The home improvement market could use some improvement itself.
That’s the latest from Lowe’s Companies Inc. During its second-quarter 2024 earnings call Tuesday (Aug. 20), the company revised its annual forecasts downward, citing a challenging macroeconomic environment dampening consumer spending on home improvement projects.
As a result, and for the sixth straight quarter, Lowe’s posted a year-over-year sales decline.
Total sales for the quarter were down 5.1% to $23.6 billion, compared to $25 billion a year ago, according to a press release. The slide was “driven by continued pressure in DIY bigger ticket discretionary spending and unfavorable weather adversely impacting sales in seasonal and other outdoor categories.”
“The company delivered strong operating performance and improved customer service despite a challenging macroeconomic backdrop, especially for the homeowner,” Lowe’s Chairman, President and CEO Marvin R. Ellison said in the release.
However, Ellison stressed that the decline in Lowe’s DIY and consumer segment was “partially offset” by positive comparable sales in Pro and online.
“[W]e continue to build momentum with our Total Home strategy reflected by our mid-single-digit positive comps with the Pro customer this quarter,” Ellison said in the release. “As we look ahead, we are confident that we are making the right long-term investments to take share when the market recovers.”
Comparable pro sales were up mid-single digits, and Lowe’s reported double-digit online Pro growth.
Read also: Lowe’s Targets Smaller Pros for Bigger B2B Growth
The professional and contractor segment in the home improvement marketplace is one of the most valuable due to the large ticket size compared to everyday consumers and DIY hobbyists.
Against a backdrop where the lingering effects of inflation have led consumers to prioritize essential spending over discretionary home improvement projects, Lowe’s strategic focus on pros has never been more central to the retailer’s growth.
“Pro backlogs remain healthy and consistent with last year, and 75% of pros surveyed by Lowe’s are confident in landing new business,” Ellison explained during the earnings call, noting that Lowe’s is focused on driving Pro penetration, in part by accelerating the company’s online business and elevating its assortment.
“We are seeing strength in the small and medium pro,” said Lowe’s Chief Financial Officer Brandon Sink on the call.
Lowe’s earnings come a week after the retailer’s main competitor, Home Depot, reported a similar softening of the macro environment and stressed to its own investors that it is doubling down on a similar strategy to Lowe’s by targeting the professional builder to weather tepid consumer demand.
To stand out, Lowe’s executives told investors they are doubling down on both their digital strategy and in-store experience.
“In home improvement, your stores are still an incredibly important part for the pro customer,” said Lowe’s leadership. “Same with our inventory levels and brand offerings… After we establish those foundational things, we can drive stickiness with more sophisticated offerings.”
See also: Lowe’s to Pilot in-Store Mixed-Reality Experience for Kitchen Design
As of Aug. 2, Lowe’s operated 1,746 stores representing 194.9 million square feet of retail selling space, per the press release.
“We want to bring a more digitally friendly experience to Pros,” Lowe’s executives told investors.
When PYMNTS sat down with Radar CEO and co-founder Nick Patrick to discuss retail innovations being driven by ongoing digital innovation, he explained: “If you really want to send a personalized, targeted message when somebody is at this store versus that store in a mall, you have to nail the details. One area of innovation for us is pushing the limits of what’s possible with location accuracy.”
Elsewhere, when it comes to home improvement retail, the PYMNTS Intelligence report “The Online Features Driving Consumers to Shop With Brands, Retailers or Marketplaces“ revealed that millennials are taking the lead.
One in 4 millennial shoppers bought building materials, hardware or tools in the 30 days before being surveyed, above the population-wide 19% of consumers who did so.
Home improvement retailers are looking to grow adoption with this digitally engaged generation by partnering with on-demand delivery aggregators. For instance, in April, Lowe’s kicked off a partnership with DoorDash.
“[It’s] everything from, ‘I’m in the middle of painting my bedroom, and I realize I’m out of paint tape,’ to ‘I’m mulching my backyard, and I realized four bags of mulch short,’” Fuad Hannon, vice president of new verticals at DoorDash, told PYMNTS in an interview. “We are excited about leaning into that DIY shop for consumers who want to get time back.”
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