Financial Data and Key Metrics Changes - Total sales for the third quarter were $41.4 billion, an increase of 2.8% from the same period last year [5][20] - Comp sales increased by 0.2% year-over-year, with U.S. comps up 0.1% [5][20] - Adjusted diluted earnings per share were $3.74, down from $3.78 in the same quarter last year [5][23] - Gross margin was 33.4%, flat compared to the third quarter of 2024 [20] - Operating margin decreased to 12.9% from 13.5% in the same quarter last year [21][24] - Return on invested capital was 26.3%, down from 31.5% in the third quarter of fiscal 2024 [24] Business Line Data and Key Metrics Changes - Nine of the 16 merchandising departments posted positive comps, including kitchen, bath, outdoor garden, and appliances [14] - Comp average ticket increased by 1.8%, while comp transactions decreased by 1.6% [14] - Big ticket comp transactions (over $1,000) increased by 2.3% compared to the previous year [14] - Online comp sales increased approximately 11% year-over-year [16] Market Data and Key Metrics Changes - Comps in Canada and Mexico posted positive results in local currency [5][20] - Comp sales in the U.S. were +0.1% for the quarter, with variations of +2.2% in August, +0.3% in September, and -1.7% in October [20] Company Strategy and Development Direction - The company is focused on controlling internal factors and believes it is gaining market share [6][7] - The acquisition of GMS is expected to enhance the company's position in the building materials distribution market [7] - The company plans to continue investing in its business, targeting capital expenditures of approximately 2.5% of sales for fiscal 2025 [25] Management's Comments on Operating Environment and Future Outlook - Management revised guidance for fiscal 2025 due to softer-than-expected results and ongoing consumer uncertainty [6][24] - The lack of storm activity has significantly impacted home improvement demand [5][34] - Management noted that housing activity is at 40-year lows, affecting consumer behavior [36] - The company expects total sales growth of approximately 3% for fiscal 2025, with GMS contributing about $2 billion in incremental sales [24][25] Other Important Information - Merchandise inventories were $26.2 billion, up approximately $2.3 billion compared to the third quarter of 2024 [23] - The company opened three new stores, bringing the total store count to 2,356 [23] Q&A Session Summary Question: Impact of GMS on EBIT dollar shortfall - Management explained that the inclusion of GMS and transaction expenses contributed to a 20 basis point impact on operating margin [28][29] Question: Expectations for demand recovery - Management indicated that demand recovery is unlikely without increased housing activity or reduced interest rates [48][50] Question: Average ticket and promotional activity - Management noted that the increase in average ticket was due to customers trading up for innovation, with promotional activity remaining consistent year-over-year [40][41] Question: Margin structure improvement from acquisitions - Management discussed the potential for margin recovery through synergies and cross-selling opportunities between SRS and GMS [74][87] Question: Regional performance and consumer fatigue - Management observed no specific fatigue in upper-income customers but noted a softening in larger project backlogs [85] Question: Cross-selling opportunities post-GMS integration - Management highlighted successful account handoffs and cross-selling between Home Depot and GMS, indicating strong collaboration [91]