While Lowe’s has made major strides in its turnaround efforts in the past few years-the stock outperformed Home Depot’s over the past 12 months and Barron’s named Chief Executive Officer Marvin Ellison to its Best CEOs list this summer-most analysts agree it still has some catching up to do. Plus, Home Depot didn’t provide any guidance to counteract the gloominess.Īnd that’s probably what’s weighing on Lowe’s.
Yet, the comps slowing so quickly might have investors thinking hard about whether or how much longer Home Depot can sustain its pandemic bump, especially as stimulus checks wane and the housing market settles down. Still, even bulls know the white-hot growth of 2020 isn’t sustainable: The consensus forecast for same-store sales to grow 5.4% was a marked slowdown from the prior four quarters, which each recorded double-digit sales jumps. Home Depot and Lowe’s (LOW) have generally been standouts in the so-called stay-at-home trade, helped by a robust housing market: Consumers have kept putting money into their homes-from buying properties to taking on remodeling projects-even as vaccinations have allowed for a broader economic reopening. In the past few quarters, they’ve become even more important for investors, who are looking for clues about how long pandemic winners-like home improvement companies-can keep their momentum going. Same-store sales are a key metric in retail because they smooth out the impact of store openings and closures. Traffic fell even as customers spent more, in part because of higher raw material costs, which has pushed up the price of products across several categories.
But same-store sales grew a smaller-than-expected 4.5%. On the surface, Home Depot’s earnings were better than expected-both its top and bottom lines came in above analyst estimates.
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