Lowes vsp program

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So there is truly a comp versus comp. As we think about the calendar impact if we modeled our comp performance, assuming the 13th versus 13th the other way, comps would have been about 60 basis points higher than we reported. So it would have been roughly 3. That's helpful. And on Bob Gfeller's comments, he gave a language, I'm not sure I heard before. It said and I think it was within a reasonable range of the nearest competitor for pricing.

Can you maybe you flesh that out and tell us what that means exactly or is there a way to think about that?

Sure, Budd. This is Bob. The reason why I'm using that phraseology is because our lens is wider as we think about our competitive set, as we think about being an omni-channel company. So traditionally, we would look at price competitive just against our principal retail competitor. But as we look at the value improvement program holistically, we have a wider lens.

So really depending on the category, depending on the product, we will be priced competitively based on what is a solid offer for the customer for that category against the relative competitors.

I think I had gotten a question before, we are certainly looking at Amazon and certainly looking at other retailers that play in categories that we also compete in and although they may not be core to those competitors. So it's just a broader lens as we look at being price competitive. One last note for you though is we have, as it relates to our principal competitor, looking at our price competitiveness as we said before, we've expanded the number of items we're looking at across our store, and we are very confident that we are priced competitively against that specific competitor.

And just one last quick one. Can you give us the big-ticket versus small-ticket comps that I think you've done in the past, I didn't hear that, Bob. The over , under 50 I think it was. Budd, I don't have that available. We can certainly call you back. Just responding to your question regarding what comps would have been, the spread across the months would have been much flatter than the reported comps. First question for Bob Hull. Can you maybe, if possible, shed some color on the performance of the southern markets, where one would probably expect that the weather did not have as profound an effect from month to month relative to the corporate average?

As Bob Gfeller spoke, the Northern markets had the best performance early in the quarter and it trailed off, both at the end of the quarter. The Southern markets were the most consistent performing in the quarter, typically, right at the company average for most of the quarter.

Second question for Robert Niblock. On the VSP program, it sounds like the charges being a little bit greater than your anticipation implies that more people took the program and what you had originally have thought.

First, if you can confirm or deny that. And then maybe just a little bit more color as to where specifically you saw most of the people take this program, what divisions and categories were they in? As far as -- we haven't built anything into our guidance for the year for VSP. So we wait and see what the impact of that was and traded accordingly. As far as the magnitude of it, I think we have those people that took VSPs. As you know, it was really a program for the corporate office structure.

And I think as we look through the number of people who took it, the years for which they took it, I'd say I'm pleased about the impact and what we accomplished with the VSP. It was pretty broad based across the organization, where we saw people taking the VSP for a number of different reasons, people may have been in different life stages and provided them opportunity to do something different. That other thing was, in the last 18 months, we've changed dramatically. Our expectations of leaders in the organization.

So it really is a different company that they're working for today. It was 18 months ago, let's say, so that did provide people an opportunity if they wanted to move on because they weren't fully committed, let's say, to the direction we were heading. So as we looked across the organization, the people who took it really pleased with the outcome, really pleased with the way that it shaped up. And as far as getting into pretty broad based across the organization, I don't really want to get in particular areas as to where people took the VSP or not, but overall pleased with the results.

And one last question, if I may. With the respect to ATG, I remember you folks said that you're going to kind of lay off of them for the first 90 days. Now that we've kind of passed that mark, what changes, if any, are you making to the integration of ATG with your brick-and-mortar presence? Alan, this is Greg Bridgeford. ATG is -- our primary focus with ATG is really to enable the processes that they have fine tuning through the years to quickly add items and make it into meaningful assortments for our consumers to be able to leverage those processes over to Lowe's core models for the purpose of expanding the reach and the impact of lowes.

So if you look at that, that's working well, and we are adding items at a faster rate. We're learning their processes. We're keeping it very focused. Our interaction with ATG, as you said, there's some firewalls around it.

So 2 focus areas, keeping a pretty tight rein on any distractions for ATG, which operates at the business model very effectively and getting the leverage we expected. Can you provide a little more clarity on what is driving the delay of the implementation of the line reviews by 30 days? And are you seeing any greater disruption from the process that's impacting your sales than you previously anticipated?

Michael, this is Bob Gfeller. I'll give you a little more color around that. So we've got the accelerated line review process, which is the upfront piece that the merchants are working them through and then, of course, we've got to execute the resets. We always knew this was going to be test and learn as we kind of move through because we're taking on such a challenge.

And the 2 key learnings are really from a capacity of just workload from the number of line reviews we're going through, we've talked about almost line reviews completed by, really, the end of this year. From a quality standpoint, number one is, we wanted to slow it down to make sure we're utilizing the analytics as best as we possibly can from the merchandising standpoint, number one.

So that's the integrated planning execution tool, the efficient item assorting tool, number one. Number two is, there's a lot of work to be done when you move the reset. And because we are making significant changes in SKU assortment, in price progression and in some cases, presentation, our learnings to date have been, let's make sure that those handoffs are smooth as possible so that we make sure that the presentation to the customer is as good as we expected to be when we model the results on paper.

So the reason why we're hedging a little bit more into the lead time is because as we move through these first few resets, as we're just kind of learning as we're going and we want to make sure that we give it enough time so that the results are what we anticipate. And as you think about the quarter, how long do you think the impact from demand being pulled forward is going to influence your comp trend?

And was the impact from being less promotional about what you expected for the quarter? So Michael, this is Bob Hull. The comp impact from the big ticket was about as we expected. Deep promoting, we expected that's less of an impact in Q2. As I mentioned earlier, there's a lot of promotional activity in appliances specifically to Q1.

So less impact of deep promoting in Q2. As it relates to the pull forward, we estimate that the impact on Q2 is roughly 40 basis points, so not terribly significant. And then earlier Budd had a question on ticket bucket performance. I was able to run to my office and grab that information. A couple of things. First, just on the week shift, Bob. Maybe help us what you think the sales impact's going to be in the second quarter as you start to get back some of the benefit you got in the first.

How is May to date? And then what's been the competitive response to that? And how should we be thinking about the promotions year-over-year as we move throughout 2Q and beyond? So Peter, I'll start with the first few and let others chime in. As it relates to the week shift impact, there really is no impact for the year. May has started off as expected. As it relates to Q1 promos, as I mentioned, the biggest impact on the big-ticket promos was in April, roughly basis points relative to the basis points for Q1.

And then your last question dealt with competitive response. And Peter, this is Bob Gfeller. Just one other point on the big-ticket promotions in April, as I think we mentioned in the scripts, these were conscious decisions because we are moving back to EDLP. Some categories will be EDLP plus. But some categories don't need to be promoted at the depth that we did last year. So it's really a depth issue on appliances, Millwork, where we frankly bypassed some big offers that we had last year.

From a competitive -- one other point on that as well is, the merchants upfront as they're looking at their lines, they are critically looking at the profitability promotions they run in the past.

And as Greg said, they are making hard decisions not to repeat where it wasn't a profitable decision that was right for the customer.

That's happening all throughout the quarter inclusive in April. And as it relates to the competitive response, the competition quite frankly is doing -- they're executing their plan and we're executing our plan. We're certainly keeping an eye on it, but we did make some decision to make sure that we stayed on plan because we think what we put in the marketplace was still competitive to address customer needs.

And as Greg said, in the second quarter looking at the promotional and medium mix, we think is going to help us move into the second quarter on plan. My first question was with regard to the strategy behind fewer promotions on big ticket.

I'm just curious as you consider the EDLP approach, if that's necessarily the right strategy across the store and whether or not you're seeing others in the industry pull back on promotion and big ticket? You mentioned that the customer is constrained, and I'm just curious if it's accretive if you do promote that particular area of the store, would you reconsider?

Dan, I'll start, and then I'll get Bob Gfeller to jump in. As Bob explained, yes, there are still certain categories, certain times of the year when we will be promotional. It's all about rationalizing that promotional cadence. So, for example, as he described in the first quarter, it was about going less deep on certain promotion such as appliance.

So it's really rationalizing that as we're moving back to EDLP, rationalizing the promotional cadence across the store, looking at the profitability of promotions previously, looking at which categories we think need to be promoted, which ones the customers most likely to expect to be promoted or we'll respond most likely to those promotions.

We anniversaried that in April of this year for the consumer. And for the commercial customer, we'll anniversary that in the second quarter.

And that's what Bob and the merchants have been working through in this process. And Dan, just to build one other comment around Robert's point.

Robert's scripts talked about the stages of home improvement. And when we think about these big-ticket categories, both merchandising and operations, we need to sell the project. And so one of the other things that we are trying to look at critically is how do we use more than just price promotion where we bring in the value proposition, where we bring in the exterior selling solutions, where we bring in the technology to make the experience simpler for the customer.

This is all about how we kind of encircle the project and sell the project in totality. So that type of a mindset is what we're trying to look at as we go forward so that, again, we move from just a product promotion to more of a project selling mode. And so that's something we're looking at based on selling across the stages and addressing customer needs. My follow-up question was on the credit.

Credit has been doing well for a while. Portfolios, in general, have been experiencing lower losses, lower write on. I'm just curious, as you look forward, what kind of leverage you would expect out of credit based on your current comp plan as we go through Qs 2 through 4. So Dan, as Robert said, we cycled for the value proposition.

We cycled the consumer piece in April. We cycled the commercial piece in July. So for the year, we do expect the credit program to generate leverage 30 basis points for the year, which is lower than the 63 we leveraged in the first quarter, principally, due to losses. So we'll still see benefit for the year, but to a lower degree than we saw in the first quarter.

Interested on the line review process. Bob Gfeller, I know you're in a new position now, so I'm just curious how that process is being managed related to the management change? Went to Lowe's on Friday and got a Quote from the Pro desk. Would I have better luck with pricing if I go to a lowes in a major town? Because right now I'm haven better results just going Ordering normal.

The QSP seemed so confusing to me as well! I found that there were two ladies at the pro desk that were dialed in and knew the program inside and out.

Then the were many other attempts where I got a different cashier and it was like we were speaking another language when I showed them my QSP sheet with the items I wanted to take that day.

It will save time in the long run and the more items on the QSP the more discount they can apply. I did two separate one and the first was with one of the gals who really understood it and set it up so I could purchase the items as I went along. The second one I had a different guy at the desk, he was not familiar with it, he set it up as a single purchase and then said he had to do it completely different and it was literally over an hour of sitting at the pro desk waiting for them to figure it out.

As far as purchasing I'd just try to find the one person who understands it and try and learn their schedule and only deal with them. I started letting people go ahead of me and waited so I could deal with the cashier I wanted. I have saved tens of thousands on Lowe's QSP program. The key is to have large quotes, so put all you need for your project in it.

As you use it, you may elect to not put the low percentage items in the QSP. The larger the quote or the more per item number, you get a bigger discount. Sometimes there are sales like you saw and QSP can't touch it.