coronaviruspandemic has battered much of the retailindustry, but home improvementstores are a major exception to the rule. Home Depotand Lowe’s — the two biggest players in the home improvement retail sector — both reported strong sales in their earnings calls this past week.
- Seth Basham, the managing director of equity research at Wedbush Securities, credited pandemic stay-at-home orders and beautiful spring weather with this “surge” of spending.
Millions of consumers across the United States have spent the spring of 2020 largely stuck at home as a result of the coronavirus pandemic. All those hours spent indoors — acutely aware of each rickety shelf, leaky faucet, or dingy tiled floor — have proven to be a boon for home improvement retailers.
Home Depot and Lowe’s just posted earnings this week. Home Depot’s report proved to be a mixed bag, with the company citing costs around employee benefits as well as the cancellation of many major sales events. Lowe’s, in the meantime, saw a major increase in sales.Advertisement
“There have been a surge of sales because of the coronavirus,” Seth Basham, the managing director of equity research at Wedbush Securities, told Business Insider.
Home improvement’s success by the numbers
Shoppers have been flocking to Home Depot and Lowe’s both online and offline during the pandemic.
Market research firm Numerator‘s Shopping Behavior Index found that home improvement spending has remained strong into May, with “shoppers making more frequent trips to sustain their at-home habits.” Locations analytics company Placer.ai found that visits to Home Depot and Lowe’s spiked 1.2% and 1.9% year over year over the course of 2020’s first quarter. And the flood of customers only continued to strengthen as April drew on. For the week of April 20, Home Depot’s weekly store visits saw a 31.3% jump above its typical baseline, while Lowe’s experienced a 71.8% rise in visits.
Warm weather and cooped-up consumers
So what’s behind the spike in home improvement spending?
The beautiful spring weather in many parts of the United States is one significant factor, but sunny days have always been a boon to home improvement sales.
According to Basham, this recent surge is also largely thanks to the wide impact of the coronavirus on daily life for consumers across the US. He said that many shoppers have been left “looking for projects” to tackle at home. In other cases, consumers who now find themselves working from home feel that they finally have the time to dedicate to projects that they have traditionally put off.Advertisement
“It does seem that people are still going to go ahead and do projects they had in mind because they have the wherewithal to do it, home prices are still going up, and they still have the jobs,” Basham said. “That’s what really has driven the vast majority of the improvement in their sales trends.”
A recession could still sink home improvement
Despite the largely positive news, there are still a few dark spots for the home improvement sector.Advertisement
Meanwhile, if the coronavirus sets the economy spiraling into a “deep, long recession” that sees “housing roll over,” home improvement retailers will likely find themselves in trouble, Basham said. But at this point, he said it’s “not clear how bad it’s going to be” in terms of the coronavirus’ longterm economic impact.
The lifting of coronavirus-related restrictions in many parts of the US does not appear to have dampened home improvement spending, however. Advertisement
“As some of those stay-at-home mandates lifted, sales trends have remained as strong or stronger than even the back half of April when they got a little bit of a benefit from the stimulus check distribution,” Basham said.
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