For the first time since 2005, The Home Depot and Lowe’s Cos. both delivered positive comparable-store sales in all four quarters of 2010. Last year was also the first year both companies showed an increase in full-year sales since 2005.
These trends are strong evidence that the worst of the economic cycle has passed for the two home improvement retail giants.
Home Depot reported the bigger increase in comp-store sales, a margin that widened in the fourth quarter, as it jumped 3.9%, while Lowe’s increased 1.1%. Among the positive drivers: Customers bought higher-priced goods, like appliances.
At Atlanta-based Home Depot, the number of transactions worth $900 or more each — about 20% of the company’s sales — rose 10% during the quarter. It was the first time that category had risen in a year, according to Carol Tomé, chief financial officer. Customers responded to Home Depot’s aggressive appliance promotions and took advantage of the energy tax credit that expired at the end of the year, Tomé said.
Robert Niblock, chairman and CEO of Lowe’s, said during the company’s conference call with analysts that Lowe’s faces pressure from a continuing decline in home values, low consumer confidence and inflationary factors, such as rising fuel prices. “We’re prepared to operate effectively in a slow-growth environment,” he said. “While uncertainty in the market remains, the economic recovery is continuing.”
Sales in Home Depot’s most recent reporting period were driven by the kitchen and bath, paint, flooring and plumbing categories, as well as its international businesses, the company said. Sales in maintenance and do-it-yourself repair categories were robust as were decor-related categories such as ceramic tile, carpet, paint, faucets and bath fixtures.
Mooresville, N.C.-based Lowe’s also had its share of bright spots. Sales of flooring — especially Stainmaster carpet — cabinets and countertops were strong. Company executives took that as a sign consumers were willing to invest in higher-ticket projects even as they caution that consumers are still wary of the economy.
As the industry waits for a strong housing rebound, Lowe’s is looking to gain market share — a goal it certainly shares with its rivals — and make progress on some of its key initiatives including weekend staffing, increased employee sales training, and greater emphasis on Lowes.com and other Internet programs.
Hope springs eternal
In anticipation of the spring rush — the most important season for home improvement retailers — Lowe’s announced it would hire 50,000 seasonal employees on top of the 8,000 to 10,000 weekend employees the company is bringing on board permanently as part of its recently announced restructuring. To make room for the weekend employees, Lowe’s eliminated about 1,700 middle managers, about one per store, last month.
Lowe’s said the move allows the company to streamline the in-store management structure and hire the weekend sales associates to staff the stores during the busiest hours. Lowe’s, which employs about 234,000 people, said its percentage of full-time employees would decrease to the 60% to 65% range, down from 70%.
Home Depot, which said it is hiring 60,000 part-timers for its spring season, is stocking up on lawn-care products, gardening equipment, patio furniture, grill and other traditionally strong items to prepare for its busiest season. To augment the push, Home Depot is planning a series of spring sales events across the country, including its Spring Black Friday event.
Executives from both retailers said they expect to take advantage this sprin