As one of the leading names in home improvement retail, Lowe’s sales performance points to overarching movements and trends in the industry.

The retailer’s first quarter 2024 earnings release confirmed that there is still upside in the market as sales performed as expected, confirming the opportunity to focus more on affordable home improvement projects. The retailer’s investments in operational improvements will pay off as it is well-positioned for dominance when the market improves. 

Q1 2024 Sales and Comparable Sales

  • The retailer reported revenue of $21.36 billion vs. an expected $21.12 billion.
  • Earnings per share were $3.06 vs. an expected $2.94.
  • Comparable sales declined 4.1% at $21.4 billion vs. $22.3 billion.
  • They affirmed an annual forecast of a 2–3% decline in sales from 2023, targeting between $84–85 billion vs. $86.38 billion 2023 sales.
  • Pro and online sales were positive for the quarter.
  • Store foot traffic was up, but the average ticket was down 1% and is expected to be flat for the year.
  • Geographic variability: Rural stores are the best-performing store subset, and the Western division outperformed the other divisions.

Key Takeaways and Marketer Actions

Small projects for big returns: Lowe’s experienced a slowdown in Q1 in product categories associated with big-ticket and complex projects like remodels, flooring, and kitchen and bath upgrades. This was not a surprise considering CEO Marvin Ellison’s warning to investors this same quarter last year that the retailer expected consumers to pump the breaks on discretionary spending over the near term. The consumer is simply waiting to spend while they tighten their monetary belts, delaying spending discretionary income on big projects due to stubborn inflation and concerns around cost of living. However, an encouraging trend is that consumers are willing to spend on services and experiences. So, although big home improvement is currently benched, continued investment in smaller projects signals a desire for improvements to the home that should translate to bigger projects when the macro turns around. That’s why Lowe’s remains confident in the medium- to long-term outlook for the industry.

The retailer saw continued adoption of innovation, as well as small landscaping and live goods projects in their “SpringFest” sales event. This may signal consumer willingness to invest in maintaining curb appeal including other outdoor categories like paint, decking and fencing, pavers, pest control and garden tools. Must-have categories remained strong including water heaters, and although consumers are buying fewer full-appliance suites, they are still replacing single appliances as needed.

In light of current financial pressures, consumers continue to benefit from products and projects that help them save money and have healthier homes. A shift toward products that save energy and water and reduce utility bills continues, as does adoption of products that promote cleaner indoor air quality like air filters, air purifiers and environmentally preferred cleaning products. 

Growth is expected in the second half of 2024, so brands should be ready for growth with inspiring projects and products when the time comes! 

Loyalty for long-term growth: Lowe’s rolled out its new DIY loyalty program “MyLowe’s Rewards” to all stores in the first quarter. In the climate of continued cost-of-living pressure, a consumer loyalty program with rewards and promotions may drive significant sales and meaningful, long-term attachment to the retailer. It’s too early for lift from the loyalty program as Lowe’s is focused more on enrollment and app downloads to build the program, but they do expect the program to drive an uptick in store trips and project extensions. 

The professional contractor: This key customer segment accounts for about 20–25% of Lowe’s sales vs. its competitor that draws about half of its sales from the Pro. And despite the lesser share of this customer base, the retailer has prioritized growing the Pro segment with ever-growing Pro services. They now carry Klein tools, which should draw more Pro traffic for electrical-related projects. They also saw strong performance in roofing, concrete and block, drywall and insulation. The Pro market has proven to be resilient, maintains a healthy backlog as compared to last year and outperformed in all regions. The repair and remodel, MRO and trade Pros represent half of the Pro market, and small- to medium-size Pros are a key focus for the retailer. 

Improving online: Online sales grew by 1% in Q1, and the retailer saw improved conversion rates. They have expanded same-day delivery with additional external local delivery partners. This growth is notable in the context of overarching sales pressure and should be a call for brands to make their product description pages as robust, explanatory and compelling as possible. Utilize great photography, how-to videos, and clear and relevant product descriptions and instructions.

Nimble marketing: Lowe’s has taken a new approach to marketing that’s really paying off – their geographically targeted digital marketing allowed them to navigate storm impact in the first quarter to ensure optimal relevance in key markets. And their sports marketing efforts reveal the fun side of the brand, teaming up with Lionel Messi and Inter Miami CF and CONMEBOL Copa America 2024 USA™ to win over soccer fans. 

Betting on the future: Lowe’s has been executing a multi-year investment roadmap to fine-tune its business, and as a result, they are poised for growth and strength when the home improvement market normalizes. Investments have included growing their private brand portfolio to deliver value to the DIY customer, growing shrink-reduction efforts using AI, simplifying and securing online order pick-up technology that negates the need to interact with an associate, and improving the returns process. They’ve also made improvements in IT, supply chain and the store environment. Even small moves matter, like closing on Easter Sunday for the fifth year in a row, allowing associates to spend time with their families, which contributes to improved employee retention. 

What’s Next?

As with our guidance on the home improvement retail space over the last two quarters, fine-tuning your brand’s essentials is imperative. 

  • Develop content that promotes the smaller projects customers are currently tackling and that equips them to execute with confidence. 
  • Tighten up your product description pages. 
  • While the market is more quiet than normal, take the opportunity to invest in packaging refreshes to improve your brand presence in-aisle and deepen your connection with the DIY customer. 
  • Use data to personalize marketing content and measure results so you are poised to scale and optimize your marketing investments.

The home improvement market has always recovered from a downturn. Expect the same and be sure you’re ready for big movement when the opportunity comes. 

Remember, this analysis is based on publicly available information and represents our interpretation of the data. We encourage you to conduct your own research and analysis to develop marketing strategies best-suited for your specific brand and target audience.

At Porchlight, we partner with home improvement brands to develop and implement strategic marketing campaigns that drive results. Contact us today to discuss how we can help your brand navigate the evolving market landscape and achieve its marketing goals.

By providing insights and thought leadership, we empower home improvement brands to make informed decisions and thrive in a dynamic market. So, stay tuned for more industry analysis and marketing tips from Porchlight!

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