Comments from the two giant DIYers have caused analysts to lower their forecasts for the immediate future.
They were the outliers in the retail world, continuing to remain optimistic while their brethren were less positive about the outlook going forward. And now, they too are a little more pessimistic.
Home Depot and Lowe’s, the giant doppelgangers of the home improvement retail world, in recent conversations with one analyst firm, have both lowered their forecasts going forward for their businesses. This comes following a period of unprecedented growth for both companies and even their lowered expectations are still beating many other general merchandise retailers.
In a meeting with Telsey Advisory Group, the New York-based banking and financial services consulting company, Home Depot’s comments “left us more concerned about the near-term industry environment for home improvement given the tough, macro climate.”
That said, TAG believes Depot “should remain a winner in retail, given its best-in-class execution, digital prowess, and permanent and hybrid work-from-home arrangements causing more maintenance and repair activity. Home Depot also should be able to leverage HD Supply to grow its share in the $100B fragmented maintenance, repair, and operations (MRO) market.”
Telsey is a little less optimistic about Lowe’s. “We came away from our meetings with continued confidence in Lowe’s long-term strategy, but we remain concerned about the near-term and are lowering our 3Q23 and annual estimates given the tough macro climate for the industry. In the near term, we believe the company’s business is likely to remain under pressure from the soft housing market trends.
“Furthermore, Lowe’s expressed to us that headwinds have intensified further since the company’s last earnings call on August 22, with a greater pullback in DIY sales than anticipated, driven by weakness in more discretionary categories—like flooring, kitchen, bath, and interior projects—and in big-ticket products—like appliances. In addition, the resumption of student loan payments this month is anticipated to pose a negative.”
The outlook for both retailers is still looking shaky it said. “Overall, we believe Home Depot’s business is likely to remain under similar near-term pressure as Lowe’s, reflecting the tough macro backdrop, soft housing market trends, and lapping the solid gains related to COVID-19 and government stimulus in the past three years.”
Grow your business at the premier global woodworking trade show.
International Woodworking Fair
August 6–9, 2024
8:30 AM–5:00 PM
8:30 AM–2:00 PM
Georgia World Congress Center
285 Andrew Young International Blvd
Atlanta, GA 30313