The Home Depot, Inc. ($HD)

And welcome to day 2 of JPMorgan's 12th Annual Retail Roundup. Again, so happy to have all of you here and everybody that's on the line. And as a reminder, at 4:00 today, I will be interviewing Jamie Dimon in this room with our my coworker, Matt Boss, which is always exciting to hear what he has to say and there's no shortage of content right now for Jamie to respond to. So please come and please ask questions too. He's an open book. So with me today, I'm very pleased to welcome Home Depot's EVP and CFO, Richard McPhail, -- The Home Depot. Thank you for attending.

Thank you, Chris.

It's a pleasure to have you.

Great to be here. We're in an awesome building, too. I mean just great for JPMorgan. Great for Manhattan. Fantastic.

Yes. Yes. Yes. And we're renovating the old Bear Stearns building right next door. So we're going to have a nice corporate campus development.

That's beautiful.

So at a macro level, let's just for a second, put oil prices aside and geopolitics. And what I'd like to set this table with is, can you narrate the demand environment in 2025 to help us think about the starting point, and then we can think about what potentially happens from here.

Well, thanks, Chris, and it's great to see everybody. Thanks for being here. 2025, I think the demand environment softened during the year from how I would perceive the entire market. Now I think we'll get to our performance in a second. But if you look at how our sector -- well, let's -- maybe let's zoom up a little bit and just talk about consumer confidence. At the very highest level, we saw consumer confidence drift lower through the year. We saw increased concerns over uncertainty, over inflation, over obviously events in the broader world and then over concerns over job loss. And so our customers told us through the year that, that uncertainty was the largest factor keeping them back from engaging in larger home improvement projects. If you look at our sector and you could pick a number of proxies for our sector, but let's just take private fixed residential investment, which is a significant component of GDP. And our sales are -- when we report to the government, our sales sit in a component of PCE and PFRI. But if you look at PFRI through the year, actually over the last 8 quarters, we saw a deceleration in PFRI. In 2024, it was positive every quarter year-over-year, but decelerating. In 2025, we actually saw it turn negative year-over-year and continues to decelerate almost in a straight line. Despite that, we posted in the fourth quarter of 2025, we posted our fifth consecutive quarter of positive comps in the United States. And so everywhere we look, our market has seen a degree of softening, but we have begun to outperform the market I'd say, in a more measurable fashion as 2025 went on, and we certainly expect to outperform the market in 2026.

And so as you -- as we try to diagnose that, you did have a storm headwind in the back half of the year. If we take that dynamic away and go back to, you've always spoken a share of wallet. Right. And over -- we're now back to sort of pre-COVID levels on share of wallet. Historically, if wages are growing 4%, consumption grows 4%. And this category is performing well below that, obviously, includes -- and you're outperforming that. So why wouldn't, over time, given replacement cycle dynamics, why wouldn't we just continue to -- the category itself continue to migrate towards that albeit with some housing headwind against that. So said another way, why wouldn't '26 be better than '25?

Well, I'm going to separate from the wage conversation. I think I would probably get more towards what's the shape of general economic growth and then how does demand for home improvement vary from that economic growth. In the near term, we know that housing activity is frozen. I'll continue to use that term. We've used that term for 3 years now. If you look at the proxy for housing activity as housing turnover, existing home sales, typically, we're somewhere between 4% to 5% of all homes existing in the U.S. changing hands. We're at 3%. We've been there for 3 years, and now it's kind of going on 4 years. We have never seen housing activity this slow for this long. It's touched the 3% mark, maybe 4 times in the last 50 years. Every other time it popped pretty quickly. And I think this is a function of housing affordability. So we know that when mortgage rates went from the -- 30-year mortgage rates went from the high 2 percentage area to the low 7 percentage area within the span of about 12 to 18 months, that created a pressure on affordability we haven't seen in decades. And so when I think back to your comment, why can't we see home improvement demand return. I think we can and will absolutely see home improvement demand return, not just to parity with broader economic growth and demand, but beyond it. Look, housing is a cycle. We're not immune as home improvement -- as the largest home improvement retailer in the world. We are -- we do participate and see the impacts of that cycle. But what goes down at least history has proven out, usually comes back up again. We think that again, if you just look at the affordability point as one of the components of pressure in our market, it's a function of 3 things: home prices, mortgage rates, income and income growth. Income growth remains stable to strong. Home prices, it's interesting. Look, we are now, I think, in the second year of seeing corrections in more markets than we're seeing increases in markets. And then mortgage rates obviously trickle down steadily through the year. We've seen some volatility in recent months. But to me, look, housing is a market. Markets typically reach equilibrium on their own. And so could we see a period of modest home price corrections as we get to equilibrium, I think we're already seeing it. So I think that's probably the affordability point and then the uncertainty point are the largest things facing our sector disproportionate to other retail. Once we turn the corner and we're not going to call timing on it. But as we said in our December investor conference, we do expect that when this turns, you will see home improvement demand outstrip the broader market. We're looking for in a market recovery case, target comps of 4% to 5%, total sales growth of 5% to 6% top line, which are accelerated by new store growth, new branch growth under SRS and which is exciting for us and then driving bottom line faster than top line. So look, we've seen this before. We've lived through cycles since 1979 at Home Depot. And I think I would ask just point all of our investors to look at what's going on in the market from an economic data perspective, look at anyone touching housing right now. Anyone touching housing right now, if you looked at a broader landscape of retailers, distributors, homebuilders. You touch housing right now, you're probably deeply negative in Q4. We were positive top line in Q4. And so I think this is just -- it's great evidence that we know how to operate during periods of turmoil. We learned how to engineer agility into our supply chain during COVID. And if you think too, Chris, I just have to trump it measures like our gross margin performance in 2025. If you adjust for the acquisition of GMS or take that out, we landed our gross margin rate on the button compared to our expectation for the year. And think about that, that was the target that we set at the beginning of 2025, that's before Liberation Day, which, by the way, you remember that happened during our session last year. So through all of that, we delivered the gross margin on the button that we expected with all of the -- all the influences. And so we feel great about being able to manage through any environment and succeed. We're taking share, and we're in control of our destiny.

As you think about the rates versus the uncertainty question because rates drive improved affordability. So that's an obvious unlock. We're not sure when and how that changes.

Right.

I guess to what extent as you think about the flow of last year and into this year, has uncertainty become a greater factor in the consumers' willingness? And is the right interpretation is because you're so more project oriented, the uncertainty is weighing on those bigger projects?

Uncertainty continues to weigh on larger projects, and we see those larger projects still not recovering. I mean we've seen pressure in categories like kitchen and flooring and lighting and -- so there is pressure. Beyond a certain price point, it's -- and it's not reflective of the health of the customer. The customer, particularly the homeowner is extremely -- or their financial position is solid and frankly, better than it's ever been pre-COVID. They saw housing wealth increases of 80% to 90% in home equity values over the last 6 years. So their balance sheets are extremely healthy. We're at full employment, incomes are growing. So the homeowner is healthy, our customer is healthy. There's just a reluctance based on this uncertainty. And when we survey our customers and we ask our pros, what are your customers telling you? They consistently say, it's not that I don't have the ability to spend. It's that it just doesn't feel like the right time. So.

If you look back to in COVID when the government was nice enough to send checks to consumer, your category benefitted quite a bit. We're also stuck at home. We're in an environment now where it appears tax stimulus is offsetting the -- some of the uncertainty factor, at least like at least in the context of where gas prices have gone. You talked about tax stimulus. Can you talk about tax stimulus, how does that impact consumption in your category? And to what -- in the content as well as how did it play out in the context of your guidance?

Right. Well, so I think we're still watching what the impact of tax stimulus will be. And we don't want to comment on intra-quarter trends. When we set guidance at the beginning of the year, we said we would expect comp sales between flat and 2%. That is ranged because there are a number of factors that could be headwinds and could be tailwinds. Tax stimulus, if you kind of just took this, took the math and put it in a vacuum, we've seen a range of estimates. And if we had our fair share, if every penny of tax stimulus was spent on consumption, and we had our fair share of that consumption, we'd see something like upwards of 0.5 point of comp to the good. But we know that they're countervailing forces. We've watched private fixed residential investment continued pressure on that. We know there were concerns heading into the year as we set guidance on inflation and job loss. And so when we look at these potential headwinds and tailwinds, that's why we provided a range of outcomes.

Understood. And then as you think about -- just because I know this is a popular question as we think about the recent prices and we come back after. But how do higher energy prices impact your P&L? Obviously, there's an ocean freight concern and then there's a trucking diesel concern.

Well, look, I kind of go back to the agility point. I mean we've seen significant swings in supply chain, transportation expense in the COVID era. And I'd say the dynamic -- look, there's no doubt about it. Fuel is an important input to our operations. But we've proven the ability to protect our P&L. Look, we're not immune if you see significant sharp swings in the cost of fuel, that's going to impact our whole space and probably all of retail. But again, I would bet on us to be able to mitigate the impact to the bottom line. And we'll just -- we'll be watching it. It's obviously a fluid environment right now.

Yes, indeed. Actually, 1 more macro-oriented point, which is tariffs. For anything that's imported, then granted, you do buy a fair amount onshore, but anything that's important -- that's imported from Asia, tariff rates are lower year-over-year in most categories as we sit here today versus the back half of 2025. How do you think about -- how does it -- if we assume it stays here, how does it play out for The Home Depot? Do you think we've obviously seen that peak of pricing, but would you expect potentially deflation in the category? And if not, can you maybe help us think about what the margin potential could be around lapping higher tariff rates?

Right. Well, going to your pricing comment, I do think, as we shared with investors, I think that there was probably anticipation that inflation would begin to cool sooner than it made sense. To me, at least, I think watching costs flow through the P&Ls not only of The Home Depot, but retail in general, I believe that the timing of those costs meant that you saw more retail action at the end of 2025, even heading into the beginning of 2026 than the market might have anticipated. I do think that as a market, we are through those retail price adjustments. And while you'll see a year-over-year dynamic play out, that will kind of correct itself or rather be completed through kind of the first half of 2026. When it comes to what we should expect where tariff rates are lower, first of all, we warned not to make long-term permanent assumptions and rather to just manage as best we can. But Chris, I think the most -- probably the best way to think about this is we're a market participant. Tariff impacts are felt by the entire market. And so I think the question is how do all market participants react if tariff pressures become lower. We are not -- no one in the market is able to move outside of the broader market participants action. So that's just a way of saying you just -- I think you have to put yourself in the shoes of all market participants. And when you -- typically, when the market sees broad-based cost pressures or broad-based cost relief, that typically has an impact on price levels. But just kind of remains to be seen. I don't think we've -- we should necessarily count on a fixed set of assumptions for the year.

The only certainty is constant uncertainty.

Probably.

Thinking about -- I want to pivot to the long-term strategy. You've been positioning yourself for market share gains, you've expand the TAM and as you've gone to MRO and now more the large Pro business, we have a lot of questions here. But as you think about that large Pro and the recent acquisitions, fundamentally, can you speak to what drives success in that business versus the traditional retail business? And where do you think you are in terms of building out those core skill sets?

Okay. Well, look, we're -- we've always known that the Pro was essential to The Home Depot's success. The Pro has always been a part of our business. And if you go back to Bernie and Arthur, they created The Home Depot in part to provide a sense to consumers that they could shop like the pros did, right? I mean, come shop in warehouses. And so what we would do for the Pro typically trickle down into success with the consumer, and it was -- it created do-it-yourself. But when we think about the Pro opportunity, for decades, we have known that we underpenetrated our Pro customers' wallet and to penetrate further, would require us to begin providing our pros and simply put the ability to have products received at the job site. I mean that is kind of a cornerstone of kind of changing our business model to further penetrate Pro wallet. I want to zoom all the way out. So we operate and are the largest player in a $1.2 trillion addressable market. In December, it was $1.1 trillion. With the recent announcement of the acquisition of an HVAC equipment distributor, we expanded that TAM. The world of HVAC equipment and parts distribution was not part of our $1.1 trillion TAM. And so now we've expanded it. Of that $1.2 trillion, $700 billion is the Pro opportunity. And I think I want us all to step back and think about that number because there is no one standing in the way of The Home Depot in terms of attacking a $700 billion opportunity. What is standing in the way, it's the ability to serve our Pro better than anyone else in the market can. We're not yet at that point. We grew up in a cash and carry world where the elements that we were appealing to the Pro with we value, selection and service in the stores. That's still a product orientation though, cash and carry retail. We learned over time and I'd say we were still learning towards the -- as we moved into the 2020s, that what we actually had to reorient ourselves to was creating a service model. If you're going to get deeper into the Pros wallet, it is not enough to have the best retail locations and the best product assortment and the best in-store service. You have to have an outside sales force capable of assisting the professional with larger projects. You have to have exceptional delivery to the job site. You have -- and I think those 2 elements are kind of cornerstones. You also have to be able to extend short-term working capital financing, we call it trade credit. And then you have to have kind of second order operational capabilities, order management. As a cash and carry retailer, we had not built up the capability for you as a pro to have some flexibility in your ordering with us. Hey, at my end, you're the pro, your end customer is changing their minds, their change orders. You have delays in the job site. This requires a degree of agility that we just simply didn't have in the ability to modify orders, modify delivery times, this kind of thing. And there are other second order capabilities of importance, preferred pricing. We want to make sure that we can compete effectively across the entire project for every type of professional. So when I think about what we're building, we are building capability across that entire capability set. We're not yet at parity with a lot of our competition in that $700 billion market, but we are gaining ground every day. When you think about the sales force, we have thousands of outside sales reps in the market now and are still rolling that out through markets in the U.S. They're doing something that's never been done before, which is selling across all product categories. When you think about delivery excellence. So compare us to anyone else out there who you think might have the ability to compete for that $700 billion. We have 2,350 plus stores in North America and growing every single year. We have with the addition of SRS and GMS, 1,250 wholesale distribution branches. We have over 100 branches of HD Supply that deliver direct to multifamily sites. We have our network of 17 flatbed distribution centers, 20 direct fulfillment centers, 150-odd MDOs, market delivery operations. There will likely never be another supply chain that looks like that, that is oriented towards delivery excellence to the Pro. And so I don't want to go too long, Chris, but I think the point is the market is massive. We are the 800-pound gorilla in the market. We continue to accelerate the -- accelerate our capabilities that allow us to create that service model our Pros tell us with every month, we're gaining ground. We're consolidating their supply base. For them, if we can save them time and deliver with excellence, they will go to us. They've told us that, and they show us that in their spend. Our trade credit program where we extend working capital, short-term working capital, really just in the form of billing upon delivery rather than billing upon order shows lift every time we offer our pro credit, they lift their sales. So we're gaining ground. And then I want to address again, kind of a big picture point. So we began in earnest leaning into the kind of the Pro opportunity. While we've always done it. We realized the extent of this opportunity really just in the early 2020s, 2021, 2022, it was kind of the first time we talked about this Pro ecosystem. We had the idea of flatbed distribution centers since 2015. That was a bootstrap model where we said, look, the demand for job site delivery is becoming too great for us to be able to service. We don't know how big that demand pool is. All of our deliveries were originating at a store, the flatbed truck. As we stood that network up, we realized, okay, we can actually broaden the assortment and carry infinite depth and then that led us to understand, okay, there is a way that we can win this world. As we built those organic capabilities out, we came into -- or entered discussions with SRS. SRS called us in 2023 and said, we think we know what you're building, and we can help this. And look, Ted and I have -- we know every wholesale distributor in the country. We've met with many of them over the last few decades. SRS was the best managed distributor we have ever seen. And so in 2024, we said, look, there is a way to create a platform that is a complement to The Home Depot. It's complementary, and it's also additive to The Home Depot by going after that specialty trade contractor, and we've built on that platform ever since, which I'm sure you want to talk about. It's a really long-winded answer, Chris, but that's because the opportunity is massive. What it takes to win is complicated. You look across the 9 million Pros in the United States. There aren't very many who are identical to each other. And you have to be able to serve them in the way they want to be served. A specialty roofer is going to need a different service model than a general contractor will for roofing. And that's just one little example of how we want to attack the problem by serving the Pro in the way that they can best be served.

We'll leave a few minutes for audience questions at the end as well. As you think about -- so SRS, largely roofing, landscape, pool, GMS, wallboard, ceilings, Mingledorff's is now HVAC. Where do you think you are in terms of building out like the largest portions of that large Pro wallet? And to what extent does -- how do you think about organic versus an M&A in the remainder of those large categories?

Well, in terms of where we are, I mean, we have the right to win all $700 billion in the Pro market. So I think we're exceptionally early in at least our vision of becoming the most trusted partner to every Pro in the United States. We think we are -- we have the right to win. We don't yet have the ability to win, which is why we're building these capabilities. On the SRS side, so as you mentioned, we just added the -- what is SRS' fifth product vertical. So when we acquired SRS, they have roofing pool and landscape. We added GMS in wallboard, ceiling tiles and associated products and now Mingledorff's is an HVAC equipment distributor. HVAC is a fantastic vertical. This is a vertical we talked about with SRS since before we acquired SRS. It's actually new for The Home Depot, which is why we expanded our TAM by $100 billion as we acquired them. And there are many reasons, by the way, I'll just do 30 seconds on HVAC. Number one, the cross-sell for SRS across roofing, gypsum, HVAC, you're beginning to see a more complete picture. How do we grow SRS further? Look, there are a number of product verticals that we've built up organically. We've distributed lumber, doors and windows, plumbing, flooring, organically really in earnest since we began standing up these flatbed distribution centers. We are making great gains, for instance, in the distribution of doors and windows where the retail model probably includes too many product touches as you think about the supply chain, taking out every touch adds profitability to that model. And so we have made gains in that model in our centralized supply chain, our direct fulfillment centers, the ability to deliver doors and windows with excellence is giving us another advantage to selling the entire project. So Chris, I mentioned that because that's an example of organic share capture. And I think if it can be done organically, we're always going to do that. Acquisitions work when they accelerate the achievement of our strategic vision, but I think it's important for our investors to understand a few things about the acquisitions that we've made. So first, there's a very high bar when it comes to acquisitions that are acceptable to The Home Depot. And I think since our acquisition of HD Supply in 2020, we have maintained the same set of standards that must be met. Number one, there has to be exceptional strategic fit. There are no acquisitions out there. Look, our strategy is grounded. It is core and culture. It's the delivery of an amazing interconnected experience, and it is winning the Pro. And within that winning the Pro, obviously, we have very targeted strategies when you think about product verticals, we like adjacencies because we like cross-sell. But you've got to have amazing strategic fit. The acquisition has to be an exceptional financial performer. The Home Depot is not in the business of acquiring companies that we then improve the operations of. We acquire and partner with companies that are best in class at what they do and how they serve their customer. And then there has to be a really strong cultural fit. I think we have perfect cultural fits across SRS, GMS and Mingledorff's. But when you use that as a screen, you actually wind up eliminating frankly, I'd say a majority of companies that you might think are acquisition targets. Even large-scale companies, there are large scale companies out there that just simply don't pass that screen. And so if you look at what we've done to augment our ability to serve the Pro through adding acquisitions, we were the first to go into roofing what the #1 roofing distributor in the country from a quality perspective. We were first with the Wallboard acquisition, we were first with an HVAC equipment distribution. We will acquire high-quality assets that are best in class at what they do, if they advance our strategic imperative. But we know we can do a ton organically, and we'll keep pushing. And let me -- I'll give you an example of organic. The HVAC acquisition opens up the world of HVAC parts distribution. And so you think about what...

We're not in that.

We're not in that. We do -- look, we absolutely sell HVAC parts and we do distribute those. But opening up an avenue to the HVAC installer because we have the equipment distribution -- it just -- it's a different world of customer access. So now think about what we can do with our direct fulfillment centers with same-day next-day delivery with an extended offering. This is not something we've built out. We haven't even closed the acquisition of Mingledorff's, but we are excited about the value we can bring to the customer. And so that's an example of things that we would do organically.

Excellent. I have some further questions, but I want to see if anyone in the room has any questions. If you do, please just raise your hand and grab the microphones on the table. Great. So as you -- and by the way, you also have a very low cost of capital and incredible technology infrastructure you bring to bear?

Yes, we do. Look, our cost -- our low cost of capital and our low-cost position is a benefit that we -- the flywheel of The Home Depot is taking those benefits and passing them on to our customer. We will always be the sharpest value prop in the market for the entire project and that cost of capital position and our low-cost operating cost position allows us to do that in the market.

So I want to go back to the Analyst Day from December. So as you think about when you embarked on this large Pro effort and then accelerated it, organically accelerated with SRS and other recent acquisitions. It caused CapEx to go up, caused D&A to go up. It sort of created a headwind on your margins where other retailers saw these massive gains during COVID when the business popped. And it dragged sort of ROIC along with it. Our impression of the Investor Day was that you were at the trough, that you had put the foundation in and yes, we're going to continue to add bricks and layers around the large Pro effort. But we are coming to the bottom on the ROIC cycle in that efficiency, which is the hallmark of Home Depot, and AI was enabling this to start to turn up. We just need the market. Was that the right interpretation?

That's the expectation. Now -- but I think it bears a little bit more explanation just to get everybody on the same page. So first of all, we've outlined our margin expectations moving forward. In a market recovery case, we expect to grow bottom line faster than top line. Market recovery 4% to 5% comp sales, steady gross margin, operating expense leverage driving high, very-high-single-digit EPS growth in that case, 5% to 6% top line growth when you add new stores and branches. But if you think about the history of our margin over the last few years, you have just a few pretty simple components of it. First, it's just the impact of margin mix of the acquisitions of SRS, which are actually really strong ROIC generators when you think about organically that wholesale distribution world is actually a much more return accretive model than I think most folks expect that gets masked by the fact that there's a lot of acquisition activity in distribution. But let me talk about ROIC in general. So -- sorry, I'll complete the margin question. We made investments in wage over that period, right? And one of the things that we will always do is take care of our people. And we're proud of -- I think our entire sector faced into wage pressures and retention pressures in 2022. We took some steps to fix that. We're in a great position now. Our associate commitment Index is at really, call it, recent or highs as far as recent history goes. So we made investments that put pressure on our margin profile as we saw top line pressure in the market. Ultimately, our margin leverage or deleverage reflects top line momentum. So as the market recovers, what do we think about ROIC? Well, ROIC was -- obviously, it has pressure as top line and operating profit does. When you think about what our ROIC expresses, well, we -- from the period 2008 to 2023, we really didn't add any new stores. And so you think about the tailwind that creates an ROIC as you're depreciating a store base, and as your levels of investment in the company are low by historical standards over that period, you generate higher ROIC. In fact, still today, 99% of our stores are over 10 years and so you get that ROIC tailwind. As we begin to invest, how do we decide to allocate capital to investments. Well, we do it on an internal rate of return basis that I'm sure our investors would want us to do. Can we earn an exceptional margin over our weighted average cost of capital. In other words, do we have a hurdle rate? And does this investment cover the hurdle rate. When we think about store investments, these are some of the most I'd say, predictable investments we can make with a strong IRR. But in the early stages, the ROIC is very low, right? You can think of IRR is the average of ROIC over a long period of time. So as you lean in, you're going to put pressure on ROIC. As you make acquisitions, again, remember, we're only acquiring market leaders. And so as you pay market multiples for market leaders, you're going to see immediate dilution to ROIC, but I'll come back to the point you've made. Yes. We expect ROIC to expand from here as our market recovers, as we see gains from that investment period you talked about, it's absolutely our intention that ROIC moves up and to the right from this point.

I thought the other important...

There's a question over there.

I'm sorry, go ahead.

So I guess I had a question about that, particularly in distribution. I've always thought that as more of a cost of capital type business. How do you have confidence that it doesn't just go to cost of capital 0 perpetually. I mean it's a dogfight, is it not?

I'd say it's a highly rational market. And I think what -- again, what's interesting to me is if you look at a new branch -- a new SRS branch versus a new store, ROIC of the new SRS branch accelerates significantly faster than the ROIC of a new store, a very capital-light model. And so no, I think wholesale distribution is, number one, it's exceptionally fragmented. And so I think we've seen margin stability over the history. And I expect that margin stability to continue. I also expect us to be able to improve our margins in distribution as we see gains from scale and as we see gains from productivity driven by AI. I -- so look, we're very bullish on the outlook for our investments to drive earnings growth, which then drives ROIC.

We have another question.

Just trying to think about that $700 billion opportunity and just -- I might have some of these things wrong, but framing it versus the other piece of the business that obviously you've executed against well over all these years, and you -- again, this might be wrong by a little bit, but you've gotten kind of like 20-plus percent of that business. And so is that -- like how do I think about that versus that $700 billion in terms of opportunity? You didn't say anybody is really standing in your way, but in your IT stack, I would imagine complexities of delivery and product and all this other stuff probably gives you even a bigger opportunity? Just any thoughts relative to that 20-plus percent on the $700 billion market share versus the other piece of the business.

Well, let me -- so let me just -- let me phrase it maybe a little differently and tell me if I'm hitting your question. But I think our market share with the Pro is much lower in that $700 billion sector. You could divide it roughly to say $400 billion of that is kind of the complex Pro where we have very low market share. Obviously, being the kind of the #1 home improvement retailer in destination for the pros in the form of our stores, our share is higher in the other $300 billion. Let me -- let me talk about the entirety of the $1.2 trillion. So let me bring in consumer because what we're doing in delivery should be a tailwind for both our Pro and our consumer. The gains we've made in the -- in promise times, so shortening promise times. The amount of deliveries that are now same day, next day, over half our deliveries are same day, next day to the customer. That's not something we ever even imagined when we started building these DCs that, that would be the customer demand. I don't know if I'm hitting your question, but let me just -- let me shift this a little bit to why I believe we win with the Pro and the consumer. There are gains to scale and because scale provides you with an advantage to invest in AI-enabled customer-facing tools. I'll give you a couple of examples. I think the -- maybe the one that comes to life for me the most is we are moving to a world where the orange apron associate who is the lifeblood of our customer experience, has so much product knowledge at their fingertips enabled by AI that you can be -- what might have taken months to do in terms of on-the-job training in the aisle is now instant. Every associate has a handheld device that has all of the cumulative knowledge experience through an agentic, an AI agent to help the associate in the aisle with the customer. We are going to kind of areas of -- I'll simplify it. We are pushing an initiative called One Tasking. Prior to this year, our associates not only served customers, but they also moved product around the store. We have always -- or at least for 20 years, we've had some other merchandising execution team. They have also handled certain aspects of bay maintenance and product movement. We're shifting to a model now where we are pushing almost all tasking to that merchandising execution team. The freight flow in the building is handled by that team and it has been supercharged by AI-enabled tools that allow prioritization of tasking and really kind of optimization of freight flow through the building. What does that allow us to do for our orange apron associates. We just want them to sell. And so tools like the kind of the knowledge all-in-one handheld, I think, put us ahead of anyone in our market. The equivalent online is Magic Apron, everyone should go on to homedepot.com. I know you would have naturally done that today anyway, but Magic Apron provides that same level of Agentic AI assistance to our end customer. So look, we're going to be front-footed in terms of AI enablement. We just hired a fantastic new Chief Technology Officer. If you haven't, please take a look at her background, we think that this is a huge step forward in leaning into AI and being a true AI leader in the American economy. And we've seen the gains from it, both from a customer experience perspective as well as a productivity perspective within the business, and we'll keep leaning into it. I might have taken a tangent on your question.

Do you think you get 20% share in large Pro?

Look, I think we have the right to win every dollar. I do think we have the right to win every dollar. And I think the question is these Pros, you think about it, they want partners that they can count on. We are steadily gaining share. And I think that that's how we're going to continue to look at it, steady share gains. never retreat, never give up any ground, but don't outrun our ability to execute with excellence. We're not there yet, but we're gaining every single day and month and quarter. And so look, what's the limit? I don't know, but there's nobody standing in our way. So we're -- we couldn't be more excited about it. Look, we think we're operating the business as well as we ever have. Our in-stock position is right where we want it. Our staffing is right where we want it. We're operating with agility in our supply chain in our current environment, and we feel fantastic about our ability to continue to win in the future.

Awesome. It's a great spot to start. Let's thank Richard McPhail from The Home Depot.

All right. Thanks, Chris.