Same-store sales jumped 12.3 percent at Lowe’s and 7.5 percent at Home Depot in their first-quarters as sheltering Americans found time to tackle household projects.
Lowe’s CEO Marvin Ellison said on his company’s conference call last Wednesday that the retailer benefited from the arrival of spring weather in many Western and Southern geographies “as well as a customer mindset that was heavily concentrated on the home.”
He added, “We served broad-based project activity, ranging from outdoor landscaping and other beautification projects to essential indoor repair and maintenance work and long deferred home projects — the to-do list that customers hadn’t previously tackled given their busy schedule.”
Strong sales of cleaning supplies and appliances like refrigerators and freezers were seen directly driven by COVID-19.
The retailers’ digital investments also paid off as online expanded about 80 percent for both. At Home Depot, 60 percent of online orders were completed by curbside pickup. The online growth is supporting new customer acquisition.
Professional contractor sales showed strong gains, but not at the rate of consumer sales as state mandates hampered permit issuance and job site inspections. Households were also reluctant to have workers in their homes for heavy indoor installation categories such as kitchen and bath.
The start of bigger projects as social distancing guidelines are relaxed may provide a boost in coming quarters. Topping the list of desired changes for current homes are more space, updated kitchens and home gyms, according to a survey from realtor.com taken during the first two weeks of April.
Headwinds for home improvement chains include the loss of the initial benefit of stimulus checks. Home sales have also plunged to a nine-year low as unemployment soars. Downturns also typically lead homeowners to shift spending to repairs and upkeep rather than upgrades.
Wedbush analyst Seth Basham wrote in a note, according to MarketWatch, “A quickly rebounding housing market and continued growth of home prices in most areas (especially in suburbs to which many city-dwellers are fleeing) could support demand better than we previously forecast, but the burst in DIY home improvement projects will likely fade as the economy ‘reopens.’”
