Lowe's to Follow Home Depot in Reporting Earnings Amid Core DIY Consumer Pullback

As the home improvement retail sector braces for the impact of reduced core DIY consumer spending, Lowe's Companies, Inc. (NYSE: LOW) is set to report its second-quarter earnings on Wednesday, February 26, following Home Depot's (NYSE: HD) strong performance. Lowe's faces challenges in the DIY segment, with consumers tightening their purse strings on discretionary big-ticket projects. However, the company's strategic focus on the Pro customer segment and digital growth initiatives offer reasons for optimism.



Lowe's reported total sales of $23.6 billion for the second quarter of 2024, with comparable sales down 5.1% from the same period last year. The decline was driven by softness in DIY bigger-ticket discretionary demand, which was partially offset by positive comparable sales in Pro and online. The company's Pro segment recorded mid-single-digit positive comps, while online sales grew 2.9%.



Marvin R. Ellison, Lowe's chairman, president, and CEO, acknowledged the challenges in the DIY segment but expressed confidence in the company's ability to navigate the current environment. "Our results this quarter were modestly better-than-expected, even excluding storm-related activity, driven by high-single-digit positive comps in Pro, strong online sales, and smaller-ticket outdoor DIY projects," he said.

Lowe's strategic focus on the Pro customer segment has proven successful, with the company gaining market share in key categories and driving growth in this segment. The company's investments in serving the small to medium-sized Pro customer, including adequate staffing, loading assistance, inventory levels, a loyalty program, a world-class CRM system, and reintroducing national brands that Pros prefer, have yielded positive results.



In addition to its focus on the Pro segment, Lowe's has been investing in its digital platform to provide a seamless shopping experience for both DIY and Pro customers. The company has seen positive online sales performance, with a 6% comparable sales growth in Q2 2024. Lowe's has also expanded its same-day delivery options and improved the overall online shopping experience, driving more sales through its digital channels.

As Lowe's prepares to report its earnings, investors will be closely watching the company's performance in the DIY segment and its continued growth in the Pro segment and online sales. The company's strategic initiatives, including its focus on the Pro customer segment and digital growth, position it well to navigate the current economic environment and capitalize on the expected recovery in home improvement demand.

In conclusion, while Lowe's faces challenges in the DIY segment due to reduced consumer spending, the company's strategic focus on the Pro customer segment and digital growth initiatives offer reasons for optimism. As Lowe's reports its earnings, investors will be looking for signs of continued growth in these areas and the company's ability to navigate the current economic environment. With its strong fundamentals and strategic initiatives, Lowe's is well-positioned to return to average annual sales growth of 3%-4% and an operating margin that rises to 14% as the economic cycle rotates favorably.