Hey, welcome to day two of JP Morgan's 12th Annual Retail Round Up Forum. Again, so happy to have all of you here and everybody that's on the line. As a reminder, at 4:00 today, I will be interviewing Jamie Dimon in this room with my coworker, Matt Boss, which is always exciting to hear what he has to say. There's no shortage of content right now for Jamie to respond to. Please come and please ask questions, too. He's an open book. With me today, I'm very pleased to welcome The Home Depot's EVP and CFO, Richard McPhail. The Home Depot. Thank you for attending.
Thank you, Chris.
It's a pleasure to have you.
Great to be here. What an awesome building, too. Just great for JP Morgan, great for Manhattan.
Yes.
Fantastic. Yeah.
Yes. We're renovating the old Bear Stearns building right next door, so.
Okay
We're going to have a nice corporate campus developed.
That's beautiful. Yeah. Thank you.
At a macro level, let's just for a second put oil prices aside and geopolitics. What I'd like to set this table with is, can you narrate the demand environment in 2025 to help us think about the starting point, and then we can think about what potentially happens from here?
Well, thanks, Chris, and it's great to see everybody. Thanks for being here. In 2025, I think the demand environment softened during the year from how I would perceive the entire market. Now, I think we'll get to our performance in a second. If you look at how our sector, maybe let's zoom up a little bit and just talk about consumer confidence. At the very highest level, we saw consumer confidence drift lower through the year. We saw increased concerns over uncertainty, over inflation, over, obviously, events in the broader world, and then concerns over job loss. Our customers told us through the year that that uncertainty was the largest factor keeping them back from engaging in larger home improvement projects.
If you look at our sector, and you could pick a number of proxies for our sector, but let's just take private residential fixed investment, which is a significant component of GDP. Our sales are, when we report to the government, our sales sit in a component of PCE and PFRI. If you look at PFRI through the year, actually over the last eight quarters, we saw a deceleration in PFRI. In 2024, it was positive every quarter, year-over-year, but decelerating. In 2025, we actually saw it turn negative year-over-year and continue to decelerate almost in a straight line. Despite that, in the fourth quarter of 2025, we posted our fifth consecutive quarter of positive comps in the United States. Everywhere we look, our market has seen a degree of softening.
We have begun to outperform the market, I'd say in a more measurable fashion as 2025 went on. We certainly expect to outperform the market in 2026.
As we try to diagnose that, you did have a storm headwind.
Right
... the back half of the year. If we take that dynamic away and go back to, you've always spoken to share of wallet.
Right.
We're now back to sort of pre-COVID levels on share of wallet. Historically, if wages are growing 4%, consumption grows 4%, and this category is performing well below that, obviously, and you're outperforming that. Why wouldn't, over time, given replacement cycle dynamics, why wouldn't the category itself continue to migrate towards that, albeit with some housing headwind against that? Said another way, why wouldn't 2026 be better than 2025?
Well, I'm going to separate from the wage conversation. I think I would probably go more towards what's the shape of general economic growth, and then how does demand for home improvement vary from that economic growth. In the near term, we know that housing activity is frozen. I'll continue to use that term. We've used that term for three years now. If you look at the proxy for housing activity as housing turnover, existing home sales, typically we're somewhere between 4%-5% of all homes existing in the U.S. changing hands. We're at 3%. We've been there for three years, and now it's kind of going on four years. We have never seen housing activity this low for this long. It's touched the 3% mark maybe four times in the last 50 years. Every other time, it popped pretty quickly.
I think this is a function of housing affordability. We know that when 30-year mortgage rates went from the high 2% area to the low 7% area within the span of about 12-18 months, that created a pressure on affordability we haven't seen in decades. When I think back to your comment, why can't we see home improvement demand return? I think we can and will absolutely see home improvement demand return, not just to parity with broader economic growth and demand, but beyond it. Look, housing is a cycle. We're not immune. As the largest home improvement retailer in the world, we do participate and see the impacts of that cycle. What goes down, at least history has proven out, usually comes back up again.
We think that, again, if you just look at the affordability point as one of the components of pressure on our market, it's a function of three things, home prices, mortgage rates, income and income growth. Income growth remains stable to strong. Home prices, it's interesting. Look, we are now, I think, in the second year of seeing corrections in more markets than we're seeing increases in markets. Mortgage rates obviously trickled down steadily through the year. We've seen some volatility in recent months. To me, look, housing is a market. Markets typically reach equilibrium on their own. Could we see a period of modest home price corrections as we get to equilibrium? I think we're already seeing it. I think that's probably the affordability point and then the uncertainty point are the largest things facing our sector disproportionate to other retail.
Once we turn the corner, and we're not going to call timing on it, but as we said in our December investor conference, we do expect that when this turns, you will see home improvement demand outstrip the broader market. We're looking for, in a market recovery case, target comps of 4%-5%, total sales growth of 5%-6% top line, which are accelerated by new store growth, new branch growth under SRS, which is exciting for us, and then driving bottom line faster than top line. Look, we've seen this before. We've lived through cycles since 1979 at Home Depot. I think I would just point all of our investors to look at what's going on in the market, from an economic data perspective. Look at anyone touching housing right now.
Anyone touching housing right now, if you looked at a broader landscape of retailers, distributors, home builders you touch housing right now, you were probably deeply negative in Q4. We were positive top line in Q4. I think this is just great evidence that we know how to operate during periods of turmoil. We learned how to engineer agility into our supply chain during COVID. If you think too, Chris, I just have to trumpet measures like our gross margin performance in 2025. If you adjust for the acquisition of GMS, or take that out, we landed our gross margin rate on the button compared to our expectation for the year. Think about that. That was a target that we set at the beginning of 2025. That's before Liberation Day, which by the way, you remember that happened during our session.
Yes
last year.
Through all of that, we delivered the gross margin on the button that we expected with all of the influences. We feel great about being able to manage through any environment and succeed. We're taking share, and we're in control of our destiny.
To think about the rates versus the uncertainty question, because rates drive improved affordability, so that's an obvious unlock. We're not sure when and how that changes.
Right.
I guess to what extent, as you think about the flow of last year and into this year, has uncertainty become a greater factor in the consumer's willingness? Is the right interpretation because you're so more project-oriented, the uncertainty is weighing on those bigger projects?
Uncertainty continues to weigh on larger projects, and we see those larger projects still not recovering. We've seen pressure in categories like kitchen and flooring and lighting. There is pressure. Beyond a certain price point, it's not reflective of the health of the customer. The customer, particularly the homeowner, their financial position is solid and frankly better than it's ever been pre-COVID. They saw housing wealth increases of 80%-90% in home equity values over the last six years. Their balance sheets are extremely healthy. We have full employment. Incomes are growing. The homeowner's healthy, our customer's healthy. There's just a reluctance based on this uncertainty.
When we survey our customers and we ask our pros, "What are your customers telling you?" They consistently say, "It's not that I don't have the ability to spend, it's that it just doesn't feel like the right time." So.
If you look back during COVID when the government was nice enough to send checks to consumers.
Yeah
Your category benefited quite a bit. We were also stuck at home.
Right.
We're in an environment now where it appears tax stimulus is offsetting some of the uncertainty factor, at least in the context of where gas prices have gone. You talked about tax stimulus. Can you talk about tax stimulus, how does that impact consumption in your category? The context as well as how did it play out in the context of your guidance?
Right. Well, I think we're still watching what the impact of tax stimulus will be. We don't want to comment on intra-quarter trends. When we set guidance at the beginning of the year, we said we would expect comp sales between flat and 2%. That is ranged because there are a number of factors that could be headwinds and could be tailwinds. Tax stimulus, if you kind of just took the math and put it in a vacuum, we've seen a range of estimates, and if every penny of tax stimulus was spent on consumption and we had our fair share of that consumption, we'd see something like upwards of half a point of comp to the good. We know that there are countervailing forces. We've watched private residential fixed investment, continued pressure on that.
We know there were concerns heading into the year as we set guidance on inflation and job loss. When we look at these potential headwinds and tailwinds, that's why we provided a range of outcomes.
Understood. As you think about, just because I know this is a popular question as we think about the recent crisis, and we come back to it after. How do higher energy prices impact your P&L? Obviously, there's an ocean freight concern, and then there's a trucking diesel concern.
Yeah. Well, look, I kind of go back to the agility point. We've seen significant swings in supply chain transportation expense in the COVID era. I'd say the dynamic, look, there's no doubt about it, fuel is an important input to our operations. We've proven the ability to protect our P&L. Look, we're not immune if you see significant sharp swings in the cost of fuel. That's going to impact our whole space and probably all of retail. Again, I would bet on us to be able to mitigate the impact to the bottom line. We'll be watching it. It's obviously a fluid environment right now.
Yes, indeed. Actually, one more macro-oriented point, which is tariffs. For anything that's imported, and granted you do buy a fair amount onshore, but to anything that's imported from Asia, tariff rates are lower year over year in most categories as we sit here today versus the back half of 2025. If we assume it stays here, how does it play out for The Home Depot? Do you think we've obviously seen the peak of pricing, but would you expect potentially deflation in the category? And if not, can you maybe help us think about what the margin potential could be around lapping higher tariff rates?
Right. Well, going to your pricing comment, as we'd shared with investors, I think that there was probably anticipation that inflation would begin to cool sooner than it made sense. To me at least, I think watching costs flow through the P&Ls, not only of The Home Depot, but retail in general, I believe that the timing of those costs meant that you saw more retail action at the end of 2025, even heading into the beginning of 2026, than the market might have anticipated. I do think that as a market, we are through those retail price adjustments. While you'll see a year-over-year dynamic play out, that will kind of correct itself or rather be completed through the first half of 2026. When it comes to what we should expect where tariff rates are lower, first of all, we've learned not to make long-term permanent assumptions.
Rather to just manage as best we can. Chris, I think probably the best way to think about this is we're a market participant. Tariff impacts are felt by the entire market. I think the question is how do all market participants react if tariff pressures become lower? No one in the market is able to move outside of the broader market participants' action. That's just a way of saying, I think you have to put yourself in the shoes of all market participants. Typically, when the market sees broad-based cost pressures or broad-based cost relief, that typically has an impact on price levels. Just kind of remains to be seen. I don't think we should necessarily count on a fixed set of assumptions for the year.
The only certainty is constant uncertainty.
Probably.
I want to pivot to the long-term strategy. You've been positioning yourself for market share gains. You've expanded the TAM-
Yeah
As you've gone to MRO and now more to the large Pro business. We have a lot of questions here, but as you think about that large Pro and the recent acquisitions, fundamentally, can you speak to what drives success in that business versus the traditional retail business? Where do you think you are in terms of building out those core skill sets?
Okay. Well, look, we've always known that the pro was essential to The Home Depot's success. The pro has always been a part of our business and if you go back to Bernie and Arthur, they created The Home Depot, in part, to provide a sense to consumers that they could shop like the pros did, right? I mean, come shop in warehouses. What we would do for the pro typically trickled down into success with the consumer, and it created do it yourself. When we think about the pro opportunity, for decades, we have known that we under-penetrated our pro customer's wallet. To penetrate further would require us to begin providing our pros, simply put, the ability to have products received at the job site. That is a cornerstone of changing our business model to further penetrate pro wallet.
I want to zoom all the way out. We operate and are the largest player in a $1.2 trillion addressable market. In December it was $1.1 trillion. With the recent announcement of the acquisition of an HVAC equipment distributor, we expanded that TAM. The world of HVAC equipment and parts distribution was not part of our $1.1 trillion TAM, and so now we've expanded it. Of that $1.2 trillion, $700 billion is the pro opportunity. I think, I want us all to step back and think about that number because there is no one standing in the way of The Home Depot in terms of attacking a $700 billion opportunity. What is standing in the way? It's the ability to serve our pro better than anyone else in the market can. We're not yet at that point.
We grew up in a cash and carry world where the elements that we were appealing to the pro with were value, selection and service in the stores. That's still a product orientation, though, cash and carry retail. We learned over time, and I'd say we were still learning as we moved into the 2020s, that what we actually had to reorient ourselves to was creating a service model. If you're going to get deeper into the pro's wallet, it is not enough to have the best retail locations and the best product assortment and the best in-store service. You have to have an outside sales force capable of assisting the professional with larger projects. You have to have exceptional delivery to the job site. I think those two elements are kind of cornerstones. You also have to be able to extend short-term working capital financing.
We call it trade credit. Then you have to have second-order operational capabilities, order management. As a cash-and-carry retailer, we had not built up the capability for you as a pro to have some flexibility in your ordering with us. Hey, you're the pro, your end customer is changing their minds, their change orders. You have delays on the job site. This requires a degree of agility that we just simply didn't have in the ability to modify orders, modify delivery times, this kind of thing. There are other second-order capabilities of importance, preferred pricing. We want to make sure that we can compete effectively across the entire project for every type of professional. When I think about what we're building, we're building capability across that entire capability set.
We're not yet at parity with a lot of our competition in that $700 billion market, but we are gaining ground every day. When you think about the sales force, we have thousands of outside sales reps in the market now and are still rolling that out through markets in the U.S. They're doing something that's never been done before, which is selling across all product categories. When you think about delivery excellence, so compare us to anyone else out there who you think might have the ability to compete for that $700 billion. We have 2,350+ stores in North America and growing every single year. We have, with the addition of SRS and GMS, 1,250 wholesale distribution branches. We have over 100 branches of HD Supply that deliver direct to multi-family sites.
We have our network of 17 flatbed distribution centers, 20 direct fulfillment centers, 150-odd MDOs, market delivery operations. There will likely never be another supply chain that looks like that is oriented towards delivery excellence to the Pro. I don't want to go too long, Chris, but I think the point is the market is massive. We are the 800-pound gorilla in the market. We continue to accelerate our capabilities that allow us to create that service model. Our Pros tell us with every month, we're gaining ground, we're consolidating their supply base. For them, if we can save them time and deliver with excellence, they will go to us. They've told us that, and they show us that in their spend.
Our trade credit program, where we extend short-term working capital, really just in the form of billing upon delivery rather than billing upon order, shows lift. Every time we offer our Pro credit, they lift their sales. We're gaining ground. I want to address, again, kind of a big picture point. We began in earnest leaning into the Pro opportunity. While we've always done it, we realized the extent of this opportunity really just in the early 2020s. 2021, 2022 was kind of the first time we talked about this Pro ecosystem. We had the idea of flatbed distribution centers since 2015. That was a bootstrap model where we said, look, the demand for job site delivery is becoming too great for us to be able to service. We don't know how big that demand pool is.
All of our deliveries were originating at a store with a flatbed truck. As we stood that network up, we realized, okay, we can actually broaden the assortment and carry infinite depth. That led us to understand, okay, there is a way that we can win this world. As we built those organic capabilities out, we entered discussions with SRS. SRS called us in 2023 and said, "We think we know what you're building, and we can help this." Look, Ted and I, we know every wholesale distributor in the country. We've met with many of them over the last few decades. SRS was the best-managed distributor we have ever seen. In 2024, we said, look, there's a way to create a platform that is a complement to The Home Depot.
It's complementary, and it's also additive to The Home Depot, by going after that specialty trade contractor. We've built on that platform ever since, which I'm sure you want to talk about. It's a really long-winded answer, Chris, but that's because the opportunity is massive. What it takes to win is complicated. You look across the 9 million pros in the United States, there aren't very many who are identical to each other. You have to be able to serve them in the way they want to be served. A specialty roofer is going to need a different service model than a general contractor will for roofing. That's just one little example of how we want to attack the problem by serving the pro in the way that they can best be served.
We'll leave a few minutes for audience questions at the end as well. SRS, largely roofing, landscape, pool, GMS, wallboard, ceilings. Mingledorff's is now HVAC.
Yeah.
Where do you think you are in terms of building out the largest portions of that large pro wallet?
Yeah.
How do you think about organic, versus an M&A in the remainder of those large categories?
Well, in terms of where we are, we have the right to win all $700 billion in the Pro market. I think we're exceptionally early, in at least our vision of becoming the most trusted partner to every Pro in the United States. We think we have the right to win. We don't yet have the ability to win, which is why we're building these capabilities. On the SRS side, so as you mentioned, we just added what is SRS's fifth product vertical. When we acquired SRS, they had roofing, pool, and landscape. We added GMS and wallboard, ceiling tiles, and associated products, and now Mingledorff's is an HVAC equipment distributor. HVAC is a fantastic vertical. This is a vertical we talked about with SRS since before we acquired SRS.
It's actually new for The Home Depot, which is why we expanded our TAM by $100 billion as we acquired them. There are many reasons, by the way, I'll just do 30 seconds on HVAC. Number one, the cross-sell for SRS, across roofing, gypsum, HVAC, you're beginning to see a more complete picture. How do we grow SRS further? Look, there are a number of product verticals that we've built up organically. We've distributed lumber, doors and windows, plumbing, flooring organically, really in earnest since we began standing up these flatbed distribution centers. We are making great gains, for instance, in the distribution of doors and windows, where the retail model probably includes too many product touches as you think about the supply chain.
Taking out every touch adds profitability to that model, and so we have made gains in that model in our centralized supply chain, our direct fulfillment centers. The ability to deliver doors and windows with excellence is giving us another advantage to selling the entire project. Chris, I mention that because that's an example of organic share capture. I think if it can be done organically, we're always going to do that. Acquisitions work when they accelerate the achievement of our strategic vision. I think it's important for our investors to understand a few things about the acquisitions that we've made. First, there's a very high bar when it comes to acquisitions that are acceptable to The Home Depot. I think since our acquisition of HD Supply in 2020, we have maintained the same set of standards that must be met.
Number one, there has to be exceptional strategic fit. There are no acquisitions out there. Look, our strategy is grounded. It is core in culture. It's the delivery of an amazing interconnected experience, and it is winning the Pro. Within that winning the Pro, obviously, we have very targeted strategies. When you think about product verticals, we like adjacencies because we like cross-sell. You got to have amazing strategic fit. The acquisition has to be an exceptional financial performer. The Home Depot is not in the business of acquiring companies that we then improve the operations of. We acquire and partner with companies that are best in class at what they do and how they serve their customer. Then there has to be really strong cultural fit. I think we have perfect cultural fits across SRS, GMS, and Mingledorff's.
When you use that as a screen, you actually wind up eliminating, frankly, I'd say a majority of companies that you might think are acquisition targets. Even large-scale companies, there are large-scale companies out there that just simply don't pass that screen. If you look at what we've done to augment our ability to serve the Pro through adding acquisitions, we were the first to go into roofing with the number one roofing distributor in the country from a quality perspective. We were first with the wallboard acquisition. We were first with an HVAC equipment distribution. We will acquire high-quality assets that are best in class at what they do if they advance our strategic imperative. We know we can do a ton organically, and we'll keep pushing. I'll give you an example of organic.
The HVAC acquisition opens up the world of HVAC parts distribution. You think about what
You're not in that.
We're not in that.
Yeah.
Look, we absolutely sell HVAC parts, and we do distribute those. Opening up an avenue to the HVAC installer because we have the equipment distribution, it's a different world of customer access. Now think about what we can do with our direct fulfillment centers with same-day, next-day delivery, with an extended offering. This is not something we've built out. We haven't even closed the acquisition of Mingledorff's.
Yeah.
We are excited about the value we can bring to the customer. That's an example of things that we would do organically.
Excellent. I have some further questions, but I want to see if anyone in the room has any questions. If you do, please just raise your hand and grab the microphones on the table. Great. By the way, you also have a very low cost of capital.
Right
incredible technology infrastructure.
Yes
you bring to bear.
Yes, we do. Look, our low cost of capital and our low cost position is a benefit that the flywheel of The Home Depot is taking those benefits and passing them on to our customer. We will always be the sharpest value prop in the market for the entire project, and that cost of capital position and our low operating cost position allows us to do that in the market.
I want to go back to the Analyst Day from December. As you think about when you embarked on this large Pro effort and then accelerated it, you organically accelerated with SRS and other recent acquisitions. It caused CapEx to go up, caused D&A to go up. It sort of created a headwind on your margins where other retailers saw these massive gains during COVID-
Mm-hmm
... when the business popped. It's dragged sort of ROIC along with it. Our impression of the Investor Day was that you were at the trough, that you had put the foundation in, and yes, we're going to continue to add bricks and layers around the large Pro effort. We are coming to the bottom on the ROIC cycle, and that efficiency, which is the hallmark of Home Depot, and AI, was enabling this to start to turn up. We just need the market.
Right.
Was that the right interpretation?
That's the expectation. I think it bears a little bit more explanation, just to get everybody on the same page. First of all, we've outlined our margin expectations moving forward. In a market recovery case, we expect to grow bottom line faster than top line. At market recovery, 4%-5% comp sales, steady gross margin, operating expense leverage, driving very high single-digit EPS growth in that case, 5%-6% top line growth when you add new stores and branches. If you think about the history of our margin over the last few years, you have just a few pretty simple components of it. First, it's just the impact of margin mix of the acquisitions of SRS, which are actually really strong ROIC generators.
When you think about organically, that wholesale distribution world is actually a much more return accretive model than I think most folks expect. That gets masked by the fact that there's a lot of acquisition activity in distribution. Let me talk about ROIC in general. Sorry, I'll complete the margin question. We made investments in wages over that period, right? One of the things that we will always do is take care of our people, and we're proud of. I think our entire sector faced into wage pressures and retention pressures in 2022. We took some steps to fix that. We're in a great position now. Our Associate Commitment Index is at recent highs as far as recent history goes. We made investments that put pressure on our margin profile as we saw top line pressured in the market.
Ultimately, our margin leverage or deleverage reflects top-line momentum. As the market recovers, what do we think about ROIC? Well, ROIC obviously has pressure as top line and operating profit does. You think about what our ROIC expresses. Well, from the period 2008 to 2023, we really didn't add any new stores. You think about the tailwind that creates in ROIC as you're depreciating a store base. As your levels of investment in the company are low by historical standards over that period, you generate higher ROIC. In fact, still today, 99% of our stores are over 10 years old, and so you get that ROIC tailwind. As we begin to invest, how do we decide to allocate capital to investments? Well, we do it on an internal rate of return basis, as I'm sure our investors would want us to do.
Can we earn an exceptional margin over our weighted average cost of capital? In other words, do we have a hurdle rate, and does this investment cover the hurdle rate? When we think about store investments, these are some of the most, I'd say, predictable investments we can make with a strong IRR. In the early stages, the ROIC is very low, right? You can think of IRR as the average of ROIC over a long period of time. As you lean in, you're going to put pressure on ROIC. As you make acquisitions, again, remember, we're only acquiring market leaders. As you pay market multiples for market leaders, you're going to see immediate dilution to ROIC. I'll come back to the point you've made. Yes. We expect ROIC to expand from here.
As our market recovers, as we see gains from that investment period you talked about, it's absolutely our intention that ROIC moves up and to the right from this point.
I thought the other important.
Question over there.
Oh, I'm sorry. Go ahead. Yeah.
I guess I had a question about that. Particularly in distribution, I've always thought that as more of a cost of capital type business. How do you have confidence that it doesn't just go to cost of capital zero perpetually? I mean, it's a dog fight, is it not?
I'd say it's a highly rational market. I think, again, what's interesting to me is if you look at a new branch, a new SRS branch versus a new store, ROIC of a new SRS branch accelerates significantly faster than the ROIC of a new store, a very capital-light model. No, I think wholesale distribution is, number one, it's exceptionally fragmented. I think we've seen margin stability over the history, and I expect that margin stability to continue. I also expect us to be able to improve our margins in distribution as we see gains from scale and as we see gains from productivity driven by AI. Look, we're very bullish on the outlook for our investments to drive earnings growth, which then drives ROIC.
We have another question over here.
Hey, Richard. How are you?
Hey.
Just trying to think about that $700 billion opportunity.
Yeah.
I might have some of these things wrong, but framing it versus the other piece of the business that obviously you've executed against.
Right
incredibly well over all these years, and you've
Yeah
... again, this might be wrong by a little bit, but you've gotten kind of like 20+% of that business.
Right.
How do I think about that versus that $700 billion in terms of opportunity? You didn't say anybody's really standing in your way, but in your IT stack, I would imagine the complexities of delivery and product and all this other stuff probably gives you even a bigger opportunity. Just any thoughts relative to that 20%+ on the $700 billion market share versus the other piece of the business?
Let me rephrase it maybe a little differently, and tell me if I'm hitting your question, but I think our market share of the pro is much lower in that $700 billion sector. You could divide it roughly to say $400 billion of that is kind of the complex pro, where we have very low market share. Obviously, being the number one home improvement retailer and destination for the pros in the front of our stores, our share is higher in the other $300 billion. Let me talk about the entirety of the $1.2 trillion. Let me bring in consumer, because what we're doing in delivery should be a tailwind for both our pro and our consumer. The gains we've made in promise times, so shortening promise times, the amount of deliveries that are now same day, next day, over half our deliveries are same day, next day to the customer.
That's not something we ever even imagined when we started building these DCs that would be the customer demand. I don't know if I'm hitting your question, but let me shift this a little bit to why I believe we win with the pro and the consumer. There are gains to scale, because scale provides you with an advantage to invest in AI-enabled customer-facing tools. I'll give you a couple examples. I think maybe the one that comes to life for me the most is we are moving to a world where the Orange Apron associate, who is the lifeblood of our customer experience has so much product knowledge at their fingertips enabled by AI that what might have taken months to do in terms of on-the-job training in the aisle is now instant.
Every associate has a handheld device that has all of the cumulative knowledge, experience through an AI agent, to help the associate in the aisle with the customer. We are pushing an initiative called One Tasking. Prior to this year, our associates not only serve customers, but they also move product around the store. We have always, or at least for 20 years, we've had something called the Merchandising Execution Team. They have also handled certain aspects of bay maintenance and product movement. We're shifting to a model now where we are pushing almost all tasking to that Merchandising Execution Team. The freight flow in the building is handled by that team, and it has been supercharged by AI-enabled tools that allow prioritization of tasking, and really kind of optimization of freight flow through the building.
What does that allow us to do for our Orange Apron associates? We just want them to sell. Tools like the knowledge all-in-one handheld, I think, put us ahead of anyone in our market. The equivalent online is Magic Apron. Everyone should go onto homedepot.com. I know you would've naturally done that today anyway, but Magic Apron provides that same level of agentic AI assistance to our end customer. Look, we're going to be front-footed in terms of AI enablement. We just hired a fantastic new Chief Technology Officer. If you haven't, please take a look at her background. We think that this is a huge step forward in leaning into AI and being a true