Simeon Gutman • Morgan Stanley

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President, CEO & Director Doug Mcmillon stated that AI is not yet lifting top-line sales but the roadmap is exciting. He affirmed the strength of the business mix flywheel (marketplace, advertising, membership). EVP & CFO John David Rainey added that despite cost pressures, the underlying business is strong, citing significant growth in advertising and membership, and expressed confidence for the second half of the year.

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CEO Doug McMillon responded that the company's current guidance positions it to be 'appropriately aggressive' while still aiming to grow profit faster than sales, a long-term goal. CFO John David Rainey added that the diversification of income streams, such as the 15% growth in membership and 50% growth in advertising, provides the flexibility to invest in the business while still delivering on profit growth objectives.

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CFO John David Rainey responded that the company is striking the right balance between investment and margin expansion. He emphasized that recent investments in technology and supply chain automation are already driving the strong bottom-line results. Rainey stated that while future margin opportunities exist, the company is focused on building for the long term, which requires continued, balanced investment rather than over-focusing on a single quarter's performance.

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CEO Doug McMillon described the underlying momentum as consistent with prior quarters, with storms providing a small lift. CFO John David Rainey concurred, clarifying that the timing of Flipkart's Big Billion Day event added about 60 basis points to Q3 growth, which will create a headwind in Q4, but otherwise, the business performance is very consistent.

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EVP & CFO Brandon Sink clarified that Lowe's is not expecting a macro inflection and that the second-half outlook is based on gradual improvement and share gains from its Total Home strategy. President, CEO & Chairman Marvin Ellison explained the acquisitions are an evolution, not a change, in strategy. He stated that Lowe's is positioning itself to capitalize on the future housing market recovery, particularly in new construction, by acquiring capabilities to serve large pro customers, a segment where Lowe's previously had strategic deficits.

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CFO Brandon Sink confirmed the guidance framework is 'roughly the same' but now incorporates recent weather pressures and the lapping of a strong 2024 hurricane benefit. CEO Marvin Ellison added that the strategy is to outperform the market regardless of the environment. Regarding flexibility, Sink stated there is 'definitely some flex' in the $1 billion PPI plan for 2025, which can be adjusted based on market conditions, but management is confident in the current plan and margin outlook.

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EVP and CFO Brandon Sink clarified that significant margin pressures from the storms were isolated to Q3. Chairman and CEO Marvin Ellison attributed the high single-digit Pro comp growth to the Total Home Strategy, including brand expansion, improved service, and digital enhancements. He expects Lowe's to continue gaining Pro share, while a broader market recovery will likely be led by big-ticket DIY and do-it-for-me projects.

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EVP and CFO Brandon Sink outlined the financial outlook, expecting roughly flat comps in the first half and a 1% lift in the second half driven by strategic initiatives. Chairman and CEO Marvin Ellison described the ADG acquisition as an opportunistic move to enter the highly fragmented, $50 billion new home construction market, a segment poised for growth. He clarified it complements the Total Home Strategy without altering their disciplined capital allocation philosophy. Brandon Sink added that ADG generated $1.8 billion in sales in 2024 and is expected to be accretive to EPS in fiscal 2026.

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CFO Brandon Sink detailed the comp sales outlook, expecting a flat first half and 1% growth in the second half, driven by company initiatives. He reaffirmed the full-year operating margin guide of 12.3% to 12.4%. CEO Marvin Ellison explained that the ADG acquisition is an opportunistic move to enter the new home construction market, a $50 billion TAM, and serve a new cohort of Pro customers. Sink added that ADG had $1.8 billion in 2024 sales and is expected to be accretive to EPS in fiscal 2026.

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Incoming CEO Michael Fiddelke acknowledged both external pressures, like consumer inflation, and the internal need to improve execution and deliver a superior guest experience. He emphasized that a retailer must be nimble and that while the team feels good about the current full-year guidance, they are always evaluating opportunities and will remain flexible to chase growth.

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CFO James Lee explained that the focus is on continuous productivity to fuel investment and maximize profit dollar growth, driven by accretive platforms like Roundel and Target Plus, and tailwinds from shrink reduction. CEO Brian Cornell, EVP Cara Sylvester, EVP Richard Gomez, and COO Michael Fiddelke elaborated on the company's long-standing and ongoing investments across marketing capabilities, the $31 billion owned-brand portfolio, store remodels, and supply chain technology.

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COO Michael Fiddelke attributed profit pressure to sales deceleration in high-margin categories like Home and Apparel, and costs from pre-positioning inventory for the port strike. CFO Jim Lee specified that higher general liability and healthcare costs accounted for about 1% of the SG&A increase. CEO Brian Cornell emphasized playing the 'long game,' highlighting strong traffic growth of 2.4% (10 million incremental transactions) and digital growth of nearly 11% as signs of consumer engagement that justify continued investment.

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EVP & CFO Richard Mcphail attributed the demand improvement to the financial health of homeowners and continued engagement in core categories, while noting large projects remain deferred. Chair, CEO & President Ted Decker and EVP - Pro Michael Rowe provided proof points for the Pro initiative, highlighting a belief in market share gains, significant improvements in on-time and complete delivery, and a double-digit sales lift from Pros using new trade credit and faster delivery options.

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EVP and CFO Richard McPhail stated that while Q1 performance was strong, the company is only one quarter into the year and feels comfortable reaffirming the existing guidance. CEO Edward Decker added that the SRS acquisition is performing above expectations across all three of its verticals. He highlighted that SRS is now managing Home Depot's trade credit program, which is in the early stages of onboarding core Pro customers and is already showing accelerating comps with engaged Pros.

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CFO Richard McPhail stated that while they feel good about the business, they are reaffirming guidance as it is only one quarter into the year. CEO Edward Decker added that SRS is performing above expectations and taking share in all three verticals. He highlighted the trade credit program as a key integration point, with thousands of Home Depot Pro accounts already onboarded, which is driving accelerated comps from those customers.

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Chair, President and CEO Ted Decker acknowledged the health of the consumer but stated the company is not anticipating a significant rebound in housing turnover or a large decrease in mortgage rates in 2025. EVP and CFO Richard McPhail added that the 1% comp guidance reflects current run rates, pressure on large projects, and the inclusion of SRS. McPhail confirmed that 10 basis points of leverage per point of comp upside is a good estimate.

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EVP and CFO Richard McPhail clarified that the Q4 outlook is not a fundamental deceleration but reflects caution in extrapolating Q3's significant weather benefit. CEO Ted Decker noted that general macroeconomic uncertainty has been a major deterrent for large projects. He believes that as this uncertainty fades, homeowners will utilize their substantial home equity, but the timing remains unclear.

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CFO Ryan Grimsland attributed the H2 comp lift primarily to easier year-over-year comparisons and improving two-year trends, rather than a major underlying shift. Grimsland stated that Pro business strength is the key driver, while the company remains cautious on the DIY consumer's response to price elasticity from tariffs. CEO Shane O'Kelly added that improved 'time to serve' and assortment are also boosting the Pro business.

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EVP and CFO Ryan Grimsland confirmed that the year is playing out as expected, with DIFM (Pro) driving performance while DIY remains pressured. CEO Shane O’Kelly added that the company is focused on controlling what it can in DIY through availability, marketing, and loyalty programs. Grimsland reiterated that gross profit growth, driven by cost-outs and cycling prior-year headwinds, will be the main driver of operating income improvement, and the full-year guidance already incorporates these various puts and takes, including potential tariff impacts.

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CFO Ryan Grimsland detailed that the 7% target is based on achieving a mid-40s gross margin rate and a sub-40% SG&A rate, driven by COGS improvements and productivity gains. CEO Shane O'Kelly added that the goal was set after a year of evaluation and is seen as a reasonable trajectory that provides internal accountability, supported by major foundational changes like the Worldpac sale and store closures.

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CEO Shane O'Kelly distinguished this plan by highlighting his team's 'say-do ratio,' citing the successful Worldpac sale, supply chain consolidation, and other decisive actions taken over the past year. He attributed recent sales softness to a pressured DIY consumer but noted the Pro business showed accelerating 2-year comp trends. The path to growth involves capturing the eventual DIY rebound and executing a multi-faceted strategy to better serve Pro customers.

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David Maher, President & CEO, explained that pricing actions have been selective and more focused on gear, footwear, and apparel, while the US-based golf ball manufacturing provides some insulation from tariffs. He noted it's too early to compare the current situation to historical inflation due to the dynamic tariff landscape. Maher emphasized that for Acushnet's premium-focused consumer, any price increase must be justified by a clear performance improvement, a principle they carefully adhere to.

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President & CEO Chip Brewer clarified that while the Topgolf CEO change makes a spin-off impractical in 2025, the strategic process considering both a spin and a sale remains active. He noted that improving sales trends are beneficial for all potential outcomes. Brewer also confirmed the estimated full-year tariff impact has increased from $25 million to $40 million, which is now factored into the company's updated guidance.

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CFO J. Kevin Willis responded that he expects a more balanced ticket-to-transaction mix as newer stores mature and if the inflationary environment moderates. CEO Lori Flees added that the Q3 transaction mix was negatively impacted by the Easter holiday shift. Regarding new stores, Flees stated that their performance ramps are incredibly consistent with projections, delivering on expected mid-to-high teens returns on invested capital.

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CFO Mary Meixelsperger advised against a simple run-rate projection, highlighting factors like lapping prior initiatives and the upcoming summer drive season, while reaffirming the 5-7% full-year guidance. CEO Lori Flees explained that the comp spread was primarily due to the timing of pricing actions by franchisees, who have independent pricing authority, rather than a fundamental operational difference.

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CFO Mary Meixelsperger affirmed the results were indeed substantially in line with internal expectations, with minor variances. She expressed cautious optimism for the year, suggesting potential upside towards the top end of the guidance range but reiterated comfort with the current range. CEO Lori Flees added that consensus estimates might have been lower due to the timing of the latest refranchising transaction.

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CEO Lori Flees clarified that competition within the quick lube segment is stable, but promotional pressure is increasing from outside the category (e.g., tire shops) to drive traffic, which can impact new customer acquisition. She stated that expansion opportunities remain strong across all market types. Flees also confirmed that the company does not have a specific franchise mix target, but is focused on accelerating franchise growth with strong partners to expand the network.

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President and CEO Jason Potter explained that while a few hundred everyday items are critical, the vast majority of the assortment consists of thousands of opportunistic products, which is core to the model. On driving comps, he emphasized that value is a combination of price, quality, and service. He clarified that recent test store success was driven by merchandising and the shopping experience, not by lowering prices, with the goal of improving both customer loyalty and profitability.

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CEO Jason Potter attributed the softness to the basket, not traffic, and suggested it was an execution-related issue. CFO Chris Miller clarified the restructuring costs, noting the guidance range was tightened to $59-$61 million to include 5 more store closures, but confirmed this does not impact the full-year adjusted profitability guidance.

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Chairman Eric Lindberg stated that 2025 is the 'completion year' for the systems conversion, with the goal of having all necessary tools for efficient inventory management restored. He gave examples of CEO Jason Potter's questions, which focus on the customer trip, in-store execution from an operator's perspective, and ensuring data integrity. CEO Jason Potter added that he is in a 'learning mode' to gather information and sees significant upside potential.

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Interim President and CEO Eric Lindberg took direct ownership, stating, 'We did this to ourselves.' He explained that the company made a strategic error by pricing for margin to recover from a weak Q1, just as competitors were lowering prices. The system's lack of visibility hindered the central team's ability to see and react to the problem quickly, and operators, who share in gross profit, were also focused on margin.

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President & CEO Denise Paulonis addressed the softer Care category by explaining that the company is refining its tactics, including a focus on performance marketing, single-item promotions over quantity discounts, and leaning into value messaging like 'skip the salon.' For the Q4 outlook, Paulonis stated that the guidance implies sequential top-line improvement in both the Sally Beauty and BSG businesses, assuming a consistent macro environment. She expects momentum to be fueled by innovation in hair color at Sally and new launches like Unite at BSG.

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President and CEO Denise Paulonis confirmed that performance has improved quarter-to-date in Q3, particularly in the BSG segment as flu impacts subsided, though she remains cautious on the consumer outlook. She also confirmed that no material tariff impact is expected in the current fiscal year due to inventory positioning. Regarding control markets, she stated the flu was broad-based, but the impact of other events like wildfires could be isolated, noting that overall store closure days were up notably year-over-year.

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CEO Denise Paulonis affirmed confidence in achieving mid-single-digit operating margin growth, stating the top line is built to withstand consumer shifts while strategic initiatives drive growth. CFO Marlo Cormier emphasized that the Fuel for Growth program is building an ongoing efficiency 'muscle' and is on track to deliver its targets through 2026 and beyond, suggesting the benefits are sustainable and not peaking.

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President and CEO Denise Paulonis described the pricing environment as moderate, with modest increases in Average Unit Retail (AUR) and no significant price hikes from vendors. She stated that product costs are 'quite in control' as inflation has moderated. She also noted that the company has limited exposure to potential tariffs from China, as less than 10% of its product is sourced from there, and mitigation plans are in place.

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President & CEO Danny Rivera stated that Driven Brands does not disaggregate traffic and ticket but noted both are performing well, contributing to the 7% same-store sales growth, driven by non-oil change revenue and strong attachment rates. EVP & CFO Mike Diamond added that while there is some quarterly variability, the company is pleased with the mid-30s margin for Take 5 and considers it a sustainable and realistic full-year target.

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EVP and CFO Michael Diamond explained that Take 5's margin pressure from repair, maintenance, and rent expenses was anticipated. He stated that for the Franchise Brands segment, while there are fewer cost levers, its stability provides consistent cash flow, and management remains confident in its long-term trajectory despite near-term softness in the discretionary Maaco brand.

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CEO Tom Taylor stated it was too early to comment on 2026 forecasts, citing ongoing uncertainty in the housing market but also noting that the company is actively pursuing growth through new products and enhanced design services. CFO Bryan Langley confirmed that the new store maturation 'waterfall' effect continues to be a positive driver, although the performance gap between new and mature stores has compressed slightly. Tom Taylor added that stores opened in the last three years have significant ramp-up potential when the market improves.

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CEO Tom Taylor explained that reducing the store count to 20 was a prudent first step, with the flexibility to cut further if business deteriorates beyond the low end of their guidance. He attributed the Q2 trend improvement to broad-based strength in both transactions and ticket. Taylor and CFO Bryan Langley noted that while price increases historically boost sales, they are being cautious with the outlook due to unpredictable consumer behavior and general demand concerns in the current economic environment.

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CFO Bryan Langley explained that 45% of store costs are variable, primarily labor, which can be flexed with transaction volume. With 75% of stores having room for adjustment, they can manage costs efficiently. CEO Tom Taylor added that ongoing investment during the downturn prevents the need for catch-up spending. For guidance, Taylor stated they assume a benefit from maturing stores and a stable, not rebounding, housing market. Langley projected sequential comp improvement throughout the year.

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CEO Tom Taylor confirmed the plan for 25 new stores in 2025 remains, but with flexibility to adjust based on market conditions. He stated that as existing home sales turn positive, Floor & Decor's business trajectory should improve. President Trevor Lang added that the company is actively reducing new store CapEx and operating costs to ensure good returns even in a muted environment.

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President Brent Kirby and CEO Brad Beckham characterized the tariff environment as rational and in line with initial expectations, emphasizing their focus on mitigating consumer impact. EVP & CFO Jeremy Fletcher explained the SG&A forecast includes a Q4 comparison benefit and that upside pressure could stem from inflation or strategic investments to drive top-line growth. CEO Brad Beckham reiterated the company's commitment to long-term share gains over short-term expense management.

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Executive Brad Beckham stated the company is focused on managing the current environment rather than initiating a new SG&A spending cycle, noting they were somewhat disappointed with Q1 SG&A performance but are maintaining full-year guidance. He confirmed there are no plans to strategically invest in price. Regarding inventory, President Brent Kirby and Brad Beckham affirmed they will not change their strategy, continuing to invest in having the best parts availability, which they see as a core competitive strength.

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CEO Brad Beckham explained that confidence stems from historical precedent, where the industry has consistently rebounded after periods of economic uncertainty like election years. CFO Jeremy Fletcher clarified they are not yet seeing granular data pointing to a recovery but are positioned to capitalize on it when it occurs. Fletcher also confirmed that their expectation to outperform the market is a core component of their guidance process.

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Interim CEO & Chairman Ronald Sargent acknowledged significant market share improvements in Q1, attributing them to new store openings, better in-store execution, e-commerce growth, and the strength of Kroger's private label brands. On e-commerce investment, he noted the foundation is strong but all aspects are under review. EVP & CFO David Kennerly clarified that the Ocado drawdown was a contractual option exercised on the agreement's seventh anniversary.

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Interim CEO & Chairman Ronald Sargent stated that while no retailer is ever satisfied with market share, the biggest driver is new stores, and Kroger saw share gains in markets where it has recently added stores. He also credited the in-store experience and strong e-commerce growth. On the Ocado matter, EVP & CFO David Kennerly clarified that the drawdown was a contractual option that Ocado was entitled to exercise on the seventh anniversary of their agreement and was 'nothing more'.

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Interim CFO Todd Foley confirmed that the projected 3% EBIT growth will come from both the core business, which has strong momentum, and the alternative profit business. Interim CEO Ronald Sargent explained that the board is conducting a comprehensive search using a national firm to evaluate both internal and external candidates, with the primary goal of identifying the right leader to drive growth and shareholder value.

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Interim CFO Todd Foley confirmed it was a fair assessment of the strong core business growth despite fuel headwinds, with alternative profit growth meeting expectations. Chairman and CEO Rodney McMullen added that the alternative profit businesses have higher margins and are driven by the flywheel between physical and digital stores. McMullen also confirmed that mainstream customers performed better in Q3, while budget-conscious households remain under significant strain from cumulative inflation.

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Interim CFO Todd Foley explained the updated sales guidance reflects confidence against a ~1% inflation backdrop, with encouraging progress toward positive unit growth. CEO Rodney McMullen added that it is too early for 2025 guidance but affirmed the company's long-term business model remains intact.

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Chairman & CEO Gary Friedman clarified that the increase in the RH membership discount from 25% to 30% is a permanent, strategic move to gain market share, not a temporary promotion. CFO Jack Preston confirmed this change is already factored into the full-year guidance of 20-21% adjusted EBITDA margin. Friedman noted a separate, short-term 35% discount on outdoor furniture was a tactical move to capture sales during its brief peak season.

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Chairman and CEO Gary Friedman stated that RH expects to turn free cash flow positive in the next year and will be able to self-fund the business. He characterized the company's existing debt not as a need for cash, but as a strategic 'currency swap' used to repurchase what he believed was undervalued stock, a move that has already generated significant returns for shareholders.

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CEO Gary Friedman affirmed that the company has substantial data and is very confident in its outlook, irrespective of interest rate movements. He noted that RH is significantly outperforming the industry, which supports the durability of the trend. He confirmed they have enough data on product performance to inform their strategy and that the key challenge now is maintaining focus and prioritizing the most impactful initiatives.

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CEO Steven Lawrence attributed May's choppiness to consumer pressure but highlighted positive catalysts like the Jordan launch and new store tech rollouts. EVP & CFO Earl Carlton Ford IV explained that gross margin guidance is maintained due to proactive inventory pull-forwards at pre-tariff prices and a strategic shift of sourcing out of China. Lawrence added that in a high-tariff scenario, the primary impact would be on consumer spending and sales volume, not necessarily margin rates, due to various mitigation strategies.

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CFO Carl Ford indicated SG&A will deleverage slightly under 100 bps at the midpoint, driven entirely by growth investments. CEO Steven Lawrence added that base stores have seen sequentially improving trends, and the focus is on turning them positive with new brands and tech. Ford emphasized that cash flow remains strong and was up year-over-year in fiscal 2024 despite negative comps.

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CEO Steve Lawrence stated that the Q4 guidance of -4.5% at the midpoint contemplates the compressed holiday calendar and that the company is tracking in line with its internal forecast. Regarding new stores, Lawrence confirmed that the 2022 vintage continues to comp positively, and the performance spread relative to the total company remains consistent with previous quarters.

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CEO Steve Lawrence responded that the comp spread between new and existing stores was roughly the same from Q1 to Q2. CFO Carl Ford addressed the gross margin question, stating that this year's performance does not preclude future gains. He noted that overcoming the Georgia DC productivity headwind should provide a benefit next year, and the company remains confident in its long-range plan for margin expansion.

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CEO Winnie Park explained that mitigation involves vendor diversification, assortment changes, and price adjustments on about 15% of SKUs, with 80% of units remaining at $5 or below. COO Ken Bull added that the guidance assumes any benefit from price hikes will be offset by unit degradation, leading to margin erosion. Both confirmed mitigation efforts are embedded in the guidance.

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CFO Kristy Chipman provided a quarterly cadence for comps but declined to break down the traffic and ticket components due to the dynamic nature of tariff mitigation efforts. CEO Winnie Park noted they are evaluating the labor model to drive sales. COO Ken Bull clarified that the Q4 'sales left on the table' comment was related to inventory challenges from chasing product, not suboptimal labor levels.

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Interim CEO Ken Bull responded that the performance improvement was relatively consistent across the store base. He noted that both comparable stores and new stores performed well, with new store productivity exceeding expectations. He stated that while individual store results vary due to factors like cannibalization, the positive trend was seen broadly across the chain as Q3 progressed.

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Interim President and CEO Kenneth Bull clarified that the moderated growth number was chosen after a deep dive into the real estate pipeline to ensure strong returns and selectivity. He emphasized the primary driver was to avoid over-taxing the organization and to maintain focus on the turnaround initiatives, rather than it being a signal of business stabilization.

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CEO Michael Creedon stated that the company only discloses the chain-wide AUR of $1.35 and does not break it out by store format. CFO Stewart Glendinning explained that all costs for services provided to Family Dollar under the TSA, including salaries and benefits, will be fully reimbursed. He also reiterated the long-term corporate SG&A target of approximately 2% of revenue post-separation.

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CEO Mike Creedon stated he is excited about the standalone opportunity and sees a very attractive multi-year algorithm with strong margins. He noted that the company has been in a heavy investment mode for several years (CapEx, wages, hours) and believes these investments, combined with the multi-price strategy, position the business to manage well and drive profitability over the long term.

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CEO Michael Creedon outlined a vision for a compelling long-term growth algorithm with strong margins, driven by new stores and operational clarity. He stated that the company has already been in a heavy investment cycle (CapEx, wages) and that these investments, along with multi-price flexibility, position the business to manage costs and drive strong multi-year results.

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Interim CEO Mike Creedon clarified it was not an apples-to-apples comparison. The 5.1% figure was specific to Q1 conversions' performance in Q2. He reiterated that performance improves over time and the lower aggregate Q3 lift was due to a different mix of conversions (fewer high-impact 1.0 to 3.0 conversions) and a less responsive geographic mix in the Midwest compared to prior conversions in California.

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COO Mike Creedon explained that the rollout pace is determined by two main factors: the internal team's bandwidth, which necessitates using third-party labor, and the supply chain's capacity to process and distribute the new multi-price products to stores. He noted that while they are slightly behind the original schedule, the primary challenge in well-executed stores is keeping up with strong customer demand.

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COO Mike Creedon explained that the rollout pace is determined by two main factors: the internal team's bandwidth for execution alongside other projects, and the supply chain's capacity to process and distribute the new multi-price merchandise to the stores. He noted that when the execution is done correctly, the primary challenge becomes keeping the popular new items in stock due to high customer demand.

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CEO Todd Vasos suggested that a sustained comp above 2%, with a healthy mix of non-consumables, is key to achieving margin goals. CFO Kelly Dilts confirmed the 61 basis point shrink benefit exceeded expectations and is anticipated to continue providing a tailwind throughout 2025. She noted that improvements were seen even in stores without self-checkout removal, attributing the success to broad operational excellence.

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CEO Todd Vasos explained that a sustained comp above 2% is sufficient to achieve their long-term goals, but emphasized that the composition of that comp, particularly growth in higher-margin non-consumables, is critical. CFO Kelly Dilts confirmed the 61 basis point shrink benefit exceeded expectations and is expected to be a tailwind for the rest of the year. She noted that operational excellence is driving similar improvements in stores with and without self-checkout removal, suggesting the progress is sustainable and foundational.

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CEO Todd Vasos stated that the core consumer remains financially strained but is resourceful and adapting to inflation. He highlighted that a trade-down from mid- and upper-income consumers, which began in Q4, appears to be accelerating into the new year. Vasos affirmed that the company's 'Back to Basics' initiatives are positively impacting results and that they are closely monitoring potential tariff impacts.

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CFO Kelly Dilts responded that the new 'Project Elevate' remodels should help maintain the real estate program's historical contribution to comparable sales. She emphasized a focus on managing the cost structure, particularly shrink, damages, and retail salaries, to work towards the company's long-term goal of double-digit EPS growth.

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CEO Todd Vasos explained that the largest margin opportunity lies in reducing shrink, which he expects to become a substantial tailwind in 2025. He detailed progress on the 'back-to-basics' plan, including improved staffing, reduced self-checkouts, better in-stocks, lower employee turnover, and significant inventory and SKU reductions. He emphasized that these operational improvements, coupled with promotional activity, will drive performance without indicating any plans for store rationalization.

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President, CEO & Director Ron Vachris responded that Costco is aggressively lowering prices wherever possible, especially as key commodity costs decrease. He noted that the company's competitive price landscape improved in the latter part of the quarter. Vachris affirmed the strategy is 'full force ahead on lowering prices' to drive business growth and mitigate tariff impacts for members.

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President and CEO Ron Vachris stated that Costco's strategy is "full force ahead on lowering prices" whenever possible. He explained that buyers are immediately passing on savings from lower commodity costs, like butter and eggs, to members. This aggressive pricing posture, combined with efforts to mitigate tariff impacts, is improving Costco's competitive position.

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Executive Gary Millerchip stated that consumer behavior remains consistent, with members focused on quality and value but still willing to spend, albeit choicefully. He noted a continued shift toward food-at-home and strong non-food trends, except for flatter performance in electronics and apparel. Millerchip also highlighted that Canada's comparable sales remain strong and in line with year-to-date performance.

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Executive Gary Millerchip noted that members are choiceful but willing to spend on new, quality items at a good value, citing double-digit growth in categories like jewelry, home furnishings, and sporting goods. He also observed a shift from food away-from-home to at-home, with bifurcation in meat purchases. Executive Ron Vachris added that seasonal sell-through is strong, with a focus on foundational Christmas items like furniture and appliances. Gary Millerchip concluded that available data suggests Costco is gaining share across most mentioned categories.

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Gary Millerchip, an executive, explained that Costco's model balances investments in members and employees with driving top-line growth to achieve leverage over time, noting that productivity offset recent wage hikes. Ron Vachris, an executive, added that the card readers, already used in Europe, improve real-time traffic counts, streamline front-end productivity by moving membership verification to the door, and have been well-received by operators and members.

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President and CEO Lauren Hobart attributed the conservative guidance to lapping tougher comparisons in the second half of the year, while affirming the business has strong momentum and a resilient consumer. Regarding Nike, she expressed confidence in the partnership, the upcoming product pipeline, and Nike's ability to effectively segment products to minimize channel overlap.

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CFO Navdeep Gupta explained that the guidance reflects strategic SG&A investments in areas like GameChanger and DICK'S Media Network, whose benefits are realized in the gross margin line. He confirmed the higher House of Sport CapEx is due to the strategic decision to purchase some real estate, given strong landlord interest and access to premier locations. CEO Lauren Hobart added that the company is investing from a position of strength to capture long-term market share.

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President and CEO Lauren Hobart explained the inventory increase was a conscious, strategic decision to be well-stocked in key items for the holiday season and to support an earlier spring transition in warmer climates, expressing confidence in the Q4 outlook. CFO Navdeep Gupta confirmed inventory is in line with expectations, noting clearance levels are down, and stated the focus is on driving strong top-line and bottom-line growth, which may involve an interplay between gross margin expansion and strategic SG&A investments like RFID technology to position for 2025.

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President and CEO Lauren Hobart stated that customer engagement is at an all-time high, driven by a unique store experience, effective marketing, and the ability to provide complete head-to-toe outfitting for both performance and lifestyle. Regarding House of Sport, she confirmed the stores continue to perform very well, increasing customer dwell time and attracting significant interest from mall landlords, which provides access to premier retail locations.

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CEO Laura Alber affirmed that returning to growth is the company's top priority and that they expect to take market share for the full year. CFO Jeff Howie explained that the mitigation costs were short-term Q1 expenses from aggressive actions like halting shipments. He expects these costs to pay back as the company sells the tariff-free inventory it pulled forward.

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CEO Laura Alber responded that the company views tariffs as an opportunity due to its scale, in-house design, and supply chain capabilities. She detailed strategies like shifting production from China, increasing U.S. manufacturing which offers speed-to-market advantages, and implementing targeted price increases on select items. Alber stressed that competitiveness is based on design and quality, not just price, and expressed confidence in outperforming rivals.

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CEO Laura Alber reaffirmed the company's commitment to minimizing promotional pricing while still taking necessary markdowns on clearance items. She stated that regular-priced comps are improving and that as the company laps periods of heavier promotions, the year-over-year comparisons and business trends will become clearer and more stable.

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CEO Laura Alber stated the company is 'absolutely not' changing its non-promotional stance, focusing instead on product innovation. CFO Jeff Howie confirmed that significant year-over-year margin benefits from lapping pandemic-era ocean freight costs will dissipate in the second half. He added that benefits from the shift to full-price selling also begin to annualize, leading to guidance for flat back-half operating margins versus 2023.

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SVP of Finance Ryan Brody explained that the company is up against easier comparisons in the second half of the year and has been pleased with the results of the volume discount program initiated in October. He acknowledged the guidance implies a high single-digit negative demand comp in the back half, reflecting a continuation of the choppiness seen since April. He also noted that new store productivity figures can be skewed by the timing of openings versus when deliveries flow through.

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An Arhaus executive identified the two biggest drivers of Q1 deleverage as showroom occupancy costs and strategic investments. Jennifer Porter, CMO, added that the Q1 promotional strategy is in line with 2024's approach but advised analysts to be aware of calendar shifts for key holidays like Easter, which can affect the timing of promotional periods.

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CEO Niraj Shah highlighted that Wayfair is better positioned than in 2019 due to a vastly expanded global supplier base and more advanced logistics capabilities. He also noted that with the company's tech replatforming largely complete, resources can now focus on growth-driving features. CFO Kate Gulliver added that Wayfair's more efficient P&L provides greater flexibility to manage the environment while growing EBITDA dollars. Niraj Shah argued that Wayfair's platform model and integrated logistics are generally faster at adapting than traditional retail models.

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CEO Niraj Shah stated that while there are signs of pent-up demand, Wayfair's strategy does not depend on a category rebound, focusing instead on taking share from a large, fragmented market. Regarding the 2025 outlook, both Niraj Shah and CFO Kate Gulliver emphasized that market share initiatives and profitability are interrelated. Investments are made based on the profit dollars they generate, and this is done in concert with maintaining strict cost discipline to grow absolute adjusted EBITDA dollars.

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CFO Kate Gulliver affirmed that the Q3 guidance accounts for the gross margin investment, which is enabling share gains in a challenging market. Regarding the full year, she reiterated the commitment to grow adjusted EBITDA by more than 50% year-over-year, driven by expense control, but did not provide a specific dollar forecast.

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CFO Jedidiah Gold explained the guidance reflects caution due to the uncertain consumer environment, potential tariff impacts, and a moderation in April trends. He noted that while member growth and revenue per member outlooks are stable, the retail sales forecast has been lowered. Regarding cash flow, Gold stated the company's model is roughly cash flow neutral for the year, with excess cash from a moderated new build plan being used to pay down debt.

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CFO Jed Gold clarified the 2025 guidance assumes a mid-single-digit decline in retail, which is an improvement from 2024 but a step-down from the weather-aided Q4. CEO John Lai added that competition is a slightly bigger headwind than inflation for retail. Lai stated there is little location overlap with the bankrupt competitor, so no immediate impact is expected, and any benefits from broader industry rationalization are not factored into the guidance as it will take time to materialize.

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Executive John Lai described the Titanium membership as 'amazingly sticky and strong,' with no degradation observed after promotional periods. He added that performance has been evenly distributed across all markets, regardless of penetration levels, which he attributed to the universal appeal of the car wash service.

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CEO Joel Anderson stated that after thousands of price adjustments, he feels the company is in a good position on price. He described the Vital Care membership program as a key long-term growth lever for 2026 and beyond. Regarding guidance, he emphasized that 2025 is a 'self-help' year, and the company's plans are not dependent on an industry recovery. CFO Sabrina Simmons added that they are not counting on a positive comp to achieve their adjusted EBITDA target.

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CEO Joel Anderson explained that while internal work on growth levers like marketing and product innovation has begun, the external impact won't be visible until late 2025 and into 2026. CFO Sabrina Simmons clarified that the pricing review is a surgical, SKU-level analysis to balance value and margin, a strategic process that predates recent tariff concerns.

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Executive Robert Helm noted that it's too early for definitive color on the Big Lots stores that just opened in February but results are exciting so far. He also explained that the later Easter shift elongates the spring selling season, which should ultimately be favorable for the company, especially given the recent improvement in weather.

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CFO Robert Helm clarified that there was nothing significant to call out, explaining that the inventory growth reflects a multi-year effort to catch up relative to unit growth. He expressed confidence in their inventory position, stating they are 'locked and loaded' with deals for the holiday season.

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CEO John Swygert clarified that the Q2 margin pressure came from lower-margin room air (air conditioners) and consumables, and that the higher-margin seasonal and toy categories in Q3/Q4 are not expected to be a drag. Executive Vice President and COO Eric van der Valk stated that the only sign of consumer weakness is in big-ticket categories like flooring and mattresses, a trend that has persisted for a couple of years. John Swygert added that this consumer stress is precisely why Ollie's value proposition is winning.

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CFO Robert Helm clarified that the Q2 comp is running in line with guidance for the lower end of the 1-2% range, with strong core performance being offset by soft seasonal sales due to weather. He also confirmed that Q1 gross margin was slightly better than planned, driven by favorable deal flow and lower-than-expected shrink.

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CEO Kecia Steelman defended new stores as a profitable share-gain opportunity and noted that remodels now incorporate more flexible fixtures. CFO Paula Oyibo added that the company frequently refreshes the fleet with new brand launches and plans to remodel 40-45 stores this year.

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Executive Philip Daniele attributed the strong comp to a combination of favorable winter weather and improved execution on key initiatives, noting good momentum for the second half. CFO Jamere Jackson added that while the accelerating Commercial business creates some margin drag, strong merchandise margin performance is more than offsetting it. He also cautioned about a difficult LIFO comparison in Q3.

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CFO Jamere Jackson expressed confidence in improving comps, strong gross margins, and disciplined SG&A management to support operating income. Executive Philip Daniele added that the company has diversified its supply chain over the last decade to mitigate tariff impacts and expects the industry to remain disciplined on pricing.

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CEO Philip Daniele responded that commercial sales improvement will be progressive and sequential, driven by enhanced inventory assortments and improved customer service, rather than a sudden snapback. CFO Jamere Jackson added that gross margin strength comes from strong merchandising efforts, and while pricing has been muted due to low inflation, they anticipate a return to historical ticket growth trends.

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CFO Melissa Rasmussen stated that a 'substantial portion' of the EBIT improvement comes from the $12 million SG&A takeout. While she referenced the historical mid-single-digit comp needed for leverage, she noted that recent actions were taken to lower that breakeven point but did not provide a new specific figure, emphasizing that America's Best is the primary driver of profitability due to its scale.

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CFO Melissa Rasmussen explained that the guidance midpoint reflects current trends, while the high end assumes macro improvement and the low end assumes deterioration. She noted a choppy start to Q4 due to Hurricane Helene. For SG&A, she confirmed that lower incentive compensation was a tailwind in 2024 but is expected to become a headwind in 2025, which will be a significant factor in the year's expense profile.

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CEO Harry Lawton responded that the comp transaction growth in Q4 was widespread across both categories and geographies, with stronger performance in areas affected by weather. He emphasized that this growth is a key differentiator for the company. Lawton also noted that new stores are performing in line with expectations, driving incremental transactions from new customers, though this is not included in the comp base.

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CFO Laura Felice projected Q4 preopening expenses to be around $15 million. CEO Robert Eddy clarified that while vendors are supportive partners in Fresh 2.0, the primary margin pressure comes from higher in-club labor costs for handling fresh products, an investment the company deems worthwhile for driving long-term member loyalty and traffic.

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CEO Robert Eddy described the strategy as both 'offense' (proactively growing perishables and accelerating assortment changes for long-term gain) and 'defense' (reacting to price-sensitive consumers). He emphasized that most of the pressure comes from deliberate choices. Regarding long-term margins, he explained that the company reinvests gains from initiatives like their retail media network and category management process back into the business to strengthen the franchise, rather than targeting a specific margin level for any single quarter.

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CEO Bob Eddy stated that BJ's is gaining share in both food and non-food categories like electronics, as well as significant share in fuel. Regarding membership, he said the goal for higher-tier penetration is over 50%, compared to the current level of just over 40%. He highlighted the impressive sequential growth of over 100 basis points in the quarter, even with a recent fee increase, as proof of the value proposition's strength.

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Chairman and CEO Bob Eddy stated that BJ's is gaining share in both food and non-food categories, including electronics, despite softer general merchandise comps. He linked strong fuel share gains directly to the higher-tier member value proposition. The ultimate goal for higher-tier penetration is over 50%, up from the current 41%, and he highlighted the impressive 100+ basis point sequential growth in Q1 as a sign of strong momentum.

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EVP, Strategy and Development, William Werner explained that SG&A leverage from new clubs is expected once the company reaches a steady cadence of openings, such as 10-12 per year for several consecutive years. He noted that while they are currently in a ramp-up phase causing slight deleverage, new clubs are comping at 2-3 times the chain average, already beginning to contribute positively to the overall company comp.

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CFO Matt Bilunas explained that gross margin expansion in Q3 and Q4 will be similar to each other but lower than H1, as the company fully laps the benefits from its membership program changes. He noted the services and membership benefit in Q2 was 'significantly more' than the total gross margin expansion. He stated that future product margins depend heavily on the promotional environment and category mix, and while less promotion could provide relief, it is not guaranteed.

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