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Dwelling enchancment retailers Dwelling Depot (NYSE: HD) and Lowe’s Corporations (NYSE: LOW) reported their third quarter 2022 earnings outcomes this week. Each firms surpassed market expectations on their high and backside line numbers which galvanized the Avenue amid the prevailing considerations over inflation and housing market circumstances. Right here’s a have a look at their respective performances in Q3:
Quarterly numbers
In Q3 2022, Dwelling Depot generated income of $38.9 billion, which was up 5.6% year-over-year, and forward of estimates. Comparable gross sales elevated 4.3% whereas EPS rose 8.2% YoY to $4.24 and beat expectations. Lowe’s complete gross sales in Q3 elevated 2% YoY to $23.5 billion and surpassed projections whereas its comparable gross sales rose 2.2%. Adjusted EPS grew practically 20% to $3.27 and exceeded expectations.
Demand traits and class efficiency
Dwelling Depot and Lowe’s witnessed wholesome demand traits in residence enchancment throughout the third quarter. On their respective quarterly convention calls, each retailers hinted at a few elements that would assist drive additional demand for residence enchancment. These elements included housing inventory age, scarcity in housing, and residential value appreciation.
Dwelling Depot talked about that prospects have been nonetheless spending plenty of time at residence underneath the present hybrid work mannequin which allowed them to undertake extra residence enchancment tasks. Each HD and Lowe’s talked in regards to the ageing of houses and the scarcity of homes that may additionally immediate prospects to put money into residence enchancment.
As houses proceed to age, the necessity for restore, upkeep and reworking arises. In line with Lowe’s, two-thirds of residence enchancment spend is non-discretionary on restore or upkeep tasks that can not be delayed. The scarcity in housing additionally implies that persons are opting to renovate their present houses than shopping for new ones.
Through the third quarter, each Dwelling Depot and Lowe’s witnessed momentum throughout their Professional and DIY buyer bases. As talked about on their calls, each retailers count on to see continued power within the Professional enterprise as their prospects inform them that their backlogs stay robust and that the majority of them count on extra work in 2023 than 2022 thereby indicating the resilience of residence enchancment demand.
In Q3, Dwelling Depot recorded constructive comps in 11 of its 14 merchandising departments whereas Lowe’s posted comps development above firm common in eight of its 15 merchandising departments. Dwelling Depot’s comp common ticket elevated 8.8% whereas Lowe’s comparable common ticket rose 8% within the quarter pushed by product inflation. HD’s comp transactions fell 4.4% whereas Lowe’s comp transactions declined 5.8% in Q3.
Outlook
Dwelling Depot reaffirmed its steering for fiscal yr 2022 whereas Lowe’s raised its outlook for the total yr. Dwelling Depot expects comparable gross sales to extend approx. 3% and EPS to develop within the mid-single digits in FY2022.
Lowe’s expects complete gross sales to vary between $97-98 billion and comparable gross sales to be flat to down 1% in FY2022. The corporate now expects adjusted EPS to be $13.65-13.80 versus the earlier outlook of $13.10-13.60.
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