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May 21, 2020, 9:22 a.m. EDT

Lowe’s benefited from delayed DIY projects done during coronavirus lockdowns, while Home Depot saw professional jobs put on hold

Lowe’s beat profit expectations while Home Depot fell short

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By Tonya Garcia, MarketWatch


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Lowe’s says customers did DIY projects while stay-at-home orders were in effect

With more time spent at home, people finally undertook those long-delayed, home-improvement projects, giving Lowe Cos. Inc. a boost in first-quarter earnings.

Lowe’s /zigman2/quotes/205563664/composite LOW -1.76%  reported profits and sales that far exceeded FactSet expectations, sending shares up 1.2% in Wednesday trading.

“We served broad-based project activity, ranging from outdoor landscaping and other beautification projects to essential indoor repair and maintenance work and long deferred home projects, the to-do list that customers hadn’t previously tackled given their busy schedule,” said Lowe’s Chief Executive Marvin Ellison on the Wednesday earnings call, according to a FactSet transcript.

Comps for the do-it-yourself category “slightly outpaced” those for the professional category, Ellison said.

Read: Americans spent their stimulus checks on ‘discretionary goods’ such as bikes, video games and clothes, Target and Walmart CEOs say

“Towards the latter end of the quarter, consumers’ focus has shifted towards their gardens and our data show a sharp uplift in the number of people undertaking gardening projects and/or buying new outdoor furniture and accessories,” wrote Neil Saunders, managing director at GlobalData Retail.

“In our view, this is helpful for Lowe’s as its garden center proposition is relatively strong. Outdoor living collections and furnishings have also been enhanced and ranges are more compelling and prominent in stores.”

Home Depot /zigman2/quotes/208081807/composite HD -0.59% , on the other hand, missed profit expectations but beat on sales.

“So the pros definitely faced some headwinds from the state mandates,” said William Lennie, executive vice president of outside sales and service at Home Depot, during that company’s earnings call on Tuesday, according to a FactSet transcript.

“We also had some restrictions in the form of inability to get permits issued or job-site inspections completed so they can move on with their projects. And finally, there were some headwinds there with homeowners just having the reluctance to have crews working in their home when they were sheltered in place.”

See: Walmart spent nearly $900 million on the coronavirus in Q1 and says it’s a ‘reasonable assumption’ that they’ll spend that much in Q2

Still, Home Depot executives say that both professional and DIY business had a good showing.

Home Depot forecasts that these professional projects have simply been delayed.

“[I]n our own services business, which is some of our best pros, we’re not seeing a high cancellation rate of the jobs,” said Craig Menear, chief executive of Home Depot. “It’s just a postponement. The customer still wants those to go on.”

Home Depot suspended its financial guidance.

/zigman2/quotes/205563664/composite
US : U.S.: NYSE
$ 163.78
-2.93 -1.76%
Volume: 3.72M
Sept. 17, 2020 4:03p
P/E Ratio
21.76
Dividend Yield
1.47%
Market Cap
$125.99 billion
Rev. per Employee
$230,029
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/zigman2/quotes/208081807/composite
US : U.S.: NYSE
$ 279.96
-1.67 -0.59%
Volume: 3.17M
Sept. 17, 2020 4:00p
P/E Ratio
25.64
Dividend Yield
2.14%
Market Cap
$303.16 billion
Rev. per Employee
$261,993
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