Lowe’s Companies, Inc. (NYSE:LOW) Q4 2022 Earnings Call Transcript

Brandon Sink: Yeah. Brian, I’ll just connect that to the guide, Marvin highlighted with what we’re seeing more with the DIY customer. But just looking at the Pro and expectations into 2023, continuing to outpace DIY 11 quarters in a row, double-digit comp, we continue to see Pro across all ticket ranges, both comp and transaction growth. And while we did see DIY lag in 2022 in the discretionary category, some of what Marvin was describing, we are seeing those overall transactions continue to improve across the year. So when we look at 2023, still expecting outperformance with the Pro, but expecting that gap between Pro and DIY to continue to close and tighten, and that’s what’s reflected in our guide for next year.

Brian Nagel: That’s very helpful. And then my follow-up question, just with regard to lumber prices. So you discussed here and we get it, this is kind of a pass-along dynamic when prices declined as a negative for sales. But if we’ve gotten to the point where lumber prices have declined so much of — that’s actually becoming a potential stimulant to demand, I don’t know if you’re seeing this in your business or maybe in some of your polling of your professional customers?

Brandon Sink: Yeah, Brian, I’ll take that and, again, kind of connect it to the guide. So our guide at the midpoint for lumber, in particular, assumes a normalized pricing environment, certainly considered to what we’ve seen for the last three years. And within that lumber assumption, as you heard in my prepared remarks, expecting headwind in both Q1 and Q2. And I’ll call out also if that €“ when we look at lumber pricing currently, if that were to play out across the remainder of the year, it actually puts another 100 basis points of pressure on the midpoint of the guide. But to your point, within that, we are expecting an offset in units, and there’s potential that, that could be a stimulant for our business. But again, right now, we’re expecting and have considered at the midpoint of our guide, just more normalized pricing and a slight rebound in units in the next year.

Brian Nagel: Appreciate all the color. Thanks, guys.

Brandon Sink: Thanks, Brian.

Operator: Next question comes from the line of Karen Short with Credit Suisse. Please proceed with your question. Ms. Short, please go ahead with your questions.

Karen Short: Apologizes, sorry. Thanks for that. So just on two questions. You guided to flat to down 2% comp. So that was kind of in between the robust and moderate scenarios that you offered. And then your margins, though, are only on the moderate range, not the robust range. So I’m wondering, if you could give any color on that. And then on the wage investments that you called out, obviously, one of your competitors also announced very sizable wage investments. So wondering, if you could just give a little color on your wage investment versus industry and/or one of your largest competitors?

Marvin Ellison: So Karen, this is Marvin. I’ll take the wage question, then I’ll let Brandon take the first part of the question. So two things. First, we feel great about the financial commitment we’ve made to our front line associates. And we’re also very confident in our long-term financial plan. So since 2018, as we mentioned, we’ve invested over $3 billion in incremental wages and share-based compensation for front line associates, including $170 million wage investment we made last year. And over the past four years, we’ve increased our wage by more than 20%. And Brandon mentioned that we’re going to be investing $350 million this year in frontline wages. And over the next three years, we’re going to invest nearly $1 billion.