Peter Benedict

Marvin detailed how AI is creating productivity gains and enhancing associate capabilities with 2 million monthly inquiries. Tech team seeing double-digit productivity gains from AI development tools. Brandon confirmed demand planning, pricing, allocation and replenishment all in active AI investment, contributing to $1B PPI target.

Marvin highlighted Pro Extended Aisle exceeding expectations with new suppliers and markets added weekly. Adding vinyl siding, building materials, doors, flooring, electrical wiring to help capture planned Pro spend.

Brandon detailed 30bps additional dilution wrap in FY2026 (50bps annualized), $1B incremental productivity for 2026, with some modest unanticipated cost pressures also embedded in the guide.

Bill cited strength in carpet, tile, and adhesives with both DIY and pro mix. Joe highlighted centralized selling freeing up associates and improving installation LTR.

Marvin noted pros are focused on smaller repair/remodel/maintenance projects due to housing lock-in. Skilled trade labor shortages are an emerging concern.

Bill described a disciplined SKU-by-SKU approach to sourcing diversification, noting that some products may not make sense going forward in any location.

Marvin noted dramatic acceleration for onboarded vendors. Joe highlighted ability to generate quotes within minutes vs days previously, with direct supplier-to-customer delivery.

Marvin explained the small-to-medium pro focus in a $500B TAM, and Bill confirmed broad-based positive pro comps across all categories.

Brandon noted conservative assumptions on hurricane rebuild timing due to uncertainty around insurance proceeds timing.

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Jeffrey walked through the three gross-margin drivers (tariff peak, oil, shrink accrual lap) and stressed no IEEPA refund benefit is in guidance.

Laura credited DTC improvement, better photography/storytelling, furniture strength, and new-store performance for the acceleration.

Howie confirmed the 70 bps non-comp benefit will accelerate through the year as most of the 20 new store openings and 9 repositions occur later in the year.

Howie disclosed shrink was about half of the reported supply chain benefit, with physical inventory results coming in lower than expected. The right accrual level is embedded in guidance.

Laura described Design Services evolution: added accessories layer on top of furniture, then seasonal/holiday. Future is AI in the hands of associates. Sameer Hassan elaborated on AI amplifying category authority and expertise for product discovery and interior design guidance.

Jeff detailed multi-leg retail strategy: 17% of stores closed since 2019, repositioning from indoor malls to lifestyle centers, plus new store growth. Still more repositioning to go but white space infill opportunity. Overall store count not expected to change substantially in 2026.

Jeff declined 2026 guidance citing tariff volatility. Noted India tariff at 50% is an open question, Supreme Court decision on IEEPA tariffs pending. Six-point mitigation plan will offset large portion but ultimate amount depends on where tariffs land.

Laura detailed domestic manufacturing capabilities: factories in Mississippi, North Carolina, and Rejuvenation in Portland. Could expand domestic upholstery. Noted industry constraints on rapid reshoring.

Laura emphasized pricing is item-by-item, not sweeping adjustments. Value equation includes design, quality, brand, and service. Newness coming in at good margins with some items underpriced. Also sees opportunity to improve markdown margins and increase full-price penetration.

Alber emphasized WSM's unique holiday assortment as a competitive advantage no one matches. Reiterated commitment to reducing promotions, noting the customer doesn't have to wait for a better price. Emphasized proprietary sourcing gives competitive value at full price.

Kurt attributed the second-half margin path mainly to tariff choppiness, freight, DC start-up costs, and a Q4 supply-chain benefit, but did not fully bridge each driver.

Seth confirmed 1-2% AUR inflation expected in 2026 from blend of commodities (corn in low-to-mid $4s) and tariff pass-through. Hal said garden center strategy now includes large, medium, small, and pop-up formats. Over 1,000 stores with live goods planned. Live goods among best-performing categories.

Hal described three AI buckets: enterprise vendor AI modules (ERP, replenishment, marketing), custom-built apps (Heygura, Tractor Vision, CorSo) scaling in use, and agent automation via OpenAI enterprise integration with 1,500 users connected to Snowflake data lake.

Seth confirmed pet category past trough, recovery may be slower than historical. Over 500 stores converted to 5G+ pet format with incremental SKUs outpacing balance of chain. 800 stores by year-end.

Hal confirmed assuming current tariff rates (10% non-China, 145% China) for the full Q2 ninety-day period. Guidance limited to Q2 receipt exposure only; hopeful global trade policy moderates.

Kurt described Allivet as stable with modest spring/summer peak for flea/tick. Long-term operating margins expected to equal or surpass Tractor Supply levels. Focus in 2025 is onboarding Neighbor's Club members.

Gary reported no major change in core merchandising behavior (gas aside) and cited a protein/GLP-1 halo (KS beef sticks, ultra-filtered protein milk) Costco is leaning into.

Gary declined to give a digital-engagement penetration metric but confirmed website +24% and app +40%+ traffic, and Ron called out pay-ahead pharmacy and online cake/deli tray ordering as upcoming app enhancements.

Ron sees continued runway but no target number, and Gary said FY26 CapEx will grow above FY25 (which itself outpaced sales growth for the first time in years) driven by warehouses, remodels, depots, manufacturing and technology.

Gary said the digital-mix renewal drag will persist a while, compounded by Asian-warehouse cohorts, but is an opportunity to mature members up the loyalty curve.

Ron cited Pleasanton opening as evidence of incremental business even near existing high-volume locations, plus success in smaller markets like Scarborough, Maine.

Rainey said right way to think about CapEx is 3% to 3.5% of sales growing with revenue. Not shying away from investment given opportunities to drive improved returns. Every dollar must fight for highest return. Saw significant price dislocation in quarter and were very aggressive with buyback purchasing $4.6 billion more than all of last year. Will continue to be opportunistic during price dislocations with lot of conviction in strategy. Total buyback for year to be determined balancing with dividend and CapEx.

Doug gave a general response about the evolving competitive set rather than naming specific competitive responses, emphasizing a customer-first approach with competitors in peripheral vision.