The Home Depot, Inc. (NYSE:HD) Q2 2023 Earnings Call Transcript

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So complementing, directing the task and then finding exactly where the product is in the overhead drives a ton of productivity for us, and we expect to roll that out later this year.

Chuck Grom: Okay. Thanks Ann.

Operator: Our next question comes from the line of Brian Nagel with Oppenheimer. Please proceed with your question.

Brian Nagel: Hi. Good morning. Thanks for taking my question. So, at the risk of being maybe a bit repetitive, I just – with regard to inflation, I guess maybe now disinflation, so we are starting to see – and I know you mentioned in your prepared comments the lumber price dynamic there where you have seen improved unit demand. But the question I have is as we are seeing or we are moving past maybe peak-ish inflation and getting more disinflation, how are you seeing the overall business flex here, both from a – I guess from what you are doing as well as how your consumers are reacting generally?

Ted Decker: I mean broadly on the inflation piece, well, we still expect that the overall year will have a net inflationary impact on our costs in retails. But as we go into the second half, it is moderating. And when you look at just the activity of cost increase requests, I mean they are negligible. I mean there are a couple. And we were in the billions of dollars at one point of cost in. And so net new requests for cost and certainly cost increases in the supply chain, that’s all completely abated. As we go into the second half, when you think of product cost, transportation, overall transportation costs and then what would ultimately do in retails, inflation has certainly abated. Commodity is certainly down meaningfully from the peak as well as year-over-year as well as even shorter term.

But beyond commodity and the fact that we don’t have increased inflation, we are not expecting a deflationary environment. I think Richard used the term settling. We are kind of settling into these non-commodity price levels. And as the Pro and consumer customer has gotten used to those over the last few years, you are seeing the normalization in transactions, as Richard called out. So, we are encouraged that the cycle of inflation is essentially behind us. And Richard, I don’t know if you – or Billy, if you have anything else to add to that.

Billy Bastek: No. I would say we are encouraged by the improvement in transactions and as we see the normalized pieces that Richard spoke about earlier, but we don’t see a deflationary environment as we go forward.

Brian Nagel: That’s very helpful. And then the second question I have and I know it’s going to be a bit nuanced, but just to understand how your consumers really reacted here. So, as you look at the West Coast, you called out, I think is a point of strength in the quarter as weather maybe normalized a bit. But the question I have is as you are watching that consumer reengage with Home Depot amid more normal weather conditions, is there anything there surprising, or is the consumer coming back like you would normally expect with the weather shift like we have seen?

Billy Bastek: Yes. I would say, Brian, that we commented out in Q1 because of the impact that we saw, and it played out precisely kind of how we thought in the West. As I mentioned, that was our best-performing division. Customers engaged heavily in our seasonal businesses that were so pressured into Q1. And so it really did play out precisely how we had thought.

Brian Nagel: Okay. I appreciate it. Thank you.

Billy Bastek: Thanks.

Operator: Our next question comes from the line of Michael Baker with D.A. Davidson. Please proceed with your question.

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