Lowe's Companies, Inc. (NYSE:LOW) Q4 2023 Earnings Conference Call February 27, 2024 9:00 AM ET

Company Participants

Kate Pearlman - VP, IR & Treasurer

Marvin Ellison - Chairman & CEO

Bill Boltz - EVP, Merchandising

Joe McFarland - EVP, Stores

Brandon Sink - EVP & CFO

Conference Call Participants

Peter Benedict - Baird

Zach Fadem - Wells Fargo

Simeon Gutman - Morgan Stanley

Chris Horvers - J.P. Morgan

Kate McShane - Goldman Sachs

Steven Zaccone - Citi

Operator

Good morning, everyone. Welcome to Lowe's Companies Fourth Quarter 2023 Earnings Conference Call. My name is Rob, and I'll be your operator for today's call. As a reminder, this conference is being recorded.

I will now turn the call over to Kate Pearlman, Vice President of Investor Relations and Treasurer.

Kate Pearlman

Thank you, and good morning. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer; Bill Boltz, our Executive Vice President, Merchandising; Joe McFarland, our Executive Vice President, Stores; and Brandon Sink, our Executive Vice President and Chief Financial Officer.

I would like to remind you that our notice regarding forward-looking statements is included in our press release this morning, which can be found on Lowe's Investor Relations website.

During this call, we will be making comments that are forward-looking, including our expectations for fiscal 2024. Actual results may differ materially from those expressed or implied as a result of various risks, uncertainties and important factors, including those discussed in the Risk Factors MD&A and other sections of our Annual Report on Form 10-K and our other SEC filings.

Additionally, we'll be discussing certain non-GAAP financial measures. A reconciliation of these items to U.S. GAAP can be found on the Quarterly Earnings section of our Investor Relations website.

Now, I'll turn the call over to Marvin.

Marvin Ellison

Thank you, Kate, and good morning, everyone.

In the fourth quarter, comparable sales declined 6.2% as DIY customers continue to remain cautious with their home improvement spend and harsh weather impacted large parts of the U.S. in January. In spite of these challenges, I'm very pleased with the excellent customer service in our stores and strong operating profit performance for the quarter, driven by disciplined focus on our perpetual productivity improvement initiatives or PPI.

Looking at the full fiscal year 2023, we delivered sales of $86.4 billion, adjusted operating margin of 13.3%, and adjusted earnings per share of $13.09.

Beginning with our DIY sales results, November and December trends improved from the third quarter, followed by a sharp drop in traffic during periods of extreme weather in January. Macroeconomic factors like persistent inflation and a stagnant housing market continue to make DIY customers and consumers hesitant to spend on big ticket purchases for their homes, and those who did engage in home improvement activities took on smaller non-discretionary projects with a heightened focus on value. This impacted demand for bigger ticket interior categories like kitchen and bath, flooring and appliances. In the last quarter, we shifted our strategy to adapt to these changing consumer behaviors, resulting in record Black Friday and Cyber Monday online sales and improved holiday sell-through and margins.