Home Depot, Inc. (The)

Fourth quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Isabel Jancy. Please go ahead.

Thank you, Christine, and good morning, everyone. Welcome to Home Depot's fourth quarter and fiscal year 2023 earnings call. Joining us on our call today are Ted Decker, Chair, President, and CEO, Anne Marie Campbell, Senior Executive Vice President, Billy Bastic, Executive Vice President of Merchandising, and Richard McVale, Executive Vice President and Chief Financial Officer. Following our prepared remarks, the call will be open for questions. Questions will be limited to analysts and investors. And as a reminder, please limit yourself to one question with one follow-up. If we are unable to get to your question during the call, please call our Investor Relations Department at 770-384-2387. Before I turn the call over to Ted, let me remind you that today's press release and the presentations made by our executives include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause actual results to differ materially from our expectations and projections. These risks and uncertainties include but are not limited to the factors identified in the release and in our filings with the Securities and Exchange Commission. Today's presentations will also include certain non-GAAP measures. Reconciliation of these measures is provided on our website. Now, let me turn the call over to Ted.

Thank you, Isabel, and good morning, everyone. As you'll hear from the team shortly, the fourth quarter of fiscal 2023 was largely in line with our expectations. For fiscal 2023, sales were $152.7 billion, down 3% from the prior year. Comp sales declined 3.2% versus last year. and our U.S. stores had negative comps of 3.5%. Diluted earnings per share were $15.11, compared to $16.69 in the prior year. After three years of exceptional growth for our business, 2023 was a year of moderation. It was also a year of opportunity. We focused on several operational improvements to strengthen the business, while also staying true to the growth opportunities detailed at our investor conference in June. As we reflect on 2023, we are better positioned in four key areas. We invested in our associates, the heartbeat of our company, and the storage of customer service. Effectively managed disinflation while maintaining a strong value proposition for our customers. Right-sized our inventory position and increased in-stock and on-shelf availability levels. And we reduced fixed costs in the business that were introduced during the pandemic. As you know, at the beginning of 2023, we announced an approximately $1 billion investment in increased annualized compensation for our frontline hourly associates. This allowed us to improve customer service, position ourselves favorably in the market, attract and retain the most qualified talent, drive greater efficiency and productivity across the business, and improve safely broadly. We also navigated a unique disinflationary environment. We did this by leveraging our best-in-class cost finance team in merchants to effectively manage cost movements while also being our customers' advocate for value. And we believe prices have essentially settled in the marketplace. After several years of unprecedented sales growth, we entered 2023 with more inventory than we would have preferred. While the products we sell have low obsolescence, Our teams work throughout the year to improve inventory productivity while delivering the highest in-stock and on-shelf availability rates since the pandemic. Today, we feel very good about our inventory position heading into 2024. Productivity and efficiency are hallmarks of The Home Depot, and as you heard at our investor conference in June, we announced our commitment to reduce fixed costs by approximately $500 million to be fully realized in 2024. We've now taken the necessary actions to achieve this cost benefit, which Richard will detail in a moment. As we look forward to 2024, we remain focused on our strategic opportunities of creating the best interconnected experience, growing our pro-wallet share through our unique ecosystem of capabilities, and building new stores. In December 2023, We made a strategic acquisition of Construction Resources, a leading distributor of design-oriented surfaces, appliances, and architectural specialty products for pro-contractors focused on renovation, remodeling, and residential home building. This acquisition adds to our robust product offering of products and services. It allows our Complex Pros to easily shop across aesthetic product categories in a showroom setting, which is how they are accustomed to shopping for these types of goods. We are excited to welcome construction resources into the Home Depot family. In 2024, we will continue learning and building out new capabilities for the Complex Pro. We are expanding our assortments, fulfillment options, and our outside sales force. and just recently began piloting trade credit options. In addition, we continue to work on new order management capabilities to better manage Complex Pro orders. For the Complex Pro opportunity, this means that by the end of 2024, we will have 17 of our top pro markets equipped with new fulfillment options, localized product assortment, and expanded sales force and enhanced digital capabilities. with trade credit and order management in pilot or development. What I hope you take away today is how great we feel about our business and how well we are positioning the business for the future. We remain excited about the opportunity to grow our share of a fragmented $950 billion plus market. Our associates and supplier partners have continually demonstrated agility and resilience, and I want to thank them for their hard work and dedication to serving our customers and communities. And with that, I'd like to turn the call over to Ann.