- Lowe’s just posted a 34.2% jump in year over year comparable sales in its second quarter.
- Executives said on Wednesday’s earnings call that the company’s strong performance has been driven by a surge of consumers that are increasingly “focused on the home.”
- Lowe’s also saw a 135% increase in year-over-year sales on its website, which has recently been revamped.
- “We are looking forward to building on this momentum on the back half of 2020 and for years to come,” CEO Marvin Ellison said on the call.
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Consumers are continuing to flock to Lowe’s for paint, interior decor, and lighting fixtures during the coronavirus pandemic, leading to bombshell quarterly earnings results for the home improvement retailer.
The North Carolina-based company reported total sales of $27.3 billion and net profits of $2.8 billion in the second quarter. Comparable sales were up 34.2% system-wide from last year, with US same-store sales spiking 35.1% over the same period.
“We are pleased and humbled that we were the first choice for many customers that needed home improvement items during this unprecedented time,” Lowe’s CEO Marvin Ellison said on a call with analysts Wednesday.
“We are looking forward to building on this momentum on the back half of 2020 and for years to come,” he added.
Ellison further credited Lowe’s’ impressive earnings to consumers’ “broad-based and cross channel” demand for home improvement goods across the company’s 15 geographic regions in the United States. He also singled out the company’s “cost-discipline” and renewed strategic approach to pricing and promotions.
As customers dined-out and vacationed less, spending by the company’s do-it-yourself shopper base “outpaced” comparable sales in the professional consumer base category, Lowe’s said.
Bill Boltz, Lowe’s vice president of merchandising, reiterated the company’s belief that Lowe’s shoppers have developed a “keen focus on the home” during the pandemic, with so many individuals working from home.
He said that while all 15 merchandising departments in Lowe’s store delivered positive comparable sales, indoor categories delivered combined comparable sales jumps of 30%. He said the results were “driven by strength in indoor categories such as decor and lighting.”
Consumers during the pandemic have been eager to take on “projects to repurpose home space for work and study, discretionary indoor and outdoor projects to increase customers’ enjoyment of their homes,” Boltz said, adding that the company has also seen “significant improvement in flooring, millwork, kitchen, and bath.”
Ellison, along with Lowe’s Chief Financial Officer David Denton, also highlighted Lowe’s’ ecommerce gains in the quarter. Sales on Lowes.com spiked 135% year-over-year. The company garnered a “higher than expected” number of downloads of its mobile app in the quarter.
“We continue to prioritize investments in our omnichannel capabilities, as our customers continue to shop more online,” Denton said.
Going forward, the home improvement retailer’s CFO asked analysts to keep in mind that traditionally, the third and fourth quarters tend to be “smaller revenue quarters” for Lowe’s, “due to natural patterns of the home improvement sector.”
Lowe’s and its Georgia-based rival Home Depot have both captured the swelling market of consumers looking to spend money usually reserved for travel or dining out on home improvement projects. Foot-traffic tracking company Placer.ai described the phenomenon as the “endless home improvement surge,” and noted that Lowe’s saw a year-over-year boost in foot traffic of 30.9% and 25.8% in June and July.
Seth Basham, the managing director of equity research at Wedbush Securities, published a note on Wednesday saying that Lowe’s soared above already high investor expectations with its comparable sales spike.
He wrote that the home improvement retailer “has been able to capitalize on incredibly strong demand better than” its rival Home Depot, largely thanks to “its DIY focus, suburban location skew, outdoor categories skew, fewer store capacity restrictions, continued promotions and better inventory management.”