Consumers are forgoing big-ticket home projects, a fact that is cutting into Lowe’s revenue.
The home improvement retailer released earnings Tuesday (Feb. 27) that showed sales for its most recent quarter dropping from $22.4 billion to $18.6 billion, “due to a slowdown in DIY demand and unfavorable January winter weather.” Pro customer sales were flat.
The company also forecast a 2% to 3% drop in sales for the years ahead, as consumers step back from do-it-yourself (DIY) home repairs and remodeling projects amid higher inflation and a slowing real estate market.
“Those that did engage in home improvement activities took on smaller, non-discretionary projects with a heightened focus on value,” CEO Marvin Ellison said during an earnings call.
That meant a decrease in demand for big-ticket items for kitchen and bathroom projects, along with appliances and flooring. Ellison said Lowe’s is planning to debut a DIY loyalty program to drive both in-store and eCommerce sales.
Last November, Lowe’s slashed its full-year sales outlook after reporting a “greater-than-expected pullback” — to the tune of 13% — in sales as homeowners held off on DIY projects.
Those pressures have worsened since last year, with 62% of consumers now living paycheck to paycheck in January, compared to 60% last year.
“This increase suggests the rising cost of living may be taking its toll on consumer finances — including high-income consumers,” PYMNTS wrote Tuesday.
“More than one-third of those annually earning more than $200,000 say they live paycheck to paycheck. While rising housing and food costs impact high-income consumers, other factors — such as nonessential spending, paying expenses for others and drawing on savings due to unexpected expenses — may particularly inform their financial lifestyles.”
Meanwhile, Lowe’s rival Home Depot is merging its digital and in-store experience to improve its omnichannel experience, as PYMNTS wrote last week.
“In 2024, we will focus on building more robust capabilities to support an interconnected self-service returns process, where customers will have the ability to start a return online and complete that return via mail or in-store,” Ann-Marie Campbell, senior executive vice president, told analysts during an earnings call.
“We have just begun all of this work in earnest and are very excited about the friction we will remove through this process while realizing significant productivity benefits over the long term.”
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