by The performance of America’s largest home improvement retailers offer clues for the furnishings industry
ATLANTA — Two of the country’s largest home-improvement retailers, Home Depot and Lowe’s, reported their second-quarter financial results last week, offering another glimpse into how today’s home consumer is spending. While both retailers posted sales growth, their respective results suggest that consumers are prioritizing smaller projects, maintenance and services while remaining cautious about larger discretionary purchases.
Home Depot reported a 5.7% increase in second-quarter sales to $47.9 billion, while comparable U.S. sales rose 1.3%.
“Our second-quarter results exceeded our expectations,” Richard McPhail, executive vice president and chief financial officer of Home Depot, said in a news release from the company. “We saw broad-based demand across the business as customers continued to engage in smaller projects.”
Reporting a day later, Lowe’s posted an 8.3% increase in sales to $26 billion, but comparable sales rose just 0.2% and the retailer lowered its full-year outlook.
“Sustained growth in Pro, Online and Home Services led to our fifth consecutive quarter of positive comp sales, despite pressure in discretionary DIY spending,” Lowe’s Chairman, President and CEO Marvin R. Ellison said in a statement.
The preference for smaller projects, rather than large-scale renovations, could have implications for other big-ticket home categories including furniture. Recently, premium furnishings retailer Arhaus noted this trend in its own second-quarter financial results. In its investor relations presentation, the company noted one driver of current client demand was “light refreshes,” including smaller updates to existing spaces and ongoing investment in homes already owned.
While Arhaus operates in a different part of the home category, its adjacency to Lowe’s and Home Depot’s businesses offers another clue of how consumers are approaching spending on the home. Consumers are still engaging with their homes, but in many cases, seem more interested in improving what they already have.
Even in a challenging sales environment, that could mean opportunities for furnishings retailers. Consumers who aren’t ready to move into a new home, or invest in a drastic makeover, may still be willing to replace an item or two, or refresh a designated space. For furnishings retailers, that could be messaging more accessible ways to make smaller changes.
Furniture and home retailers are particularly subject to cautious consumers right now. That was a main takeaway from the latest retail sales data from the U.S. Census Bureau released last week. An analysis of the data by category showed that furniture and home furnishings stores remained under pressure even as overall retail spending continued to grow.
Taken together, the recent earnings results and retail sales data point to a consumer who hasn’t stopped spending on the home, but is being more selective. They aren’t necessarily sitting this cycle out, but they are approaching it with more intentionality, favoring smaller, more purposeful purchases over major investments.
