Loews Corporation

Good morning, everyone. Welcome to Lowe's Company's first quarter 2024 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'll now turn the call over to Kate Parman, Vice President of Investor Relations and Treasurer.

Thank you, and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer, Bill Bolts, our Executive Vice President, Merchandising, Joe McFarland, our Executive Vice President Storrs, and Brandon Sink, our Executive Vice President and Chief Financial Officer. I would like to remind you that our notice regarding forward-looking statements is included in our press release this morning, which can be found on Lowe's Investor Relations website. During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2024. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties, and important factors, including those discussed in the risk factors, MD&A, and other sections of our annual report on Form 10-K and our other SEC filings. Additionally, we'll be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found on the quarterly earnings section of our Investor Relations website. Now, I'll turn the call over to Marvin.

Thank you, Kate, and good morning to everyone, and thank you for joining us today. First quarter sales were $21.4 billion with comparable sales down 4.1% from the same period last year. Despite the continued pressure and DIY bigger ticket discretionary spending across the industry, we deliver better than expected spring seasonal sales. Overall, we perform well in a challenging home improvement environment as we adjusted our strategy to win the early spring customer and take share in key categories with data-driven marketing campaigns and our compelling seasonal assortment, which includes our industry-leading outdoor power equipment lineup strengthened by the launch of Toro. We also gained traction with our total home strategy reflected in our positive Q1 growth in pro and online sales. In addition, we improved customer satisfaction while also maintaining a disciplined focus on our perpetual productivity improvement or PPI initiatives across all functional areas of the business. Overall, we're excited about our spring strategy and we're pleased with how our SpringFest campaign resonated with customers, especially in smaller ticket lawn and garden projects. The combination of the right brands, compelling offers, strong store execution, and more nimble marketing helped us capitalize on this key time of year. Bill and Joe will provide more detail on our spring and PPI efforts later in the call. Now turning to pro. As I mentioned earlier, we delivered positive pro comps in Q1 as our strategic investments to improve the pro experience are driving increased sales and improved customer engagement. Specifically, investments to improve service levels as well as our expanded brand portfolio that now includes client tools are strengthening our relationships with this core customer. This customer has proven resilient, as reflected in the recent pro survey, with healthy backlogs in line with last year. Our strategy continues to focus on taking share with the small to medium-sized pros, such as repair and remodel contractors, property managers, and trace people. We estimate these pros represent half of the $500 billion pro market, which remains highly fragmented. We are striving to provide a high level of service with these small to medium-sized pros as we continue to build trust and credibility. And we continue to invest in pro growth, which includes expanding our capabilities to handle larger order delivery to the job site, while also opening new Lowe's Pro Supply branches around the country. There is still significant runway ahead of us to grow our sales with these customers while also leveraging our retail footprint to drive profitability. Now shifting to online. In the first quarter, online sales were up approximately 1%. Our ongoing improvement in our conversion rates in Q1 offset continued pressure in bigger ticket DIY categories. This quarter, we expanded our same-day delivery options by partnering with DoorDash and Shipt. Lowe's is the first home improvement retail partner on these platforms, and their members now have quick and convenient access to a wide assortment of home improvement products across the country. These new partnerships complement our existing same-day delivery options with Instacart, in addition to our same-day delivery option on Lowes.com using our last mile partner, OneRail. Our objective is simple. giving customers access to the home improvement products they need however they choose to shop. And we're tailoring our digital experience to support the unique needs of different customer shopping journeys based on the type of project. And we're also using virtual and mixed reality to make it easier for customers to explore and visualize different possibilities for their home. Another exciting step forward for Lowe's this quarter was the national rollout of our DIY loyalty program called My Lowe's Rewards. This program is designed to reward customers for choosing Lowe's for their home improvement needs by earning points toward My Lowe's money, providing free standard shipping, as well as other offers and gifts. In addition, customers can also save 5% every day on eligible purchases with the My Lowe's Rewards credit card. As Milo's Rewards Program matures, the purchase data will allow us to better understand the specific needs of each customer and tailor offers to their individual preferences. We're pleased with the early customer adoption and the successful launch both in-store and online. And our frontline associates have also rallied around this campaign, and I'd like to thank them for their successful efforts to promote Milo's Rewards and educate our customers on the benefits. Now, speaking of team, we're excited to welcome the best soccer player in the world, Lionel Messi, to our Lowe's home team lineup. We're also extending our reach to more sports fans beyond the football fans we connect with as the official home improvement retailer of the NFL. We're now striving to reach the 34 million soccer fans in the U.S. who are not NFL fans, and we're excited by the rapid growth of soccer fans in the U.S., This exciting alliance along with our partnership with MLS Club Inter-Miami CF and the Copa America 2024 USA Tournament gives us the opportunity to build trust and credibility with a broader customer base. These partnerships will help us bring new customers to Lowe's and offer some unique experiences and rewards for these very passionate fans. Now I'd like to provide a quick update on our view of the macro. Uncertainty around interest rate cuts, stubborn inflationary pressures, and a consumer still showing a preference towards spending on discretionary services and experiences continue to weigh on the DIY home improvement demand. And the outlook for lower mortgage rates and improved housing turnover remains uncertain. Real wage growth and home price appreciation are solid, but the home improvement customer is still on the sideline expressing concerns about higher cost of living and the state of the overall economy. And while the near term is still challenging to read, we remain confident in the medium to long-term outlook for our industry as our core demand drivers are all supportive of growth. Our continued commitment on our PPI initiatives combined with our ongoing investments in our total home strategy not only allow us to perform efficiently in this challenging macro environment, but also position Lowe's for accelerated market share growth when the home improvement market recovers. Before I close, I'd like to extend my appreciation to our frontline associates for their continued hard work and commitment to Lowe's and to our communities. I visited stores in eight of our 15 geographic regions in the first quarter, and our frontline associates are simply outstanding. And with that, I'll turn the call over to Bill.