Home improvement merchants The Home Depot Inc. and Lowe’s Cos. Inc. both reported year-over-year growth in online sales for Home Depot’s fiscal third quarter ended Oct. 30, 2022, and Lowe’s, ended Oct. 28, 2022. Despite rising costs due to inflation, consumers are investing in home projects — and both do-it-yourself and professional customers continue to shop.
Home Depot reported a profit of $4.34 billion Q3 2022, up from $4.13 billion in Q3 2021. Meanwhile, Lowe’s reported a profit was $154.00 million, down nearly 91.9% from $1.89 billion a year earlier. In 2021, Lowe’s sold its Canadian business to Sycamore Partners for $400 million, resulting in a pre-tax non-cash impairment charge of $2.1 billion on Lowe’s Q3 earnings results.
Net sales were up for the first time since January 2022 at $23.48 billion. That’s up from $22.92 billion for the comparable period a year earlier. net sales increased 2.4% in Q3 2022 to $23.48 billion, compared with $22.92 billion year over year.
And while customers for both Home Depot and Lowe’s made fewer transactions in Q3, average order values grew. A sign that while prices are higher, consumers are willing to make the investment, said Jeff Kinnaird, executive vice president, merchandising, at Home Depot, according to a Seeking Alpha transcript.
Home Depot ranks No. 4 in the 2022 Digital Commerce 360 Top 1000 database. and Lowe’s ranks No. 11.
Home Depot Q3 earnings 2022
For its fiscal third quarter ended Oct. 30, Home Depot reported online sales grew 10.0%.
Net sales increased 5.6% at $38.87 billion. That’s up from $36.82 billion for the comparable period a year earlier. Net earnings increased 8.2% to $4.34 billion. That’s up from $4.13 billion for the year-ago period.
Additionally, Home Depot fulfilled 50% of online orders through its stores.
For the nine months ending Oct. 30, Home Depot net sales grew 5.3% to $121.57 billion. That’s up from $115.44 billion a year earlier. Net earnings for the period were $13.74 billion, up 5.1% from $13.08 billion for the year-ago period.
CEO Ted Decker said despite inflation and rising interest rates, “our customer has remained resilient and engaged,” according to the transcript. “Customers are still spending lots of time at home. We’re not all back at work five days a week. These homes continue to age, and they’re worth 40% more than they were pre-pandemic.”
Decker highlighted the retailer’s Pro and do-it-yourself (DIY) customer growth. Home Depot’s B2B Pro business sells to professional home improvement and other contractors.
As more homeowners plan to invest in the homes they already own as mortgage rates climb, Richard McPhail, chief financial officer, said it’s a shift to an “improve in place” mentality.
Home Depot and Lowe’s could benefit from an aging housing marketing, says Brian Yarbrough, an analyst at financial investment firm Edward Jones.
“We think the demand and the tailwind for the housing market remains positive over the next three to five years,” Yarbrough says. While the outlook remains positive, Yarbrough said he expects growth to slow in 2023 due in large part to inflation.
“As inflation continues to outpace wage growth, at some point, it has to cut into consumer spending,” he says. Consumers will likely look where they can cut back on non-essential purchases, which could trend toward cutting back in the home improvement category, Yarbrough says.
Lowe’s earnings Q3 2022
Lowe’s reported its online sales increased 12.0% year over year for its fiscal third-quarter ended Oct. 28.
“Our Lowes.com sales grew 12% this quarter, four times our U.S. growth rate, representing a sales penetration of 10%,” said CEO Marvin Ellison, according to a Seeking Alpha transcript. Ellison said the retailer will continue to enhance the online user experience as well as its fulfillment capabilities.
Strong appliance sales drove the majority of Lowe’s 12% increase in online sales, said Brandon Sink, chief financial officer, according to the Seeking Alpha transcript.
The retailer noted its focus on enhancing omnichannel fulfillment capabilities. Joe McFarland, executive vice president of stores, said the retailer is on track to decrease shipping times 50%. Lowe’s also began offering same-day delivery nationwide with Instacart now supporting more than 1,700 stores.
Net sales were up for the first time since January 2022 at $23.48 billion. That’s up from $22.92 billion for the comparable period a year earlier.
For the nine months ended Oct. 28, Lowe’s net sales was $76.61 billion. That’s a slight decrease from $74.91 billion for the comparable period in 2021. Profit was $5.48 billion, down from $7.23 billion a year earlier.
Fulfillment retail strategies at Home Depot and Lowe’s
Both Home Depot and Lowe’s cited omnichannel options for customers as parts of their fulfillment strategies. Lowe’s announced it will open a new coastal holding facility in the port city of Suffolk, Virginia. And Home Depot noted during its earnings call that half of its online orders were fulfilled in stores.
The pandemic prompted many large retailers to offer alternative ways to receive merchandise. Offering in-store or curbside pickup paid off for Digital Commerce 360 Top 1000 retailers in 2020. Those that offered such options grew collectively online by 50.3% in 2020 versus 30.2% for those that did not.
60% of both Home Depot and Lowe’s ecommerce orders were picked up in stores in 2020.
Edward Jones’ Yarbrough expects ecommerce growth rates will continue to grow, albeit at a slower rate compared to the pandemic boom of 2020.
“I expect growth rates to stay somewhere in the single high and low double digits,” he says. “We’ll continue to watch that. I still expect a sizeable amount of the orders will be picked up in store — which is nice because that’s a better profit [for the retailer] than to have to ship it directly to people.”
Home Depot earnings
For the fiscal quarter ended Oct. 30, Home Depot reported:
- Online sales grew 10% compared to a year ago.
- Net sales increased to $38.87 billion. That’s up 5.6% from $36.82 billion for the comparable period a year earlier.
- Profit grew to $4.34 billion. That’s up 8.2% from $4.13 billion for the year-ago period.
For the nine months ended Oct. 30, Home Depot reported:
- Net sales rose to $121.57 billion. That’s up 5.3% from $115.44 billion a year earlier.
- Profit for the period were $13.74 billion. That’s up 5.1% from $13.08 billion for the year-ago period.
Lowe’s earnings
For the fiscal quarter ended Oct. 28, Lowe’s reported:
- Online sales grew 12.0% for the quarter ended Oct. 28, compared with the same quarter in 2021.
- Net sales increased to $23.48 billion. That’s up 2.2% from $22.92 billion for the comparable period a year earlier.
- Profit was $154.00 million, compared with $1.89 billion a year earlier.
For the nine months ended Oct. 28, Lowe’s reported:
- Net sales was $76.61 billion, down slightly from $74.91 billion from the comparable period in 2021.
- Profit was $5.48 billion, down from $7.23 billion a year earlier.
Percentage changes may not align exactly with dollar figures due to rounding.
Sign up
Stay on top of the latest developments in the ecommerce industry. Sign up for a complimentary subscription to Digital Commerce 360 Retail News.