Lowe's Companies, Inc. (NYSE:LOW) Q1 2019 Earnings Conference Call Transcript

May 22, 2019 • 09:00 am ET

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Lowe's Companies, Inc. (NYSE:LOW) Q1 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Good morning everyone and welcome to Lowe's Company's First Quarter 2019 Earnings Conference Call. This call is being recorded. (Operator Instructions). Also supplemental reference slides are available on Lowe's Investor Relations website within the investor package. Well management will not be speaking directly to the slides, these slides are meant to facilitate your review of the Company's results and to be used as a reference document following the call.

During this call, management will be using certain non-GAAP financial measures. The supplemental reference slides include information about these measures and a reconciliation to the most directly comparable GAAP financial measures. Statements made during this call will include forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. Management's expectations and opinions reflected in those statements are subject to risks and the Company can give no assurance that they will prove to be correct. Those risks are described in the Company's earnings release and in its filings with the Securities and Exchange Commission.

Hosting today's conference will be Mr. Marvin Ellison, President and Chief Executive Officer; Mr. Bill Boltz, Executive Vice President, Merchandising; Mr. Joe McFarland, Executive Vice President Stores; and Mr. Dave Denton, Chief Financial Officer. I will now turn the program over to Mr. Ellison for opening remarks, please go ahead, sir.

Executive
Marvin R. Ellison

Thank you, Regina. Good morning everyone. Our first quarter comp performance is a clear indication that our focus on retail fundamentals is gaining traction. Despite solid top line results, our gross margin performance in Q1 highlights that we still have work to do as we continue our transformation. We are taking the necessary short and long-term actions to improve our gross margins, which I'll discuss in more detail in a moment. But first let me highlight what drove our sales performance in Q1, specifically our commitment to improving in stock and customer service coupled with our focus on winning with (inaudible) improved sales performance.

For Q1, we delivered total Company comps of 3.5% and our US home improvement comps grew 4.2% for the quarter, while there was challenging early in the quarter given that we experienced the second what is February on record. In fact unfavorable weather exerted 315 basis points of top line pressure in February as well as improved we saw broad-based sequential improvement with comps of a negative 1.4% in February, positive 3.5%, in March and positive 7.2% in April. We drove increased traffic to stores and to lowes.com and generated a more balanced top line growth with increasing transactions by 2.2% and increasing average ticket by 1.3%.

We delivered positive comps in 10 of 13 merchandizing departments, including double-digit comps and seasonal and outdoor living in high single-digit comps in lawn and garden. We drove positive comps in all geographic regions, with the exception of Tampa in Houston, which faced tough prior-year comparisons from hurricanes Irma and Harvey. For Q1, some of our best performing geographic regions were Atlanta, Charlotte, Los Angeles, Nashville, New York Metro, Pittsburgh, Philadelphia and Richmond. Our