Consumers are putting do-it-yourself (DIY) projects on hold, which is bad news for Lowe’s.
The home improvement chain has slashed its full-year sales outlook, saying Tuesday (Nov. 21) that it had seen a “greater-than-expected pullback” — to the tune of 13% — in sales as homeowners held off on new DIY work.
“Given our 75% DIY mix, the DIY pressure disproportionately impacted our third quarter comp performance,” CEO Marvin Ellison said in a news release.
“At the same time, our investments in Pro continue to resonate, resulting in positive Pro comps again this quarter.”
The company’s earnings report shows it lowering its full-year sales outlook to account for total sales of $86 billion, down from an earlier $87 billion to $89 billion projection. Comparable sales were expected to be down approximately 5% as compared to last year, adjusted from an earlier 2% to 4% decline.
Lowe’s earnings came one week after rival Home Depot likewise reported a cooling in DIY spending, with its customers opting for smaller projects rather than larger — and costlier — remodeling campaigns.
“We saw the continuation of the trend that we have been observing throughout the year with softness in certain big-ticket, discretionary-type purchases. Instead of engaging in larger projects, customers continued to take on smaller projects,” Home Depot EVP of Merchandising William Bastek said on an earnings call.
And like Lowe’s, Home Depot’s Pro business also outpaced its DIY segment, though executives on the call said the margin of outperformance was “the narrowest we’ve seen” and spoke of driving demand in that segment.
“The number one way we’re focused on driving demand is with the complex pro, it’s a $200 billion space. That is our strategy,” said Ted Decker, chair, president and CEO of Home Depot. “Larger pros with more complex spend, we are building out the capabilities to service that demand. It is increasingly where we are very focused.”
Other retailers have adjusted their sales forecasts as consumers curtail their spending, including Best Buy, which also reported Tuesday. And Walmart last week offered a more moderated outlook for the rest of the year.
CFO John David Rainey noted that “sales have been somewhat uneven, and this gives us reason to think slightly more cautiously about the consumer versus 90 days ago.”