A day after Home Depot dazzled observers with strong sales, rival Lowe’s also reported gains, with same-store sales rising 2.6%. But its forecast for the year ahead is softer than some expected, and its reliance on brick-and-mortar sales may make it more vulnerable, as the category shifts to become increasingly omnichannel.
Lowe’s, based in Mooresville, South Carolina, says fourth-quarter sales hit $16 billion, compared to $15.6 billion in the comparable period of the previous year. And net earnings rose to $509 million, compared to the $824 million loss it posted in the fourth quarter of 2018.
For the year ahead, the retailer anticipates total sales growth of approximately between 2.5% and 3%, with comparable sales climbing between 3% and 3.5%.
"Our sales growth was driven almost entirely by our U.S. brick and mortar stores,” says Marvin R. Ellison, Lowe's president and CEO, in its announcement. “We have a detailed road map in place to modernize our ecommerce platform.”
Those depressed ecommerce results contrast sharply with Home Depot’s strength. That retailer just posted a quarterly ecommerce sales jump of 21%. It was actually the fifth-largest online retailer in the U.S., topped only by Amazon, Walmart, eBay and Apple, according to the latest ranking from eMarketer.
“Although the digital channel is growing, it is doing so at a much slower pace than the overall sector, so Lowe’s is losing online market share in home improvement,” writes Neil Saunders, managing director of GlobalData Retail, in his reaction to Lowe’s report. “Getting digital right is critical if Lowe’s is to generate higher growth, if only because increasing numbers of consumers start their journey by researching online and many more are now ordering online too.”
New research from NPD Group underscores just how important omnichannel shopping has become in the category, with 20% of DIY customers saying they prefer to shop both in-store and online, making almost 14 purchases across both channels.
“While most home improvement purchases are still in-store, as industries mature online the omnichannel mix begins to shift,” writes Leen Nsouli, home improvement industry analyst at NPD. “Increasing consumer demand for convenience, and retail advancements in digital capabilities, ecommerce platforms, and the supply chain are key drivers of this shift.”
The report from the Port Washington, N.Y.-based company says that more than half of DIYers use buy-online-pick-up-in-store options at least occasionally, especially those aged 18 to 44.
In the last year, it says online spending has gained for major home appliances, as well as storage, hardware, plumbing and air filters.