A：The consumer environment continued to pressure the housing market, with housing-related demand disproportionately impacting home improvement demand.

A：The company has revised its guidance for fiscal 25, and it remains focused on controlling what it can, with teams executing at a high level to grow market share.

A：The company recently completed the acquisition of GMS, a leading distributor of specialty building products. This acquisition further enhances the company's position as a multi-category building materials distributor, bringing differentiated capabilities and customer relationships.

A：Initiatives that have improved the associate and customer experience include the rollout of the freight flow application to all stores, which has improved efficiency, and the use of computer vision technology to reach record in-stock and on-shelf availability levels.

A：New tools deployed for professional customers include a project planning tool that allows for the creation of material lists, tracking orders, and deliveries, and a Blueprint take-offs tool that uses AI and proprietary algorithms for accurate estimations and material purchases through a single supplier, saving time and increasing accuracy.

A：The company's results were below expectations largely due to a lack of storms relative to historic norms, which notably impacted areas of the business such as roofing, power generation, and plywood.

A：During the third quarter, Pro and DIY comp sales were positive and relatively in line with one another. The company experienced strength across Pro-heavy categories like gypsum, insulation, siding, and plumbing, as well as in DIY categories with seasonal products such as live goods, hardscapes, and other garden products. Total company online comp sales also increased.

A：The speech mentioned recognizing several vendors for innovation, including leaders in cobratoxin, some Feather River, Milwaukee, Rayo, be fre, kita, Trager, and many more. It highlights the ongoing partnership with suppliers and the value they bring to both professional and do-it-yourself customers.

A：The merchandising organization is focused on being customers' advocates for value, which includes maintaining a broad assortment of best-in-class products that are in stock and available. It leverages strong vendor relationships and a best-in-class merchant team to offer top brands with innovation, increased functionality, and enhanced performance at the best value.

A：The acquisition of GMS added approximately $900 million to third-quarter sales, representing about 11 weeks of sales in the quarter. The acquisition's impact was reflected in the results, including a change in the composition of sales and additional transaction fees related to the acquisition.

A：For fiscal 2025, the company has updated its guidance to include softer-than-expected results in the third quarter. Total sales growth is expected to be approximately positive ions, with GMS contributing about $2 billion in incremental sales. The company expects a gross margin of approximately 33.2%, an operating margin of about 12.6%, and an adjusted operating margin of approximately 13%. The effective tax rate is targeted at about 24.5%, and the company anticipates a decrease in diluted earnings per share compared to fiscal 2024.

A：The revenue shortfall is primarily due to GMS making a smaller contribution to EBIT dollars than expected, which is tied to the absence of storm activity leading to lower sales. Additionally, there's an EBIT dollar shortfall because the company is not reaching the full amount expected from EBIT.

A：The inclusion of GMS is expected to have a 20 basis point year-over-year impact on operating margin, taking into account the decrease in comp sales from one comp to slightly positive. This will contribute to the previously discussed deleverage.

A：SRS continues to perform extremely well despite significant pressure in the roofing market with double-digit shipment declines due to the absence of storm activity this year. The expectation is for SRS to show some improvement in the supply and in operating expenses (Opex), leading to a revision in the fiscal year guidance.

A：In the upcoming quarter, Q4, there is an expectation of operating expense deleverage due to having 13 weeks of expense compared to 14 weeks in the prior year. This results in approximately 50 basis points of operating expense deleverage in the quarter.

A：Consumer behavior has been resilient, as the team registered a positive comp for the entire quarter despite a slowdown towards the end. Lack of storm activity was the primary driver of sales pressure. While the team had expected a pickup in demand in the second half of the year, particularly due to lower mortgage rates, ongoing consumer uncertainty and pressure in housing continue to impact home improvement demand. The team believes it is taking share and is focused on continuing to deliver a great value proposition to customers.

A：The slowdown in comp sales was primarily attributed to the lack of storm activity in the quarter. October was the most heavily impacted month with negative comp progression. The team had anticipated a pickup in demand in the second half of the year, supported by lower mortgage rates. However, this did not materialize due to ongoing consumer uncertainty and housing pressure. Adjusting for storm activity, the underlying business comp was flat in Q3 and is expected to be negative in Q4 due to continued storm-related pressure and the absence of catalysts to increase demand.

A：While certain economic indicators like GDP and PCE suggest strength, the home improvement sector is facing challenges due to ongoing pressure in housing and incremental consumer uncertainty. Low housing turnover and adjustments in home prices are contributing factors. Consumer segments remain healthy, but economic uncertainty, particularly related to living costs, is hindering an uptick in underlying demand adjusted for storm activity.

A：Promotional activities have not led to any trade down, and the modest increase in the average ticket was primarily driven by new innovations in the market. This increase is consistent year over year in Q3 and Q4. The fundamental demand in the business, while not increasing, remained very consistent with Q1, excluding the impact of storms. The company continues to see customers engage in projects.

A：The impact of GMS on operating expenses in Q3 and Q4 is estimated to be about 5 basis points of margin or 10 basis points of expense, which translates to about 5 cents of EPS for the year related to GMS transaction fees.

A：The inventory increases have been principally due to the inclusion of GMS in the balance sheet and the investments made, especially to enhance speed and delivery reliability.

A：Home improvement demand may recover based on factors such as home price appreciation and household formation, despite current pressures. The underspend per household and industry reports suggest there may be a cumulative under spend in repair and remodel activity in the U.S. housing market. However, the tension between lower turnover and home price appreciation needs to resolve itself as we progress through the remainder of the year and into the next.

A：The Home Depot has increased its fixed cost structure in the pro segment, with investments in wholesale-type capabilities and acquisitions of strong wholesale platforms. However, these investments are not significantly impacting the fixed costs, and there has not been a lot of incremental fixed cost put into the business to support the pro organic initiative.

A：The full-year guide should be considered the appropriate starting point for modeling future business growth, as Q4 has some noise from the 53rd week and the shape of the business, which is normally a significant low point from a volume perspective.

A：The 53rd week, being a year-over-year contract, does not impact the 2025 numbers but does affect the year-over-year comparison. It is a short-term noise factor that should not be considered when evaluating the financial performance for the upcoming year.

A：The speech suggests that there will be more robust tax returns and tax rates going into effect in 2026, which could indicate a positive story. Consumer uncertainty, particularly around housing turnover and prices, are described as near-term and newer phenomena.

A：Pro forma adjustments indicate that the acquisition of Srs will impact Home Depot's financials by approximately 40 basis points of gross margin and 20 basis points of operating margin. The pro forma impact accounts for a portion of the full year's effect but does not include all the steps in the mathematical calculation.

A：In fiscal year 2025, the ownership of GMS is projected to result in a 55 basis point impact to gross margin year over year, reflecting the ownership of both businesses. The operating margin impact is indicated to be 35 basis points.

A：Both GMS and Srs were impacted by weather, with no entity being immune to the broader weather impacts in the market.

A：The projected long-term impact of further consolidation is expected to lead to structural improvements or a recovery in margins as the company gains more bargaining power with suppliers. This will be driven by structural differences in the wholesale business versus retailing and the leverage of incremental sales and operating efficiencies across a larger business scale.

A：The deceleration in transactions is attributed to the storm impact, while the acceleration in sales tickets is related to strategic pricing moves to ensure project protection. The exact impact of these factors on overall elasticity is considered too early to determine.

A：The team's work during the quarter was praised, with efforts to protect the project and value in stores being highlighted. The inventory composition was also mentioned, indicating that over half of the inventory is not subject to tariffs and is sourced domestically. The company is closely watching the impact and is looking forward to the holiday season.

A：The positive performance of big ticket items is not seen as an indicator of a leading demand shift for big projects. Instead, it is attributed to individual item sales like appliances and power tools, and the pressure on commodities. Additionally, the strength in big ticket is related to the company's success in pro initiatives and capturing a larger share of bigger, Pro-oriented projects.

A：The data does not specifically show fatigue in the upper income customer base, but there is a regional impact noted due to storm and weather patterns affecting the higher income cohort.

A：The most acute regional differences are related to storm and weather patterns. However, no specific impact is seen in the higher income cohort. There has been some trade down noted in certain items like countertops, but not across the broader assortment in the store.

A：Yes, there has been a noticeable change with project backlogs for professionals starting to diminish. Pro backlogs have been reported to be a little bit softer and pros are booking months with fewer projects compared to having full books previously.

A：Improving the margin structures of GMS and Srs is an opportunity. The company plans to leverage synergies through cross-selling across the entire enterprise, including S, R, and GMS. The potential for future improvement is tied to the company's ability to drive cross sell effectively.

A：Cross-selling opportunities are ongoing and have been successful, such as the roofing sale example provided. The company does not rank order these opportunities but emphasizes the ongoing success of cross-selling between the Home Depot and GMS sales forces.

A：Srs and GMS have grown organically through existing branches, greenfield branches, and acquisition of customer lists and smaller regional operations. They aim to continue this pace, focusing on tuck-in acquisitions and organic growth. The model suggests a potential for continued success in branch expansion.

A：The storm had a basis point impact on same store sales in the third quarter, and it is expected to be a headwind in the fourth quarter and the first half of the next year. Fourth quarter sales are expected to have underlying flat results, similar to Q3, excluding the storm impact.

A：Housing pressure is a factor that influences the near to medium term outlook for Srs and GMS. The original mid single-digit growth expectation for Srs may need to be revised to low single digits due to the impact of storms and other economic factors. The company plans to provide more detailed guidance on this in a few weeks.