LOW
#So Chris, in the quarter, weather had no net impact to the three month period.
We did have favorable weather in the first part of the quarter, a little tougher weather toward the end of the quarter.
Second, as you suggest, we did see two-year stack accelerations throughout the quarter.
So feel really good about our ability to deliver comp on comp.
As we look to 4Q, we would expect further acceleration on a two-year basis into Q4.
As it relates to November to date, we were in line with our expectations and we're really excited about Q4.
Mix should have a negative impact.
As Rick noted, we're now into four straight quarters of double-digit appliance comps.
We've cycled some tougher compares, although appliances continue to perform well.
So mix should be a little bit less pressured in Q4, and going forward, for that matter.
Thank you, <UNK>.
So I'll start and let <UNK> jump in.
So Dave, we're doing some media-mix modeling, so we're trying to understand impact of different mediums on different markets, and we're adjusting accordingly.
So ultimately, we're taking a look at the most effective yield, which is the sales dollar yielded for dollar of marketing spent.
We have shifted some, as Rick mentioned in his prepared comments, we've shifted some dollars away from print towards more digital assets.
We're able to reach more folks on a very cost effective way, which gets into the effectiveness of, and efficiency of, marketing.
<UNK>, the pro is an inexact science.
We have some direct measurements of them relative to managed accounts and credit vehicles.
There's some imprecise measures.
The pro mix is about 30%.
It's grown ---+ in the past three quarters, it's grown in line with the Company average.
The fourth quarter last year was a little bit faster, so that would suggest it's migrated from a little bit higher, in that 30% range.
I'll start.
This is Robert.
Then I'll let the other guys finish.
Certainly, when we look at consumers' discretionary versus nondiscretionary spend, we're seeing that when you combine small and large discretionary spend, what they're telling us is that more than 50% of their spend is on a discretionary basis, which has tripped over from where it would have been prior years.
So, we're seeing it move above that 50% level.
We talked about appliances being double-digit comps for the quarter.
We've talked about some of the project spending and the initiatives that we're putting behind that, whether that's project specialists interiors, which is major, interior remodels or product specialist exteriors, which is the exterior programs we do.
Fencing, siding, new windows, those type of things.
Both of those programs had double-digit comps in the quarter.
So appliances, PSI, PSE, all running double-digit comps in the quarter.
So we are seeing that consumer take on that willingness to spend around the home on discretionary projects, driven by, as I said in my comments, the macro factors as well as continued comfort that comes from home price appreciation that they're seeing.
The other item I would add in addition to Robert's comments is, if you take a look at tickets above $500, comp at 7.2%.
Continue to see strong growth in the big ticket categories.
Thank you.
It's a great question, <UNK>.
When you think about it from where we were at, peak operating margins previously to where we're at today, and trying to hone back in on that, we really are a totally different company.
If you think about back in those days, it was single channel.
We were on a rapid expansion of the store footprint.
We think the store is still the nucleus of our relationship with the customer, but the store in and of itself is not enough.
We really have to be there on an omni-channel basis for the customer.
That's why everything we've been investing in for the past few years is really to be able to deliver that omni-channel offering, so that we take those stores, we continue to build on those and leverage them.
The PSI, PSE programs that we just talked about, whether it's the improvements that we've made on dot com, whether it's all the improvements that we've made with the pro customer, to really get us back to point where then we can look at other opportunities to try and grow that top line.
Certainly we expect to continue to have gross margin ---+ I mean, operating margin improvement, continue to have nice flow-through as we drive comp sales improvement, like the guidance that we've given you.
But, we will continue to look at ---+ how are there other opportunities, as the consumer changes.
The way the consumer wants to interact with us changes, what are the other opportunities where we can do things that will continue to allow us to pursue opportunities for growth, particularly in a recovering market, and the affinity that we're seeing with the consumer around investing in the home.
So, whether it's stuff like lowesforpros.com that we invested in because we know that was a key gap we had there, whether it's rolling out additional PSI programs like we added this quarter in the store, you'll see us looking at ways that we can continue to make sure that we're responding to where the customer wants to go.
And whatever that ends up being, we'll end up evaluating that, but also using the base of stores we have to continue to drive nice flow-through.
I don't know ---+ I don't have the number back before the peak, as to the exact numbers as to where it was at.
That would be back in the ---+ (multiple speakers)
2009 is when we started the survey.
2009 is when we started the survey, is what Bob's saying.
So we don't have numbers back before the decline.
What we are seeing, though, is a greater proportion of customers telling us they're leaning into the big ticket discretionary from smaller ticket discretionary.
As you think about greater consumer sentiment, confidence around their personal job situation, there's home appreciation, they're starting to think about these bigger ticket discretionary projects.
I can say that the categories that you asked about did comp in the 3% to 4% range.
As <UNK> said, they were positive.
But, they were below the Company average based on the strength of the appliance and seasonal living businesses.
So the market specific growth is based on the state of the economy and housing in those markets.
So the factors that drive the macro Lowe's business also drive each individual market.
Housing and incomes in those markets, some higher, some lower, depending on where they are in the housing cycle.
We've talked about the choppiness quarter to quarter, and the flow-through.
That's a variety of factors.
Performance relative to plan drives those accruals year-over-year.
The nature of the credit program, as we think about portfolio performance, loan loss reserves, that's driving some expense leverage second half of this year, relative to first half.
As I mentioned in my comments regarding building repairs and maintenance, are planned as more front-half loaded.
Therefore, we're getting the leverage based on the timing of projects year-over-year.
So there's just a variety of factors that contribute to movement year-over-year.
I think if I had to leave you with a punch line, you heard us talk about steps we're taking in payroll, in advertising, in indirect spend that are sustainable, will drive benefit through 2015, into 2016.
So for 2015, SG&A grows at roughly 46% of the rate of sales growth.
I think something close to that 50% is probably the right way to think about it.
So as you think about the mix of our business, it's 70% pro and ---+ excuse me, 70% DIY, 30% pro.
However, the pro ticket is larger than the DIY, pro.
So the driver of the big ticket's probably going to be closer to 60%/40%, DIY to pro.
Thank you, <UNK>.
This will be our last question.
So, Rick talked about customer satisfaction.
We continue to see very strong customer sat results through our customer focus program.
As you think about close rates, we've done a lot of things to address all the potential factors that might impact close rate.
Both the quality and quantity of labor, the depth of inventory, the local assorting.
Rick mentioned way-finding, which is the ability to navigate our stores.
So a lot of good steps we've taken.
As a result, we're seeing roughly 100 basis point improvement in close rate, this year relative to last year.
That's the expectation.
We've seen good sequential progress through the quarters.
We saw sequential progress through the months of Q3.
As Robert talked about in his comments, good momentum as it relates to the consumer and the drivers of our industry, and each day our execution continues to improve.
So we feel good about the ability to drive and achieve or exceed the outlook we put forth for the year.
Thanks.
As always, thanks for your continued interest in Lowe's.
We look forward to speaking with you again when we report our fourth quarter results on Wednesday, February 24.
Have a great day.
