This is the ninth installment of a special series, presented by the National Hardware Show, exploring key trends and developments driving the growth of housewares and home goods in the home improvement retail business.
The home improvement retail sector has demonstrated it is well equipped to overcome retail market disruption, including e-commerce pressure and worries of a looming economic slowdown.
Wall Street observers and analysts remain bullish on two pillars of the big-box home improvement channel— Home Depot and Lowe’s.
Jon C. Ogg of 24/7 Wall St. recently cited Citigroup analyst Gregory Badishkanian, who wrote, “In the home improvement space, mid-single-digit sales growth is likely to be led by remodeling as the age of the U.S. housing stock continues to increase, home prices are appreciating, housing turnover continues, and interest rates are low.”
Badishkanian added that Home Depot and Lowe’s are more resistant to recessionary conditions than many other retailers.
Home Depot, which has rapidly progressed its home and housewares presence though a content-rich, upmarket e-commerce-led program, is still viewed by many analysts as a more reliable stock play than Lowe’s.
Travis Hoium of The Motley Fool recently wrote, “Home Depot has better inventory turnover than Lowe’s, better margins, less debt, and a better dividend for investors. It’s hands down the better stock between these two, and I think this is one retailer that’s built to last. It’s not losing sales to online competitors the way many big box retailers are, and it has loyal customers who aren’t moving to competitors like Lowe’s.”
Still, Lowe’s is earning credit for its sharper merchandising and service-driven transformation under CEO Marvin Ellison, who once headed Home Depot’s U.S. store operations before a stint as JC Penney’s chief set up his home improvement return to Lowe’s.
The Trefis Team, for Forbes, noted that Lowe’s has seen steady revenue gains the past couple of years from $65 billion in 2016 to $72.8 billion in 2018, with Trefis estimating Lowe’s will increase revenue by 2.1% to $72.8 billion in 2019.
Teresa Rivas of Barron’s in a recent post cited Citigroup’s Badishkanian in reporting how Home Depot and Lowe’s have “sidestepped most of the worries about a trade war and consumer habits that have plagued other areas of the industry.”
Rivas reported that Badishkanian wrote that Home Depot should benefit from “still-solid underlying macro fundamentals and housing drivers.”
Badishkanian also is impressed with Lowe’s merchandise changes, store operations, supply chains and upgraded services for professionals, Rivas noted.
Tonya Garcia of MarketWatch cited a recent note on Lowe’s by Wedbush Securities analyst Seth Basham, who wrote, “Lowe’s focus on boosting Pro sales through increased service levels, pricing and merchandising is beginning to pay off, with enormous runway ahead.”
The National Hardware Show, set for May 5-7, 2020 at the Las Vegas Convention Center is the leading B2B marketplace serving the growing home improvement retail channel. The Show presents a comprehensive range of innovative new products in hardware, tools, building, homewares, paint, smart home, outdoor living, pet and more.