Lowe's Companies, Inc. (LOW) Earnings Call Transcript & Summary

This call is not for media representatives or BofA Securities' investment bankers or commercial bankers, including corporate and commercial FX. All such individuals are instructed to disconnect now. A replay will be made available for BofA Securities' investment bankers and commercial bankers, including corporate and commercial FX. The replay is not available to the media. Good day, and welcome to the Lowe's company call. Today's call is being recorded. For opening remarks and introductions, I would now like to turn the conference over to Ms. Liz Suzuki. Please go ahead, ma'am.

Great. Thanks, everyone, for joining the virtual Bank of America Consumer Retail and Technology Conference. I'm Liz Suzuki. I'm Head of Bank of America's U.S. Hardline Retail team, and I am privileged to be joined on the line with 2 key members of the Lowe's team: CEO, Marvin Ellison; and CFO, Dave Denton. Now for those who attended this conference in person last year and saw these guys on the stage then, it seems like a lot has happened in the last year. At the time, both were fairly new to the company. Marvin, you had joined in July of 2018. And Dave, you had come on board in November of that year.

So my first question goes to Marvin. And I'd love if you could describe what's been on your to-do list since you joined and what you have already checked off on that list in your first 1.5 years on the job.

Great. So I would say on the to-do list first is just assessing the business and understanding the needs of the team. So as a reminder, we made some pretty dramatic changes in our leadership team. And just to give you some specifics, we replaced the Chief Financial Officer position, Head of Merchandising, Head of Stores, Chief Information Officer, President of Lowes.com and our supply chain lead, just in some of the higher-level, C-suite positions. And most recently, we changed out our Chief Marketing Officer. In addition to that, of the 13 merchandising vice presidents, we replaced 11 of those positions within the first 10 months. We replaced all 3 division presidents for store operations and 10 of 15 regional vice presidents. So as you can tell by that quick summary, we've made quite a few changes, which I think is important from a leadership perspective in order to start the transformation. It doesn't mean that the individuals that we were here previously were not talented. We had a shortage of what I would call deep home improvement knowledge, and I wanted to have more retail expertise on the team that's gone through transformations and understands what modern retailing looks like. And so the first item on the to-do list is make sure that you have the right team in place. From that, we want to understand what are some of the strategic things we needed to do for what I would call short- and long-term improvements in the business. And we coined a phrase retail fundamentals because we felt that looking at just the basic foundational elements of the business, things that all retailers must be good at: outstanding customer service, being in stock, space productivity, having a robust dot-com business and efficient supply chain, et cetera, we were not where we needed to be as a large modern retailer. So we put a lot of initiatives in place to address those foundational areas of retail. And the last thing we did is we made a big commitment in our information technology. We announced last year that we're building a state-of-the-art global IT center in downtown Charlotte, which will house over 2,000 IT professionals focused primarily on modernizing Lowe's IT infrastructure and allowing us to be, again, a much more agile and nimble company relative to technology. In 1 year's time, we've hired over 1,400 new IT professionals to join the company, and they're working on not only IT but our e-commerce business. So in summary, those are some of the things we put in place with a lot of details underneath each of them.

Great. And just a similar question to Dave. So what's left on your to-do list? And what are some of the key performance indicators do you think are the most telling in home improvement retail?

Yes. Well, just maybe I'll take that in 2 sections. One, kind of from a -- just from a finance perspective is, one is we really went back and refocused our finance group and really aligned it to support the business more broadly, creating a center of excellence around finance to support the merchandising team, one to support the store operations team and one to support the supply chain team and really building an infrastructure to enable those finance professionals to lean in with their business partners to help inform better decision-making from a financial perspective. And that's well underway, I'd say probably 90% complete at this point in time. Obviously, we have some work systemically to make sure that we have great visibility, kind of talked about it from a P&L perspective but well on our way to be able to manage that. I think really from pivoting now more from a business perspective, we have a very -- we've set a very specific target to get to a 12% operating profit flow-through metric over the next several periods here. And part of getting there is making sure that we improve the top line performance of this business largely by getting in stock; and secondly, winning the Pro customer because I think that's a big opportunity for us as we think about the horizon over the next several years to grow sales performance. Secondly, we've leaned in pretty aggressively to manage our SG&A profile primarily at the store level, making our store associates more productive and more customer-facing. And that's been a big emphasis. And I'd say we're well on our way. We have a road map to get to that 12% over a reasonable planning horizon here. And there's a lot of work that we're driving day in and day out to execute against that plan.

And just a follow-on to that about the store associates' time on customer-facing tasks. I think this is something that had been mentioned early on in the transformation initiatives. Where do you think that balance stands today in terms of how much of your associates' time are spent customer-facing now versus a year or 1.5 years ago?

Yes. So this is Marvin. If you go back just to the beginning of 2019, roughly 60%, 6-0, of all payroll spent in the store went to a task that was nonservice or sales-driven. Whether it was loading a truck or working in our back office function, it was not serving the needs of the customer. And so the store operations team created a 3-year road map with specific initiatives and projects to take that 60% equation and reverse it. And so I'm pleased to say that we ended 2019, that 60% number was reduced to 48%. So today, 52% of every payroll dollar spend in the store goes to serving a customer or driving sales. And what's important about that is that we were able to leverage payroll expense and overall store expense while improving customer service scores in the Pro and the DIY customer segments, which points to the fact that we did it the right way. And we invest in technology. We redesign processes, and we're able to achieve some of the short-term goals. And our expectation is as we work through 2020 into 2021, we're going to have 60% or more of our payroll being allocated to sales, service, which we think will be a part of driving that productivity improvement that Dave talked about.

And Liz, this is Dave. I'll just add to that. Partly as we move through 2019 is we've actually reorganized the store, putting the right, I'll say, departmental managers to manage each component of the store to be more effective and be more, I'll say, customer-facing to make sure that we're, one, assorted correctly but also staffed correctly kind of day in and day out to better support the needs of both the DIY customer but importantly the Pro customer.

Yes. And that payroll leverage was supported, to Dave's point, by over 6,500 incremental assistant store managers and department supervisors. And so we're trying to invest in our people. We're trying to invest in our customer to really drive that customer-centric thought philosophy that we're trying to put in place. But at the same time, we're being very focused on our operating income and creating the right level of productivity.

And you guys mentioned that winning with the Pro has been a pretty big initiative for the company, and there's this gap between Lowe's and its largest competitor in terms of the percentage of your sales that are going to professional customers versus DIY. I guess first, why is this such an attractive customer to go after? And second, how do you think you can take share over time when it seems very difficult to get pros to change their behavior. So in other words, what's going to make them shop at Lowe's versus your competitors?

Well, when you think about pro for a second, the reason why it's so valuable is because that customer drives so much productivity across every department of the store. So just to put it into context, the average pro is roughly 8x more valuable in annual spend than your traditional do-it-yourself customer. And so if you think about the importance of a customer that drives that much productivity, it's important that we enable that customer to take Lowe's into their consideration set. And so one of the first things that we did when I arrived in July of 2018, we spent a lot of time talking to pros who had no longer considered us as one of their key considerations for their business. And so we wanted to know, "Why did you stop shopping at Lowe's?" And so they gave us specifics. And so we started on our retail fundamental focus in Pro to correct some of the concerns that those customers had. Things like we were not properly assorted, meaning that we didn't have the products that they wanted. Things like we didn't have the depth of inventory, so we invested in [ job-like quantities ]. They were concerned about the poor staffing levels and the inconsistent staffing levels, so we made investments in department supervisors in every single Pro department. They were concerned about very basic things like preferred parking so their tools could be safe in the back of their truck when they were in the store shopping. So we created preferred parking and dedicated loading, which allows them to be more productive because they can leave their jobsite without bringing more of their crew people with them. And for pro, time is money. Now these things are not overly strategic, but they were fundamental baseline things that the pros expected just to even consider Lowe's as some place they would shop. So after putting these things in place, we saw our Pro business outperform DIY in 2019. And in the fourth quarter, we saw our Pro customer service scores improve over 400 basis points. So these things are working. But now we've taken a more strategic approach, and that is how can we create stickiness and how can we help the pro to turn right into our parking lot and not let them to a competitor. And so we've piloted in 2019 a Pro loyalty program combined with a CRM infrastructure that we currently didn't have. And so from the pilots, we were very pleased. They exceeded all expectations, and we're in the process now rolling out a Pro loyalty and a Pro-specific CRM strategy to all stores, and that should be completed by the first half of this year. And so we believe, starting out with the foundational elements of retail fundamentals, staffing, in-stock, service levels, et cetera, now building upon that with a more strategic focus on CRM so we can speak to the pros specifically, we could market to them within the channel in which they're in, whether they're an electrician or plumber or MRO. Today, we're streaming one message to all customers. In the future, we will be very surgical and have more one-on-one marketing. And the Pro loyalty program gives the pro a reason to keep coming back more often because when we look at our current pros, if we just could get a larger share of their spend or larger share of their wallet, the whole program is just significantly successful without having to go out and attract one more new customer. So that's kind of where we are. It's very valuable because it improves overall space productivity. And because you have fixed cost in pros that's already embedded in how we operate the store with staffing in the departments, as sales increase, those sales tend to flow to the bottom line a lot more effectively. So all in all, it's really a key strategy that's something that we're very committed to.

Yes. And I just don't want to miss that last point that Marvin just said because I think just financially, if you think about the pro customer and as we start gaining more share of their wallet in our outlet, the incremental velocity of that sales, those sales dollars flow almost to the gross margin level down to the op inc level. And so from a financial perspective, they're very productive as we lean into that. And then secondly, just coming from a company who had a very large and mature loyalty program, being able to create a database that you understand your customers, you understand their shopping behaviors, you understand what incents them to shop your channel or other channels is hugely valuable. So to the degree that we -- as we continue to mature this program, to be able to lean into that database and be able to drive behaviors will be ultimately very financially prudent for us over the next several years.

That's great. I was just wondering if -- and this is probably one for Marvin, if you can talk about the opportunity in e-commerce. It's currently a pretty low percentage of sales, and it's been growing at a low rate for the last few quarters. Can you just talk about some of the reasons that e-commerce has been underperforming, either intentionally or unintentionally? And then what changes are being made to that platform?

Absolutely. So if I can take you back to the beginning of 2019, Lowes.com was sitting on a decade-old platform. And what that created was a very static and a platform that had very little flexibility or agility. So the first thing we had to do was create a program to replatform the entire site. I'm pleased to say that by the end of the second quarter, Lowes.com will be totally replatformed on Google Cloud, which gives us an enormous amount of agility and flexibility for things like search and navigation for customers, the ability to go to a one-click checkout and so many other basic functionalities that most retailers or pure-play e-commerce companies take for granted and Lowe's just couldn't replicate because of the very prehistoric nature of our platform. So after the replatforming, concurrent with it, there are a couple of things that we're doing, and I'll be very specific, that we think we'll start to change our sales trajectory in Lowes.com in the second half of the year. Number one, today, in most cases, if you do a price comparison on a like item on Lowes.com and another site, we will appear to have a higher retail because we have freight combined with the product cost. That's how the site was set up. And so we're in the process of unbundling the freight and product cost on existing SKUs, and all new SKUs being added are now being added with freight decoupled. That will make us a lot more price competitive because the customer will have a true view of what the retail is. Second, we have a very difficult time expanding the number of SKUs on our site. I would guess that our largest competitor probably has 4x the number of SKUs on their site than we do. And it's primarily because as we add drop ship SKUs, it is a very manual and a very difficult process to do. So as an example, we're trying to add, let's say, 1,000 SKUs from a drop ship, then that may take us months to do than a world-class retail or e-commerce site can do within hours or days. And so we're going to be transitioning to a much more robust way and quick way to add SKUs. There are certain SKUs that require special handling, things that are classified as hazardous material, whether that's batteries or cleaning supplies. In most cases today, we can't sell those items online because we have to have a special handling provision in our system to ship them. We'll have most of that in place in the second half of the year. And I'll give you just one more as an example of just the nature of our site. Today, it's really difficult to shop by collection. And what I mean by that, let's say, you want to go to Lowes.com and buy a patio set that includes a table, 4 chairs and an umbrella. Today, it's a very difficult transaction. The customer has to go to multiple screens and basically piece that set together and then work their way to checkout. In most cases, that set's going to show up in different boxes at different times. And we're going to basically one-click collection purchase in the second half of the year for all types of items to make it much more customer-friendly. So that's just a short list, and there's a much longer list that we're working on. The key is, there's no one big unveil date that these things come online. These things will come online throughout the year. But as we look at third quarter, we have a lot of confidence that within that time frame, we'll have enough initiatives online that we'll see the business start to change its sales trajectory. And we're anticipating that we're going to see much improved sales in Lowes.com in the back half of the year. And so those are some of the things we're working on.

That actually is a great lead in to my next question, which is, what has surprised you the most? Now that you've been at Lowe's for some time and have gotten a better sense of what's under the hood, it seems like this may have been one of those issues that you didn't realize quite how difficult the challenge was going to be.

Well, I'll give you my thoughts, and I'll let Dave give you a couple of his thoughts and what surprised him. To be totally transparent, the difference is there are some positive surprises as well. I mean -- so I'll start with, was really surprised and pleased with the amount of resiliency and the commitment of our frontline associate population. And I mean the men and women working in the stores, distribution centers, call centers and in some of our store support centers. There's a lot of tenure in this company, and you have a lot of associates that are very passionate about the company and passionate about the communities that they work in. That's a really important point because as you try to transform a culture, having a foundation of those frontline associates really loving the company and buying into the change needed to be successful is very important. And we're fortunate that we have that. But some of the things that I was really surprised by that we'd have to get fixed: One, obviously, is Lowes.com. I had no expectation that we had a decade-old platform, and then we were as manual and as clunky and as uncustomer-friendly as we were. And the project plan to get these things corrected is well developed. So we have a really good line of sight on what it takes to make those things happen. So I'll say that would be one. I'll say number two, was a little surprised with the lack of home improvement knowledge we had in key areas of the business like merchandising and store operations. As I mentioned at the very beginning of this call, we took some pretty aggressive steps to upgrade the talent and bring in more technical and product-specific knowledge in home improvement. And I'm excited because I think that gives us a much better decision-making capacity as we work to transform this business. Overall, from a technology standpoint, we're behind. The last 7 years, the company has spent a lot of capital, but that capital has been primarily on adjacent businesses and acquisitions. And we didn't make a lot of capital investments in just the basic infrastructure of the company. One example is if you go to our stores today and you peek behind our cash registers, most of our point-of-sale units are green screen technology. That is technology beyond 20 years old, and that makes it very difficult to train the new cashier, and it makes for a very poor and extended customer experience. So we're working. By the first half of this year, we'll have all new point-of-sale terminals. We'll have touch screen, the most modern point-of-sale both for the associates and for self-checkout. So those are some of the things that I was surprised with. But the key is, so I'm pleased with where we are in the transformation. We're just 1 year in, and we have multiple years in front of us. But we're going to make improvements along the way, and I'll let Dave share his thoughts.

Yes. Listen, I agree with everything Marvin said. Just a couple of other things that I would highlight. From a positive side, I just -- I've been pleasantly surprised really with the strength of the brand. If you talk to our customers, they're very loyal customers, and the belief in the brand is really high. So I think that's a really good foundation that we can build upon. Again, as Marvin said, from a team perspective, both here in corporate and the stores, just the willingness of our associates to embrace change and get focused on serving the customer has been a really pleasant surprise. We're not happy to win hearts and minds. We're just happy to make sure that we give the right tools to be able to get the job done. And then just in totality, I guess, on the negative side, the things that really surprised me and the rest of kind of the management team here is just the lack of investment in the core business here was over the last probably 5 or 6 years was very noticeable once you get under the hood. And then secondly, just the lack of some very basic core processes that we're all coming from different retailers who were pretty mature or had a good handle, that were standard, some of those processes here were substantially broken or nonexistent. And so we had to go back and rebuild some very basic infrastructure at this point in time. So we've had to kind of slow down the pace of change to make sure that those things were in place, so the foundation is good to build upon.

Great. Thanks. That's very helpful. I think I will probably want to leave enough time for the audience to ask questions, I have a number more. So in case people are shy, I will definitely chime back in. But operator, if you could open it up to the participants on the line and just let them know how to queue up for questions, that would be great.

[Operator Instructions] We'll take our first question.

Great. Thanks for taking this question. So I know that you had rolled out a leasing program recently in your stores. Can you talk about how that has performed so far?

Yes. It's probably pretty early days. We had it in the stores and pilot back half of last year. And really, the focus of this is to give customers who struggle with credit a different avenue to own largely an appliance in a way that's economically viable to them. So I do think it's a very -- it has been a very successful program. I don't think it's -- people have asked us, "Is it material in a sense that it's going to drive a substantial amount of cost going forward?" I think the answer to that is no. But it is really important and vital for those customers who have that specific need. And we've been very focused on making sure this program is well balanced in a sense that it is not a program that is a high-cost program to consumers, rather a very financially viable program to consumers who have this specific need.

At present, we have no further questions in the queue at this time. [Operator Instructions]

Well, in the meantime, I'm going to ask you a couple more. This one's for Dave. I mean the market has obviously been volatile. Now rates have been cut to support the U.S. economy. As a home improvement retailer, do you think that Lowe's benefits from lower interest rates? And have you seen a direct relationship in the past between lower rates and higher renovation activity?

Yes. It's a really good question. I don't know that we've seen a direct correlation between rates and, I'll say, demand in our stores. What I will say, though, is to the degree that lower rates spur consumer confidence, I think that consumer confidence is much more of a bigger driver from that perspective. So again, as you sit here today, we really like the fact that rates go typically -- historically, when rates go low, consumers feel more confident. Obviously, with what's happening now at this very juncture, I think there's probably additional pressure that gives consumers probably less confidence just given the uncertainty that's happened over the past several weeks. But I do hope that this thing -- and I do anticipate that this will stabilize from an uncertainty perspective in the next several weeks.

Great.

And Liz, I will say just to that point, Marvin and I were on a webcast last week. And at this point in time, we still see demand in our stores tracking pretty aggressively. We feel that we're really nicely positioned as we move into the spring time frame. I think this team has been in place now a year. So we've had the opportunity to really think and plan spring more appropriately, not that we won't still have opportunities to improve it going forward. But I think we feel better about where our business sits at this point in time and how we're positioned in the next several months. And we continue to see very strong demand in our channel.

That's great. And I actually did want to ask, I know you guys mentioned in your fourth quarter conference call that at that time, you weren't -- hadn't really seen a big impact from a product sourcing standpoint. The supply chain had appeared relatively intact at this time. I mean has there been any update to that? Like it seems like production is kind of starting to come back on line a bit in China. So any update you could give on that would be really helpful.

Liz, I'll start out. This is Marvin. Because our business is highly penetrated in spring, most of the products that we need for our Q1 going into Q2 business is either in our stores, in our distribution centers or on the water, and that's coming from Asia. So we're in a really good position for Q1 and the early portion of Q2 from a product perspective. And we talked a lot about our in-stock and our inventory investments. And we think that the strategic investments we've made in inventory going into spring is a benefit because we just have an inventory depth that we haven't had going into spring in a very long time. Having said that, as you can imagine, we're monitoring production of our different suppliers' factories on a daily basis by PO, by SKU. And what I can tell you is we're starting to see production continue to improve and pick up. So we still are very optimistic that we're going to be in a good position relative to the second quarter, but it's a very fluid situation. But as we take a snapshot today, we feel like we're in a really good position. And it reinforces Dave's point that our business trends are good. There's a lot of demand in this sector, and we've had a full year to plan and to prepare for spring in the first half of the year. And we think that, that planning is paying off for us.

And I would imagine that you are -- and that Lowe's is one of the larger customers of some of your suppliers, so probably some competitive advantage there in terms of having a little bit of leverage or a little bit of -- a little bit more clout relative to smaller participants in the market.

I think that's probably true. Yes. I think that...

I'll say it's true. And look, again, this is about just being very detail-oriented. And our global sourcing team, along with our merchants and our supply chain team, are paying, as you can imagine, very close attention to this on a daily basis. But when I look at factory production and the improvements that are happening, in some cases, each day and definitely week-over-week, I mean, we feel like that everything is headed in the right direction. But again, that's based on taking a snapshot today, but it's a fluid situation. But if it continues to trend in the way that it has trended the last couple of weeks from a production standpoint, then we think we're going to be in a good position.

And I think the other thing, too, just given the home improvement sector compared to maybe other sectors of retail, the vast majority, probably over 80%, of our product is actually sourced here in the U.S. domestically. So we don't have the same type of dependencies we do on an Asian supply chain. And most of those products that do come from Asia obviously have long lead times. So we're well in-stock from that perspective. So we're probably best positioned to weather a storm if there were to be some disruption than most other retailers, although we're not really seeing that now.

Great. Operator, are there any other questions on the line at this time?

Yes, ma'am, we do have additional questions in the queue.

A couple of questions on appliances. I think one of the things you talked about was pulling a lot of your appliance inventory out of stores. Can you just talk about when that's going to happen and what the working capital unlock might be? And then I think you mentioned pre-Black Friday, some issues related to promotions in appliances. Could you just talk about kind of what happened there and making sure that, that wouldn't happen again?

Sure. I'll take the first piece of it, and we'll both kind of tag team this here. From an appliance perspective, keep in mind, what we do today is we assort appliances and hold appliances in roughly 1,700 stores. So if you can just imagine the SKU proliferation that's occurred over the last several years, the amount of inventory required to support that assortment in each of our locations, we have a lot of trapped inventory. The idea here is to push those appliances up one node in the supply chain and have, I'll say, a regional distribution network to be able to support both appliances but also big and bulky items to relieve the stores. When we do that, we're going to be able to centralize that inventory and relieve a lot of inventory pressure. We have that currently in test in 3 small markets. And that test is we're continuing to kind of build out, learn and understand how best to operate that within our environment. The test, it's on a head start. There's very good things that are happening. We're very optimistic about it. There's still some kinks that we're working through. I would anticipate that we probably have an 18- to 24-month road map still to kind of roll that out consistently across the U.S. So I think it's a big opportunity for us over the next several years. And then from, I guess, a Black Friday perspective, I'll have Marvin kind of weigh in to that topic.

Yes. And as we discussed on our Q4 call, when we entered into the Black Friday time period, we decided to make a heavier investment in marketing towards the latter part of the month, Black Friday, Black Friday weekend, et cetera. But what we didn't anticipate due to the compressed holiday season is that the demand for appliances would be really strong in the early part of November. Now we were priced right, and we had the right quantities. We've had the voice in the marketplace shouting out kind of our position on price and assortment during that time frame. And candidly, we simply did not gain the early November sales in appliances that we anticipated. And because of the compressed holiday season, we were hoping that those sales would come back in December because of the unique nature of that kind of 1 less week. And when that didn't happen, we just did not get to the level of sales that we hoped to. Now the good news is appliance is still outperforming the core business, even though it came in under our internal forecast and expectations. We feel great about our appliance business, feel great about our assortment, and we feel great about the brands that we carry. And we're making investments in that space to make it more customer-friendly and make it easier for our associates to sell. And to Dave's point, we have this road map in place, 18 to 24 months. And our expectation is within that time frame, we're going to have market delivery available across the chain. So not only can we deliver appliances from a more central location, but all big and bulky product to take pressure off the stores and to release some working capital by not having inventory assigned to 1,700 stores versus having more market-based inventory strategy. And so we feel good about appliances. We had a slight strategic error in November, but that's something that we don't foresee happening again because of unique nature of the holiday season.

Great.

It appears there are no further questions in the queue.

Okay. Then I will ask one more. So I guess we're -- just to close, because I think this may be a long answer because I think there's a lot to be excited about. So this is a question I'm asking everyone. Just what are you most excited about in 2020?

Yes, I will say quite a few things. I mean as I go through our different strategic initiatives, we are focused on merchandising excellence. I mean we're going to continue to invest in our merchandise services teams, which are vendor-paid associates to help with resets and bay maintenance. We currently have 16,000 associates in those roles. We're adding 17,000 -- I mean, 7,000 vendor-funded associates to the existing 16,000. So we're going to have a total of 23,000 associates focused on merchandise service. We're going to have a full year of them. We have a full year of the field merchandising teams in helping us with our adjacencies, with our space productivity, with our localization. We have all of our merchandising vice presidents that Dave mentioned in position for full year planning for the spring season, the first half of the year, key events throughout the year. And so the stability and the continuity of our merchandising team is much improved. We're excited about store operations and what we're doing to continue to invest in people, what we're doing to improve our service by transforming the individuals in the stores focused on service versus task. And the fact that we rolled out almost 90,000 smartphone mobile devices to our associates to give them some of the best-in-class technology at their fingertips. We're excited about pros. I mentioned we piloted Pro loyalty and Pro CRM. It exceeds expectations in every pilot location, and we'll have this fully rolled out in the first half. And we think that this will give us the ability to have true stickiness with customers and to get a larger share of their wallet, which is critically important to the entire financial model that we've laid out. And we're excited about the fact that we're going to have the beginnings of a modern e-commerce site. Because in home improvement, e-commerce is not just important for dot-com sales, but we have heavily researched categories where customers go online, research it online and then they decide from that research if they come to the store to buy. When your site is clunky and not customer-friendly, then you lose foot traffic because customers choose not to shop your brick-and-mortar locations. So fixing Lowes.com will also not only improve our dot-com sales, it's going to improve our brick-and-mortar sales, which is a whole enterprise-wide initiative. And the fact that we have our President of Online in position for over a year, our Chief Information Officer has a deep understanding of e-commerce, and we have a very detailed road map, but we're excited about what will start to happen in the second half of the year. And last but not least is we're excited about the team. We have a team of professionals with deep experience that understand retail, understand home improvement. And when we look at the macro environment minus some of the short-term disruption that we've seen in the last couple of weeks, every key macro indicator points favorably to the home improvement marketplace. And that's one of the reasons why we think our business has been healthy and strong as we started 2020. So there are a long list of things that we're excited about.

Great. Well, thanks very much. And I think that wraps up the end of our 40 minutes. So I really appreciate the time. Thank you so much for participating again in our Consumer & Retail Technology Conference. Thanks, everyone, for joining.

Bye-bye.

Thank you so much.

Thank you.

Thank you. That does conclude today's conference. Thank you all for your participation. You may now disconnect.