best outdoor gas grills The Home Depot's CEO Discusses Q4 2013 Results - Earnings Conference Call Transcript
Home Depot Limited(New York Stock Exchange: HD) 2013 earnings call for the fourth quarter, held at zero o'clock A.M. on February 25, 2014Frank Black, vice president of investor relationsChairman and chief executive, craig Menear-Carol Tomé, executive vice president of procurementChief Financial Officer and Executive Vice President, company services analytics-Wolf search Eric Bosshard-Dennis McGill, Cleveland Research CenterKate McShane-Selman and societyCitiScot Ciccarelli-Royal Bank of Canada Capital MarketSeth BashamWedbush SecuritiesJaime Katz-Morning Star Greg merrichMichael lather of the ISIDeutsche BankKeith Hughes creditRifkin-Hello everyone, welcome to watch today's Home Depot fourth quarter earnings conference call.Today's meeting is being recorded.Ms started today.Diane Dayhoff, vice president of investor relations.Please continue, madam.Diane DeHoff, thank you, Lisa. good morning, everyone.Today, Frank Black, chairman and CEO of Home Depot, joined us;Craig Menier, Executive Vice President, Merchandising;Carol Tomé, chief financial officer and executive vice president of corporate services.After we have prepared the speech, we will open the phone for the analyst's question.The problem is limited to analysts and investors.As a reminder, we would be very grateful if participants limited themselves to an issue and follow the steps belowup please.If we are unable to answer your question on the phone, please feel free to call (770) 384-2387.Before I transfer the call to Frank, let me remind you that today's press release and our executive presentations include forwardingOutlook statement as defined in the Private Securities Litigation Reform Act of 1995.There are risks and uncertainties in these statements that may lead to significant differences in actual results from our expectations and forecasts.These risks and uncertainties include, but are not limited to, those factors identified in the distribution and in our submission to the Securities and Exchange Commission.Today's speech also includes someGenerally accepted measurement.The coordination of these measurements is included in the version and is available on our website.Now, let me transfer the call to Frank Black.Thank you, Diane. good morning, everyone.Sales in the fourth quarter were $17.7 billion, down 3% from last year.The fourth quarter of this year is 13 weeks, and the fourth quarter of last year is 14 weeks.Excluding the week of 2012, sales rose by 3 in the fourth quarter.An increase of 9% over the previous year.Comp sales are 4.Diluted earnings per share were $ 4%.73.Our U.S.Sales at the store are 4.9%.From a geographical point of view, 17 of our 19 AmericansS.Positive competition was announced in the region.The two regions with Comps being negative are New York and New Jersey, which overlap the strong repair sales brought by Hurricane Sandy last year.Balance our positive performance in the western and southern divisions, and even under pressure from New York and New Jersey, our northern division also responded positively.We added ticket and comp transactions during the quarter, improved inventory turnover and maintained a focus on cost control.Sales of our professional customers have increased for another quarter.Adjusted for the impact of the hurricane, pro and consumer growth rates were the same for the quarter.The Marvin & Operations team continues to focus on improving the experience of our professionals.We launched the Pro Xtra project last fall.With Pro Xtra, our professionals can buy their products, take advantage of exclusive products and get useful business tools.Logo of speedUps has increased, more than 10,000 per week, and we will launch new features for our professionals in 2014.In the merchandise sales that Craig will detail, we are pleased with the results of our Black Friday holiday and Gift Center events this quarter.We saw strong growth in connected retail, with dot com sales growing by about 50% on a 13-week basis.As we continue to improve the experience of the entire website, mobile and tablet, our online customer satisfaction score has improved and we see a faster conversion rate.To support our interconnected retail efforts, we recently opened the first of three new direct fulfillment centers.Each facility will have the capacity to accommodate up to 100,000 SKUs and will be shipped directly to customers.We already have the convenience of 2000 all over the country, can buy online, can also return or pick up goods in instore.These facilities will now expand our capabilities to ship on the same day that most orders are received.As another part of our interconnected efforts last month, we got a blind eye.com.We are very excited about this acquisition, Blinds.Com is the leader in the online curtain market, providing customers with a compelling shopping, sales and service experience.In addition to our belief that they will bring us strength in this category, we also believe that they can help us develop first-class capabilities to sell custom, configurable products online.Most importantly, their corporate culture fits well with Home Depot culture.On the international side of the local currency, our Canadian business is higher than the company's average.Just last week, we opened the first of two new Canadian rapid deployment centers.Our Mexican business has received positive returns this season and has achieved positive salary growth for 41 consecutive quarters.Throughout 2013, we went beyond our plans.On the basis of 52 weeks, our sales increased by $5 billion.We have the most transactions in the company's history, and our best annual comp sales have increased since 1999.From our two-year cumulative rate, we have a very consistent double-digit increase in sales per quarter.With the help of our suppliers, the company is able to respond effectively to this growing demand while maintaining a tight operational focus.Carol will detail that we expect sales to grow by 4 for 2014.Diluted earnings of $ 8% per share.38, a 16.5% increase.2014 of GDP is estimated to require a low orderTherefore, 2014 of our guidance is based on the housing market as a continuous downwind for our business.We do not believe that all housing indicators will maintain growth rates from 2013.There was a particularly strong recovery in house prices last year, but we do expect the recovery to continue. Although house prices will rise at a lower rate, it is expected that house prices will support the growth of the home improvement market.Year-over-Private investment in fixed housing increased to 3 per cent of GDP.Fourth quarter 1%.This is still well below the 60-year average of about four years.6%.Finally, today our board of directors announced an increase of 21% to $0 in our quarterly dividend.47 per share.This is the fifth dividend increase over the years and is also 50% of our target dividend payment income.We are still committed to limiting capital allocation and creating value for shareholders.We will invest to maintain and develop our business, our intention is to increase our dividends every year, and we will use our excess cash to buy back shares.Finally, let me thank our colleagues for their hard work and dedication.I would like to thank all of our colleagues in particular for helping their clients and communities through the most recent winter storms, usually in the most difficult situations.This is a good reflection of everyone's hard work, 100% of our stores are eligible for successful sharing, a profit sharing plan for our hourly staff.We have created a record of successful spending sharing for the full year of 2013, nearly $1 billion.We are proud of this outcome and look forward to continuing this momentum in 2014.Let me transfer the phone to Craig.Thanks, Frank.Good Morning, everyone.We are satisfied with our performance in the fourth quarter, although the sales composition in [Dr] countries is very different.The sectors where the fourth quarter results exceeded the company's average pay were indoor gardens, kitchens, outdoor gardens, plumbing, electrical and tools.Excellent performance in toiletries, paint, decoration, lighting, flooring, wood products and wood.Comp sales for building materials are negative, reflecting a difficult yearover-A strong annual comparison of bookings [ph.Sales during the quarter were driven by major events, including our excellent Black Friday and strong guest center, as well as a flexible response to seasonal categories including winter preparation and decorative holidays.As Frank mentioned, the weather has some effect on our anniversary salesEd last year's Hurricane Sandy sales and the fourth quarter of this year suffered severe winter storms at the coolest temperatures recorded in the Midwest and Northeast.Therefore, our northern division has experienced negative competition in outdoor project categories such as wood and building materials.This negative effect was partially offset by positive performance on the weather side --Related categories such as portable heating, water pumps, weather stripping and snow removal equipment.In countries and regions that are not affected by bad weather, we see the strength of the entire store continue to increase.Nationwide, including our Northern Division, comps in maintenance and repair categories such as pipes and fittings, air circulation, cleaning and HVAC are above the company average.We also saw the continued strength of the bulbs, where sales doubledFigures for the fourth consecutive quarter are being compared.Continuous innovation in LED technology is being adopted more and more widely by our customers and expanded to other categories in the store, such as decorative lights and safety lights.The categories traditionally dominated by our professional clients also performed well.For example, the price of size wood, insulation, concrete, pneumatic fasteners is higher than the company average.As I shared with you last quarter, we carried out several initiatives to drive sales.During the decoration festival, we launched some new products, including our pre-lit trees.While the holiday sales season has been shortened by one week compared to 2012, we have driven positive competition in these categories, including our online channels.Thanks to our amazing values and the execution of our colleagues, we have one of the best sales --Through interest rates.Sales on Black Friday were the highest on record, and sales at the gift center exceeded our plan.Driven by our supplier partners, excellent exclusive offers enable us to bring our products to market first and achieve outstanding performance in accessories, tools and portable power supplies.Total Comp transactions increased by 3.The season was 3%, while the average ticket rose by one.1%.The impact of commodity inflation on ticket growth was generally flat.Transactions below $50 per ticket account for about 20% of our USS.Sales rose by 2.Fourth quarter 5%.More than $900 per ticket also represents about 20% of our USS.Sales rose 5.Fourth quarter 5%.The driver behind the increase in big ticket purchases is the continued recovery of electrical appliances and our professional customers.Now, let me turn my attention to the first quarter.As we enter the spring sales season, we are excited about the opportunities we have.Our new classification planning tool provides us with the ability to optimize classification locally and helps us to better prepare for spring.As we all know, spring is our biggest sales season.Therefore, we will hold the Spring Black Friday event for the fifth consecutive year.Working with our suppliers, we plan to bring special buyers and extraordinary value to popular spring products such as patio furniture, grill, landscape and daily necessities.In addition, we are excited about the new products our merchants add to our products.In the outdoor life, we launched the high-end courtyard furniture of Brown Jordan, which can be bought online and displayed in some of our stores.This exciting new product allows customers to customize furniture and fabrics to suit the fabric selection of Sunbrella.We have also added five new collections to the core terrace, which will expand our range of products and provide more options for our customers than ever before.On the grill, Weber's newly launched gourmet barbecue system exclusive Spirit series provides our customers with a variety of accessories to enhance the barbecue experience.In addition, we have added charcoal and gas grills from KitchenAid to expand the new brand.The new feature of the outdoor power supply 2014 is a full range of cordless power supply provided by Eagle, including mower, string trimmer, hair dryer and hedge trimmer.These tools are powered by 56 V LithiumCompared with other batteries in the industry, the power of ion batteries has increased by 40%, and the charging time is significant, which allows the battery without electricity to be fully charged within 30 minutes.Although we are ready for the outdoor spring sales season, we also provide a strong product lineup for projects within the home.The ActivTouch H20 manual shower for Delta is a new product for Bath that combines the fast [ph] shower head and manual shower with 9 spray settings and is easy to use with the ActivTouch technology,In addition, by working exclusively with polar [ph], we are launching a range of new bath products including toilet seats with integrated LED lights.For our professional customers, we will launch a new water heater from Rhine with innovative features and improved diagnostic control.The energy consumption of these water heaters is reduced by 10% compared to the current model, and the available hot water is increased by 25%, saving time and money.In addition, many of these models have reached the energy specifications of 2015 units a year in advance, which is owned exclusively by Home Depot.Entering the 2015 spring sales season, we believe everything is going well.Positioning, and excited about the opportunities it brings.With this, I would like to transfer the call to Carol Tomé, thanks Craig.Good morning.Fourth-quarter sales were $17.7 billion.As Frank mentioned, fiscal 2012 included 53 weeks, an increase of about $1.Sales in the fourth quarter and throughout the year were 2 billion.The extra week is not included in our sales calculation for 2013 comp or the same store.Comp sales are 4.At 4% this quarter, positive competition was 3.7% in November, 6.It was 9% per cent in December and 3% per cent in January.Comp sales in the United StatesS.The store is positive 4.This quarter was 9%.Positive comps with 3.7% on November, 7.December 8% and 3.8% in January.Our sales have increased by 5 this year.4% to $78.8 billion.Excluding sales for fiscal 2012 for 53 weeks, total sales for fiscal 2013 increased by 5.2%.Total comp sales this year is 6.8% and comps in the United StatesS.The store is positive.5%.Our company's gross profit margin for the fourth quarter was 35%, much better than our plan, 10 basis points higher than last year, of which 14 basis points from the United StatesS.business.The year-over-Our annual expansion in the United StatesS.The business can be described in the following ways.First of all, due to productivity within the supply chain, we have experienced a gross profit margin expansion of 6 basis points.The expansion of the remaining 8 basis points reflects the net impact of changes in the sales portfolio, in some cases, co-As we reached a higher level of purchase, op and rebate levels were higher than last year.In this year, we have experienced a gross profit margin expansion of 18 basis points.Operating expenses as a percentage of sales fell by 26 basis points to 25% in the fourth quarter.Excluding additional weekly operating expenses from last year, the percentage of sales fell by 554 basis points.Operating expenses accounted for 23 of sales in fiscal 2013.1% is 106 basis points less than we reported last year.On the basis of 52 weeks, our expenses increased by 32%In line with our guidance.Interest and other expenses in the fourth quarter were $0.178 billion, an increase of $80 million over last year, and interest and other expenses for the whole year totaled $0.699 billion, an increase of $0.154 billion over the previous year.The increase in interest spending is mainly due to the $4 billion incremental debt issued in the fiscal year 2013.Our income tax rate for the fourth quarter was 36%, 36.4% throughout the year.Diluted earnings per share for the fourth quarter were reported to be $0.73 increase of 7.4% more than last year.On a 13-On a weekly basis, earnings per share increased by 19 after dilution.7%.According to the report, the diluted earnings per share for this year are $3.76, an increase of 25.Compared with the previous year, 3%.On a 52-On a weekly basis, earnings per share increased by 28 after dilution.3%.Last comment on earnings per share, you will remember that in fiscal 2012, we had a $0.145 billion non-Recurring charges related to the closing of our Chinese stores, which is $0.Negative impact on diluted earnings per share for fiscal 2012.We provided a supplementary schedule in the press release setting out a year --over-Compared to the year in which this fee is not charged.Now, move to our operational metrics.In the fourth quarter, we opened three new stores in Mexico and one in the United States.S.It ended the year with 2,263 stores.At the end of the year, the sales area was $0.236 billion, the same as last year, and sales per square foot increased by 4.9% to $334.By the end of the year, Inventory was $11 billion, an increase of $0.347 billion over a year ago.Inventory turnover is 4 times.6 times, from 4.Five times last year.Continue our stock repurchase program.We received 3 in the fourth quarter.4 million shares related to true-We launched an accelerated share repurchase or ASR program in the third quarter.Also, we bought back $2 in the fourth quarter.1 billion or 264 million shares.This includes 7.Open repurchase of 5 million shares-market and 18.9 million shares were bought back through the ASR program, which was launched and closed in the fourth quarter.We bought back $8 in total this year.5 billion, 111.3 million shares have been issued.Calculated based on the average of start and end long-In the last four quarters, the return on investment capital was 20 for regular debt and equity.9%, 390 basis points higher than the end of fiscal 2012.We detailed our 2014 guide in the press release, but I would like to take a moment to comment on the highlights.Keep in mind that we deviate from GAAP, so the guidance for fiscal 2014 will be rolled out from the results of fiscal 2013 we reported.Looking forward to 2014, we will start with GDP growth forecasts and establish sales growth assumptions.S.It's about 2.8%.We are also predicting that the United StatesS.In 2014, the housing market, the rise in house prices, the structure of households and the volume of housing transactions, will contribute about 200 basis points to comp growth.Despite a slowdown in macro and housing data over the past few months, we still believe that we are at a moderate stage of housing recovery.As Frank mentioned, housing prices are still attractive and we continue to see a rise in house prices, which is positive for our business.We expect comp sales to grow by about 4 this year.6%, total sales growth of about 4.8%.Some people may think that this is just below the guidance of table 2014 for US in December 20.While there has been no substantial change in our economic outlook, we did adjust our 2014 plan to reflect a weaker Canadian dollar than last year.I will also note that the extreme winter weather of February is not our friend, but our competition in February is positive and we know first hand that many homeowners have some overhaul in front of them, this shows that we should have a good spring sales season.For 2014, we do not expect gross margin expansion that is consistent with our intention to leverage cost savings to support recovery and growth in the low-margin product category.In terms of expenses, we predict that our expenses will grow by about 33% at the rate of sales growth.This year, we expect our operating margin to grow by about 70 basis points and diluted earnings per share by about 16 basis points.5% to $4.38.Our earnings per share guide includes our plans to use excess cash to buy back some $5 billion of outstanding shares within a year.Our 2014 capital expenditure plan is about $1.5 billion, an increase of 8% over our spending in support of Connected Retail in fiscal 2013.This year, we expect about $8 in business cash flow.8 billion.We will invest in our business in cash and return capital to shareholders in the form of share repurchase and dividend.Our commitment to shareholder returns remains a sign of Home Depot, except for the fact that we bought back $5 billion in outstanding shares in 2014.As Frank mentioned, we have just announced a 21% increase in quarterly dividends, equivalent to a $1 dividend per year.88 in-Consistent with our target dividend payout rate of 50%.So we thank you for attending today's conference call, Lisa we are now ready to ask questions.Question-and-Answer session operator ).We will get the first question from Aram Rubinson of wolf research.Aram Rubinson -Wolff research I would like to ask you a question about growth, in addition to the recovery, companies in many cyclical businesses will turn to acquisitions when economic growth slows.Wondering if you could tell us a little bit about your interest in acquisitions, as it is today, and as you have seen a few years of economic easing, how do you think this will develop?Frank BlakeI will also have Carol comment on this, but I will say what you see now from us, and what I hope to continue is, we don't actually use acquisitions as a complement to sales growth, but as a complement to capabilities, we think it's important to increase our capabilities, and I expect that to be the case.Carol tomes is indeed Aram, and we have a filter on how they can support our existing business by looking for opportunities for growth through acquisitions from this perspective.So if you look at the blindsCom our recent acquisition is not only that we got a really great online configurator, much better than what we have, we also got another [ph] call center where people know how to end the sale.This is the business we believe has great potential for growth.Aram Rubinson -Wolff studies the company, so growth will not be a recovery after the acquisition, will we focus more on stock buybacks? More information about increasing leverage, or if you would like other innovations to point to us and think about what it will look like in five years.Thank you.Frank BlakeSo Aram we also often consider sharing and expanding categories in our stores to increase the productivity of our stores, we have actually gone through quite a long time, our market is not growing and we have some experience in generating a positive compensation growth market even in flat housing.2010, 2011 is not friendly in the real estate market, we are full of confidence in this.We're going next to Eric boshod from Cleveland Research.Eric Bosshard -Cleveland researchers want to know if you can make a point about your current recovery in a modest space. Have you reviewed the past three months or the past six months?Whether it's in categories or price points, or in the field of discretionary transformation, the consumer needs and appetites you see are different.But how do you see this development, if there has been any change in intensity or demand areas over the last three months, relative to the previous three months (unrecognizable ).Frank blakso Eric once again asked Carol to comment on some of the macro things we are seeing, but I will also say before that, it's hard to sort out these conclusions from a quarter, and for us, a lot of particularly unusual weather and some unusual overlap.So, as Carol mentioned in the comments, we do think housing is a downwind, but probably not as good as 2013, but if you look at the last quarter again, it's hard to sort out some details about this.From a macro perspective, we believe that housing will contribute to our growth next year, and we are about 200 basis points.In our view, it contributed about 250 basis points in 2013.Rising house prices are the biggest driver.House prices have doubled in the past few yearsWe're not predicting this number.In 2014, we think they will rise by about 6%.Now, they have 21% of the time to do some preference for Conservative prospects before house prices return to peak, but we think it is realistic to make a plan.One of the comments I might say about consumers and Craig is that when we look at sales against good, better, best open price, all the way, we see premium products growing in all four quarters, including the previous quarter.So it's not true in our view, I think the consumer changes, I mean, there are definitely other interruptions, but the consumer doesn't seem to really change.Craig MenearNo, not at all.As Carol mentioned, we saw the opportunity to rise.I think another comment is that we have shared our Pro for the last few quartersBusiness has been recovering.So you will see that growth in categories such as wood and building materials is not that strong during the historically depressed period.Eric Bosshard -Cleveland Research CenterThank you very much.Thanks, Eric.We will answer the next question from Dennis McGill of Zeman & Associates.Dennis McGill -Good morning, Solman and associate ateshi.I guess the first issue you notice is the area that is not affected by the weather, I think there is very little sustained intensity between the two, can you put the numbers behind, or if you look west, the snow there is very heavy (invisible )?Frank BlakeSo Dennis in the Western Division is our strongest division with the least impact on the weather.Dennis McGill -Zelman & associate and I guess when you say stay strong, is it fair to say that comps are comparable than in the previous quarter?What I want to say is that our company is about twice the company average.Dennis McGill -Sorman and associate atessokay, this is helpful.Then Carol, I think you mentioned that the gross profit margin is much higher than the plan, and you are a little bit experiencing the leverage there compared to a year ago, but where is going to be driven up relative to the plan, and how does this factor enter the flat prospect of 14 years?Carol TomeSure.You remember we were anniversary.Strong sales from Hurricane Sandy.We have sales of about $0.235 billion.ied.Nevertheless, we have made a plan to increase our building materials sector year by year.on-year.As Craig points out, it's not growing year by yearon-year.This is good news from a profit margin perspective, as we benefit from lower penetration rates in lower margin categories.So this is a big change.Another change is the purchasing peers we encounter in certain categories, which is just a function of the requirements.So we have a new purchasing layer in refrigeration, installation, pipe repair, we have no plans, which gives us a higher level of cooperationop and rebate.Dennis McGill -Solman and associate atessokay, perfect.Thank you.Best of luck.Thank you, Carol Tomei.Thank you, Frank Blake.We're going next to Kate McShane at Citi.Kate McShane -CitiThank you.I hope to follow up.Regarding the previous question asked about the trend of the real estate market, Carol, you always express your thoughts on the changes in the environment, I would like to know if you can increase your perception of any opportunities for relaxing the pipeline to work or lowering the FICO score, and how does that affect your guidance?Carol TomeYes.We have always believed that credit supply is the main driver of the housing recovery and the formation of the recovery curve.We are very encouraged by what we have seen at Wells Fargo.Wells Fargo has announced that it will reduce the FICO score for FHA loans from 640 to 600 now.We think this is especially good for new families who buy the first home, and when you consider the affordability curve, it's also a good new story because if you look at an affordable area, A $100,000 mortgage, which would be a good mortgage for FHA loans, the FHA loan has been in the range of affordability until the mortgage interest rate reaches 9%.We are therefore encouraged by this.So we 've also heard other lenders start talking about relaxation, which is still a very stressful environment, nothing wrong, but there are encouraging signs.Kate McShane -Thank you. thank you.If I can keep up soonAccording to the weather, regarding sales in the expected region, how much do you think will be pushed up in the first quarter, and how much do you think will be lost at this point?Frank brachley, we did not see any loss at this stage of the game.Obviously this quarter has been very, very early and we are going through a more typical way of selling winter operators and we will answer the next question from Scot Ciccarelli in RBC Capital MarketsScottish peopleRBC Capital market scarol I know you mentioned some macro factors, but are you particularly concerned about some factors now, I think when you talk, both Frank and Carol refer to PFRI as a percentage of GDP as 3.1 The long-term average today is 4.Is it realistic to return 6% to 4?6% or more, given the current environment and current GDP size, what do you think is the realistic goal of overtime?Frank blakso Scott talked about our concerns about Carol, and he just had a discussion about one of the long-standing concerns, that is, the supply of credit and the indication that we are starting to see some improvements, but this is certainly a key factor in our focus on PFRI recovery and whether PFRI is back to 4.6% the economist will tell you that there is a tendency for things to return to average, but there are always exceptions to the rules.It will take a while for us to do this.Another thing I would like to point out is that what we are looking at is that family information I am weak, but when you consider whether it is so weak and go back to credit availability.So we need to get these millennials back home and again be very happy with what we see at Wells Fargo.Scottish peopleRBC Capital Markets so basically credit is what you see driving all the other data, whether it's turnover, house prices, etc, you think this will be the main reason why we call it Delta in this equation.I mean, the underlying engine is still job growth and we need people to find jobs.We need GDP growth and then we absorb more, I mean there is no excess capacity in the real estate market.We actually have very, very low inventory levels.So if you have employment growth, and if you have GDP growth, then another key factor to focus on is the supply of credit.We will be at the back of Laura Pina Canaccord OperatorAnd Genuity.Laura Shang PingCould you please comment on your market share trends for the quarter?Frank blakkeyes, so if you look at the 12 basis points of the roll, we're up about 35 basis points to 26 basis points.5% based on data from the New York Stock Exchange, when we look at third-party data that tracks consumer spending only, we have about 10 categories or departments in 22 key categories or departments if you wishSo 22 classes in 10 departments.We are therefore pleased with the fact that we continue to expand our share.We will answer the next question from Seth Basham with Wedbush Securities.Seth Basham -The Wedbush SecuritiesFirst question is also about share earnings, can you help us understand what's going on with the appliance, and how much of the appliance you have in recent quarters is clear?Frank blake, when we looked at the most recent quarter, it again showed based on third-party tracking that we had a share of about 180 basis points in that quarter, this ratio is about 170 Rolling 12 points, which will obviously exceed four quarters.Carol TomeAppliances contributed about 60 basis points to our comp growth this quarter.Seth Basham -Secondly, if I can follow up --On the macro side, if you think the supply of credit is relatively tight and you look at indicators such as the ratio of trade, debt to income and limited companies, these are all related to norms in the past.So, how do you correct this based on other aspects of credit availability?Carol tomes if you work in a financial institution you suffer billions of dollars in losses and your interest rate environment is so low that it's hard to write a book.I mean, it will be shy and you will be very cautious about underwriting.I can imagine, as financial institutions will tell us.So while there is, it's a better lending environment, and I suspect that's why banks are starting to signal that they are willing to change, which is a tough path for these people.We will go next to Jaime Katz of the Morning Star.Jaime Katz -Good morning.Thank you for taking my call.Can you guys comment on the next Canadian business situation and add a little color?Then, maybe talk about how you guys plan on marketing to a professional business this year to grow the business faster?Frank Blake.Jaime, on Canada and Mexico operations, first commented on Mexico, which, as I said, has achieved positive comp growth for 41 consecutive quarters.I mean, this year's performance, that's what we said, we didn't spend much time thinking about it, but this year, in the case of the Mexican economy, this performance is really unusual and it has undergone major adjustments and major adjustments that are very focused on the changes in housing policy.Therefore, we are very satisfied that our business has not only performed well in history, but again this year in a difficult environment.Then in Canada, adjusted to foreign exchange Canada's comp growth in the fourth quarter was stronger than the company's average.Again, we are very pleased with the state of our business in Canada.We feel good about ourselves.In this competitive environment, this has received positive returns for several consecutive quarters.Jaime Katz -Morning stars and marketing professionals?Frank BlakeYes.From the pro point of view, Frank mentioned our project to launch Pro Xtra, which we were excited about, and we signed 10,000 customers a week, where the momentum was strong.In addition, we are happy with our mobile app in pro, which allows us to really help our professionals to run a better business and take advantage of some of our online tools, connect our professionals in virtual and physicaland-Mortar positionSo beyond that, we will continue to be aggressive in the traditional way of advertising, like broadcasting, which resonates well with our professionals, but ultimately for professionals, it's about something basic, that's convenience, our great service, they get in and out fast and have high value, and we're going to focus on these three things as well.Jaime Katz -Thank you all.Nice quarter.Thank you, Frank Blake.Thank you, Carol Tomei.We will answer the next question from Greg Melich of the ISI Group.Greg Melich -ISI GroupHi, thank you.Two questions.One is the comp trend for the whole quarter, and by this quarter, I'm surprised how strong it was December 1 years ago, can you explain what this is and the impact of Sandy? It looks like January is the weakest month of the quarter, how much of it is weather, and how do you think these trends look at February?Frank brekes has something to do with December, let me talk about it first, and as I mentioned in my comments, we have a record Black Friday.Our gift center sales exceeded our plan.The incident was an important part of overall sales in December.We had a wonderful season because it had something to do with our decorative festivals and wild trees.Therefore, we are very, very pleased with the performance and project of our merchants, and when our store accepted this and drove, our colleagues did a very good job.When you see January, there are some weather effects, as you expect, in part, on the contrary, during that month we see a slight softening in the more discretionary spending categories, this is certainly a factor.As a result, the sales mix changed in January.Carol Tomé we don't like to use the weather as an excuse, but we think we may have lost $100 million in January.Atlanta was frozen.Greg Melich -ISI group My other problem is to solve the bigger problem of this problem, we do implement the Affordable Medical Act, one thing we are looking at is, how many employees have accepted the new structured plan, you can update us with any information on the occupancy rate of your own plan, or how you can bake in the direction of SG &, will this help?Greg, Frank blackkeys.In addition to saying that it is consistent with our plan, we will not go into the specific details about take in depth.Greg Melich -I think it's the ISI group?Frank BlakeYes.Greg Melich -I don't think the guidance has changed?No change in guidance.Our HR team did a fantastic job of reducing any cost stress by realigningTender placement service, planned redesign.So we provide insurance for our employees while taking care of our shareholders.We're looking for Michael Lasser from UBS right now.Michael Lasser-UBSFrank seems to be the biggest driver of the market in the past 12 to 18 months.When do you think the turnover will exceed this number again, you may see compensation between home improvement company and housing turnover.This is an interesting question.We're just talking about this among ourselves, and it's interesting that historically, for us, the volume of houses is not a good way to predict our sales.If you go back over time, so I'm not sure that the real estate market will turn to another factor in the market as prices appreciate.Carol TomeSo just gives you a few data points, which I find interesting.If you look at the correlation between House turnover and home improvement sales between 2000 and 2013.You have a high R Square similar to 0.7.If you look at the original pulp from 2010 to the original pulp from 2013, the R Square is 0.3.So the real estate market is changing, which is a good way to explain, but not necessarily a good way to predict.I think if you look at the 2000 metric, the R Square of 2010 might be higher?Carol tomelittle is a bit, but not much.My second question is about the acquisition of Blinds.Com, as you become more and more proficient in online interaction and attracting customers, do you think this will put you more at the crossroads of online retailers?Craig MenearWe thinks we're on these quasi-stars.Michael Lasser-UBSBut what I think is more important than you ...... Craig mennier we don't think it has any effect on us at the crossroads.We first bought it like blinds.As Carol said, what explains it is the ability it brings internally that allows us to compete better in connected retail, but we imagine, almost all of us with Internet products already have the goal of improving our families.Michael Lasser-UBSOkay is fair enough.Let me ask the last question, what is the duration under extreme weather conditions, and the cost of repairs associated with this.How do you compare it to tornado or hurricane related expenses?Thank you.Frank BlakeMichael, who doesn't need to win at all.spring breaks.So I will doubt that there is, I can look at my own yard.Some people now have a demand [ph], but it depends on the time of the spring break, depending on the duration between the recognition of the demand and the action to achieve the demand.We will answer the next question from Mike Baker of Deutsche Bank.Mike Baker -One of the two issues Deutsche Bank has with repo, so 5 billion this year, I think you mentioned 4 a year ago.6 billion, but it may be advantageous to say that it is more debt-bearing, and you have certainly done so and added that number.We are closer to 2 points a year later.I think the target leverage ratio is 0, just wondering if you can describe any increase in the $5 billion figure.Carol towell well today we are planning to pay $5 billion using excess cash, and as far as you are concerned we are not meeting the maximum target of EBITDA's two Adjusted debts.We have about $1 today.If we are going to achieve this and we don't have any plans right now, then 9 billion of the loan availability.Last year we raised a lot of debt and it was always a good idea to let a while pass before you get back to the market.Excellent execution just now.Mike Baker -Deutsche Bank makes sense.Second question, maybe this is just the last look at you, but your comp guide recommends a 200 basis point reduction from 2013.I think about 50 basis points come from housing.The other 150 basis points slowdown is, conservative rather than just cautiously expecting the annual comp to reach 7%, or are there other things we should consider?Carol Tomé asked you to consider the item.We enjoyed commodity inflation in 2013, but don't think it will happen this year.In fact, tight commodity prices will put some pressure on us.So there's only one driver.Another driver, as you know, is that we launched our extended customer classification in many of our stores, looking at 500 stores.We will therefore attack this.So it's just a little bad for us.Mike Baker -Deutsche Bank and we do not plan a storm.Thank you, Carol Tomei.We don’t.Mike Baker -Deutsche Bank.We will take them.Mike Baker -Very helpful.Do you energise this amount, or is it a commodity impact for 13 and 14 years?Carol Tomet-I will be rounding out here, 80 to 90 basis points.Mike Baker -Bank of Germany?Carol TomeYes.Mike Baker -Okay, thank you.Carol TomeYes.We will answer the next question from Gary Balter of Credit Suisse.Gary Balter -Thank you.Actually, just follow up on the last question, how much share-how much share of your comp is helped by the share gains of some competitors who may be struggling and you are at 2014As Craig pointed out, according to the New York Stock Exchange definition, Carol tomewell enjoyed about 35 basis points of stock appreciation in 2013.We still tend to build plans based on shared capture, which doesn't mean Gary won't do everything he can to get shared capture and take care of our customers.So we're not going to do that.Gary Balter -Good credit.Then you made some comments on Canada and the devaluation of the currency, is there a way, I am not a senior drama economist, but given the decline you have seen in their currency, this makes their purchasing power a little better for Canadians, do you think it would help to base the business at some point, putting aside the monetary impact?Frank blake's Health Foundation business in Canada?Gary Balter -Yes, I'm sorry. go ahead.I said Gary, we are very, very satisfied with the performance of our Canadian business.In an environment where our competitors, Rona and some others, have encountered great difficulties, our Canadian business has done a great job.So, frankly, regardless of the exchange rate, we expect to continue to succeed there.Okay, thank you.We will answer the next question from Keith Hughes from SunTrust.Keith Hughes -SunTrustThank you.You spent your year with the product-given your competition for the product in 2014, our project is worth $900 or more, and what is the number you expect there --The store sales guidance you gave before?Frank BlakeSo we actually plan our year based on the growth of deals and tickets, and our plan is roughly the same.If you look at this year, we are very close as there is a very balance between tickets and deals.Keith Hughes -Does SunTrustI specifically ask for deals over $900?Keith Frank blakkeno, we're not planning on that level.Keith Hughes -Good sun.Do you think it will be bigger than comp sales or will it come back with it?Frank blakkeno, I think if we see a sustained recovery, I think that in the ongoing proIf the customer's home value continues to remain the same, and driven by the customer who is taking on a bigger project, I think we may see a bigger ticket continue to grow.Carol Tomé, in terms of the shape of the perceived year, I think the growth in the second half is heavier than in the first half because we are still anniversary --From a sandstorm.In the first quarter, we had more or less $0.15 billion in the first quarter, and the second quarter was an outstanding year for us.So I think if we try to build a model this way, Keith, I will build this model this way.Keith Hughes -Thank you.Carol TomeYes.Diane DayhoffSo Lisa, we still have time to ask one more question.OperatorOkay.We will answer the next question from Alan Rifkin of Barclays Bank.Alan Rifkin -Thank you very much.Your growth in the Internet business is very admirable, considering your investment in the followingDate, one must assume that dot com continues to exceed brick-and-mortar side.Carol, what impact will the accelerated growth in the dot com side of the business have on EBIT margins?Carol toomewell, a few things about the profitability of our dot com business, year 1 --on-This year's profits are much higher than last year, which is good news.When we consider the 2014 and later versions, we consider the impact of the dot com business that is growing faster than the core in our guide, because as far as you are concerned.Alan Rifkin -If you can, the last question is to play the devil's advocate here.I believe that in the past, you have actually said that the most important macroeconomic variable for your business is GDP, even bigger than housing, because GDP clearly contains housing and everything else.Your guidance on GDP is actually higher than 2013 in 2014, so even if you expect deflation in commodity prices in 2014, why don't we look for a comp that is slightly higher than you today?Frank blakso Allen, I will make some comments, which Carol can then add.Our comments on GDP are most important to us, which were made in the context of the housing market, and frankly, the housing market is still in the doldrums.So in 2010 and 2011, when we are actively competing, what we are saying is that this is a reflection of the GDP recovery that we have not yet seen, the country also saw no downwind in housing.What we tried to lay out at the meetings in June 2012 and December 2013 is that now we see a period in which housing will be the downwind of GDP, when you compare '14' to '13', it's more than we 've seen in 13 years.If you want to add some comments there, Carol?If you think of the housing drivers that have the greatest impact on our business, we believe that house prices will rise in 2014, but prices are half as high as they were in 2013.So this yearover-year change.In terms of turnover, we believe that the percentage of turnover as a unit will decline slightly from 2013 to about 4%.All of this is in the right direction, but in the right model, we are collecting all the data that Allen can collect and making our point about what the business will do.Diane DayhoffWell thank you for attending our conference call today and we look forward to your participation in our conference call for the next quarter.This concludes today's meeting, ladies and gentlemen, and we thank you for your participation.