Lowe's Companies (LOW) 1 Mar 232022 Q4 Earnings call transcript

Good morning, everyone, and welcome to Lowe's Companies Fourth Quarter 2022 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 and Treasurer.

Thank you, and good morning.

Stores; are our Chairman Joe Chief Executive Executive President today Officer; Chief McFarland, Financial me our Vice Boltz, Sink, Bill Vice of Officer. with Marvin President and Ellison, Executive our Executive Here Vice Brandon and and President, Merchandising;

is which website. I like can on Investor Relations statements be you our press notice regarding that found would in our release remind forward-looking to included this morning, Lowe's

for are During XXXX. this be will including fiscal call, expectations making comments forward-looking, our that we

results various important expressed the result those Actual Form other materially implied or on and those in report and XX-K may from filings. risks, differ our sections as a annual SEC of risk discussed factors, of factors, MD&A and our uncertainties including other

non-GAAP of of section discussing A can measures. GAAP US be these to Investor found we'll in quarterly reconciliation be Relations website. Additionally, certain the items our earnings financial

Marvin. I'll over turn to call the Now,

good declined you, US morning, sales comparable everyone. and fourth X.X%. total company the In X.X%, Thank Kate, quarter, while decreased comps our

comps commodity For the impacted points. basis by deflation XX quarter, US

the the quarter. in for pay dividends the continued reflected sales by continue our to investments Pro strong fourth customers Pro Our company in

we've this US, XXth the fact, quarter double-digit consecutive the In growth Pro in despite that deflation. is commodity stronger-than-expected driven

our a focus solid decrease improvement demand saw Despite once home holiday on in while we there And sales, was productivity. continued operating as modest improved categories, maintaining on again buying. DIY adjusted by gift expected, in our core a pullback we margin DIY disciplined

to adjusted cap sales fiscal financial $X.XX, a of up with adjusted of earnings of for expanded last During the per and compared adjusted the of margin earnings basis share diluted XXXX $XX.XX, $XX.X adjusted per approximately points XX increase results performance share billion, XX%, off These over XX% year. year. to operating prior margin operating solid quarter, XX% leading

builds assistant into on store $XXX permanent hold our an supervisors for chain effect $XX of leadership managers to the our who went we're most associates, $XXX in million frontline and our critical recent increases and associates, discretionary two our the results, company. incremental frontline which hourly in these million December. which includes million This awarding supply investment roles to in wage With in profit-sharing bonuses

of XXXX, $X wages targets. next frontline the contemplated at the mentioned choice December for wages associates, employer billion over and we've compensation over becoming will which are several our we commitment Since discuss long-term share-based which as our by Analyst invested retail, investments in compensation investments wage one of incremental increasing in XX%. and we just frontline in to Investor including These more additional are to And our reflection years, committed are Conference, detail. over associate in our Joe

engaged Pro, as on a basis. remain Throughout Home the with to in our Total we gain quarter, strategy growth traction two-year US XX% home-related of consumers activities. delivered In continued we and XX%

We enhance program, on and our Pro assortment needs. our are our Pro relationships partnership tool Rewards product to building Pro by through continuing CRM capitalizing our MVPs, with our to and meet momentum growing

our professionals. detail on number among more product This to Pro tool call. and brands certain exciting the news later the and across Tools coming that know share this be will the will brand Lowe's. Klein assortment electrical assortment trades. is hand our HVAC of One to national to back Pros is our immediate one enhancing Bill example loyal fiercely in creates that credibility exciting are addition We Klein

and if Pro in healthy. have they're backlog Now, countless our asked is We're our Pros still and conversations. formal one constant many surveys, our with question counsel about communication of through you day-to-day Pro

strong hold their Pros believe We were and December they which in jobs more dynamic ability to and Analyst compared of all homeowners out is on this more same Investor January equity. stated and and booked survey, at remain or than our confident with levels that they In to about we sheet to Conference, fueled includes XXXX, the find XX% our being backlog. things their balance the talked record by of

of grew sales partly strong of of growth in a represents Lowes.com, sales. XXXX, X% XX.X% penetration. On on the quarter sales two-year than top more appliance to fourth comp and XX% This due XX%

online omnichannel like also shop We our from appliances remove to adding showrooms focused where for conversion. from to customers purchase We're making on friction Apple customers' Pay includes removing continue customers' online. improve shopping the journeys, experience, quarter this friction often before their which our

of added market regions two us geographic and across for to bulky more supporting the geographic new big X,XXX continue country strides in our We appliances areas and delivery to XX other stores. the model make than this bringing rollout We also products. quarter,

And replacing profitable industry in it supply is for bulky big lawn and the our model, inefficient reminder, cabinets. consolidate as riding and us categories appliances our grills, directly and in market-based customers' position homes, us our products and leadership delivery a delivery to from bulky big chain model. and stock positions growth This model like flow other product enabling delivery to mowers further store

We the retail of sale Turning our completed quarter. business Canadian this Partners Canada. to to Sycamore

addressable to business, trillion a we into market entire they our forward I'd opportunities to us solely transformation under a as customers, are take them improvement where focused grow As $X higher-return and enabling the like wish best we result, on have of now estimate team ownership. commitment business home US their to I new Canadian to to extend my more market, move the the invest and serving our to for we our share. appreciation

as my XXXX. going I environment range market. opinions conflicting like improvement know, of the home on you to there on is share I'd And the in what's to wide macro a perspective Before happen close, in

record disposable stock, roughly the the and housing savings supportive. than income, income From homeowners. our of top of higher our pre-pandemic, levels $XXX,XXX on who equity perspective drivers are nearly owners $X.X Consumer average. price personal of be homes, are to in likely their home enjoy core business, in age XX% of remain continue concentrated with appreciation, still to more trillion the XX% Homeowners

level modest the meaningfully is in age homes home built decline And a pandemic of there during Even the oldest of not with over up to XX years eroded. continues World since prices, old, XX% the stock if the II. US be housing would equity War

supply continue slowdown meet their to These to opting our needs. place factors, along higher for home formation, we by driven to rates of with boomers' increasing housing with up their preference And existing and place, widespread baby evolving age to trading more consumers be given continue strong to work millennial turnover than is in rather and household low trend will tailwinds in a nationwide the in demand, business. see upgrade remote

outlook dynamics reflected of these know discretionary for the industry. pullback said, which of in medium the we also the we longer the a and holiday in confidence consumers All term That some experienced season. that recession, are during is wary being give us potential of

quickly macro trends closely We're and monitoring to we if have playbook the proven softens. pivot a

gives a confidence to quarter in our operational effectively a This leadership agility, and business manage demonstrate results in environment. wide ability in in comp in the to our Our reflected is negative scenario. our which experienced sales fourth expenses ability of team deliver macro our the variety leverage productivity

customers their associates our thank day-out. to frontline serving like I'd closing, to commitment for and day-in In

continue be their and As for passion to impressed helping communities. by I customers their travel to stores, visiting country I every week

Bill. over turn And with that, call I'll to the

home morning DIY Thanks quarter, resilience though the on and Marvin sales sales three-year continued fourth improvement Pro and good slightly were decreased the XX.X% everyone. core basis, in by comparable In with reflecting US up X.X%, a momentum demand.

kitchen and delivered We of comps strong key in positive appliances, growth And paint, bath. excluding we delivered Decor, in Building fueled division, our the by impacts Home categories Products deflation. and commodity like

rough building we by across continue product materials, paint, categories, We to we're meet expand and including their the service are to plumbing, as and strength particularly encouraged needs. offerings our seeing Pro millwork

Pros, we our partnerships. continue And four new add to including to consistent with brands relevant Strategy, Total Home

First, we're since site, Pros which to important of drinks adding from before of customers. money going for the make to is is the time Coca-Cola job reduce stops portfolio number these a

consumer, Pro adding rural in and Carhartt our we DIY Second, with popular both Apparel our that's our especially are stores.

of and Third, Bell, entered have with Hubbell, to new a including partnership pro-branded boxes, TayMac giving all their access we RACO. us national electrical

excited Klein we Tools. And are back fourth, bringing be to

this mentioned, electrical tool and professionals. Marvin the number brand among is one As HVAC hand

a So, big and us just deal for Pros. this is our

client We of in are channel, which widest the also really second home excited retail improvement the products to announce selection anywhere that half XXXX. will Lowe's available be offer in of the will

tools, Spider tools initial Specs, Coca-Cola Little brands tools selection followed by Werner. and to Simpson FLEX, test our Our like include already Mansfield, Tools, additions innovations. GRK, Marshalltown, SharkBite, Strong-Tie, Metabo, new rollout Carhartt and measurement brand DEWALT, Klein other includes arsenal, Bosch, FastenMaster, Estwing, and Eaton, multiyear LESCO, product great a Pro are of client Lufkin, of Giant, ITW, strong which Hubble, electrical will hand and

As with brands the come back with our to opportunity grow Pro Lowe's us. newfound we they to see recommitment to gain recognize because momentum in come see we the to to Pro, and and many continue the Lowe's cases,

to this division of grew kitchens capability way. and easier by a Growth manufacturer. to new these for gain supported in them applies In and for order, was continue much Appliances the share bolstered critical led quarter. appliances, merchandising are DIY that performance our which by and faster we making savings automatically market the advantage baths decor, it to Shifting and home as take category. paint instant Pro our rebates across the customer's supplier offers, both to

both real-time labor This the technology and only drives friction but mail-in that another This online rebates with Lowe's competition our also and savings, is the stores customer with innovation for leapfrogging replaces improve of in cumbersome customer the experience, example conversion. remove to productivity. not improves

to Job standout also Rewards another This applicators, uptick Site in We're everything caulk our we for departments attachments items like growth solid easier make was and designed strategically Pro and upgrade it by paint MVP's sundries our paint Pro need category Paint in stores. trip. fueled our customers one is Paint our as paint they get across an Delivery. to upgrade pro seeing with

walls also for other private of is our already Lowe's protect messes. high-quality, high-value outperforming a first-ever the families This STAINMASTER fingerprints paint, We results paint and launch are busy to and brand looking solution began early their from expectations.

driving capitalize trend increasing of for customer focus private nationwide penetration on to is us timed preference the brands. private Our enabling on brand well

a right talented see and increase particularly to kitchens custom tools, all lead tailor suite team category and of solutions digital Another our cabinets with by for outperformed is their budgets that were of of as demand preferences. for help the our quarter driven an in well customers designers, times strong as We design along virtual bath. expanded encouraged improved this which

demand excluding we delivered and lumber, continued building the and in comps across Pro materials strong we to rough millwork Products copper delivered the Building investment strong broad-based Turning impacts home. plumbing, DIY growth, division, driven commodity positive the deflation and of by across

performance year. saw in with lines consumer holiday hard consistent as broader gift buying trends compared the was Our we in decrease a prior to

solid the season However, above holiday sell-throughs a with XXXX delivered levels. team still

reverted consumers patterns last more we saw typical year chain supply expected, holiday to buying As to as buying due to when a concerns. widespread early compared

continue innovative customers' build ahead, to to our assortments. on continued with As we look our enhancements new products for we and preference product

eliminated We asking our been have new a XX-volt hose popular with around first also the Nailer Turn customers e-STEER Kobalt Zero We're compressor and are platform Kobalt a expanding new tools X,XXX an site. single a technology. about can drag excited nails charge, Cordless for, instantly on on fire including that with technology that to job our industry's the and Mower need Radius EGO air the

With wheel three battery single allows driver's system charge. the by the that precision, unit increases EGO powered on this the intuitive now mow and acres steering a to control sleek that

in-stock the three in are We're improvement perpetual making positions productivity strides assortment capitalize and that ready support time merchandising in productivity we've on biggest year, to in-stock the in to to driving years, had levels. an on of season strong of our initiatives. as addition part best spring We enterprise-wide selling right our enhanced also with

one the capacity and scale our costs. larger and As transportation secure continue carrier import importers of and our reduce relationships we to to domestic leverage in US, the

come with to prices sales materials our raw are margins. As are suppliers we of to competitive the cost our and to protect ensure that working down, transportation our and support

the products We sophisticated of cost components sell. optimization that have track of tools prices we the underlying

teams the for informed well these So discussions. are

through we doing also just are out productivity our suppliers organization. throughout costs We drive accountable our as holding are own to their

our suppliers partnering Media One Lowe's Network. also with are Roof through We our

XXXX, drive for them of locked partner suppliers and excited already and target top to contracts Some Lowes.com the our convert are to strategically sizable have traffic improvement sale. on home in to shopper we with to

forward chain supply will to hard looking support XXXX. appreciation we to XXXX, value throughout inventory Before together my you. extend what in partners merchants and we I close, Thank and find customers. accomplish our their and our along provide with to I'm to for as teams, I'd vendor ways our to like work to continue continued our shared

And Joe. I'll now call over the turn to

Bill, you, I'd commitment unwavering and and Thank their for operating start year our everyone. to by like customers associates delivering another good morning, solid to our thanking of serving results.

heart more look in on our associates used customers employer homes. associates' Associates so stay of we where to for as of retailer careers. product That's at rely to focused retail, but build they on the solutions in why the our upgrade right to and repair the where their choice becoming even any are their so knowledge, industry,

remain monitor market made and investments in all the us flow the we've over years, wage a geographic pool help maintain substantial areas company. hiring robust and As each we four last competitive to Marvin and review constantly candidate of mentioned,

we comprehensive flexible and Beyond opportunities. benefits, scheduling options offer compensation, competitive bonus

of top the to As excited out incentivizes and retailers million incremental only bonus, supply their careers annual our are sharing This share-based offer compensation handful on we and quarter award assistant managers $XXX for our $X,XXX in Lowe's. year, and to one at close incentive their of chain supervisors are which build includes for an we this of with discretionary we profit store bonuses. ASMs, a to them million bonus $XX

exceptional forefront some a leaders service. in on hardest and creating critical leaders at are they our working These company, undoubtedly customer focused are the of culture the of

for are in these million options. revamping recognition associates higher year. recognizing this Based awarding their in on to leaders, food we improvements $XXX sick listening, this quarter, our continuous we also leave efforts to break associate store part-time hourly quality, other lower-cost addition eligible In added of associates rooms also including with

us the than of build Our helped over as positions than from associates. of last XX% leadership starting with hourly people year, have investments our leaders in our within more XX% more store

our pleased in spring, busiest had staffing we have As we year, best the enter that years. we've I'm time levels that of three

also associates into serving on translates for which we're our focus is opportunity Our how the biggest growth. Pro,

most the ever the understand expectations. launched which training, our storewide customers in QX This a helping key PROvember Pro desk. Pro the Know This across entire serve our MVPs to training including Pro at as successful not we participation better well how quarter, supported Pro exceeded store, we've had, associates days, just the events, as bonus

quarter, especially would commodity like despite Pro our driving basis, associates, on I thank comps outstanding a of for to results, team, deflation. Pro delivering our US XX% XX% for two-year the

MVPs, We continue purchases to engaging by incentivizing Pros, and Rewards loyalty. building capitalize leverage partnership long-term program to demand our and this Pro on

in points scores offers points, pleased XXX like giving to can't size, in Pro is exclusive small as every continue results Our customer mid-size feel Pro our to savings reflected and MVP program increase access QX. to make see exceed an in basis designed of the their bonus to pros, We're elsewhere. expectations, that regardless get they to satisfaction

our on gears to Shifting productivity. focus

make or our productivity perpetual PPI, progress improvement continue with initiatives. We to

the associates' generate store, key objectives and customers. simplifying jobs while of service. removing One friction us our This is approach improving for savings our cost of customer while to productivity the in allows simultaneously PPI

touchscreens One great is transition at our example desk that value, to and completed with omnichannel just process outdated to promotions. system quickly with accounting systems. the easy-to-use and this return return associates to for our our policies returns of new items technology legacy the We scan conversion automatically modern of correct the enable

our manage product more customers, return gives This simplifies policies to also easier complex suppliers it to improve returns. quality, and for while for enforce experience making the insights associates our

Zebra including end to the to additional June, XX,XXX continue by smartphones the associates device, also new tools, all ensure of have a roll floor associates. walking sales including MST We out our

to associates, Our dozens initiatives returns leadership they that. we do underway is easier when things things And knows of that for of our one make our new the just our team for customers. make just process easier example

none associates. course, our of without be of would possible And this

driving tuning our your for in, appreciate thank serving hard focus on your associates work. For productivity. customers ongoing you We and

Brandon. call the to with I'll And turn over that,

and you, morning, Thank good Joe, everyone.

our to of with begin year. me results. Let last $X.XX share per We GAAP earnings compared $X.XX generated diluted QX

certain applicable. from where Now, point this comparisons include comments non-GAAP my forward will

disciplined Excluding retail well per we transaction of allocation. the of associated our $XXX $X.XX, an on sale our diluted generated the million continued pretax capital share compared focus quarter as as of with Canadian was costs This adjusted of XX% fourth earnings business, the increase by of XXXX. to driven productivity, increase

QX billion, sales comp XX% the This totaled comp X.X%, a generated offset includes of and was down stronger a average unfavorability driven points comparable a sales Sales in by sales in Pro transaction to due product in were lumber up decline quarter, were XX headwind inflation by week. basis XXth consolidated higher XX partly Comparable a offset sales $XX.X driven US the on and lumber approximately of dollar in million, ticket X.X% deflation. $XXX by X.X%. $X.X basis represented which deflation. declined Canada comp comps. to a in with rate X.X%. of billion exchange by decline FX basis, partly point USD sales,

increased more sales Of and note, Canadian and copper Pro driven the continued XX% X% lumber strength QX On in pressured in US appliances. deflation deflation. both our sales quarter the than quarter, despite partly comps up were expected. lumber in by lowes.com, decline the sales

on X.X% moved in Our US down November holiday quarter, improved pullback to we due as discretionary spending. DIY through the monthly comps with comps

benefited a basis versus Product also the XX XX due investment improved quarter, of pressure rate points X.X%, were of basis continued private chain margin of product basis credit comps fourth Gross of to In year. lumber percentage from points points from year. related product points supply basis to portfolio. lower basis margins turning label sales of the shrink margin XX.X% mix prior offset basis points favorable by XX was from DIY of in the Gross down rate in up network, margin January, reflecting home. XX was positive expansion December, XX sales. our the our Higher and pressure down X.X%, last with from points in comps XX

to offset the executed sales a basis across initiatives XXX points Adjusted sales, we rate XX.X% adjusted partly year SG&A basis effective of SG&A despite of of as X.X% relative as prior modest XXXX, The XX% below was margin in by operating sales on tax levels. points, of rate PPI our Adjusted adjusted was rate. margin levered lower levered decline leverage company. gross QX XX

Inventory ended now with solely on billion, for billion to from product quarter Canadian by up inventory X. largely which year, the retail the inflation year. is quarter the at same closed $XX.X the US sale reflects business, down of February as the business on driven our units last $X.X prior Inventory we slightly

as categories shift mix to continue growth. to drive Pro more We our invest future we inventory towards

Now, we driven both our let In returned me XXXX, $XX.X dividends. billion shareholders billion and repurchases generated operating allocation. share to in turn $X.X we by free to through and capital flow outstanding cash results,

for dividends to we reflected repurchases in quarter, the $X.XX to $XXX million per shareholders. fourth billion. the return of our the paid operating expectations share at total During shares repurchased for in million cash and This billion ahead This share year, billion. brought to excess performance $XX and for better-than-expected our commitment $XX.X approximately XX $X

debt-to-EBITDA. XXX of an X.XX times of return Canadian point adjusted business. invested delivered with on the basis costs quarter of related associated we And to sale retail impact transaction the XX.X%, inclusive at our ended finally, We capital

this financial we our outlook, to XXXX introduced Turning morning. which

long-term the outlook home improvement strong. As remains for Marvin indicated,

be residential pressure. XXXX, under will some investment in However,

slight a Given are cautious we home and in inflation, improvement forecasting elevated more of market. a levels the decline consumer, rates, interest higher

continue with to to ranging We the billion. from market outperform to in sales billion $XX $XX XXXX expect

sales a in in that two Comparable in on Keep expected comparable to are be XX fiscal range based be calculated flat through of sales XXXX X%. to down XXXX. mind will weeks

to growth to market expect exceed as again Pro in DIY sales Xx. the and we broader Pro is XXXX continue expected by outpace to growth

loyalty lineup. We on new CRM our with tools, to and program, expanded build our our Pro momentum Pro MVPs brand will Pro continue the with

planned expecting are across productivity XX.X% the offset our investments. to to operating XX.X% wage range as the of drive margin We part continue to our in PPI initiatives through organization, we in

for invest went XXXX, million are XXXX the to associates, in For effect $XXX into in includes expecting $XXX portion permanent we incremental frontline million which that our December. the wage of wages investment

up We rating. XXXX, share credit this billion planned of to with maintaining reach year expect expenditures $X BBB+ in expect our repurchases, to and times X.XX our we our target capital also leverage while

Our our from share is that approximate allocation strong shareholder-focused to to earnings year. in deliver in contribution $XX.XX the there in an Keep for business mind strategy approximately the adjusted in week $XX and operating expected performance XXrd per capital to EPS was $X.XX XXXX. Canadian

first expectations performance, like easier moment a to perspective. comparison would sales is I our spend for a an discussing from half which

when basis point consider lower to sales impact second lumber of we the However, expecting headwind in point quarter XXX headwind and to quarter. XXX a prices, a sales are we nearly first the basis in the

be below impacts, we quarter comps be second to to expect year these range. year guidance range first guidance our our sales and above comps Given full full sales our quarter our

shareholder-focused shareholder closing, In strong combination the operating allocation continue confident results meaningful our of long-term value. capital deliver to and I'm will strategies our that

open we that, And it for with questions. up will

you. Thank

from proceed question your Thank with Instructions] Simeon [Operator questions. for with Stanley. ready line now Morgan is you. Gutman first question. And the our We’re of Please

morning good Hey, everyone.

have I a and a First, macro micro question. then

of some kind largely up. of housing ignoring guidance of of -- monthlies given backdrop the assumes But it. is guide some comparisons, So guess midpoint point in And minus the re-question just answered and I I one. the minus holds US gave roughly to some you know rounding the -- Brandon metrics. -- the that with when that the the deceleration I the comped minus that monthlies one wanted in the

drives and what So -- that?

at held go which mentioned, that on is improvement specific, to what Simeon. The time. over income, prepared roughly pre-pandemic the take supportive. for historical be equity like demand some the average what homes, drivers of are part, a first everything look said reminder, average, to remain non-discretionary. I above I we and in homes, trillion drivers $X.X I'll personal in age still these have And disposable a Hey, $XXX,XXX and the our two-thirds levels. roughly back of home They demand of is kind savings things US are comments. sell When just of I'll up take in we

And there are that that have things other into sustainable trend, think confidence place boomers, millennial remains us supportive. the tailwinds, baby Brandon formation widespread work, more buying, remote when all these the household, backdrop and But about and we as in give so is some of some degree discretionary caution aging still factored said, we guide. of

I'll let anything So add Brandon to that. additional

Simeon, talk to this specifically your question I'll QX. on Yes, Brandon. is

prepared interest we play DIY that's appliances. remarks, As the to seeing bit a categories, discretionary responding solid I out holiday exit, cautious and quarter November in like said anticipating to more but one the We nice with and value. in consumer, as in are continue of rates, the this progression a saw categories we we hit a January home see we performance demand across did improvement see of inflation, core

what consistent market turn the much next shared of moderate in comfortable And December seeing single guide the in we we in So low at the we terms call with digits in line it, in what with QX, it's down, look very as feel back to being X%. at we're and X% year, scenario. the with

what full anticipating of what year. the again seeing consistency lot a with with next year good for think QX we're we I we're got in So

to guidance follow-up to I guess the different? forget or the year I PPI or think cost environment it going this can then across And/or initiatives. XX.X that are gave of any in the ratable, that you more is from some or pull the need OpEx makes meaning XXX forward there the within you even you And the Okay. I it? bucket micro, if this, control. discussed XXX about long-term stuff any XX, can if and -- there's is the that's the such if that's year productivity And December, you that achievement that things the of we up time frame so

say would at what Yes. algorithm ratable roughly flat December. we look are in gross Simeon, I mean, I the at look shared three-year XXXX, for the with margin. we we the for period expecting guide we when as

productivity of points bulk our guide the basis and initiatives. of the it's largely expansion reflected SG&A XX driven the EBIT coming is to being in So XX from leverage, that's by

shared that's transitioning an expecting just what three-year we specifically what translating the SG&A on from in to from So and standpoint XXXX. we're

Conference, Simeon, whether only chains, operating is, operations. all one that And think environment, this And being it take you flat in is to not functions, I that thing at Investor to PPI merchandising, is but the margin. productivity, it example, that's shows supply expenses The initiatives across or look even focused as functional if -- and at it's add a area, with ability just leverage have negative just solely we an consistent you heard a our in Analyst Marvin. December sales as QX, I'll still the to

macro in upon it's scenarios. And to ability that we're confident so although our a deliver of ratable, in very variety

Great. Thanks. Good luck.

Simeon. Thanks,

Next line McShane questions. of Kate Sachs. with question proceed your Goldman with Please is from the

Kate. price for elasticity. ask on Hollander to about wanted Patrick We is This Hi. just

Analyst saw kind discussed but third in sticking confidence your the item was prices had December more Another mentioned Day they in at in the that quarter. competitor quarter of the price than fourth they the sensitivity

then prices need Will more activity? So price see you. do guys something address we markdown first, sensitivity come down? seeing some how Thank And of to to you similar? are you the

is this Patrick, Hey, Yes. Brandon.

prices, stepping on we demand at with elasticity, through the last for relates impacting we that just look resilient back, very necessarily business. when not our we As question pandemic, saw years three the the to were it seeing were higher consumers who

in seeing consumers mentioned I anticipating with to As the trends are and more normal response, last responding we value. consumer

that going expecting first half as terms XXXX. our is base. we lift in from seeing across that inflation year of that look as are minimal coming continue portfolio. into be we of to normalize we're at inflation going modest as mostly those seeing to inflation activity And lapping of year. new XXXX, slow, So the expected the to we're that expecting a Most pipeline in move are through to XXXX, benefits wrap is We're next supplier we impact and requests in to inflation

on we then expect transactions, also across the that year. to we in which improve by see that inflation side, to transaction the And a expect be modest offset decline

looking the traditional between year back and in balance XXXX half then more of tuck a we're into transaction. So

Great. Thank you.

you. Thank

the your from comes questions. Scot question with next Our of Ciccarelli Truist. Please with line proceed

sort that I or regional thing Hey, Scott. and by Joe is housing commentary. you'd whether price impressed on or for break more morning, any out areas really was less on outlooks good there's bullish not are in backlogs was Pro This the of where guys. just I their there been people more is wondering, correction?

question. prices a those I'll you, call what of Joe, are Florida, What imagine, So markets like appreciation as call, And out markets around Phoenix, to you good pandemic. the more close I a let's couple really would as an accelerated that example. during home had of markets. South attention there can And country pay we tell the

those are in material tend prices any US. than to down coming in difference broader -- sales performance seen markets those as not in We've come the

that to statement in in are Pros cited to their survey And the of geographies. pretty able year from backlog January our consistent statistics it, last very and universal much our that being being sustain so I confident all when XX% a across is

continue build of giving important and us sales. with just can Joe to the sustaining I program let on loyalty that our it's and this and us going a how very bit performance And ability you the allow how tell business. drive I'll touch that's loyalty to little we think we're to very and is program MVP to grow What that pleased

for thanks And Thanks, Joe, question. Yeah. the Marvin.

the they And is does the materials the six market they Can the work we key there’s, areas Pro at, you comments. to Marvin five and the deeper, get what Pro they of like? need dig But the booked the type relates his kind months, What cost? it prepared made As which jobs is market, next they Credit? can far labor of, Pro of the just as then do. right is that out to balance get look in and it the look how

versus program, trajectory we're and track new construction. And the the out that we're health pleased servicing. as we remodel Pro small and these this So of the our roll loyalty of with business we Pro as

you so Thank Great. much.

from the question. Nagel of proceed your next Oppenheimer. Brian is question with Our line with Please

My sound prior I like apologize. question to Hi, may good similar morning. questions.

to they back week, comments they if made broadening, normalization -- consumer will, of weakness. what last by Going discussed consumer competitor your the or to turned you

weakness You your in or the that, would across you holiday, -- giving, in seeing out discussed normalization broadening you they are around characterize also weakness discretionary. But the gift portfolio? this what called

think start QX each I'd typically DIY highest stronger month And I saying the a holiday November, in fourth good And Brian, of at quarter, the customer. comp of because it's comp you fair of a really away home we we performed because is to because feel that period heavily cadence notice selling period the about of was discretionary that customer core from we stronger directly so business and of our the was month DIY off for focused But by month, the being improvement that almost gave moved buy. of the as how categories, discretionary every year Brandon look the that quarter, they question. positive when the on season. the correlated performance with January, that monthly

So to improvement any the point appliances, because case we flags as the don't discretionary we case the categories customer, the discretionary of about in see held us, we spending, at up DIY point paint. really we're concerned at really for look look that red core overall home well in health

well. areas So are performed those that really

any additional And I'll add comments. Brandon let

the Brian, into see year. Marvin And outpace we continuing continue while Yeah. we we're all Pro Pro category, and just ranges, XXXX what highlighted DIY XXXX, some Marvin XX with transactions seeing in DIY of we in But describing, across double-digit what a DIY to the customer. at growth. expectations looking guide, with overall both connect the the to are that across quarters comp did see more to to those discretionary lag improve and in ticket just transaction row, was the comp, I'll seeing continue

close we in for year. gap the Pro, next and and continue that's expecting outperformance to reflected expecting to between our So at still XXXX, DIY guide look when what's and with Pro tighten, but that

And helpful. That's follow-up prices. to my lumber question, just with then very regard

sales. it, get potential and of have much here of don't declined I so of prices we've polling becoming professional seeing is you're to if pass-along -- a this a prices in demand, actually gotten in customers? your for some we stimulant point to that's know of or if your business maybe So as your But you this negative a declined discussed kind when where the dynamic lumber

take Yeah, connect kind and, Brian, again, to the I'll of guide. it that

that also remarks, guide we've to if certainly particular, for points across at that you midpoint it prepared within So last in year, normalized both of years. – puts considered pressure my QX. at three midpoint pricing XXX and assumption, when look on that in headwind what to expecting the And the the guide. assumes we out heard And our the were for of play the lumber currently, call if pricing a QX out seen actually lumber, environment, as in lumber basis another of I'll the remainder

But to offset and the just pricing be at we're potential midpoint within expecting of our stimulant could now, units business. right and that your next point, rebound an are and expecting for there's that, again, But guide, units, more year. considered have in a normalized in the we in that, slight a our

guys. the all Appreciate Thanks, color.

Thanks, Brian.

ahead question. your with Next go Please question comes from Karen Short, proceed the please line with your Credit of Suisse. Ms. Short questions. with

Thanks Apologizes, sorry. that. for

just two questions. So on

comp. to guided flat down X% You to

not the robust moderate the that And kind that you scenarios then margins, So between though, moderate only range, and are of robust range. in was your on the offered.

if one So that that. very color investments. wage obviously, out, could you then called competitors investments of on any And your give on sizable I'm you also announced wondering, wage the

just your if your wage of a on wondering, So largest one could color industry little you give competitors? investment versus and/or

is question. I'll Brandon the wage first take part take So then Karen, I'll the the of let Marvin. question, this

two So things.

to long-term confident our very And great in associates. we've we're also about First, made front commitment line our feel the we financial financial plan.

we've So line $XXX the $X in billion more wage by wage front since compensation last investment year. XX%. XXXX, and made than associates, share-based as years, increased we mentioned, for including four million And wages we've our we over incremental past over invested

be that to next the mentioned million $XXX to in year invest nearly going And going billion. this investing frontline over we're we're Brandon wages. three $X And years,

contemplate we you rural as community, So footprint it's our this and long-term disadvantage. our all guidance a when stores our XXXX sometimes as in challenged an get factored together, competitive financial of investor guidance. And by

we're paying because wage, we highest we're process And not, advantage an and it's to very, retailer. you When the operators adjusted. markets where rural to small discuss of the follow wage local where a operate, specific most have actually the very get

let hand do our really strategy, wage feel is it, have I'll good just talk a bit as spring really staffing McFarland and hiring, deal we to well. and approach responded I to And I'm Brandon, this the you little which, going of our associates us and time our Joe about to before for big So know, is year. about what levels it a

our right three hiring, best thanks for This markets ahead And our our now. the expectations. it with had come spring Karen, associates, season, is pleased the Yeah. relates years. frontline of as very staffing is in to staffing And question. as into the we've I'm

team's ability the very with So and to staff pivot wherever are. the challenges pleased

strategy, choice great summation working a it's our to leading hand that your cycle, other question. part in we an over Brandon Karen, truly believe to of feel that, our is have retail. for us we and being like in something investment so, it. it that And commitment answer of we And feel associates on us, to We I'll to is about the our employee

margin. shared first a Yes. of in the your down scenario. We moderate what and midpoint question we on guide, X% December, operating look in XX.X% that Karen, at

that with midpoints. the bookending in just provided right is line, guidance Our those purely we range consistent that, with

there. So very consistent

so much. Okay. Thank you,

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

Thanks my a question. taking morning. Good lot for

first, the you or and end being the meeting market weak most closer scenario. at The at could in at midpoint analyst pointed squarely scenario, is robust market moderate to to So, scenario the now low likely be the market scenario scenario. December, the the on market guidance the the moderate

have XXXX? what's days so a XX to So follow-up. your changed then And last for I the expectations in or moderate

Yes.

sums Marvin. So, Michael, is it up. level, At high it's lumber this That a pretty deflation. much

we're XXX XXX As Brandon in have points QX. headwind headwind basis mentioned, in points going basis of QX to and of

what compares. lumber is. at our Going the That XXXX, But what into looked easiest guidance that pretty sums what's first in year in the when much remains. discussed deflation, as up we December between that throw our of half different we and you

of add for Michael, that just And sort the we table very out, called weak scenario I'll Yes. still that much the us. off

out out. that would playing don't see economic at we it require think significant that we called I point, and shock,

basis was we're So And that that XX.X% operating of downside, the margin, line week with expansion as so points even still in moderate squarely in just in still even reminder, view. a very scenario that XX a scenario.

shop card especially thinking you are to year. little Understood. credit a gets consumer P&L you. or the the promotion. Thank contribution on want My the how outlook about What's tougher. year? realistic expectation, this a for private this environment shop as is to gross Thank And follow-up you. label consumer may the a margin bit The more on overall

it Yes, as to talk Michael, I'll margins. about the relates guide

slightly on that's comps. margin to So and operating on negative very expansion, focused year next flat delivering

the mentioned, in be you that we flat expecting roughly are As gross to margin, XXXX.

a side, few there's see to puts of pressure side, going headwind delivery. to initiative and different And takes rollout investments. productivity continued that managing specifically number expansion chain, and from market The we're of our supply on our strategic the Pro mix efforts. and flip We're continue a

commodity from private You benefit mentioned then initiatives. costs continued pricing our brand transportation and and also penetration, lower

out that SG&A PPI of continued to efforts large from called the productivity heard part and So the leverage is the from team. going you've come

brands of look some want as and and you to the else margins anything So private next momentum through if know Bill, that formula there's that's don't we flow there? on the I of seeing sort And, at add year. we're

brand choices. talked gives for certainly opportunity consumer what where Private we isn't the in in better Brandon, brands about December, us a private margin. Michael, an categories relevant. and They a national brands offer carry some Well, additional

for promotions adding activity, new offer value, we XXXX. but to not customers we're it As promotional the continue to want to relates

the That's quarter. the credit referring gross fourth margin card just to on was clarify, the label And private helpful. was to a I drag in that

Yes. Got it, Michael.

a So, but for environment drag the interest has as and number factored we of the the rate part turn we seeing. that like takes, most puts XXXX, in into we mainly have that we're given and into QX, But absorbed, of been yes, bulk again, that feel 'XX.

very Thanks, much.

Thank you.

question from the ISI. line Next your Melich Greg Evercore with Please with comes question. of proceed

puts and follow-up and with the in on 'XX? that gross before expectations mine. that shrink a quarter. quantify for last into that takes, a just start to I Hi. your you us think was give Could fourth other margin I'll On I headwind question get also

Yes.

of the got great terms organization as doing Joe we're efforts again, in that absorbed largely QX against a turn was approximately out. feel but Greg. the we at bit On particular, XXXX. a within QX, in call more worse point, a and that that broadly organized and basis crime, like sure, we It's I'll shrink, bit of let pressure it team what in pressure. driven So with retail we're look to pressure and what been shrink, and We 'XX saw in seeing largely maybe We than expected. XX by point protect

thanks The the we're And asset question. industry the pleased ORC. for with really entire team. listen, has pressure protection from So,

for safety, Our the for shrink, things rolled good. out asset innovative protection team see so outlook has we some and new

then in how on of that was And the through sort the inflation my and I and comes question key year. Great. guess, traffic

than think cadence the is quarter first or the it is sounds second about you in first or range. the we year, if half half the So, above half assume range, than is the through second below better the worse line? like, quarter Should first the

Yes.

in Greg, line. half, very much Second

still would negative maybe And second better in negative? traffic half, lessoned... the it. And be, but the Got difference less

Correct. Correct.

good and luck. Great. Thanks,

Thanks, Greg.

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

Thanks morning. good question. guys, taking Hi for the

that any commodity markets first on first starting South, seasonal That's early, how in question. of in there. out just season laid understand your the you We comp out my Just wanted is But spring here? curious, some demand it the is to view I quarter just hone know but early impacts there. curious the read?

due guidance And Yes. Peter, that's guidance, we're the our out the as that being called QX with we the we look full sales seeing. year to range. pressure again, pricing lumber consistent at February primarily below

South We of begin see in customers strength Bill to are as a our and and let for to discretionary categories, South detail. that spring, Deep early particular, in to in prepare talk signs more encouraged little seasonal I'll bit

and they're setting in way sales the started spring the early fertilizer, And supposed to and Yes. see Deep way nice South, the Thanks, see to I to you start Peter, of our stores come is South, Brandon. to product start And to in we to think what's it's occur chemicals, landscape come occur. January. start supposed products,

wildcard And February so can progress that. by kind of to. markets seeing month. these these -- we're it's and always a encouraged way it the deep south But be south in certainly, months supposed in

promotional through plan And to that I the your it. -- just there's maybe the I'm curious remarks responding we've prepared -- been is you for where a mentioned just year. limited mean, very you in back the I promotion. have Got the laid that then to consumer period value. Thanks. been out mean,

you. second half the years? for how question. Things of to to you've do that we what maybe plan your first maybe year the about in promotions? terms how couple of tend compare my done here So, they in think you do of last traffic, the drive to That's the Thank

activities you're the be promotional not Lowe's. those. behind to lot behaviors Peter, candid, from I'll And any level, are very of that. activities So, to and be to At irrational of first relative industry a a quite And us. came old highest very to increased the the by in We're practices promotions. along those rational fortunate take see going part

while getting One but taken with we're years very you of half a discussed should we felt and I off promotional arrived that And industry. that when Boltz to we things consistent a there. first we that business run drug in get the it's was there, and four us this are how high-low fortunate was not Bill ago the

but get of pandemic-driven a getting without promotional there's these customers promotional don't no anticipate offer are anything for we increased to you I if activities. want and we high to know Bill, we see value add? So, cycles, Obviously, value, can demand as looking out you environment. believe

No, break on that I think team to you see the in appliances, XXX,XXX day. appliances have that different roughly may is guys remember activity one every area the and

there's appliances an to always retailers. in be the driven by by for so supported offer manufacturers, And going the the marketplace

appliance no area products. one out But there as offers has that's are additional Those improved. supply So, promotions. for

much. you Thank luck. Understood. Good very

Peter. Thanks

Thank you.

Steve come final We question. which of question, Guggenheim. Please have time your for with line the Forbes will proceed with one from

Good a the modeling taking I Marvin, wanted question for morning question. just Canada. to given with and Brandon, thanks quick exit the follow-up of

and impact a you gross could margin And the think impact gross. it so mix think on the I'm of business not exit sure on has would the Canadian us help about because I positive if

And basis of can the relative in XXXX? of sort partially point net us for XX you flattish help impact to and the quantify is this margin supportive that whether XXXX outlook a gross

Steve, half. Yes, margin was and impact year gross full margin. there And on think the half about split points between XX a basis and you roughly it's operating when SG&A,

that dollar for take a during you Days And think to was how you of in in dollar about and Thank to we us initiatives lastly, about terms. which the Analyst step and investments ongoing remarks, just is much in curious, XXXX. hear. great the that. the remains Any still the if OpEx noted prepared at front contextualization I compensation of productivity back related XXXX highlighted level you've then

sure could about not year? you most if that talk you're maybe some And excited Marvin, this initiatives PPI about specific I'm

prepared retired, Joe so comments. of you limit mainline associate's And couple customer his system aggressively is IT two will and will to really The moment will and this ready to have get things, things. and XX-year-old the it's working us been infrastructure. friction some a that years payroll basically A many it's advancements can getting system to we're Steve. service. Well, ability in point. We literally that which us technology Yes. customers, question, officially imagine, that taken job for it our we do reduce have X.X cited Number what good of a gives update retire, one, that's as to to the still create simplify improve points

And are XX-year-old next excited our side system And pricing you'll supply to so at be and months. look holistically, candidly, in this over the are to the start few merchandising systems a see initiatives a type lot of the see away we and you'll that initiatives operating side, on tied of the on that, as available PPI correlates sale, to retirement omni-channel of more at store and chain to side. the is going going of start systems pricing store the point we and merchandising advanced

see retailers be to the sourcing ability more chain in relative addition do and deliveries way to more seamless that the have had have do. to some to that us in from do and the merchandise, to the able some gig to will different start all centers having we'll a these monolithic You'll without integrating distribution out to to go merchandise, online us of DCs ship aggregate of advanced give network ability logic points supply stores, build

four-plus So, tied it's IT years. things to last all that's are a those the again, together. work driven foundationally But of of the done been lot almost

you. Thank

in on today. you We to Thank first you speaking all with earnings for forward look joining us our call quarter May.

Thank the quarter XXXX you. This concludes call. Lowe's earnings fourth

disconnect. may now You