As one of the biggeset names in the home improvement sector, Lowe's is a trusted retailer when you need a fresh paint job or if you're thinking of renovating. You're pretty much guaranteed to check off every item on your list at these warehouses—but some shoppers appear to be ditching those lists entirely. Over the summer, Lowe's reported a drop in sales, and now, new data suggests that customers are still abandoning Lowe's, with sales taking another tumble. Read on to find out what the new numbers show.
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Lowe's didn't meet Wall Street's expectations.
Erin Deleon / ShutterstockIn a Nov. 21 press release, Lowe's reported earnings from the third quarter, with sales falling 13 percent compared with the same time last year. This follows results shared in August for the second quarter, during which sales fell by 1.6 percent compared with the year prior.
In the third quarter, Lowe's also reported a decline in comparable sales (same-store sales), which dropped by 7.4 percent compared with the same quarter in 2023. This didn't meet Wall Street's expectations, as analysts predicted a 5.4 percent decline, The Wall Street Journal reported, citing FactSet. Total sales were $20.47 billion, which also missed analysts' expectations of $20.87 billion.
Online sales also fell by 4 percent, Lowe's CEO Marvin Ellison said during a Nov. 21 earnings call.
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Customers aren't investing in big-ticket items right now.
ShutterstockEllison attributed falling sales to a "greater-than-expected pullback" in discretionary spending in the do-it-yourself (DIY) sector, specifically in terms of bigger-ticket items. The CEO warned about this over the summer, explaining that a pullback in DIY spending would impact the second half of the year, CNBC reported.
When consumers do need more expensive items like appliances, they're now "postponing purchases," Ellison said. So, instead of buying all new kitchen appliances, they might just buy a refrigerator to start.
This decline has a big effect on profits, as Lowe's is the market leader in appliance sales, which also accounts for 14 percent of the company's revenue.
"When you have pulled back on some of these big-ticket categories like appliances, it's going to be disproportionately impactful for us," Ellison said.
There were some positive numbers.
FOTOGRIN / ShutterstockLowe's earnings actually rose in the third quarter, up to $1.77 billion. This was a stark increase from the same period in 2022, but that can also be attributed to a $2.1 billion impairment charge (a reduction in the value of a company asset) following the sale of its Canadian retail business, the WSJ reported.
There was also positive growth in its sales to home professionals, referred to simply as "Pros," which account for 25 percent of Lowe's customer base. The other 75 percent is comprised of DIY customers (standard shoppers), Ellison said. However, in the overall market, the split is 50-50.
"As a result, whenever the DIY customer becomes cautious, it disproportionately affects us and while we faced a softer DIY demand in the third quarter, I'm pleased that at the same time, we once again delivered positive sales comp in Pro," Ellison said.
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The retailer lowered expectations for the rest of the fiscal year.
iStockIn light of its latest results, Lowe's is also slashing its expectations for the remainder of the year.
Per the most recent press release, the company anticipates full-year sales will total $86 billion (as opposed to between $87 and $89 billion), and that comparable sales will be down about 5 percent (as opposed to between 2 and 4 percent).
