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Home Depot Outperforms Lowe’s in 1Q17 Same-Store Sales Growth

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Same-store sales growth

With SSSG (same-store sales growth) of 5.5%, Home Depot (HD) outperformed Lowe’s SSSG of 1.9% in 1Q17. SSSG measures the increase in sales in existing stores over a certain period. SSSG is an important revenue driver, as it drives company’s revenue without increasing capital investment.

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Home Depot

The rise in traffic at Home Depot stores contributed 1.5% toward the company’s SSSG, while the growth in average ticket size contributed 3.9% in 1Q17. The ticket size rose due to inflation and customer preference for newer and more innovative products.

The pro customers outperformed DIY (do-it-yourself) customers in 1Q17. Through its pro referral platform, the company connects professionals with “do-it-for-me” customers. Also, during the quarter, big ticket sales, which are above $900, rose 15.8%. The merchandising department posted positive SSSG with the appliances, lumber, and flooring categories posting double-digit SSSG.

Moving to international markets, both Canada and Mexico posted positive SSSG in their respective currencies. The company credited its interconnected retail strategy for positive SSSG.

Lowe’s

Lowe’s (LOW) 1Q17 SSSG was lower than analysts’ estimate of 2.9%. The company blamed weaker outdoor sales for lower-than-expected 1Q17 SSSG.

The rise in average ticket size contributed 3.5% towards Lowe’s SSSG, while the decline in traffic lowered its SSSG by 1.5%. In the US, the company posted SSSG of 2% with 12 out of 14 regions posting positive SSSG. In international markets, Mexico posted double-digit SSSG, while SSSG in Canada was flat. The company blamed unusually high snowfall for lower SSSG in Canada.

Williams-Sonoma (WSM) posted SSSG of 0.1% during the quarter. Next, we’ll look at analysts’ revenue estimates for Home Depot and Lowe’s.

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