Consumers during the pandemic turned to home improvement projects
Lowe’s on Wednesday reported a 30% revenue gain in the second quarter of 2020, with sales reaching $27.3 billion as consumers used the pandemic as an opportunity to fix up their dwellings.
Comparable store sales increased 34.2% year over year, the retail chain said. Comparable sales for the U.S. home improvement business increased 35.1% for the second quarter. As well, e-commerce surged 135% during the second quarter, also reflecting larger pandemic trends in the retail world. Lowe’s also reported Q2 net earnings of $2.8 billion, up 64% from the same period last year.
"We saw sharp acceleration from Q1 demand trends, including significant increases in the number of new pro and DIY and millennial customers," Marvin Ellison, Lowe's president and CEO, said on the post-earnings conference call. "DIY comps outpaced pro comps in the quarter, driven by a consumer mindset that was heavily focused on the home and wallet share shifts away from other activities like dining out, vacations and purchasing apparel."
Lowe's also credited some of its Q2 growth to city dwellers.
"Importantly, we saw strong sales trends in urban areas. In fact, comp sales in our urban markets outperformed remote or rural markets by over 500 basis points," Ellison said. "This is an important data point because it reflects the success of our business model in all geographic settings, as well as the importance of having a strong pro business as well as an effective omnichannel strategy to compete in urban settings."
Lowe's also did vital digital work during the ongoing pandemic — a signal of what retailers have to do to keep ahead of the curve as the outbreak continues.
"We completed the replatform of lowes.com to the cloud during the quarter," Ellison said. "This enabled us to improve site functionality and sustained triple-digit growth without any systems interruptions."
In the second quarter, Lowe’s invested $460 million in support of front-line hourly associates, communities and store safety. Through the first half of 2020, Lowe's has invested $560 million in COVID-related financial support for its associates and $100 million in community pandemic relief, with a focus on minority and rural small businesses and health care workers. Additionally, the retailer’s second quarter performance resulted in a record quarterly "Winning Together" profit-sharing bonus for its hourly associates at 100% of its stores, which totaled $107 million.
“Sales were driven by a consumer focus on the home, core repair and maintenance activities, and wallet share shift away from other discretionary spending,” Ellison said. “Through our retail fundamentals strategy, we have dramatically improved our technology and operational platforms, which enabled us to meet customer demand and grow our business. Looking ahead, our sales momentum continues into August, and we are investing in the business to further our omnichannel capabilities.”
The day before, The Home Depot also reported its financial results, another sign that consumers stuck at home during the ongoing outbreak are filling their time with home improvement projects. The chain on Tuesday reported a 23.4% year-over-year revenue increase, to $38.1 billion. Comparable stores sales in the U.S. increased 25%. Sales that leveraged Home Depot's digital platforms increased about 100% in the quarter, and more than 60% of the time the chain's customers opted to pick up their orders at a store.