LOW - Earnings call 4 2024 | Lowe's Companies, Inc.

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Operator

Good morning, everyone. Welcome to Lowe's Companies Fourth Quarter 2023 Earnings Conference Call. My name is Rob, and I'll be your operator for today's call.

As a reminder, this conference is being recorded.

I'll now turn the call over to Kate Pearlman, Vice President of Investor Relations and Treasurer.

Kate Pearlman

morning. good and you, Thank

Sink, Here with Executive Merchandising; Chairman Chief and Marvin McFarland, Chief President Financial Officer. today Bill Boltz, are Brandon Stores; Officer; President, President, Executive Ellison, Executive our Vice our and and Vice me our Executive Joe Vice

would remind website. found be our on Investor Relations you I notice is statements can forward-looking like morning, our in which to included press that regarding release this Lowe's

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

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

call I'll over Now to the Marvin. turn

Marvin Ellison

I'm PPI. and in with driven operating Kate, DIY or very these excellent customers customer you, disciplined the focus service U.S. as the home with a of remain cautious large by of weather comparable to improvement parts X.X% good spite their quarter, performance for January. In impacted productivity perpetual our initiatives In Thank improvement the challenges, strong and quarter, stores pleased and profit declined continue the harsh sales on morning, in everyone. our spend fourth

year adjusted per adjusted margin and operating Looking XXXX, earnings delivered billion, $XX.X $XX.XX. of of at we the full sales fiscal of share XX.X%

make flooring by periods Macroeconomic and customers like extreme on value. and from spend results. trends with sales weather those demand took in in This activities did to focus housing traffic to inflation consumers DIY DIY nondiscretionary a categories during December ticket in our and on of improved with bath, interior projects drop smaller, appliances. purchases the And for homes. like persistent stagnant continue for followed third who quarter, sharp and bigger big our home heightened on market a a ticket January. and factors hesitant Beginning engage improvement November impacted kitchen

changing last strategy in Cyber In sell-through and Black improved resulting to record a Monday these our shifted and and behaviors margins. Friday online to consumer adapt quarter, sales we holiday

all improvement designed program This loyalty more While DIY these we're pleased customers at Bill for to January. results, excited now this launch customer detail MyLowe's retail these spring our see a provide the responds to an our spring competitors Lowe's. other we're of program homeowners product most the that needs. we're to DIY call. Among home its In to for of and customers choose customers great value. is assortment exciting DIY value-focused rewards choose to in how first the the spring later see designed will gives shop we changes targeted more on over focused DIY in where these program marketplace our marketing to nearly retailers, improvement for outstanding new lows more and rewards kind home multiple products strategy get our announced lineup reasons traffic-driving for compelling on is winning spring

loyalty DIY enabling creating both a We return members, us traffic time, effect over and this while and loyalty flywheel our and visits loyalty experiences expect drive also increases personalize to for demand to offers a that for Pro nationwide and the available Lowe's rewards will retailer and online. DIY making offering national home with time just distinct improvement be in customers. both for MyLowe's in in-store only March spring

flat comparable for weather difficult pro were Pro. macro to challenging moving in sales Despite a our Now quarter. and the environment, January,

in Pro these with fulfillment customers leads line reminder, medium-sized with holistic a and owner. executing on to recent assortment, rewards backlogs loyalty. are business our our to And cautiously their and Pro remain close incentivizes in us Pro convenient in small- our ability experience year, best-in-class a optimistic a core last they long-term survey, We program are As their is options more about XXXX. customer that creating and and a focused strategy digital generate enhanced product told

aim Pros As Xx and they Pro of will increasingly mature, business these investments scale us as at and more their rate. market to the save money, enabling time earn grow we to

higher digital sales lower customers are Now experience. a and were positive quarter, returns, online. indicator to pleased we're flat see Comparable responding our fulfillment for and to turning the improved conversion and to that rates faster

developing co-creating home innovative on Pro like improvement remains seamlessly improve AI Vision world-class GPT sell, like customer app focused solutions technology with to chat serve experience Our and design work our our headset technology kitchen multigenerational talented new immersive generative customer to using our a best-in-class and for omnichannel we shop including how team Apple's base. plug-in. companies

let's to our Now transition to macro. view

many we at to call. on sales healthy. locked a Brandon how later uncertain. Also, in frame, below X%, rate in we it's and of soft slowing expectations decline, travel, As spending services Although while will of Due these levels unfortunately, on time the fair while you keep demand change. existing the consumer pressure, expect still even there's still as And this to quickly at improvement increased the pace a their is homeowners more of X/X are XX may interest difficult consumer of years. normalize, almost which preference timing the rates rates restaurants customers predict. will quickly we anticipate a we of other showing for with inflect? on cuts in And home and lot confidence home not mortgage look inflation. under timing these react trends And post-pandemic experiences. these remain of will will our DIY unclear it's how seen remain But a demand is to are on detail in elevated in changes still Overall, demand spending factors, when forward, the It's provide speculation are to we've very there financially sidelines. to very XXXX expect landing, anticipated also question, asking and many the the is of habits

and our in Pro of Home upwards strategy a program, chain are making DIY people and why continuing homeowners price aging you baby in supportive. trends However, core plan our number of time X income, improvement uncertainty, execute you investments remain in home merchandising working me to like elevate disposable of place right of and long-term and appreciation loyalty we're for improvement. our a stock control, level best-in-class will and with demand confident environment Total And rolling trend what can near-term -- Pros. store undersupply remain localize at we and supply out a we our to home our a ability and in economic from high both environments. Despite age controlling omnichannel housing the strategic drivers our IT meantime, you multitude of why and a personal and to medium- and these remind in infrastructure, let on across very demand boomers in bullish over that we're our household the business, and the on hear home experience. see modernize factors focused confident we assortments, outlook The When formation, chronic home millennial homes, improve digital the developing sustained

of will and Lowe's the sales for growth short win these market set investments home improvement up when Home All position and strategy us Total to strong our profit in in the run recovers.

with to who assistant their to frontline bonus make Before customers communities our commitment appreciation our associates for and serve hard-working This our dedication, managers to $XXX of better. the way our associates of hourly like saying I our thank to discretionary my serving we end-of-year close, an extend In of recognition you million. I'd customers. associates is awarded and

passion, visiting and travel I'm I conducting and from across consistently by directly our associates, As their secured the humbled their country town halls expertise. stores commitment frontline

Now the over turn Bill. I'll to call

William Boltz

Thanks, morning, Marvin, and good everyone.

highlighting in on a online profitability. and convenience, while softer DIY remain stores trends all maintaining on continued a we our this While value demand both focus and balanced focused consumer, price-conscious to quarter,

drywall, Pro customers. storage. expectations Lowe's. is the HVAC of improvement sales committed and our was exceeding increased an brand with for home #X strength window staying by with products. was in across professionals tools to Pro This now Pro serve Building appears pela's fulfillment our continue and across to screen Lowe's, demand a we tools are comps but our hidden the screen a the We hand the includes for tool we positive area We which closed. in performing best that serving Pro, improved retail initial our when built-in store, stores, as back comps and This with resilient capabilities windows. tool to building also better quarter, assortment the electrical Throughout largest fueled enhance new combined away in stackable electrical, the to hides roofing product This and Throughout continued open, our channel products to offering. Beginning with Materials. positions client service new we continue flat to innovative bringing window in-stock client products resulted to additional and like introduce it's and launch have when

appliance shift This past be and to our increasing preference consumers' ticket bigger strategy trends, unit decor. categories to for was quarter, single the by flooring deal. This like interior pivoted division for to Turning shopping and we in best their impacted responsive kitchen purchase the home in appliances. DIY search significantly demand a like bath, a go-to-market softer and more

adds up see attainability consistently ], another [ as we we a trading for Samsung And conscious, of despite which to customers is all pressured exclusive category events. continue over also $X,XXX. and innovation Black in craft our resonate This product example our seeing retailing makes average others across where a spec features. Paint While popular slow up right This help our LG who melting Bosch, appliance and major our like these seller seen trade for like are actions brands premium exclusive great is we've line selling successful smart paint. some type was to the and Pros consumers appliances, is double affordable innovation a of already our our for the approach categories. which industry-leading major innovation, to continuing refrigerator, paint Cyber for high-quality KitchenAid, product this Mila assortment offer remain LG, value designed contributor ice. Friday budget and A has freezer to Monday are and we while including expected, top of price

with traction Beyond demand have strong spring as before gaining we exterior confidence we arrives. the place Pros, colder us turned in gives paint right weather offering January. which in saw the

grab to the improve Sherwood William make paint paint higher-margin experience trusted items color to to upgraded projects. easier completed also for our and of our customers department, to We Colors wall shopping their recently the rollout our complete converted which the attachment need they it

Turning quickly to and This our reflected in buying results lines. patterns, and we our consumer sell-through adjusted to hard was improved holiday profitability. changing where another area is which the

are and to the that the across apparel, We new also assortments consumers pet encouraged as and respond rural continue with automotive in strength to our resonate country products brands.

partnership in We launched recently market now also This installation. solar services battery partnership new with home leader Sunrun, for enhances and our the a offering

homes renewable their in go-to capitalize power And of to the are destination biggest is ourselves to with spring. looking our this for demand. enter homeowners year, on as the we season energy. Lowe's positioning we consumers

Deere, Origin is businesses excited in brand they exclusive which lineup, to directly And grillers mentioned, Cobalt about private across John sales enables on Blackstone in grill a our don't which home for features Allen Aaron's, homeowners our our spring see to the which power can innovation market. smart As like Husqvarna, from that lineup this seasonal outdoor spaces their griddle to XX, patio purchase their leadership about to customers unmatched equipment is improvement, The to of and brands, space. also consumers and mobile we new from our points. also excited lineup. switch of reflected aisle outdoor trending SKIL, outdoor and competitive power styles equipment are new able tender sets our assortment on continued ] and [ our with functionality shop in builds market merchants and for multiple our grill now if launch our color with more fast-growing in Char-Broil they're continues new grills Craftsman, Ego, extended our price Roth seconds bringing industry-leading Toro at alongside in value easily update prices on product The Marvin are looking or the a bring lets the associates floor, devices. the traditional the I'm

also taking I'm that advertising position, for be featuring more spring their in-stock spring. to sophisticated strong and will are approach will and enhanced traffic-driving marketing forward Lowe's. assortment projects looking a seasonal to on compelling our homeowners Beyond we tech-enabled season, our get strategy This launching motivate started we events at

are hands at sports NFL expanded and We live into their popular players also an commercials relationship trying with Home Lowe's featuring leveraging DIY leaning our team projects.

the and in XX are the of participating in Christian We team X season's Kelsey members with success players extremely featured Bowl pleased home of commercials. Travis our Super while Lowe's team, both with being McCaffrey, this

gears Shifting productivity. to merchandising

team making which, our and or on the tremendous offsetting cost Our as improvement progress are of is supply initiatives, we perpetual productivity planned, Pro our chain PPI investments.

network pricing promotions, media private closely our investor brand costs. the I improving outlined reminder, analyst and a expanding approach and our maintaining to PPI penetration, initiatives that productivity, our product at scaling include a As retail inventory and managing conference disciplined

we been of that with the we absorbed costs working year, closely and raw increases claw vendor material back past now high of inflation. normalizing. the during periods our have some transportation to cost Over And partners exceptionally are

calculated Our approach, best-in-class tool our optimization reducing helping level to gives guide us take us costs a to surgical portfolio. the data that across item down robust allows to us cost

to into and to work sales. we costs strategies these traffic suppliers, our marketing merchandising are savings those and recoup with we As reinvesting drive our

thank the Joe. shared on position now and merchants customers to their in strong to As to win unwavering us a for our I putting I'd focus to vendors over our delivering and turn close, spring. I'll call like for value

Joseph McFarland

work in this capabilities. profit I operating quarter customer scores serve customers reflecting start improved strong this and improvements versus our in thanking to tightly by everyone. would slower and execution DIY, managing satisfaction the both our expenses fulfillment Their year relentless for despite once sales. team and frontline with like you, last basis Thank Pro scores their frontline and our good with quarter. morning, efforts associates focus of service again hard performance controllable were Bill, improved points XXX resulted to Customer combined up omnichannel while

new improved XX% advance be In where as store. our options call all gig network. our functionality their almost has like . delivery can Customers texting, since as track directly, and same-day issues X-way notified well fact, through can their this year, to XXXX. They in without delivery also status a score omni to date functionality new confirm use order resolve self-service have to they needing

options for front-end checkout the we're fulfillment in also with improving our in the customers, communicate year keeps XXX telling configuration. process. BOPIS to lines easier or needing expanding appreciate us with checkout front-end aisles also online, front-end the assist are front-end over We our embracing new how configuration the to addition we they In store over instead this new enhancing This and buy XXXX. and completed get of with experience, Customers helping process rollouts XXX pickup associates experience new through when sales customers long. faster our planned

end flow front strides also end back making transformation. with freight on the our our the stores, are improving we ongoing of are While we

improvement and profitability. perpetual and will are for improve floor merchandise part and improving provide experience initiatives, new and processes both are each and stores. better ongoing process cross layout. product is products for to from make or linked drive floor PPI distribution These quicker our the further productivity the are our capabilities of adding in-stocks customers These the easier store enhancements on direction freight associates once sales which removed teams store's to labels will with our all drive of freight to new place productivity it the get where a flow improved exactly that for customer now onto attachments labels our We receiving. the centers These improve our and payroll

focused our choice importantly, areas and we engagement, to scores with effectiveness X across to lower employer response and customers XX%-plus the and It's significantly survey quarter, record better our become better directly that Turning engagement efforts pleased rate a of really leadership improved associate serving workforce translates leads retail. results. turnover progress to our to more associate even productivity operations. into in more with on clear the we've And our we in annual with a inclusion. I Last am engagement driving participation. business saw that measure; made.

we for store associates. $XXX this part-time an discretionary As well bonuses mentioned, assistant full-time discretionary This $XXX for and managers incremental and in million announced frontline includes special Marvin our supervisors $XXX associates as quarter. our $X,XXX bonus of other hourly hourly as for

$X.X over wage incremental have XXXX, billion for frontline we since and in our share-based associates. Additionally, invested compensation

store success. grants share our few assistant are stock they long-term leaders In award so new. the to store fact, programs store we of in and managers our X for not to are managers retailers These our

fact, store managers decades for compensation have managers assistant since store In been and share-based XXXX. receiving

encourage year, their new added developing role. training We XXXX, are to need succeed we tools our equip advancement department opportunities and the careers Lowe's. Since to for career. to with we're over University, managers. our with up through their Lowe's store build extending them our managers advanced to X,XXX supervisors training associates their new for assistant in associates also to store for This they our creating they have as over And are next and them we leadership move assistant XX,XXX

X from the over worked to of we've years. XX% promoted managers increase number store enhancements, the ASM these With to past over

fact, In within. now leadership XX% than more our roles of from are built

of these customers best stores investments X levels have are spring of spring. to many ready this the serve led and in our All staffing to the years,

lineup the about spring loyalty excited and merchandise outlined. are DIY We the great very Rewards program new Bill MyLowe's

dedication. and like for I all hard thank our of once As I close, again to work their would associates store

it to turn Brandon. over I'll Now

Brandon Sink

Thank you, Joe.

share QX results. diluted begin generated Let earnings of with per We me $X.XX. our

with costs Canadian million last the in from comparisons $XX.X were sale of recognized we year the measures $XXX this applicable. business. from My QX point retail billion. year, include As certain of pretax prior associated forward will a comments the to non-GAAP reminder, transaction sales where

Comp related not year million million note, in material retail sales business X.X%, in and shift included Lumber January spending bigger XXrd QX approximately billion $XXX $X.X headwind $XXX sales. our comp a approximately results week. Also, in our ticket on pressure the were the sales prior sales Canadian DIY additional weather. deflation and continued related did due impact Of fiscal unfavorable have to driven by winter down generated in to reflect calendar.

comparable Although as the no on calendar calculated XX shift fiscal pressured impact on XXXX. had are XX based comps weeks total in sales it growth QX, sales to in

to Comparable ticket X.X% was down average prior year.

ticket Continued appliance pricing X.X%, categories DIY slowdown lower weather offset driven in growth traffic. many and in declined Pro-heavy DIY ticket by pressure sales. the winter Comp unfavorable January bigger impacting transactions

up comps in well unfavorable weeks from deleverage. favorable multiple benefited X.X% mix year prior offset in the weather. experienced X were chain offset during with company monthly January supply of we initiatives Gross significant basis expansion as X basis PPI delevered winter Our costs. functional pressure was by X.X% somewhat December. SG&A in points fourth sales volume versus margin initiatives and and of product November the PPI all costs. quarter, our were Gross adjusted benefits points year. last of sales as build XX.X% of areas continue momentum X.X% across we SG&A the of down largely lower from These comps to declined sales transportation margin XX.X% as as

line SKUs was quarter spring declined basis sales XX.X%, of in quarter chain. year $XX.X the in XX we prior billion, supply prior builds improving lower in with of managing Inventory flow our than rate margin. versus and prior tax with through year rate. Pro product line $X.X operating X.X% effective invest year trends while the adjusted billion effective ended tax adjusted high-velocity replenishment The at as margin points rate Operating the

excluded was year prior reminder, operations a Canadian as sale before year-end. complete As the inventory

and billion of we Now XXXX, generated $X.X through in dividends. shareholders turning to to combination capital billion cash free allocation. In $X.X share and flow a our repurchases returned

$XXX drive as we we the shares million at $X.XX finished at invest in invested continue Capital fourth And billion to year year. for a Adjusted above $X profitability. expenditures dividends million quarter, in to growth million million and to shareholders. $XXX paid on the for and we $XXX strategic in totaled return over repurchased QX the XX% X.X per During lastly, our returning debt-to-EBITDAR delivered X.XXx. initiatives capital share

our discuss to like XXXX would I Now outlook.

improvement uncertain. the mentioned, Marvin As to cuts on interest is medium- rate backdrop the consumer long-term and for but optimism remains near-term industry, improved sentiment. around are we bullish home macro There outlook potential the

can However, monetary be turnover rather for is Fed a consumer greater actions before the preference policy a on the goods. housing the remains still impacts timing spending of showing remains depressed and there lag than and Also consumer. services unclear,

strategy range billion experience especially a as of We the sales continue market sales to to Xx leverage outpace continue X%. $XX are sales to in for spending should in to expecting declines we home improvement growth rate. factors ranging offerings product in we to DIY. digital billion X% with the drive And DIY improve to are the in multiyear that pro pressure in-store Pro from and these XXXX, our to fulfillment shopping mind, options at and expecting comparable $XX

We range XX.X% to expect of operating in margin the XX.X%.

our points bridge XXXX XXXX margin are to we to our of mind. expectations, there in a operating keep couple When

each pressures enterprise-wide deleverage of a the of PPI First, the quarters. cycling These of volume positive initiatives. first in sales ongoing the expected favorable legal second, are settlement and the our offset of by X impact and impact partly

and We the on $XX.XX. managing sales efforts years, per to share approximately have in over productivity These result earnings in these few tough expenses progress made year through $XX our closely past driving realizing laser-focused PPI remain goals this significant expectations full we of environment. and

results expected your modeling you the to on like assist I'd cadence color some to provide of a the Now for year. moment take with our and

pullback for second this in different in up DIY intensified sets and of which demand, As first the the of steep quarter third half and the year. compares XXXX a reminder, in us

trends a sales pullback improvement to to over the easier continue. begin To second half, spring in comp we to this, comp variability the third forecasting And the planning not half are But trends is improve always brings current timing into for are this demand under as some we the we our half to be half. year. of DIY clear, quarter. first sales second an we unpredictable spring normal as move performance. expect cycle the pressure are first Given expect remain demand we the in as we in compares season, Rather, and while the

Given our drivers these business. customer mix, DIY our disproportionately impact

Now sales the rate we to quarter, sales is of XXX points volumes with XXX quarter as margin our be bottom in a cycling lower results well below our result our basis to expected full more specific as expect first legal adjusted of sizable QX below year a points to comp approximately basis prior settlement consistent fourth year approximately guide. combination rate. operating the The

I unchanged. let remind remains our strategy, me allocation close, of you capital Before which

the reinvest with $X billion. of is priority first to expenditures business in capital Our approximately

to continue a ratio. XX% dividend we Next, target payout

shareholders also repurchases. In through to to value. maturity cash and use market open bond confident near-term our remain to to total and We shareholder realizing the are our of ability with drive we focused for plan through return in free repay on that, strategy while execute share questions. to sustainable then uncertainty up cash home closing, $XXX flow we'll excess the our it And million continuing benefits a

Operator

[Operator Peter from the Baird. today line Benedict Our Instructions] comes question first with of

Peter Benedict

as think think you as margin your around expense X% longer X% that on the the comps term, do here lean would perhaps then forecast, given end to you've alternatively, below swing given trending comps be could types of year, sensitivity if front up of that, environment. question. one incrementals been you achieve positive, just my you range current and the on That's first that First what for the just pretty

Brandon Sink

Brandon. is this sure, Peter,

then low of We're sales of decline. comp decremental, comp contraction about XX of And expect we've we the thumb. exceed high fall at point for the the points flow-through basis on sales looking the basis top bottom margin In X% every incremental our terms sales established do side, below on for essentially end XX guide, every of side. our end. of rule do incremental If a of about points

work It level, high of an So rule doesn't quarterly basis. more of in thumb of that's a necessarily on performance. terms annual

stress XX minus not And thing and I'll XX, the natural the other plus output. is necessarily

the both you model continuing functions, downside. us all on would I upside across PPI that's the drive the tell that to what's and contemplated So very on and algorithm and the contingent

Peter Benedict

helpful. And had -- efforts. cost you've just secondly, then That's Okay. with around mean, success your optimization I

where it'll you left on kind stand of more view and 'XX. maybe your can in hold of given ticket how Do your with much on out go? think plays tickets those, the Do traffic view you some to you back how ticket is And kind average Just that into in versus the clawing costs? you're there all 'XX, you dynamics and to think reinvest maybe down. of

interplaying how you 'XX.. Just curious in see that

Brandon Sink

years through expenses downturn. question costs. Peter, the couple on here your last this first our to manage Yes. think pleased ability of I just to to manage We're really with in ability our

evolving We road initiatives. down at X.X% down X.X%. and midpoint, We expecting comps this of were robust a year, map PPI have the

that we Joe heard pleased number Again, our look you manage robust of that really ability deleverage to the Bill with initiatives and there. pipeline. as So there sales from out, And a to of million particular, us we strategic wage PPI enable to inflationary that We over investments. pressure, 'XX $XXX in going in is offset excited be believe pressure continue and about. to

historical think we specifically, question, continue in ticket that's And drag. and any significant we rate. the improvement don't more about year, off cycle pullback are largely average XXXX expected run continue we We into what hold then expected be and into pressure part as expect we up, to normal more is that to of I think just The expecting second second as XXXX. that's is of second transactions. of half ] expecting ASP as going of relationship XXXX, [ the environment. to your overall, point from side, again a we're the more to standpoint. And on we of a between ticket we that really, But on ticket DIY and in to continuing pressure the are the pre-pandemic drivers pro then a bigger half average ticket mix impacting return that a positively transactions. appliances, see the growth to And pressure, saw

Operator

question Zach Our from Wells is Fargo. line with the of Fadem next

Zachary Fadem

moving incentive lap I dynamics. and there's as pieces of some of comp line lot you know a the the the legal SG&A settlement on

So is little all there your 'XX in XX.X% margin XX.X%, operating detail any 'XX? also, takes in SG&A? any to way bit And could the more you a and margin gross the versus color bridge in XX.X% from on puts

Brandon Sink

lower Zach, the this XX at really there. it's and midpoint sales. I half the SG&A, it and the basis about a down its would on step when look range, back about of of and Brandon. it's on half X cycling deleverage settlements the points, is say themes breaks And you

those are in Those look the really as at pressure are points. 'XX. So managing we SG&A

discretionary pleased benefit which offset You QX reward frontline frontline what that from lower paid resulted expected that benefit we compensation. incentive QX full comp, the based incentive a bonus from were $XXX of any lower we for associates. and in we management But to was mentioned had the management year QX QX. that in previously had we're the our We and paid able by offset in that performance. That discretionary comp million, we bonuses incentive on

XX%. create a not XX% really headwind as bridge we that to does for So us

cycling to back of the settlements mainly the So legal the it's sales. X lower deleverage and on the themes,

Zachary Fadem

ones. quick more X then And you. Got

Just any a years then comps math color by my outcomping and now. on in slightly gross were second, few And DIY for Pro margin. 'XX your positive

today about could that DIY and it's if range. if you versus . still mix curious So XX%, Pro just in XX% talk

Brandon Sink

Yes, Zach.

your forgot I margin question. gross Sorry,

I'll Marvin toss that for Pro. So it I'll take to one.

the to themes 'XX we make continuing XXXX. discussed for as we flat. expect really investment as So Ongoing in those what we're chain expecting product brands. similar continue transportation, saw pressures wrap PPI pressure investments by be margins to fulfillment, gross And are initiatives gross we but the We're are rollout here supply roughly margin in to Bill ongoing being that delivery. offset market manage lower costs, of pro to private

gross takes standpoint. on it puts the are margin those Marvin. you, Pro, So toss I'll And from and a

Marvin Ellison

Yes.

results medium survey is that And percentages. look, owner, customer. with the business that their on can they and resilience with and the about last a what to that's they mix, small are they So continue we consistent customers they where build confident business. the on actually saw our we're feel the of actually can good Pro drive to year correct as reminder, sized our the And pleased backlog feel

as that around they gives but improved And experiences as I in mean on around a type of that issue. feel digital they're us loyalty, resonating. the that. strategic around know, DIY, equally dramatically view think we're again, we cautiously mean the optimistic confidence best-in-class product assortment things it our an expansion the to macro have a good versus how and we've we relative based any a issue we of is doing And or platform execution that we levels, I issue what business. probably And level execution service about

to our store think business when to short we're very in Brandon going to planning, and think are said in this comments, localization, positioned because we bullish run that tremendous the perfectly about we across prepared grow we've chain, we take both long market levels As this dividends, recovers, IT pay space the market I but headwind, while deal we productivity, know we're not the only service macroeconomic infrastructure, supply medium share. in term, assortment investments when made omnichannel, and with environment

Michael Lasser

with Our line of next the is question Morgan Stanley. Simeon from Gutman

Simeon Gutman

you grows grow curious much cycle you that. if on there's that so So answer bit. that your the out even into just this EPS Marvin, sales to have put resumes have a how much managed more expenses could the impact perception can misperception back to or business? it if can wanted here. on the either well and now touched I'm comment been how I Loews' or way this SG&A put

Marvin Ellison

fair No, a look, it's question.

our hours drives of the us to more not driving PPI more of me lot at best basis to for results. the is and service points traditional would because productivity answer cut also is fact the an takeout technology an a of you investments allows customer and out about service levels both. expense think selling That our DIY and our taking tasking. it remain we have And the service look gives you of in when be indication that that and payroll understanding that both the power way of XXX Pro high I you hours our that gives for extremely add to initiatives improvements

we have this productivity in about associates we talked has for technology Joe allows trying us where less and We're And drive years. that to X more invest a to model build customer-facing tasking.

productivity a staffing the down, the that So us create come we to but out sales activity best-in-class on and we in we service. on will that sales. system the go an up, a hour puts we model based we drive level activity-based day our that hindering is hours think take when sales believe great when that department position that business standpoint, driven have based a think without invest can from we And activity-based payroll

negative as think whole in going So as to last able about implications of as the we've and SG&A being managed couple and sales feel tightly model, of any the we don't efficiently managed up years. we there's not be good and

Joseph McFarland

let me a Simeon, quick example. give And you

had of had If you the XX% less think about X we years self-checkout. actually ago, than stores that

mentioned last we've have internal the our to in so And in also transformation stores right complete that the have the XXX now allowed technology. chain. roll self-checkout incremental tied self-checkouts. We built developed own assisted across adding in This has is customer our And DIY improvement have now customer complete. started our out We over for program we best-in-class And loyalty with us mobile a that the we've X entire mind. home years, with front-end

our I too. remarks, the we then XXXX. $XXX initiatives, back-end as the mentioned in And complete so look million to in incremental And prepared

focus So very activity-based continue confident the we initiatives on. in labor to and the PPI model

Marvin Ellison

just implement. and both that's that our line of develop to One I I X to many yet and that yet last have time mean initiatives Brandon we've example point. on

process outlined alive So in every that an including this function is merchandising, well Bill ongoing as comments. and in is prepared his

Simeon Gutman

The follow-up cycle. is the on

some 'XX. if looking the the bit that of cycle been little the half light as your the for was of I seems half 'XX sooner. in It kind have well. a and first base think second case even would weakest maybe And market models, of of tell was like the the part I market back to things it question more we Or normal. less is is start then big something than we sales. dependent something when normal? whether that in normal? I'm do And Marvin, of to mentioned not curious on get that's prepared up back get And is home comments again, a existing it the or you can't

Marvin Ellison

let versus this we're I'll think XXXX I'll we at of happens, positioning more is as improve point But is any that hope forecast that growth. Brandon type let outsized top dealing that perform year-over-year give when you will going comments. additional for bottom We we're and of high the you pressure that think sales we're to throughout and macro add our DIY level this feel some what it a Simeon, at When indicative comments. have perspective, irrespective are that the and going market of environment we is line to Brandon perspective comp of that the that ourselves cadence year mentioned, we kind going my about our with. I'll year. comparison of and any Brandon year, of our provide additional to improves this

Brandon Sink

base of quarters. of the unclear rate housing we've mean say, I would macro consumer no home sentiment. our It's couple the assumes case in Marvin the conditions experienced improvements Simeon, what base mentioned share turnover, versus the in I the here guide you wallet. Yes, improvement timing mentioned last change case. cuts, is just of

going of -- going improve. start we some the an lag into spending. when same translate There see macro it's is trends philosophy to before So sort be the to even green are more going expected are the shoots drivers to believe we there. to of And there,

improvement of versus So here the timing macro second cycling the the in we're have assumptions underpinnings, and any again, half our the the been XXXX. function on improvement. that is what the those views made of And we've for just a

Operator

next Our with line question Horvers of JPMorgan. the Chris from is

Christopher Horvers

So questions, X the follow-up environment. related demand on

probably country a -- First, part and ]. like weather southern quarter? warmer headwind it of was a fourth But then see more did colder, a have impact paint to net and outdoor is much seemed the you in was do much more. that Obviously, [ think that and December January areas year-over-year you you the geography helped

it think weather was the So about more neutral net do you a headwind over you when think quarter? actually side? Or the December was

towards share starting And more you positive maybe the then you the share see at holiday due on suggest least would side? move pull moving past that shoots green of that, anything mentioned to that Did of wallet. wallet in period is Brandon, but forward not

Brandon Sink

points as about really -- story impact an on business a the on month. winter we extreme basis me it just at let winter first, -- Pro those things the of January and hit impacted Chris, was sized I'll weeks. had impact weather over January outsized XXX It our weather

on what just in through actually a we And it the of basis QX, hurricane The can to view and we toss holiday with into other years over weather there. to cycling mention just theme that consumer just give is I'll point cycled to Ian IDA, saw and comp saw also again, our we've impact expectations. behavior terms what of baked he straight X was But season, all Bill, XXX of terms it's in recovery about that.

William Boltz

favorably -- and very the program and think Yes. we the respond performance remarks, saw nice tree I prepared holiday, holiday to for sales. saw my we saw as saw trim record We Chris, in I consumer mentioned there. a our

We also saw, warmer. you as mentioned, December was

perform those consumer saw well continues both take the side as we outdoor on projects. as Pro so the And on DIY outdoor the businesses to side on as

with starting and get As to spring those South of we early signs of we've our see XXXX, to weather started spring-related businesses. some to started some those get into rolled warmer, the starting for South, as with the where begin spring Deep and is February start of we're program we're

So to we're some of weather, spring. warm where we've those starting signs some got early see of

So we're excited about that.

Christopher Horvers

in you ASP you're did how appliance mentioned below, I the to But the largest don't footprint category. you I more track my pressures a have you your relative the to leaning side. performance relative sort or are store. know And you to Do market? you and if value your leading follow-up -- your track as assortment unit looking performance think the of the It is comp, you it's category. obviously, at to on then something And the gives overall think, demand line assortment market.

performing think share you do how on So side? you're the

William Boltz

Yes.

saw the we for in growth year, share So appliances.

see quarter, we all across we growth called selling major We as price average did categories. the pressure unit For saw the out.

and purchase For events, those performance both unit we're that. that. did see purchases was we that a We saw Cyber them with we weeks, the Monday, from and and single key where major as for multiunit a was And shift a to pivot. pleased to holiday met they across nice consumer go, consumer Friday wanted Black the looking the

the hands finding afraid products look so looking and entry-level invest conscious, moving to also they're which one that in, profile combination the $X,XXX that innovation, of them them for value, for our over value that example, and we to retails They'll seeing X not on. single dryer share also all-in-one example, can We in laundry, see X sell get up we're and for seeing for then trade washer and We're kind spectrums. of consumer I'll examples. for every for we GE could look

the are business. that across just X happening all business. And categories going what's it's appliance really in those of on spectrums So of

sure X going that as evolve, to talked and that on. We're continuing they fulfill capabilities business appliance fulfill. X-way performed and delivery. customer text those and and capabilities of continuing that to we're it's really to market getting our capabilities And what's make as the build we delivery business want those rolled fulfillment and about, so very online to meeting we're well to spectrums our continues we see to the So there. be can met all where way with want Joe out out

Marvin Ellison

Marvin. And is Chris, this

mean, for next code in of player Just be only can that we literally work and can to virtually come addition XXXX, to chain one in the have only the years within leave to for infrastructure is virtually appliances supply we're appliance going significant but where have not that's ZIP an inventory store hour. country, the and point every purchases delivery I national come. a in every emergency appliance is X-day significant, the market and on with major same-day day customer last deliver in our capacity in with customers in still to having virtually take

to impossible, And his that so the and is on that we'll in difficult, to we think look, to our team Bill have And will for us. is continue manage brands our if environment. model nice assortment something through team macro brought work want replicate not and and and really listen where based to have they go. And Bill think we'll I the job, us a and work to to continue pivot his done consumer the

Operator

Sachs. Goldman from line comes Kate with the question Our McShane of

Katharine McShane

percentage You ticket big we could mix mentioned still ticket backlog. you're that under stays of ticket? in larger sounds you what projects. it within And in mix get terms to around pressure a to wondered versus compares big stable smaller of pandemic are pre versus DIY. in terms of terms those backlog. that try our also a well how it and the seeing question little as goes what when of seeing Pro seeing the -- And It arms we you comes bit if like were of the more that smaller in But

Marvin Ellison

in spend if first But take financial for second, is you the we to this leverage Marvin. I'll second Kate, jump that of DIY work and feel is the all part. consumer, choosing about the on Bill Joe in Yes. think a consumer good let places. and the the about their simply or I'll part, healthy. consumer they're different

because whole talk relationship just travel, more think restaurants spending, spending and quite during a the say for discussed also, their is on that on and about back getting we've just to that back out us, of wallet normal. this the And few the As home-related of to a are but on customers concerts, companies different of is don't us getting surprise goods I customers pandemic. purchased post-COVID in consumer not clearances all on

it. still trying out the this working we at believe some Having on we're that We're work call to So way timing we macro through said environment not point. will our of that, that cycle.

high our business Our objective to is and invest at to execute in level. continue a

to of to consumer in to take spend we're So back be whenever advantage reverts normal, going position it. that a perfect

some is to differentiation program that and else of the reasons a someone our for can over to we choose of level DIY loyalty specifically the consumer. rationale so online, why consumer DIY to we a One DIY create the give them of preference both launched and the in level for be in-store marketplace, us

we for consumers, and about change going, those their And to think we with we we're frame they're on seen, spending occurs time feel what so I whatever remains what think think but to that and them habits? buying as good is we'll wait where about it big ticket positioning be

William Boltz

add just Yes. category. varies Kate, by I that it product really would

X as appliances, you've said, spectrums with so And going. really I got

Pro in looking value-conscious variety about. in the products of our their stores looking them quality met, a different and they we get we both have to consumer price the and pricing that's then in-store. And can multitude of at low-end of and offer customer of and you we ready product those have we're And a at that having stores across as excited new whether again that product product we online price that and all we across wherever meet be the of the spring, a points got lot meet way You've levels offer on stock innovation, jobs, for want the our to points. we cabinets

are And We're the mowers, behind it's new. bigger lawn product And product. about of that. Toro, those ticket you riding launch like so think about all bigger walk ticket mowers, excited

ticket we as outdoor looking furniture, Allen We XX. to upgrade Origin our program. products And introduced and so spaces. Roth Those she's are patio thing same with introduce address the bigger &

to and met. takes on we to how do, variety be trying to online a meet wants she both be her want in-store. as be we're again, of wants to pricing We on these met to she wherever offer that's what want So she based to And able her projects. to

going. to And localized and we're We've we've across ready ready to our the stores, that in-store. get so different online to ready. we're with for worked mother our really that those We're We've hard sure areas nature of offer country that address we're to the make we're and needs assortments got across readiness. cooperate geographies and and hard worked the really we excited variations about both these

for So one more we have question. time Rob, that, with

Operator

will question from final The of be line with Steven Zaccone Citi. the .

Steven Zaccone

outlook particular I improvement wanted perspective. basis I and embed from could half a same-store if And on circle more a also it a multiyear on Brandon, guidance. second basis, about curious to was you talk back just because does sales in bit a a pretty big that little X-year to stack the then

So really say could you not out conservative flush bit maybe what's a arguably the that's just improvement? in Because driving view. one

Brandon Sink

pressures, Steve. over in improving of just but year. that of last clear, we intensified DIY reflective improvement as are of second a to the the half comp QX any in our on weakness year-over-year particular result And comp not purely in be macro is of easier comparison. Yes, the views turnover easier looked Really, specifically low the I'm persist. cycling the higher the at my to the earlier rates, when we at inflation, we we're housing cadence When expect to look comment, second macro reaffirm comps, we interest compares half, going

across cadence. leaned the X-year we at of consistent it trajectory at looked looked a the pretty basis, There's we as ways. So I lumber. would hard moved pretty ex on we which a We lot into a year. tell different X-year you

break to and really comfortable the of provide operating transparency and down that. So we and level to full the right year with to margin comps the feel the wanted visibility

Steven Zaccone

on just you you stores, shifted That's portfolio at Is about think this Okay. a you being your think there would about anything had peers opportunity? the framework. rural in then the then opener one store helpful. that's more And consider when new I is stores point of broadly, the follow-up has year And as the net the of future? some to opening

Marvin Ellison

final part your I'll that Marvin. is This take of question.

new we can real on productivity. openings, as describe the voids look believe space focus the around going mean, store we estate that country of on candidly, our right parts to for always on it's new get investment. we our we're I capital the for store But what -- different So return is where

We estate, to infrastructure existing invested for with opportunities capital We in significantly productivity. where our incredible using new get real and dollars create is upside stores our greater space invest stores to versus expensive in just on in return we're our the investments opening to those that. think struggling pencil. have capital such

to rural, greater other assets and merchandising we'll you're we our and value going rural voids wanted the the time again, see and categories. they're spend the an sure to most pleased the have how to nonrural well already that pet, automotive, the enough job. things we to stores learned but own. locations you extremely of be And you're around some a of when positive stores clothing about performing, key consumer about those going XXX-plus make teams for their serve exceptional start to focus. We And about like on we're open us those going a us outperformed customers and see company categories from creating of and expand country. with that in we enough think driving Joe Bill and demand, done of to that's productivity Relative And handful like ton performance space categories

something portfolio show start places to the And it's with. this, of going to see around hear you'll very continue but our stores. so to in you're pleased up it more about that us talk And we're

Kate Pearlman

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

Christopher Horvers

This concludes XXXX the Fourth Quarter Earnings Call. Loew's

now may You disconnect.

Lowe's Companies (LOW) 27 Feb 242024 Q4 Earnings call transcript