Lowe’s 2Q16 Earnings Call Notes

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Lowe’s Companies, Inc.’s (LOW) CEO Robert Niblock on Q2 2016 Results

The outlook for home improvement remains positive

“Looking ahead to the second half of 2016, the outlook for the home improvement industry remains positive. Persisting gains in the job market and disposable income growth that continues to outpace the economy should further contribute to solid growth in consumer spending. And the outlook for housing remains bright, with strong home sales and construction in the first half of the year posed — poised to benefit growth in the second half of the year.”

Strong housing fundamentals

“With home value appreciation expected to persist and incomes continuing to rise, we expect homeowners to be motivated to spend on their homes. Overall, strong consumer housing fundamentals should continue to benefit the home improvement industry.”

Consumers feel positive about the value of their homes

“Our second quarter consumer sentiment survey showed similar trends. Consumers continue to view their personal finances and home values favorably, with half of homeowners believing the value of their home is increasing. We believe this positive sentiment around home value is driving home improvement spending. Consequently, we continue to see home improvement spending outpace overall consumer spending, as well as positive home improvement project intentions, including strong engagement in big ticket discretionary projects.”

Consumers are still highly engaged in discretionary spending

“everything we hear from the consumer, they are still highly engaged in discretionary spending around the home driven by [indiscernible] housing market and the value of their homes continuing to increase”

500bps comp spread between west and north

“Yes. Simeon, this is Robert. If you look at to part of your question, spread. The West was our best-performing area of the country, best-performing division. As we said the North was our weakest-performing division. There was almost 500 basis point spread in comps between those two divisions. ”

Michael Jones

Strong social media on Facebook Instagram and snapchat

“So, as an example, we have a very strong social media footprint on Snapchat, Facebook, on Instagram. In the second quarter, we drove 27 million impressions on social media alone, and that’s on top of 32 million impressions in the first quarter.”

Promotional environment is rational

“I guess, I would probably describe the promotional environment, again I think it’s rational. I don’t know that you’re going to see any substantial increases in promotional depth. I think you see us leverage our consumer insights analytical capability to tweak promotions to make the more efficient, and I think you see us use some of our marketing digital capabilities to ensure that we’re getting better utilization on how we extend our promotions.”

Bob Hull

Strength in west and south, pressure in northeast

“In Mike’s comments, he talked about the strengths we saw in the West as well as positive comps in the South. Certainly, we had pressure up in the Northeast, which contributed most of the pressure associated with weather.”