LOW - Earnings call transcript Q2 2022

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Operator

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

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

Kate Pearlman

morning. good and you, Thank

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

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

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

turn Now over Marvin. to call the I'll

Marvin Ellison

our and Kate, quarter, the second increased declined company U.S. comparable everyone. sales In you, good X.X%, X.X%. morning, while Thank total comps

Pro strong. sales quarter, the For remained

quarter this ninth fact, the Pro we've consecutive is double-digit driven growth. In that

in remain driven trends Lowe's, strong, of at underlying the our second from reminder, the of sales and a the As year. our is quarter half improvement of DIY our DIY by lower sales XX% customer are the sales XX% the while expected than while Pro. home first were And

heavily like lawn DIY call, concentrated As are I categories as of sales on many the spring timing garden seasonal DIY. in impacts previous our mentioned and disproportionately

garden was regions. early, by in arriving from combination spring moving to of This cold savings showed XXXX. on lawn season increase the from late, plan In grills DIY unprecedented certain demand the temporary the lap a more purchases impacted planting some in products. in now a modest patio are demand and XXXX home sales. on a over years three pressured and improvement the two goods, rounds categories like and discretionary unprecedented a quickly and precisely hot and fueled as demand, addition we the away also including was Also, winter consumer it likely by ended pullback summer then possible that factors This drove shift rate time. from to spending this outsized year disproportionately while government sector we stimulus, spending consumer an past for These of towards we services measure at to believe it

whether more seeing Bill activity. home grills, And you trade of To strong which demand our will our in on trends, despite and spending DIY DIY resilient, in patios our trends. some price select seeing asked we the provide trends of summarize, reflects have down in indications we're sales demand are higher categories products points. and like innovative customer later discretionary remains point, new this improvement continued continued contexts the customer the at call. down. If not anything, purchase for slower we're trade seeing opposite with material consumers strong At their

to turning Now Pro.

will update quarter, the provide a sales feel our designed call. Pro Joe with that network saving solutions X% We on to and Pro and to a fulfillment Charlotte, Pro the later regardless on particularly time them strategic this XX%. momentum one initiatives our them offer every money com, time is of in most delivery of delivering invest continuing a a grew for same-day Lowes. XX% representing enhanced because improve on further year. performance Pro can lagged by towards believe penetration further like their we On We're runway size center sales XX% of DIY. our ways is pleased for options, growth to there penetration Because We're capabilities continue nearly are actively more outperform tremendous the both including MVP's as MVP Therefore, Canada, basis. heavily seeing convenient gig with business fulfillment. we reminder, is high QX In that for in piloting business. valuable fulfillment serve we're which is prices still record lumber ahead. of And to a Rewards, benefited an disproportionately Canadian is market, growth we two-year the omnichannel it lumber, and because with the weighted loyalty U.S. the make Pro Pro last program, of Pros, from new

is particularly me discuss the our operating for improve discipline the which again to sales. despite ability across lower operating business, once Let we've demonstrated operating margin pleased our by now I'm performance second that our with developed quarter.

also operating perpetual reflects our on delivered which did PPI margin During $X.XX, operating or will detail half our PPI. it the focus an of earnings expanded in Joe disciplined discuss success of in the the Not XX quarter, for balance to for margin also PPI help the several progress is leverage first The later points, year team's productivity and drive year. only initiatives improvement, our years. support of of call. basis and more share our we per nearly XX% operating the last diluted will initiatives the next versus increase

of appreciation, and disposable dynamics home market Lowe's, the the retailer. demand about that some the to that At are age dynamics address builder improvement our like home the pressure three home of I've clarifying income. factors stock the the personal same I'd I by the housing to correlating begin concerns shareholders market are necessarily not from home market. highest that improvement improvement the that heard pressure price want Now home

homes not will turnover appreciation, while housing in return and get turnover and that equity highs, index they that it home gives record on we remains at home more peak And the important, they early does the prices of also same than over half disposable rate is of getting old turn ticket that repairs. is slowed, which While keep price acknowledge XXXXs are the customers More are a make age older. housing those confidence homes at home their old, homes. importantly, big starting housing for the in now the key a built the boom has in which the years personal and at inflection income. to XX U.S. as XX housing investment point years And millions

homeowners, Consumer all-time were In savings $X.X of more at than benefit wealth terms highlights households key another and are of roughly high. higher high-income that pandemic. still be household who our excess disposable they And pre is are in XX% is likely personal of concentrated industry. middle- income, an trillion savings which to

the is customer core Our homeowner.

high improvement home is that turnover. slowdown the home despite In win having income, when their are lower rates. interest turnover needs. of spend homeowners improvement reasons most rising more the markets key to we from to less desirable, addition one housing housing saw interest in and mid-XXXXs significantly moving rates fixed mortgage slows strong fit low in can housing make to disposable their invest in This is homes benefiting homeowners rates as in motivated supply And current a grew when and it are as when and

the Pros the trends significant Now prospects years. speaks Pro in We and the of we busier past their to Pro remains The highest than in the ever, home to strength are shifting backlog continuously it's in our customer to pent-up is retail services. the is their seasonal survey for the outlook and demand In fortunate demand been in their uncertainty Pro and operate Pro. job the macro sector positive. our industry years, despite the and improvement short, long-term this unprecedented and in two for confidence

As company, the facing Bill. inflation, our for In of hourly incremental quarter. serve over are due work to a they associates and to high pressures I the to like we have million These bonuses their jobs frontline important to providing I that, some personally we an are customers appreciate do thank our the with this recognition would of our deliver most everything call best-in-class experience. cost I'll turn $XX our deeply associates in they And to in close, to and associates hard dedication.

Bill Boltz

morning, are the results. in business, U.S. X.X%. beginning and sales up to DIY through our walk with Marvin, comparable you second In seeing Thanks, I'd like the the we that everyone. good quarter, were trends

our patio, our stores, we enabled and inventory in we live chemicals trends sold disciplined directly which broader of to at impacting winter certain from in two industry. exclusive country, many Marvin retail like retailed process the summer this After designed than products plan still mitigate out a XX is mentioned, slow patio the areas year. the Origin that of furniture moving fertilizer, you're were had the our in home-related garden chair nursery. sales of short planning with outsized sales, spring certain Benfield categories like many And to to most demand us As even down seeing in years for categories like outdoor But market. growth $XXX. within across first across more and outdoor grills, pressures expected, consistent items newly But for ag

to quarter from EGO, spending Rather latest in like seeing in CRAFTSMAN for is underlying demand products Kobalt, the ongoing trade cases, the more battery-powered Skill the than customers interesting reflecting up, trend seeing purchase we technology trade strength. many and the Another innovation, brands. down, consumer are available

market products trade below the in to our number before low over a of with continue Refrigeration, quarter sales EGO retailed U. And dramatically to and despite expectations, said benefits have XX-volt were unit to and self-propelled client fact, one incremental we S. priced. consumers higher-priced that In have busy the to and LG, was doesn't $XXX. mowers brands we of KitchenAid, mower see appliance this share an assortment, our most value the expensive our while up in proven we battery retailer continue lead for In take like top-performing products outperformed lifestyle. family's in sales that being the one that forecast one This features what our Samsung as be serve

plumbing, or it our easier which Or to And designs pre-sized how This a day and easy like miter for from time our new all the wanes intricate points they Pro, to due feature and BUILD highly we sheet and across and it And all-star store We and are offer getting well. coating. do-it-yourself our product, rough Customers Samsung, EGO, our strong electrical, also exclusive. clean. like are on Moen, a a LG, Pro products cost-effective leading now comps merchandising how brands do projects expanded as to for to gears in flooring, Shifting $XXX. the John than savvy new building molding Aaron's. at customer, and feedback results paint, Kohler, tile and Owens and of the overwhelmingly within broad-based materials, laminate Deere, including and Trex, each new source them like BATTEN can with hardware. saves price Honda, keep positive lineup, Husqvarna these that Corning, for about jobs across for positive our and install Lowe's makes customers, value DIY transform make less our delivered wall vinyl KitchenAid, STAINMASTER continue products to Whirlpool, easy categories, we millwork customer

We Pros need that from and are important traction that to making this trust. Pro our continue offer and optimize assortments with the pleased we brands are know with products ensure we we they to customer the the

durability This quarter, concrete that improves quality, liquid projects. EdenCrete, and we additive sustainability launched of a the

millwork, market power and battery lithium these more this brings even homes with Pros a more battery only technology in package. a vinyl in buying launched popular to our FLEX smaller were hit of own line increasingly reliable And making with new the DEWALT, the in premium of our trim in FLEX products We to trend Lowe's stack technology exterior stock both have look, some first power now cordless an before even they available black new to also which give pallets our also we destination window, the shelves. tools,

In the Bosch, portfolio also JELD-WEN Pros DEWALT, from further Strong-Tie, SPAX, programs Crescent, interior Estwing, record ITW, of Mansfield, come FastenMaster, the previous prefinished Simpson trusted we and doors, factory, Lufkin, These strengthened Werner. Metabo, which expense FLEX, year. our modestly the like required pre-painted added to our time in and door. cycled saving We Little the declined Spyder as GRK, lumber paint Marshalltown, prices business, comps have Giant, additions Eaton, LESCO, high SharkBite, over

demand. However, were reflects the significantly underlying which strong unit project up volumes year-over-year,

sales grew on building over we top years. few the growth have seen Turning now past Lowes.com, the tremendous of to X%,

our configurator track We online assortments, continue easier make customers enhancing and the and out tools, improving our by to invest orders. enhancing delivery and experience and the to experience user in expanding to for their visualizer building our it

And finance, our like to inventory environment. complex in and a for inventory my I'd like along their also team, management I'd to merchandising planning close, I retail As entire thank supply with and lastly, their chain continued improvement disciplined customers process have turn tackle. vendor hard our you to over they for work now Joe. need partners every home I'll and the thank our for ensure partnership and to the they call products Thank project teams

Joe McFarland

and morning, Bill, everyone. you, good Thank

me our associates. customer Let or our perpetual for They begin initiatives to expressing delivered by due PPI. profitability my this service appreciation and commitment to improvement their quarter productivity strong

needless first that from drive of the half PPI year, to Simple continue including stores, initiatives year, our time we a call processes. in on made expense. simplify reducing our we duplicative XXXX, distract many I'd Over further tasks meaningful have we to the with launched what now of are for discussing on service Project some how customer we of this Earlier like we and focus spend our one daily the what strides. remainder focused store

In will Project out Simple, week the new we nonproductive it XX our per launch system, of half. inventory store discussed or eliminate that SIMS. store second in February, we game-changing, as I the per management continue over hours expect rolling fact, In

seeing months just into are we are six we results. implementation, strong While the already

to while stocking are pack visibility, feature, the product second sell-through searching on spend for an online. we nonproductive customer also we associates the new process provide prescriptive down experience rates. half, inventory reducing will the specific exciting based SIMS and new hours associates This in With And improving shopping improved leverage down. will instructions in-store our the for

whether top to go the know replenishment on more needs a and the planning directly end process. efficient, altogether. shelf the This product cap stock or the they bypassing drives inventory to So, proactive

productivity, for come. that a at static As of not a these deliver only second quarters of will set ongoing not to continue examples many initiatives to but will illustrate, is date. that in the PPI initiatives predetermined process PPI's expire perpetual half,

Now shifting our Pro. to focus the

quarter. Pro of XX% over continue comps the in We to deliver results incredible with

in points this quarter continues DIY-heavy, penetration every bonus our our in enhancing MVP's traditionally launched basis in Pros over launched our a expectations. is to first days extra event in double-digit our in the A.O. a we the Pro XXX fact, July, increase over U.S., conjunction that and that our In Metabo, In program the new with leading XXXX. driven brands a an have loyalty is MVP Pro And points row Smith further focus Valspar, that partnership of FLEX, Pro Rewards our first-ever Even with day. quarter, Pro such outperform the Pro comps. it ninth offering we we as saw and of bonus This bonus products on with from quarter Lowe's MVPs XX% most we program. points on are use Pros earn Frigidaire. DEWALT, and

benefit. all can Center. or easy Pro Pros made Pros in Our for we their their choice, to and products it Reward redeem for the MVP other It points gift cards is

mature be Pro As Pros excited that are second to for our tailored we present with them. Rewards in will offers compelling MVP's program half, our continues the just to

ourselves preferred their with significant shift of a I on important Before differentiating retailers. employer quality week, full-time our as are our the is four-day investments in we way can of even recently full-time retail. options that our terms. in me it now we to discuss predictability making other This their become asset, is most life, We that fixed close, the Most associates, associates. providing request announced work days or from and in we another associates choose for fixed scheduling associates' expanded strive let our choice off a them are improvement

period associates we to inflation, an this awarding during discount mentioned, XX% high household of million. of time Marvin frontline hourly an bonus incremental are associates a designated help on items. with cleaning our and for providing $XX Also everyday frame, are As additional our we

of inflation these Associates burden we which of a the purchase items. hope impacting XX% can now products many ease at will discount, these

thank look continue I will tools associates' once build balance, associates again our providing while our commitment customers. work-life them a to the like to Lowe's. ways career to to and for for improve to We our Lowe's would with at meaningful their to

I'll turn call to Brandon. over the Now,

Brandon Sink

Joe. Thank you,

per X.X% dynamic improved over Let average higher prior from We comp X.X% $X.XX, QX. in X.X%. environment. compared cycle sales earnings two delivered X.X% Pro comp offset with sales. me by sales product QX ticket diluted as begin productivity an This over transactions points with transactions results. Comp sales year share operating X.X% ticket. we of $XX.X quarter. inflation the down years billion, we higher drove sequentially U.S. QX to our sales in increase of XXX a Comparable were average as outsized declining and were up comparable of drove growth basis as in DIY was increased

certain prices. spring offset and Our increase On shortened by the in categories season, sales Pro sales the This lower impacted DIY partially increased sales. quarter. demand by were in in lumber discretionary X% lower-than-expected Lowes.com, customer a XX% was

X.X% in quarter, in Our expectations in May, is XX.XX% This we last consistent U.S. X.X% sales in were year. Gross monthly of May. in the with XX and that down was down up X.X% up comps June margin points second the basis discussed July. from

margin expected, year. the basis Lumber was from down prices declined April versus As late significantly XX points through prior product mid-June. rate

margin sold XX supply as our basis expansion domestic through we our pressure. transportation well As drove costs, was of import product points pressured. inventory network, of the rate as higher cost chain layers, both and also Higher

XX driven up we as $X year tax sales be points was or to bottom our XXXX with billion, of down billion The line are comparable now the margin effective continued the substantial lumber with to range Inventory against by first slightly X% slightly of product near effectively from due partly X% margin sales lower points basis XX.X% the slightly our year points margin our prior and offset across reflected first volatile well the reflects will collaboration morning, by was planning over weather. the more year. sales gross basis momentum Pro leverage the the were relative $X.X our our efforts. of SG&A sales. ability half product basis $XX XX levered the single XXXX. year. was half Operating billion trends. enterprise offset of outlook. of market as favorable gross quarter up well full inflation. drove the expect towards second at of We the year range to the end This financial bottom navigate our of the lower in quarter, $XX.X experienced rate. strong billion to damaged while that as quarter We first of compared rate DIY teams XX.XX% cost SG&A the the cost up first Despite product last year. This product points to profit largely very of $XX for to half cost results These XX.X%, productivity approximately basis pleased rate digits. XX%, QX XXXX QX expectations impacts XX.XX% for representing mix. inflation This for up in partly down the prior shrink related half XX units of sales XX in the pressure cross-functional as versus levered were Additionally, by the by we diligent to from of of XXXX. year, a I'm and low improving our Operating live affirming unseasonable was billion, as goods pressures ended half

remainder continue the the year. to We of expect Pro DIY for to outperform

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

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

expect Given to for XX.X% our now range better-than-expected at first in end XX% year. the the our operating of to flow-through the be we half, margin full top of

year sales last and the investments range Company's focus, Lowe's, remain the At for we all over lever we gross best-in-class despite share of years. consideration, margin to of SG&A the per $XX.XX this diluted hard at $XX.XX. now and capital Taking reflects of ability our the work several expect earnings to top be to lower-than-expected strategy. to committed the allocation into Our end effective

share capital continue $X we to XXXX, in For expect billion $XX and approximately repurchases. expenditures in billion

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

allocation our of strategy. capital QX, shareholder-focused $X.X In free share both combination billion to we cash shareholders. in And flow. through our Company to the $X.X returned generated Turning repurchases, dividends a and billion

$X the XX.X repurchased we for shares quarter, During million billion.

also $X.XX the in quarter million $XXX a support dividends $XXX expenditures target strategic per of invest and at announced share payout million $X.XX we We to increase to the per we support XX% in our paid Capital dividend totaled in as ratio. XX% in share, growth our business initiatives.

our of towards rating. target adjusted our progress quarter make to the maintaining and to continue X.XXx, remain at X.XXx debt-to-EBITDAR, We BBB+ committed we ending

we in return Finally, year. on delivered quarter, XX.X% XXX up the last invested versus of capital basis points

meaningful look are confident in business And long-term drive making right I for with that support and value. I'm As will the it and we to capabilities shareholder our we that, open up questions. investments ahead, people our highly

Operator

Thank Morgan now ready of Our [Operator for Instructions] Stanley. Gutman you. question from the questions. first comes with line Simeon We're

Simeon Gutman

units if And go do be or are My or a view first decelerating. still more units have DIY 'XX? question are there's is bottoming we The you and negative in this year appear comps to down. to rebaseline

Brandon Sink

Yes.

Brandon. is this Simeon, So

Just we year. weighted the at DIY look seasonal DIY specifically, business was in heavily the of to the as half first

the I a patio pull the weather, mentioned forward we bit underperformed grills. to due that in just think, and

three-year improving, saw six to the interior. more the year, core last We've half July one- of down And the continued over in transactions, of back in business, again, in Pro six. the in seen down core improvement we've XX. to point QX particular, Second momentum X, seen store, comps transitioning I'll post in particular, these then, We a building Simeon, and interior and in step-change clear weeks, the categories. to QX, the

second again the and in around the So, seeing optimistic step-changes seeing half. we like the we're momentum that we're

Marvin Ellison

is this Simeon, Marvin.

at half more the when of note obviously half important first is I look think year, first to seasonal. the you it's the that

And not of you years to so saw the think outdoor you seasonality some to year, chemicals, that impacts last in the we these et And we discretionary of patio our had in two units, the lot cetera. about negative then about the couple unprecedented that drove if talked garden, and weather think a we of demand about what lawn if of in unprecedented experience specifically, going of second business and We're categories. DIY going seasonal overlap grills. the categories, experience not and half those the highly discretionary we're

Simeon Gutman

And can maybe, sense years? off a growth do ask to in a follow-up. sales margin the later this and you've going do Day feel faster you and you Or faster. Do year, can that drive that Marvin, you're you then feel I as Analyst rising? the says, historic goals line we if couple and reinvest of able like have been productivity out of there's long to years you I get any much keeps know gains top in coming growth, we these we part as of even could or you keep pause, hey, of

Marvin Ellison

Simeon, really it's good a question.

financial think it on the depends I category.

marketplace. you $XXX improvement is two I to remind determine fragmented really just market based a marketplace. this is home players and on but it's the that, the share largest I'll focus think a gain just that And easy on So overall billion

get fact the can to we we the And on have we grow, that is around know to our wrong side, we XX% So that Pro an that XX%. penetration number just way specifically believe hovering incredible on continue absolutely significantly higher. revenue focus to

is, as Now Joe mentioned, basis the since points increased good is XXX news XXXX.

we was on margin, mean, So, plateau. we was side, baseline. operating sales On to the we that It incredible have not said I an a continue consistently think revenue to XX% opportunity grow. a

say grow future going benefit Joe see another we this plateau, to continue about of a we the Now is that about baseline list, that the static to can quarters but not thing future PPI that same that talked importance hit initiatives in from. candidly think when is something and we We our just to we're years. going XX%. it's be

to we those So both grow, we the we look detailed in areas, that providing to very and have forward at conference. think outlook a December room

Operator

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

Kate McShane

wondered per your And little seemed We cost inventory if could units? then be versus this about competitor. bit inventory unit you your composition to lower talk more a than

Just in-stocks? chasing your you on categories? any view what is current are And

Marvin Ellison

incredible and the pleased would let I'll in I industry. in units place Kate, really a good Brandon jump extremely first and put constraints say, chain I Bill time environment and could this you with I'll vis-à-vis So hard in. have us planning collaboration position with in it and that, to disciplined of declining the am of supply inventory to retail lot work. that's Any the take just first foremost, difficulties forecasting, taken part points and a

of year. about the feel So, the headline we position last versus good feel we our is half year really second in good the about our in-stock current inventory position, and

bit in and past a to quarters. talk feel position we're where Bill let that financial we've we I'm been about a I'll better So are expression in about like past going and where let Brandon and we little years much what versus the talk

Brandon Sink

only The units Brandon. in would is thing prepared remarks, we down. the being this talked about add Kate, I

a I think in demand, had in-stocks particular, pandemic. seen we've support certain it investments, in struggled areas has space we've bit the needed the to allowed To as make the momentum that we improved through continue us in Pro there. to

here are years. So have that the inventory an stock last been levels where year they've margin X.X than as second we would the over are we like we of for Marvin any half. seasonal said, position. We're managing seasonal and in expectations really expected exit just And every better from pleased included fully

Bill Boltz

level quality good, categories would is improvements the the that And to inventory want add in. Brandon, that thing we although across the still store there only is I are see of the

dramatically working our store versus And we're level to better order teams that, to our this so, quality -- the than are to is the with supply continuing last but of with do partners And shelf on been. chain that product in inventory the those. teams year expedite to it's year working work the vendor into and

Operator

Peter is with Our next with your Please Baird. of from proceed question question. line the Benedict

Peter Benedict

you like these First impressive, service agility maybe stores been you give have the levels the still confidence manage are question, as shown do you you're you dollars? guys you levels just has share sacrificing ensure service not How SG&A operating up? that clearly. in that holding metrics that can Any

Marvin Ellison

incredible Peter, we hour operators have service levels. from Obviously, away as And store while versus as that question. taking tasks. job pay good an Joe attention we what and it's the very close task a in levels to service done thing really is describe the investing

job So and SG& the a masterful it's and pay not days of A when old service. you risk you side. taking rip line, away see reinvesting of bottom you but from dollars like Joe parts service done have leverage, hours team some of to What the just kind the that out on of roll his the non-customer-facing then store, those our dollars is pulling where

the that is to I'll So you likelihood and is quarter to specifics. easy headline But for give SG&A let not up Joe DIY some the in Pro with do. recommend and both leverage,

you could some Joe, provide detail. So

Joe McFarland

with talked initiatives, floor and tasks we're productive. on We've it the goes to focus Marvin. our PPI our back again, engine. things, in about the just associates. management the scheduling. daunting new many more be on unnecessary that the And replacing done Thanks, enabling them flexible We've time moving times labor the And I to listen, associates' past with think the we've had

customer measure operational we single we've single progress the in we expense and day, experience. pleased the every every with we're moving the as forward, made both so, week, continue very And and

Peter Benedict

Are do what That's just And know you're Are I softening guys maybe curious DIY or demand, that relative helpful. question -- Pro any eyes environment. navigate whether That's it any internally be behaviors? next kind But would around a there on you maybe categories? signal I metrics just be of this to kind watch of what there trend? volatile just kind of watching have you to constantly. it'd would you as guess great. you of your then

Marvin Ellison

different is there's thing a people live the there few I'm at. pleased through improvement imagine, my of home of of Look, a we as that a I slowdowns lot of look quite around you with, the I quite few And in lot a team macro look space. experience, who think the table, iterations can are when that things most

have playbooks inventory. on operations store managing side, and pretty merchandising on some side, we the effective the cost So on

the we've bit one of of that the that things agility our I'll to we just fin demonstrated these give have times. that, look the Having unique you of reasons a I we some why said pause bit health make think of little quite on Brandon sure in of the business. at a it's the of let

Brandon Sink

in this Peter, really just for call Yes, unit particular. environment, I just in I important look to dynamic out think at us trends would

about We're pre-pandemic and by some driven terms in being how get So at much the week between we're teams, mentioned seen merchant business where We've these patio the how a inflation, ticket, the grills. one-, looking level. levels. talked assortment driving is category in finance demand. week trends categories down -- what back at We units two- we're the much of of to offset, in, of detailed teams, and and very out, and units seasonal we've three-year

and get unit Pro side want continue great to the seeing areas we're flip business the understand to starting is like and feed. to growth in we that comfortable So other

at are the the replenishment focused impacts, across So drivers looking and assortment, looking that. of impacts the inventory business ordering how really that those teams on

Operator

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

Steven Forbes

wanted start the I to Pro. with

what sort out your and to saw you tier note look the curious during So the Joe, up Pros Marvin and or of as quarter Lowe's the can majority MVP half? new, back if whether Pros signs in I mentioned of it's gearing realize of but any we early today you program, loyalty sit you

Marvin Ellison

I'm say me -- that let answer just to first. not going me question let specific, that so Steve,

already So thoughts and And but monetizing made comp a I'll the growth Pro we a service growth really two-year on some give We driving XX% of from you the just Pro the loyalty XX% about talked think the is on staffing investments we've technology. what's foundation that that and basis. program. in

easier gig that kind piloting you work we And think customers. have that, comments, that's his Pro in in we're what the and foundational ongoing improved that's a is successful for excited new improvement. I things center early do fulfillment And possibilities. point a about loyalty. our as the in last make why mentioned, asked network, that fulfillment stages. incredibly our Fulfillment Bill one to reason of as I is we is investment talked And the the you're we're about of then think we know prepared third And of program MVP continue second is is to component seeing the brand that the and to process. growth an

launched to define metric up And our that tell year, some that than in lot the we Xx you key want so, engaged to and Pros the level expectations, we Customers tell that's provide that's And level we're I I is early me, credit will with that have a do do, too what the granularity will Pros in and mean, loyalty Pro progress. you we'll it's that? to discuss it future, the understand to But how leveraging we we Pro look don't we've I events that more I at. and of share externally. all have this we exceeded come. tiering points loyalty the pleased but externally, Do don't. that spend but more that are of

Steven Forbes

the I chain half. appreciate quick then on the Marvin. the margin gross pressure. got supply flattish Brandon. of a the color, it and just for outlook back we Clearly, cost for follow-up sort And transportation relatively a Based guidance, build-out implies maybe

or product the on maybe strength? margin So help from just any offset it's if there's mix

Brandon Sink

Yes.

business margin have -- like the We pretty on handle drivers feel second over the we here gross half. a of the we good have

distribution, as the as to to of supply other transportation. neutral we We expanded product network. by QX fairly margin credit, contributors That's mentioned as modest improvement, costs. relates expect half mentioned, margin. it you across We in and Shrink drag second chain inclusive higher the the offset look

from that. unchanged guiding our full-year to a standpoint. really, deliver slightly as about ability really margin it to good to up gross feel So We relates

Operator

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

Scot Ciccarelli

you another I gives several a the trends last few DIY -- softer the over of cycling -- we around this seen demand? of what isn't bit, you've little the of we in accelerated the confidence question. beginning the little months, know following of but is, bit, that cycling years So bounced the DIY you slowdown but

Marvin Ellison

fair question. a It's

I'll Brandon Scot, part, some take provide So and the I'll let context. first

So when understand you demand to in understand shortened look important at discretionary DIY and an once you lot make you have relatively the an categories. home, look patio I also, of again it's two a that. us, that impacts quite at about negative bit or the do of first for isolated been half, think the mobility that the or furniture two we've and it and for really a spring overriding and talked years and how We the at put is for we of and we year garden categories, that of spend patio But investment outside and grills. that's and almost a to later, season of grill all And had talked three with last lawn about a amount lot a we lot lack pressure weather not DIY-specific. exclusively on candidly, time the

very trends. the half, context try we be that. characterization, look happen that of business specific we little the store, is will shift But year. So in seeing. the what on a just when interior know a half when I'll at we back of in based we provide the the in we the to let first coming Brandon our trends the back are to DIY half, on what the And we And can look we as believe slowness drove put on

Brandon Sink

Yes.

categories. Scot, particular and seeing mentioned three-year business, we're the weather, given post think outlook clear at we called the the at the the and with think earlier setup seeing isolated last, looking that definitely get it's just DIY well second just of that the It's we business the Marvin momentum, confidence half have then like the momentum seeing So and Pro, comps, look coupled that in I we that business, really the I that, that feel And think when half second again, we less we on discretionary, structural in impacts the we're there. just that core out interior-focused just of at the as with look as again, X we step-change the one-year into around I half first we're the sort seasonal. plays in And business. July

Joe McFarland

Yes, thing just to that. add one Scot,

shift tends big recessionary that environment, versus as more look at repair a in to categories you So to the the the DIY, ticket.

out there we watch indicators So, a regular basis. very on there's that a of lot

Operator

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

Michael Lasser

EPS articulated to a year? of end end lower how the and full Thanks you the of range, at still earnings but outlook low taking the for my the the year your the question. the lot of comp that range, could be back the your high in lower be hit view The comps half will for guidance the the

Brandon Sink

Yes.

most scenario So with updated Michael, have this on which we're very the the is Brandon. I business, would that delivering what you, outlook. we in that's just likely our tell focused

confident SG&A that's and in guide, in really at are at how the expansion we line what have leverage scenario, we're we're we Confident translating that seeing the this X%. profit looking ability to EPS. that's gross on down given being confident time. So, point with that We're margin, and step-up top the in manage and to where delivering

Marvin Ellison

typically is Marvin. percent we talk Michael, expense often The sales. And thing internally and is this revenue. a that sales that, percent And to relative of is about as expense of

And ability that deliver this we that we something of that's point, at can so, have feel And that. down. as that we to proven and I very revenue that QX so that we should in same goes year rate the And can ensure pull can, of our have upon. expense represent levers confident QX down, we we think our bring then

Michael Lasser

XX last risk Marvin more where to of furniture versus is where grills Okay. episodic Thank today in other the guys. risk me, well follow-up patio the business, from been stands that out way performance -- and sales that other And areas business, of being areas very kind those XXXX. were the couple those business. nature nature? about called right much flooring, in in above sales categories line another into of the Seasonal have Is trend excuse leak to you outdoor trend is XX% of of XX% categories over-earning much start that And is think the XX% on could in years? how there of my about the to question appliance is and they demand. above be lighting, of that the this the as

Marvin Ellison

it's Michael, question. really a good

can to and think of modeling on. build of I you this environments difficult been forecast any the has one that to kind appreciate most consistent

we pay attention we what will you those to now looking all we have levels. at to obviously understanding category by pre-pandemic close reverted and to call rates So pre-pandemic where say sale is and back I what we trends the are

really right. to in know And we specific for we question know as good and second really that Because insight we any to that just to coming And back with of our run have a ensure are good so were are position, what these those categories job overlaps, those categories attention uniqueness out and a the attempt answer tough up we're answer presentation, in is merchandising are pay that's kind the year. the best to have where you manage of we categories of We'll quarter. rates, our wrap that precision better close try to priced it. the not. which we end of to much of that it's the And

Michael Lasser

Understood.

Operator

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

Eric Bosshard

the your and if units for pricing seeing into and inventory the to you're we what first where half, regards relative strategy to changing in move sit as promotions back Curious you considering with you're half? with

Marvin Ellison

plans Marvin. pricing. is and promotions of answer to to this no philosophical is any Eric, our approach change Short

to we day. tools consistent have more be to single visibility competitors real-time is reinforce a every to we can on that our that philosophy we've again, thoughts we pricing key so talk with. be about give invested I'll right some that Our just promotion sophisticated let to in price And Bill stick us plan competitive. and his

Bill Boltz

morning, for good thanks and Yes, Eric, question. the

that price And Just journey for things strategy to a we're strategy, We've pricing three-plus been really a and just couple merchandising of from an working over strategy. was last pricing the the everyday trying on really playbook unwind years. to and high-low this couple reminders. our to that what of has competitive strategy a follow

basis promotion being work feel there up, weekly finance all between the that. price there. of us resources line good And those about being be key really then a to to we've done to so, do the it's the a And allowing on manage about to is team daily, monitor prop competitive, And really us the merchants, from good we that SKUs perspective, the sight very matter. expects on that when customer and

So the of coming obviously, we've weeks. Day in couple here up next Labor got event

go You holiday the into Black season, Friday.

with provide through we've And changes cap that et so, events value strategies, in with there we'll work and strategies, the cetera. be and our that store value the day flex really offers key continue with to end hard in supplement the then to made for those customer out day and

Eric Bosshard

events. you resonating? curious, seen What past, environment? different events, these you in follow-up now have this with Just engagement that. within just ran consumer when more Is Historically, more, different? promote on is bit the Lowe's have just seen have are relative responding understand as a units is a you or asking, promotions to from the bit Again, different And a X consumer July the those some I'm Or less you you I'm you similar on inventory. the I sales and negative those? payback new and look at softer focused that, things but similar, run

Bill Boltz

of I to first, things, opportunity put a on time -- a an stuff and there's couple there's value. Yes, think there's

about a mulch a our it about in so certain I one role is goods as remarks, said then role the the Eagle certain And businesses. opening us lawnmower And for example And the that in unit, I innovation, of in where new live unit driving and and types things and of the and half products, was think customer by best customer remarks, the assortment. in you of it's best-selling door traffic, that finding you talked that and value prepared they you drive is $XXX my year that. good far those in the my products in promotions if of first and get merchandising category of the play a think about have

it So has low that on product. not and there just adopted promotion, not the was and and consumer the it's out priced. love platform, It's they battery

both, business, every to And trying of really a it's that's of manage. appliance the hundreds and combination in thousands know, blend that you of we're as break the So, day. appliances

to with got and in you've out. an in be day day appliance out So, the there business offer

it. So that's how we're playing

Marvin Ellison

categories of demand, I we're really Marvin. is with in pandemic. that during demand out the coming question environment outsized this appreciate this the certain discretionary customer And Eric, in unique because especially

difference X arrived monitoring So, -- promotions versus see we just Lowe's I to call today about it, The holiday of our we are biggest closely when respond. Tier our any at customers we that types four just return is look of years there on all that at, did of ago a promotions coming get to the investment. go analytical is we to out process rigorous

parts looking Brandon where good customers of really we'll are the we're we've at going events. And point, because we're interior on doing been about these we'll the anxious about these environment. and a we differently the as good some the is earlier, to at year responding much But we're to so, going not just trends year, not the do, feel and full unique responded customer said follow We is of have well the And customer of into outlined. quite that's when we're or of the because because we some half strong this whether is better a relative Bill's feel the what going to adjust to just got now shifting we're adjusting we trends customer the back kind to of engagements historical feel evaluate year look positioned. such of a next as And because accordingly. I a assessment bit how return store

Operator

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

Christopher Horvers

about is follow-up talked a a from consumer that headlines sort vacation of echo to DIY Day, talked Brandon's reengaging Labor certainly side. year, Marvin, post flip last and positive the back And a So about some on Have the you also as and in my first August you that DIY DIY. into coming question seen improvement there then were trend? comments continuing follow-up, that.

what are how sustain that now -- about saw the So sustain last seeing you you're to against the thinking to you year? step-up ability for

Marvin Ellison

in post step into We've our it's means said. the we August. early business, seeing a than we're in but those that trends, that continues I'll and of better trends seen we anticipated Brandon what July Well, repeat certain anticipated, change and But even the month X that seeing we're early, categories.

look a kind that's let year. good of as reiterate So the news. confidence in part But just at the I'll consumer we Brandon the we have of DIY back why

Brandon Sink

Chris, get is interior much specifically and going other there's nice mix out more within has to weeks, just the I detail seeing to home comps. a too say a on building momentum. just call core, Yes, we're into seeing where as areas, going pricing I given lumber categories, just business at I is of we've not six see be DIY, continue would into as that's but too, we're over the notable, DIY as the get especially just point, seeing But then and we that mentioned response, and also moved we between to sort there, And I'd activity been momentum DIY that where August I'm we're to Pro decor response of the think, here. the last

Christopher Horvers

come commodities have And of your Got the then it. of of input down the products lot commodities -- some of recently. a for some

pricing some since go about rollbacks? intent thinking capabilities? some vendors your near How cost at you on deconstructing board, and introduced Marvin, from the to in the you've -- back You've came sophisticated very price for are -- you term

Marvin Ellison

elevated work for position, in more Bill. was Well, merchandising Brandon with he before to us did his that prestigious

give him on you that. some let specifics I'll So

Brandon Sink

Marvin. Thanks,

normalization say, So some from Fed, the yes, monitoring rate half across just commodity Chris, year. into we're given would the I expecting next seeing tightening as markets, we're move that second we and the definitely

call understand drivers the management across like have labor, in renegotiate We our when pricing from very built transportation. going terms suppliers. product feel with and have then but And We down, we going be and to a cost materials as a much we're actually we're his prices always ensure process. back we're commodities, positioned as We with We're in pricing. disciplined Bill do, competitive we perspective, the Marvin team. And going coming like prepared dollars, raw we're we we the to it's portfolio where that to approach of our approach insights to cost as from and leverage underway the to mentioned, suppliers. certain has areas if always there

Operator

D.A. Davidson. with question Please coming with of is from Next the your question. proceed line Michael Baker

Michael Lasser

follow-up. digits for one and bit question slow I want double a business bit but from that's Pro Pro, did up a the a little two year basis. to Maybe it Pro two One, business, little a questions. and a last did on year quarter great,

Pro or of I so? being little is how that. So guess then weeks six the comment but wondering bit better. And these this the what DIY, last doing any on to make on business comments a in

Marvin Ellison

overall Pro And at the back dividends. the that quantity going good pieces program, continue. into volume it's relative job said, is typically that I when in foundational as look like just be. this loyalty outlined reset to Marvin. with And the in Yes. think as Pro across DIY noted, brands, with of of stocks it's we're get Pro We Bill to a of new year it's the year, our Joe made And project we've volume sales store, were feel paying are and and as quarter loyalty we feel second geographies we the think the seeing of Pro three for incredibly as just addition some we brands our penetrating ago. think Pro business, fulfillment And in we're improvement. in about year. things strategy with Pro one the improved adjacencies, see And the about Thanks we seeing two the daily we of loyalty. we half literally specifically the sustainable to the very Mike. and last also, highest we all But what the years just to those momentum quarter or improved This the all business. our the not the momentum reminder, the proven on the investments all is is customer, positive U.S.

performing post those we're X taking vis-à-vis Pro post really DIY. DIY the business is is Pro that the trends those performing for taking also really July well well seeing and is for also So, we're DIY. is and X same July seeing

Kate Pearlman

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

Operator

This XXXX you. quarter second the Thank earnings Lowe's call. concludes

time. may this disconnect You at now

Lowe's Companies (LOW) 17 Aug 222022 Q2 Earnings call transcript