Sales contracted on a year-over-year basis in the third quarter for home-improvement retailer Lowe’s, due in part to a decline in discretionary spending. Sales in the period were $20.5 billion, compared to $23.5 billion in the prior-year period and comp sales decreased 7.4%. According to Lowe’s, pro customer comp sales were positive once again in the third quarter.
“In the third quarter, the company delivered strong operating performance and improved customer service despite a greater-than-expected pullback in DIY discretionary spending, particularly in bigger ticket categories,” Lowe’s chairman, president, and CEO Marvin Ellison said in the company’s earnings report news release. “Given our 75% DIY mix, the DIY pressure disproportionately impacted our third quarter comp performance. At the same time, our investments in pro continue to resonate, resulting in positive pro comps again this quarter.”
During the Lowe’s earnings call, Ellison said pros are still working on projects, with many the result of increased wear and tear on aging homes and the need for unavoidable repairs.
“This continues to create project backlogs for [the] small- and medium-sized pro who is our core customer,” Ellison said during the call. “In our most recent survey, nearly 70% of pros reported healthy backlogs, but given the uncertain macro environment, they’re feeling a little less confident.”
Ellison said the company continues to make progress on its pro investments, including increasing loyalty through the Lowe’s MVP Pro Rewards, developing a “world-class CRM platform,” improving job site delivery, and enhancing service levels in stores.
“Overall, we’ve built a competitive pro sales and service model, which is creating a flywheel effect that will enable us to grow pro sales at times the pace of the market,” Ellison said.
Bill Boltz, executive vice president of merchandising, said the company’s enhanced product and brand offerings “continue to resonate with the pro.” Lowe’s delivered positive comps in building materials in the third quarter, partially driven by strong performance in pro-heavy categories such as roofing and drywall. The retailer delivered comps above the company average in rough plumbing.
Joe McFarland, executive vice president of stores, said initiatives targeted at improving the customer experience yielded 200-basis-point and 300-basis-point improvements in customer satisfaction scores among DIY and pro customers, respectively.
“We created an industry-leading customer-centric scheduling system, which allows us to predict customer demand and align staffing around peak customer traffic for each store and each department,” McFarland said. “This system creates enhanced operational agility so we can rapidly adjust as demand patterns shift. We’ve enabled greater productivity by putting mobile smart devices in all of our associates’ hands to make them more efficient, reducing manual tasking, and enabling faster customer service.”