Home Depot (HD) vs. Lowe’s (LOW): What Q4 Did for These Home Improvement Retailers

home improvement retailer Home Depot Inc.New York Stock Exchange: HD) and Lowe’s Companies Inc. (New York Stock Exchange: Low) recently reported earnings results for the fourth quarter of 2022. Both companies are forecasting lower-than-expected sales and a decline in the home improvement market in the near future. Here’s how these two rivals fared in the most recent quarter.

Quarterly results

Home Depot sales were $35.8 billion in the fourth quarter of 2022, little changed from $35.7 billion in the same period last year. Comparable sales for the quarter he fell 0.3%. EPS was up 3% year-over-year to take him to $3.30.

Lowe’s fourth quarter 2022 sales were $22.4 billion, up 5% year-over-year, but below expectations. Comparable sales he fell 1.5%. Adjusted EPS increased 28% year over year to $2.28.

Category performance

During the fourth quarter, Home Depot’s average comp ticket increased 5.8%, driven by inflation across product categories and demand for new products. Comp deals were down 6%. Lowe’s average comps ticket was up 4.8% for him due to product inflation and higher Pro sales, but this was offset by a 5.5% decline in comp transactions for him.

Both Home Depot and Lowe’s showed strength in the professional customer category in the fourth quarter. Home Depot’s Pro sales growth outpaced his DIY in the fourth quarter, and Lowe’s saw strong Pro sales and strong demand for DIY across major home improvement categories. Both companies say they have a healthy backlog of Pro customers. Home Depot and Lowe’s saw positive comps across categories like building materials, plumbing and woodwork in the fourth quarter.

Market trends and outlook

Both Home Depot and Lowe’s expect the home improvement market to decline in 2023, but are optimistic about the industry’s long-term outlook.

Home Depot expects flat real economic growth and consumer spending in 2023. The company is seeing transactions normalize as consumers shift their spending from goods to services, and believes the home improvement market will see his low-single-digit decline if this shift continues. at the current pace. Home Depot expects demand for home renovations to slow in 2023, but believes the long-term foundations of the market remain strong.

Lowe’s has seen positive trends in disposable personal income, rising home prices and aging housing stock, which are the main drivers of its business. Factors such as remote work and the formation of millennial households are also tailwinds. Consumers are choosing to upgrade their existing homes to meet their changing needs. All these factors give us confidence in the long-term prospects of the industry.

Lowe’s believes that residential investment will come under pressure in 2023, and expects the home improvement market to decline slightly due to high levels of inflation, high interest rates and consumer caution.

Home Depot expects comparable sales growth to about 20%. FY2023 will be flat compared to FY2022. EPS is expected to decline in the mid-single digits. Lowe’s expects total sales to be around $1. $88-90 billion by 2023. Comparable sales are expected to be flat to down 2% year-over-year. EPS is estimated at $13.60 to $14.00.

Home Depot’s stock is down 8% over the past 12 months, while Lowe’s stock is down 11%.

Click here to read the full transcript of home depot and Lowes Fourth Quarter 2022 Earnings Conference Call

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