DIY retailers diverge
The home improvement sector has outshined other retailers for several years thanks to the improved housing market. But it’s starting to show signs of strain.
While Home Depot nailed it once again with better-than-expected third quarter results, rival Lowe’s was beset by hefty charges and meager traffic to its stores.
Atlanta-based Home Depot raised its annual forecast as its customers spent more with each visit. Lower unemployment, higher wages and strong housing sales in recent years have helped.
Mooresville, North Carolina’s Lowe’s reported a messy third quarter as it struggled with weaker traffic and hefty charges for a recent acquisition. And while home sales have leveled off at a healthy level this year, the ultra-low mortgage rates that have helped boost sales are beginning to creep higher.
Fears of a housing market slowdown won’t dissipate any time soon, says Scot Ciccarelli, an analyst at RBC Capital Markets. However, the factors driving home improvement sales, such as housing inventory levels and home prices, remain strong.
Analysts expect the contrast between the two retailers to widen if Lowe’s continues to lose momentum.