The Home Depot, Inc. (HD) 14 Nov 232024 Q3 Earnings call transcript

Greetings, and welcome to The Home Depot Third Quarter 2023 Earnings Conference Call. [Operator Instructions] It is now my pleasure to introduce your host, Isabel Janci. Please go ahead.

Thank you, Christine, and good morning, everyone. Welcome to Home Depot's Third Quarter 2023 Earnings Call.

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

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

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

presentations non-GAAP of provided measures is measures. our also certain website. Today's these on Reconciliation include will

let the me to over Now call Ted. turn

morning, Isabel, quarter $XX.X same the X.X%. third earnings and year the quarter down had comps third for Thank and stores negative were X.X% the Comp quarter per everyone. in of year. in the period Diluted same X% third from sales last compared year. $X.XX last period you, billion, last share declined good the Sales to from $X.XX our were U.S.

certain continued with and smaller customer second was to we The experienced big-ticket saw the categories. projects line in Similar with expectations. discretionary quarter third pressure in our engagement quarter,

the impacted will deflation overlaps negatively and quarter. other shortly. these lumber and and addition, results and copper trends business wire Billy In discuss storm-related in

DIY quarter, the customer Pro customer. outperformed our During third our

in longer external outcomes. only ago, relative the a and left healthy lower norms. X surveys to historical Though they are previous backlogs are they for guidance the believe Pro likely elevated suggest endpoints year are than quarter internal our that no year, still we While were and range

and we range a through fiscal take announced in we moment. this in guidance will XXXX. our you press Richard release, As a for result, the as morning's details narrowed

of this year reflects we've a period discussed, moderation. As

ability We However, very confident excited through wallet this and unique and in our to initiatives grow we store to deliver committed capture our the strategic shopping in interconnected navigate to are remain best the environment. footprint. share about are business experience, the with our Pro investing

on shopping the in we As focus experience investor a frictionless we and our discussed conference interconnected customers. for June, at creating to invest continued

the and largest We highly rated progress digital homedepot.com is are the pleased with in one retail. we our United in websites States, of one the the is are of app making. most all retail of

across still And journey. the points reduce believe we there pain to yet, opportunity is shopping

like of once teams the Our and and throughout communication process order better returns and an the intuitively identifying areas ability seamlessly changes are to shopping easier make journey improvement placed. an to

initiatives. we're building multitude unique ecosystem our and products on For of We our out of remain in Pros, investing a services. focused

President, our global Executive organization. our evolving are stores in service elevated structure Senior and we result, organizational a the recently better business Campbell As Vice to sales and Ann-Marie outside aligning

operations. to expertise, product of this change of fulfillment ecosystem opportunities, biggest leveraging our organizational will them us one is growth by Pro full and allow serve our assortment, better and

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

commitment we and orange and million announced the $XXX in to invested Last In causes addition, the Foundation by goal week, Depot proud military Depot of aprons. the Home veterans, of spouses tens total members Home XXXX. veterans and The have surpassed million thousands $XXX is of to also service increased

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

everyone. good Ted, morning, Thanks, and

very Let store start it organization. will the role new sales my create alignment global by between business and I'm excited and about saying the services that and me the outside

heard conference our share and you capturing represents at in June, in is one addressable $XXX opportunities. Pro's the wallet growth greater a share. largest our relatively have As billion roughly investor of we today, It market, of little

unique that beauty The Depot is The Home of have we competitive advantages.

of unmatched stores, engaged exactly we And that's our our options that are for do. leading fulfillment the brands, that be and Our to what associates, aim benefit expansive our our leveraged can convenient customers.

Pro. improving drive Pro new To in His to instrumental Padilla knowledge will experience or that, tenure operations on with XX-year will capabilities will Pro's goals. with the Hector focus store achieving new our teams stores. and for our of success the do organizational and be structure momentum our create stronger shopping

our to XX will Chip Devine, serve Outside Sales, Head He on brings out capabilities better of years And complex building experience. of nearly work private needs. distribution more

product no our time Ultimately, single how choose customers the have We a shop of the experience we of must every Pros picking so focus whether use many our great at stores, to with operations, that our us, a job sales these of within friction know us. removing they matter with on store, ecosystem in our aisles receiving site across shopping associate most at with product when capabilities their a or our digitally.

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them one can. way could I incorporating today, are more in be capabilities lies ahead. the not these opportunity that our ecosystem customers excited a exist Pro While serve we full else no market about to in in the

importance about Having stock the on in-stock, and we quantity efficiently. the And the for the we've shelf implemented help to on-shelf critical, over more in initiatives several right in several OSA. ultimately, talked of the available do experience, products last right and the for effectively is and or in-store and have availability purchase years, us this

merchandising the allocation a right. proprietary past, determine invest tenured In stores about to store-by-store with categories using to by teams our we've model in or get drives our talked GSR on GSR field space which basis. productivity coupled

vision product and in about quickly associates Using direct Sidekick our de-palletized the vision. key And tools and More to or Sidekick have out bays early our across of exist. deployed recently, machine U.S. find helps improvement associates stores. Today, talked where meaningful we overhead given to these in computer been they rollout on-shelf you days, all while technology, have computer learning helps our availability. OSA low is have

of beauty depth They is on and also high-velocity more initiatives ensure The we remain restock for product available with these drive and have stock easier a in make they for productivity. greater it to of that product, sale. the shelf associates products

deliver and the associates to shopping we allocate a better time most tasks important on a our enable result, more experience. to focus As

of can our value the examples our drive just associates and different our for initiatives customers, many significant are shareholders. a These types few of that

thank ready year, serve to a them I want challenging they to do. all Despite engaged our amazing customers, remained for our and associates and have

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

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

were our Ted, line heard sales the in from you quarter, expectations. our during third As with

We overlaps. have in However, discretionary-type softness of and projects, we did the larger take the been engaging have that smaller of the continued impacts from unfavorable some to storm-related customers trend saw throughout year commodity with purchases. core on projects. continuation observing certain big-ticket, Instead deflation in we

for Turning quarter. to our department third performance the

XX positive Building of department appliances, garden, departments company comps and comp millwork, the and plumbing, Our above remaining average, posted Materials including outdoor posted pain. merchandising hardware, X a tools our

and third the our X.X%. comp decreased decreased average During ticket X.X% comp quarter, transactions

growth, from average for products. commodities, we experienced new deflation innovative comp driven by core Excluding and demand ticket primarily

lumber average growth points impacted the commodity by negatively XX categories in core approximately quarter, copper. Deflation third our deflation and from during driven by ticket basis

a During lumber to in the see year a relative to third quarter, ago. we decline prices continued

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

over or were X.X% transactions the of comp last $X,XXX those to quarter down Big-ticket third compared year.

big-ticket We categories continued engagement like softer discretionary flooring, to see cabinets. in and countertops

saw in big we roofing, and categories strength power. portable like However, insulation Pro-heavy ticket

increased Sales year. sales. third online digital to company of quarter total leveraging our approximately X% the platforms to compared last Turning

of nearly the stores. customers were and search improvements for These experience a in us invest our that online to and track half range in released continued of updating and We more orders simple the our enhancements across customers app help our during complex to variety to things the quarter orders with third quarter. website our online from through like algorithms those recommendation transacted third fulfilled digital

during Annual assortment. another we for appliances, exclusive with appliance our in-store our and During were we're customers' to we encouraged quarter, the continued Halloween hosted In And our Day customers both unique in event. their and online, with Halloween was collection program, results. events, year pleased as Labor XXXX the the third product and add the record our to engagement with sales

our Black our continue this gift more. we center, gift with Friday Milwaukee fourth intend continued most annual lean As brands Makita, DEWALT, Husky to In to turn attention of our RIDGID, our into the we that assortment quarter, customers events. our we holiday, for with matter RYOBI, and and to center momentum

RYOBI for FORGE photonic MXX customer, on drill These fastest-charging for everyone, longest new changer and life cordless kits batteries. have will the of our a battery will be any batteries new something it's the MXX We DEWALT platform. our our assortment MXX and Pro Milwaukee tools, game FORGE providing wide of impact whether powerful Milwaukee most or

QEP, WAGO save that vendor product improvement addition in excited of and to It the of applications. releasable installation also log This I'm the Milwaukee, Custom to wire to announce make the including in the USG, Pro level connector space extend our Products, us connector Building the Pro and and that and innovative brands tight requested strategic authority our assortment addition features top a help of a WAGO position. segment one will most few. speeds quarter, powerhouse that is up is brands wire WAGO relationships home Leviton these name of

We Home channel. recently our of number The in box big SKUs Depot stores, are exclusive national which in launched the a retail to

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

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

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

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

During with negative the in third the negative in in Comps quarter, our of in X.X% X.X% total in quarter in X.X% X.X% September comps and X.X% of X.X% X.X% negative company in August, negative October. were for October. negative comps U.S. and negative negative were August, September with the X.X% comps negative

In important Mexico comps to currency, and monthly company adjusting note that relatively above some were is posted Canada It and across local comps overlaps average. the the quarter. seasonal storm-related consistent shift, for

line third quarter, expectations. In was decrease a from XX the in which our was the last our XX.X%, year, quarter basis of gross third margin points approximately with

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

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

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

to million. for expense million the $XXX quarter by increased other third and approximately Interest $XX

our tax In of third quarter, rate in XXXX. effective XX.X%, the XX.X% from third fiscal the down was quarter

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

we third was square store to bringing X Retail feet. total selling our opened stores, XXX X,XXX. During approximately footage square new quarter, million the count

X the At And were $X.X year or of to to ago. inventories X.Xx the billion were XXXX. end of the third merchandise $XX.X turns XX% down quarter compared inventory billion, quarter, flat

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

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

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

for guidance fiscal comment our Now XXXX. on I will

fiscal are in XXXX. our of As for the from one quarter guidance you range we remaining likely points with and we as therefore, narrowing our XXXX, Ted, end outcomes, no heard guidance longer expect previous

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

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

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

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

In to productivity addition, continue we focus as you on heard business. from in Ann, the driving

actions realize previously savings in and confident We have the of cost announced will taken fully commitment. annualized a help number in on this deliver $XXX will million are we that us that XXXX

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

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

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

the Stanley. Gutman line Simeon comes [Operator of from Instructions] first Morgan Our with question

inflections we that the one, Pro story of little might about see getting Pro the maybe at is between when but DIY and has worse? In this quarter looking thinking DIY a spread is and stabilized, the maybe bit

a And longer then right, out? to that's sort comp than would And better? Pro and for the feel could that a get of take if it little worse overall play that's actually, to little that normalizing before wrong, could correct free mean gets it the if

had question. some the consumer, the say and it I performance in for gap Thanks time. Pro would narrowest

So they well. both performed reasonably

fact, comp year, seasonality quarter, look overall this the that. that and at the if that's normalized for business in at If about for and deflation. this quarter year, in you and at through pretty smooth X% comp and look of you because if narrowed QX we QX, and you first the of feel step look quarters and we're really weather the commodity the of third good the back minus X And storms price of year performance the we our guidance

gap as with abating are consumer. are operations seen The said, we to really and regional good pretty that. our our We increasingly And had least the pretty prices And is consistent. between in And settled then I operating supply good as very normal. getting businesses also narrowest variability We've And have the regions. sell-through. chain seasonal deflation, about back Pro feel well.

are better. positions inventory Our

Our as all took in-stock in better, store things the the through on-shelf we're much rates are doing Ann you improve availability. to

innovation paying are mentioned, the in wage it's great than Billy is ever and as propositions, shape product And better value Our are off. been. investments

has way Our ability our down, attrition have in with associates down. more being And time that store, attrition had is the their improved. to serve customers

comp continue going to home for reverted pressure the pre-COVID of all to was where and home that monetary delivered $XX-odd as that projects. asset and throughout that motivation here that specific class not reverts your larger than to. the improvement share So consistent the it not sit now The improvement still more in shift about financing year. completely PCE to posture really for has sure today the know that's good But or operations, answer really of from worth feeling higher-for-longer goods, a And is exactly Fed question, is trillion we what we're we definitely pre-pandemic. has durable

we said, engagement, we projects. So with see goods, in as It's at seasonal larger the down projects great engagement are moment. engagement a the bit smaller

feel moderation overall. GDP know, in improvement business spend. year, period consumer. But the customer. of our So looking still as XXXX just the it for what I off talking we're and I lots home driven about this operations very good mean not but about a of X.X% we're business. operations news in we're we with the the QX, that's of But news couldn't today, watching. better came I obviously at resilient Great by mean this of you

the And then GDP. follow-up, mentioned maybe you

do? seem pretty get business we GDP Given that -- not prices should the revert how GDP we better even how any could for sticky maybe about be home a should better, pretty to with turnover to weak -- as proxy think and may we should

this Simeon, is Richard.

have have few how out of that's the drivers those over to what most possible last period, indicate are We focused thoughtful back take years the we on we settled the why of of to the business pandemic that us share things of -- and the approach in tried and PCE.

about haven't business. we're economic layer talk one, number the that going not on today. durables for spend. to There Ted we reverted Ted the Like all share. had of of increasing activity have out, underlying back of way pressure Fed is housing-related the kind and to stance And But of has PCE XXXX pointed could XXXX levels still and the said, supports outlook an as higher-for-longer

when call we what talk said, that's watching XXXX we And at will the our quarter. we're get So like about Ted to next moment.

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

the wage XXXX? plus settlement the operating considering to to cost this outs and ins comp investments, XX%-plus in to next with year, there of that cost fair is in you've Richard, margins saves is Or us you need base certain all legal a year of it this level your the expand see can QX hold will got your for margin? assume

Thanks is line from expense top There positive see to is a of you expansion leverage. in there for Margin the deleverage digits point comp largely that function turn where a question. growth. low

provide XXXX on measures, place We're now have we have and put in $XXX into What actions million to XXXX. cost is have today. heading fact, not us going completed essentially in buffer with guidance that take will a done we

provides of buffer regardless margin. And in outlook, so the some that

QX. you legal would from reinvest And it. settlement the Got mentioned then you gain that

part a this any the like? was And be of it say will largely it is QX? then reinvestment Or that in what in all, look what QX? of fair would there to investment first color on or So actually is

the part had of throughout spent year. that We've

the offset that be still a is that, fully the end assumption favorability will by it of think year. I correct

as our really jumping your off best I you guidance the modeling. to so point point for And

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

seeing a So purchasing verticals pre-COVID purchasing and patterns activity of you probably bigger other lulls lot frankly, with, between. a in retail return in where other on verticals, we're and holidays to some around or events activity, weekends retail more see

that one, seeing advantage So a for two, pattern? to an the the operational are improve you are: are you questions to from ways case, similar productivity? general of is guys take there And that standpoint assuming pattern

seen Ed question, for the year that. relates so different some consistent throughout very prepared for best to weather customer as been it It's we mentioned Thanks Billy. Yes. and half. Listen, It's in the fluctuations patterns the throughout haven't the account quarter. of his Scot. some saw the when as we remarks, in the you effect really And first and of in forth,

we haven't seen that. So

Listen, whatsoever. as activity it relates to promotional

our in to our and But to events stores a reverted we pre-COVID have activity execute We standpoint, really that excitement back love from promotional for drive times. customers. it's

mentioned, certainly, the Our pricing settled is Ted stabilized. several last as environment The certainly over months.

very operate market we a in operate rational -- promotional a So in we and very environment.

this said, has pre-pandemic I times. of As to returned kind

mean that day of for strive with be always our Scot, a fun. on events in to engaging customers. will They're a lot every months will values associates. they're focus But great retailer the during have day. an we we and with always certain -- engaging out, They're And EDLP. seasons we we EDLP XX I year, day

a just then quick And it. Got follow-up.

any discretionary, big-ticket specific are positive the seeing you're a actually there all they still areas mid-single-digit trending, Or negative? it, is call inflection? where On

both to engagement Pro with the supplier the forth, we and remarks, the our we prepared we where continue to out called to see so continue we're thrilled power and have And innovation great seen consumer. innovation, like where bring that market. my engagement. categories base portable partner with continue We that to with And we on in candidly, great we see No. the

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

gross some You My decline follow-ups questions. deflation. lapping quarter, had with little first you of the couple storm-related one can you were a to that? in prior demand third the what talk a about bit So margin is, drove and commodity

that would be have I would So thought positive. those

that is So fair?

that the offsets it to were drove what lower? And

the back think said, a inflationary market. environment I that as worst Chris. go retail is question, us. observation made result, settling as of well, the Billy's mentioned prices in most I'll Ted the we've to the important Billy comments as for behind Thanks And the and this are is

there Some prices ahead really talk our stabilization But higher than others we're are levels come gross about. But that differences will settled as turn quarter through that some settling can sort at anticipated there transportation seeing -- prices lower. through as margin, and Specific are benefits some I'd some the those of timing. those settling to Billy and timing XXXX, we are product inventory. of are consider cost

the our Billy, expect maybe view gross kind year-over-year. just margin full But we pressure and on see slight prices. For the changed talk to of about hasn't of settling year,

be rational mentioned, And said, inflation very Yes. I behind seems environment mean, the what absolutely a settled Prices us. in. I to I as market. reiterate work you again, in

the this And any than frame, frankly. thing no other is other is time different I'd add

deflation portfolio outs we talked We or year P&L. how have a we've lot that to a take ins as on, it whether approach other to relates lumber the throughout it's and about the

across So very we've that seen board it to relates a the rational stabilization pricing. and environment, normalized really as a

it, Got got got it. Got it. it,

So on and you that $XXX then a talked million point sense. savings the of historically year. side, And low cost next cost variable about the leverage single-digit makes

time, some You've for at same the transactions time now. negative had had quite -- you've

we in how becomes minimum can time, months, levels. in of are labor you or maybe less talk -- over is the X staffing So in offset can the there the still maybe where context and on $XXX fact variable it flexibility stores could you'll percentage if terms of is negative less comps -- negative be you the transactions the be from the by having flexibility. next of million -- about the get that 'XX you over how become And that

There's -- you're XXXX that lot of tell that kind of Chris, conjecture question. into built I'll the right. answer. thanks for a you

that in the talking when think degree of of our you're changes enough of labor really isn't model, model. to labor the I say change our about the in nature changes So transactions material nature

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

cycle industry? downturn about home very for what XXXX promotional and the extended, being discounting under the that more expect conditions was discounting the rational. than it across the protracted improvement you remains be intense talked will If would You or in environment

were case, if the it... everyday And portfolio would to true price remain Depot to choose low that Home approach be to that the the and

And gift some We been Friday away appliances Black as from spring years, will and items stores, playbook for and stay traffic our said Billy, center events those committed seasonal to for and promotional right, EDLP. don't and us the going see the we we cadences, to earlier, in have get years garden that.

to promotional category, even In of ceiling fact, Paint, we've on stayed backed were and truer then promotional and we've X% to was and think on that. remember all margin, prefer constantly XX% and like today. XX% reductions a XX% of than of promotions was off are we when categories and And I which that less XX% you fans the we XXs, off off. be

a think of the our example. you in component share. pro, of by for a when protracted to home If for are But nature job. mean labor protect market, sure, take had just going that I you for going improvement mean, the large the competitive. is I piece of we And one downturn paint, to sure, certainly we're projects, done big a such be

as paint your bill, than painting job $XXX the the for room less $XXX, If either consumer pro job in your cost opportunity that it's to going or labor for is doing you. living your the be you're a and

needle, bias, chase in would that's a component position think price of our $XXX of So moves aggressive off that lot $XX a our starting the really no, why job being be don't $XXX we super I and wouldn't take dynamic. the to

approach question $XXX million think just this you to took Is Got facets. next net for realistic of that you. upside helpful. has such follow-up could is, Home be historically, year about under-promised all number? Very there over-delivered that My in building to same it savings the Depot that when cost and

really volume a built that Well, of COVID. during the handle our explosion to capacity more function having in was number cost

side capacity forms And pill, then where of many that back. the we in sort other of pulled

XXXX. of It provide for to the move thing environment. buffer it right as operating regardless does margin And was to into the happen so do our we a

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

Pro business. Congrats wanted focus of to on role. the new side on the I the

past, still So the a distribution basis. flat the Pro commentary the for the the regional very that couple of and a about in growing been centers there's next much rollout complex on years? the the focus strategy Is with on

Pro, next out what zoom priorities those and are X within the you the years? opportunity complex to as X about top think the And with

Steven, for thank the about kind that. room, has much Chip in so knowledgeable you there. you. been intimately words and is Thank the he

And we continue and Chip, it of functionalities so some I'm bit that to will going to we continue of capabilities capabilities over to build. to little talk and some a about the leverage he'll the and that throw

Steven. you, Thank Yes.

march is earlier important the as connectivity the teams this as outside We the of into the an are the expansion going sales down remarks, well. our of part asset to our to and continue certainly in store build continue grow to mentioned complex Pro it was

single in flatbed and every shop stores that. our is connecting Pros Our delivery that day systems our ecosystem part to of

where in into those as distribution we to different look markets as support we we to from expand as evaluate expand best well our Pro. growth will to continue we So and currently forward opportunity are, the assets move

I Just to But about PCE wanted of this stable would a blocks it's help period I Okay. backdrop know inflection think business the the about revisit I business, question key are to Simeon's a to what challenging from predict. the opine guess you take because rates? building the really helpful. is it you Is you single-digit could market market moderation on if when low more about provide to be it you growth? curious I'm any shift? talked backdrop as

ticket had COVID the period, a at we're was and always that, what we during transactions. balance for Steven, Yes, between And interesting looking inflation.

by and size. we So we had had AUR basket ticket driven also up up,

the But was didn't so really high, have elasticities. engagement you

in XX% to had led what comp. transactions, driving and You ticket that's the

and prices in commodities And ticket. powering you'd falloff As come people projects. elasticity the were didn't abated through you inflation have a still that you've was get seen those in that has primarily and down, because initially expect,

stance Fed versus the mix it's a now higher from the pricing what's response versus and level And of pull of interest rates. forward

traditional all that's that and dynamic. it's transaction the the muddying dynamic So ticket

for equally now is But what for. looking us that's ticket and solid between transactions. And leveled. prices what's a have be we've comp said, as essentially And balanced healthy we'd

Our But of we're that And then forward, modestly. been And growth if that each for in out have be up our looking ticket was the going a still down whatever through nice forward. for ticket bit dynamic balance be. you might PCE in shift commodity, take pull a transactions, quarter. working we'd would

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

about The guess question that previously think price bit further. maybe a I I have, but actions, I to have just Michael asked expand may

So trend while. a tickets we've obviously, for I unique weakness this bigger been discussing demand now in and very backdrop. mean, a

But as your Home look than there other particularly price? could better demand that Depot again, perspective, to pull within spur 'XX, are big-ticket other potentially towards you from levers

Well, to Pro. the we're is demand drive with that the way focused #X complex

split our larger that -- $XXX And more we're it's serve and that a pros, So space as we've to on. we're billion and there's complex focused the demand. is $XXX defined key is Pro, XXX building that's capabilities spend pro billion evenly strategy It's that the what the that's XXX consumer. out if that

think for be we're $XXX very, share we Brian, and of of business white sort very and And focused that take years our to what and years, that, as space. a is I that is driver billion going on

my of quicker. Obviously, the Thanks, Ted. second year. you much guidance my for follow-up, narrowed balance then the your it. And Got --

on third in fiscal quarter. sales early trends trends about But here commentary talked You QX? any the in fiscal

Our year is track to on performance X our guidance. XXXX achieve first weeks full in the

Peter next Baird. Benedict comes from question Our line with of the

Another here. average one on ticket

So pre-COVID ticket around average $XX.

now up it's kind closer to XX%. of so I think $XX, trending

things curious, there's the have to Richard, It about I perspective -- inflation there like-for-like. not stabilizing. inflation on make is know exposure that? there a can any I you out How like-for-like big-ticket big like-for-like the what mix? just of deal the like versus you sounds that play innovation component think is of be kind potentially there? just your SKU if wonder But big-ticket as could and seems

Thanks for question. the

to think I few that. there answers are a

have all, First really portfolio. across of and settle abate like-for-like basis the of on we seen a kind inflation

lumber had in see ticket. years I those in interesting the and seen think big-ticket we've particular, inflation deflation, over dynamics it's skewing -- big in you we've results some as different

talk Billy, little there. a about you bit trends But maybe

response and we great both -- -- have reaction power mean portable to we capabilities, categories insulation, we're things seeing. back I and just roofing, like I'll on where the to Pro consumer added continue and where see you we've Brian to innovation drywall just see Yes. Ted's innovation,

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see pricing, anything stabilized seen mentioned, the I months multiple environment from what don't and different now. over we we've last As rational

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your Are you topics. latest thoughts around curious of those -- kind just

a very future. in maintained foreseeable close We've the debt-to-EBITDA intend and so leverage to you. to ratio that we do Xx Thank position

maintain with excess We as really our dividend. flow then the first. form we the respect shareholders to that consistency We we repurchases. cash, in to capital will determine of allocation. in also And invest our pay business We

in date, $X.X To no our stance. your billion. point, really to change repurchased we've There's

important I that's there. the takeaway so think And

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

Okay.

of just we does midpoint expect Is fourth a bit do deceleration does too Just a the reading seem thinking has about -- that? into if much little yet we guidance, deceleration? suggest been am of your of quarter, a implied I the it it that Or function business consistent. the take like a

as your part that, a really was And second a Halloween you said, or your into all decorating strong. Historically, trim business. of maybe tree holiday

I has fourth the think better comp your than this years, should it's different in that? Why like the third year of been be last XX than XX quarter quarter.

points range Thanks to of range. our for it for for truly and helpful felt likely narrow that become less We us the investors be extreme what narrowing the would range it The question. that of is we so saw the is.

an of of period to There of time levels. all from guidance that XXXX PCE back has a the the year from assumption our reflected reversion been pandemic year beginning the share our

has seen back. reversion that, QX. in share assumes that that steadily. assumption range way the the We've We're guidance prior still built but largely And gradually will for continue year. throughout an to Our not revert range current reverted, and all our

So guide. in there our is some notion of that

Okay.

said, it's So I like -- sounds like function the getting to the it's just of a middle range. of

one If ask question. other could I

You bit storms seasonality. talked and about little a

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right that seen is see of more kind the where normalized act up and little a and the in businesses as categories it's year what direction. So weather to expect line in trend a positive little you you'd we'd you've more say with that trend fall

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

a Tad, focusing really market us or Pro Dallas for Can that performing? average. on chain Ann, market update is just you the sales, on the maybe follow-up versus on how

differences markets predictable comment that any your like And can to on behavioral the able initiatives you're Pro you on noting the changes? just being strategic then very based I on seeing and Pro. analyze of behavioral maybe are -- complex maturity mean, you focused between

that off Pro. because of with saying knowledgeable on again engineer Hector of momentum success and I'll the about and us by and to a been throw And last working it help certainly the several Yes. going Chip over that. years deal the how are over you functionalities Chip, you to capabilities that start intimately just are I'll has

-- But what is -- Pro this on. ecosystem there is the is we focused are

Now see over the to side, And to And of complex those. and details -- give to to build capabilities in-store but bit as not these Chip, these little side the a leverage capabilities, continue on only kind going the of and we effectiveness Dallas. the in-store not we Pro. we're you more it out or -- I'll throw

assets And our distribution meaningful and expanded built yes, impact force, where Thanks, where in capabilities growth. sales assets, seen Anne. we've absolutely, inclusive of Yes. we we've Steven,

team sales the cohort best-performing outside of is Pro. Our all

and to mentioned going the appropriate I necessary to in continue, markets. that then add as we're So in assets before, where invest

or progressed better how Maybe expected. quick Billy, follow-up big-ticket sum Richard just it the to ticket a all to for relative quarter performed conversations expectations? like the It here, than up way sounds any just for

the big-ticket that would expectation. frame plan? us any on have way I big-ticket multiyear help trends. quarter comp of But to stabilization imagine You the sort for internal wasn't in progressed how versus

Yes.

were better out I from I listen, was interaction Having largely said it some our appliances. to related think how it position a called we consumers there. We great it. we is in planned -- inventory that,

So just to it our largely had we better inventory from some tailwind saw as that. how relates But position would. played out it thought we it exactly

the regions. with And hurricane, very the when then really, balanced very board the board across on shifts balanced early to were account across back across prior lapping comments, again, for and what the of the a year weather you some we the and

higher is of it's of of is think across sort for thematically point, longer a in repeat There I coming surveys. sort this projects. stance deferral larger just by important the Fed of the to to

just ticket true largest you here macro and we're all to forces macro that want on for us. the back that's if so the zoom watching, to And way the the probably

right. That's

Rosenblum from Bernstein. line the with Dean final comes Our question of

the to between really understanding sales of store Pro the the that then out Pro the complex versus My performance splitting sales overall question. Pro. My to relative to question and comp just is and Pro about project

put just comp. call than it, X% a worse DIY Pro, So sure one understanding, and very you to slightly make another, U.S. to Mexico. I'm up, negative close Canada and

And then characterize down or store you just the of to CFCs? call and Pro Pro, can X%, the U.S. the the either assuming X.X%? outside that. force And Pro outside correct sales you in verify I'm can sales through store then it, So relative sales

actually don't where rolled taking all or the every targets not Well, an said. we've it's market separation what of with seen out sales. We're like Ann And and first, your we delivered capabilities. that's last ecosystem actually is The in goals lifting sales. store part consistently point we've respect have to

the we worried, Originally, true. store. The is going has our delivered begin opposite to proven okay, sales to cannibalize

we way are pleased. so we're And in progressing that a

in respect your With narrowest margin the in Pro outperform quite some at did seen albeit first the question, we've the QX, factually, to consumer time.

Pro the commodity If quarter. for for flat impact, you actually essentially was normalize the

$X,XXX? big guys transaction determining you're us, Is versus constitutes you you us you small? for my could over how small like for versus clarify a would Great. project Okay. And that projects, And measure guess I project follow-up be be would when it can great. if that big a size just what clarify

at to are class When from volumes in projects, that sales some infer larger to doing look are categories We at and more millwork category from sales. we you kitchens, sell likely an extent, higher flooring, inference.

larger external they're the We to us projects of also they're shifting our data kind working nature We use projects on. of tells kind survey what from and customers ask that is seeing that what smaller. of

And so it's a triangulation.

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

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

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

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