Loews 3Q15 Earnings Call Notes

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Lowe’s Companies’ (LOW) CEO Robert Niblock on Q3 2015 Results

Robert Niblock – Chairman, President and Chief Executive Officer

Customers not increasing overall spending but allocating more to home improvement

“as we survey our customers and what they tell us for their intentions with respect to spending, and we look at overall their level of spending is not increasing. But the amount that they’re allocating to home improvement, they are indicating that they’re spending more in home improvement, then obviously how much of that winds up in our channels, which you have to look at.”

People are engaging in discretionary spending around the home

“we think that if you look at what’s happening in the overall macro environment, when you look at what’s happening with home prices, it once again speaks for the fact that consumers are reengaging in discretionary spending around the home.”

Half of the spend is discretionary

“when we look at consumers discretionary versus non-discretionary spend, we’re seeing that when you combine small and large discretionary spend, what they’re telling us that more than 50% of their spend is on a discretionary basis, which is if you strip that from where it would have been prior year, so we’re seeing it move above that 50% level.”

Consumers are willing to spend on the home

“So we are seeing that consumer take on that willingness to spend around the home on discretionary projects, driven by, as I said in my comments, macro factors as well as continued comfort that comes from home price appreciation that they’re seeing.”

Robert Hull – Chief Financial Officer

Get Better media spending yields from digital than print

“we’re doing some media mix modeling, so we’re trying to understand the impact of different mediums on different markets and we’re adjusting accordingly. So ultimately, we’re taking the most effective yields, which is the sales dollar yielded for a dollar of marketing spent. We have shifted some, as Rick mentioned in his prepared comments, we’ve shifted some dollars away from prints towards more digital assets. We’re able to reach more folks on a very cost effective way, which gets into the effectiveness and efficiency of marketing.”

Greater consumer sentiment and confidence around the personal job situation

“what we are seeing is a greater proportion of customers telling us they’re leading into the big ticket discretionary from smaller ticket discretionary. As you think about greater consumer sentiment and confidence around the personal job situation, there is home appreciation. They are staring to think about these bigger ticket discretionary projects.’

Michael Jones – Chief Customer Officer

Continuing to move marketing spend towards digital, towards social media and away from traditional mediums

“if you look at the way we’ve remixed our advertising and marketing spend, we’re moving more towards digital, more towards social media and less out of some of the more traditional one advertising vehicles. I’ll give you some numbers, a way to think about this. Just looking at social media, Lowe’s followers on Facebook are over 3 million, Pinterest just about 3.5 million followers, Lowe’s video views well over 70 million. So we see a one of easiest ways to track is just watch our activity on social media. Our digital footprint is very, very large and we continue to increase it. So we’re quite proud of the work that’s happened there.”