retail watch | Feb 29, 2024 |
Home Depot, Lowe’s and other big-boxers report weak results amid tough market

The home improvement retail business could use some improvement right now.

With some of the big players in the space—Home Depot, Lowe’s and Floor & Decor—reporting disappointing financial results over the past week or so, the decline across the category that began in the middle of last year continues.

On the heels of runaway success amid the pandemic, the DIY sector was holding up well despite the triple whammy of inflation, slow housing sales, and consumer spending shifting to pursuits like travel, restaurants and entertainment. That’s all history now, and while there’s no exact science to the correlation of home improvement spending with home furnishings purchasing patterns, some historical data suggests the latter follows the former by six to nine months.

Should that wisdom hold true here, home retailers, as well as interior designers, are unlikely to see a bottoming out—much less a return to increases—until late 2024. Certain pieces of the business, like luxury and new home construction, remain less vulnerable to all of this, but even they are experiencing the doldrums right now.

The numbers for big home improvement chains tell the quantitative story.

Home Depot
For its fourth quarter, the biggest of the big boxes said sales fell 2.9 percent to $34.8 billion. That beat analyst forecasts, but just barely. Same-store sales dropped 3.5 percent globally, and its U.S. stores saw a 4 percent decline. Depot said its Pro and DIY businesses were similar, but that “big ticket” transactions, or those over $1,000, fell 6.9 percent, indicating both builders and homeowners might be doing smaller projects rather than serious remodels.

Going forward, the retailer is projecting a modest 1 percent increase in sales for the next fiscal year, but that will come from new stores, as same-store sales were forecast to be off 1 percent.

The number-two home improvement chain reported a bigger drop in comp store sales, off 6.2 percent for Q4 2023, although it, too, beat analyst forecasts. Lowe’s said its Pro business, which was flat, held up better than its DIY sales, which still account for the majority of its revenue. Looking ahead, the brand expects the next year to be flat overall, with same-store business declining between 2 and 3 percent.

Floor & Decor
Though much smaller than its two giant competitors, the chain reported a similar story. Net sales for the quarter were flat, driven by 14 new stores as its comp store sales were off 9.4 percent. It beat analyst forecasts, giving it a feel-good headline similar to the other chains’, even if the actual results were nothing to celebrate. Floor & Decor expects to keep opening new stores over the coming year—as many as 35—which will boost its top line, while same-store revenues are projected to dip between 2 and 5.5 percent.

Taken together, the home improvement sector story is remarkably consistent, and the optimism we saw from all of these companies in 2023 continues to morph into acceptance of a tough marketplace. When will that change? Well, if these players aren’t sure, no one is.


Warren Shoulberg is the former editor in chief for several leading B2B publications. He has been a guest lecturer at the Columbia University Graduate School of Business; received honors from the International Furnishings and Design Association and the Fashion Institute of Technology; and been cited by The Wall Street Journal, The New York Times, The Washington Post, CNN and other media as a leading industry expert. His Retail Watch columns offer deep industry insights on major markets and product categories.

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