Financials of the Mass Merchants
We have a summary of financial reports from the two home-store giants, Lowe’s and Home Depot. Both companies reported their respective Q4 financials recently. Here are the numbers.
Lowe’s
On. Feb. 27, Lowe’s Companies reported $18.6 billion in total sales for Q4 2023 (ended Feb. 2, 2024), compared to $22.4 billion in the prior year quarter. In reporting these numbers, the company said a slowdown in DIY demand, as well as unfavorable January winter weather, lead to the quarter’s decrease of 6.2%. Lowe’s said comparable sales to its Pro customer (a category that includes plumbers, electricians and contractors) were flat for the quarter. Despite the 17% drop in quarterly sales, Lowe’s said its earnings rose as margins improved and overhead costs came down.
“This quarter we delivered strong operating profit and improved customer satisfaction, despite the continued pullback in DIY spending,” commented Marvin R. Ellison, Lowe’s chairman, president and CEO. “We remain confident in the long-term strength of the home improvement market, and we are making the right investments in our Total Home strategy to take share. We are also pleased to award $140 million in discretionary bonuses to our frontline associates in recognition of their exceptional customer service in 2023.”
Lowe’s said it expects 2024 comparable sales to be down 2 to 3% as compared to prior year, with total sales of $84 to $85 billion.
Home Depot
Home Depot recently reported its fiscal 2023’s fourth-quarter results. For the period ended Jan. 28, revenue totaled $34.8 billion, down 2.9% year over year.
“After three years of exceptional growth for our business, 2023 was a year of moderation,” said CEO Ted Decker. The company said that shoppers remain concerned with inflationary pressures and face an uncertain economy. HD says it believes consumers are now scaling back when it comes to big-ticket purchases like flooring, countertops, and cabinets.
Overall same-store sales, or sales from stores open at least a year, decreased 3.5% and U.S. same-store sales declined 4.0%. The company expects sales to increase 1% in 2024 and same-store sales to be down 1%.
Home Depot’s Chief Financial Officer Richard McPhail said demand dipped throughout the year as consumers returned to more typical spending patterns. He added that falling lumber prices and rising interest rates hurt the business.
Long range, the company is more optimistic. Between pre-pandemic fiscal 2019 and 2023, revenue increased by 39%. And Home Depot wants to hang on to these gains. “Our market is on its way back to normal demand conditions,” he said. “We’re not quite there yet, but the pressures we saw in 2023 are receding.”
The company has also felt a pullback in consumer spending, particularly on big-ticket items, as some families postpone discretionary purchases because of inflation, put off buying a new home because of higher interest rates or choose to spend on experiences rather than goods.
Outlook?
Neither Lowe’s nor Home Depot are clear, at least in these financial statements, where outdoor power equipment fits in their business outlook for 2024. Both companies still talk about helping customers with “home improvement” products, think lumber and paint and appliances. And they both predict moderation in DIY spending in 2024.
Both companies are also clear that professional customers are a focus. And with Lowe’s increasing its range of Toro equipment, the OPE market is surely part of its growth plan. The company’s “Total Home” strategy includes five focus areas, including “elevate assortment,” “drive pro penetration,” and “accelerate online business.”
We will continue to watch how power equipment products fit in the sales and marketing portfolios of these two companies.
