Page 42 - HW September 2019

global eyes
Lumber (and tariffs!) limit US home improvement giants’ Q2
BOTH THE HOME Depot and Lowe’s singled out tumbling timber prices as affecting their second quarter numbers, with the latter also warning that Trump’s tariffs may also have an impact during the next financial year.
The Home Depot cuts forecast – “Mixed” was a common commentary on the Atlanta-based DIY giant’s second quarter (Q2) of FY2019.
Sales were US$30.8 billion, just +1.2% on the previous year, while comparable sales were +3% and US-only comparables +3.1%. Although Gross Profit was up, analysts also pounced on a 20 point drop in Gross Margin.
Along with FY2018’s 53-week fiscal period and, as with Lowe’s (see below), ongoing falling lumber prices were singled out as a significant cause of the modest top line gain with Craig Menear, the Home Depot’s Chairman, CEO
and President, seeing fit to update the company’s sales guidance “to account primarily for continued lumber price deflation, as well as potential impacts to the US consumer arising from recently announced tariffs.”
In this light, The Home Depot cut its forecast for FY2019 year-end sales to be around +2.3% with comps +4%.
www.homedepot.com
Lumber also limits Lowe’s – On 21 August Lowe’s reported Q2 net earnings of US$1.7 billion, compared to net earnings of $1.5 billion in Q2 FY2018, including US$14 million of pre-tax operating losses from winding down
its Mexican retail operations.
Q2 sales grew marginally (+0.5%) to US$21 billion while overall comparable sales were also modest
at +2.3% and comps for the US home improvement business +3.2%, slightly beating the Home Depot’s equivalent number.
The main negative factors influencing Lowe’s Q2 were “lumber deflation and difficult weather”.
But growth is growth, however modest, and Lowe’s President and CEO, Marvin R Ellison, remained positive as ever: “Our transformation is ongoing, and our future is bright. We are confident that we are on the right path to capitalize on solid demand in a healthy home improvement market and generate long-term profitable growth.”
Of course Lowe’s has also been busy cutting overheads, with plans to lay off “several thousand” workers including assemblers, who put together items like grills and patio furniture, maintenance and facility-service jobs which it says it will outsource.
“We are moving to third-party assemblers and facility services to
allow Lowe’s store associates to spend more time on the sales floor serving customers,” a spokesperson for Lowe’s is reported to have said.
Shortly after the Q2 numbers,
Lowe’s also announced an exclusive of some 10,000 items of NFL (American football) branded merchandise, to be heavily promoted as the football starts again, including a new online video series called NFL Homegating Makeovers by Lowe’s, around football-themed home makeovers...
www.lowes.com
40 NZHJ | SEPTEMBER 2019
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