Depot reclaims comp-store lead

The dust has settled on last week’s back-to-back Home Depot and Lowe’s earnings-report excitement.

The Home Depot reclaimed its lead in the comp-store sales comparison with its largest rival, posting a 3.8% comps in the U.S., compared to 3.0% growth for Lowe’s.

Comp-store sales are generally accepted as the leading metric to determine a retailer’s health. Still, Wall Street chose to reward Lowe’s, and punish Home Depot, which lowered its full year guidance.

Depot’s stock has dropped from 238.85 before its earnings release, and it was trading Monday at about 217. Lowe’s on the other hand saw its shares rise from a pre-earnings release 113.40 to about 117 early Monday.

Wall Street was perhaps spooked by Home Depot’s downward revision to its sales expectations.  Looking ahead, the company’s full-year comp-store sales growth is now expected to come in at positive 3.5%, down from previous guidance of 4.0%. Full year sales are expected to grow 1.8%, that’s lower than previous guidance of 2.3%.

And while Home Depot said it was reaffirming its earnings per share guidance, Lowe’s said it would raise its adjusted earnings per share guidance.

Another area where Home Depot outpaced Lowe’s was online sales. Home Depot’s online sales grew 22% from the same quarter last year. “ continues to be a source of strength,” said CEO Craig Menear.

At Lowe’s, e-commerce is described as a business under repair, as the company reported third-quarter comp growth of about 3%. Lowe’s CEO Marvin Ellison said: “We expect to see our Lowe' growth rate start to accelerate in the back half of 2020.”