The three months of May, June and July were a period of intense corporate and financial angst. Bears were walking over the stock market, inflation was buzzing, and nobody really knew if America’s new national pastime of spending on home projects would last deep into the post pandemic.
Into this environment comes the back-to-back earnings reports from The Home Depot and Lowe’s, shedding light – at least for the time being – on the state of home improvement.
At the top of the list of takeaways is the continuation of home improvement demand, especially for the pro market. Also observed was the trend of fewer transactions with higher tickets per transaction.
Powered by its mix of pro customers, Home Depot scored its sixth consecutive quarter of domestic comp-store-sales bragging rights over its blue rival. Home Depot also posted its single most successful quarter in the company’s history, with sales of $43.8 billion, and net earnings of $5.173 billion.
Lowe’s CEO Marvin Ellison described sales as disappointing. But Lowe’s came very close to achieving its own record-smashing quarter, but had to settle for a performance that achieved runner-up status, trailing only the second quarter of 2021 in terms of sales and earnings.
Ellison described the home improvement customer as resilient, but this year’s metrics are compared to previous year’s numbers that benefited from three rounds of government stimulus and pandemic-induced home improvement spending.
“We now believe that certain categories like patio and grills are disproportionately impacted by the unprecedented demand from 2020 and 2021,” Ellison said.
Ellison also reported that the business is not seeing evidence of trading down to lower priced merchandise. “If anything, we're seeing the opposite with continued strong demand for our new and innovative products at higher price points,” he said.
Other significant metrics shared by Lowe’s:
• For nine consecutive quarters, Lowe’s has posted double-digit growth for its pro business, which accounts for about 25 percent of Lowe’s total sales. Pro comps were over 13 percent “The pro is busier than ever, and the strength of the Pro backlog speaks to the significant pent-up demand for their services,” said Ellison.
• Lowes.com sales grew 7 percent in the quarter.
• Comparable average ticket increased 6.1. percent, driven by pro sales and product inflation. Comp transactions declined 6.4 percent.
The Home Depot finished the quarter with 2,316 stores, unchanged from the first quarter. Lowe's finished the quarter with 1,969, down from 1,971 in the previous quarter.