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Lowe’s Outperforms Home Depot’s Same-Store Sales Growth in Q1

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Lowe’s first-quarter SSSG

Lowe’s Companies (LOW) outperformed Home Depot’s (HD) SSSG (same-store sales growth) of 2.5% with reported SSSG of 3.5% in the first quarter. Lowe’s SSSG was driven by growth in both total transactions and average ticket size. The company’s total transactions increased by 2.2%, while average ticket size rose by 1.3%. The company posted overall SSSG of -1.4% in February, 3.5% in March, and 7.2% in April.

In the US, Lowe’s SSSG for the quarter stood at 4.2%. However, removing the negative effects of commodity deflation and wet weather in February, the company’s same-store sales grew by 5.7%. However, in Canada, the company’s SSSG was negative due to the weak housing market.

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Lowe’s SSSG was driven by growth in its online performance, improvement in sale productivity, expansion of its product offerings, and more personalized marketing initiatives. During the quarter, the company improved its sale productivity through the better usage of the end caps and also a redefined strategy for off-shelf site stacks. The company’s SSSG on Lowes.com grew by 16%. The sales from professional customers outperformed sales from DIY (do-it-for-yourself) customers.

Home Depot’s SSSG

Home Depot posted overall SSSG of 2.5% during the quarter, which fell short of analysts’ expectation of 4.2%. Along with wet weather conditions and lower lumber prices, the hurricane-related sales of ~500 million in the corresponding quarter of the previous year negatively impacted the company’s SSSG during the quarter. The company’s SSSG was driven by growth of 2.0% in average ticket size and an increase of 0.5% in total transactions.

The company posted SSSG of -2.0% in February, 5.6% in March, and 3.2% in April. The company posted SSSG of 3.0% in the US. In Mexico, the company’s SSSG was positive in its local currency. However, the company’s SSSG in Canada was negative.

To improve customer satisfaction and improve the convenience, Home Depot has been investing in reducing the friction in its interconnected shopping experience. The investments have resulted in sales growth. During the first quarter, the company improved its front-end checkout experience, continued with the rollout of automated lockers, and simplified tools for its associates. All these initiatives contributed to the company’s online sales, which grew ~23% YoY. Of these online orders, ~54% were picked up from stores.

During the quarter, the sales to professional customers continued to outperform those to DIY customers. The company’s new business-to-business website added 35,000 new customers in the quarter, which took its total number of customers to 135,000.

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