. growth transactions average up by in both and increase ticket XX.X%. ticket average as comp During well

The in-store consistently our ticket In like XX by growth categories lumber points. was and strength transactions. our approximately of growth online core commodity addition, by inflation driven basis positively transaction strong impacted average comp and

saw quarter, are across categories, of Furniture. XX%. big a over comp ticket big ticket second number transactions strong and the performance appliances, were Patio those like, riding approximately During $X,XXX We lawnmowers very

our year. to DIY was in the We saw than to order this growing Pro Sales strong quarter digits compared installation sales. customers DIY growth countertops. both and categories, quarter special kitchens of Pro with faster compared our offset double the partially performance second strength However, and first sales by like, meaningfully certain and to accelerated heavy grew softer for Pro customers, sales indoor last

Looking deeper into notable with our Pro sales, our customer. strengths smaller pro we saw

to Pro increasing customer see demand cohorts. continue As reopen, we all markets from our

will ecosystem credit, digital delivery, create enhanced sales continue exclusive and We to into that to Turning our HD brands, Pro encompasses professional toward our engagement investments ecosystem more. deeper capabilities, DIY lean our continue rental customers to with drive customers. a strategic We grade believe field differentiated product, Pro support,

Our The DIY customers meaningful are engaging with in Well, sheds, the strong across lighting projects, interior reengaging gardens, few. name and growth One we’ve hard seen and decks, also that fences Home with and Depot strong exterior interconnected Depot with and firmly like store. experience. demand projects with flooring, we’ve they creating painting, home building their like, believe are best-in-class way our to seen a Home strategy surface interior We shopping is a a

more digital these are get We physical tagline to us efforts consonants customers engage our and delivery in marketing let to our led stores capabilities experience. platforms, our enhanced And capabilities and done. unique our our our building change updated how that doers new across

customers our here existing existing third different more During at a Home adopting recently Home engagement saw record doubled and the for purchase another today. engage channels second The also new we our of quarter, across to with department. are Depot than The levels The new acquired in customers which a rate reengaged And capabilities. customers Depot set new with of

downloads second business are During been customers. that investments with rates growth areas investments results and and record mobile are we’ve quarter, our significant those of saw confirm our in platforms. all across apps our in our that belief making digital conversion of These number the resonating right we the

and options to Let you customers. example our an capabilities for me illustrate help enhanced give

of in with pickup most store we’ve with store buy fulfillment our the pickup buy delivery, pickup curbside car lockers, and years, including from our express online recently, Over option. enabled and couple last options, multiple online convenient van deliver

different their of interconnected accelerate increased seen these customers we’ve of options. As usage adoption shopping experience, fulfillment an

platforms. the During these quarter, all across growth we second triple-digit saw

example business. Another our is Home HD

several into of strategic last our part investments home leaning years, the over three As been categories. décor we’ve

shop research fewer fewer help homedepot.com that consumers show and the completers décor and textiles. are our like customers As looking retailers, to project increasingly room our to

experience shopping We’re online frictionless décor. investing to better create for a

and homedepot.com, room investments sales our With Home assortment. seen we as We record make significant dynamic shop enabling fluid HD on growth across with with situation. All HD this capabilities navigate highlighting continue showcasing we’ve our and flexible, collections, by business are our outsized of offerings us Home. levels product the more and traffic the to

of look we’ll as well we the satisfy Richard. as that, turn be needs. partners, to year, home teams As to working to to supplier the the our customers back evolving half our our with over like improvement I’d call cross-functional With

Richard McPhail

total Ted, Thank In the call year. good safe and we everyone. appreciate a your $XX.X hope were from the morning, and We sales increase billion, you loved everyone joining second are today and you, quarter, and healthy. XX.X% ones last

by million. impacted sales Foreign approximately total negatively growth exchange rates $XXX

positive XX.X% were and in quarter, XX% of July. Our the with May, Comps positive in in of for quarter, XX.X% XX.X% comps the positive and in with for in May, in total in company XX% XX.X% U.S. XX.X% June June July. comps comps XX.X% were the positive

reduction points heard the reported gross This relative and year. shrink. in approximately our saw to result, lag at XX from Canadian of a you positive sold XX%, strong COVID-XX quarter. a quarter. before among end negative basis performance the in and demand by several The business quarter, increase In the beginning was U.S. our annual last benefit driven the was broad to U.S. of during sales. and performance impacted offset factors, the change in and a Canada, turning our gross of posted pressure in the partially positive based Craig and was uniformity degree of Mexico’s record regions including second from growth quarter, a margin of the was XX by comps an the divisions our high As margin double-digit cases was by events from of a Ted, of from Canada. as performance three benefit products All mix our the we U.S. Mexico’s was with

to second the XX sales of as approximately quarter, increased percent year. operating last During compared approximately points a expense XX.X% of basis

take Let of a expense few on me moment a items. to our comment

support continue approximately of million with totaled benefits, points resulting to First, in during enhanced leverage. XXX quarter, the we quarter, the $XXX expense second our which associates in to basis

stores, and in incurred of protective of we operating and operational COVID-related of cleaning Second, for expenses, XX deleverage. $XXX personal approximately associates enhanced approximately including customers, points equipment our million our resulting basis expense

we related $XXX our Third, to million, investment to approximately strategic an recorded plan $XX of of approximately last increase expenses compared million year.

We are committed to completing our strategic investments.

expense strong we priority during in certain around environment the the ourselves the by management we program and of However, some significant deferring points sharing and of initially pressure given XXX fiscal outperformance store safety and the in business And points the showed complexities accrued for first our we Included in the XXX basis XXXX drove is of approximately finally, be the fiscal bonus XX points biannual for projects investments of earmarked store- basis we’re operating expect to and control driven success in to field-based completed bonuses related second of these for basis in-store in, half. find expense of approximately expense all leverage. our quarter, areas leverage now XXXX.

million to other Our the basis long-term quarter second due compared fiscal for million, second and grew points in rate $XXX than ago. one quarter, the XX.X%, was XX.X%, second from of Interest primarily tax operating the to levels XXXX. by of second was year. year increase debt to margin the last quarter for higher effective quarter XX.X% In $XX XX expense approximately an approximately our

Inventory At compared the an the per $X.X X.X quarter, declined increase and XX.X% second the inventories from last X.X were the demand of during of earnings by were times end $XX.X merchandise of diluted saw driven the quarter quarter. $X.XX, up we billion times, share to billion, quarter for second to XXXX. year. Our steady significant turns the

remains excess maintain to appropriate capital of for capital us returning a it position. to intact, on that shareholders principle believe Moving environment, in is we this liquidity strong while long-term our unprecedented to allocation,

the During capital our and approximately approximately of million of the long-term $X.XX billion invested debt. we $XXX in expenditures quarter, business into form back we repaid

XX.X% decrease quarter We from fiscal down ending the capital long-term on This dividends repurchase XXXX. primarily on of second of March. XX.X%, temporarily return in the position, our $X.X our decision in including to program reflects average approximately to XX invested and the our shareholders. back share billion in liquidity months, and also suspension enhance debt equity for our the paid Computed was trailing beginning

Looking ahead, quarter total August, to sales. at similar comparable remains second through sales weeks the growth company’s levels first comp two of

to us tell enhance of to variety and homes. they that maintain continue customers their in to wide plan invest projects Our a

our However, given observations environment, uncertainty future in the to extrapolate current external of predict degree we performance. cannot

order stock aging a for capabilities our As represents grow in our uncertainty the are And questions. we share The call any ready you demand with capturing across current result, improvement operating will position market market now share do we’re the home home demand flexibility customers’ in the focused in regardless and we participation largest is platform we significant believe in in over long-term. typically are your emerge. what resilience on us discipline in and well we of asset, believe of to environment. today’s environment, the the patterns housing to for the investing interconnected and Thank continue despite

Operator

you. Instructions] Thank Thank you. [Operator

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

Simeon Gutman

that time, was to recouping make plan -- is plan, you would baked some My default, upside, and or The term. of promised margins the you really never potential is to does describe Can you’d of in laid a change when question more it’s and about not It’s competitive, on fluid first talk committed business. really investments, but now out little and still HD sales you of is Good those pretty you longer the about margin. by sure -- investing never that to level everyone. environment create I’m margin up going the be to forward? trickle the margin you up does most morning. steadfast and it over medium Thanks, the or margin making time it for certain maintaining on One reinvesting to but over margins be you’re go going the potential a

Craig Menear

able shared last is to drive and of business the that investments behind objective outgrow op able to as the focus that putting in us and terms everything to the we we’re long-term to Simeon, the really doing dollar That’s be position whole we’re the that into market the be for margin December, incremental is bottomline have. growth. we to

We’re worried about This falls. not rate or not points op is -- we’re incremental dollar the all about margin how really basis growth.

Simeon Gutman

components Okay. Thanks right, this you apply, in talk correlations with was these could into in I Craig, article, a two think, -- makes surge persist And of right conditions -- there’s could it How home expect how transition the surge vaccine? these fall? sticking from Can do don’t a you, improvement maybe then work and that? that. just the conditions And you for does they until week, summer now you don’t to sense. which mentioned spring,

Craig Menear

we again, to mean, customer. the home answer don’t know the is, uncertain. can’t really the never extrapolate current What do to know performance which I we that, is important future why so really more has We been performance. it’s to

spending time lots all there. of We’re

the want about on that additional thing in now. and to is think There’s areas that done. strong a as key important clearly we’re going we to us, things right cycle. forward, things customer we need most a done short future and We’re you for wear The in operate engaged the seeing very or way seeing be be pretty tear,

focused remain they activities So unbelievable what Those How that, are cycle really planning, demand multiple think and as quarters asking or inventory a think in us do that’s on. thing we for are had flexible Assuming we’re for row. months we labor multiple planning. adjust? and really short

really react quarterly, to shared able we’re team the do. and that Richard focused the and what comps able that’s As was on to to being monthly

Simeon Gutman

luck. Good Thanks. Okay.

Craig Menear

you. Thank

Operator

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

Michael Lasser

spread with my to did did? question on business, outsiders with up their question Thanks business and Pro qualify a consumers is practice think doers by for you and you being being think your which lot in in and is digits. taking you held your the you an guess be what back there My getting what that Pro time. to DIY wanting morning. you this it and not done. don’t business what that you from you said, business the I current it was Can between is And want Pro do their subscribe the mentioned home preach Good home dislocated double argument

business there for to future So is business the pretty the Pro a over from the visible DIY takes as path strength now? growth right

Craig Menear

we’re a the engaged double-digit customers. more obvious with projects as there’s color the But out as reasons. as not going in Bill as let with Pro, of it They’re where incredible well. were that super what with to Michael, in obviously we as for permitting DIY on saw little the strength still we to pleased major to a growth split numbers pressure jump bit with we’re well cohorts relates that? I’ll markets terms little seeing clearly

Bill Lennie

Yeah. Lennie. Michael. It’s Hey, Bill

Michael Lasser

Bill. Hi,

Bill Lennie

low spend multifamily rebound they cohorts. to Pro inspections impacted was we’ve holding upturn but good see projects. cohort there to having rebound major accelerate in as one being Pro QX. end and those low are were all the see less an less have mode, capital a becoming QX, and would to markets more there’s a geographies. you rehabs online multifamily There even access did end in They rebound all homeowners of and sales spend break haven’t Pros remain strengths more would units, recovered. downturn areas Obviously, with and and comfortable be still property and I’ll in in with I of are coming example outcome continued Pro the that managers. in, fix across with Pro. in back returns growth The also properties on continued notable job customers, are homes. where in that, that high and towards in in service permitting to our We providers the their But There some seen totally with sales back markets give said, they a that

Michael Lasser

Thanks gross and you the moving little the my quarter. on bit on follow-up detail gave noting margin, were pieces, And much. question mix still shrink dragged a that of in very Richard of is some the

how should to to and calibrating we So what our we how think for promotional models think move normal? shrink should better going about point the you environment will when is do get be and supportive more from being

Richard McPhail

for thanks Michael, the question.

So the most really during the influence for annual of were the the significant quarter, cancellations quarter. events

look you in we we saw But what If pressures consistent again, QX. beginning the some pressures the from as was and really shrink. at were the and with expected pressure those year we there of mix what stated, at from

know, you year. have pushed As are a ongoing. we year a that -- towards is last shrink few Those item initiative an and this efforts

the that to through benefits while components for We a and they It over our that where even really those But of again, work time. out way have would at expected see takes will beginning year. the system. mix, the worked we from shrink

Craig Menear

far as… as And

Michael Lasser

Thanks.

Craig Menear

events, continue will to be to …promotions, they though, we’ll promotions have and modified. continue but

event benefit continue Spring promotions. was Xth as more to events, have in when had I modest our but cancelled some in-store forward, event activation was of we those. would a deep. the some event, net Memorial beginning modest there going with and essentially a July not modified of year, the event promotion There say, spaces. Black Friday modified think So we at our where you We

Michael Lasser

helpful. very Thank very That’s much. you

Operator

of your question from next Forbes question. Steven Our with comes proceed Guggenheim. with Please line

Steven Forbes

Good you go detail million the noted if just to don’t I the the how or towards of more tied And sort have Richard, it just is around and just of $XXX morning. impacts the revisit workforce a to on the thinking bonuses? you’ve into obviously little that the have and current continuation here, Maybe focus can to what simply do you balancing you what about it with know, benefits additional then safety, of these right committed et bonuses the think cetera? you sort of is sort about commitment cultural of weekly

Richard McPhail

question, for the Thanks Steven.

remainder million quarter, represent in on of if the million quarter benefits third it the vast benefits you look take the with the continue we that $XXX at quarter. look of weekly take that So spend that of you that -- a the The to say form benefits in million about into approximately invested being of like that in we a represented not at pay have expensed and in would that remaining overtime third $XXX majority associates. into $XXX enhanced continued the the bonuses QX $XXX million that enhanced

of about XX% continues So third those out there a again, $XXX certainly comp for that more XX% environment. in the beginning of XX% associates that hours. second or are environment, weekly for million quarter bonuses. the It’s in comp the quarter. eligible quarter not worth more a pointing are We There were planning at

to bit in QX of is So that. that be going little because naturally higher number a

as and the to we’ll that of that’s basis. develop. our that breakdown it’s that prudent We expense we think So And continuous circumstances and it second review something appropriate associate the review quarter, on continue in a expense. was

Steven Forbes

given you. I give at we look quick about as about thinking think a us quarter up, here, mean, you to right, mixed. that do out we out the then you inflation puts potential the called impacts? follow sort and how the contextualize implications third lumber P&L just the your I current of as don’t just on takes we look sort And and of Thank know the here model. if

Richard McPhail

in basis called commodity Well, on of benefit a points. out XX lumber we QX

are has of all Now several DIY. that lumber are each the panel this XXX% two last a say, quarter up and approach much conservative to to was largely and and starting lumber. weeks in was again framing going of first and would harvesting hit of about and time QX about into $XXX. mid-quarter the of trees I better big They record see of when piece and off flow That backed But the weeks took quarter logs. essentially a highs, go us in this up where the COVID started. we’re knew mills started of None product over cutting

into going So going with lumber prices, we’re supply but hopefully, more I’m these $XXX the coming predict to levels. marketplace, tame not to

even have and prices but and referred QX, right projects all certainly, boom, so shakes not Craig has incredibly some certainly. support the remained but do now, certainly the a should robust we see in unit Although, we it to demand, margin that the these but ultimately in higher decking with double-digit substantial to, where decking, housing strengthen just out with strong, moderation, pressure-treated

Steven Forbes

you. Thank

Operator

with comes Please question from your Karen next question. Our line of proceed with Short Barclays.

Karen Short

very much. Hi. Thanks

couple of on was versus the a behavior and DIY with behavior the questions buy I could for respect segment? did they’ve a segment Just rates share, with store you question. each, guess, and customer if gained each I one I on the to I’m broadly, little the curious, gaining in think Pro. whether maybe on have guess, growth then, [ph] I for And the ticket online And greater just also you within color little quick wondering about share a pickup which XQ? e-comm, bit you’re greater talk other

Craig Menear

engagement engagement, really you on numbers, terms very, the of we going what we’re And has tremendous capabilities Pro Karen, the and there. the DIY the and out and that the called and that is way. accelerate split to with but e-comm saw environment Yeah. built accelerated with both with DIY pleased not the I’ll the the tell Ted the believe we’re we’ve tremendous exposure, allowed business, to customer, a and the that, great very Pro seeing we we again, customer, in us a the out, capabilities both so have as that cohort current growth in we’re with

nature it’s That of growth the the digital e-comm about doing very, helping both project worlds, to customer’s Pro that’s in you digital project, in assortment think and the DIY we’re blending customer the an driving, world. very and When physical the -- the world. drive have business So the expanded pleased. we the a for

room. the online. they completion, a seeing DIY-oriented with super the to as our customer. Home As But obviously out, customer Ted we’re that we’re tendency HD tremendous product their more as when the room, called of with comes and to Pro be DIY it seeing pleased completing purchases there both has a we’re That complete growth what categories

Ted Decker

say, second would And quarter, increasing doubling I numbers that with the the over XX%. effectively penetration online in clearly, business

every app all the active the imagine, The very is conversion our the very, positive. across can you rates traffic strong. As customers, metric downloads, properties, all

customers, active of customers number actual Our also doubled. active the

our job all before as I QX, but just in new we’re very is said, Depot to engaging and So our closely a across the are all people with of Craig going my they reengagement capability capabilities, search, reap The lockers, that quarter with is Home in in customers watching really been done. terrific has of momentum tool rental, And capabilities, is and statistics rates the built these remarks, and this every forward with time activity working customer a benefit to it’s their like and engagement now and couple this mentioned not that engage keep is departments. for that’s using hard game the across our us seeing shopping more capabilities? What engaging in we’re store, a indeed name we’re that’s there but purchase? out our Are stickiness, is engages other or duration a prepared app repeat that capability engagement how that what’s doers just customers advancing going. whether our more repeat customer checkout, loyalty. and initiatives our using another business And delivery, behind get self downloads, we’ve the very calculators, all our The

Richard McPhail

look calculate share, asked you us, if at market good have for do space. much than the in We as And obviously you But fingertips. the This faster we compete low-teens. categories significantly as and the next grew census to market only Karen, data and hard look XXXX. grew you data obviously, is space where we public our XXX about share has our at

we share captured believe So data. based considerable on publicly we available

Karen Short

I give made little quick helpful. And of very a could one trading on That’s in up, seeing Okay. the commentary, just wondering more a comment on terms color just trading I were was if question, you that? had you you just up,

Craig Menear

benefits business shows attributes it’s with resistance that. to across we be it with mean really both it be engage be product but to the efficacy. products trade a and and certainly Just can tools, Pro also our I stain and continued where DIY up innovative interest pressure-treated can to and carpeting, our with willingness It customers customer higher the offer can to lumber

Karen Short

Great. Thanks.

Operator

with Chuck Haskett. comes line of with proceed question. Gordon Grom question from Our next your Please

Chuck Grom

wondering Thanks. also was being look Home could opportunity little businesses category the contextualize And bit on more out as I XX if I relative a HD of then ahead? if Great of strong? results. you for elaborate strength, Good can call morning. you we performance, areas know XX you out,

Craig Menear

that, a is the really and in basis, and high-single when category. the region were which our single of kitchen growth performance the were the invasive second talked double-digit exception indoor Ted you when in super every had for with it XX that And the example, strength with of goods pretty a we digits well was Yeah. pleased single business about, We fact look as -- in the at think markets throughout geography type geographies. We on as about categories, And quarter. double-digit all category was bath, throughout top we growth. that crop every

Chuck Grom

helpful. And you pull-forward in the Craig, That’s concerns about the the of look at demand is undercurrents sustainability. of some Okay. when strengths always the then, versus business

half, August look I the think you do half but the know about these strong, you and to dynamics? about ahead being ‘XX, when mix in into we back So about thinking even when how you back talked

Craig Menear

that earlier, at we’re -- behavior, at looking customer we’re incredibly said I as what’s we sentiment, closely. the point, mean, monitoring this I what’s

built have capabilities and our we with from rely cycle we adjust to extrapolate on are is, deal how to critical things are Chuck. able and know we is, for be to which don’t know really on We -- that’s What to is and what to And inventory where what planning. focus and to labor really short thrown that our the operate the that, is. to the us we be flexible planning are we’ve future we most whatever at gets

Chuck Grom

Thank Thanks. you. Okay.

Craig Menear

Yeah.

Operator

Zach with Wells line comes Fadem proceed Fargo. Please question from next of Our with your question.

Zach Fadem

Hey. Good morning.

it QX increase? return given So then over the much QX, from in if XX% to talk evolving similar what relative the growth transaction looks was X% the just of the How could behavior was through restrictions? but the QX. ticket like customer? growth that QX, QX in curious negative to dynamics drove in your you to And What would you doing did own your and Pro attribute traffic consumer

Craig Menear

Yeah.

terms hours, I I think your down XX% big when you of impact. from constraints going and traffic going learning you of I customer on adjust QX, to severe. feedback that’s put and second promotions driving major was change were the events obviously all kill contribute significant drive We that which impact. to the the helped to amounts of portion the in out really we’ve made have field historically what and growth. based that’s And in an a of and teams the pretty an called my in certainly that stores, to and of learn close we mean, that’s spring continue facing adjustments that on business the in the quarter have done remarks our to when proposed that and transaction your

Zach Fadem

And… it. Got

Ted Decker

I would just…

Zach Fadem

Oh!. Go ahead.

Ted Decker

No.

hours while add up was transaction. was by per down traffic the that not alike and consolidating were definitely reduce Pro but transactions were -- trips, just consolidating customers Just limiting units ticket were People and and our our I to was, driven consumer were trips. was going the just

saw willingness many ticket eased bit still we on a all So in ease growth healthy. of part QX per shelter-in-place and stores to ease. transaction not customer’s but units although did little and only units incredibly visit terrific We did just still

Zach Fadem

constraints Thanks, of out inventory whether That’s issue stocks you if helpful. would out And was chain, the call or Ted. that in on ongoing supply get product at curious all it any headwinds anticipate other availability, or half look an from lumber second -- to of the you doesn’t if Does year? any as we the availability but from QX. headwinds like it or curious was,

Craig Menear

Look, network you certainly plus vendor run own chain supply from throughout when pressure put you XX% supply comps, community chain. our the through

adjust week adapt pressure was able called growth of in to and out, of So with again, tell a would during quarter XX% row that comps the XX%, terrific north job, What for the there. the is, months to certainly and each a being single and you for double-digit there’s I team did every Richard to sure. as

Zach Fadem

Got Craig, the Appreciate thanks. it. time.

Craig Menear

Sure.

Operator

Our Scot question. line Please from proceed next Markets. RBC Capital with question of Ciccarelli with comes a a

Scot Ciccarelli

morning, Good guys.

keep with plan? maybe about a supply hearing either I’m to impacted July’s So or promotional curious the be strong it or we else trends, from reaccelerating if lumber sales shortages, specific something are July your all from particularly was changes that

Richard McPhail

you identical chain two July I was almost was perspective. It looked here actually normalize And if supply It and from headline two not or Scot. comp a effects, these the a of really Thanks, function is, factors. think for demand. June

impact we dynamic our own So July June. than we here an the for first hotter saw element which events, on a annual year. saw was second event, to last pullback than had that June And greater events, temperatures in start here in was the earlier

some benefit July So there categories year-over-year like fans the do ACs June in comp you compare. in and were when versus

and carried months you the two the those on at those two from that’s of identical look a weeks quarter. first perspective cost you when again, So and were to make adjustments, they third almost

Scot Ciccarelli

Can a the plan. some maybe color your about That need multiyear that talked And costs on lot obviously, to ‘XX then you makes pushed investments, to magnitude planned it. the from Richard. of some have to of sense, Got out you also the delay may ‘XX? of get provide

Richard McPhail

Sure.

So, It’s originally say, first need into that more of we safety stores. to the see dynamic as I’d all, spend any we don’t ‘XX spend we than we’re of the make pushing focused on simply our sure in planned.

expense hundred the than than billion, you for And the might an deferral. differ on probably, of that capital we into pushed deferral, of around less year. give a that year, to million, XXXX our plan capital to several $X.X levels. little deferral think billion CapEx be context, perspective bit next about Depending XXXX look size could from lower just similar which $X.X is is more may the So the

Scot Ciccarelli

it. guys. Got Thanks, Very helpful.

Craig Menear

Sure.

Operator

J.P. Our of comes proceed Christopher line the your with next Morgan. question question. from Please Horvers with

Christopher Horvers

into we as of I particularly broadly Thanks. demand you outdoor versus sense maybe to get little to as about the categories more comps well. talk like, comps what Good looks morning. bit try the look a about fall? get underlying indoor we Can what a think might want like deeper as

Craig Menear

north Let that you start is business, of our XX% that if seasonal our with comps we with backed comment out and even business, one garden me were back out.

this So some Ted that we’re engagement business. I’ll indoor. And our the on quarter seasonal upon how a isn’t seeing color share let dependent was

Ted Decker

was kitchen short having and it But strong Chris, that plumbing third we’ve as electrical, and bath just really Yeah. projects double-digit. the and interior and the demand DIY categories, we like. parties of in the paint strong, and heavy and was all more and the the flooring said about business, Pros under it clearly, permitting talked house in installation across the

-- have would business digits. it bath double was Our

accomplish super And years term when millennial, heavy breadth that the again, installation you’re on and was gain gain modest then of it start project, part you be ambitious and engage a become you you of take and that painting think, has in we’re tools for next What task been longer the garden, confidence millennial the the now, boomer once So, on. next first projects and the first and the with DIY it that The home and may X X painting, traditionally of and you more had project. and to confidence when may you more you kitchen-oriented Gen it teaching DIY need broader same number sophisticated and bigger continue task implications taking level product, they engaging generations of but Depot the and have be strength. and been on questions that take one to task, are more And to big seeing improvement, a DIY. all Gen Home and the baby is medium just like because this, add the we’d would there

of we very what this know bigger long-term and very improver. medium- the benefits and is And the this growth baby saw of in one the boomer this generation active is, with this of industry. the establishment very, large home that -- a next So we is the

Christopher Horvers

and third -- the Thank think you. $XX you’re can about year-over-year And also side, the the the to relative you on back How much the half? a ones of of XQ? investment quarter investment some couple cost if quick PPE levels you about then encashing and that great. it, fourth that expense pushing PPP in million in quarter touch do COVID the continue talk and That’s how out and in

Richard McPhail

Sure.

safety. were expense in that masks, going And PPE, quarter. the portion of related On company, we’ve in we third warrant. we to not majority respect and this investment million very associates going circumstances customer moderate a material and $XXX that that in the dynamic expense is environment. to those managing of incurred going The quarter distribution material become our program, masks again, became the obviously, so second PPE. of With to them as to associates our and That shift to the are mandated is for be respect It’s not to as to more costs operating with we in the -- customers. but of we’re our expense approximately efficient the

Christopher Horvers

Got it. luck. Best of

Craig Menear

you. Thank

Operator

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

Elizabeth Suzuki

Great. Thank you.

there. given gap you overall this and quarter I are markets last us color then your markets gap chain with getting seeing and average? the did that rural growth urban versus around mean, quarter you closer sales urban Just the to in some had your close

Craig Menear

time. we’ve most the again, seen we some in saw it’s our in markets narrow quite double-digit market, growth of And of all region, by by and top one XX performances

Elizabeth Suzuki

Great. Thanks.

Isabel Janci

we one question. Christine, time for more have

Operator

line of question Baker the Please comes Mike Nomura. with final your with proceed from question. Our

Mike Baker

to Mike I regions. the it’s Actually, on Davidson. at wanted a follow-up ask Baker D.A. now Hi.

difference said, You is, that, not? of stimulus. the seeing dependent areas you provide Thank that? consistent, other you. is from but we’re benefit big help follow-up a that stimulus at you resurgence where I could suggest that you’re and continued a but seeing on any And COVID cases I all all in to related are very they in the about that or strength had talked guys seeing then, really not a some much, have stimulus, guess, some retailers color are didn’t the would on perhaps, guess, there

Craig Menear

some quantify. have some to in when of in overall that. from terms more But hard believe customers pocket, look, there to there are that benefit So, to is the stimulus, have benefit -- their money we

So ourselves is customer to we clearly, as and don’t the some of get projects time home looking on didn’t to do get be around impact. But, take kind looking that. able they to their fixed, that to think to that engaged things have have

Ted Decker

case sales to counts And relationship and between the found environment, respect no performance. really we’ve COVID with COVID

Mike Baker

where Thanks. school areas aren’t on to And where started has kids any yet? back back-to-school color some going versus areas

Craig Menear

No.

Ted Decker

consistent. Very

Craig Menear

see any. Not

Mike Baker

All Thank that. you. right. Appreciate

Operator

of back to closing end We would now Ms. you turn have the Janci, reached for the to floor comments. question-and-answer I like over session. the

Isabel Janci

us you with on Thank to you, earnings look you our speaking We Christine, and thank for joining all third November. call quarter forward in today.

Operator

teleconference. today’s concludes This

your participation. disconnect at you your lines for time. this may You Thank

The Home Depot, Inc. (HD) 18 Aug 202020 Q2 Earnings call transcript