Lowe's Companies (LOW) 24 Feb 212020 Q4 Earnings call transcript

Good morning, everyone. And welcome to Lowe's Companies Fourth Quarter 2020 Earnings Conference Call. My name is Rob and I'll be your operator for today's call.

As a reminder, this conference is being recorded. I will now turn the call over to Kate Pearlman, Vice President of Investor Relations.

morning, good and you, everyone. Thank

Vice today Here Investor President and Merchandising; Financial would can like be Ellison, statements notice Dave forward-looking Executive President you our Marvin to Executive which Officer. with I Chief this included Joe our morning, Officer; in remind Relations Vice our President, me Chief Vice Bill our found Executive and is regarding our and are website. Boltz, Lowe's Executive Stores; President, McFarland, Denton, that our on press release

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

discussing GAAP we found certain I'll US With turn to non-GAAP be A that, morning's the these Investor items measures. financial press Relations on release can over Marvin. website. Additionally, our will and to reconciliation be call this in of

hourly safety Good morning, protocols our and to in associates been we during protecting $XX year. support associates which always in financial highest by remain health million posed thanking our over invested communities. our safety in $XXX quarter, begin which in everyone. we and laser-focused to quarter, priority, over store associates total brought efforts frontline the $XXX million for communities the our In We the of for communities. assistance their the support of to invested million COVID-related the incremental the associates like our hourly customers has and pandemic. recognition unique challenges by in And our serve the on ongoing for for of frontline and I'd efforts the our pandemic,

safety COVID-related associates, and billion for we our the support $X.X store year, invested nearly our in For communities.

our Now, to results. turning

For XX% we off total XXXX, $X.XX. sales comparable increased delivered XX% comp per Those per sales grew year XX% a Company in and growth diluted growth $X.XX. quarter, earnings to and of earnings prior share adjusted cap where to the adjusted results fiscal over the XX% share

Looking customers results perspective, broad-based, exceeding over and for growth exceeding online, especially with from quarter US at sales regions the the geographic shifted XX% all fourth their of US, geographic sales all season. in Lowes.com, shopping more a XXX% divisions. comparable as XX holiday was grew On across growth the XX%

chain, store that they comps Pro across wherever enhance again, on omnichannel to operations, to however, shop, and DIY comps continue mindset driven Once retailing home. on focused remains choose. our our demand the by Lowes.com goal in in consumer meet and capabilities We whenever supply with customer to quarter, outpaced the our

home come school, home primary the for pandemic, and the four office residence, has recreation to serve a location entertainment. the purposes: a and During a home primary

continues Pro Part shop comp In for for our And facilitate a addition customer, show quarter our our on market our the Pro. component the rewarding by are our medium-sized of shopping over to is and focus of the momentum, success by was these returning footprint a to experience in tailor again. redesigning in the QX year. over the customers, in busy intuitive steps with our comp their Pro driven even our strong Pro repeat evidenced XX% fast, and of stores and small service for home share to acceleration DIY the very our the our to business offering efforts stores nearly continued mid-XXs total to a strength important strategy. Pros

will discuss new call. Looking and both online in needs our meet to customers. to the market efforts in-store and of levels, our service our the Joe grow forward, on on focused we're Pro existing further share enhancing later Pro

drive retail to our restrictions mentioned is COVID-related commitment progress by margins. Canada. labor several greater in to productivity remains into customer comp we're focused mid-teens on XXXX home. operational that for Home I fundamentals a and traction strategy, the the new tremendous delivered turning improving in and at everything playbook our despite earlier, growth to Now new We Total as And effect executing gross went improve gaining their with efficiency needs leadership made our The Lowe's during Canadian operating team which quarter. provide

As January; a Total Bath quickly a our two pivoted Organization from launch event. saving events strategy holiday to an example, to we Home quarter, in an during Home event support the successful seasons and of event

we and During other everything we toilets solutions provided for for storage strong installation solution events home garages, towels for out helped bathroom. a Organization freeing want The truly they space in from didn't our for fourth find to our event, bathrooms. and the tubs very home their who upgrade to valuable up a activities. with with January. paint customers Bath provided their services, do-it-yourself, quarter the And sales Both helped Home to to us even total event close customers to customers dream fixtures the need and

strategy, gain making while I our our shift accelerating market from to right retail to share. total efforts forward, Looking confident investments am to we leverage fundamentals we're the our focus home

drive will in enhancing reminder, investments strategy acceleration installation our online, Home and a pro, our market by product our elevating Total services, assortment. share As localization

share as for will that drive sustainable growth us are Pro We solution home total our and initiatives these DIY customers. deliver to allow a we confident market

to for appreciation to of Before I associates I'd need. their to like close, this my once communities extend time again dedication in serving our heartfelt our

of year. in but bestowing vaccine taking the Lowe's professional And made of which turn wide range enormous not and with time and Canada, our that will communities. to challenges in number presented rollout year remains we magazine respond associates gains our X the Also, the the for recognition, And challenging the Fortune we business efficiency. customers continue newly our be potential the marketplace and During we although customers. of associates Number unpredictable We're sacrifices Most personal to And XXXX. operational and grapple agility Lowe's to market very numerous that many focus our notice health is the and that, a one Bill. XXXX Even Retailer, macro years. And continue the our will uncertain, on know the we first by and with pleased recently operating developed to in that us share I'll honor outcomes also by quickly reflected safety over our underway that by confident Admired Specialty our we're drive environment as will most with I'm XX recognizing priority, the to as call allows lives, on lose US is supporting for very a COVID-XX. in humbled

comparable XX.X% Marvin, broad-based we've Thanks, the in online And quarter. across the growth growth customers, in-store since improvement and across and everyone. seen trends of Pro departments. both all and home fourth consistent the good US sales We was DIY and delivered morning, with quarter, second merchandising

positive DIY again, quarter. to meet driven national inflation. unit projects well customers, our offering the private we fact, well execution, ensured during strong once In high-value comps the was, for Pro commodity XX balanced continued top as Lumber demand positioned generated well-known by the performer, demand brands, were all combined and merchandising as home-related with of elevated across that brands, over with of compelling product Great XX%. departments

gutters. other Our keep Several stores did our with to and pro-focused merchants business which exceptional for quantities. and to to building building in-stock above categories job-lot product these improved including stocked service of an our was job exceptional us Pro ensure our materials, and customer with our categories. driven strong supply in roofing with vendor XX%, an comps chain allowed An to continue by were and teams have working demand in partners level demand up that grow posted

categories garden also reflecting outdoor the home. living, XX% focus comps consumers' seasonal delivered in and the Our quarter, lawn the above and on paint continued and

drive outdoor in seasonal The holiday Our heaters delivered sales also a and pits. successful that fire patio holiday key exceeded brands to Tree Trim selection program strong a customers' team our the with grills, season leveraged expectations. and team living and a

its we enjoy saw as chore-related in worked in As of the growth these driven pressure strength theme power the notable by outperformance both strong with snowblowers, the of remained outdoor and navigated generators was delivering throughout quarter hardscapes, products. continued in lawn quarter the And their continue and Continuing spaces. outdoor comps their in enhancing cleaning along nursery, paint were garden, as strong strong with outdoors, to interior customers exterior as to stains performance also maintain weather holiday-related and consumers category with favorable. and finally, early weather our planters and live such sales as outdoor equipment product, the washers categories Outdoor the areas.

turning results. Now to online our

over and the the working time-pressed year, As build the consecutive the which completed we in offer this growth our simplified further the our LowesForPros as and to on XXX% replatforming to And checkout half comps Pro. user Marvin the enhance customers for And up out cloud quarter, also online. we during online. enhance first process these to Lowes.com, are with of then speed XXX% sales with significantly customers search now we be the we to on mentioned, third features we will to loyalty experience delivered features the of shopping continued quarter that

resets our now US the stores quarter, complete. we last As our with layout approximately we discussed resetting of have XX% of been

to expect drive by greater achieving with key three sales this We foot square investment. per productivity objectives

as through First, front Pro store. to faster of each relevant intuitive products added at for driving other experience Pro products we've the and and grab-and-go more shopping a adjacent placed flex area a sales now the

like positions the now call which aisle up the main shop Second, We're Pro easier and by unproductive by who local category of this period products, to increasing what that in strategic more market so bays, customers, tailored now teams eliminating both appreciation time. my sincere our for or our better without which cleaning to stores offer market. third, all initiative execute the to to new the us I'd products share confident are store. for to across power on driving to diligently we transactions moving localized well of a And gains. space opens such planograms basket-building product accelerate the of bays short finally, our assortment then worked Company to the DIY junk

our elevate and offerings. to continue also We product brand

as in soon position make provider retailer with US US: Plumbing appliance to the Mansfield will become continuing brands and addition the improvement addition appliances Products. Hisense our are improvement home of customers toilet And the only Kohler, on Lowe's the Mansfield. retailer the build and our the home stores. the in offer This three top of Lowe's to Standard leading American to Midea exclusive We will

spring our new Aaron's. we're to and Deere, transition as the great OPE, we by our positioned the the safely a to Husqvarna, we power position teams preparing around anticipate we wide have in of outdoor the customers, EGO, country. to been season our spring, sets arrival leading As already completing selection in Craftsman, Leveraging Honda top-selling and John in from equipment, battery-powered have brand a serve

shopping to allen of all products forward to ensure refreshed confident addition, to will traffic our spring We're by vignettes centers grilling, retreat of their well program, inspire garden make a many think as our which we outdoor enhanced resilience as to showcasing and next great you vendor that as I In further furniture, will consumers season. they I'd a utilizing offering. express thanks looking by engineered changes our of continuing technology flooring Lowe's deliver on in + while continue close, partners our WetProtect protection during like have total provide about support, we flow provide to make to call. to approach remain my improve And social need brands offering that differentiate innovation continue mind what available our Weber the guaranteed the and their terrific showed more was inspirational our will drive distancing, everything upgrade are wide a looking spring protection vendor for our of spring, exclusive and to and before will within for that space, the reimagined and this to vinyl, and We're dedication launch to roth with merchants patio over great customers you, extraordinary will for moisture we array both This and leading products Pergo grills level functional outdoor of are an lawn and patio new to and tirelessly of laminate, sub-flooring. these and garden. I'm Char which wood, homes with truly we finally, the Broil. a flooring excited is we demonstrate sharing Joe. spring for the two peace we work Total Thank high to as in and season luxury demand reflection our backyards the to product I'll rigid including selection year new a levels turn a in teams leverage This flooring in complemented And of outdoor Home will meet that safe, and call services. now to for and consumers of strategy. our

crisis and our associates of in $XXX everyone. and forefront brought announce of Thanks, once And the presented in Winning profit level. our under I million Bill, XXXX. at to expect as that $XX associates been permanent January, for are of challenges more part-time our imagined. seasonal communities us our the associates, way This And for hired Together payment XXXX incremental this the in full-time on good quarter a In again to that once of the year could bonus This exceeded Lowe's. our get our and XX,XXX over customers roasted over in the past Lowe's communities target morning, XXXX. always announced outstanding responding million. full-time that roles and an their efforts, again have expectations, million XXX% total could again be past totaling bonus This to because more each bonus few the associate. on service exceptional the the associate more efforts $XXX associates And to has into the spring challenge assistance in Lowe's. than to over for hiring a we associates represents million not year. pleased the $XXX COVID-related in through supporting $XX of today each we're customers ensure recognition our XX,XXX shop stores than $XX we builds bring fourth the with retail this changed they from of row, sharing

evident to our rolling Nowhere orders online increased they the Lowes.com with these demand. rolling BOPIS are contactless of we few over improve the began out capabilities fulfillment a roughly multiple quarter, more X,XXX to by this lows experience. the of fulfilled our We support began months is customers, for lockers growth all shop customer in needed April, by in And later. have on pickup launch stores US we've dramatically continued We our sales stores in year. curbside lockers pickup with the touch mobile first app options providing And in goal to meeting to XXX% rapidly to now and enhance our we to than then for whatever stores, stores the to choose. expand this out XX% lockers in way we consumer pickup BOPIS demands the

the their in-store fulfillment that arrive announced dedicated handle This that at standing teams Last store. quarter, way out we fulfillment are they enabling on alerts quicker customers we we fulfillment were began to to technology up rolling stores Geofencing all up orders. our their orders, pick when when quarter,

enhancements, of fulfillment on the new BOPIS from and lockers and of teams, customer improvements in these already the Geofencing the driven technology use to All focus satisfaction have to speed the service. easy

number of the in a This to enhancements hours Importantly, that to for productivity by the dramatic improving we've evidenced fulfill teams the leverage fulfillment they app. orders is are picking reduction also made needed pickup. as

fulfill X average year than now orders can we ago. fact, one In faster on times

with to let's the Now Pro. turn our performance

delivered As comps mentioned, in quarter. Marvin mid-XXs fourth the we

pipeline, our any they focused books they their Pros only Loyalty enhance offering We continue Pros the get to done. need on providing job of tools not but need business. are This close their also to just Pro years, other our the like to project with time by

TurboTax. to a our are members the As true Pro partner with pro, Loyalty on a we now providing discount $XXX

Our tool. and existing need. Loyalty on as service repeat building we Pro for customers. thanks lot the looking I'd Pros, demonstrating fantastic the differentiate team that up will to the our is home for Pro is stores value-added their new done. and And better consistent forward Relationship day, selling commitment history, to XX months all and grow through Pro executing year-end process. Pro to transaction Pro well XXXX, momentum this this I'm way truly provides strong drive in new with to Loyalty year, continue continue we brands raise our with be CRM or members products new desk January, out rates launched from actions. retain like close bar that we're which Management, our Pro And for that also to these to offer can technology greater we the and It's they Throughout data-driven on grow of penetration manage to Customer is levels, job a expediting entire like offers are accounts offering to and one right our quantities the offering. newly the earning Pro Pro Every we job the the to Lowe's reflected special penetration. Pro our through late Rolled a in tools our export

for customers. We a associate will be allowing us will associate Pro the personal better with expect their enabled and our type tender that Store record-keeping Pro facilitate stronger by currently for underway, we account, is to also training able more this and tool regardless targeted transaction any relationships business. outreach of specific to

improving time Over our that the our enhancements made serving spend aisles operations with few up customers. free more in the in the store technology years, productivity has team strides in past considerable stores, to associates

key Perpetual our multiyear Productivity profit. we PPI, our we that continuous productivity leverage play role in Through Improvement, a will we are kicking in a or new initiative into technology initiative will XXXX, deliver to are processes new off enhancements. continued calling and This in operating PPI. As productivity productivity improvement critical we operations move store

Some on multiyear to new With name rollout a that, set systems of on the over Perpetual management in of we POS, our to $X.X billion making workforce investor look under store productivity tools, the of $X.X expanded goal Productivity future modernized it I will PPI move the and industry-leading December that the checkout a digital enhanced These progress are to touchscreen these to to inventory functionality most forward toward incremental store are to important productivity significant you we OpEx in-store initiatives deployed technology help few. initiatives management handheld infrastructure, a devices achieving signs, Improvements calls. updating Dave. billion update. turn I'll towards at us

Joe. $X.X returned begin this few morning you, Thank dividends. shareholders $X.X In capital we of robust a performance, comments and generated outstanding billion cash strategy. flow the we fiscal with to our I'll allocation in repurchases free the both share through combination operating by regarding billion driven Company's XXXX, and

share. During $XXX dividends million the fourth alone, per at quarter paid we $X.XX in

XX.X $X the $X.X share. also We a for at $XXX the total price million This repurchased an billion approximately year. shares share billion in repurchases for brings of average to

debt-to-EBITDA our remain We credit remaining business unforeseen billion We fiscal have long-term and balance immediate the significant we strategic in and that billion flow We billion $XX our initiatives. $X.X circumstances. share facility, of the undrawn navigate shareholder value. for $X.X with strong ratio end full access in to and to on and with confident our as to drive billion support any on funds. X.X on have totaled cash at authorization XXXX along year, our in times. our capacity the have year we ample plan growth ended approximately in we $XXX invest of liquidity million cash billion utilize to revolving $X cash quarter, repurchases Capital adjusted the stands sheet, $X the expenditures equivalents At to the

quarter, previously-announced turn restructuring. like QX, very statement. to a to generated GAAP $X.XX I'd Canadian an of related the In per Now In operating there $X.XX income earnings modest the diluted the we last share increase impact to was year, of to on income compared XXX%.

of comparisons strong as These benefit dividends. operations. focus increase of ticket higher-than-expected to applicable. continued billion, inflation and basis on government and strong $X.XX, XX.X%. execution from both with to my due the were average stimulus new and the points results reflecting comparable from customers. where XX.X%, to a across Now share approximately earnings will driven $XX.X by from transaction as repeat of diluted Operating a comparable the home, existing of sales sales rates XXX benefit modest was QX, growth store growth of to checks as adjusted forward increase a drove XX% sales certain by XX.X% of comments Commodity This next with compared the we results quarter the comps round comp were experience an our the well delivered this geographies. prices. our balanced quarter non-GAAP up continues US quarters, growth consumer past the as control a point In to rising margin focus merchandise on Pro driven was in year. and prior and per include our DIY QX both XX.X% customers, improved in strong productivity were few lumber pay across departments for cost well selling in of continued volume, sales quarter and channels, consistent

comps Our in the XX.X% XX.X% US November, January. were XX% accelerated December, monthly and in in through quarter

appliances, benefited to on which product driven the promotional product process took rate by manage and in our sales a all gross in over stance points organization government events more to less significant basis effectively margin the points quickly margin As management basis improvements bath January. January Marvin home down our focus pricing, and last from categories, round was cycling year. cost X strong early strategies. last year improved across including Company Adjusted mentioned, margin holiday We second the in quarter. launch also on season EDLP in a execution XX.X%, gross from XXX stimulus. modestly from promotional our late pivoted December margin, Despite selling and of benefited continued

inventory basis and adjusted offset demand led points good pressure sell-through shrink, pressure lower XX from basis products chain strong gross points from from pressure basis addition, XX benefits In from Adjusted to SG&A pressure margin to seasonal XX of QX. of write-offs from XX XXXX. These points by basis holiday cost, points of minimal were to and installation of revenue. lumber basis levered of XX.X%, credit points XX supply in

we we our programs $XXX of to related COVID-related frontline and in assistance approximately These investments in These expenses charitable by associates SG&A incurred and basis $XXX points. XX million approximately cleaning well anticipated, financial approximately safety-related as as expenses. negatively approximately million COVID-related other As $X $XXX million included of for million $XX approximately million impacted leverage contributions.

we incurred US expected, million XX stores the in approximately SG&A As $XXX reset by leverage project, points. which impacted approximately negatively basis

our mentioned, volume been payroll occupancy approximately As higher by points sales operating have completed offset resets approximately Adjusted basis basis of incremental was and offset chain the XX in points stores approximately to efficiencies, to significant in drive improvements costs These operating XXX advertising the quarter improved margin up stores. XX prior sales approximately income basis of Bill investments of long-term of and and leverage were XX by store related XX% of supply of leverage to the our were leverage basis as X.X% points somewhat operational points. for growth. year productivity

and fixture The to effective QX. in tax depreciation is due was higher run In was of better-than-anticipated tax business slightly rate. our in investments Canadian short-lived resulting addition, technology assets The in rate adjusted levels increasing versus our historical XX.X%. performance of lower-than-expected store

lumber increased inflation approximately the sustained million. throughout values customer levels At by inventory inventory our billion, up build and year-end, to high of demand. to meet levels the was inventory continue quarter $XXX $XX.X We

planning and business close, we're about in our let current trends Now me our talk how before 'XX. I

year, February of encouraged the the quarter the from winter sales impact easiest we Although recent we continued that month, trends is strong this that apart the fourth in broad-based the have saw storms. comp are this

XXXX outlined availability our companies, remains planning vaccine the Like of how trends. restrictions like we remains we're widespread will limited our business and be balance will future there in experiencing approach be business COVID there unclear Canadian the with the when into at whether additional COVID-related today. of the year, It have a update. to Looking at many our investor December consistent we visibility

be and at heavily in uncertainty our levels. near-term how performance our pressure result home broader weighted These different less downward create from the penetrated moderate in mind sales the Lowe's year. we that improvement investor market market-based update, might the robust market market of DIY Given $XX in for market, home more it billion expectations outlook. December on total scenarios $XX three online in is which modest Keep three or the outlined perform, scenarios billion weak, improvement than mix-adjusted both business to the on ranging would

While each XXXX top on we result cycle scenario initiatives our outperform industry line that a will expect from the unprecedented as this we to share are represents delivering sales as market continue focused our growth, decline market gains.

business. At $X.X totaled efficiencies productivity perpetual with Additionally, investing are of the initiatives these And each and drive same investor from that in ranging comments operational consistent environment. XX.X% scenario, margin each demand mentioned year-over-year, my implemented December, scenarios programs to Joe billion depending our the incremental equity through investments and we XXXX. increase at of we slate to And operating wages earlier. adjusted XX%, the XXXX expect to have in time, upon the in associate frontline a our update we are in that embedded in

We non-recurring XXXX. significant also spend lap will from

would very in in line experience essentially modest seeing the still year, this with While sales scenario. year, relevant home the approach market market our it's are trends early This will billion. robust a and improvement $XX we the contraction scenario market assumes

with we remain agile store in expenses. able consistent to we at the will We and Day, and are are we year. share market, comp expecting And $X incentive rapidly what billion to labor, in outlined to Investor advertising quickly flex changes any this react repurchases

little selling robust planning year, driven capital season. in the given by quarter by should first more roughly spring Our are the the of concentrated And but be we approximately for repurchases $X flow activity billion in a in half generation ratable 'XX. cash expenditures our

its excited about to future ability are and continue With shareholder value. to business remain extremely of for So the questions. in we closing, we sustainable deliver ready our that, now

Thank you.

We Sigman Our the question Credit first are comes Suisse. [Operator with of line questions. from ready for now Seth Instructions]

on all congrats but morning. scenarios wanted relatively the December. gross guidance, included to Hey flat. not on question follow-up discussed you the Thanks and guys, for it point recall, in the Obviously, here. full progress. good I Dave, I taking guidance If margin the

saw maybe still Given down be the in outlook? we margin slightly, quarter, about fourth EBIT as we you How about in the should pressure margin SG&A be get to the more that? from same I'm to curious, thinking gross just should thinking but benefits 'XX

Seth, Year. question. Happy New Good

think, margin Clearly, and focused cycle that seen on we're as year. we through importantly, you've consistently us income performance, we're operating as most expansion I this Just is XXXX. focused our into gross improving really margin do on

We continue product perspective. nice make a really cost from to progress

I we're seeing think out from supply is future and demands investing also meet the consumers what a make us that the perspective building future. to of sure the we're in do to chain needs you're in

So longer I the excited about that expect think do gross I margin think term, that. about flattish. we're over it

what think as some experiencing from materially headwinds are We but lumber, inflation about Seth. discussed from in we nothing changed we has December,

pretty Obviously, you've you about helpful. been seen strength thank Okay, just for a that, has follow-up broad-based. question demand. And then that's the

acceleration. category? may you're feel changing? year. the seem types of of or that this evolving just question seasonal pointed acceleration you see projects focus that like constrained an some the you mid-XXs that's How during how curious of it Pro comp their in does been some that the seeing I'm the does of the like in projects bigger whether to, Beyond customer an been have parts Because you've And the part is the of variations are seeing, the consumer

on get So, that. Thank little wanted I to a more just context bit you.

a this Marvin. bit I'll that, Seth, part and So of let Joe Pro. I'll take comment is on

your think the XXXX, look environment can to relevant. I comp very questions you at the what during said, are And to cadence As saw the the quarter, accelerate state And forecast. obvious, when is is a you we say throughout. all we've difficult month for us

for comfortable their the that and events, our all two You gives the upon sales indication that continue activities and month home in importance the customer those COVID project to and look performance, at Home still mindset and more of event, livable which to as Organization that an Bath discussed January, Dave Home significant you both more the various ways is is us. Total the of find a make into event leaning the has strategy forced they the I

performance. the So installations. the to about feel work all we years a to Pro service in again, ticket, ticket, platform the is, proud categories. the about two relative question short small our mood retail Joe to good big let We I'm feel a and we fundamental great across and gave Pro of that customer those strategy the in because, put different just of all little talk place answer effectively great position the the to customer. we're trends And last very going your bit us about the

around year very We're Pro mentioned early just not Pro. I'll soft their Joe business became in comfortable discuss little homes. on normal because occurrences around As we the strangers in let environment comps the prepared customers more comps. excitement in the of bit our a XX% of allowing quarter an being And we mid-XX% delivered year. in the hovering where was for the the comments, this in

Thanks, the Marvin. you And for thank question. Seth,

correct, to space. the nice underlying excited QX, did in see from about demand acceleration. You're Pro comp We're the a we QX

the space, throughout at that the look offerings the we've kind expanded we year. robust the about of pipeline had Pro there product in As out that's thinking

Pros all confident US I the to addition, for on and addition, ease we these close. of progress we've to Pros comments, year-end reset move the the shop. in created fundamentals. in then focused And that forward, prepared we're and our expedite that In their benefit area And from as that things and TurboTax my continue the help stores the been mentioned like making we to Pros

the that out very what's the addition, CRM excited Pro Loyalty integrated happening inside about along rolls very about business. growth platform, and Pro the excited with our new of In

all. Best luck. you Thank of

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

are gives Thanks, base scenario? more but some question you everyone, and turns think that? year you that and -- twist not, towards you for tracking And case we're I as have good the it a the My or if one. that mentioned fact Dave, in confidence is morning. as any the you you goes? in know I there that as Do confidence you interpreting more Or that it confidence a Or we're perspective, if the business outlook expecting or tracking is robust first I was the case. robust, know don't couched will. on

the feel we're Listen, only encouraged moment. I we by into think we're the year, but I a that the at few trends think seeing weeks

Marvin So think and Joe I health I actually of Pro the accelerating as the -- think we it's just articulated, sustainable and business is bit. a

living invest So support many and the to their sure both them the At home that. remains in an their for make needs is that consumer continue same continues sustainable but that, educational is kids, in I invest think time, to forward. also we asset good about going to healthy needs cases, that feel really the to the and for

early we're but this So pretty encouraged point, still. at

to can't we'll I'll what those two, the that retail our this any confident implementations morning. and, We Home We going all store to at number Simeon, that put going XXXX operations, our it's a continue share us like. take XXXX income. the believe of work in degree an allow of what we're IT lot we fundamental of to to two believe reflection hear Lowes.com, hard flag not and say is on place we merchandising, to we And improve those operating probably that share; market income. think theme And initiatives predict anomaly. infrastructure. two And add we're time, and and same one, back Total look believe we're Marvin. macro acceleration is, operating in was a high pro, across things. that strategy improving market us, for same take precision you'll we're that go things: us will Obviously, planting is with number market just But I going to to

divide way if we if versus line-dependent of execution transformation-dependent. in expansion. amount bridge scenarios. And internal it or versus know follow-up for the how robust points, think, Okay. look my we I you I don't XXX basis is that can at margin case said, much but it the I at don't we other top it if or could among that know looked and

kind it well of how show as you go to business. a -- aggregate, gross gross And is I about, And Analyst does us performance relatively I of flat think where we perform SG&A to building to little I of margin maybe how that for would kind might was again, guidance slide rates perform. as a just block Day XX% at and our a going our look walked that SG&A back across in XXXX margin where improving of presentation. from -- end and margin rate in presentation our us perspective. encourage bit the this the had largely being is

Okay, thanks guys. Good luck.

next McShane, proceed Our Sachs. from is question. Goldman the coming question Please Kate line of with your

your a don't of put further my percentage there into just thanks question. or if you taking way Pro any us thinking was is as thanks. exposure as of with the wondered main what for you today. sales if stock that is, Hi, and the of on competitor. what today? your XXXX some there is I up wondered like price insight the initiatives, comps all feel as that your big I to have Pro could update was But I you've is Good there any in percentage morning, because is ceiling valuation the sales with

best answer during as pretty this that, to Hi, way significantly our we're know, XX% the to XXXX. of to key XX% The obviously, that out-penetrated I'll to DIY is the going that Marvin. stick going you The out coming reevaluate Pro much penetration. Kate, We're year. is that, is

may Pro the to So consistent to a DIY at data XXXX good, look we know and be relative data penetration. not that set

in probably related some initiatives comments the half balanced specific to prepared the need also in of through out. What get to and Joe's is, say mine, I XXXX laid we that cycle Pro. to first data we So really can of out the

square we by what two productivity drive was things of the why gap the multiple Lowe's to one is should operating than ago, focused it main a and throughout store years a entire was reasons key the the foot sales productivity Pro penetration little per categories at Pros arriving product had on in of that One less store. we over income have because significantly been. relative

to as perspective productivity a from the on know because And is operating for we well driving us store. of space our be the so overall income part as to improve Pro focus going critical it's throughout

later you to But year answer. and to back we improvements. it, making focused an great get in is the think key we'll be we're on we're So, going on the

it we just Kate, that bit little And look a the I'll at add opposite.

over us opportunity big segment is significantly accelerate We in is investments that really all we're And years. the that several the allow are under-penetrated, have. to making next to we but the going pretty business

we that in number to And that you. to what on bonuses thank relative think question is associates my how Okay, wages the given of XXXX, paid then XXXX considering about during that and just was follow-up in should time? were especially

is we at make earlier laid income benefits, programs this mentioned any in year and our we So a billion was XXXX Marvin. can. analysis, what wants the December it. and incremental the morning, he financial pre-COVID. in his in the that reflect The I'll Kate, in investments associate-related prepared provide out XXXX to for and out what this And from $X.X investor and think take other if in for laid operating XXXX, what intend update Dave any mentioned we've at level, comments, But additional the to highest for Dave Dave targets associates. and equity good investment that us, news made wages, I

in highest US. retailers catching the from an are made pathway enormous associate why are say that so an proud have to That's we going to investment candidly our work to to we up. that that We've catch the we of one investment very retailers been wage COVID, up already we from so hourly on speak, to wages the need perspective get an other to bogey, make So, into standpoint a don't up. we're

the at the our So, at how But than look see into we guidance make anything of has to Obviously, needs range guidance we discussed that. look tracking, be least the has we'll factored and business XXXX financial plan of at or been that Dave this investments don't will as already materially we'll that morning. different in December associates. is any any

two our the levels a last few we've floor on simplify to the floor the you updates some of of think if question. what work sales the associate taking sales And Marvin all said. years, to standpoint the store Joe, about the done. given, from and I'll store we've over and thanks just So structure, we've been steps operation Kate, add it's things for a

And workforce management I has be about the our balance of tools model, able operational the transaction-based on and in continue, the laid very to feel labor so we team initiatives in labor spring addition, addressing for associates transactions efficiency and management to by good deliver any and will the the out, that market, hiring done need the in finally, then, where We and we of coming feel to adjustments confident a we've to. by season, measure position going we we've made forward. so markets. sales job need And the difficult-to-hire pipeline nice feel ticket that

you. Thank

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

Thanks my morning. question. a taking lot Good for

in at -- the of even scenario, PPI low end at come introduction you'll even that sales you likely end initiative, in end in the middle if the profitability for come it don't come XXXX? the Given of of is high scenario or if the you your

to what very we at think we're a set not go and will, going sight business. I segments diligently all time Joe kicked income as line we just going of a a after do management we our very to Michael, the operation. say operating bit is so And over that. adamant probably improve working has a that. to We're off But That's if And our of I'll And focused really a major little effort sales on performance. team can that business, we're we're as we're that. improving good controlling improving that that. and dead we're doing have across about really sure we're look making these to that We're as pretty scenarios is control. productivity more it's doing probably specific But across guidance, what it our Clearly, you Dave there. here. we're

it margin more like at on Okay. be year return near what's the likely to promotional than for pressures, some a chain going seems and gross at least probably your drag environment. And least puts to supply have this you're inflation term, to takes more with

in already margin gross your with offsets? scenario, that it declining you in in keep flat do the are So fourth XXXX? the What how quarter,

and a few We've from enhanced promotional in listen, different areas. our Well, a we're perspective. just merchandising pricing tools, focused

have think I perspective, value a to to and kind an merchants negotiating more of drive back consumer EDLP-type perspective. the of real environment, special a how cadence going and at of think looked buys taken areas out from at, the a time in step from promotional same just certain

top I think chain line our manage how the our we're online business same getting a next both we about lot to supply profitability. think more deliveries and efficient of on same and to home do in out to to layer time, day, be need the drive we to At day job improve more we and the as efficient site.

those our that's but all some to focus, is also So, Michael, have operating part yes, have. gross margin And do that job levers manage our opportunity headwinds performance. actively to our -- we income that's through, again, we're using once on flow those real are we things And of improving a we're headwinds, working that the performance on again, to with manage improve we're overtime.

Okay.

Michael, this to I'll just a that. couple is of comments Bill. add

we've been of everyday years, competitive last on of As journey a get to an we've the couple to said more price. over

a our done Home perspective work XX of Total on months then as and as so our go in. one getting had part our well. And gives that And last strategy credit a doing have been the prior of we it's and opportunity the in and that localization us margin coming unlocks high-low from typically for forward to key of we initiative, this this we're of what less approach leadership team we lot around

that we're what So, in on December. can deliver we said confident we back

you just could a the year stand versus to quarters. margin Where lever though. that that, that a in your might headwinds pricing you next If of in position clarify gross experience have you of you do might can couple today been you as terms offset where of some If ago? use

is in and tell today Bill of work say, day ago had I'll truly versus What is we years I Marvin. that have what the and What is a this tools look, Michael, you two set is night difference. currently progress. it's Well, can the a merchants

have we ability the us in using now to pricing gives I can and years were smaller in we clusters. localized two markets. it mean price more broad ago, So instruments to price blunt

to we get locations. down individual Now can

different into the lot it store of of volatile is In goes expansion allows product solves major that capture to localization, the a But of benefit addition things And the like couple process sound Joe you changes deal, retail digital put price-changing Bill's but margin. there to way and not in can have may a a point, that, in a talked have signs. frequent, the where market. It significant right activities, parts one labor digital And costs if big rather that. you in to of like gross about you right are a can issues. place, actually you the

strategy the to your destroy simply just riding from when Bill, just big, waiting gross sets, doesn't So and for deep just exit that example patio get seating geographic and products and saw lawn Joe it in happen perspective. mowers markdown was and out. the the in margin clearancing I'd your wrong walked location in to I a and West everything Philadelphia because because it update you're shades use store was the at other December

to don't right we have right location so all So we deep in markdowns the exit. solve team that, product of Bill's is working to can so the take

the -- will against our headwind things to those own chain. of we're a play go all making, some create like So investments us supply up giving in role of internal in to

activities. we'll the updated keep you So, on

Thank you very much.

with proceed question the Short of comes Please Barclays. questions. from line with next Karen Our your

very much. upside margin reinvest But had your the than about cadence that? be even end should maintain I think I then we probably kind guess how you'll know, thanks of better range. you opportunity? and previously? would end you're the of you And to said, Would one you guidance slightly as be at Or I indicated you'd contemplating Hi, trending that operating actually of or up robust that, there kind follow-up. if

Sure. Yes, ma'am.

outperform is and we gain the this share to is way is question best market the to Marvin. in statement expect that simple XXXX. The answer So Karen, that

because market our top and So would that the that be ears, if the it line on would only would we scenario, provide performs on opportunity robust music with our better to bottom believe the us line. than upside

market focus and on So will income. forecast going just and be very, improving us. have for operating to only taking again, improves And singular we're good anticipate, we than than better news that macro very our if share the a better

update then thanks. quick -- this, Loyalty to some then, same wanted Pro timing happen card if Pro I Great, at to you of on but to would you'd willing And the Loyalty with be and time the credit a the Thanks. I be program? does Or the as willing members just don't of combining number the give provide the see, color know migrate you of with to us all Lowe's cloud? just that low on

is tell What perspective. with we're easiest the as number merging competitive of very we Joe platform. you the pleased we're adoption the we're the a to credit I'll very question, loyalty is, pleased members not can a that. that of the returned going So visit with the rate with take about result from let that part provide and and I'll the talk of and you no, of

this is Yes, thank the Karen, for And Joe. question. you

credit our together. Pro migrating be will We and platforms platforms our Loyalty

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Pros, And number has work what delivering the excited although of themes, is team the the Pro and so those the underlying done. about all with we that won't release platform we're

Thanks.

the with your with line Christopher question from JPMorgan. next Our comes questions. Please of proceed Horvers

was? in think talk the the you compare about think XX%. What that saw how morning how good lift you what comp, when would do hit? everybody. And at stimulus Spring stimulus Thanks, to Can last obviously you A helped there business January? you very strong lift you

our comps. here. points Hey, from as new perspective. the did think help XXX that XX we I between into We somewhere basis estimate Yes, cycled year, stimulus, Chris, and do Dave

I been has stimulus I the and moderated on gone has -- the little a now, it as of performance bit. impact while think has a for think

it an year dramatic trap think I we hit, but has it we see -- hit little as those up do So checks ago. a inflection kind bit, do of first not or a been as see when it when do basically was it so nearly

And just then gross as think Understood. the you the on margin. T -- about to square

potential have chain the cadence So you Is investments. to scenario. supply in XX% shrink the slides, You freight in pressures have there any do earlier, margin flat around probably the robust gross that? in maybe

relative a to maybe first expect So down in the it you that to net and back in half be XXXX, then flat way? up a the half, do bit and flat

to back I two this performance think focus about bit I'd say of things taking at just demonstrate the we're end little Marvin's continue more you'll our on probably in give some operating talk color a and are metrics. two on is than just hear that's consistently, that those improving point, in share, That's focused that, we our market what at that the specific year could day, this point you just income. to time. us

a Have Understood. spring. great

you. Thank

your of Eric Research. coming Bosshard line is question next proceed the Cleveland with with from Please Our questions.

of areas of the some made of areas Good of gains the chain supply morning. different online payback the making both of making How the areas, investments, incrementally? I'm think to accelerating process. those are 'XX? terms especially about where what is be Curious of really will you're that future obviously where you're to of investments those in I'm you're understand And end trying to investing is incremental growth. you've But up Pro areas, in and that growth experience those both you in the customer some curious them already, share in in in from in what that, and do terms in regards

trying investment individual is to we Marvin. which and committed between pathway delivery XXXX stores we're Eric, question, Specific And the billion we're on to XXXX, model, your a on, create $X.X that. delivery achieve the a the of years will our supply transition So market-based from chain model. to of to to well this early infrastructure pressure market-based and a

ecosystem to In that, a they shop trying that model choose customer a serve addition to will to creating. any that this omni-channel fulfillment way we're in we're develop

to appliances. seamless delivery have different? relative bulky items visibility with customer, it will how big be appointment, arrival, a that a and It different better will to you specific with starting be more So any scheduling would to and

the more a or have appliance the you're in opportunity if space, to you're DIY So pro, purchase for going to a seamless the product.

to fits customer Just an process has associate going scheduling back an to will and to take a find to availability the try you it's clucky and through calling an this date historically, done customers' done the been at purchases by is appliance, how the process inconvenient understatement. manual be a a To of product best the and when schedule. say home that customer the

a to store also create side on center. digital an in we've whether Now customer or system. transitioned the to inventory, experience. it's visibility openness where their to doing choose What model omni our total their scheduling associates distribution a trying a in prepublished And can based have we're own is market-based in our more date Pro of on

see You're lockers us site year. you're our flexibility launching lot going delivery see have more us to Pro later this Pro improve around And job to that. with and a going

supply those operations So chain, partnering see activities to later wait with a there those. a customers of Joe but lot day that other those underway are into get that will in ways to we'll two a And difference. are

'XX, and to is, And question The 'XX, in sales either of sales upside Dave. incremental guess year story of diluted margin came trying Or change? the for the be margin play expand helpful. the of margin margin the better the business. through upside but the scenario, made incremental to can I what an scenario? that's get a in an scenario? that were incremental sales incremental And Does Okay, 'XX obviously, or in in sense same as upside necessary, in were sales a in sustained I'm then the does investments one incremental there business

scenario, Yes. should your XXXX, done what in Eric, upside bit little in point. just I given would it say expand a to we've that

Great, Thank very you. helpful.

So, great.

So, Rob. With more going one question, that, we're please. to take

question Next the Greg will Melich from of come line ISI. with Evercore

love on Great, follow-up I'd thanks. inflation. to

at percentage input commodities? you have great. in bps fourth And even think quarter. the XXX of through commodities, if about you So called And your year? the outside What full would number pass of that really costs I some out for rise those could the that looking be you sales, is any the talk ability to in

inflation yes, has largely, the category. primarily So in centered the been lumber

managing. is think -- this the If about ultimately from And and something perspective, very are basis commodity passed a largely, about to on that we're you consumer it at store. the used standpoint, XXX again, points. that those from This is to

about full it basis points it the number for 'XX? year, we're XXX how have been thinking impacts as what that -- And would

certainly Yes. the off we And half -- watch we'll I keep year, was it's year daily. head. we'll my points. the back than the basis of of top than But less XXX keep -- know in half don't obviously, obviously, that it of so higher inflation the first the

back to chain. then I Got question my supply goes of it's the sort And it. along. and coming have plan, know really you follow-up

X not -- anything through that from on on it seen them Just planning you as whether Is supply Walmart, how respond. market get ago. given or Depot, it's $X.X from CapEx a from was the is Anything ramps from you're Home that billion and your sort investments plan, centralized significantly Amazon, you particularly where on in competitor, do X delivery year where chain, you're the leaning seeing more of that of to number fulfillment? but you're more seeing what year just up there we've more into to first as operations, want

specifically from responding the such We're really way. how way. they desire that taught is products it COVID all quickly it #X consumer to dramatic and of think we large and more the from feel I way strategy customers the about an pandemic large a of sound. the optimal such perspective. needs us No, it And every shift, a preferences will taught to US We receive expense to to and inventory a like customer our amount We purchase. it Greg, also, in not when is manage hard how a the us deliver do the store, retailer appliance and transportation that comes in

on a is of the only enormous but manage not productivity, to how market-based from around inventory dollars store So, going perspective a Company. amount billions in to we unlock labor of an going model

to mowers absolutely So we market-based patio lawn delivery the and the other grills. process for product bill furniture up way opens go. appliances, and In riding is and categories the it like moment, sheds

with past the DC e-comm Southern a us. That's California to going new our us an opening give bulk our distribution And and opportunities. centers docks this same-day ability our this centers. perspective fulfillment help be the US X question, up ability for aggressively is opened more location. gives every two-day delivery fulfillment strategy, So have relatively model building and that's We're up to the cross to your delivery incredibly dot-com important we're going to to e-commerce to answer We out year. us market-based from additional It to create to also next-day delivery. in market

we're site that, underway addition a into that initiatives that we to reality. a have on leaning job to In couple working of to make going and be delivery, Pro we're

of investment, is we're as at to the delay what's couple understand about right feel hard have into lot. and really to very committed the the going short there's of supply we lean to But to the competitive we're And we a do. allow question years. us because again, be but in and laid But next we're the in chain we're make benchmark it. an out. reason for to something So most we your strategy know going to is marketplace, investments, to. working look benefit we've believe answer committed out-years. And going a the transformations we it's retailers We they're good why it And to we very to

luck. good and color. great Thanks great, guys That's

you. Thank

teleconference. This concludes you. Thank today's

time. for your may participation. You disconnect lines Thank this your at you