LOW - Earnings call transcript Q1 2022

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Operator

Good morning, everyone. And welcome to Lowe's Companies' First Quarter 2022 Earnings Conference Call. My name is Kevin, and I'll be your operator for today's call.

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

Kate Pearlman

good and morning. you, Thank

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

During we of the including uncertainties from risks, a call, factors, risk annual may XXXX. will this 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

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

turn to our we X, would that X:XX December announce an on X:XX we be to Eastern Time person York results, p.m. New City. quarter a.m. hosting in to and will like analyst from I Wednesday, in investor first conference Before

growth call to For leadership I'll turn executive team will unable of in on those Marvin. With long-term over that, you the Total this who on to financial our and event, our our will key attend event video. the person, in initiatives are the Home also targets. updates At be Strategy live-streamed provide

Marvin Ellison

declined X.X%. our good first and U.S. comps morning, down the Kate, quarter, Thank the total sales company comparable with In X% you, everyone.

expectations first in our line were with sales Excluding for category, the our quarter. seasonal

a on approximately In on at a U.S. XX% basis. were company we comps basis, up and and Pro, delivered XX%. XX% of X-year X-year sales total growth comps goals Looking

projects. demand also core We improvement saw nonseasonal for home solid DIY

unfavorable prolonged spring-related due delayed selling categories. a However, we weather spring that season to experienced impacted

to years put finally anticipated into we context, this now in the over was arrived, historical some one XX like past the the and seasonal a But fact, has our on the wettest April impact in has are memory. I In of provide very spring in and or to the the sales coldest on month of recent perspective would delayed DIY that May. do-it-yourself seeing improvement sales. our spring in

seasonal at concentrated while a XX% same As ahead Richmond Dallas of reminder, categories. our though Simply our expectations, and categories geographies, time, our live spring were DIY to the the northern And the sales even roughly Houston, regions outdoor well. equipment, impact many were sales came patio sales stated, our goods, regions markets. north our as Nashville, further and unfavorable look, larger sales seasonal Atlanta, in the delayed negative weather to many DIY. digits Charlotte, spring consumer you was was across down where season the Florida, heavily north, And are those in in more of in are of late the grills all power double in like furniture in particularly the

chain half mentioned, seasonal I we of inventory how strength our improved discuss a first again year. our projects event. enhanced in in our as And recent our majority DIY customers assortment, Pro in we for our the the to late Later this surveys business position, to discuss that sales, the spring postponed Pro fuel on our we trends slate full month season. demand our staffing demand. win supply Bill Lowe's, we're customers and business serve serving their will Although capabilities a to plans during spring of sales this strong Joe improved the see ready spring call, to and encouraged customers. seeing And year, are by busy continue are as continue will of May. report the place customers indicate while increased shop We're to the our capitalize Pro their the also to strong with in At

has Importantly, our improvement to us Total the when margin Home decline. agility Strategy even given operating deliver flexibility and sales

excellent is reflect During of our the enhanced These $X.XX, of earnings quarter, capabilities. great labor a key discipline X% share pricing XX over leading perpetual initiatives, improved execution our tools, year. improvement initiatives, and operational approximately per operating or basis PPI points, of addition number results productivity margin last expanded to in diluted which increase versus to management our including in an

us strategy and Our assortment and elevate provide products the in enabled they need all the with our across QX home that customer DIY and Total brands Pro we their improvement Home our customers of product both also projects. to with win as

Pro Let our with me progress now discuss we're the customer. making that

Lowe's customer last approximately important As Pro very top XXXX. mentioned, in On growth reflected progress MVP's nearly we on the and penetration. growth of the grew in year. the QX the in in Rewards comp basis in XX% increase growth comps point I XX% the Lowes.com, we Program nearly the over this XX% delivered top XXXX Later in of launched X-year first with Pro Pro in represents XX% a of that of quarter. XX% penetration sales from of XXX first X% Joe XX% how discuss U.S. sales to approximately with XX% continue XXXX, and of of the will quarter which Pro call, over in is early was The sales on quarter drive in in success Partnership our to

increasingly omnichannel the Tennessee, a deliver this adding Florida our service new our experience. at enhancing by by delivery products same consumers also expect Kentucky that XXXX. gaining We've integrated terminals. the and stores of adding traction shopping the lawn big By We're while And and strategy we end including who riding are converted of mowers from also we're customer bulky the our better to our these delivery expanding grills model. convert with our market we to geographic to leveraging offering, products, fully appliances other costs patio, our already enhance we cross-dock region in area, to delivery portfolio on market incremental track we're time. full fixed fourth As

new our the agility to to the market housing the turn as work, for in him now X-year the remote have increased Lowe's their in are This to brings Other role, year, operating lagged greatly appreciation. improved this continuing age Brandon like lumber the to take executive some our have of at dynamic have us a we're and leadership and like macro over our their confidence close made would age team. our we supported capabilities Sink industry Turning is for we by home call and work Canada positive. margin. the home at so beginning communities results on remains work Dave big-ticket welcome Last continue I we the community the enhanced our a in expanding strong, home before a X that And to the to tailwinds And and in commitment needed of is associates this the and associates benefited purchase tenure, Lowe's, millennial share to in as Bill. excited price customers. I sheets believe our the take and that, improve investment place, contribution would long-term to environment. the Homeowner home advantage, baby close, long-term to These we by will I are million U.S. high all impact allow while reflection the our and respond macro thank a year, the And Chief in frontline capabilities very to he financial And over And items giving due performance program the role the closing, moment new called in where improvement balance are acumen Hometowns. like mix in environment, years, to I Lowe's' that our improvement. and Officer. would to remain to prices operational a dedication. record back In to QX. boomers past operating will household I to live preference expertise of Brandon as the to announced to strong thanking CFO community, years. and for formation for to past Canada's improvement we ensure EVP business. with $XXX which stock, hard few store higher we and of to outlook also extension factors competitive committed like Denton results lumber to Financial despite our uncertainty Canadian his from

Bill Boltz

a first quarter, the up Marvin, morning, declined and but on comparable good In basis. were XX.X% X.X%, everyone. Thanks, U.S. sales X-year

positive while strong driven comp a DIY our building by Pro, our home expectations came in sales delivered in above we demand. decor in momentum solid driven products, by quarter, with This the

However, prior seasonal to down spring comps compared impacted and year a as were categories. hardlines delayed season

company as were continued In basis. and demand finally to have while pay of over see above decor exterior training job arrived. flooring capabilities. weather Within We were paint up average site category, improved throughout categories and improve spring and pleased enhanced the XX Paint in the our to to comps X-year categories home paint paint in the quarter. service expanded Pro X division, were delivered our few past Inside particularly seasonal in-stocks XX% off we've a delivery the and this are the model, strongest in primers investments on over our quarter. categories as weeks XX the out our drivers our continue has our quarter, offering biggest Pro built our Also, as associate interior growth

this reward to received. on top product our that recent program maintenance as to solutions flooring, to our continue momentum offer. for already We has paint have launch rewards consumers addition the Pro they are the was incremental in vinyl our customers, and contributor this category once the low the again building other meaningful new stylish MVPs luxury prefer with Within of

these consumer extension current its STAINMASTER lineup, well. new in in tile. with offering We and innovative customers. vinyl stain-resistant We're all the of late right STAINMASTER tile, STAINMASTER for and And to our the also within products great our preferences. have March, as refreshed products product brand behind this categories. new characteristics lineup, carpet luxury excited new the value and styles high-performance to extend And and brand first are warranty are for continuing a laminate launched in launching we we reflect we to With functional to brand home, our our STAINMASTER portfolio and

to Now products. building turning

electrical, and demand continues strong competitive by Pro We which plumbing, reflect underlying in-stock continue and strength millwork larger products, delivered a Pro improvement strong Building performance, strength home key core driven the inflation. commodity building last materials, to positive building rough X-year and, including we positions. see demand year's XX% across broad-based extent, categories, to on for to comp in projects in consumer persistent lesser a lumber,

we years, meet several excited are new past for with In the and Pro have Corning been PINKBAR. about lighter this rebar is family Pro the to Xx the Pro fiberglass introduction Owens expanding focused traditional to it costly we This known Over our needs of which to product the offerings than of work our less steel easier and rebar on makes and quarter, ship. customers. product as stronger brand both

brands These to portfolio, Mansfield, Estwing, Spyder Simpson of ITW, coating other FastenMaster, Strong-Tie, national manufacturer Lowe's. includes Crescent, is our SPAX, FLEX, an and like Little already important We Eaton, Bosch, in new strong the Metabo, LESCO, which products and DEWALT, a Pro excited the GRK, Lufkin, announce brands roofing Marshalltown, partner to expansion brand SharkBite, Giant, powerful strategic brand, and roof additions to Werner. outstanding are APOC are leading also which

hardlines. Now our looking performance at in

I were seasonal delayed mentioned by As impacted our earlier, categories spring.

the our of leading other we weather brands has that EGO, brands are As to first Aaron's zero-emission a this to always From our teams on CRAFTSMAN seasonal the demand year's and event. remember we started with CRAFTSMAN, Deere, have Honda, and Husqvarna, spring past broken the a best-looking has delivering higher convenience the spring Skill seen products in that as finally rechargeable equipment have across neighborhood. important the the John And Kobalt, categories. over spring again And quality need customers season slow, is half it's successful year. such the yard weeks, to few the offer focused and their the this now while

new items brand approach Spring Allen traditional and private our taste. the are Origin our to spring We half hanging I products mulch, And customers. is also brand soils new strategic first great and spring new are to updating multiweek on our baskets to we tailored expand on the in to modern continuing for leveraged forward positioned to like second our a demand, as which Fest, this lineup + brand, our as capitalize deliver well value well late and in popular event more quarter several event, on which our with promotions spring, Roth is XX, surge we for to call. popular is look

at Lowes.com. Now looking

we XX% a and the X-year over mentioned, a growth growth in quarter Marvin saw As on X% positive basis. positive sales

We continue who seamlessness to increasingly and the experience. Lowes.com critical is for capabilities, user on in shopping omnichannel enhance their our consumers and expect experience flexibility which

network where we needed as to across capabilities, our as also online chain. chain customers mentioned, ability the new mitigate to and relationships paint for flow breaks in our place rates Our visualizers order enable now scale the coastal quickly season. enhanced and pickup to are and leverage it's capacity of facility And countertop our enabled carrier our And we in-store ahead country. including supply driving increases holding and better goods bagged supply us within expanded to conversion are Marvin the work weather to to cost spring to secure our product continue

Before our and you, I'd the partners to like over our now again Thank and I'll call I once turn and for work thank hard their close, Joe. vendor to dedication. merchants

Joe McFarland

spring good by serving I frontline thanking this like for to Thanks, morning, commitment and Bill, customers, to continued their especially everyone. in associates busy our our begin would season.

Also, the and over in same to several laser-focused that manage activities. as and sales achieve The investments dividends enable tools on even technology that this effectively we've we have on our of to customers flex At high-quality enhancements tasking experience. stores effectively consistent quarter paying XX% the we the a are made we serving lower patterns enhanced strong aligned delivering departments so several across continue years labor customer time, labor made customer XX% demand labor over our to past we only We to payroll time their so years associates clearly scores. are past and that that management our environment. and satisfaction spend manual we've the a

capabilities on XX% as mobile in tasks not our on as reminder, ratio which did a associates new time We of enabling XXXX, time-consuming more tasks. As to associated that profitability, PPI point-of-sale recently our inventory project our and enhanced improved support that further all handheld eliminated digitized flipped enhanced devices, customer. this addition for allocated only checkout, the by is Improvement was technology more associate many unlock has our Perpetual we or appliances also has improved and visibility productivity modernized productivity has initiatives. pricing to management, it customer in-store driven And continue and lumber. This but through Productivity not This service.

improvement. which across a are rather initiatives initiatives efforts but all PPI continuous time, our operational reminder, a over of not of As well of are a that scaling onetime series as as culture contribute stores our efficiency to

earlier, contributed our initiatives QX. success mentioned of Marvin to margin operating performance strong the in As PPI our

few around take our which minutes to quarter Rewards is results when first a creating partnership to Pro Partnership Pro. in our with Pro and discuss like our strong MVPs launched Program, a the I'd we Now business centered

our program Pros the in are also Through really are to for insight the about build better-than-expected program pleased customers. to the months. Pros Pro Pro job expanding on we to where CRM We fulfillment to that needs this to platform through meet our And the with allow adoption expand quantities. in of enable enhanced momentum center loyalty our the anticipate share will see that program, these us us Pro launch new continue SKUs we're this wallet Charlotte, features better lot and we capabilities valuable fulfillment to are our their expect valuable top and in we as we customers coming the our rates stocking gaining project with Pro consistently with and need new

are building and our to approach capabilities branches fulfillment, Pro stores site our this supply job pilot today. Lowe's through Pro existing handled new we we As delivery on

our basis Although and years, we capabilities market share. us in points penetration this gain our are to accelerate the will continue X improving pleased with over XXX to Pro fulfillment past growth growth of allow

initiatives, with the of pleased to in of success am choice become Pro our addition I the strides In employer retail. our to new

of to associates in to build through are free are future programs we supply this company, a data careers careers associates academic technology logistics, program a into pathways our learning throughout more As that announced. over charge. associates and within in XX Lowe's today development in are designed as investing continuous These their just chain, committed we jobs analytics, excel Lowe's, XXX,XXX to their well more. as cybersecurity, debt-free than toward education initiative, participate and Through programs eligible University including new and help

a Finally, I'm and our that that last it the at in best process pleased are we staffing technology standpoint staff reduce position quickly dramatically associate helped pipeline hiring that to from than capture accelerated takes ensure new time up were the we tools a better in new report spring. we hiring through and We this process applications. candidates the These time us for year.

positioned Looking also right are service, and forward, customers our products. are for to productivity drive spring our well the we surge demand customer meet while we to making in continue to investments serve to enhancing the

associates As to will I I Brandon. With relentless to I on for in like over their close, driving once productivities customers turn that, would stores. thank our serving store now focus again our it and

Brandon Sink

to saying Joe. what an CFO. serve honor Thank is begin by I'd it you, like Lowe's to as

executive leadership our into made capacity years, to continue momentum. tremendous we organization. extremely team transforming as Lowe's a new I'm progress in leading be my the with retailer the finance a world-class omnichannel Over several past excited joining we've

X% prior delivered of year results. rate lower improved gross compared of We margin and to per disciplined driven turning against an $X.XX, diluted earnings QX expense management by Now increase sales. share to

of decrease from increased comp year. basis XX.X% As stimulus in points of of a basis later well we mind the ticket government product and benefit levels XX.X% difficult cycling higher X%. commodity QX as last This to XXX in to due most Keep prior increased last by sales, were X.X%. count sales driven transactions X-year comparable X.X%, approximately spring in given was of down Comparable over of quarter start Pro inflation expected, sales lapped sales basis. government billion on and count storm declining year, transaction grew $XX.X by comp inflation. that comp our average as impact a XXX the year, offset with comp year. comparison point results the up X.X% sales stimulus X-year the in the which transaction and of U.S. decrease a and were XX.X% a recovery

offering. categories Our Lowes.com, Pro core XX% pressured XX% approximately as basis. in in increased Pro over And remain in seasonal elevated categories sales quarter our while demand the continue build we by on outpaced X% sales and growth or with sales service our the DIY quarter product momentum million sales On to with driven the and DIY X-year quarter strong, a XXX lower sales basis approximately by $XXX points. on in for the

round and unfavorable cycled were weather. Our storm February, down in X.X% sales stimulus were in U.S. sales the March, In third April government of we negatively by March X.X% in and while comps over down impacted April. Texas recovery up in the monthly X.X%

XX.XX% we credit basis effectively disciplined increased up product from rate management April basis inflation on benefit XX cold a while points live March February well points unseasonably basis of strategies as improved points Gross XX X-year increased as last XXXX, gross compared lumber volatility. the margin by XX distribution sales planned from Looking to and cost X%. sales drove pressure These comp of our to basis and pricing margin was in quarter, to offset weather from XX.XX% basis QX levered drove basis to Also, goods SG&A points XX points quarter, margin basis last of product year. year. favorable of points first product costs. benefit. SG&A points and increased were damaged from a XX.X% growth XX of Product U.S. revenue by price in partly higher XXXX this of pressure XX mix manage cost at benefits XX XX.X%, as increased leveraged basis

year. rate. drove offset of points prior we against lower $X.X increased line mentioned, Operating Joe rate levered year. productivity Operating XX in margin improved with was leverage was profit by sales labor billion, basis which cost XX.XX% lower of store As prior fixed sales and wage versus

ability XXXX. The to adjust enable sales a line despite in operating reflects operating increase decline with $XX.X a at our year. rapidly from prior line reflects effective Our tax This operating Inventory in billion or $X.X in the improved levels seasonal rate dynamic that us trends. QX up $X.X ended XX.X%, XX% quarter billion capabilities with margin was from billion, a environment. to in leverage QX

inflation, reflects increase were Our a to XX% inventory also balances higher while balance from breaking both product an late approximately commodity due expected and spring. than

our financial outlook. to XXXX turning Now

in Our performance was QX expectations, with categories. seasonal line our excluding

event as and a first breaks half is Bill truly driven by is when the weather However, country. timing spring the across mentioned,

past first morning, the line year year are that reaffirmed guide. outlook. improved in which our with weeks, will financial This half seasonal full full we our in X-plus Over reinforcing our our categories, seeing results is XXXX trends deliver confidence we we

expect representing sales the billion down of $XX to XXXX X% up We year, in of to sales X%. continue $XX billion range to a comparable for

to We DIY the Pro continue to expect for outpace year.

to approximately $X billion to As a a includes in billion week, reminder, our XXrd equates which $X.X sales sales. XXXX outlook

slightly to full rate year for to expect prior continue up as We to gross compared margin the year. be

inventory layers. than pressure continue However, lumber gross our we higher weeks earlier several as will expected, turn as margin QX declined shift into through to cost we prices

we in of margin the our half the result, first up gross be with compared see first As margin half now for slightly to to our a expect XXXX. gross

gross PPI the the slightly to XX% of XX.X% in continue margin rate execution also expect and for operating of to continued margin initiatives. higher We our a full year, range by driven

earnings $XX.XX. diluted and $XX.XX our with share strategy a billion, we of capital expect approximately dividend for of our billion XX% $X We XXXX, to share range allocation still outlook year we per committed in repurchases In disciplined this to expenditures $XX also our ratio. while supporting remain payout are also target capital confirming in approximately

above affirming are return on invested our of XX% the outlook for we year. Finally, capital

I'd our at Now allocation we value drivers shareholder-focused flow. strategy. repurchases, in Lowe's, creation our and $X.X of returned by combination capital In like both our the shareholders. one reviewing of cash to billion company $X.X QX, through generated free And to a dividends share close billion

which for questions. expand confident our with to ended substantial we deliver equivalents, as billion excited plans March. $X.X The last ahead extremely our our This are grow accelerate includes to from continue now ready strategy, adjusted make cash continue During cash the meaningful margin slightly $X invested enabled we X.XXx quarter, we the points with repurchased XX.X issuance versus in strong returns. allocation we up million $X.XX billion at balance to offering debt-to-EBITDAR, $XXX shares are for repurchase year. We us at the in a delivered share, and capital the totaled operating $X.X quarter, market opportunity dividends we billion, million quarter, enhance by in in and and of in we invest X.XXx. share per to bond return the And value. our target in proceeds for ending quarter paid $XXX In to as and of million shareholder performance and disciplined notes in the progress and XXX trajectory larger-than-planned expenditures of our closing, quarter. on basis us the quarter Capital drive both capital the operating of that, and continue we we business XX.X% remains sheet growth share. towards Driven healthy,

Operator

today Melich is Greg Evercore. Our Instructions] from from first question [Operator coming

Greg Melich

X stimulus. a that in on have when quarter, flows in, my just comp inventory. mid-XXs? of is we question questions. second looking sort is then X-year in I understand of and how spring the think the And the shift about we One second be to Should at

Brandon Sink

Brandon. Greg, this is

April, came is positive U.S. in categories down month. spring X% as seasonal the remarks, my mentioned the and Just especially above of average comps across within feel as May, our about say country. I'll we trends really for the comping our I we breaking early prepared in on, And company good out

year. QX, of year some all being have at us the I as volume when XX $XXX positive for We're the the X to of million. is bit year, weeks with to QX comp confident the yields our to sequential QX, trends, for balance balance QX. the year. that for well. million. the tailwind continue We're recovery of the And with of look the X improvement, Memorial with year. JX. full going think full our in ahead of continue be Father's Day, strength to to plus a the And QX a then the X. But that that We Day, Inflation is in That's sales Pro confident to said, We're see range pleased down weather we X biggest go-forward in XX% $XXX a slight the comp going over

Greg Melich

inflation that. imply on that was does mentioned of XX% X% are about down then the was Perfect. that I actually year-on-year. you inventory, And growth and mix that -- Am XX% units --

Brandon Sink

we manage have lineup we inventory Inventory remarks Yes, and first a prepared in group price terms. is of other do upcoming every XX%, and heading strong things. holiday to and the -- balance commodity I our seasonal a Spot remind couple dollars and was year, half with the on. have will in up Greg, both QX the inventory we carrying pressuring inflation, and in additional along into seasonal QX

strategically in-stock beginning and needs add appliances. to of in Bill, of we've But over where the in-stock locked to paint pandemic, support there's constrained he to in continue it the the We since we're made improvements, categories position job I'll kick quantities in invest Pro a particular, couple anything inventory and had and to we've our if there. in best

Bill Boltz

hit think No, you Brandon, it. I I think,

of I key some brought the during the season. the quarter think with sure that We the for ahead the made. seasonal seasonal fourth you we're making focused call that we've of shared is that inventory us on we in sell-through buys

of And through through so year. the half we're focused that first working on the

Greg Melich

trade you haven't seen down, like? And any it sounds guys

Marvin Ellison

no. The Marvin. is is this Greg, answer

As Pro spent our a across with of DIY literally this and a imagine, customer trade you at on in bit can business. we down geographies, material the daily, quite weekly we've time no seen and basis looking online,

Operator

coming Our Brian Nagel next is from Oppenheimer. question from

Brian Nagel

congratulations role. Brandon, off, on new your First

Brandon Sink

Brian. you, Thank

Brian Nagel

My on say now where a call. question, there what of are guess primarily, Marvin all please for is get documented. and analysts I direction but I'll detail weather as I news to the following disruptions the And maybe the well

these you were, As you gives cautious look indicative a in weather-related a what and that pulling confidence fact, greatest slower business, not back discretionary on the spring more now at spending? the consumer of sales

Marvin Ellison

Brian, question. really This -- Marvin. a it's this is good

the a I'll take of assessment. Bill first just more So let give product-specific I'll part, and

in was and So a good were U.S. take really X.X% The that as the we the February is, weather look we stimulus. difficult And comping of then of top the was a a that stimulus operate quarter, April, at I had month so and March really we coldest obvious to positive we years. were all running well, anticipating at when in mentioned, March, in start to strong, anticipated In month comp performance, the mean, of this was you states. we us, when their weather-driven was us negative for the we event. overlap and it the And of XX news to categories on in over to look

well, the categories et we the well close of you'd glimpse take weather And and weather live to at these of were off the moment, would in parts of grilled seasonal these northern patio, exceptionally of southern relatively in the were goods, outdoor obviously, in power, could easily something some weather country we categories mean, I all cetera. and the look So where perform a moment the we see shift. decline. get those markets, in would performing

seasonal way trends weather April, was to we we're environment, on our the reflects the So month in that more the us as And both Brandon And a is QX company to those with the May, mean as analyze underperformed of May. in is this are we obvious at categories daily, the now that weekly a getting same overperforming the driven month I pleased I weather. that and moment prepared seeing. look what that very by of we mentioned are of literally in we're also basis the impact comments,

So I'll other add details. Bill any let

Bill Boltz

also to is out only new I innovative seeing of that add, thing product. No, we're Marvin, the and strength think

of saw like of so brand on, The we the you look mower very very segments well. weather the doing and saw continuing And green the outdoor the strength perform product businesses like strength quarter, the exterior riding Aaron's throughout in at Deere, as first in project John shoots outside Pro well. live like And strength we strength you touched as just -- the the nursery, project of of to EGO projects. battery-powered

us gives just it QX. through that So good that confidence can carry we

Joe McFarland

comment add I'll there. one additional Brian, just

expanded Lowe's our Pro look the the that you Pro offering, at Pro, mentioned our earlier his Marvin If strength market we're the that inventory the that and of new prepared you seeing, of growth at Pro launch MVP then mentioned the product deeper in XX%, revamped remarks, look and program. health our then and earlier Bill at trends strong

we've think got I good confidence there. in so the And trends underlying

Brian Nagel

it. very one follow-up. just all appreciate quick really That's I helpful. I And guess

weakness should sales assume no think made happened and QX, it fair really In that the we these here QX? basically, about lost in is as there's all the in demand? other words, seasonal So be to that sales up

Brandon Sink

Brian, would QX. that's fair that the correct. X.XX to to It's shift in assume fall

Operator

Gutman Your next from coming Morgan question is from Stanley. Simeon

Simeon Gutman

you're handily the Street first any beat the year. change at making So least the quarter not to earnings, and

I sales. it the some make quarter, second you'll like think up sounds

And rewarded outlook. raising will was getting paid way, quarter that for fact it better, the and The no one or by first first so is -- the did any be the same. half

implicitly, means there's out. that's the I conservatism. guess, way that don't taken something So was I it to or just know think of it if right

So curious is first in way that? some you're second the looking anything that the here you the in quarter. your And at the since changing thoughts around half, have business headstart

Brandon Sink

Yes.

this of specifically lot So and gross margin. Simeon, Brandon. timing-related around is is A this

driven my So by as basis of in results improvement I for and points mix. rate remarks product margin QX, said prepared XX

for from benefits true periods product-related nature, inflation. benefited But of product especially nature, in be lag can are that's in are keep to Cost mind, the especially on and also layers side credit. in We in both temporary and -- going proprietary temporary margin commodity the inflation.

do we began. step back, that then seeing due So some level we to cycle deflation as late other credit. into specifically of we have that expect in lumber We some as And shrink QX, began March. variables, such

drag, We then be costs messaged. to with a And inclusive delivery market transportation expect we've which guided slight supply that chain, is what what higher are back half. going consistent of to largely be we've neutral over and build-out, the the

full margins it's So and step a it's for of in for overall up the modest timing slightly margin, a layers first the bit margin, as improvement mainly turn year. But back. cost mainly for half

the didn't So reason the we that's flow year. to beat full the

Marvin Ellison

Marvin. is this Simeon, So

think note performance pleased we're it's me really the that for in with first important the I profit half. to

our from took and retailer sales from gross cetera. difficult cost payroll it declining point, a unprecedented and size of year-over-year margin et have this a perspective. expense lot leverage a work operating a have discipline For inflation and and lot to supply environment is management, And really lumber deflation. That of in basis an to chain, the on and of we're operational management, Brandon's margin

we And to see in start couple that, give as we of and because to us so headwind shift, that's anticipating just we're starting planning going last the to say, some just lumber conservatively we're QX. weeks,

Simeon Gutman

some you're mean on on so you business this a you line? pressure, might know on as as pricing That's feel fuel well tick be maybe little touched Or your level fully your that And continue pricing inflation you higher? I costs. real that offset assume Brandon, top helpful. Does it's My don't the there mentioned follow-up, does to of you'll related you transportation unit And it. prices. may the time? just help degradation adjusting

Marvin Ellison

this is of lot putting -- We've pricing take improved time a me let part a So of from systems in that. Marvin. the standpoint. take I'll spent first

real that by place everyday in and geography. where cadence we're Bill gotten So we've thing analysis high-low an Lowe's line of your be is to geographic for competitive doing competition everyday on this day online sight a we of off in-store put competitive of have are an can competitive strategy the and by early competitive And you have pricing more prices scraping time, was that location. pricing One both promotional when good by he arrived is the way known you category, every to only to price.

some competitively But And And focused cases, we're a of looks provide inflation And lot on we that consumer. inflation, so we've to have that what a forward just lot in let financial Brandon that. done the I'll cases, of product in priced. being -- to with carry of specifics like.

Brandon Sink

mix. Yes, to just cost on import they're the are, that's say we also container just add giving visibility done Simeon, fuel great job going costs as with correct portfolio that, have a when I’ll the question from to manage into costs a would is And those to I totality The it add where your hit. direct consideration teams set to the that vendor. of costs, transportation, along us

managing So in retail we that are this environment. appropriately, managing

and it we of particular, that. offset comment. to would is that be those some other the only trailers, of additional totality doing chain, minor in thing help look a managing the transportation, leaning other fuel, portfolio. the the So would of When on and supply to some like we're more On things things intermodal like we also cost add overall into at I feel

Operator

is Short question today from Next coming Karen from Barclays.

Karen Short

a couple So I questions. of had

with you largest about update give you on us -- respect or and traffic competitor? bridging terms within I you your you how how do more? in your And just your talk your terms and/or I margin mean, that operating with definitional margin largest differences with actually think about about footage. an of your you think competitor versus on to guide, little can But maybe there's maybe structure, square then Just of can XX% a in gap the think bit ticket

Brandon Sink

Yes. with and to back I'll Karen, question, second point. get it Marvin the start the to pass let me first

digits, that. the the transactions the year. was DIY comments, for the a point the our this. suppliers from year. the positive our the the on QX accelerated we and QX we that there specifically inflation, finance ticket I'll decrease commodity. double second opening still QX, believe however, with to ran that's It start the will do in, storms moderate. in mentioned thick on from half to pinpoint. and We're this miss day decrease as to then figure will do say, of teams of working and and inflation We're points we high be ticket, side, an 'XX, on digits XXXX we the cycle So lumber to partly spring as transaction weather delayed should And expecting transaction moderate for mid balance harder bit transaction inclusive a we I impact are during as expect believe to the We to single day and out of low single-digits say to Texas of inflation lap through side, due XXX over stimulus, of of do from in QX. driver balance planned But merchant primary the high basis that, the I'll out. the standpoint, watermark down we And little was

flat will to the expected dynamic expect high that mid So to transactions is offset and that the positive the the formula comp, year, the to of narrow the by ticket year. over get we we move down net-net, transactions balance us of single-digit balance as ticket through and

Marvin Ellison

Karen, think Pro. margin question. comes penetration about versus of us you I'll you between I the down it to DIY the and structural take the our about largest When operating our differences more other think kind think competitor, and really of

going good by penetration we've years, We an in an that penetration The the been And us is think news just the points. continue Pro to X I for our have quarter. XXX improve last Pro you expectation if setting target. think in we're we're comments, prepared not first roughly business. about increasing to reflection basis obvious a my that's

specific the So gives to margin we or Bill's and in all sight, that as we the based you work Strategy, brands direction. the Pro, innovation with competitive private a to really clear chain just But we doing team going online our that right very we the we're Total to of grow that operating and think addition about all going to have that's it to feel and supply the track of on and on improvement. style getting expectation. continuing and be that, business. on It very headed pleased execute performance whether is overall and quarter, XX% infrastructure. our that all In continue that a sight good in us focusing store the initiative, line beyond it's expectation customer Again, we how we're brands executing at we're and a private Home like on to to line feel have on like great income, in we're with we in we're of to a operations making and key delivering infrastructure, differentiation an do price point can drives it we're investments and that have

Operator

today question next Your Horvers JPMorgan. coming is from Christopher from

Christopher Horvers

just up first So is commentary. May question following the my on

running of total comp. the ahead company now You talked DIY about average

growth sort XX% math, cleanly math will into you getting backing comp. in that mid-single-digit reasonable? If of you're that that still Pro Is above the get

Brandon Sink

unique in expectations normalize going expect breakout but know bit. which our outpace But to in of environment be is this QX, I'll X%. to start should X to guide first couple weeks the we've that that the seasonal to at absolutely business. QX. been in is business and said through dynamic, the say of to in we've the in what the expected seasonal of market, to the QX recover don't is that And translate But that be the DIY, Brandon. grow to Xx the be dynamic, outperforming been certainly reflected the just that Pro to is in going performance in we we million ahead of running of XX to the DIY you, will majority that DIY business. I up given would cycling, Pro Chris, Yes, I X% QX balance DIY remind Pro down just a going

So your question. answer that's I would how

Christopher Horvers

Okay.

was outperforming It you said Sorry, I outperforming average. company thought the expectations.

Brandon Sink

Correct. Correct.

Christopher Horvers

Got right. All it.

not you in just Sorry very To of down in in you it of then uncertainty. And seeing Marvin, earlier that. to a an like any release, seems increased business the the a responsive -- terms added about sort trade weather. effect macro press question, around mentioned line

puts you that? the something just on you X ago? expand all takes and observing? maybe now less consumer it can fulsome given the simply Is there are being months on So Is versus

Marvin Ellison

and economy. It's we more interest in rates. But of concerns. an that We're broader confident have And very as are aware remain just sector, aware we rising look really the very a we're confident there what think improvement is of for we're inflation in outlook what's interesting macro I that acknowledgment sector. all we we're the in still improvement at home seeing that home the

economic what said. key intently appreciation. Pro material so the our when I've about imagine. of at can DIY. remains We think It you home drivers And repeat customers. monitor from remains We've business, And we I'll price and look our it just We seen no it trade as they closely down they're our age customers, things just those continuing when in talked that customers, one the confidence year. remains of stock, We invest would the home. out. DIY it come talk the And to our as housing for Pro homeowner wait the to of to booked us we this give

more home of environment just of we're seeing. we so good sector. that statement acknowledgment was the my And feel about an And improvement broader macro all the

Operator

America. from Suzuki Liz from coming is today question next Your Bank of

Liz Suzuki

is see impacted XX% that But homes isn't change hands gotten spending. rates X% turnover recently degree renovation U.S. written as greater of of that about the we've by we've housing not of really important home those So that do the as and a pushback are homeowners base presumably interest how price of appreciation.

that Because So purchase my of on much home rates. how the on question sale home average is, spends prepare they stats a they the impacted of have and actually reliable what homeowner is improvement get to trying you market we're by home? when for any when sense renovation a rising portion seen just a

Marvin Ellison

best. at anecdotal be would it Liz,

tell it you data But represent conversations that. statement that. to So is we firm don't But consumers, data view have we fact-based again, correct. our with don't our Pros to and and any have support any of your us that

Liz Suzuki

product just average ticket. a how in the average ticket quick innovation more inflation. just contributed has follow-up mean, obviously then And is on than to growth I

do you and cycle where normal tailwind what categories replacement innovation be So ultimately a does could accelerating be much may the that of inflation view normalize? as the how when product

Bill Boltz

it's Liz, Yes, Bill.

what it like we're quality smart trading to store, with across customers innovation, so across see seeing product appliances to appliances. in see areas And appliances, better category. every the you we But really up

power in brand the I mentioned battery response, in EGO question specifically. As an with outdoor earlier equipment

power seeing it and all innovative the with also in of Deere likes there. gas-powered Aaron's, products outdoor John You're

seeing in it You're paint.

see also the that we're across So with brands And just private of our really the innovation. you STAINMASTER. able offer in introductions categories, to

already that seeing now carpet vinyl, flooring. been seeing way now weave in. in and about you're tile, it's So laminate you're I in its start to talked

value. you So great a Origin got us, new great and brand XX, for modern is again, which offers innovation

Marvin Ellison

And invest for investment is expense. correlates availability that historically we we more an home of tells because think have but confidence I And I the home health a improvement about is where environment this value Liz, the this What you value it supply-demand to up, again. appreciation, as appreciation are just price in to Martin one sector and lot macro of the not why point there the it want simply kind the in when an is And see it's us consumer home confidence. a impressive have questions our an consumer. of of your price to is home of the unique reinforce home data on you reasons issue of retail and going homes. also unprecedented have

supply-demand X million of less tells So us this a homes data our million, more it's have is X.X where you the versus and of demand availability. of bubble issue

customers, And that Bill on And because a home investing about home that's up, the you what get trading so said price think they're about I in to feel think more return comfortable our you appreciation to think they investment. of if our going business. value

Operator

question today is from Zach Wells coming Fargo. from next Our Fadem

Zach Fadem

structural you And takeout the then would or call how SG&A what seasonal of the versus versus you as year? SG&A PPI-driven? the in would sequential should quantify you the dollars? Can square balance help we How me QX step-down reconcile much

Marvin Ellison

So Zach, this is let take Marvin. Brandon the going part context. Joe some and provide and first of I'm I'll that, then to

up on to I payroll, hours have also sending place Carolina basis, by down contemplated that activity-based allows and were to out we sales writing to based department. velocity a and North when literally from Morrisville, in we that summer XXXX every That that but a is we relative payroll arrived location in to an model volume irrespective of significant on contrast a had So what of trends. flex schedule store, store by of weekly us

So for you sustainable that so as we to a did can think were as of talk get effectively and Joe the view that's in we payroll, why I'll QX see leverage about of able let a result year. we we'll balance the how

Joe McFarland

think from just onetime payroll as standpoint, PPI Thanks, I but important ongoing about the Yes. not Listen, Marvin. initiatives. it's a initiatives think to initiatives,

through different to ability and our RTVs at we list whole the of leverage as centralized SG&A look go And initiatives, PPI initiatives. a so down

increased to scores. is So onetime, LTR I both showing and it Pro not And and going are think very it's the this done because but a continue. customer we've do-it-yourself service effectively

to So kind I of good some points just that productivity. think

Brandon Sink

in add, the we thing have And Yes. Zach, points. with of the consistent SG&A what earnings algorithm the full only leveraged other expect. That's range we basis would would year I so the for XX

the and is of think And drivers comp to are be use supply able a negative being through what environment, between stores, that to what split understand volumes, the leverage those the been and in point units, expected Joe's business, for being to against news within transactions us. for in understand I what really then the are going chain move think, workforce tools, point, inflationary and has this highest great optimization being against powerful to the really truly quarter with are able demand businesses flex and in both the the as model the good year. we to able proof there I us our the

So I'll that. add just

Zach Fadem

the comps balance the your versus do here? you can fair points this it the in realize about to of to Pro you Pro And XX year, overall square a industry spread track and rate component double-digit weather growth widening the it. But year? between how quarter, seasonal business industry will is at And Pro the and with think normalize. about as DIY assume DIY Got from your I

Marvin Ellison

market teams expectation the to on number Loyalty Program is the our Pro-related about of think to Bill Program program, grow other merchant have talked assortment our customers enrollments. Xx point, data that that's new based Pro on we if interesting on one Zach, Well, and customers the products of new enrolled. the we MVP than his Loyalty spending And in based exceeding that, our our that our We achievable in Pro Pro. list look currently really XXX% credit expectations MVP and at more they're enrolled not added

site that give So Pro large with mention other lot it start include think job a And we opportunity sustainable. initiatives some us future the fulfillment will of gives filing growth in an not to to that we is to to our us confidence approach. serve a that are

obviously, on rest our challenging, we the will of all initiatives, view are none DIY that it's will and all continue. the have on year. those of said lot DIY reinforced, think into mix a as the in So we Pro out Pro Look, is our guidance, that those how reflected guidance, crystal us Brandon of our of our a we Having dynamics like mix. for ball, Pro we feel the think based of that, play factored growth and there things

Kate Pearlman

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

Operator

webcast. Thank teleconference you. That conclude today's does and

your You a thank participation you disconnect time, We wonderful at and this lines have for your today. may day.

Lowe's Companies (LOW) 18 May 222022 Q1 Earnings call transcript