Good morning and welcome to Lowe's 2025 Annual Shareholders Meeting. Please note that the company is recording this meeting for replay, and attendees are not permitted to use any device to record the meeting. I'll now turn the call over to Kate Perlman, Vice President, Investor Relations and Treasurer.
Thank you and good morning, everyone. Here with me today are Marvin Ellison, Chairman and Chief Executive Officer, and Juliette Pryor, Chief Legal Officer and Corporate Secretary. I would like to begin by reminding you that today's presentation includes forward-looking statements. These statements are subject to risks and uncertainties that could cause actual results to differ materially from the company's expectations and projections. Additional information about this is included in the meeting materials available on your screen. Additionally, the presentation includes certain non-GAAP financial measures. A reconciliation of these items to US GAAP is available in the quarterly earnings section of our Relations. this meeting is being hosted in an online-only format. With that, I'll turn the meeting over to Marvin.
Thank you, Kate. Good morning, everyone. As Chairman of Lowe's Board of Directors, I'm pleased to welcome you to Lowe's 2025 Annual Shareholders Meeting. To begin, I'd like to introduce the director nominees, in addition to myself, who are standing for election at today's meeting: Mr. Raul Alvarez, Mr. Scott Baxter, Ms. Sandra Cochran, Ms. Lori Douglas, Mr. Richard Dreiling, Mr. Nadeep Gupta, Mr. Brian Rogers, Mr. Bertram Scott, Mr. Lauren Simpkins, Ms. Colleen Taylor, and Ms. Mary Beth West. I'd also like to note that Ms. Kate Fisher and Ms. Lori Lundegan of the independent accounting firm of Deloitte & Touche are on the call. They will be available to answer your questions in the Q&A session of the meeting. Mr. Victor Lattessa of CT Hagberg and Associates is also joining us on the call today. Mr.
Lattessa has been appointed Inspector of Election for this meeting and will assist with the tabulation of proxies and balance. As your proxy cards indicated, Juliette Pryor and Brandon Sink have been duly appointed as proxies for this meeting. At this time, I officially call the meeting to order. Juliette, please outline the process for today's meeting.
Thank you, Marvin. We will begin the meeting with the formal business portion. This consists of the election of the director nominees named in the proxy statement, approval on an advisory basis of the compensation of the company's named executive officers in fiscal 2024, and ratification of the appointment of independent auditors. After we complete the formal portion of the meeting, Marvin will provide a brief business update. We will then open the floor for questions, and we will use the time remaining to answer questions that shareholders submitted either before or during this meeting. Shareholders who have logged into the web portal for the meeting using their control number may submit their questions over the portal. Please refer to the meeting rules of conduct posted on the web portal for additional guidance regarding the procedures for the meeting and the question-and-answer session.
A replay of this annual meeting will be made available on our Investor Relations website following today's meeting. Notice of the annual meeting of shareholders of Lowe's Companies, Inc. has been provided to shareholders of record as of March 24, 2025. The notice and accompanying proxy statement were mailed to shareholders beginning on April 17, 2025. As of the date of record, there were 559,705,809 shares of common stock outstanding, of which 500,791,516 are represented on the call today, either online or by proxy. Therefore, we have a quorum and may proceed with the formal business portion of the meeting. The polls are now open and will close after the presentation of the last proposal. If you have already voted, it is not necessary to vote during the meeting unless you wish to change your vote.
As provided in the notice of the annual meeting of shareholders, the purpose of this meeting is to address the following items of business. First, elect 12 directors to a term of one year. A description of the nominees' qualifications to serve as a director is included in the proxy statement. Second, approve on an advisory basis the compensation paid to the company's named executive officers in fiscal 2024. Third, ratify the appointment of Deloitte & Touche as the company's independent registered public accounting firm for fiscal 2025. We have not received notice under our bylaws of any other items to be considered, so no other business is expected to be conducted today. Each of the three items were proposed by the company, and the board recommended voting for each of them. This concludes all matters presented for shareholder consideration at the meeting.
If you have not already voted, you can do so now following the instructions on your screen. I will pause for a moment so anyone wishing to can submit their vote. The polls will be closing shortly. The polls are now closed. I have received the preliminary report from the voting inspector based on proxies received by the opening of the polls at today's meeting and based upon the vote of shareholders. All nominees to the board of directors are elected. The advisory vote on compensation paid to the company's named executive officers has been approved, and Deloitte & Touche is ratified as the company's independent public accountant for fiscal 2025. Please note that the final voting results will be filed with the SEC within four business days. This concludes the business portion of the meeting, and I will now turn back the meeting over to Marvin.
Thank you, Juliette. Now I'd like to spend some time providing you with an update on our company's performance. In 2024, we delivered another year of solid financial results despite a challenging macroeconomic environment as consumers continued to feel the pressure of inflation and higher interest rates. Total sales of $83.7 billion was down 2.7% on a comparable basis. Across all areas of the company, we maintained a disciplined focus on expense management and our perpetual productivity improvement or PPI initiatives. This helped us deliver an adjusted operating margin of 12.3% and adjusted diluted earnings per share of $11.99. In 2024, we returned $6.5 billion to our shareholders through a combination of dividends and share repurchases as a demonstration of our commitment to driving sustainable shareholder value.
I'm also pleased to announce that your board of directors approved a 4% increase in your Lowe's quarterly dividend this morning from $1.15 per share to $1.20 per share. This reflects the board's confidence in the company's ability to effectively navigate near-term market uncertainty while also making the right investments to drive long-term growth. Now turning to our long-term strategic initiatives, we updated and refined our total home strategy in 2025 to more closely align with the key drivers of home improvement demand and position the company to take share when the home improvement market inflects. This strategy reflects our commitment to helping solve our customers' total home needs with more value and exceptional service. The five key pillars are to drive pro penetration, to accelerate our online sales, to expand our home services, to create a loyalty ecosystem, and increase our space productivity.
Now allow me to spend a few moments outlining a few of our key growth initiatives for 2025 that support our total home strategy. Let me start with one of our key pro initiatives. Our transform offering drove pro penetration to roughly 30% last year, up from roughly 19% in 2019. We delivered mid-single-digit comparable sales growth for pro in 2024. We also recently launched our redesigned pro loyalty program, MyLowe's Pro Rewards. The new program is tailored specifically for our target customers, small to medium pros, who can start earning rewards immediately and achieve higher rewards with lower levels of spend compared with the program offered by our largest competitor. With MyLowe's Pro Rewards, we expect to incentivize repeat purchases and greater spend with our pros as they enjoy meaningful rewards when they shop with us.
Now let's transition to another key initiative designed to help us accelerate online growth. In December of 2024, we launched the first online product marketplace and home improvement in the U.S., enabling us to offer an even wider extended aisle at a full spectrum of price points from value to premium. We offered an assortment of third-party products focusing on core home improvement and adjacent categories with everything from furniture to tools to small appliances. Though we're still in the early stages, our new partnership with Miracle, a global leader in marketplace technology, will help us scale quickly. Through Miracle, trusted new marketplace sellers and existing suppliers who want to offer their entire product lines can easily manage their catalog on Lowes.com. We can drive this growth without carrying inventory, managing pricing, or investing in new fulfillment centers.
Finally, to assist in creating a loyalty ecosystem, we're very pleased with the performance of our loyalty program, MyLowe's Rewards, designed exclusively for the DIY customers. We recently marked the first anniversary of this program, which already has more than 30 million members who spend nearly 50% more than non-members. As we learn more about our customers through this program, we're able to tailor compelling offers to them and continue to cultivate their loyalty to Lowe's. Now turning to how we are harnessing the power of generative AI for our business. In 2024, we created a framework to focus on the ways AI can enhance how we sell, shop, and how we work. We built a robust platform that gives us the agility to innovate alongside many leading platforms like NVIDIA, OpenAI and Palantir.
Our goal is to continue to enhance the customer and the associate experience and to support the business with the tools for better forecasting, better sourcing, better inventory planning, improved pricing, and fulfillment. To highlight an example, in collaboration with OpenAI, we recently launched two new digital tools built on the same AI-powered foundation, one for customers and one for our associates. My Lowe is the first AI-powered home improvement virtual advisor, and it gives customers trusted advice and product recommendations on Lowe's.com and in the Lowe's app, helping them navigate complicated projects with newfound ease. The digital tool provides the expertise of a knowledgeable Lowe's associate, offering simple steps and practical solutions. It helps them complete their project by directing them to purchase what they need right in the app.
For associates, My Lowe Companion app on their mobile smart devices addresses a host of complex customer questions, enabling associates to serve customers with confidence even outside of their typical department. Now let me turn to our April announcement of our agreement to acquire Artisan Design Group, or ADG. Having established a strong foundation to serve the small to medium pro customer, we're now ready to serve a larger pro in a new distribution channel. ADG serves national, regional, and local home builders and property managers by providing design, distribution, and installation services for interior surface finishes, including flooring, cabinets, and countertops. With over 130 branches across 18 states and well-represented in the Sunbelt, ADG is an industry leader that earns best-in-class customer satisfaction scores from the top builders in the country.
By expanding our pro customer base to a single and multi-family home builder, this acquisition will position us to gain share in a highly fragmented $50 billion market. With an estimated 18 million homes needed in the United States by 2033, home building is expected to be a major driver of pro plan spending over the next decade. I would like to spend a moment talking about the strength of Lowe's leadership team. We are pleased to have one of the most diverse and experienced groups of Executive Vice Presidents and Senior Vice Presidents of any company in the Fortune 500. This was accomplished without quotas or targets, and it is one of the key reasons for our strong financial results that we have delivered over the past six years.
The value of inclusion is also behind our philosophy to hire and promote people based on talent and never exclude anyone based on their differences. We also remain committed to becoming the employer of choice in retail, and I'm pleased that we're being recognized as a great place to work externally. When we support our associates, we help them provide outstanding service to our customers, which was reflected in the J.D. Power naming Lowe's number one in customer satisfaction among home improvement retailers. This external recognition reinforces our commitment to our associates, who continue to be a competitive advantage for Lowe's. We are also supporting the communities where we do business, helping them recover from disasters, investing in safe and affordable housing, and in neighborhood improvement. We know that when we serve our communities, our associates, and our customers, we will continue to deliver sustainable value for our shareholders.
In closing, I'd like to thank our frontline associates who are our greatest asset. Every week, I have the honor of visiting our stores across the country, and I'm inspired by their hard work and their dedication. They are the driving force behind our ongoing success. That concludes the business update portion of the meeting. Now I'll open up the question and answer period of our meeting.
Thank you, Marvin. We will attempt to answer as many questions as possible during our time today. If we do not get to your questions, we will post answers to unanswered questions on the investor relations page of our website. We also encourage you to contact Lowe's investor relations at investorrelations@lowes.com. If a shareholder has a question, please enter it in the ask a question box on the website. Also, we have received a number of similar questions. In the interest of time and to answer as many questions as possible, we will group similar questions together. Our first shareholder question is, why did you scale back DEI because of pressure from conservative activists?
Thank you for the question. No changes were made to our approach to diversity due to any activist pressure. While some of our programs have evolved, our commitment to diversity has not changed. It is embedded in our values and is core to who we are as a company. We are very proud of our accomplishments, and we continue to cultivate a workplace where everyone feels welcome, valued, and respected. As I mentioned in my business update, the makeup of our leadership team reinforces our success as one of the most diverse and experienced teams in the Fortune 500. This was accomplished again without performance targets or quotas. We have a very straightforward philosophy where we hire and promote people based on talent, and we never exclude anyone based on their differences.
Our next shareholder question is, will you be increasing wages in order to be more competitive?
We're a big believer that a good job starts with good pay. We frequently monitor and adjust wages at a market level to ensure that we are remaining competitive. Since I became CEO in 2018, we've made quite a few strategic investments in incremental wages and share-based compensation for our frontline associates, totaling more than $4 billion. We also offer a comprehensive and very competitive benefit package that has very, very competitive bonuses. This includes a quarterly profit-sharing bonus for our frontline hourly associates, stock grants for assistant managers and store managers, and a 10% discount every day to all of our associates.
Our next shareholder question is, what are you doing to improve your management of inventory?
I can honestly say I'm very pleased with how we are currently managing inventory. Today, at Lowe's, we currently have the best product in stock position and best inventory management process since I've been CEO. We have leveraged technology to modernize our replenishment and demand planning process. For some of the more challenging planning scenarios, like weather-related demand, we're leveraging advanced AI-driven inventory management solutions. I'm pleased with our progress as a company, and we'll continue to implement modern technology to remain on a path of continuous improvement.
Our next shareholder question is, how do you plan to control your cost of goods given significantly increased tariffs under the Trump administration? Have you considered sourcing products from locations other than China who are not subject to the same tariffs being levied against that nation?
This is obviously a very timely question. As I mentioned in last week's quarterly earnings call, we've been engaged in an ongoing effort to collaborate with our private and our national brand suppliers to diversify our global sourcing over the last several years. Today, as an example, Lowe's sells products made in over 100 countries around the world. Roughly 60% of all of our purchases are sourced from within the U.S. This equates to approximately $30 billion in annual spend. We're pleased with the progress we've made to broaden our sourcing footprint, but we're going to continue to work to further accelerate our diversification efforts because we understand how important it is to our business.
Our next shareholder question is, what is the board's plan for downstream profits from AI?
If you go back to my business update, I talked about how we've established a framework to help us harness the power of generative AI to enhance how we sell, how customers shop, and how our associates work. Our flexible AI platforms allow us to create solutions alongside many of the leaders in this space, companies like NVIDIA, OpenAI and Palantir. The goal is to enhance the experience of our customers, but also our associates. This is seen through better forecasting, improved sourcing, improved inventory planning, and faster fulfillment. I'm very confident if we execute these areas of focus well, we will absolutely deliver enhanced profit for the company.
Our last shareholder question is, what do you intend to do to help stores run more efficiently to better serve our customers? What is being done to improve execution and accountability at the store level?
This is something that's near and dear to all of our hearts, and I can candidly say that we're pleased with the execution at our stores. The external recognition, like J.D. Power recently naming Lowe's number one in customer satisfaction among home improvement retailers, gives us confidence that we've made the right investments that allow us to make the progress that we've had over the past five years. Candidly, we're never satisfied. That's why we continue to make significant investments in technology as we have the last few years to build a true omnichannel experience in our stores and online. We're also leading the way in retail by leveraging AI-powered apps for our customers and our associates.
Our goal is to leverage our My Lowe Virtual Assistant to give our associates the product knowledge, the project knowledge, and the confidence to sell with confidence across all these complex businesses that we have in our stores, regardless of the tenure experience of the associate. We also want to give our customers trusted advice and product recommendations on Lowe's.com and also in the Lowe's mobile app. This is the first time a retailer has successfully implemented this type of technology at scale, and we're pleased that we're leading the way. Also, if you think about the pro side of the business, which is roughly 30% of our revenue, we recently launched our extended pro aisle to help make the quoting process faster and easier.
This new process generates quotes within a matter of minutes and is available seven days a week for our customers, which is also very important. This gives you visibility to our suppliers' inventory, and it also has the option for delivery straight from the pro to the job site so that the customer can have this convenience. Looking ahead, we remain committed to investing in the right technology and the right process improvements to drive more efficient store operations. It's also something that is really important for us to make sure that we improve the associate experience, both on the DIY and the pro side of our business.
Thank you for your questions. That concludes our question and answer session. We appreciate your attendance and participation. This meeting is now adjourned.