Major home improvement retailers Home Depot (NYSE: HD) and Lowe’s Companies, Inc. (NYSE: LOW) reported their earnings results for the second quarter of 2024 recently. Both companies faced headwinds during the quarter which took a toll on their performance, and each of them updated their full-year 2024 guidance to reflect the continued uncertainty within the home improvement market. Here’s a look at their quarterly performances and their full-year expectations:
Home Depot’s net sales inched up 0.6% year-over-year to $43.2 billion in Q2 2024. The top line included $1.3 billion in sales from the SRS Distribution acquisition. Comparable sales decreased 3.3% in the quarter. Adjusted EPS dipped to $4.67 from $4.68 last year.
In Q2, Lowe’s net sales decreased 5% YoY to $23.6 billion. Comparable sales decreased 5.1% and adjusted EPS amounted to $4.10.
During the second quarter, Home Depot saw weaker spend across home improvement projects due to pressure on consumer demand caused by higher interest rates and greater macroeconomic uncertainty. Lowe’s witnessed softness in demand for DIY projects, which make up for a large part of its sales. Adverse weather led to softness in spring projects, which also impacted the companies’ top lines.
In Q2, Home Depot’s comp transactions fell 2.2% and its comp average ticket dropped 1.3%. Big-ticket comp transactions, or those over $1,000, were down 5.8% YoY. Lowe’s saw comparable average ticket edge up by 0.8% in the quarter, helped by strength in Pro-heavy categories, while its comparable transactions fell 5.9%, due to pressure on DIY project spend and lower seasonal transactions. Both retailers saw weakness in larger discretionary projects such as kitchen and bath remodels.
Home Depot’s Pro segment outperformed its DIY segment in the second quarter. Lowe’s also saw strength in Pro, with mid-single-digit positive comps. On its quarterly call, Lowe’s indicated that its Pro customers have healthy backlogs that remain consistent with last year. In addition, a majority of its Pro customers are confident of landing new business.
Against a challenging home improvement backdrop and weak consumer demand, both Home Depot and Lowe’s updated their guidance for the full year of 2024. Home Depot’s updated sales outlook includes the contribution from the SRS acquisition.
Home Depot now expects its total sales for the 53-week period in FY2024 to increase 2.5-3.5% versus the previous expectation for a 1% growth. SRS is expected to contribute around $6.4 billion in incremental sales.
HD expects comparable sales for the 52-week period to now decline 3-4% versus the prior outlook of down 1%. Adjusted EPS is expected to decline 1-3%.
Lowe’s lowered its FY2024 sales guidance to a range of $82.7-83.2 billion from the prior range of $84-85 billion. It now expects comparable sales to be down 3.5-4.0% versus its prior outlook of down 2-3%. Adjusted EPS is now expected to be $11.70-11.90 versus the previous expectation of $12.00-12.30.
Home Depot’s shares were up over 2% on Friday while Lowe’s stock gained over 3%.
The post HD, LOW: Near-term outlook for home improvement remains bleak first appeared on AlphaStreet.
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