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Why Home Depot Continued to Outperform Lowe’s Growth in 2018

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Home Depot’s SSSG

Home Depot (HD) beat Lowe’s Companies’ (LOW) SSSG (same-store sales growth) in all four quarters of 2018. Home Depot posted SSSG of 4.2%, 8.0%, 4.8%, and 3.2% in the first, second, third, and fourth quarters, respectively.

In the fourth quarter, the company’s SSSG was driven by an increase of 2.3% in the average ticket size, while transaction growth contributed 0.9%. The company’s investment in creating an interconnected shopping experience has improved customers’ satisfaction, conversion, and increased sales. During the quarter, the sales from both professional and DIY customers were positive. However, sales from professional customers outperformed sales from DIY customers. The investment in the company’s B2B website helped the company deliver a more personalized offering for its professional customers, which drove the company’s sales during the quarter.

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Lowe’s SSSG

Lowe’s posted SSSG of 0.6%, 5.2%, 1.5%, and 1.7% in the first, second, third, and fourth quarters, respectively.

In the fourth quarter, the company’s SSSG was driven by a 2.3% increase in the average ticket size, which was partially offset by a decline of 0.6% in its traffic. The company’s online same-store sales rose 11% during its fourth quarter. However, the management team stated that the company didn’t fully capture heavy traffic on its website due to system challenges. To address the challenges, Lowe’s has appointed Mike Amend as the new president of its online business.

Although Lowe’s underperformed Home Depot’s SSSG in all four quarters of 2018, it was able to catch up at the end of the fourth quarter. In the United States, Home Depot posted SSSG of 3.4% in November, 3.5% in December, and 4.1% in January. In comparison, Lowe’s SSSG stood at 0.9% in November, 1.4% in December, and 5.8% in January.

Next in this series, we’ll look at EPS for Home Depot and Lowe’s in 2018.

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