The Home Depot, Inc. (HD) 15 Nov 222022 Q3 Earnings call transcript

Greetings, and welcome to The Home Depot Third Quarter 2022 Earnings Conference Call. At this time all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabel Janci. ahead. go Please

and third Christine, everyone. to Welcome Thank XXXX good earnings Depot’s quarter call. Home you, morning,

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

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

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

me turn let Now, the call Ted. over to

$XX.X were quarter $X.XX X.X%. third U.S. average while our last Diluted fantastic from $X.XX continuing From period were share supply chain done in you in versus on Company period our year, tight positive comps our same the the last XX comps us third disruptions, of the currency. had Comp quarter up below per to joining has a up call Canada the third regions stores year, compared serving U.S. the inflation in of Company of The and global X.X% appreciate delivered our Sales local Isabel, job above team and sales were last to and while comps earnings We the customers you, a year. and morning. average, for everyone. Thank both posted the a geographical morning, Mexico good each X.X% year. this same billion, last perspective, quarter from market. navigate positive labor

This hurricane quarter another marked active also season.

As by always Hurricanes incredible both Fiona suppliers associates do, supporting in be our our to these they the and thoughts and Ian job storms. of those did impacted continue and with those path an

quarter in home demand reflect Our projects. solid results for improvement continued the

and as the While we of did products categories, strong certain detail, project Jeff business will across see most remains some in deceleration departments. our

saw year-over-year also growth in and We Pro our the customers with quarter. DIY both,

customer very We environment. we While our forward. our well macroeconomic can’t are consumer backdrop the going evolving will and navigating business impact predict remains performed a the how resilient, unique

leverage our across and strong, growth However, believe remains in for the to believe to positioned we in trends distinct we and closely long-term demand effectively uncertainties, are continue have team and on to elasticities home advantages well we our capitalize we business any experience monitor Despite the and of compelling improvement near-term our environment. underpinnings to the space. competitive manage tools, opportunities

both, are our we on We and in as continue the seeing our traction to momentum business are customers. with interconnected our pleased build DIY with we Pro

greater in example, functionality app, engagement. our Home and capabilities For we have as see Depot better we

improved In for connect products Pro online attributable and last navigate translate versus active which growth is our in to fact, seen growth experience makes program, to provided the friction new we easier. year. have our world world. made, the navigating as users the program strong including and monthly with the they double-digit interacting seamless an physical of less our customers military year, and store several enhancements The a of much enhancements feature, store the These have for loyalty launch the mode throughout connectivity to we we’ve digital

remain also focused associate improvement to in customer within experience. and driving store continuous both We walls productivity on enhance the the of our four

The the tool new in-aisle on By We operations, enhance low availability currently key customer highest associates Sidekick, real will called out value to a mobile and our designed to in-store on-shelf the launching tool direct can is which direct bays associate exist. productivity tasking both, or tasks to devices time. application are associates in we our is generate experience. to where an simplifying

experience focused online For fulfillment, engagement as a to other we remain these enhanced in with business as customer, including capabilities, of management deeper customers. the investing well Pro more tools on ecosystem personalized an drive

onboarding are their we also focused shopping experience, are more run our help capabilities we the Pros on While removing businesses efficiently. to from friction

Our Path Pros is that tell It all is platform members. Pro finding that cost at extra their pain This skilled we Pros to contains available and To professionals. announced in our candidates begun to trades qualified thousands already hiring labor jobs. connecting have no business. recently Pro us and point a proprietary of end, skilled with trades their people posting unique open platform,

job to them on me Our turn to throughout hard our customers work. dedication the to like is and value most team our important, merchants, associates that, store for quarter. and and supplier chain Jeff. and and over thanking service did by an teams, their customers, teams I’d remains what supply delivering the call With partners our close outstanding MET focused let

communities. of I Ted, supplier all for serving and start want to to you, thanking morning, and good also their customers ongoing commitment Thank by partners our associates everyone. our and

continued the third improvement teams and heard and our demand home from you execution to supplier see partners. As during quarter, strong projects solid for we Ted, from

average. merchandising lumber, the hardware Company the indoor garden apartments performance but appliances, company quarter: XX of the of comps. materials, during posted and XX above other Turning our our third with comps to had positive, average. the paint comp departments flooring plumbing, All positive Build exception were below millwork, and

during comp was positively driven across ticket ticket from average points commodity inflation our third by up well lumber in ticket compared those core big a as quarter, fittings strength our and many copper. ticket driven product were our growth of growth approximately as and average new transactions like across basis and impacted build categories categories over comp Inflation innovative Big pipe $X,XXX primarily We the the by for transactions and the or gypsum. products. fasteners, third categories in quarter, materials, X.X%. saw our XXX to comp During by comp increased demand The XX.X% X.X% year. third and average decreased inflation last quarter ticket Pro-heavy

and were both growth During Pro positive, outpacing DIY. quarter, the DIY sales third with Pro

are the by with DIY and encouraged momentum both customers. Pro our seeing we We’re continued

tell In strong. Pros their remain us addition, backlogs our

plumbing, During and hubs the in can of millwork as in the and and categories as well showers be business fencing, double-digit departments project our quarter, fittings, and remained cabinets. performance build like siding, boxes This materials, comp our other healthy. conduit lumber seen

Pro resonating We important multitude we the with across are about serve addressable momentum our product space. continue strong billion encouraged customer. and feel $XXX we with our by capabilities. enhanced through repair-remodel unique larger medium also To a in share are continue These the and our ability We We’re of removing building to this confident to that continue that ecosystem we double-digit see Pro, a believe post Pro to customers. large it’s a comps. the interconnected to gain increase will grow that ecosystem Pros offerings friction Pro to investments Pro share

more the an experience. now have customer has of managed know, we year. of of a We by we’ve friction metrics you improved achieved XXXX points increased to XXX% meaningfully shopping in to the was and and last example through own appliance satisfaction And third been milestone. of on our from have operations. important the appliance the this delivery journey of increased to remove deliveries have December quarter, significantly As great experience. X interconnected announcement A quarter end-to-end. market in delivery our customer delivery complete On-time our approximately volume percentage our compared This third

company to sales. Turning online total

We driven platforms to continued by are XX% assets. Sales of digital our our increased with which our quarter last our third performance investments, year. of leveraging digital with are very was This customers. nearly pleased compared the resonating the

fulfillment For during improved capabilities, quarter, drove times conversion. example, across different which the lead greater

with chose our power our of stores, online transact our through were For the to us retail interconnected approximately testament those fulfilled third a XX% the orders during of that quarter, online customers to strategy.

excited the season. We’re about holiday

add Halloween for hosted During to and in-store continue our not with as online, assortment. happier the our with quarter, customers results. Halloween our XXXX event to year we collection third and our exclusive their could both sales the be a record and program, unique was

fourth Friday As momentum and to holiday, the turn we our center events. gift our quarter, to continue Black annual this we with intend attention

to customers assortment we which holiday. sourced for for have had, teams our tree find easier most the Our makes have the artificial tree their it ever perfect compelling

agreement. free power, backed of for this be with holiday and great our brands assortment appliances, extraordinary in our happier of And with have featuring our by X we our In launched Oracle, couldn’t Earlier into exciting kit looks exclusive And Frigidaire. tools, fall, more center, we and next run also value. matter to continue X increased exceptional lifetime Samsung, X we RIDGID, terms program, RYOBI, on innovation kits lean RIDGID with that gift offers drill customers center, and In offering X lineup, In fuel our combination Milwaukee that tool, of in LG, Drive our XX-volt Husky tools and and are more. we our reflects MXX decorative customers. assortment combo GE for service and brushless our the Flash, most time and Makita, our with all DEWALT, industry-leading we the this Milwaukee, with have tools. gift generation safety functionality we features

with craft the exclusive a multiple have innovation including side-by-side LG ice-making. We and offers, great refrigerator ice,

we like extended prior are right the with the several years, that, we’ve call the turn brands, and over and weeks, Richard. great these experience. With well inventory to with right customer we believe to over I’d events positioned As a

billion, of and you, quarter, $XX.X Thank Jeff, last $X.X increase the an X.X% sales from morning, year. third total or billion were everyone. good In

margin the in X.X% August, positive our was positive October. and of last for from in In in October. positive X.X% year, basis, a quarter, were driven investments. X.X% X.X% Comps approximately August, During monthly decrease quarter, September XX XX%, our X.X% of third supply with in On gross comps X.X%, quarter, of in three-year U.S. in the were points consistent by third were basis across and X.X% a in with total quarter. primarily company positive comps the chain approximately the comps X.X% comps the September

We product while transportation cost maintaining advocate successfully position as significant for the value. and pressures customer’s continue offset to our

expense sales to of During quarter, a as decreased percent the XX.X%. operating third points basis XX

our in in reflected with efficiency expectations, performance as well investments store line as was expense our environment. to investments operating designed which Our wage continued planned drive

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

per of earnings an X.X% diluted XXXX. the compared quarter to for increase $X.XX, share Our the of third were quarter third

last times, third compared XXX end primarily product opened new strategic inflation $X.X was At million supply and down X.X quarter square billion global response one And up and to in third to inventories our year. of the quarter, the X,XXX. approximately decisions quarter, During store U.S. inventory stores, two the billion, times total growth to continued reflects were Inventory we XXXX. the from cost disruption. our feet. Retail in X.X Mexico, $XX.X chain turns were in three selling third count square bringing of the footage

capital allocation. of to investing excess and our Turning intent to repurchases. dividend, is it in our After share the to in return paying shareholders our business cash form

invested business from trailing million $X.X XX the our in share $X.X and $XXX we to down long-term quarter, billion Computed third expenditures. of capital XX.X% billion the shareholders returned form we in and of the during return equity invested average the was on for in repurchases. form we paid our approximately to approximately quarter dividends And XX.X%, approximately During capital of quarter, the months, back the and the into debt beginning of third on fiscal in XXXX. ending shareholders

on for I will Now, fiscal comment our guidance XXXX.

are with saw we guidance performance are from you the very quarter. during As solid Today, Ted, for pleased the we third we XXXX. reaffirming our heard

We expect for X% of sales growth comp XXXX. approximately fiscal

be to quarter. sales positive expect We the fourth comp for

to approximately fiscal year. diluted expect fiscal We for the mid-single-digit XX.X% per percentage we share our XXXX And operating be XXXX. growth expect compared margin to earnings in

cross-currents. we environment find with a year, said the many ourselves throughout unique As we’ve in

in date, conditions, operating growing will of flexibility broad-based moderate to and against inflationary the managing four intended resilient. are through we policy our proven monetary exceptional demand. dynamic environment, with To a confident a faster to that global our all in We chain decades We shifts backdrop through while constrained not supply market than shareholder manage value. has customer continue feel delivering environment seen while

for XX, City. the an call York XXXX to are will that June be opening questions, Before we pleased holding on investor conference New announce in we

for more We in near please but Thank we your will the details future, now, the participation And questions. are for in for date. call. share you now ready today’s hold Christine,

you. Instructions] Our Michael first the Lasser comes question UBS. of from Thank line [Operator with

the Home impact control, of heavily market sentiment right taking ultimate a my now home The Thanks focused demand. housing are stock of Depot’s around that the question. for improvement morning. lot on factors the its narrative like is Good and state on so and your out

So, X%, And of If for initiative Home it, a current home if of state earnings share, could of only you was scenario. the next such to your coupled structure example, you were with is environment, demand, your that in you of gain and have can you’d improvement only flexibility call X%? that stock, you could down help back year, buy down, the cost comps your control? basis market of grow affords points sort in a given be that with X% your that actually in that frame lot couple hundred capitalization down is Depot what your

improvement. job, $XX We business. another They customer, strong our mean, and good we’ve quarter business seen think to home And about for lot of Michael, in last year. reaffirmed home is into have won’t equity. the that core three A you customer billion And a for a if healthy. we’d From we mean, remember, we the good, heard but get this look very there guidance our and just and growing customer Thanks tends share and There quarters I question. of this reported taking is sheets. noise a way a lay the the can out and just forward feel step detail before, you’ve Hey. but assure of it. around we Michael. to I environment. home minute some see the our their strong increased our still I own Good that housing morning, two still any environment specifics in have year. wages, our balance grown lot back I

However, his is all cetera. and as and unique inflation of resilient remained Richard rates, said et given interest in our it has prepared a environment, But rising notes, engaged. customer I mean cross-currents, lots that,

Pro very quarter. customers in strong. demand, we past As DIY this our is Project said, both again grew in particular, and

Pro are indicate lots healthy. Our Pro are home. intercepts strong customers Customers still sales with backlogs spending time and at our are their still that our very of

they were at days than more they’re And These XX% work to pandemic. back pre week. We’re not all five age. homes worth continue a

is throughout people into we’re would a a inflation. been going certain of price get sensitivity difficult did to they raised some as general? stronger Now, with that thought and in Do are wasn’t be projects? values up a categories guidance mean, Is still that’s in questions there we we thought some back inflation? but as the a housing the than basis. down certain And Is two-year cause. pandemic, that’s other have I’m and deceleration to root products during I meaningfully bit, a housing We consumer sure the why some may be. year initially categories. it we’ll reaction that again, or strong see this pulling we price to have certain it on in go to get bought categories transactions on forward pull have so Our much moving at

fourth that lowest However, we tougher implies from year, our positive year. QX guidance will the albeit and for last comps be have quarter comps the

as and I any strategy, operating in environment. team, a as we take consumer each may I backdrop, the some to the still continue we we’ll in all Pro with comments, housing, of that of of the housing, the in homes initiatives strong And my share have there that with mean, So, to believe is said of while these housing backdrop aging quarters in shortage the our of of next be feel term. the we medium country and for long this space incredibly cross-currents fundamental in the the our in

Home a That’s especially one might very experienced prelude be helpful be some from that framework. some of But could pronounced fades. year that in of this inflation deceleration seeing, into what to ‘XX, of the the that a might deceleration that the as Depot material more you’re benefit light has assume

best more negative? for comp in our expectations it about recalibrate just it’s slightly Home XXXX a the Depot, model is to if and and So, think even negative

be? everyone might about what incredibly earnings certainly any in talk wrestling we’ll take we’re actions the Are factors Those control, that February. our and on call out going an and Again, a we’re bullish. can focused things Fed we fourth are delighting after to that rolling Well, us recession? are ‘XX to our share strategies, quarter But ultimately deep in with how environment. remain our so, we our outside all taking If control. customers opinion. has There of

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

on Focusing housing.

we’re our or than because spending not made home So from and home, you if temporary it’s effect? lag your decouple your comps spending stacks. more in of suggesting are the or we’re that -- time our than maybe it’s that I home? Ted, and these equity, in sales case assume just Is maybe housing longer just metrics temporary because time metrics. lag is more I are lags quicker know decelerating don’t much this you or this a comp other

Richard. it’s Simeon, So,

a time. we begin steady, we on backdrop, maybe and became the further also long and of last home ran some to as But is talked we’ve call price to what harder. view, that part lot prices that become made home has decade appreciation, prices discovery, little it, points home demand, bit improvement and price a -- sort think, our I’d always into to appreciation middle change call a driven really of price in it, more put home of Ted’s the home for you even, was -- Just

to your lag that sort the from points call, all us of perspective. important. to there’s effect we periods? that there XXXX, or period is so, here you number going ‘XX, many anchored lags are a I think and appreciated what question holds decade. Are is just price hypothesis of home been, an we And many in XXXX. so there know that one, is the are observed folks And there multiple all yes. when somewhat and I intuitive always on that almost were And has you what the a is -- specific think last XXXX spending? to over saw think I of in true that spend That’s And But halo another are our in fact, in during we this

a mortgages. were have You homeowners their on where XX% of situation underwater

we sales a You that in driven by saw acceleration comp had relationship foreclosures. really our in

depreciation When millions in home years. single that discovery look I the last -- a and have the We of were newspaper XXXX. price -- XX% as a single period that three Ted price was There it at every appreciation sorry, sellers So, day in price the talking wasn’t situation on essentially year-over-year that to said, creating forced we now, you’re XXXX discovery. the price had home correction over of digits. front of were about price we massive not of

are up if are people a is In I and you XX%. decelerating. It one. for, observers, there think correction, year-over-year to ask think fact, But listen are prices December, prices X%. most you or home Since -- if I up home calling is a modest most

balance actually second, Ted said, quite will is from perspective. sheet question enough And as a discovery a is, homeowner, my that price behavior? to Because price well So, you’ve if meaningful depreciation how occur? change spending then folks’ you’re the done

the You dynamic just another a with interesting bank. And becoming and mortgage a then, stay our likely place and rates in seeing in you cash is to likely job, likely project, place. customer we’re more so have in improved begin increasing, have where more

to over in mortgages And health so sort back the the just back of going ago, back a underwater of were homeowner then. of decade XX%

standing look X%. mortgages have owner-occupied those stock housing Of credit of U.S. mortgage, no fixed rate in at the the of do owned mortgages rate, XX% households, fixed are outright, the the those Of of now. XX% XX% mortgage. that are Let’s are below XX% a

telling are and seeing place what that’s dynamic them. and a Pros stay And now customers So, are us, are that’s improve telling your we the are what telling customers in of their our home. us

maybe your forecast it easy be inflation. very of shouldn’t That’s disinflation? follow-up going at to could of Can it your mix percentage helpful. A to aren’t risk you Or be on another what XXX be sales Is parts variable frame from product some vulnerable? XXX? because

It’s Jeff Kinnaird.

We’re very watching inflation carefully.

good We experiencing seen some which months, is our inflation call But lumber the we categories. in broadly, the for in still recent are I’ll market. inflation deceleration some some in it consumers. specific have

in We weeks. a deflationary the recent have lumber seen over market

a quarter in I that days lumber was out at the we’re seen industry impact inflation lot But in it from prior of for looking we’ve quarter. the two early fact, years. an carefully. the more did stabilization in versus call of that representative In

managing category by We’re category.

in closely suppliers working We’re cost components. our managing of terms with cost and

all cost of And all components very good managing we virtually that closely. We understanding we’re of very and products it have sell. deep a again,

the Our with line next from Chris of JP Horvers question Morgan. comes

but it’s future guess, incrementally categories in is to uncertainty business to the maybe what you affect or Fed’s rate more it’s more it’s dramatic today, I comments So, not and raising more of that become seeing potentially? are you’re the your cautious the the because slowing maybe volatile certain going summarize

I think yes, -- fair a Chris. That’s representation, that’s

down? DIY watching? Are I -- KPIs slowing? so then, your seems maybe over you Are of trends It guess, unit any consumer, And months the best Okay. driving of like concerning are of of adding project seeing are the sort categories. what some is trade business specifically you talk couple from inflation And you’re that project in you past can seeing the caution? element you? of about the categories you is more the volatility commodity that seeing I some guess,

I imagine, you Well, at demand. -- as we healthiest every the et can and see nature and we the business look data would the and thing healthiest is The say by set about geography cetera. thing the project of that category,

and Jeff household are demand all project-oriented of We and that out it a the consumers, demand called the categories strong. business project each versus with that both customers, incredibly the that our is look consumer. and driving we Pro remains at with remains Pros that project And strong Pro

and there these caution the those more We’ve categories, some And to definitely some into boil. home reaction whole certain and appliance lot inflation. of of it purchased forward? to price what’s little a Those off Some on three or moved the was as a is they’ve of good about is harder categories tease out. it has Is finally and or pull last everyone grills. -- sensitivity years, project in items? come again, talked have a improvement, the again, That’s

in a point. Here’s case

the strongest big our grills of at garden are one patio, business, might I that we categories, Grills and had remember. look you patio. say, indoor down. was more patio quarters can two But You discretionary

cautious. we’re are mixed that’s our some definitely and there definitely signals. So, It’s why got attention,

do that shopping Obviously, month guess lot you incredibly guess I strong the we’ve an just three-year was just just early you year thinking the consistent year. into the last October impact maybe trends -- about last are up, is an election and following the it consumer is about had in over holiday a the heard think And talked November? how -- I month. business And was then the and about today season? season has To on holiday extent you normalizing. positioning overall, what the

see XXXX trend. the the some concerns retail. we shortages to seen in pull in we’ve years, across supply chain-driven of consumer In normalization Look, back last of couple forward of terms

return potentially to see the the back just holiday we consumer. So, more normal do by spend

Black As in we’re gift I and center, Black decorative the our very prepared assortments, good commented our overall we about holiday remarks, about our excited season. our feel Friday, Friday

And numbers have front the of Chris, in just you don’t case cadence. called out you in monthly you,

So also X-year the were really, X-year just months, a across not consistent but so our comps a basis.

keeping X, sequentially. X, last X comps August, year’s X Just and in in September and that mind X October were X

look a you of X- smoothing you quite at much. or tell basis, months X-year out, don’t maybe some that X-year the So, as if

Our next with question Steven Zaccone from comes the line of Citi.

end the on follow the Chris’s out from in To thus results. hurricane up been maybe to commentary spend the there has recovery recent quarter call Congrats XQ? on performance, strong impact any the about of third the and far

It was relatively minimal.

a quarter. think year. about we had mind, in from million this $XXX amount impact we So, overlapping from keep were hurricanes we similar But last

associates. And are minds health of our customers So, our now. these and our What hurricanes and the is hearts them and storm impacts extend across quarters. certainly right and we’re more with about concerned safety

on if line the not growth to a I given A were sales a lot in to opportunity But target an can around discussion weaken rate but margin margin, the of gross is help chain rate I for know wanted there’s focus gross future? the on margin to outlook I top margin. guess, you place uncertainty, improvement as levers us basis. supply the through housing specific multiyear protect to there costs think in ease?

look at as a Steven. quarter-on-quarter. closely, outs lot We when margin to ins it forward. look managing we it comes and We’re There’s margin of

the and the and people as we look, else -- think costs than add to the manage pricing experience above we well that. have that I’d just here. We anyone tools We’ve proven

look the mix our value in chain. right, And proof is years, disruption, pudding been Over history. in there’s think the yes, the our at last back a three when I you

comes with Our of Truist. the question from Scot next line Ciccarelli

more of happening So, lot there’s you guys of are to what’s uncertainty everyone understands have around you stage? But that relationships because business potential roll growth broader here as more ‘XX will with given I think out home interest improvement the we about obviously thinking at still and how guys infrastructure some environment Pro a kind rates. the large prospects the

we capabilities, large exciting And And identified share actually larger to team addressable Thanks set out do a wallet I’ve right a and customers, what the needed been we for more your always could we share engagement more Pro here, capability an repair known $XXX of we’re may that introduce now incrementality need billion XX build great. these with that wallet and capabilities insight a couldn’t the Scot. be share years, as of of them are with what’s the more that little Hector, out Pro. to is so to get or growth as get remodeler. And of and we’ve we’ve what question, know, Hector be understanding to deliver large as to market. of seeing you would excited Actually what And we capture wallet to of Pro. that his take off. building the us give building the with sales over

to outside to our the we enable and customers -- expansion continue response of ecosystem. super sales Scot, excited from about Yes. be the Very just continue excited our those resources as of capabilities growth about are friction driving. Pros our to remove we from the

on for our continue but around response our removing excited more the platform super we engaging grow to not with And digital just stores grow, in or just platform, whether as associates, Pros. it’s purchase. our friction. the BXB, in-store customers be more continue they’re of We’re and seeing direct we our engaging unplanned platform, we to are about other capabilities, those sales digital outsized just in with sales And that also

more We the continue are from our and and channels, friction removing customers with to different us engage all more.

potential what to conceptually get think is of us revenue or these way potentially ramp kind there a about as size at least out? for capabilities filled the Is to

As Ted excited. we’re said,

reasons the so a excited fragmented because a such such it’s of of fragmented One suppliers. market we’re market,

And so, the to is we tremendous part the it’s is opportunity of hard size. just excitement think and and exciting

the the team ones meaningfully I of and don’t our we yet are grew But fastest the this say, And yet. grew these large numbers, again consumer out developing, growing with Pro can engaging and Pro mean, Hector Pro, faster than are who I each what consumer. but and quarter, break the are again

comes question Chuck next of Haskett. with line the Our Gordon from Grom

could X%. customer a Overall was you over DIY down the for across us transaction I that and wondering is Pro if pack little base.

was if that but break again, Pro. the the know don’t large out, strongest, we I

All Okay. right.

it, I’d our Pros maybe is across say too, assortment. way mean, to Look, our shop the -- I put

going speaking. you’re transaction sort across that of said Pro. generally strength is business, ticket see So the with dynamics, similar to as But, the

the the as moderate Okay, on likely Do or are you a hold think cost to you you dollars? environment? front, as pressure pricing start to are and on ease, to prices how about gross start think and to try result, makes lower retain and you prices margin And sense. to do same the as peers that costs then likely you maintain to margin costs profit

very this watch we Chuck, closely.

competitors it garden We across are more We that say very up for We business. closely. advocate up see see that has could enormous that and innovation. value trade to the watch We see We we and still our in to see multiple categories. market our great in great the innovation to willingness the outdoor I customer’s category. more been an tool innovative will and for and products. value, that there trading shift

But -- it’s easing. and on the Chuck, side, definitely cost

you from last a years. during Lumber X So, look row. in to peaking commodities, three these to down commodities months nearly particular, have from X, down at now $X,XXX under is been peak at way obviously in current $XXX

across see store. still inflation the we However,

be in inflationary some while certain So down is categories pressures our continue net XXXX. with point and cost will retails, costs forecast that into at coming this

with the comes Brian from line of Nagel Oppenheimer. question Our next

my maybe bit remarkable strategically a regard has inflation. inflation, kind done So, -- that passing what Home as little mean, I a I to question, with now job along ask while want we’ve Depot of seen differently. to first for a I question, think But Chuck’s

of of a elasticity So are now down, type doesn’t you some few that Ted, type inflationary see mentioned question demand environment? expect you and guess, the I would you’ve pricing times go is, pressures would you’re to that pressures necessarily meaning ease, have pick that even as seeing starting ease. or in demand you up I see inflationary some if unit slowly

be Well, It’s determined. elasticities hey, weren’t moderation, also likely if and say, not will. would the question, to could it’s you a as be up, on you on great they the if sensitive

lumber, started weekly, as And high-XXXs, Jeff two there on market up of we more saw over response classic work as that even to again. team less when we grills to and so though, price much or years. our broadly, think each other two get copper points there been $XXX, drop pricing price to wire, On classic a grills. a Jeff low-XXXs we years. And each saw up reaction certain commodities, bring year to we’re the the wasn’t With down has Across see where mentioned why off or sharp unit some productivity. the board, plastic you That’s price grills much some I engagement. in there’s this, I categories. and has have categories, when forecast with -- the the more and those been hate and dramatic the we beaten past across those prices expectation expected flat more innovation saw sensitivity last you low-XXXs, unit productivity. and a But a

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great our every a across it’s and what categories, managing job think do merchant that’s So, Brian, I a and mix, teams the Jeff such day.

the any gave just specific That’s comps but it. quick trend reiteration through of for us very QX? of Richard, you into more the obviously, the my just cadence like on the commentary we guidance, saw a and Got business of helpful. then here quarter, follow-up one, And

two of expect we to weeks as the positive comps quarter. first in XXXX said, Nothing guidance. the in be And QX view our changes we on

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

DIY DIY it the is of the on year, you in think ahead, first back the half on the or there and this And a improved customer basis your three-year and about category conditions one- pull projects? outperforms trade housing As quarter? scenario a as well-documented DIY about maybe challenges specifically think bigger customers customers behavior your fair to Pro that you consumer tighter say where and in down economic is as

you to to repeat the of second Zack, question. have I may part the get

the the business first the effect part with of in our we question, refer as what some through On had look, QX, always year. we’re we really bathtub respects. to consumer pleased

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as scenario there where Pro down outperforms bigger Is a or pull customers projects? DIY Yes. on back trade

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it. this not sure asked answered someone -- question I’m we before, And we

seeing We are not trade down.

example, grill or ultimately they that down. bought you people traded If take not appliance it’s my and

have I few do again, purchased people they’re years. the And when already think, in purchase, past buying people innovation. that it’s

respond. Our incredibly strong traeger is bring they business, for as out customers innovation, example,

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can. market back any and the three But of happened obviously all And There’s the from more these I than we think gosh, here, you normalize about that this pretty answer than all that what’s questions if look when segment. years, you’d wow, on back incredible digest better a last all in and can’t you we that’s recession say, overall of goes great. my the customer. what of industry dynamic opening health comments level engagement to and is the this

Our the D.A. next Davidson. line from with question comes Baker Mike of

business. -- gave improving the appreciate such the color your job fourth great on But you outlook. quarter you’ve a I holiday done

to this make occurring by done talk you for fact, last in quarter be quarter Can you’ve about fourth the that your the quarter better years, of such tougher quarter year? In XX has might third that’s your XX And definition, a comp bigger than what different comp. fourth on why comparisons. you? been And

Mike, great decorative of and in the And customers. for that for the We’ve it’s again our the quarter. have exceptional we holiday. value -- in years, fourth we’ve are category, built had past Jeff. involution we advocate Yes, an backs we’ve business great on the value and customer’s

Home Second, Milwaukee and Pro we’ve MXX And built been drill/driver the kit, The gift to that combo innovation innovation a the the And earlier enormous is that appliances. an Appliances category as exceptional, to at an at our is business then the our look consumer, I earlier. rate. of built we’ve about It’s for it’s Ted delivering incredible you just Depot. our gifting to category we’re spoke exceptional. centers. in talked

We’re investing in terms of capabilities delivery. in I earlier, like spoke

Then, terms projects in ready review smaller home We quarter. project. also investing holidays. is lot a project then say, see around storage. customers’ online. getting a The for in and for we’re organization. a purchase in fourth capabilities, eating, I’d of the a great time Storage dot-com their finally, fourth consumers doing And great of We’re quarter building and I’d and our say the to willingness business

called gain event. out We the the when on And storage storage we QX. finally, we’ve an across -- the for customer’s value it comes in incredible then built this business. performance have And dot-com an incredible to We advocate business. is

our big expecting to President around our Cyber part app our performance. do comments I’ve Broggi a of that you got a Monday of and Jordan digital app? Jordan, couple great make QX want with here, We’re a performance, of the is online.

in it average monthly about around talked experience we we’ve features X.X Store, We improvements talked coming is experience We Yes. and I growth the about our It’s connectivity. at users, the well, mean, checkout traffic. lot in-store strong mean in really our talked and love mode. We’ve the I with got fastest-growing it’s the A App our some for We Ted downloads Jeff. all about ratings in-store but Yes, our Apple, store in performance Google, And MAUs, X.X see experience. in We with online the military. about. called as of we property. on love it’s front, loyalty. sure. Thanks, what double-digit made. customers Pro numbers out out respond.

We’re app. sales of got We be dollars the more billions couldn’t excited. through of

more Great. If I ask one follow-up. could

how bit slow about Your of think quarter. maybe costs, we should that forward? buybacks buyback a Thanks. borrowing or higher Is did function going this little a

capital don’t to a cadence year. that will just We buybacks, investment of and sort reflect and think the smooth about we year of through buffer the working ascribe necessarily a typically how cash throughout

into So, there’s read that. to really nothing

with Bellinger question Our from line Partners. David MKM comes next of the

mentioned some preceding So, the going back pretty are you it you gets that pretty items to ticket as of in discounts some of discretionary know weeks being category those and on it, much the seeing those higher comments. Halloween $XXX last items the, pace? We some faster call as Halloween. $XXX, items discretionary performing I well. saw more lower quarter, turning Are evidence and some at a

those of are off starting splurge quickly the that rest more indications any the to business? than So, items cool and

the assortment, trees, about assortment. I it’s value quarter, Halloween our across holiday If our We’ve feel fourth it’s to customers -- the really be if our if are commented for in we in Skelly, couldn’t it. exceptionally category. is marketplace. record included earlier, performance. to sales, well about great online consumers and infamous turn our had our in-store we the very excited the decorations, unmatched with got sellers we best we’re had reacting one as and decor we which it’s we And has the that in really good offer terms and lights, I the great of of value both innovation happier Halloween customers innovation And been our David, if

Got Skelly. have a it. I

elevated exactly like that’s of just the Dallas levels. the facilities more store that so customers? know you’re that is stores? inventory the I what in us aimed at much be not at Pro to inventory piece So, on level. looks the there is about. it’s number follow-up, a How talking Maybe in So, growth a of bit sitting to My that at

deceleration you growth too you’re at us that the unpack inventory Just the of just now with comfortable some this help and us seeing. especially much get number XX% aren’t point, on sitting

Supply we really growth the made to if is inflation inventory QX, facility our earlier reflect case, year-over-year. of year inventory investment land we in we one primary inventory that look to year-over-year. inventory QX from $XXX build factor In than year-over-year. decisions have grew QX, you actually, million the then, inventory position. in QX. the numbers just by One our But typically our about so this and Well, inventory And to down factors we QX. around dropped prior. of inventory the In in to to our to QX certainly we value. our And strategic just is give throughout part inventory some from look, actually that the And Chain as fantastic actually XX% you feel fact, came history, number and XX% In really,

healthy, is we’re happy position. and with inventory Our our

Christine, we have time question. for one more

will question come from Steven Forbes final of Our line the with Guggenheim.

I Maybe just the at excludes sales quarterly selected or release, a the follow-up Supply. focus look the on press If data, obviously HD performance.

like can if the of it some Ted, it overall curious, upside of asset driving expand performance the business. on performance in looks that to you backdrop as may the So be today’s

the they et best Steven, another are HD business Yes, hospitality, and housing and great quarter focused terrific quarter are running largest Yes. extended living, last the cetera. just MRO We multifamily thanks. team and and this mentioned O’Kelly doing job. a Supply. for Shane for his

sales our We the integrating customer on records tracking, chain. supply way now acquisition. financial work and the of or work are forces, -- and the made remain their integration well we they’re all starting of in is projections, ahead the integrating Their

acquisition So, happy about. that one has just been super we’re that a terrific

maybe Ted. a then just or And quick for Richard follow-up

remind today? reason then, spread between sales fourth think quarter? doesn’t current sort is look of Given year-to-date that to and that can the And of what sales into us you the any percentage comp the business growth, performance, hold net spread as sort we at the of on

happy it. break Supply we’re out. Well, with we so But said, HD don’t as Ted

they’re difference the or installed. sales POS, always gap just seen reflect sales there. sales reflects On from between as and we’ve the a delivered comp, comp actually It sales

We’ll comp will here but sales our the important higher year, be -- guide the probably there. to number going is that than a comp see through activity-based because guide, little around metric that’s You’re sales.

Janci, for comments. turn back would to Ms. floor over I now the you closing like to

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

conclude Ladies and gentlemen, today’s this teleconference. does

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