Zachary Fadem: Got it, thanks for the time.
Brandon Sink: Thank you.
Operator: Our next question is from the line of Scott Ciccarelli with Truist Securities. Please proceed with your questions.
Scot Ciccarelli: Good morning guys. Can you please talk about any regional differences you are seeing both in different parts of the country but also differentiation here between, call it, the rural locations you guys continue to reference as well as heavier urban locations? Thanks.
Marvin R. Ellison: Yes. So Scott, I’ll take the first part there. Look, I’d say regional differences, there’s nothing material to speak to. I mean we know that housing and home prices ramped up pretty aggressively during the pandemic time frame in a couple of markets. But when we look at the overall geographic spread, I mean there are no real material differences between locales that have had dramatically increase in housing costs and some of those costs are starting to moderate because you still have markets around the company — country rather where home price is still going up. So we look at it, obviously, because it’s one of those key internal macro indicators that we factor into our assessments, but there’s nothing material to speak to.
Relative to urban and rural, we have spent a lot of time talking about the importance of localization. And to say that Lowe’s was a company that was not very localized five years ago would be an understatement. And as much progress as we have made, I think Bill will tell you that we still are excited because there’s still lots of opportunity for us to be even more specific in how we localize from a rule and from an urban standpoint. I’m going to let Bill talk a little bit about our rule initiative and kind of what we’re seeing. It’s early days, but the early signs are positive. And I’ll let him share just some general thoughts around those initiatives and kind of what we hope we’ll continue to see.
William P. Boltz: Yes. Thanks, Marvin. And Scott, as I said in my prepared remarks, we got roughly 300 stores completed in the second quarter. Excited about what we’re hearing from our consumers as they’re giving us credit for the products that we’re putting in there. We’ve been able to do some stuff around pet with our partnership with Petco, which we’re excited about. We’ve also continued to learn and continued to listen to our customers. And so there’s opportunities with different things related to that rural customer, whether that’s utility vehicles, livestock feed, apparel, different types of products that they’ll use every single day in and around their home. And so we’re going to continue to learn. We’re going to continue to adjust as we go, as Marvin said, kind of in the early innings of our localization opportunities.
And on the urban side, we continue to adjust there as well, making sure that we’re right for those urban markets, whether that’s the types of products that they need for security and safety, whether that’s areas in and around building codes and making sure that we can meet the Pro’s needs in those markets. We’re going to continue to tweak and adjust as we go forward. So excited about what we’re doing on the localization front and what we’re doing with rural.
Scot Ciccarelli: Bill, just a clarification, if I can. On the rural side, like is it outperforming the urban areas now or that’s the expectation as you wind up localizing more?
William P. Boltz: It’s performing at what we expected it to perform.
Scot Ciccarelli: Got it, thank you very much.
Operator: Our next question comes from the line of Michael Lasser with UBS. Please proceed with your questions.
Michael Lasser: Good morning, thanks a lot for taking my question. It’s not the fairest metric, and there’s a lot of noise in it but if we simply look at Lowe’s performance relative to its largest competitor, over the last couple of quarters, Lowe’s has been outcomping that player. Presumably, this quarter, it’s in part due to Pro doing a little bit better, online sales doing well, and maybe more seasonal catch-up as a result of leading higher — harder into that category. So a) is that the right interpretation and then b) how sustainable do you think that this measure of Lowe’s performance is?
Marvin R. Ellison: So Michael, I’ll take that. This is Marvin. And I’ll just be really honest with you. We spent a lot of time talking about the importance of being customer-centric. We don’t pay a ton of attention to what’s happening at our competitor because we believe if we take care of the customer, the customer takes care of everything else. So we’re going to continue to stay focused on our total home strategy. We think if we do that well, then our results will be sustainable. And that means that we’re going to be very localized, it means that we’re going to be intentional around the small to medium-sized Pro that we’re going to make our 1,700 stores connected to our customers via omni channel, and we’re going to continue to be intentional around what we do to give our associates a great place to work.
Those things are most important. And I think our results this quarter, although in a difficult market, reflect that our Total Home strategy is working, and we’re continuing to invest the appropriate amount of capital to ensure that irrespective of the macro environment, we’re not going to slow down on our investments in supply chain IT infrastructure, omni-channel, and our Pro initiative. So for us, it’s all about taking care of the customer, and that allows us to outperform our closest competitor, then that’s just a benefit that we’ll be more than willing to accept.
Michael Lasser: Understood. My follow-up question is on your view of the sales environment for the back half, understanding that you’re still taking a prudently cautious stance given what’s happening with macroeconomic indicators. Now with that being said, are you seeing any signs that those discretionary big-ticket purchases that had been weak, such as patio furniture, grills, other big ticket purchases are starting to stabilize or do you have line of sight that they might start to stabilize as you move into next year?
Brandon Sink: Yes, Michael, this is Brandon. Just a reminder, again, as we look out at the second half, we’re cycling up plus 3% in Q3 of last year and a positive 0.7% in Q4. So that’s been factored into our expectations. To your question specifically on DIY discretionary, we definitely saw the smaller ticket discretionary projects that were fueled by lawn and garden. We saw that benefit in Q2 as we get into second half, that seasonal benefit is going to subside. So some of the bigger, I’ll call it, interior DIY discretionary areas, I would say, we’re seeing very much performance here early on through August, similar performance with what we’ve seen over the first half. And that baseline performance is essentially what’s reflected in our expectations for second half.
Michael Lasser: Thank you very much and good luck.
Brandon Sink: Thank you.
Operator: The next question is from the line of Eric Bosshard with Cleveland Research. Please proceed with your questions.
Eric Bosshard: Thanks. Two things, if I could. First of all, I guess probably for Bill, as you think about managing inventory and mix and promotions in this environment, how are you trying to position the business, are you leaning in to try to drive traffic, are you responding and perhaps a little bit more defensively, just how are you trying to position inventory mix and promotions?
William P. Boltz: Yes, Eric, first of all, thanks for the question. We’re focused on trying to provide value to the customer every single day. And so that comes through lots of different things, making sure that from the Pro side that we continue to do things like we’re doing right now as we roll out client tools in our stores, excited about that launch. We think that offers a nice opportunity for us as we’ll have the largest assortment of client in the home improvement channel. So right now, we’ve got roughly 150 SKUs in the stores today. We’ll have all of our stores set by the end of this week. So that’s just one way of being able to provide value to that Pro customer. And then from an inventory side, we came out of Q2 in better position with our seasonal inventories than we did a year ago.
