Consumers show continued interest in home-improvement projects. An aging U.S. housing stock makes Home Depot and Lowe's optimistic.

Home improvement chains The Home Depot Inc. (No. 4 in the 2022 Digital Commerce 360 Top 1000 database) and Lowe’s Cos. Inc. (No. 11) each reported year-over-year increases in online sales for Q2 — a potentially good sign for a pair of retailers looking to improve their status as omnichannel merchants.

Home Depot also reported higher revenue and earnings compared with a year ago. At Lowe’s, total revenue and earnings were flat compared to the comparable period in 2021.

The results reinforce the findings of a Digital Commerce 360 and Bizrate Insights survey of 1,113 online home goods shoppers in April. At that time, a sizable percentage of shoppers reported plans for do-it-yourself (DIY) home-improvement projects.

Home Depot online sales results

Home Depot reported online sales grew 12% compared to a year ago for the quarter ended July 31. Overall sales were up 6.5%, at $43.79 billion. That’s up from $41.12 billion for the comparable period a year earlier. Net earnings grew 7.6% to $5.17 billion, up from $4.81 billion for the year-ago period.

The retailer reported that Home Depot fulfilled more than 50% of its online orders through its stores during the quarter.

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For the six months ended July 31, Home Depot’s sales rose 5.2% to $82.70 billion. That’s up from $76.62 billion a year earlier. Net earnings for the period were $9.40 billion, up 5% from $8.95 billion for the year-ago period.

“Our results in the second quarter reflect continued strong demand for home improvement projects,” Home Depot CEO Ted Decker told analysts during a Tuesday conference call, according to a Seeking Alpha transcript.

Decker added that the retailer saw growth in its business with DIY consumers and with “pros” — construction contractors and remodeling professionals. But he warned the retailer was “navigating a unique environment” and is keeping a close eye on macroeconomic factors.

In May, Home Depot launched new capabilities on its B2B website to enhance contractors’ shopping and quoting experience. The changes allow associates to make changes before the customer places an order. Previously, the website was not integrated with Home Depot’s ordering and quoting systems, so an associate could not easily modify an order.

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Home Depot reiterated its guidance for the rest of its fiscal year, including comparable sales growth of about 3%.

Lowe’s online sales results

Lowe’s reported its online sales grew 7.0% for the quarter ended July 29, compared with the comparable period in 2021. Overall sales were $27.5 billion, down slightly from $27.6 billion in the second quarter of 2021. Net earnings were $2.99 billion, down a small fraction of a percent from $3.02 billion a year earlier.

For the six months ended July 29, revenue was $51.14 billion, down about 1.7% from the comparable period in 2021. Net income was $5.33 billion, down a fraction of a percent from $5.34 billion a year earlier.

During a conference call with analysts on Wednesday, Lowe’s CEO Marvin Ellison said sales to DIY consumers — which represent 75% of Lowe’s sales — were lower than expected in the second quarter and the first half of the fiscal year. However, he said, sales to contractors in Q2 grew “by double digits” for the ninth consecutive quarter.

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“To summarize, our DIY trends — despite slower sales in select discretionary categories like patios and grills — the DIY customer remains resilient, which reflects continued strong home improvement demand trends,” Ellison said, according to a Seeking Alpha transcript.

Lowe’s said it expects comparable sales for the full year to range from a decline of 1% to an increase of 1%, compared with 2021.

“Results may have been better than feared given the challenging macroeconomics,” Bloomberg Intelligence analyst Drew Reading said. “An expanded operating margin despite lower sales reflects Lowe’s improved operational execution.”

Category trends

April’s Digital Commerce 360 and Bizrate survey shows that interest in DIY home projects remains strong among U.S. online shoppers.

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44% of consumers surveyed cited projects as necessary in the coming year, up from 37% in a similar survey a year earlier. 42% of respondents cited a need for DIY projects in the coming year, down from 47% from the 2021 survey. In addition, 39% of survey respondents said they were doing more home projects.

23% of consumers surveyed indicated the number of planned projects was smaller, versus 17% with more planned projects. 23% said their projects were smaller and 18% larger compared to the peak of the coronavirus pandemic. Only 11% planned to use more professionals for home projects in 2022, compared with the height of the pandemic.

The home-improvement retailers say the age of the U.S. housing stock and slow rates of new home building work in their favor.

“More than half of the homes in the U.S. are over 40 years old, and millions more built at the peak of the housing boom in the early 2000s are now starting to turn 20 years old, which is a key inflection point for big-ticket repairs,” Lowe’s CEO Ellison said.

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Home Depot’s Decker expressed optimism for the same reasons Ellison cited. The U.S. housing stock is “aging disproportionately because we had so many of those years or we underbuilt in housing. So now we have well over half the homes in the United States over 40 years old,” he said.

Home Depot earnings

For the quarter ended July 31, Home Depot reported:

  • Online sales grew 12% compared to a year ago.
  • Overall sales were up 6.5%, at $43.79 billion. That’s up from $41.12 billion for the comparable period a year earlier.
  • Net earnings grew 7.6% to $5.17 billion, up from $4.81 billion for the year-ago period.

For the six months ended July 31, Home Depot reported:

  • Overall sales rose 5.2% to $82.70 billion, from $76.62 billion a year earlier.
  • Net earnings for the period were $9.40 billion, up 5% from $8.95 billion for the year-ago period.

Lowe’s earnings

For the quarter ended July 29, Lowe’s reported:

  • Online sales grew 7.0% for the quarter ended July 29, compared with the same quarter in 2021.
  • Overall sales were $27.5 billion, down slightly from $27.6 billion in the second quarter of 2021.
  • Net earnings were $2.99 billion, down a small fraction of a percent from $3.02 billion a year earlier.

For the six months ended July 29, Lowe’s reported:

  • Revenue was $51.14 billion, down about 1.7% from the comparable period in 2021.
  • Net income was $5.33 billion, down a fraction of a percent from $5.34 billion a year earlier.

Percentage changes may not align exactly with dollar figures due to rounding.

Bloomberg News contributed to this report.

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