Lowe’s Blames Weather and Economic Woes for Drop in Q2 Comparable Sales

Home improvement retailer Lowe’s reported that second-quarter comparable sales dropped 5.1%, which is higher than analysts’ predictions of 4.1%, as reported by Reuters. The company also expects its 2024 comparable sales to fall somewhere between 3.5% and 4%, compared to an earlier estimate of a 2% to 3% decline.

For the quarter ending Aug. 2, Lowe’s reached $2.4 billion in net earnings, with total sales hitting $23.6 billion. For the same period last year, total sales were $25 billion. Total sales for the year will likely be between $82.7 billion and $83.2 billion — the previous estimate was $84 billion to $85 billion.

Fueled by economic uncertainty, consumers are putting off many home renovation projects, plus adverse weather slowed sales of outdoor and seasonal items. Meanwhile, higher borrowing costs have put a dent in new home sales, which could indicate a slow recovery for the home improvement giant.

“The company delivered strong operating performance and improved customer service despite a challenging macroeconomic backdrop, especially for the homeowner,” said Lowe’s CEO Marvin R. Ellison, per PR Newswire. “As we look ahead, we are confident that we are making the right long-term investments to take share when the market recovers.”

Other home improvement retailers are feeling consumers’ economic woes. Last week, Home Depot predicted its annual profit and sales to fall in 2024. Nearly mirroring Lowe’s, the company expects annual comparable sales to decline 3% to 4%, versus a previous prediction of 1%.

However, if the Federal Reserve cuts rates in September as anticipated, the home improvement market could be on its way to a rebound. Lower rates will ease consumers’ fear of borrowing for home renovations, and homeowners thinking about selling are likely to move forward with improvements knowing buyers will be more abundant if mortgage rates fall. Yet, it can take several months before consumers will feel the effects, meaning it could still take some time before consumer demand returns.

Year-to-date, Lowe’s share price is up over 9%, while rival Home Depot has gained nearly 5%. After Lowe’s released its Q2 report, the stock price was slightly down in pre-market trading.