Home improvement merchant Lowe’s Cos. made it clear during its earnings call that it expects a slowdown in demand in 2023.

A slowdown in the housing market — the average rate on a 30-year fixed mortgage went over 7% on March 2, according to Freddie Mac — and inflation fears remain for the home improvement merchant, much like The Home Depot Inc., which reported last month.

Lowe’s online sales results

Online sales on Lowes.com increased 5% in the fourth quarter 2022 compared with a year earlier. Once again, this increase was partly due to strong appliance sales, CEO Marvin Ellison told investors during the March 1 earnings.

Overall sales were $22.44 billion for the fiscal fourth quarter ended Feb. 3, 2023. That’s up 5% from $21.33 billion for the comparable period a year earlier. Net earnings were $957.0 million, compared with $1.20 billion a year earlier.

For the fiscal year ended Feb. 3, net income was $97.05 billion, down from $96.25 billion from the comparable period in 2021. Net earnings for 2022 were $6.43 billion, down from $8.44 billion a year earlier.

In the fiscal fourth quarter of 2022, total sales declined 1.5%

Lowe’s is ranked No. 11 in the 2022 Digital Commerce 360 Top 1000 database.

Lowe’s offers Apple Pay, rolls out new delivery model

Ellison noted the home improvement merchant’s addition of Apple Pay as a payment option at checkout in Q4 “to improve conversion,” according to a Seeking Alpha transcript. The merchant also plans to make changes to its omnichannel shopping experiences, including a “rollout of our market delivery model for appliance and other big and bulky products.”

The new delivery model replaces what Ellison said was an “inefficient store delivery model.” Lowe’s intends such changes to help boost sales of “big and bulky product” categories such as grills, riding lawn mowers and stock cabinets.

The merchant services 10 geographic regions in the U.S. with more than 1,000 stores. 

Lowe’s Pro

Ellison told investors that the home improvement merchant surveyed its Pro customers in January 2023, and 70% said they were booked out with jobs in 2023 the same or more compared to 2022.  

While the outlook is cautious, Ellison said, Lowe’s is confident consumers will continue to invest in their home upkeep.

“Even if there is a modest decline in home prices, the level of equity built up during the pandemic would not be meaningfully eroded,” Ellison said. “And the housing stock continues to age with 50% of U.S. homes over 41 years old, the oldest since World War II.”

Ellison said Millennials continuing to invest in their home and baby boomers’ “increasing preference to age in place,” as well as continued remote work, will favor the merchant in the long run.

“And given the slowdown in housing turnover is driven by higher rates and low supply rather than demand, we continue to see a nationwide trend of trading up in place with consumers opting to upgrade their existing home to meet their evolving needs,” Ellison told investors.

Lowe’s earnings

For the fiscal quarter ended Feb. 3, 2023, Lowe’s reported:

• Online sales grew 5.0% for the quarter, compared with the same quarter in 2021.
• Net sales increased to $22.44 billion. That’s up 5% from $21.33 billion for the comparable period a year earlier.
• Profit was $957.00 million, compared with $1.20 billion a year earlier.

For the fiscal year ended Feb. 3, 2023, Lowe’s reported:

• Net sales were $97.05 billion, down from $96.25 billion from the comparable period in 2021.
• Profit was $6.43 billion, down from $8.44 billion a year earlier.

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

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