By Samuel Gonzalez
Aug 22, 2024, 3:42 PM EDT
Sales at home stores Home Depot and Lowe’s have not been the bestIn fact, both companies expect that to change in the coming months as we head into the seasonal decorating seasons.
Both Home Depot and Lowe’s reported second-quarter results, with neither meeting the sales and profit ranges they had projected for 2024. And while they’re hoping for a Christmas (or Halloween) miracle, that’s more wishful thinking than certainty, as Both home retailers expect further sales declines in the second half of the year.
Home Depot told CNBC that expects its comparable sales to fall between 3% and 4%; that statistic was originally set at a 1% decline. This does not take into account store openings and closings and other one-time factors, the outlet noted.
A week later, Lowe’s confessed a similar situation to the same information portal. The company adjusted its projected total sales for 2024 from “between $84 billion and $85 billion” to “between $82.7 billion and $83.2 billion”Lowe’s also estimates that comparable sales will fall between 3.5% and 4%, which is almost double the previous figures.
“Inflation remains high,” Lowe’s CEO Marvin Ellison told CNBC. “And purchases of big-ticket items are being delayed as customers wait for interest rates to fall.”
“‘Everything I read tells me that interest rates will be lower in three to six months,’” McPhail shared, referring to alleged feedback from his clients. “Why should I borrow to finance the project now instead of waiting a few months?”.
During a press conference in July 2024, Federal Reserve Chairman Jerome Powell hinted that A rate cut is “on the table” for September. For now we just have to wait.
According to Home Depot CEO Ted Decker, a similar trajectory occurred when mortgage rates dropped in 2023 and the company saw “an immediate surge in real estate activity.” However, the executive doesn’t have a “magic rate number” in mind for Home Depot to boost its sales.
For its part, Lowe’s maintains its plans to expand its online business and, especially, seeks to strengthen its alliances with home professionals, such as contractors and electricianswhich have delivered positive results this year. Comparable sales in this sector are on the rise and online sales increased by 2.9%.
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