Release Date: February 26, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q: Can you discuss the strength seen in the fourth quarter and how it relates to your guidance for 2025? Was there any impact from weather or tariffs? A: Marvin Ellison, CEO, stated that they were pleased with the fourth-quarter performance despite a challenging home improvement macro environment. CFO Brandon Sink added that weather was a drag, particularly in January, impacting sales by about 150 basis points. They expect the market conditions to remain challenging in 2025, with a flat home improvement market, but anticipate outperforming the market through their Total Home initiatives.
Q: How does the sales guidance for 2025 compare to the framework from two months ago? A: Brandon Sink, CFO, mentioned that the guidance remains roughly the same as previously outlined. They are factoring in weather pressures and the impact of hurricanes from 2024, but overall, the framework remains consistent with expectations for a flat market and plans to outperform it.
Q: What is the outlook for the hurricane rebuild, and how is it expected to impact sales in the first half of the year? A: Brandon Sink, CFO, explained that they have baked in some benefit from hurricane rebuilds in the first half of the year, but the timing of insurance proceeds and spending remains uncertain. They have taken a conservative approach in their financial assumptions but are ready to support affected markets with inventory and resources.
Q: Can you elaborate on the performance and engagement within the Pro segment? A: Marvin Ellison, CEO, highlighted that the Pro segment is seeing broad-based growth, driven by investments in product load-in, service levels, and delivery flexibility. They have relaunched the MyLowe's Pro Rewards program to better engage small to medium Pros, offering higher rewards at lower spending levels. William Boltz, EVP of Merchandising, noted positive growth across all Pro-centric categories.
Q: How are you thinking about transaction versus ticket growth in 2025, and what are the expectations for inflation? A: Brandon Sink, CFO, stated they expect slight ticket growth driven by Pro strength, while DIY traffic pressures persist. Commodity inflation is expected to be muted, similar to 2024. The first quarter will see unique pressures due to sales shifts and investments in Total Home Strategy initiatives.
Q: What are the expectations for large ticket remodeling categories like kitchen and bath remodels? A: Marvin Ellison, CEO, acknowledged that DIY discretionary big-ticket categories are under pressure, impacting revenue. Brandon Sink, CFO, noted that while these categories are seeing less negative performance, they do not project a significant recovery in 2025 but hope to be at the bottom of the trough.
Q: How do you view the sustainability of market share gains in the Pro segment? A: Marvin Ellison, CEO, emphasized the fragmented $250 billion market for small to medium Pros, where they see continued opportunity for growth. Joseph McFarland, EVP of Stores, mentioned ongoing initiatives like Pro fulfillment centers and outside sales, which are expected to sustain growth in the Pro segment.
Q: What are the expectations for the appliances category, and what factors are driving performance? A: William Boltz, EVP of Merchandising, reported strong results in appliances, driven by unit growth, innovation, and duress purchases. The delivery model and online business are key strengths, and they anticipate continued innovation and new product launches in 2025.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
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