It's been a difficult past several quarters for businesses that rely on large purchases to make their profits.
Some big-box retailers like Target, Walmart and Amazon can be more nimble and offer cost-saving opportunities to bring customers in.
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Plus, if you sell consumer staples and essentials, like groceries, paper goods and baby products, the demand will be there no matter the economic climate.
That's not necessarily the case, though, for retailers that sell less critical materials.
Take home improvement retailers like Home Depot (HD) and Lowe's, for example.
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These two retailers were on a tear during the early pandemic, when many folks had stimulus checks to spend, interest rates were at historic lows, and most people had a lot more time on their hands for DIY projects.
As soon as the world began to reopen, however, and interest rates rose, many peoples' stomachs for pricey projects were put back on the shelf in favor of other things, like saving money or finally taking a vacation.
Image source: Scott Olson/Getty Images
Lowe's is cautiously hopeful
These trends can't last forever, though.
In its fiscal-fourth-quarter report this week, Lowe's saw a 0.2% uptick from a year earlier in comparable-store sales, those from stores open at least a year.
Revenue eased 0.3% to $18.56 billion from $18.6 billion a year earlier.
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“Despite these better than expected fourth quarter results, we’re still seeing a cautious consumer leading to continued near term pressure on DIY discretionary spending, particularly in bigger ticket projects,” Chief Executive Marvin Ellison said.
Lowe's makes store opening announcement
Though large-ticket spending may not be back completely, Lowe's is still pinning its hopes on a robust resurgence.
"We also expect mortgage rates to remain elevated, continuing to put pressure on existing home sales and some of the larger projects that are linked to those occasions," Ellison said during the earnings call.
"Based on these factors, we are forecasting the home improvement market to be roughly flat this year with Pro outpacing DIY driven by the repair and maintenance occasion. However, the investments we have made to drive growth are resonating."
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Lowe's is planning an ambitious growth trajectory to offset temporary damped consumer spending.
"In 2025, we plan to open five to 10 new stores," he said.
The plan is a part of Lowe's' larger strategy to expand its footprint and grow market share, which might help edge out competitors. It said in December it planned to open 10 to 15 new stores every year for the next several years.
Currently, Lowe's operates about 1,700 stores worldwide. Home Depot operates just over 2,000.
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