Steve Forbes

Daniele confirmed the FY2027 gross-margin outlook laps tariff refunds, calling the refund environment deflationary and the lumpy margin best read annualized.

Daniele said commercial growth bumps hard in years one-two of a program, mostly from UDS customers, with AutoZone holding only ~5-6% of a ~$100 billion market.

Management confirmed 10 weeks at 12%+ commercial growth, last 2 weeks at 1% due to shop closures. Business has already returned to normal in early Q3. Validated that prior domestic traffic comp trends of ~6% are the right go-forward building blocks.

Management attributed the difference entirely to category mix, winter drives different product mix (batteries, starters, alternators) between DIY and commercial channels.

Management confirmed acceleration predicated on sales growth. Has playbook to pull back expenses if top line doesn't materialize.

Management confirmed international growth skewed to Mexico due to scale and opportunity. Cost drag profile similar to US with 4-5 year maturity.

Management declined specific KPI ranges but framed opportunity as 5% share in a $110-115 billion market with 75-80% addressable.

Management described technology-driven fulfillment strategy improvements with long maturity curve and continued optimization opportunity.

Management confirmed 300 domestic + 200 international store target by FY2028, with significantly more openings this year.

Management cited outsized mega-hub performance, density test learnings showing minimal cannibalization, and incremental brand and assortment gains.

Brandon explained ADG is 100% and FBM about 45% exposed to residential construction, which is bumping along at multi-year lows; the outlook assumes continued pressure persisting over the second half, impacting both top and bottom lines while integration benefits and tuck-in opportunities continue.

Marvin attributed the pressure to competitors being aggressive on price in seasonal categories like grills, patio and live goods late in the quarter, and handed to Bill to outline back-half plans around Labor Day, member events, and category momentum in Pro.

Marvin linked Extended Aisle to overall Pro growth but did not quantify the segment's growth rate separately. Noted continued addition of suppliers and capabilities.

Marvin acknowledged it is early but positioned HomeCare+ as a differentiated long-term play leveraging loyalty platform, trained local associates and subscription model. No specific metrics shared.

Marvin declined to share specifics before closing but expressed excitement. Brandon noted cross-selling opportunities for complementary categories like tools and fasteners.

Marvin highlighted FBM's AI blueprint takeoff, single ERP platform, and MyFBM mobile app as immediately deployable across 1,750+ Lowe's stores.

Brandon declined to break out Q1 vs Q2 transaction mix specifically but confirmed ticket will remain the primary comp driver with transactions expected to recover in Q2.

Bill outlined Rural completion by late Q2/early Q3, workwear in 1,000+ stores by year-end, and pet initiative also progressing well.

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Corie said Best Buy Business (>$1.1B annually, growing 15-20% in H1) spans six verticals with Geek Squad as an advantage, and the team is refining where to lean in.

Corie declined to provide an organic ASP forecast, saying the focus is on having price points for every budget. Customers come in with a budget and opt into what they want, it's not as simple as all SKUs going up X%. Working with vendors to offer best configurations at various price points.

Jason said no dramatic change in promotional support, but computing vendors are slightly pulling back promotions (first response before outright cost increases) due to memory situation. This is an industry-wide adjustment, not a reduction in BBY-specific support. Vendor labor expected to grow again this year after 20% growth in H2 FY2026.

Corie declined to detail specific vendor cost-sharing arrangements but stressed costs flowing through are materially below the effective tariff rate. Noted their advantage as an only-CE-retailer with breadth from opening price point to premium. Guide remains stable on profitability despite all pressures.

Corie confirmed both breadth and depth of promotions have been higher than last year and expects that to continue, reflected in guidance. The team plans to find right moments for promotional events to resonate with deal-focused customers.

Matt declined to size multi-year opportunity but confirmed both marketplace and ads will contribute to OI rate expansion; ads may be more neutral this year due to investment phase.

Matt explained membership changes will be fully lapped, so next year won't see the same level of improvement, though standalone warranty attach rate growth could continue.

Richard said SRS was down low single-digit comps in Q4 despite industry shingle shipments down 28%. SRS invested in price to take share. GMS owned for 5 months, pleased with performance. Mike Rowe highlighted cross-selling wins including multifamily account expansion across HD, SRS, and GMS.

Ted described AI takeoff tools, pre-populated project lists in the Pro app, and 2-sigma on-time delivery achievement. Mike Rowe added record delivery reliability, B2B online sales outpacing overall, and tens of thousands of weekly projects started via the new projects tool.

Mike described active account handoffs between HD, SRS, and GMS sales forces happening daily. Example of GMS roofing customer connected to HD for framing and flooring needs.

Ted said SRS/GMS adding 40-50 branches per year plus tuck-in acquisitions. Richard noted new stores and branches together drive about 0.5 points of sales growth.

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Brad described the Stafford DC as launching with roughly one-third capacity transitioned from Greensboro and Ohio DCs. The I-95 corridor represents approximately one-third of the U.S. population. Growth includes both greenfield and acquisitions like the Salvo 7-store deal in Baltimore. 2026 new store cohort will still be spread across all markets.

Jeremy noted new stores are always the least productive initially, creating some leverage pressure. The Virginia DC infrastructure build-out is not materially different from other expansion markets. Some incremental inefficiency exists in building out the growth muscle in Mexico and Canada for the first time.

Brent noted Stafford is a 350-store regional DC that will start with roughly one-third of capacity transferred from other locations by year-end, with the remainder representing growth opportunities.

Jeremy described the insurance inflation as a cyclical period of heightened pressure rather than a structural shift, expected to normalize over time. Field organization is primarily focused on capturing acceleration in volume rather than friction points.

Owned stores cost $3-3.4M including construction and development; leased stores are substantially less at $400-600K. Management declined to detail four-wall EBITDA specifics but noted improved new store performance makes owned stores increasingly attractive.

Management acknowledged the self-insurance cost pressure is not unique to O'Reilly and the rate of change has been more accelerated recently, but expressed confidence in ability to manage and operate safely going forward.

Seth cited sequential pet improvement, completed resets, Freshpet in 250+ stores, and improving price-value perception. Substantive but light on timing to stabilization.

Hal said post-COVID rural/suburban migration continuing though now more balanced between suburban and ex-urban. More rural stores have stronger comps. Share growing in both dog and cat individually by mid-to-high single digit basis points but mixing to flat in total food. Were gaining ~20bps overall in 2022-2023.

Hal said direct sales on track with initial expectations. Initiative expected to self-fund in 2026 with no incremental investment. John Ordus reported 48 specialists covering 312+ stores, big barn customers comping nearly 50%, over $2K/week per rep.

Big barn customers with weekly needs and high order volumes are primary adopters. Three demand levers: direct sales, online bulk orders (~$200M), and in-store delivery. ROI details not yet shared.

Rob Mills noted extremely strong early adoption. Integration focused on making script transfer simple. Next phase is in-store integration with signage, PetIQ partnership, and Neighbor's Club cross-sell.

Seth Estep explained localization adjusts ~25% of store floor plans for low-single-digit lift, while Field & Stream partnership targets the fast-growing wildlife and hunting categories.