The Home Depot, Inc. (HD) 15 Aug 232024 Q2 Earnings call transcript

Greetings and welcome to The Home Depot Second Quarter 2023 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Isabel Janci. Please go ahead.

Thank you, Christine, and good morning, everyone. Depot's XXXX Home Call. The to Second Earnings Quarter Welcome

Campbell, Ted call President Vice Joining McPhail, of Executive Ann-Marie Financial and our and International are Stores President Vice Decker, and U.S. Merchandising; Vice Executive us on Richard Bastek, today Chair, Operations; President Billy and of Chief President Executive Officer. CEO;

your [Operator XXX-XXXX. questions. question department to limited to be our remarks, call the will please unable call, prepared the at are will and during Questions Instructions] investors. call Following get Relations we to be open for Investor If analysts our (XXX)

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

me turn let Now the call Ted. over to

second year. Diluted Comp to second share period as declined year. period the $X.XX were well last year. $X.XX earnings $XX.X quarter stores last also the second for billion, company and compared the for quarter from were the Isabel, X% Sales you, in X% the everyone. per same U.S. in Thank same morning, good the last quarter our down from as sales total

U.S. X comps low divisions in the All negative quarter. our single-digit of posted

weather in the relative normalized, Our narrowed Western as quarter. and spring-related sequential rebounded first significantly on our to categories division, particularly geographic basis variability a

outperformed big-ticket in to we While materials, building discretionary the performance was hardware there the plumbing, and pressure project-related in strength sales see and categories. slightly in certain DIY was continue Pro quarter customer. negative categories like second

are a they norms. elevated were suggest surveys ago, relative that are Pro backlogs healthy While they lower and to historical still than year

Additionally, projects generally scope. scale smaller in are and in these backlogs

with the particularly second projects, in with quarter, greater pleased home Billy were engagement improvement, will the which across we the consumers' detail. small In discuss

a forward, to Going agility operating as throughout with be evolving uncertain driving our efficiency and we to we also to respond continue focus and navigate continues the environment, unique dynamics business. as while productivity customer on

June, operate addition continue and to we growing share. we In as and our are we large market. remain market We capturing in fragmented and $XXX a mentioned billion-plus the positioned conference in addressable well to investor at believe business committed

acquisition beginning that track current the product acquisition, offering a Supply's I'm U.S. in located This pleased the Redi provider the Carpet, To first to extends record. end, of flooring proven MRO customer the XX strategically of with locations throughout HD vertical national with at closed which quarter, a announce multifamily our

what will associates most our team focus customers. and to on continue Our is important,

job outstanding supplier service hard store and supply throughout quarter, value and delivering chain to their thank for the to an merchants, work. like teams MET teams, customers and did our them Our dedication partners and I'd

of would Maui. the and to to our I prayers like close, send I Before thoughts people

must and in ahead. While stand help to we the we by heartbroken are on loss community we thankful accounted the that that days, now months are extreme are for, and devastation our navigate, the life and island people all the of years ready

turn to the call to And over I'd Billy. with like that,

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

in smaller-ticket increase as quarter, we an in Western country, and division, most the across notably second in projects. we our strength saw saw the In improved spring weather sales

saw addition, with XXXX discretionary-type we softness of continuation certain in trend a starting big-ticket In the purchases. quarter in we fiscal of observed the fourth

for X outdoor department XX tools quarter, our hardware, posted to and performance Turning of garden, the comp positive second plumbing, including comps, millwork. our merchandising building materials, departments

quarter, and comp positive comp second our decreased ticket average was the During slightly X%. transactions

comp lumber. commodities, for growth approximately several core and during commodity impacted the average average driven was primarily deflation Deflation Excluding products. inflation innovative quarter ticket well as by categories as negatively points second impacted basis XXX our categories by product by core in demand across new ticket from

a year During prices significant saw lumber to relative the ago. decline in second quarter, a we

the a to average, example, compared quarter was of on an representing $XXX of XX%. X,XXX in second XXXX, feet over board approximately decrease As framing lumber per approximately $XXX

or year. Turning our engagement leveraging to continue as customer approximately the increased majority from the quarter platforms interconnected compared total research, an remove project company support, physical We're blend customers second the in it us manner, across last excited through friction world. of and experience. engage platforms We our Sales with our fulfillment we inspiration and interconnected know digital vast of our our digital online about to customers X% the be transacting, to sales. whether

with the chose fulfilled online that second our stores. through to nearly half during were customers transact us orders those online our quarter, For of

second the outpaced Pro negative were During DIY quarter, and sales the slightly customer.

to a year across relative saw suggest second the and are they norms. healthy lower like surveys Pro and strength gypsum, in they that categories backlogs ago, While than Pro-heavy are historical And fasteners we insulation. still many quarter, elevated were

across see hardscapes number performance including a addition, In goods, categories, strength we live comp in smaller landscapes. of continue with and projects positive to

market, likely in see reflects softer those and pull-forward both like unprecedented or to that appliances single-item the home down big-ticket years and patio Big-ticket transactions purchases compared these improvement comp second of X.X% year. in discretionary last categories to engagement $X,XXX were continue of of quarter X we deferrals. over demand After

to in-stock best-in-class on for advocate value. a are they Our merchandising that remains broad it. assortment customers continuing when available focused organization of provide being customers' for This products and means our our need

project, the we excited to continue the products simplify the saving to also bring will our time why market. so continue That's We money. that customers innovation about into and to I'm lean

for This assortment, of Pro introducing with this we our hand quarter, to confident precision assortment the as our destination the innovative channel. excited the customers of brand-new with and We've Pro be results that in for Milwaukee addition line of results trade to lasting position we of of strengthen our positive provide the our Milwaukee tools hand tools. Milwaukee will announce feel degree seen will customers. Within big-box the are addition that the brand already high retail a these tools #X electrical electrical a

with to Home Additionally, fall, and in assortment kitchen and proprietary are known sinks innovative expanding market the faucet designs; Glacier and also as touchless Glacier new Bay heads, while is for functionalities, performance This to like and shower top lineup our bath, to excited bring grow neck brands to categories of disposals. innovation to our spring add into The we style. include Bay. of continue Depot's we such one

lineup We extremely about excited are also for our Halloween.

expanded success. traffic. our product to Halloween for as worked including And merchants for excitement bring Our preview tremendous our with of season, the and have Halloween fan this together many favorites return our assortment These products supplier help collections our was drive new of stores put a enthusiasts. of well to lineup Halloween the offerings sneak an partners as

rollout for the the are full weeks. We coming in thrilled

that, With the call turn like over I'd to to Ann.

good and everyone. Billy, Thanks, morning,

key improvement. on the for. know customer We are essential and a us focus strive helping relentless best sustain the we a home have experience associates in teams experience cultivating customer are that our they differentiator in store Our

providing retail. means In working on the focus The training opportunities tools, order This best to experience and associate experience also cultivating at make provide not experience. improvement, an in in endurable in rewarding best wages investing home Home customer the Depot competitive development we and that but and must benefits only

annualized investment year that that is effects. we I billion $X the of am happy having announced this compensation approximately to intended share our earlier

tenured are in achieve rates, our associates. to improvement what quarter, This consistent levels These to our investment. we and are among productivity attrition this wage improved in safety. we out continued meaningful with particularly More service, exactly resulting customer staffing set improvements see most

and to experience. both investing we also customer In in technology addition associates, to leverage simplify the our further associate must

of at in heard ways. is and As need significant on cash-and-carry are installation. purchasing in-store unassisted assisted which journeys Depending in customers they on, a investor service the are remaining sales. help conference sales working purchases, customers' the where our And analyst majority our different represents a in or the they There purchase, project us with you product, our June, differ. shop a

unassisted have hear sales. on-shelf right It That's focus that shelf for you products is for on the positions. and the on in-stock our available quantity why about critical or particularly improving purchase, availability, OSA, our right talk us we the in

customer. versus and indicate on what the are is considered available in-stock, sale for for to the is narrow We meaning it between shelf the in-store working our systems gap

do to enables this provide relied to product doing stored of new Computer in computer specific vision. are that and We depalletized by such do what we starting technology overhead. associate is on leverage vision locations previously as our eyes to technology

can associates a or by start, key This teams applications view provide using single Sidekick. is systems inventory picture respective their Sidekick real-time into out images bays Powered will like integrate prioritize highest-value machine our a to To helps exists. seamlessly HD stores. the phones. bays inside our and learning, their task where OSA of into then take then feeds associates low directs of These that

Sidekick learning learning machine vision algorithm as The continuously are images model and the the are tasks completed. beauty of that is captured computer is

it directing So at will better right better at bay the time. our associates right the and get to

and begun days, improvements scores. early associate engagement in implementing customer this seen productivity OSA, we have we have and higher increased it's meaningful service While as technology,

we experience our different had dozens made processes navigate significant worked Historically, systems experience, to associates our have have of assisted enhancing terms this to and and our systems. In strides. of sales improve by

years, our several the to stores we with Over in simplify of the invested system Up. order Order last management introduction have the

easily the applications, customers have We or associate that or an any service system order, use. to more first-day order, enables changing an system a intuitive a number for installation. whether a different an to more that's order placing of scheduling associate easy created across serve is up This picking robust,

scores. fulfill Not in customer XX% made assistance for needs, over it to experience These average service associates more Order spend but the only faster improved up time enhancements have led also easier does that for it make while has customer, Order stores. needs to serving Up customer's which Up the frees to customers a our

types am just significant that are a amazing of take doing all our of associate teams they of customers. so I to and do examples all our to would our this focus want associates drive for that the possible are and the without and them associates, shareholders. few excited impact for different care many customers, to on projects thank our initiatives both be store customer experience. of These can about I None

let that, the over call to With me turn Richard.

In everyone. were $XX.X million approximately quarter, second or morning, good $XXX the year. Thank total from and decrease you, of Ann, X% billion, last a sales

During the June in X% company in for Comps negative negative July. second May, comps negative negative comps X.X% the negative X.X% negative July. quarter, in were in June negative X.X% and May, with X.X% comps in our X% of with the total were in quarter U.S. X.X% in X.X% negative of and

As deflation from second compared heard continued prior to the quarter, lumber the during experience Billy, you to we year.

improvement the we unit an basis second negative resulting in impact versus XX quarter While points saw lumber XXXX. prices of comp were net a of down, approximately productivity, in

was quarter, pressure points basis last driven from the In primarily year, a by XX%, X shrink. from margin gross of quarter the second second our decrease

compared XXX quarter, XXXX. During XX.X% quarter operating expense basis of the increased approximately a points the of to second percent sales to as second

previously for top Our well hourly compensation as the operating line associates deleverage during our quarter executed performance as our results. reflects second from expense increases

of quarter to quarter Our XX.X% second compared operating second was XX.X% XXXX. in margin the for the

the ago. second quarter the in second debt $XXX other rate for debt a and increased effective quarter, interest the year floating of fiscal than on to primarily due well second as balances $XX tax as up our Interest million our quarter was XX.X%, expense million to XX.X% rate by from higher In XXXX.

a to were quarter Our the XXXX. diluted compared for $X.XX, second quarter of second the of X.X% decrease share per earnings

the to X.Xx count At During the the X the bringing turns of footage year. square down were store feet. XXXX. billion, quarter, opened stores, And quarter end inventory billion $X.X new square second X.Xx, to Retail down $XX.X million our was selling last X,XXX. of approximately merchandise XXX inventories compared quarter, were from second we total

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

$X our billion second million invested share shareholders, the And we capital approximately and into quarter, back form to During during quarter, of approximately $X.X billion to returned in our we business we form approximately expenditures. dividends the the the paid $XXX shareholders in of in repurchases.

long-term XX the average approximately was equity and return ending for on second down in XX.X%, invested quarter trailing of XX.X% Computed capital the months, from of on XXXX. the and debt fiscal beginning

reaffirming our for on for comment Today, fiscal XXXX. I'll guidance our Now we guidance XXXX. are

sales XXXX We and expect and X%. to sales fiscal decline X% comp between

targeting an year. margin the XX% for are and We operating between XX.X%

tax rate effective is Our approximately targeted at XX.X%.

of per XXXX. interest XX% expense fiscal share we billion, a anticipating earnings X% expect approximately We between and and diluted decline in to are compared $X.X

continue In focus driving and in we cost the addition, on to productivity business confident previously in savings the announced realize that million we will in XXXX. $XXX feel annualized

meeting levels needs authority our and associates. knowledgeable with customers the in on our focused strong remain in-stock leading of also improvement, product We home

value. deliver and We leverage and prudently competitive will low-cost strengthen our our shareholder continue and position scale to invest outperform position to market our to

we are ready for Thank participation Christine, in now you for questions. And call. today's your

from first Christopher Instructions] question comes line JPMorgan. Horvers [Operator with of the Our

So for we quarter, did the flat. in second the X.X% did then an seen is have you X% I industry, think down bottom? the a -- July the was on in You big the quarter, down a question first

So second a the particular? that extrapolate basis, was that in was thinking in quarter shouldn't shift? Was go-forward about something about there the that Or trends whether weather July you how there that going anything are benefited month forward? on we

is, sequentially minus cold had of were really was June. wet weather shift, months same Chris, answer X%. second shift. weather the with and it's that The We the July that yes, a And all Ted. quarter about quick a particularly

explosive in from question on the industry saying, perspective is by years. as we to your had just and as and you we goods macro the looked a out, shift have services. we economy overall to after we year of all the called where happening, while more would the start that answer know, remained growth the as And a see But XXXX And the spending demand, few incredibly particular consumer consumers their from at be moderation prior resilient. shifting

As There's -- quarter. economy grow, generally the for have all PCE a or GDP at with number And and at the is know, a severe print healthy. we consumer largely rate. to to spending, least albeit the recession continues a subsided, grow great another fears a of slower recession second continues

And over continued at wages. growth last home and several if growth homeowner, customer, core they've years, seen improvement you in home our equity job in look the customer, the the strong increases

So this Home can about Depot, strong. control, And at halfway where at we our customer what look look the if remains core operations, you you through specifically we year. great we feel are

reduction you As the the they've than in been We inventory. few positions saw, think years. our inventory placed meaningful past better in are

in-stock to have Our continued rates improve.

paying Ann really remains the value out, as called proposition off. strong. investments Our And are wage

will monetary policy further in the But uncertainties given have PCE occur know settle. dampen and what demand, Chris. we will in home know consumer the and economy. ultimately in positives spending the that quarter, remain, how all that those We were consumer -- in impact actions on where pleased specifically don't don't intended to quickly how or share improvement which sentiment will second ultimately in shift we particular overall And are the

of specifically lumber as see discretionary called to out, well second sales, to And said, big-ticket, is recovery was said, categories. as as while sequential our I impact July, continue quarter. the in do abate. lot see pressure of as a the a we the And in I improvement comp as seasonal in Billy in certain did And beginning we that

we good. to revise consumer, earlier enough too by was -- macro that driven year. and in PCE and feel So really the thought well, just while uncertainty again, example, we where lands, with a lot for see shift in there We that this much there's take, still we from ultimately uncertainty the the of our positives largely guidance

housing the answer, long incredibly share macro sector. and through fragmented keep about But we having said to better improvement market. remain taking for prospects home and this period ability this do in all and on of that, get still and We we largely feel moderation, of couldn't huge our bullish when the

side. is ticket, the the are quarter if deteriorate I follow-up on first. CAGRs your did run mean you stacks second you in -- to or average question it ticket on the My relative

talk to about this that shift you're to to is And lap through you smaller-ticket Because much the of can of in start projects accelerating? So drivers that? pressure ticket quarter. how going fourth that the

So that sort to you're just what fourth assume of in that is is now quarter? of seeing can't we large indicative accelerating, so the annualize shift out we from that small

Chris, is Well, this Richard.

our and is in the abate, in to First, healthy stacks we're signal of ticket progression, And that's we're respect that sort seeing pressures to cost actually converge. we're what just with industry actually encouraged begin as think -- we by and business. transactions a seeing

ticket So I most that think comment make that's about macro we could the progression.

projects, smaller our that some to stance -- Customers large and ticket. to certainly, have us respect large versus are likely larger, With for opt projects. our of versus more they're it to on and customers opting for may that small contractors tell impact deferral there comes when some is

But softness large-ticket what patio of in we're item certain we purchases impacts and seeing call the appliances. also discretionary like

is the there, converge the So that I begin lot both transactions on going as there's but to important -- that recovery ticket transactions kind nice and a maybe in just and most dynamic normalize. of think

line the Our next UBS. Michael question Lasser of comes from with

is end table X% and that this of transactions likely of macroeconomic Given you this some low down replacing a guidance at shock take more the point? of your large of maybe off trend can transactions, the outside year small even for coming it the in comp

but... Michael, went go with answer through to don't want the just Chris I through Well, I

you... heard I

we the of will, in laid like we settling, the and about much mean, the sequential second good out the as Richard if you healthier improvement. feel pretty a ticket again, I've normalization much Clearly, And really of balance said, -- transactions. pretty That's quarter. I view.

the a we're I June still standing in deal there going there's get of mean passed? pat lot now. uncertainty. swirling just Are to But there's updated comfortable just budget that reaffirmed things going many or a we Fed out Is more to that raise? just we so right

And is of contextually our during X the as measurement, just think to years We've not but this that growth. sales perfect thing certainly a watching PCE. in spiked other know of watched least -- saw to we our way XXXX what since unprecedented share a about we're the at

seen we've As predicted, our of share PCE.

Ted have share of services, shift from revert seen levels. steadily our PCE mentioned, towards we also share we've goods seen As into as back XXXX

think our of would you bottom the that When math our with that guidance. back math the the our trajectory, our end tells today about that to don't would reverted but shift. the in end of low the say corresponds imply We of of share all that's guidance, XXXX business is levels, that sales actually way the anything that PCE PCE that see the share us if

spend And where so elevated to improvement perhaps range it of all I'd not perspective also PCE versus know. sure for, an you'd that share there's We But end homeowners ultimately a in X that important the shift we're was say, level correspond math. of settles. the just share ago don't PCE home financial prior just much The low repeat, than that years Ted, years. does is more home from

SG&A Understood. over billion few wage years My the impacted but year operating has $X But is the being Home follow-up last growth been normal. expenses question anything are investment. by Depot's this

period XXXX, expenses what's a to entered be company because just such back in reinvested right the won't in now? that has is, profitability cycle here happening if gone need business even will where so recovers its in significant debate the company of key on doing improvement the see operating much based the cost a the So up has

in XXXX. we I early level Clearly, investment about minimum made as Well, that a But much paint more and a on Michael. and picture, to too a competitive significant we're markets. said, where in position national in comfortable we wage, wouldn't are talk Ann

feel mentioned, couldn't Ann about that again, on better So the we as returns investment.

down. to still going to horizon. seeing Wage month-to-month, as that an you expect rates increases of that need we're the are up, track planning Annual we're don't but sure in that we make I'm near-term investment do, We come those moderating. are outsize

does, That P&L see another business, with as in leverage don't volume it comps. intact. with of modest this investment. investment thesis we So then big those leveraging this always remains will wage dynamics And

just expense mid- in with conference, to to the remind, investor do case we in that a high might margin operating laid line lead leverage a EPS -- It single-digit would in to growth we X% growth. market-normalized based expansion top as expect to X% normalized out case, on

our that but is to just in back So June. worth structurally comments it nothing's changed really much, pointing

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

widen QX years? cadence DIY the Can X DIY you to moving how that versus Pro reversing out a contract should help if between the of I with as in QX, last in spread quarter think from X, QX saw [ Pro forward. us think, And you unpack and the the for, about first the curious or expect outperformed parts going to time we ]

outlier, in seen. Zach, outlier. what wouldn't of consistent much an so the noise that we've QX the we QX. to just we're is investments that noisy for Pro theme outperforming in say very But There QX much an was was in responding that just making into too with read consumer And saw that. the I'd the I

all, if base to to, the then in the between of today speak you had for the But XX out first cost could believe differences the whether bps or I next XX savings savings Richard, about there's about And of this productivity you. year. you Got And XX million talked year I'm XX it through year the in X of this and also hoping of bps the the builds $XXX to benefit and year. base. buckets that is coming

about when Yes, bps at XX out talked the -- Q of and -- we we to -- Zack, the is when XX Sure. we called margin. something beginning that actually or thanks. year progression the very of

part today. we of as certainly expenses productivity range QX the in course. that It of it wage such outcomes. was with that with in the revised -- you as operating guidance -- anticipate investment, And can offset original guidance rather think but so consistent margin of ordinary or and our guidance consistent really That and

cost-out for saw $XXX part product structure in the skyrocket The XXXX XXXX. build of XXXX and our up reflects in really separate. to we that And rationalization had volume million is a we it we cost anticipate -- most as that

So we in a cost necessary volumes. built isn't structure that today's today

And so we that will cost rationalize structure. of some

A be good warehouse we on a to would that product took and during example XXXX. a lease XXXX hold

estate that We footprint, are nature as that of Think the the our reduction well looking cost million. the at may our and some a about savings. real and -- of That's fixed cost be rationalized. base. Those with are it $XXX comes in permanent

Just these to SG&A, are all And confirm. right?

included There's COGS we're To geography -- could XX me That XX in expense, the we of haven't guidance let for benefit settled million XXXX. operating clear, productivity that initial basis in probably full-year XXXX. your points assumed to annualized No is is some part yet. $XXX be is make just of our XXXX. question, some in but included in operating in that that there sure and margin in

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

spent about but smaller complex Pro the relative Pro you've a business you your traction with lot sales and of an about? talked how are in time large project talking guys the in efforts backlogs, strength You spending, Pro to gain and in negative smaller benchmarking environment

is this Hector. Scot,

take time. ecosystem the in is the it As it far for investors' mentioned will and as hard we we are Pro, the some what as conference, building

from also today, very it hard very know. encouraged ecosystem. good of to replicate, we're Now as will getting signals be that with different is pieces as the our are And Pro by that we news customers the they the engage you

of stores the we with system fully we trade the our management with many ecosystem. order frequent markets we not visiting are they in are or our performance built only Think assets with chain don't continue to to more we in supply have have the are but credit. our a sales our basis. gauge that and as Pros deployed. of our We pieces outside expanded expanded ecosystem that Pros. continue team, resources today There But Those a in engage that

continue to is and encouraged efforts. we So cohort continue be by what we'll in very that performing, always the to invest

a the then second even you Or process? bit expect Would a And should just of comp. to negative expect bottom the levels Inventory it. Got with that continue question. we to Okay. to down mark guys was inventory your destocking drop? quite

the we've supply you made improve progress have position. chain work pleased that risk and lead we we're the relative Listen, to inventory, our associated happened our inventory super low about we we has do in to think feel productivity. And still that's everything helped. about good with teams. But and times to experienced and Well, obsolescence with have merchant

a of us helped lot supply really. chain the in the So dynamics

add, are before been And than at better the since our same time, they've the I might pandemic. in-stocks

our OSA. to [indiscernible], as Ann the So out, be the we're really our ability pleased about inventory productivity, at called but same time, in-stocks, our in-stock

really those pieces. both of pleased with So

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

for This is on Sussman Jackie Simeon.

earlier or much evidence you're peak? projects into is fully than any they? are trading Can bit small are consumers have speaking there normal they more? seeing you were drill far of pushing canceling down? off above projects. levels projects that on How And backlogs the You a off just replacing large come rather How

we I'll Well, on of if on that Index. National one is that start one and Association rely publicly-published we watch -- The Homebuilders the surveys.

the well yes, above sequentially. average. have historical backlogs are We seen they declined But

may really taking have full maybe so They very the still calls so oversubscribed may years business, many been healthy. just not oversubscribed. again, for be have a book say but phone of And you'd are professional that they they customers

historical think being score XX. at average index Again, for about if up, can the the a you this historical average, and look XX, is still you but

higher but peak So from down than average.

and indexes, field obviously, In addition force mentioned. we that sales to Hector the the have Pros of publicly-available millions

feedback but So our force sales backlogs, base. getting from They're to busy loads it's those anecdotally, we're and their engaged smaller. they're our that customer with of commentary still

So we color get the that's dynamic. where on that

it That's kind trended how call-out it. quarter? on mitigate talk Shrink taking Got going get line. worse And the the quick helpful color. that Did Can there just margin you're only any to follow-up. are one in that actions that you gross of about any better? or was impact And real the forward?

From several last years, Ann, quarters shrink a has day. pressure even few a consistent little over and the bit... and maybe the a financial perspective, And talk something been we're last tackling every it's

the certainly kind in always to I we think mitigate about organized but we've about impact Act, retail of we INFORM of to there. as lean as will little in continued No, can give as we that happening more shrink. think are that are INFORM have we've us the into know retail the that things help components crime is think a battle we Act it's out initiatives the visibility But overall. some key about that seen one in And the of bit early think I

But key certainly, seen out And really with We we seen the we've largely to several certainly in end we've government mitigate help what have to us what on in that. quarters. initiatives there. kind help of need to last their been well retail in our line it's to partners mitigate help as

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

weather-driven? actually in bit Was of talked eases a bit seeing homeowner was a you about. elasticity more like It as the improvement. sequential engagement sounds of that I largely a hoping categories? inflation demand could about you it some Or comment are was that some you

the -- impact best-performing The Thanks, earlier best-performing Steven. our West articulated actually We we think Yes. talked region No, in QX for weather division that had. patterns. QX. was the about West I the about

ACs back saw July a a those spring heat, that we engagement We bit the lot little categories. fans. more around with from into So weather in to pushed and June some you and as the of saw of

shifting of normalized those some of some So pieces. balance seasonal outside quarter just a the of much more smaller to

then to a more within from expectations. about thinking how it guidance there you're to bit weather, quarter on clarification Great. maybe difference Is year business July fair any trended? a then question, full the that fourth benefited how versus Okay. you're in August third second has near-term the if say a And of back kind range? Is comps? just half date the And in quarter

Right.

have XX weeks year. than X comp. the our quarter left half first the the So little in first weeks third a been we better have But of

the we So is think guidance appropriate. range

look versus then should quarter of just we X-year just comparisons? And quarter, the Okay. fourth at kind third

we're Yes, weeks year. provide in left we've again, got going quarterly not And guidance. the to XX

appropriate. So we think range is the

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

this transactions reinvest in wages the model, not to But remained and of the is you other flexibility have with will full the you business? that the as have amount parts investing comps it realized or committed in and $X to You negative billion for year. transaction-based labor that be potential there

the our perspective, from something there's has wouldn't year. many a I -- be against our wage. with Well, guideline a financial you're assumption to that this respect out a There's utilized would hours again, be to course, annual to is say the material around best look our guidance material you an the profile. And not annual during multiplied likely financial see change of -- going in how for to is But performance.

quickly How the rolled the Great. And Okay. is chain? vision And you for in computer could going elaborate on benefits see of the out elaborate that think near the bit more little on be term. Ann, a technology? you maybe then some across you to can just

Sure.

first Sidekick direct So which of product we started with down overhead. to application, from the pass all, associates

computer a is task is complementary the tool see vision productivity. so to overhead, helps to overall so is drive where And that product the in a associate which Sidekick component

certainly So we are bullish.

-- in already. rolled that's region that our a have out fully We

We every expect have we pilot to stores rolled year. that across we later out in what single region. be consider that And this

takes good really, product really output time ton stores. some finding in that our a seeing are We of

looking been customers, to that every doing find day. and I've trying that's we time, of product neck a in So thousands for have the overheads, long around my up associates for

in and finding year. the So productivity of where product is exactly ton overhead later drives a for task the the to then we out roll complementing, and this that directing us, expect

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

is from to disinflation, overall as flex and repetitive, risk doing unit as we're guess, I where we're well of both seen now a the your are have inflation maybe generally? here, see to comments -- how mentioned you business maybe lumber I stores, getting being with you're past you moving seeing -- improved stay I what the in you've the from are So and more question how But your in reacting seeing there as consumers dynamic we're or starting bit just prepared price -- demand. -- regard know at I the inflation, maybe to I guess, peakish a disinflation your

into the just I on of billions impact second at When they're dollars And inflation on as mean retails. at are overall of the the inflationary broadly cost mean activity piece, still were costs in in is in. well, But expect that one there net we the half, we a it have increase I you couple. requests, cost we year of negligible. will our go look moderating. point I mean a the

cost requests supply net new cost so abated. completely for the certainly all and that's in chain, increases And

As as certainly don't from go in when shorter meaningfully what and you abated. that Commodity year-over-year into have of the environment. as inflation overall and the transportation ultimately we're cost, commodity transportation, expecting do inflation, even down term. a second peak would think is we increased the fact well then certainly well retails, as we product has costs as deflationary not But beyond half,

I used think the Richard settling. term

in kind over last out. settling consumer as of these to called customer Pro the price the seeing levels. years, and used non-commodity into as has you're those gotten few normalization transactions, And Richard We're the

So is of we're that encouraged cycle inflation the behind essentially us.

that. anything know I if or have to Billy, if add you to Richard, -- And don't else you

earlier, normalized don't are about encouraged we a the we say but we we in deflationary as I'd improvement transactions and go that Richard the No. pieces environment by spoke see forward. see as

but have, be your I know nuanced, second here. bit the then to a reacted to consumers And understand it's I helpful. very going how really just question That's

reengage at called West you're look normalized you of maybe as I point quarter as think Coast, have in weather So as I is as But you the a out, question strength the a the bit. shift like Or like seen? consumer would we've weather amid the watching with weather the there normal you anything Depot is is expect more consumer surprising? coming normally back there with that conditions, Home

that Yes. the thought we it because I'd in how we the out and QX played impact out called we kind Brian, West. that in say, precisely of of it saw,

best-performing our heavily were As into QX. so was pressured seasonal division. businesses in I engaged that Customers our that mentioned,

really thought. And play precisely out it how did had so we

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

if please, I bigger could. Two, picture. One,

it little high last There's about now, That mid- was was thinking quarter, XXXX. Day, better. that that baseline. in thought right mid- think said maybe of you the Analyst single-digit to Is still industry would being digits I industry in be single you been June the way down sort high down housing market a you're the that of the to housing the indicators some bit range? in

and worked the and America. that. call Well, we've who housing we've were said in deficit demand at because We of there are uncertain, way when structural that's supply you a into look for market, some in really economists might our North imbalances

actually And you've home interesting sequential is for to prices us last improvement the X in what's months. seen month-over-month

of if year. think just most economists' data, at the for than so better I the remained have, observed So beginning home you steady many predictions year, last the look prices and part, versus at

Okay.

or at has but too much view your all -- So changed uncertainty?

that there. the with to of are didn't long is do those think And our supports aging along important we part housing supply-demand any ascribe guidance of demand benefit think And We imbalance XXXX. housing an for stock. we home that, that, term, improvement the for

bullish on we're the this of future market. again, So

Yes.

story to that the held data Case-Shiller out back -- came I that just some came some and home highs values sequential In playing now has dropoff with of housing in in United as improvement, just out out and in with data States said. as the that, we're think big now up. erased record just Richard it's have values Redfern been is values with

mortgage isn't The of there rates to available people the lot just for that locked in near-term inventory story a many is that so sale. in housing with incredibly low

at terms nominal of that below certainly mortgage in a near-term in are lows So stock. even over many of percentage X%, of rates. There's are X% housing houses are so the number turning who transactions people at

mortgage getting the if the increase million new homes. issue in rates to have values X again increasing is back used it. purchase. million inventory. percent. to of sort not buyers that holding X to So And to imbalance the to not But million just We are And fundamental much understand are now digested there's people X X-ish available of

Yes.

Okay. Makes sense.

is Sorry, The one that was follow-up this, could. I if question.

comps. the short-term-focused, quarter You first be I better -- comps? to any half on had second hate versus But August but comment said than the was so August

first half Again, quarter the the X little a comp. first weeks of were our than better

weeks have XX left. We

we'd just guidance. back we point so And you our -- to

of the Short comes question with line Karen Suisse. from Credit next Our

So X questions.

versus how and think think stand is it's But pretty going on you of your clear about the thinking the is is the that terms second with first to feel in how a question then big customer in think of where when on in dynamics backlog the are and comp DIY will I Pro. terms impact the second The you about recovery? feel I half. of you half 'XX, the Pro in into DIY DIY terms to

all it's the it's Well, of the is we the the it's same. -- not, demand. the day, sort that demand all fulfilling -- I of end or at Pro think don't same whether And

I We We saying good really. would our Pro entirety know of good where we it, again, feel But -- those our where trends about as view feel is. say wouldn't Pro I we backlogs are actually about know So the it go. business their will healthy. don't

say... would I

second the is... then question And

that was -- just going was weather responded. but it really seasonal garden stain. led also is consumer nearest-term steady the And the by consumer, No, constructive to in of engagement the exterior consumer certainly, like demand. the say things And the consumer when I painting is the view improved, and business,

a great that those their overall up it's segment and in we expect comments look earlier we all is great XX-odd mentioned on very consumer forward, macro consumer them going what income, tremendous I in the equity think jobs, So of homeowner, home, homes, economy. percent healthy you our that at value a

say So their something like of engagement discretionary, seeing Billy, in us. product as their Halloween, is decent it's engagement I is enormous improved, weather the sector. engagement business telltale But in engagement, mean, in XXX% category, a which pretty that unbelievable seeing not for in to an QX

order discussed always with Richard, operating then my And your to labor you on maintain to to inventory then question ability but margins. the comp flex helpful. is, with rapidly really respect based stability That's second SG&A in Okay. also

flexibility the in my you do within the general in the investments, I question line same have rule recent thumb mind? So guess time that is, wage with same still with of

point same mean the say degree would we post-wage have the be jumping-off But you'd that always investment, investment. we had. flexibility I have post-wage Absolutely. of

have time more question. one we for Christine,

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

So follow-ups. X just quick

trends we implies then The positive first if year if just as second expand Curious you ticket, still you comp Pro full see maybe as about it half ticket. what on in ticket to And today. think speak it's on if versus of ticket could terms of DIY the complexion. could you sort

ticket the got Billy? with We've first, -- going part weeks to and I'll and transactions. second Billy. ticket our respect encouraged we've guidance, in what just to We're -- we've out seen then break other XX we're I'll transaction within Again, than it I'll answer to go. not recovery to repeat, just and to settling of turn by

will of an we than half of in saw impact see much to the just as less And year, the we called that and overall. alone, Yes. be out lumber half we'll we the back there first get the on as abate piece

Day just Dallas XXXX lastly, the year-to-date versus as then Analyst presentation, how market average? about that the we the as update company at the is XXX on basis points you of market, And think trending any noted guys XXXX

-- is again. Hector, Yes. this Steven, No

Dallas, our very with as again, first all customers our not stores that results and and lot We by sales to platform. see engage, seeing continue online in delivery be we very the just encouraged through in back and in And we're of markets. capabilities we but a results implemented to have scaled also, encouraging Dallas the the the digital we similar the

the about encouraged very be to continue performance. So

markets again we far. test and out For to continue us, a other so and in capabilities deploy to ecosystem as capabilities at scale. And been Dallas we'll has and Dallas in learn success deploy the round

further questions Ms. Janci the this over turn to no time. closing floor comments. to back for like are There at I would

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

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

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