Investing Blog

Finance Blogs » Investing » Which home improvement store won Q1?

Which home improvement store won Q1?

By Sheyna Steiner · Bankrate.com
Thursday, May 23, 2013
Posted: 4 pm ET

It was blue versus orange in the earnings race this week, with both Home Depot and Lowe's reporting performance from the first quarter this year.

Lowe's, the second largest home improvement store, reported net earnings of $540 million, up 2.5 percent year over year. Sales for the first quarter were weaker than last year at the same time -- down 0.5 percent to $13.1 billion from $13.2 billion in the first quarter of 2012.

The slip in sales was attributed to the cold and wet spring most of the country slogged through this year.

"Last year, weather was very warm in the first quarter and drove garden sales. This year was a chilly, wet spring, so spring started very late," says Robin Diedrich, senior consumer analyst at investment firm EdwardJones.

Home Depot, the largest home improvement store in the world, also dealt with the inclement weather but had a few advantages working in its favor, according to Diedrich.

Home Depot ended the quarter with sales of $19.1 billion, up 7.4 percent year over year. Net earnings were $1.2 billion, up from $1 billion for the same period in 2012.

"Their stores are in better markets -- larger, faster-growing areas than Lowe's," says Diedrich.

"Another reason, more particularly this quarter, Home Depot tends to have more of the professional market -- more contractors as a percentage of their mix. Lowe's has more do-it-yourself customers. That has been favorable to Home Depot as the housing market is improving and people are spending on bigger projects in the home," she says.

Lowe's isn't down for the count though. Diedrich thinks it has room to increase sales going forward. With the weather improving, seasonal sales should pick up, but also the company has been working to reset some of its products and pricing.

That means looking at the "combination of the types of products, brands and price points that they offer. Changing price, maybe having higher-quality products to offer, a broader range and pricing that is more to the market," Diedrich says.

Follow me on Twitter: @SheynaSteiner.

***
Senior investing reporter Sheyna Steiner is a co-author of "Future Millionaires' Guidebook," an e-book written by Bankrate editors and reporters. It's available at all the major e-book retailers.

«
»
Bankrate wants to hear from you and encourages comments. We ask that you stay on topic, respect other people's opinions, and avoid profanity, offensive statements, and illegal content. Please keep in mind that we reserve the right to (but are not obligated to) edit or delete your comments. Please avoid posting private or confidential information, and also keep in mind that anything you post may be disclosed, published, transmitted or reused.

By submitting a post, you agree to be bound by Bankrate's terms of use. Please refer to Bankrate's privacy policy for more information regarding Bankrate's privacy practices.
3 Comments
Sheyna Steiner
June 05, 2013 at 8:43 am

Rose, I'm sure that is still contributing. It certainly had an impact in the fourth quarter last year.

Rose Douglas
May 29, 2013 at 9:53 am

SERIOUSLY - Home Depot and Lowe's are having a record-breaking season due to the desperateness of homeowners after Hurricane Sandy. The prices on all their merchandise, since the storm, doubled and tripled...

Add a comment

(Comments may take 5-10 minutes to appear)