Floor & Decor (FND) 4 May 232023 Q1 Earnings call transcript

Greetings, ladies and gentlemen, and welcome to the Floor & Decor Holdings First Quarter of 2023 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to Mr. of President Vice Hood, Investor Relations. Wayne

operator, & Décor’s you, and earnings good Floor to Welcome everyone. fiscal call. afternoon, conference Thank XXXX quarter first

Chief President; on Officer; Financial Vice Officer. me our today Chief Tom Joining call President and Trevor Bryan and Taylor, Lang, Langley, Executive are Executive

of Before I meaning Litigation contain webcast forward-looking remind within the want and everyone Safe Securities the company’s XXXX and we language. conference Comments to Act uncertainties. call the subject start, of Reform Private Harbor made to risks of during are this statements and

such characterizations refers future future including reason, Any expectations, forward-looking future those statement that in forward-looking to listed is those in differ conditions including projections statement. SEC or statements or projections for could filings. other company’s actual from results of any financial The its a events, materially market expressed

results. update Floor such guarantee performance market & information any is that forward-looking statements. future obligation assumes a past no also note or Decor not to Please of

company financial During enable call, discuss G. understand to believe between non-GAAP on comparable periods. measures SEC by basis our this Regulation better a the as investors operating disclosures defined performance We conference will core non-GAAP

on this can earnings and most on of non-GAAP found reconciliation these financial Investor call will Relations website measures website. our be Investor available press Relations recorded our the measures of to related comparable A A in release, replay of which GAAP available the each directly is ir.flooranddecor.com. be at materials

Tom. Let turn me over now call the to

call. fiscal first and Thank quarter for our earnings everyone, conference you, XXXX joining on us Wayne,

review our fiscal the thoughts highlights. quarter share and a our and first fiscal During provide quarter XXXX. some about first of discuss performance in-depth will Bryan Trevor of of today’s call, more Then remainder earnings I will our XXXX

believe year. per amidst long-term these $X.XX key we versus continue remarkable earnings results previous face execution to challenges share demonstrate declines In and we as the of adapting line diluted expectations year-over-year the our growth broader flat our significant quarter XXXX, in in the they take agility of sales and our we pride We strategies with of continued earnings strong delivered the home fiscal macroeconomic first and existing XXXX. in to in

sales we customers in XXXX as in forward, to these and expect are increasingly value look challenging XXXX. that these believe flooring existing grow out savings share those home well-positioned even we needs. navigate to we prioritize remain market our industry As to and best meet contracts headwinds and We retailers the seeking

XXX we source deliver Because broad we over suppliers, XX to compelling options are value low products. and product able prices range our countries and a products from of across

features Our range of benefits broad points and any assortments looking surface flooring. an exceptional to consumers and price install feature for hard

Furthermore, favorable growth. price our chain or product widen building by and on competition lowering we to with unit proposition to SKUs. prices specific elasticity our on to in selectively some costs us along our are price supply are passing XXXX our enable intend by value monitoring We drive customers incremental to maintain gaps

strong value in introduced and website message. price new our reinforcing our We have stores signage lower further

our are with on we front the – merchandising Additionally, our value the caps. of stores leading at options compelling end and

initiatives are While newness exciting on price driving and focused position, in maintaining innovation programs by also leadership winning new our through and we XXXX.

are customers pro further we XXXX. homeowner driving in Finally, focused and intently our with engagement on

share us. their was Meeting I plans would Annual March period our like Before managers to inspiring opportunities leave I say see growth challenging the ahead turn about developing this the call market to it to and store store over of grow how market to embrace in Trevor, excited specific our new

quarter Trevor to pillars. turn to now sales discuss growth first me our and Let call the

Thanks, Tom.

period. our market in executing our challenging We macroeconomic strategies energy how and during stores the incredibly grow our are pleased to they’re this with share

emphasizing further our everyday quantities store trend-forward are associates. and provided of service prices, our by job in-stock leading assortments, low customer lot We

over challenging years and have our training associate past the attribute in few this period. in investments leading made service to significant We wages and improved essential customer

not investments with [indiscernible] are associate playing and up off. catch are paying wages We

last each we quarters, seen For in improvement year-over-year turnover. two of the have a

fiscal customer Promoter XXX from Our Score approximately XXXX. first basis increased key by XXXX points first quarter the of quarter Net

and We the customer Yelp loved by Decor their are Recently, top ranking. highest brands by helpfulness delighted among & ranked ranked was attributes. to non-food see the was Floor announced that associate that satisfaction retailer it customers most

associates knowledgeable purchase on store focused to on flooring In leading journey competition store the floor proud to and the this as our engaging best pros. ranking well sales at are the low the our important important attribute. drive are right homeowners customer is having the as with Having be XXXX, associates we time on in conversion, above extremely prices, managers

We’ve drive also to conversion. quotes made our to follow-up stores better important improvements better our on for

without We are customer facing our sacrificing finding hours ways better to our manage service. and payroll manage expenses our tactically non-customer

our declined X.X% and with March. was comments in Total increased me $X.XXX negative total XXXX to negative Comparable to expectations. same first sales last period at fiscal sales my sales sales. Let store the to in X.X% January, in our declined quarter comparable store turn quarter first in X.X% line and X.X% X.X% February from billion now which year,

XXXX. to impacted growth of points similar our Ian by the We quarter comparable first sales positively quarter about XXX store fiscal fourth basis estimate Hurricane

Our from an X.X% second store performance, fourth expectations transactions transactions decline ticket last fiscal XXXX. in in quarter quarter to comparable XXXX average our X.X% XX.X% store from According down declined date year. with of were from quarter year the the fiscal improvement our comparable our and first and period XXXX to last same line sales

footage to prices. Our of XX.X% average fiscal is X.X% fourth from The square decelerating strategically the XXXX less purchasing to and quarter lowering ticket growth in sequentially quarter first product growth decelerated XXXX. customers sequential due

at toward We offer continue best and prices. see we and innovation, our products low customer price ongoing trends, to where better point preferences industry-leading styles

our and best offerings. less and often merchandise when flooring, point transacting purchasing consumers higher less they but better our footage, see we margins square price Overall, prefer considering

I format stores total warehouse stores opened will growth. fiscal In across discuss XXX our XX store warehouse quarter pillar our XXXX, of states. three the bringing now new new of first we to

we design leading the During with with closed expired it the prototype lease not our Orleans our and current original New design align studios. as studio five did us quarter, in

XXXth As May, excited have we in planned for milestone the quarter store second opened will XXXX, about with our another history Louisiana in be our we achieving our Metairie, opening of we company’s of are store in our history. warehouse which the

opening Alabama, in Metairie, the we our to an in new opening Rapids, quarter, We’ll stores including eight warehouse second additional also market expand Grand Aspen in addition Washington, the In D.C., Michigan. markets, three to intend Greater presence Texas, Huntsville, Maryland. and open with Hill, Temple,

by to warehouse stores opening XXXX. Fort stores will continue in XX opening Myers. one openings in part are of in we in and our Orlando warehouse Furthermore, goal Florida XX of These two expansion our

last half markets the are our and As XXXX the the of most waited store warehouse to discussed in call, openings be in second new earnings of year. existing expected to

considered potential construction delays by the have of second We waiting XXXX. the openings to half

will opening balanced expect store anticipate weeks. store warehouse we a construction more quarterly XXXX, beyond to ease to operating lead more that delays cadence and Looking

first Pro last for year, growth comparable of XXXX X.X% ticket X.X% According in increase quarter basis to accounted our sales, sales by from XX.X% fiscal our increase and increased a XX.X% transactions. last store increased Pro an business, XXX driven points and to total year. our X.X% a Pros average of sales from and

products, allow engagement. will demonstrating We from appreciation last are build dashboard quarter as further Premier continue management Pro are relationship and sticky year. our our pleased and tools grew our continue and in CRM, value installation that grow and are we solutions. and to contacts Furthermore, about making design refinements we drive XX% Pro that training Pros enhance for program lead optimize us a Pros and the or or about our through We excited industry-leading customer seek strong PPR, redemptions capabilities relationships our lifetime of value education with first loyalty to pouring to

partnerships. educational for over we workshop our education the to first Pros. We training by premier quarter XXX Pro the be destination XXXX, expanding XX aim hosted of industry In

year, significantly spending the Pros Pro we compared workshop XXXX. events are their These XX last investments educational with the quarter us from For in planned working in trained those year. have first increased XXX to as

our Turning business. e-commerce to

last the previous in first strategies XXXX aimed customer’s team increased accounted e-commerce fiscal quarter XX.X% further sales e-commerce conversion. is executing towards experience In our sales from and for year XXXX, XX% XX.X% Our year. with improving of at our compared digital on focused optimizing our

prices price our to challenges. price experience executing express added our stronger on our certain reinforcing improving filtering a and we We current economic selection value to reflect value banners further new our proposition. low unbeatable the have are website unmatched and that Moreover, SKUs are message

with our and inspirational adding by trends, current expanding options. pool on focused new extending content be category into recently categories to continue We user-generated and outdoor

better We’re engagement, emphasizing load including search webpage speed. Improving rates, accelerating user improved benefits better webpage our an mobile experiences, satisfaction rankings, several speed experience. scores, customer higher lower higher and load bounce has

Moving offerings. a continue through well-executed design in-store We our in-home moat on services. and to our aim competitive design strengthen to services developing

quarter plans designers from last over sales XXX The We design to year. designers XXXX first increased have year. stores now substantially by our the end X,XXX of with the in working have over

by on involved. leveraging scores, adjacent are selling, prior see In and to improving gross service elevate conversion. and category further in maximize materials, we follow-up basket calls, sales, discussed our CRM tickets, measuring we they’re tools, designer technology insulation experience processes when and sales customer the As focused to productivity higher average margins systems XXXX,

business, managers which Moving includes and to our regional our stores. RAMs, or commercial flooring Spartan Surfaces account work our with which

grow pleased sales and market RAMs quarter growth to the earnings with XX-month would further earnings results and to our our leave and sales are that commercial and Surfaces strong working. strategies at affirmed continue be We share first Spartan our our trailing

first of due better EBIT gross primarily than the XX.X%, the quarter by margin increased increases rate. to first XXXX fiscal sales increased quarter XX.X% XXXX, in from by expected Spartan’s an

trends, the are XXXX as project consistent about We Spartan’s remainder of new a growth. quoted leading key indicator shows encouraged

our rapid Additionally, fiscal continuing quarter organic Spartan the the we of with States inorganic approximately reps. across XXXX towards footprint. XX are our of United and achieving We national ended repetitions excited about first growth a

are our We with our mature reps more pleased of are acquired order outperforming particularly performance. productivity commercial our the rep groups and

approximately the meaningfully XX% quarter of RAMs. increasing fiscal XXXX XXXX the expectations of our fiscal with quarter first RAMs sales exceeded XX ended quarter from Our XXXX. We first first

As our discussed excited calls, earnings and remain we strategies. about commercial market the in prior opportunity

opportunity Finally, market continue about in share our from strength to of beyond. and XXXX are we’re a fiscal and to operating excited grow position the

will have We have to teams, believe agile challenging an model, continue business the we macroeconomic us navigate environment. which allow to the successfully right we demonstrated and strategies,

Brian the our detail of more the I in call now year. results financial quarter our to turn remainder and first over to for XXXX discuss will share fiscal outlook the

you, Thank Trevor. and Tom

a testament our to business in the manage year-over-year again existing once plans, Our were declines our on our first is to strength gross rate sales efficiently. executing quarter the profitability significant impact manage financial and performance home business, model. our expenses and able our by Despite successfully of adverse their recapture effectively margin we

cents quarter $X.XX we and our result, diluted a per in delivered As to of line share XXXX. with earnings XXXX first flat expectations

turn statement I’ll of cash some quarter in among me to for of the first Let line outlook balance my changes income flows. significant Then items our our and now statement, discuss the discussion remainder year. the sheet,

basis that our pleased higher year fiscal and last to supply points decision gross chain quarter product XXX prices margin increased offset are our from retail to primarily XXXX XX.X%, raise to cost. rate We first

target XXXX our of These results achieving increase in gross XX%. rate margin our exit confidence

As margin in a rate through recapturing to while as costs now lower simultaneously reminder, selectively move XXXX. supply prices gross our statement chain lower fiscal are retail we income able

fiscal the in increase XXXX substantial We result year-over-year first rate expect the with fiscal of half expansion a in gross of in most to this in margin XXXX.

Our first to the operating selling expenses or quarter store XX.X% fiscal same period and $XXX.X million last increased year. from XXXX

expenses of points sales, percentage XXX compared operating in basis a store XX.X% year to As to increased our selling last expectations. line with and

from processing X.X% XX higher occupancy was cost fixed deleverage primarily The store XX, other fees XXXX. increases, and card credit to increase decline rate transaction cost in warehouse stores sales. March comparable additional and and attributable Wage resulting operating since

operating We selling expenses our to XX% approximate and unchanged expect store our prior sales from annual guidance. of

the growth, first operating general subsidiary. to Spartan higher from increased making same year. to XXXX technology and XX.X% increases The administrative support staff, to due our depreciation center fiscal and expenses Our and we $XX.X store store related period investments are other increased quarter including store support investments to last to support related million expenses or our

$X.X comparable openings points year lower As last is expenses general the million year-over-year a result primarily administrative of decreased expenses primarily store fewer same percentage X.X% XX of the by compared caused The from to the last sales, and new from XX.X% store increased deleverage period to Pre-opening basis of period. sales. year, year. decrease X.X% from prior

in $X.X in First quarter our expense partially an expense increases in same in $X.X our under from the increased rate and million and last by capitalized to borrowings million net interest due increase to line period increase primarily $X.X million interest. offset expectations Facility interest is interest ABL with year. increases The is in

to expense in same million tax compared $XX.X last year. was $XX.X million Income period the

Our first declined points excess tax benefits was effective to period The same quarter XX.X% rate effective XXX tax year. increases XX.X% primarily from year-over-year related tax to the rate due stock-based to in the basis awards. decrease last in compensation in

same in tax excess last benefits, first impact was quarter our the the XX.X% XX.X% Excluding tax year. rate approximately to compared period of

to comments our turn my me Let profitability. now

million quarter last net in year diluted share average flat quarter million expectations. compared $X.XX per diluted million last our of with first increased first and with $XX.X line year. outstanding and $XXX.X to We compared $XXX.X earnings ended the weighted Our to X.X% was with income shares

increased million year. adjusted EBITDA same period XX.X% last to from Our the $XXX.X

today’s increased net income adjusted reconciliation A in to to adjusted EBITDA XX.X% earnings quarter margin EBITDA be last first from year. Our can release. of press XX.X% complete found

on Moving balance flow. and sheet our cash to

December pleased a decline line our X.X% in XXXX $XXX.X cash positive enabled cash total million, operations quarter working decreased $XXX.X from year-over-year of us expectations. first capital other million first inventory $X.X flow initiatives and swing operating We in that billion are report with from total flow. in inventory to quarter our The to

for expanded inventory to rate of capital slower we full We at the grow XX and sales expect year improvement a working as anticipate a in benefit days. from

with ABL for quarter the first of available of $XXX.X cash facility. the under million equivalents consisting and of and ended in unrestricted $X We cash $XXX.X liquidity million borrowing million

growth environment we spending thinking the as relevant improvement XXX that how store Let secular and in the about me to turn in the long-term my U.S. trends are as of underpinned ever. The comments remainder macroeconomic and XXXX. in opportunity home remain

being housing pleased We moat share our to during extend to declining growing turns. with the market even intent and make even our are be investments housing competitive stronger of the able cycle a cycle to as

stock sale, over well supported XX-plus The and aging investment years significant established home inventory new repair and improvement equity. in historically of of require and factors spending homes XX% include low home a are long-term existing housing and for and where homes old

The inflation our to and growth goal. our significant existing equity that year-over-year slowing changes stability values under as positioned control of their to are Furthermore, effect is shrinking to millennials price bring conditions its these and and rates, in raising and buying moderating path of more In outside balance growing appreciation its home expeditiously this home interest Reserve a Federal declines fulfill price has control. spending home prime sales, be the enter led to market. short we years, well tightening to capitalize policy sheet financial continues home on run, on of the

of share potential XXXX home our and a and encouraged we year-over-year declines the two $X.XX flat to we February from and of in be to in remainder moderating of year. prior by that on range earnings within X% and existing sales as annual the diluted there the we months that sales continue trend consideration store growth to remain expect the impact our through are is recognize into move Taking in our to $X.XX but comparable headwinds said, these emerged March, headwinds we not That their range guidance. down business, unchanged per to be

existing prolonged pressure of earnings more be this expected challenging be end services than deeper high could from further range still where sales, potential a demand. in outcomes the that on XXXX. sales spending in durables early earnings to fiscal recession year, further in from economic to in but slows It is assessing sales shift the achieving a home and want we and prudent However,

As the comparable point quarters change per and point each approximates through a in for full a impact three earnings store flow for remaining $X.XX sales share reminder, the the year. $X.XX comp approximately of percentage for from X the year

thinking about the year. me we some were provide remainder additional the about Let context how of

decline We fiscal year store decline potentially quarter sequentially the of sales expect our to returning in fiscal represent XXXX. XXXX before second of and largest to growth comparable the quarter fourth the to

Similarly, the the in expect year, we second lower earnings represent earnings quarter trough be of than quarter. improving fourth to quarter second half and the slightly first to the sequentially in primarily before

contemplate comparable before in expectations fourth growth In in the declines of the in second half half year, store returning Our quarter. the the transactions. continued of primarily to first XXXX

we grow digit reductions a transactions second start and reminder, XX.X% single our contracting before fiscal to and price to high the lead in in to as a slight through in of The our transaction half we comparing trends improve industry cycle will the XXXX of transactions making but a our XXXX. year, fourth third strategic believe to the in decline improve our As decline move are the second in we we in ticket quarters market year. average quarter share is past of the declines against expected

to call Let turn the now me back Tom.

in to investments closing, us our Thanks, to to Pros. industry make in XXXX enable we our the strategic in accelerate a marked In growth by ability particularly will Bryan. among contraction a believe year and market continue beyond, share

increased As to market early in that points market and a our XX% points share data first basis thrilled year. share by reminder, quarter to approximately the XXXX XXXX, strong are XXX we we another

business sourcing e-commerce existing XX new platform the model. opening committed could experience. pricing, for customer and investing enhancing period to to marketing scale our associates, stores, manage format sales our improve XX remodeling stores, in technology contracting a independence our warehouse difficult We We compared be in when particularly inventory direct to during to expect and larger XXXX to remain

our foundation growth While and accelerated customers be XXXX our XXXX closing, the further and earnings moat, with a every hard beyond. our we will year, dedication In our for challenging we on into our to intent are profitability, work success associates competitive day. serve owe widening laying who managing and excellence

Operator, we would now like to questions. take

very much, you sir. Thank

be question-and-answer Citi. question will conducting session. [Operator comes Steven The We Zaccone Instructions] now of from a first

probably the you for trend Thanks date cadence. to quarter wanted follow-up I for we second down a Thanks holds be end the single And decline, you year. guidance range? the this same-store quarter, should for you’ll on to that? in specifically so through big Bryan, when case, that’s kind sales range. we bet do taking my how of detail Just the do in pretty the the the building digit half, mid largest then on the of year the if see to on the the balance have back of assume achieve seems to question. say think and the But blocks full how acceleration a high

Yes. little question. Look, as QX of Thanks kind a bit will it, think for think the down. be so nailed I there, about you’ve we

growth in you’d it. where to think then half have a that, have are the quarter, obviously, And amount quarter see expect single decent improvement the quarter said end, give as improvement well. with growth the be half, really first – negative should transactions as slightly we improved with we about decline. we’ll largest are to Transactions it quarterly that grows there’s quarter. way about do so the there. that think be but where from fourth that but in as second sequential high that will you high throughout growth think a the in are from in had it’s to today then better fourth don’t But expected today the in We the of three-three the guidance, slight there, digit and the we achieve think sequentially I we’ve to as it’s fourth should fourth offset QX to things the of get it we couple for in line the that

couple a compares. reasons there’s against So One, we’re of easier why.

were and QX XX.X%. XXXX high digit QX QX down single remember then in was and declines So

we’re lapping of the is against. story what part So

taken. And in sequential expect home X improvement We then in trough sales also third, up pricing year that February the throughout from also transaction improvements seen they’re March, expect have million we that and units. from of actions the we’ve existing both

continues So we the improve throughout think that as to year.

the X% home existing lower rates about our assumptions October just peak got mortgage we’ve embedded XXXX. of the improving off So think sales within plan, sequentially in the from

sales. encouraged And I the we’re so February March as home what by mentioned, we’ve and just in and seen improvement existing

that’s in and and helpful. but that on much just mean, it step to still whether April March, the notable It’d the of or just I Great, consumer. in think how it’s then, to data color. trends? it’s to out you are helpful the some Pro seeing deceleration, people there Is a seem on grapple big trying a April doesn’t weather be other I are down from follow-up anything And traffic points there month get DIY is trend, with or that’s change

is and want Trevor, if add This to I’ll feel Bryan start Tom. free.

is entertainment Easter April leisure I experienced going the bit more a with and consumer as it, COVID in weeks spend have tricky before. out think lot we’ve more little than – April spring break April, was a had in a of that’s in to travel thing and lot fell holiday is coming only

of We’ve of improvement part in good bit April. think that’s May. seen a little month I So of the

anything by I business doesn’t their believe encouraged more spent may during But and was it but into impact us much. some that. much consumers how – than April. there shift little money the I the of their adverse a weather, we’re weather all that the It more So ties think and month time bit

Okay, detail. all the thanks for

next The comes from Thank Fargo. Zach you. of Fadem Wells question

for to could backdrop? this get comp. is the the comp in any the stores tougher impact free the the comp store relative the with newer the Could there stores Hey, maybe the help mature along us in that newer down the maturity your of two you between in curve base? change And reason to bridge the base cannibalization your comps gap to to good afternoon. to quarter of in And talk performance believe store new

first, change curve I part I answered last actual the So don’t think it’s going the itself. Zach. to

what a and we work through starting you’re – up seeing I from we have, would seeing is up of is way our the between mature at we’re XX% but way getting five the about doing we there’s those kind there. in don’t of base new any seen gap I start still a way productivity amount growth first you’re we’ve bit lower think the the of little significant think stores, of new with that then three-three are disproportionate same the our the historically And base. kind ramp years of what think I the to mature performance versus just store

was I in we really number, We opened slightly give QX to the just just stores that QX. slightly higher. it that was think due never but XX in higher cannibalization

do I an impact So there, of call saw more a really you to think but bit nothing little out.

QX macro you be Okay. changed you specifically talk the QX versus color seeing initial And you’re that suggest provide comp didn’t that QX, given the or a what’s what about could today then the trough. here initially, quarter your the you cadence to you provided will EPS talk in cadence about expectations to could the ago? And from the then additional and on provided business

our other in in correlated of highest – again, has and we a I March line that both lag seen we know talked in right? we I That’s I improvement so don’t changed it’s Yes. February mean really there. metric look, mean, look, about were and we’ve existing home and a QX. lot so bit a there’s know sales, than QX,

four a down saw to think today, March back think were we exiting more at as so February that four, four little and trough And the to QX back of then because half that it and we January. and million X bit gives kind we into million confidence about X and above see I both us we went seven so what were

little I that and more conviction us to So the back in growth think get. we’re expecting be a bit that gives about we’ll where that half

Does today, sense, QX where we anything you any just I see think be kind Zach it don’t will So of make or guys extra. know trial. we else? have the if that

time. All the Appreciate good.

Yes sir.

Morgan comes Thank Gutman you. Stanley. of The question Simeon next

Good et question. in step to and on taking apologies first afternoon, described the way also seeing Tom were cetera. off, footage further step this. people harp transactions everyone. if were The purchase? a Or down to That’s It down date are it, you time sounded my quarter

of both. bit Little

it’s we footage from have what seen historically. So been slow square

but traffic May. it’s problem much what I the as much told get it’s some my April. So you are the I the of April, foot to improvement we’re month I April more seeing of month more, during we reasons as said, and around But think

home that I think fact we – they’re you’re we of this better X.X. that like trends banks that we’ve get level. up One and macro at year, we think said closer the X%. be maybe is on as then to is as been the – take seems to worth going X.X, be seeing we the exit And Fed we’re the we granular X.X, hopefully it getting as the to driver. talked going a I rates against the comparisons easier that business, Trevor. rest make Most we of of existing the to as to mean, as we’re the the expect X%, going rates. well that’s combination an sales forecast getting see pausing some doing certainly mortgage low assumption what’s below in thing the for going the just mentioning happen year current We as to fairly business the haven’t

combination into that continue to going we’re well doesn’t up accelerate. doing I make easier what think will the seeing that the in some the we’re so plus So quarter, And against comparisons trends the our year, but what that current we’re us our confidence forecast. of macro gives whole really is five against business weeks

you’re getting close already. XX gross on to margin, pretty quick And follow-up that

it’ll – substantially be said half. up was it in first think the I

comes if it down, So you kind freight feels that mark. like XX of passed

I you’re was confused, maybe – in And then price, you’re a investing it sounded with that’s little prior. asked but gaps. think been like I content

are or gaps you widening price maintaining actually you are So them?

this Yes, go Tom, I’ll first. is

– same we’re pleased our or that recapture. our the did accomplishing while at mortgage been yes, taking We margin we’ve So that price with time.

So continue supply to down. chain costs come

done that. Our job team’s excellent in an managing

our some price I we as going the like beneficial be optionality, more transactions if mean, to that watch anticipated. to along. little But elasticity We a higher what we’re we then could to get we’re passing keep And margin or the exit of than lot and aggressive. that it’s that’s to see that. the and more going we’ll if margin We’re happens of we that we be a continue rates going adjust footage, to possible to monitor SKUs square would

some mean, the I on about closely question, prices pricing And our we is versus versus our have fantastic make our as but Simeon, competition very it’s feel very these a job and great Hey, Tom where about, merchants we the thoughtful the we’re can improvements. the done in early, encouraging. we price reductions mentioned, watch the is other competition. assortment being on of seeing those elasticity yes, that where And

drive investments So but of in continue expect price will, we’ll which gross goal balance a – down, making also of growth the come strategic to we as chain it we costs those think will margin, incremental that volume. supply that that growing

like optionality manage gives we things have. to And other that that margins, through that, changing too, payroll complexions P&L and because gross us it lever

So it’s that good to optionality. have

Partners. The comes Steven question next you. Forbes of from Thank Guggenheim

Bryan. homeowner I with Tom, start Trevor and wanted to afternoon, Good trends.

comment of you the here. comps could Pro first on gave half the homeowner Trevor I within by And ticket and impact the base of expect was homeowner into was to for that back how sort you it do price us then just strategic DIY. if transaction. wondering the think breakdown trends investments I

the in invested areas have some Pro. impact. we to if that Pro the matter most know don’t And below but our there then feel it And have that really include on expectation, homeowner the those what the I going we’re and I obviously we they’re matter trends fingertips, the we SKUs – where and is. at to SKUs the the – biggest Yes. mean, like of pricing,

on reiterate elasticity on for are we’re going the take time, been positive. reductions again, I those reads we’ve strategic and think So last where earlier to price just

you segmentation we and and XX% Pro you add I down literally The down do if seven homeowner’s university or know homeowner, Pro, doesn’t together. roughly on mean, just up our the series side. just were about math were we – can’t the we can so three-three But be six, two

see think kind the and the it we hasn’t at I the them it our store, think It we’ve where going that. see – to we where is much think look we want it. have, frequently pricing in of as it’ll much, who’s is And more price, been they’ll benefit, the but benefit Pro it you we to all and that adjusted

have in planned member that initiatives sits really on And of Pro think awareness the the of just sort Pro, cetera. where on, markets. just the you can for this frame given the a Pro of I there then any then And both maybe pipeline comment follow-up existing and value sort or know with awareness And quick et to right about investments, the us to base don’t opportunity you you the press targeted if these factor. new some awareness. year. Maybe in grow the here proposition, if are

Yes, I mean, Pro our high. awareness is

for be the it’s think think the that markets. than, our for awareness the prices program – team Pro. that very It’s starts a with I based loyalty A might that new SKUs we’re service. they to them. have bit that curated but of It of and about. with with the dedicated our about. a great excited care lower doing we’re in our testing hated this care that’s little – – well tiered we’re And I program, to markets it’s great business It’s mosaic service we’re of some good It take things customer starts Pros. assortment we XX% majority market. vast brand great Maybe matter a of

continue Our take all mean, in-stocks our We last rate year. concert will market share. from we’re in better at. I things think in-stocks the are to to even think improve were good they those than continuing work that see together we I

We great us allow follow-up also have with tools those CRM to that Pros.

thing Pro not capturing that our may and as with new. we recently designer that in or if product that’s not now should a goes, to a feature our increase relatively we’re but for awareness someone database up don’t where or us. contact of be help that to historically. we in with new they’re follow-up. Same know help Pro doing them, Pros information a get us and a picks a in well Pros stores time, the We comes works and our awareness. put couple we can familiar not now, it speak when who should weren’t had can teams system We’ve bit I’ll little of just the things that to in One our

in store street. back whether across out the scripts, doing our the back scripts new and are Pros. stores an with classes excellent doing been now we’re And those and we’re – our build on the then pounding the doing it’s find more brand we to Pro few that our help over more. we’re All keep mentioned getting stores the in our in go mentioned Pros was in pavement. business things it we’re to and have After doing Pros we Two, stayed it’s and the team the training were of trying We ability and and COVID, NTCA, continue get to impacting vendors out – should our the last third, up or out awareness. job

Michael you. Thank comes Lasser next question The UBS. from of

could the arguing, also and better but assumed that housing the macro ability for Good cause get in but haven’t next spending, Decor of is its to a recession consumer not not wrong? to the in of easy for going in has year, taking home, this negatively impact that’s Floor the Tom, and to turnover consumer question. Decor. turn also and only that from comparisons a that buy the evening. prospect downside only on a & prospect & which going to based risk would are Floor Thanks are the impact year trends Why lot guidance my the skeptics factored

calls, correlation home we’ve think I Historically, that, the existing great that. as below the that the having get that that goes home mean, we’ll that stays, don’t sales. $X towards turn positive got number we as year. increase as sales two believe to we number we start believe see on previous I a an the number existing year We benefit end of that with from think we we’ll the back If the of half million. said

We’re taking share, Michael, rate. at good a really

this Our that’s in quicker indications this market did contracting, taking last that we’re year. we year than are share

I home will us. benefit things So positive turning I perspective, those existing share a from think think sales

it’s comp our guys mean, mean, out. declines we’ve worth EPS, you you to point Again, well I year-over-year about We’ve that view. – to we that yes. kind have got house [indiscernible] I home had every an Michael, of existing you that’s of it’s if Yes. that think given $X.XX at some sales. as think come point’s got

– in of there recession. we things bit like Our we think that, so get where half back get it gets a towards a positive we our year, the believe It’s category as been has to better. little that

they in here? My that how have much reduced than industry already players will demand you price much the question reduce further the think the And drops you how is do follow-up event price? other Okay. and independence in do think

when as price in look are or larger we we all but mean, think gaps we they’ve merchants price at not we XX our our detailed XX as and smaller of shops have week. pricing, live our are to against good at just as our I Trevor. earlier, every we we competitors even is been. ever said competitors, do regions, regions, our fortunate, this Yes, And

They – seeing marketplace. the have earlier, are on But within behavior in our have spread seen supply look, it’s our down, come – confident price we’re versus well. we’re passing them, chain say others said savings Trevor we as as irrational not

And so we feel good about that part over the boat.

in pricing independence, new maybe when there’s on it’s but prognosis, versus everybody below. most you the you at our people think the case just look demonstrably I phone, And

X% cases their We’re XX%, XX%, it could be a or below XX%, ours. above not some XXX% or be XXX% cases talking might many XX%, in price

we And that’s are, independence prices so to I don’t on that are even that were lower they so much haven’t below think put going us. more to – our than we the their which prices that we seen, if pressure

Haskett. Chuck Thank Instructions] from you. Gordon Thank you. of Grom next [Operator question The comes

to several warehousing there, some by the transactions timing this sneaking of country doing to over so price wondering month particularly by And going try then seen us you more in during months. I’m for also there’s quarter region, Wondering these has if could performance parts For past any and share quarter too. date. to differences the compression if the of

part the up. is the take first Bryan I’ll part while looking transaction

the the pressure which seeing we’re seeing is So significant West, the more where challenges. the housing more yes, challenges we’re same on

less good news mature is we’re think I West. the the us for in

to and we’ve the but Our little bit be good got a – market awareness they’re younger, tend gaining the so share. West, still stores density in a gaining

trajectory the of So hopefully been the there’s six that definitely last But that over a helps offset in bit West a softness. little change in months.

March. was down X the Yes. February January, X the down And seven if negative down comp, nine it thinking transaction in XX, nine, eight, trend, in about was you’re down and quarter XX, so in

deviate didn’t really kind So moved that much of we throughout. as

well was just a year, average square lapping bit being per last change down us little as So higher point, Tom’s from ticket due to retail as the to footage transaction.

comes Karen on Short Thank you. from question Credit The next Suisse.

much. very thanks Hey,

two a questions. couple, Just quick

comment the actually the a you Pros, that respect had that I to deteriorated. you Pro So think backlog made with thought

I is, down, And more not clarify come that. just clarify actually had of saying the I second seems down talked So think to wanted prices about it I kind prior you’re so that. prices. commodity what wanted come quarters And to just like you question – then to in likely I today, maybe that’s just you’re bring when

in at take well. as and a I’ll and Bryan that stab weigh then Yes, Tom can

XXXX. are or back in but your a a that back three the a up time you give two statement, measurement, our installed. yes, you agree you seeing so And if that, Pros, so is there time quote, to high want I within they’re after have lot house that generalized weeks once going you you do a this Pro substantial Pros. within week, for with of were of sort we think them assuming then a a period a spent revert we strong opened generally to can of after the quote agree of have half such of the you them them to come with to to of bit they in mean, to a We backlogs and amount can On have second long a and

they’re makes kinds XX%, sense to probably work. what talked and they’re XX% over that house piece to biggest is total, look they’re you every XX%, business new when on last close of has In piece. doing several down Pros it months. busy. flipper taking slowed sales got The remodels, the home And the X,XXX us of construction, existing is being the at plenty of They’ve they’re we our telling

of many slowed times, Pro the flipping pricing as piece is that competition. That’s we’ve the business versus prices said a I say our been the big front I has house would couple think just And the not again, I going on are good items as mean on. as as they’ve

in think or I seen have cases prices thoughtful We competition lowered our our have prices. year competition we lower in prices lowered we been versus this some year. and have this and But prices maintaining we’ve improving

question from Seth Sigman next The you. Thank comes Barclays. of

how we the for year? your do should expense how anything little this store on build there full specifically one related about think planned should pretty which think I about just just a store. be we we timing recall of per the X% so comps If level? above what that bit do SG&A OpEx, I’m focus lower I sure Is you in up had you about? average in implied thinking rest year to was if wanted had at levers for also off that’s stay I And guys, outlook, out the volume guidance. Hey or the

Yes.

I’ll Hey, Bryan. take that. Yes. ahead go and is this

at sales. XX.X% came of So in we

year. I the think XX% to for we got it

and as so steady throughout pretty kind be each of about XX% going to going you quarter. it’s year And across that expectation our is for think the – XX%

what you way best to that. per basis, clarify well. of I that’s just So can too. And as that’s that on a guided kind of help model store we And that Yes. kind

due last up slightly that majority to and is versus just is So year, of it depreciation.

McShane Kate Thank question from Sachs. comes Goldman next The of you.

inventory accelerating I you good it are Hi, I to? you assume if the the wondered given dimensionalize year and competitive chain taken just seeing from that you afternoon. probably imagine just in standpoint, there this and comparing for share last saw challenges what Tom, good what was should gain how gains gain share could we things you I Thanks any for further. trends supply were what question. share year. XXXX? But this – some disruption, mentioned that a know our but should taking expect versus year, you’re would you

better. I I’ll modestly start mean,

of taking think a I share. amount good we’re

I a environment. independence think the time have difficult navigating in this

people are value. think looking for I

low cost We leader. are the

the best. that are are our bringing think stores. I prices into Our doing And that’s flooring jobs people

sales So share of And their it’s it’s little did I Mohawk in we’re their North soft – just and when look, surface think significant independence of there’s you now is ability to because of Mohawk talked the nature and seeing. pretty call, versus sales, if a we’re macro take in over what XX% were some call, American kind North their our down what that. American this environment that about

quarter. in So our hard a surface, total all up X% it’s sales but were not

Yes.

one And not which our the that, the rate they’re other market versus of credit of when we as same U.S. relative people are. what look from the specialty card well. of market you market their industry, credit that business a from saw the that, buying to you they look share they the growth share XXXX, since portion market If at card basis had showing other the show flooring at substantial issuers of gain that the over at for some provide we’d largest in people and we points business, insights had growing their XXX that at least own

shows in in the – ways gaining share all three the it market So we this triangulate environment. we’re cases,

Jonathan from Matuszewski Jefferies. Thank comes you. The next of question

Thanks Good my question. taking Great. afternoon. for

so XQ. And this year? up much. gross into Is like to now throughout we anticipated helping in margin a the better trade continue gross SKUs this sounds factored the Thanks dynamic been dynamic guidance? as while move margin continued to has for that invest So basically is

Hi, this is Ersan.

Our approach balanced the even trend we that see going of retail our point. year-over-year. improve took we – the continue can did [indiscernible] And as to a better at shopping so continue. portfolio customers we approach based we the when the better for we to ambitious experience We have this penetration reductions,

in I they’re when if what a think do buy want. home, consumer to the to is going their they job going

they think buy in but what that job, I and opting if tend and consumers the want going they better to doing coming buy, they’re towards best. they’re and gravitate to are So less the the to

outstanding have go. continuing merchants to job Our done an

know never for this this stop products on be that for game, macro, never is bringing in We the new doing we is but in product other we’re a side of ready We this difficult line time, long reviews. moment it. a we’ll stop the playing

So to that’s continue – I and and continue expect trends and assumptions. into to those those margin help should our to

Thank you. The next question Justin Kleber comes from Baird. of

the everyone. afternoon, Good Yes. taking question. Thanks for

March, follow-up another think Because clear seeing are wasn’t on I already you How right? are that reductions. rolled want Tom, the here from to that prices? there. Just or me, have transactions you said, So to you lower customers to back happen? just it price much some you. in the expecting clarification prices just April decelerated you And respond Thank

expectations. so we’ve – and understand to with in early too price in the flat It’s taken. were April changes Transactions line to our elasticity

on where price you’ll as is here. stores, low And the time want we’ve cost the prices of stay there’s the to for that previous signing expectation since into call, taken I first the we been go I the you the stores We part leader. – see to If in mentioned mean, I’ve down. took our

chain took to pass supply chain the run. their partners we want to of The costs be partners we’re have We supply long prices, felt need We the some down. customers. way we costs and to other back in gone their that that our professional coming to were

pass and benefits along of maintained to the what the down. felt we it we’re our We’ve too as we the of be for to we’ll said remainder prudent. it. thoughtful going in taking prices It’s early spread was So I tell the year. earlier, watch elasticity while But

Thank next of Wedbush Basham Seth you. from Securities. comes The question

for Nathan Seth. our is and on questions to there, Hi Friedman Thanks here. this two I’ll taking squeeze try for in

First, come should material in costs times is of vendor your we gross margin this significantly? now of start renew freight freight as have be that some to Or down contracts, not a as contemplating some benefit you benefits past?

then issue of regarding read a with an the be regulatory of given secondly, we’ve as was Act. in Asia, Labor but chain not requiring out Forced it about some it may as Protection as past being of changes proof Asia the part And navigation compliance imports large supply of U.S. from interrupted

question there’s Thank very or you’re gains if be if any contemplating as or this curious that seeing some there – further others considering is is my helping we you So if should impact struggle. you just much. share

those answer both So I’ll real of Bryan. you to This is try for quick.

perspective, costing in cost weighted a just from keep a So we’re that average mind system. on

that in a from basis basis year supply here in the So of give favorable that of what and the kind so impact year, those QX from throughout chain have been back have or contract consumers. some early bleed part of to us will the we’ve of gotten in that’s all throughout allows contemplated cash to a to optionality that and QX our

question in been business. your our contemplated So stuff no for that continue date, throughout that action the savings expect is impacted we have far there the second to Uyghur as receive have year. there to and With compliance do and that to as

disruptions we’re with material map expand respond to to on their customs being bit, just continuing that U.S. when our on little to monitor so to and sourcing And focused or needed. by chains, prevent working suppliers if their supply prepared

comes of Morgan. you. Thank next Chris Horvers The question from JP

Thanks. increase the seen represent a you you’ve that think since is terms from would think XXXX, about project, of laying perspective? maybe of about you went size back If headwind did My Good question the only more guidance comp a in what average average down out? to as pre-COVID footage evening, how guys. we that that

that’s a not sure. other, to mean, each I’m Chris, really question at we’re understand. I Yes, looking

pre-COVID of our I than would there’s a pre-COVID that square number. is have that think front say date average I better in don’t it today. was I but probably me, foot

you come say it’s different, way wouldn’t about foot bit that talk projects they X transaction. times, that of and our little come would as look transaction the at they less. do But think on for slightly once times, in tough foot a square we as we basis it times. together? a I say So but because down when is slightly, is Or per materially a to in kind well per It’s us, it’s that X X do about on as square it Chris, I project bundle tend

basis so a wouldn’t I And project from I materially bit little see is on pre-COVID, but less. it a that say down it’s

And there’s that too. other in complexities

of business Pro Our back probably was our then. sales XX%

are We Now it’s less goes it up it, over material XX% our at project tendering involved, design than the the when was business Pro designers know least as is well. much size now. our

than business it’s it’s fairly just So back different a it was – a then. now

you. Thank

Suzuki Your line of Liz final of America. question from the comes of Bank

in. squeezing you me Thank Great. for

I’m there in wondering units a whether fourth there down mentioned and was seeing you’re had about it the and I inventory, demand. on that you in So intentional some question like the and was just based from in just what destocking looked that quarter what quarter

were XXXX, I down X.X%. mean, look, from about down year-end units because you’re December we were Yes. from talking

it we going grow that will But grow line. mean year-over-year modestly at on rate will getting that we were of units rate, I yes, slower was some you us But down. it’s orders, suppression mean a the exit I slower for as sales. to in there putting was… just see that So than just year,

our And just in-stocks I would terrific. – say but our that

in-stocks our exactly. But

they’re and a terrific year than lot there are in-stocks ago. better were Our a

of are back to our most going And stores half. the in open

build as of that are in is well going and back back open XX% and opening stores that’s into the So get half you’re we the we XXXX, inventory as more in of see build up. to the early some as part half

Thank appreciate for you I’m look on Thanks everyone next updating I you. So going your to to call. questions. the quarter. forward the joining

Goodbye.

does that attending teleconference. gentlemen, lines. and Ladies disconnect sir. now may today’s you you, conclude your and for Thank Thank you