Zach Fadem

Richard confirmed the ~$400M cross-sell expectation and reframed the opportunity as system-wide, starting with penetrating the in-store Pro wallet; Ann-Marie and Michael Rowe detailed QuoteCenter and Pro ecosystem traction.

Richard noted SRS delivered $4B in sales with positive organic growth; roofing comps were slightly negative but improved compares in H2 should help. Q2-Q3 last year had historically low hail and hurricane storms.

Richard confirmed core margin was stable with GMS accounting for the vast majority of the 75bps decline. Cost headwinds biased toward increases from fuel and commodities but tariff refunds could provide significant offset.

Ted said no meaningful regional bifurcation despite differences in home prices and turnover. Storm lapping created the biggest geographic comp differences. With turnover at 30-40 year lows everywhere, no statistical significance from price declines alone yet.

Ted said tax stimulus could add ~0.5pt of comp at midpoint but not planning on much. Billy confirmed mostly done with tariff pricing, mid-single-digit exposure, ~3% SKU price impact, over 50% sourced domestically. Richard guided H2 comps slightly higher than H1 due to storm lapping.

Richard quantified GMS transaction fees at ~$0.05 EPS for the year, all in Q3. Inventory increase principally from GMS addition and investments in DFC speed promise.

Billy said ticket growth primarily from customer trade-up and innovation, not broad inflation. Promotional activity consistent year-over-year in both Q3 and Q4. No meaningful trade-down observed.

Ted said economic uncertainty is the top deferral reason by wide margin. Tax bill resolution removes one source of uncertainty. Rate relief would help but no crystal ball on the trigger level.

Ted attributed Q2 strength to both broader engagement across categories and favorable July weather in the North. Only slight uptick needed in H2 to meet 1% full-year guide.

Richard declined to speculate on competitive pricing dynamics but expressed confidence in HD's own position with best-in-class merchants and SKU-level cost models.

Richard acknowledged minor variability from retail method but said nothing significant to flag. Retail pricing moves in ordinary course each quarter.

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Jamere acknowledged transaction declines have been unusually elevated with a 3-handle for multiple quarters. Sees opportunity for improvement in traffic as deferral cycle is lapped.

Jamere said stronger commercial business drives faster mega hub ramp; also using mega hubs more for direct-to-customer delivery rather than just fulfillment sourcing.

Management expects outsized top-line and EBIT growth in FY27-FY28 as stores mature. Stores reaching targeted ROIC in very short period. MegaHubs performing significantly better than modeled.

Management confirmed 1-1.5pp weather impact estimate. Expects deferred maintenance to accelerate in back half of year, aided by larger tax refunds driving reinvestment in vehicles.

Management expects similar low inflation absent tariffs but warned tariffs could create LIFO expense headwind in Q4.

Management noted MegaHubs ramp faster than typical 5-year satellite maturity, becoming magnets for traffic and lifting entire market.

Management reported broad-based growth across segments except new/used car-related customers which remain weak due to high interest rates.

Management acknowledged ongoing pressure on lower-income consumer from inflation but expressed confidence in gaining share through improved execution.

Marvin confirmed year is playing out as expected, sales growth more back-half weighted based on comparisons and initiative timing. Bill detailed Daltile flooring rollout, appliance innovation, workwear/pet expansion, STAINMASTER carpet and Pro category improvements.

Brandon quantified 20bps margin dilution in 2025, with 30bps incremental wrap in 2026 for 50bps total annualized impact, weighted toward gross margin.

Marvin noted stable pro backlogs and improved confidence in labor access. Joe described a flywheel effect from Transform Pro, loyalty, extended aisle, and inventory investments.

Marvin framed ADG+FBM as positioning for the housing inflection, noting Lowe's had strategic deficits in serving the housing recovery opportunity.

Brandon reiterated no macro inflection expected, with second-half improvement driven by Total Home strategy initiatives scaling.

Marvin acknowledged the question is timely and fair but gave a general preparedness answer without specific immigration impact quantification.

Marvin attributed the January/February softness entirely to weather, citing clear geographic evidence that spring categories perform where weather cooperates.

Both Fletcher and Beckham pushed back, citing vehicle parc, average vehicle age and miles driven as the reason they reject the slowdown thesis.

Fletcher explained the second-half SG&A easing but explicitly refused to set a forward run rate or leverage point ahead of 2027 guidance.

Brad noted weather is hard to predict and while early winter weather was good, some southern market weather impact may not pay off long-term like sustained northern winters. The guidance reflects what they can control with continued consumer cautiousness factored in.

Jeremy noted individual gross margin drivers are each 10-20bps. Professional mix is a decent-sized headwind, offset by acquisition cost improvements (larger driver) and distribution efficiencies. Mexico evolution adds roughly 4-5bps tailwind. SG&A insurance pressure expected more in the first half with dollar-based per-store growth front-loaded.

Jeremy noted the vast majority of sales are nondiscretionary with little individual job price sensitivity. The greater risk is broader consumer wallet pressure causing deferrals of maintenance items, historically short-lived in their industry.

Brent described the I-95 corridor as the last domestic expansion frontier. Brad noted the region represents roughly one-third of the U.S. population with significant vehicle registrations and car park opportunity.

Matt described flex mechanisms: incentive comp scales back first ($100M at low end), then responsible reductions in store labor, marketing, and other variable expenses. Supply chain costs and bad debt also naturally flex. Company has proven ability to deliver OI outcomes even at lower sales levels.

Jason said vast majority remains duress/replacement with high single-unit purchases making promotions less effective. Focusing on: vendor-funded specialty labor, enabling in-store takeaway, and delivery speed optimization for a duress market. Will pivot back to premium/packages when housing market improves.

Matt explained computing replacement cycle is most advanced (notebooks, now expanding to desktops and gaming PCs). Gaming is launch-dependent (Switch 2 just happened, next PlayStation/Xbox consoles further out). TVs and appliances on longer 6-8 year cycles. Business shines with innovation, and momentum is building across categories.

Matt said rate easing would primarily benefit major appliances through housing turnover/starts, shifting customers from duress/break-fix single units to package purchases. Some home theater benefit too. BBY's broad assortment and dedicated labor position them well for a housing-driven recovery.

Jordan said the plan must evolve every year but does not expect promotional cadence to shift much in 2027.

Weiner confirmed the new product was developed in the U.S. rather than tested abroad, but deferred DPG results and shared no performance data.

Russell emphasized order count as key metric, short-term ticket gains sacrificing order count are unsustainable. BDE differs from competitors because discount is on items customers actually want. Sandeep added compounding frequency is the leading indicator; loyalty program is the accelerator.

Sandeep declined mix specifics going forward; confirmed Boost Weeks roughly in line with prior year as customer acquisition vehicles. Russell cautioned against over-indexing on Boost Weeks to avoid training customers.