Home Depot vs. Lowe’s: Q1 recap

Lowe's produced some negative numbers in its first quarter, chief of which was a 4.3 percent same-store sales decline. The Mooresville, N.C.-based home improvement giant lowered by about $1 billion its full year sales outlook to a range between $87 billion and $89 billion.

But in its rivalry with The Home Depot, Lowe's scored a valuable point: Lowe's comps bested Depot's 4.6 percent decline. That's the first comp-store victory for Lowe's since the pandemic-induced home-improvement-sales explosion of late 2020.

The recent first quarter 2023 story at both giants was one of sales below expectations, driven by lumber deflation and unfavorable weather. But those plotlines are just part of the story. In terms of net sales, the first quarter was the third best first quarter in the history of Home Depot, and tied for second-best Q1 ever for Lowe's.

(And for Depot, there is a huge gulf between the Q1 of 2019, the fourth best ever at $28.3 billion, and the latest first quarter of $37.3 billion.)

At The Home Depot, Billy Bastek, executive vice president of merchandising reported a trend of "consumers pulling back on big-ticket and some discretionary-type purchases."

Other highlights from the Home Depot earnings call include the following:

Home Depot's Billy Bastek pointed to the following statistics to give a sense of lumber deflation in the market.

Framing lumber (average price)• 23Q1: $420 per 1,000 board feet• 22Q1: $1,170 per 1,000 board feet

• Four of Home Depot's 14 merchandising departments posted positive comps: building materials, hardware, plumbing, and millwork.

• Comparable average ticket increased 0.2% and comp transactions decreased 5%.

• Sales leveraging digital platforms decreased about 2.9% compared to the first quarter of last year. And 45 percent of online orders were fulfilled through physical stores.

• DIY outperformed pro in the quarter (both were negative) Lumber deflation factored heavily on pro sales.

• Big-ticket comp transactions, or those over $1,000, were down 6.5% compared to the first quarter of last year

"After a couple of years of unprecedented demand in the home improvement market, we continue to see softness in big-ticket discretionary categories like patio, grills, and appliances that likely reflects deferral of the single-item purchases in pull forward," Bastek said.

Product call outs went out to Leviton's Decora Edge; Viega copper press fittings, and Behr Dynasty exterior paint.

When the weather was good, Home Depot and Lowe's both saw strength in live goods and other garden-related categories.

At Lowe's, which didn't feel quite the same impact of lumber deflation as did its rival, comparable pro sales were slightly positive in Q1 with broad-based strength across multiple categories. Bill Boltz, executive vice president of merchandising, shared the following:

• Five of Lowe's 14 merchandising categories were positive: building materials, rough plumbing, paint, hardware, and appliances.

Regarding appliances, Boltz added the following color: "With our improved online capabilities like easy scheduling and order tracking, we continue to see more and more of our customers getting comfortable completing their purchases online," Boltz said. "In the U.S., we estimate that roughly 100,000 appliances break every day. So, our investments in fast appliance delivery and a seamless omnichannel shopping experience positions us well as the go-to destination for these urgent and often nondiscretionary needs."

• Online sales also accelerated this quarter with 6% comparable sales growth, representing more than a 10% sales penetration, the company said.

• Strongest comps were from home decor, paint and appliances. In the first quarter, Lowe's launched Spec Right Interior Paint in partnership with Sherwin-Williams. It's the company's first exclusive line of tintable paint formulated specifically for pros.

•Building materials and rough plumbing led the way for building product sales. Pinkbar by Owens Corning , 10-foot fiberglass rebar exceeded expectations when introduced n 2022 Lowe's is now pilling on with a 20-foot version. Rough plumbing was driven by strength in water heaters, HVAC, plumbing repair, and pipe and fittings as we continue to strengthen our offering for the Pro and the DIY consumer in these categories.

• Lumber, which felt steep price deflation. had the highest unit comp in the company, "reflecting strong pro demand," Boltz said.

• Hardware saw positive comps, led by what Boltz described as the improved assortments of the key fastening brands like SPAX, GRK, FastenMaster, ITW, and PowerPro One.

• Boltz elaborated on the company's farm-and-ranch play, in which some 300 additional stores by year-end will have a wider offering of farm, ranch and outdoor products.

"Given our rural store footprint and long-standing relationships in these communities, we see this as a natural opportunity for our business and one that will simplify the shopping experience for these very valuable customers. The move "positions Lowe's as a one-stop shop to make it convenient for rural customers to get what they need in one shopping trip," he said.