Lowes and Home Depot Financial Results Bear Out Focus on ProsSeptember 9th, 2021 by Tara Taffera
When Lowes and Home Depot released their financial results last month, both posted earnings growth, not surprising given the continued growth of homeowners spending money on remodeling projects. But when dissecting the earnings transcripts for both companies, it was a focus on pro customers that dominated conversations, proving this is where both companies are continuing to place a significant focus.
First, let’s look at the numbers. Home Depot reported net earnings of $4.8 billion for the second quarter of fiscal 2021, compared with $4.3 billion from the second quarter of fiscal 2020. Lowes reported net earnings of $3 billion compared to $2.8 billion in the second quarter of 2020.
Regarding where those sales come from, Joe McFarland, executive vice president, stores for Lowes, says, “Pro continues to outpace DIY with pro comps of 21% for the quarter and 49% on a two-year basis. We continue to expand our digital connection with the pro customers.”
The same is true over at Home Depot, according to Craig Menear, chairman and CEO. “Our pro customer outpaced the DIY customer for the second quarter in a row,” he said.
“As we look forward to the back half of the year, we know our pros are busy, and we are working hard to secure the best products to help our pros get their jobs done,” adds Ted Decker, president and chief operating officer. To that end, last quarter, Home Depot introduced several exclusive products for its pro customers.
Like Lowes, Home Depot is placing a big emphasis on digital for this market as well. The company built a B2B website and all of its Pro Xtra customers have functionality on that platform which is built just for them.
When top executives at Lowes gathered for their earnings call, Marvin Ellison, president and CEO, pointed out that the company saw a decline in DIY demand versus last year as families transitioned back to pre-COVID purchase patterns and weekend mobility after Labor Day. “But because of the agility of our total home strategy, we were able to capitalize on pro demand driving growth,” Ellison says.
He also commented on the company’s “total home strategy” saying Lowes installation services business will continue to play an essential role as customers look to Lowes to provide an end-to-end turnkey solution for their home project needs.
Executives at both companies also touched on a topic everyone is familiar with—supply chain issues—and the retail giants have suffered here as well.
“Supply chain costs also pressured margin by 35 basis points as we absorbed some elevated distribution costs and continue to expand our omnichannel capabilities,” said Dave Denton, executive vice president at Lowes.