Lowe's Companies, Inc. (NYSE:LOW) Q3 2019 Earnings Conference Call - Final Transcript

Nov 20, 2019 • 09:00 am ET


Lowe's Companies, Inc. (NYSE:LOW) Q3 2019 Earnings Conference Call - Final Transcript


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Good morning everyone, and welcome to Lowe's Companies' Third Quarter 2019 Earnings Conference Call. This call is being recorded. [Operator Instructions]

Also, supplemental reference materials are available on Lowe's Investor Relations website within the investor packet. While 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 materials 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 of 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.

Marvin Ellison

Good morning, everyone. For the quarter, total company comp sales grew 2.2%. Our US home improvement, cost was 3% despite low single digit online growth and higher than expected lumber deflation. We saw consistent growth across the business with all three US divisions in all 15 US geographic regions generating positive comps for the second consecutive quarter. These results reflect our continued progress on our transformation plan. Four of our top five performing geographic regions were in the Western Division, driven by strength in Pro, Appliances, Outdoor Project category, improved-in stocks and customer service. In addition to the West, geographic regions that outperformed the total company comp in the quarter were Nashville, Boston, Tampa, and Houston. Commodity deflation exerted approximately 95 basis points of pressure on comp sales in the quarter, however unit growth in impacted categories strong.

Let me now take a moment and discuss what drove our success in Q3. Let's start with Pro. Our focus on the Pro continues to be a catalyst for our US sales growth and during the quarter, we continued to receive very positive customer feedback from Pro experiencing first-hand what is new and different at Lowe's and we're pleased with the Pro's willingness to grow their business with us. Our Pro comp significantly outperformed DIY in the third quarter and the Pro customers are responding very positively to our investments in job lot quantities, department supervisors and our improved in-store experience. The result of these investments in Pro not only delivered positive sales growth, they are also reflected in 700 basis point improvement in our Pro customer service scores in the third quarter. Despite this early success, we're focused on the work ahead to better serve