as low as $79.49 a month.
LIZ: THE TIGHT HOUSING MARKET
AND THE BABY BOOMER IN ADDITION
TO BLOWOUT EARNINGS.
THE HOME-IMPROVEMENT GIANT SAID
IT’S LAUNCHING LIVABLE HOMES,
NEW PARTNERSHIP WITH AARP THAT
WILL OFFER SPECIFIC EXPERTISE,
PRODUCTS AND INSTALLATION
EDUCATION TARGETED AT AMERICA’S
AGING POPULATION AND SHIFTING
NEEDS, TIPS TO MAKE YOUR HOME
FALL PROOF, RAMPS, BED SIDE
ASSISTANCE IN THOSE KNOCK IT OUT
OF THE PARK BEATING ON BOTH THE
TOP AND BOTTOM LINE RAISING THE
ANNUAL REVENUE, THE
HOME-IMPROVEMENT RETAILER
SHOWING NO SIGNS OF SLOWING DOWN
DESPITE WHAT WERE FACING THE
GLOBAL SUPPLY CHAIN AND RISING
INFLATION AS THE STOCK BUMPED UP
A RECORD HIGH LET’S BRING IN
THOSE PRESIDENT AND CEO MARVIN
ALLISON.
HOW DID YOU GUYS BE THE
INFLATION GRIM THAT EVERYBODY IS
DEALING WITH.
>> IT’S GREAT TO BE HERE, A LOT
OF WORK MANAGING COST BUT ALSO
FINDING WAYS TO REDUCE EXPENSES
AND OTHER PARTS OF THE BUSINESS
THAT WE CAN ABSORB THE COST THAT
WE CANNOT AVOID AND PROTECT PRICING.
AT THE END OF THE DAY WE WANT
CUSTOMERS TO WALK IN AND OUT
COMPETITIVE PRICING AND WERE
VERY FORTUNATE WITH THE SKILLED
TEAM THAT WERE ABLE TO MAKE THAT
HAPPEN IN THE THIRD QUARTER.
>> INVESTORS ARE BELIEVING
BECAUSE THE STOCK IS MOVING
HIGHER.
WHAT WE SEEN IN THE PAST 72
HOURS, THIS IS RETAIL WHERE
EVERYBODY IS REPORTING THE
NUMBERS, THE WORD MARGINS IS
GETTING A LITTLE TOUCHY.
IF YOU ARE MANAGING PRICES AND
I’M HEARING YOU SAY YOU’RE NOT
RAISING PRICES, HOW ARE YOU
MAINTAINING MARGINS IF YOU ARE?
>> IT’S A COMBINATION OF A LOT
OF THINGS WERE FORTUNATE, IT’S
NOT THE ONLY BIG BOX RETAILER
THIS WEEK THAT HIS REPORTED
MARGIN RATE IMPROVEMENT
YEAR-OVER-YEAR.
WE DROVE THAT SIMPLY BY MANAGING
COST.
ALSO IN CERTAIN CASES WHEN WE
HAVE THE DRAMATIC RUN-UP IN
LUMBER COST, WE HAD NO CHOICE
BUT TO PASS THE PRICES ON TO
CONSUMERS.
THAT HURT THE DYI DEMAND.
IN THE CASE OF THE THIRD QUARTER
WE HAD A COMBINATION, WE HAD
LUMBAR DEFLATION, A DRAMATIC
PRICE DROP, COPPER INFLATION
THEY NEUTRALIZED EACH OTHER BUT
THEN WE HAD DEMANDED TO SUPPLY
CHAIN COSTS THAT YOU TALKED
ABOUT.
HOW DO WE IMPROVE MARGIN WE
REDUCE OUR SHRINKAGE, WE DID A
BETTER JOB OF MAKING SURE THAT
WE MANAGED OVERALL EXPENSES ON
THE OTHER PARTS OF THE STORE.
WE HAD REALLY GOOD WIN-WIN NEGOTIATION WITH VENDORS TO KEEP
NEGOTIATION WITH VENDORS TO KEEP
OUR COSTS DOWN AND WERE ABLE TO
MANAGE PRICING IN A WAY WHERE WE
DID NOT TO BE AS PROMOTIONAL BUT
GIVE UP OUR COUNTRY COMPETITIVE
PRICE.
WHEN YOU COMBINE THOSE TOGETHER
WITH AN EXPERIENCED MANAGEMENT
TEAM WITH HIGH DEMAND, WERE ABLE
TO HIT ALL THOSE NUMBERS AND I’M
VERY PROUD OF THAT.
LIZ: THAT IS GREAT, PEOPLE ARE
SCRUTINIZING AND FAMILIARIZING
WITH MARGINS WHEN IT COMES
EARNINGS REPORT.
ONE OF THE THINGS THAT I SEE IS
DIFFERENT FROM LAST YEAR AT THIS
TIME.
LAST YEAR THE DIY DO-IT-YOURSELF
MOVEMENT WAS DRIVEN BY PEOPLE
WHO ARE IN LOCKDOWN AND WANTED
TO IMPROVE THEIR HOMES.
NOW IT FEELS LIKE THE DIY IS
STILL THERE BUT TODAY THE DEMAND
IS DRIVEN BY A SHORTAGE OF
INVENTORY SO PEOPLE AREN’T SO
EASILY ABLE TO BUY A NEW HOUSE
THAT HAS THE FEATURES THAT THEY
WANT.
WHAT HAVE YOU SEEN WITH YOUR
CUSTOMERS REGARDING THAT SHIFT?
>> TWO THINGS, TWO DATA POINTS
THAT ARE INTERESTING.
IN THE U.S. TODAY, 60% OF THE
HOMES ARE 20 YEARS OR OLDER,
THAT’S THE FIRST THING THAT’S
HAPPENED SINCE WORLD WAR II.
IN ADDITION TO THAT WHEN YOU
LOOK AT THE SUPPLY AND DEMAND
SITUATION WITH HOMES THAT YOU
TALKED ABOUT.
WE ESTIMATE THERE’S A SHORTAGE
OF 1.5 MILLION HOMES TO MEET THE
DEMAND THAT IS IN THE
MARKETPLACE.
WHEN THAT HAPPENS, IT’S A
POSITIVE OR HOME-IMPROVEMENT
BECAUSE TWO THIRDS OF THE
BUSINESS AT LOWS’ REPAIR
MAINTENANCE AND UPGRADE.
WHEN YOU REPLACING THE CABINET
AND PUTTING A NEW COUNTERTOPS
AND REPLACING THE FLOOR, ET
CETERA, THAT IS TWO THIRDS OF
OUR BUSINESS.
WHEN YOU DECIDE TO STAY IN YOUR
HOME BECAUSE THERE’S NO PROPERTY
IN THE MARKETPLACE THAT LEAD TO
EXPECTATION.
I WILL JUST UPGRADE MY KITCHEN
AND FINISH OUT THE BASEMENT AND
EXPAND THE POWDER ROOM, THAT IS
OUR BUSINESS AND THAT’S A PRO
VERSUS THE DIY.
LAST YEAR DIY WAS DRIVEN BY
CLEANING, PPE AND PEOPLE WHO
WERE NESTING AT HOME DUE TO THE
MOBILITY LIMITS OF THE PANDEMIC
AND THEY WERE FINDING THINGS TO
DO IN THE YARD AND AROUND THE
HOUSE AND SMALL PROJECTS.
A LOT OF SMALL PROJECTS HAVE
TURNED INTO PROFESSIONAL
PROJECTS.
>> I LIKE HOW YOU CALL IT
NESTING, I CALL HIS STOCK.
THANKFULLY WE HAVE MOVED ON FROM
THAT, THIS LIVABLE HOME DEALING
WITH AARP, IS THIS A PARTICULAR
CRITICAL TIME WHERE FEWER THAN
1% OF HOMES HAVE THE PROPER
FEATURES THAT SUPPORT AN AGING
HOMEOWNER?
IT FEELS LIKE YOU GUYS ARE
READING A BABY BOOMER DAILY,
WHERE YOU DO SEE THE REVENUE
GOING AND WHERE YOU SEE IT
MOVING?
>> A QUICK STORY MY DAD IS A
MUST 80 YEARS OLD AND IS LIVED
IN THE SAME HOUSE I’D GROWN UP
IN.
HE IS NOT MOVING.
HE MADE THAT PERFECTLY CLEAR.
AS MOBILITY BECOMES LIMITED I
WAS THINKING TO MYSELF TO A HALF
YEARS AGO TRYING TO MAKE WAYS
MORE ASSESSABLE, WALK-IN TUB,
PULLDOWN CABINETS, NONSLIP
FLOORS, GRAB BARS, I COULD FIND
NO PLACE, ONE LOCATION AND GET
EVERYTHING.
MY WIFE’S MOTHER NEEDED A STAIR
LIFT IN HER HOME IN THE PRICE
SHE WAS GIVEN BY THE SUPPLIER
WAS OUTRAGEOUS.
IT DAWNED ON ME, WE HAVE TO
FIGURE OUT A WAY AS A COMPANY
THAT TRULY CARE ABOUT OUR
CUSTOMERS TO PULL THIS IN FOR A
ONE STOP SHOP PROJECT MANAGEMENT
FOR ALL THESE THINGS WHERE
CUSTOMER CAN COME UP AND TRUST
THE PRICE AND THE QUALITY AND
THEY CAN TRUST THE FACT THAT
WILL BE THERE THROUGHOUT THE
WHOLE PROJECT AND ANYTIME THEY
NEED TO COME IN AND MAKE A
MODIFICATION.
IT WAS BORN FROM THAT, AS I
START TO DISCUSS MY FRUSTRATION.
I’M A SEAL THE HOME-IMPROVEMENT
COMPANY, I CAN’T GET THIS DONE.
I’M IMAGINING IS GOTTA BE HARD
FOR EVERYBODY ELSE.
I SPOKE TO OTHER EXECUTIVES AND
DID SURVEYS, WE REALIZE THIS IS
A FRAGMENTED INDUSTRY THAT TAKES
ADVANTAGE IN SOME CASES OF THE
CUSTOMERS.
WE PULL THIS TOGETHER AND WE
BELIEVE WITH OUR COLLABORATION
WHICH IS GOING TO ALLOW US TO DO
A GREAT JOB OF PROVIDING
TRAINING, BRANDED CONTENT,
VIDEOS, EDUCATIONAL MATERIAL FOR
AGING CUSTOMERS AND HOMEOWNERS,
WE CAN GIVE THEM SOMETHING THAT
DOESN’T EXIST TODAY IN A
COHESIVE ECOSYSTEM.
LIZ: PLUS YOUR DAD, I KNOW
EXACTLY WHAT YOU’RE TALKING
ABOUT.
WE HAD TO GO TO ALL DIFFERENT
WEBSITES TO GET THINGS TO HELP
MY MOM.
I THINK THIS IS A GREAT IDEA.