Home Depot and Lowe's, leading U.S. home improvement retailers, recently reported their third-quarter results exceeded expectations.
Home Depot and Lowe's benefited from increased demand over the past year and a half as consumers began more home improvement projects in their homes, allowing them to maintain their continued growth momentum.
Home Improvement demand remains strong," Home Depot CEO Craig Menear said on a conference call with analysts Tuesday. Our customers are still engaged in home-related renovation projects."
Home Depot reported Tuesday that third-quarter net sales rose 9.8 percent year-over-year to $36.8 billion.
Same-store sales increased 6.1 percent and U.S. companies grew 5.5 percent.
Operating income rose 19.4 percent to $5.8 billion and net income increased 20.3 percent to $4.1 billion.
Joseph Feldman, senior managing director and assistant director of research at Telsey Consulting Group, said in an emailed commentary, "Home Depot's performance during the New Crown outbreak proved that, given the company's best-in-class execution, digital capabilities and long-established market foundation, it remains a winner in the retail industry.
Home Depot will continue to benefit from the good performance of the housing market - including continued climbing existing home closings, higher prices and remodeling and renovation activity."
Executives noted record sales during Halloween due to exclusive product lines, including the re-sale of exclusive 12-foot-long skeleton decorations introduced last year, and expect the momentum to continue throughout the fall and winter holiday seasons.
"Home Depot reaped slightly higher results in the first two weeks of the fourth quarter than the entire third quarter," Richard Mcphail, Home Depot's chief financial officer, said in a phone call.
Lloyd's, meanwhile, reported third-quarter net sales of $22.9 billion, up 2.7 percent from a year ago.
Comparable sales rose 2.2%, beating expectations from FactSet (-1.3%) and Telsey Advisory Group (0%), with the U.S. market up 2.6% year-over-year.
Compared to 2019, results were up 33.7%.
Neil Saunders, managing director of GlobalData, said that while Lloyd's was able to build on last year's 28.3% sales growth when demand soared, it may indicate that Lloyd's is losing market share given that net sales at its largest competitor, Home Depot, rose nearly 10% .
Lloyd's was more popular with DIY consumers last year.
While the level of home improvement demand is still at a high point compared to 2019, last year has seen a decline in growth rates, when most retailers in the home improvement category experienced good growth.
This has resulted in a lower year-over-year sales growth rate for Lloyd's this year.
However, Lloyd's continues to work on expanding its specialty customer base.
This year, Lloyd's released its first toy catalog for professional customers.
In addition, the company relaunched its popular "PROvember" sales campaign, which includes a series of product promotions and in-store demonstrations.
Meanwhile, CEO Marvin Ellison said on a conference call with analysts Wednesday that the professional decorating category is once again outpacing the DIY category in terms of growth.
In the third quarter, Lloyd's professional business (20 to 25 percent of sales) grew 16 percent to 43 percent from its 2019 share, according to Telsey Consulting Group.
Similarly, Home Depot has historically been a top destination for professionals, with sales in its professional category outpacing those in the DIY category.
Neil Sanders noted that as DIY home improvement activity slows further, the home improvement industry will rely more heavily on professional customers to drive growth, making Lloyds' efforts to attract professional customers to shop with them even more important.
"Lloyd's also had a strong Halloween sales performance with products selling much faster than in previous years," said Bill Boltz, executive vice president of sales for Lloyd's, in a phone call.
Neil Sanders said, "Product shortages at other retailers meant more people headed to home improvement stores to purchase Halloween decorations and sundries, including Lloyd's stores.
The good news is that we expect this trend to repeat itself and sales of festive products will be very helpful to their fourth quarter results".
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