Lowe’s Q2 earnings call was very similar to what we heard from Home Depot when it comes to grill sales. The macro environment continues to hurt the consumer and impact the category.
And then the last thing I’ll call out, we did see pressure in big ticket discretionary seasonal categories like patio and grills. But that was largely expected as we’ve been managing those seasonal buys down to more recent trends that we’ve seen. So that was the pressure that was mainly of where we saw the deceleration in comps from as we move from June to July.
Marvin Ellison, President and CEO at Lowe’s
Much like Kingsford’s sales decrease, weather may have also played a role in slower grill sales this year. They saw a wetter May and then intense heat in June which kept people indoors.
Now let’s talk about Hardlines where unfavorable weather pressured traditional spring seasonal categories like lawn and garden and seasonal and outdoor living.
Bill Boltz, EVP – Merchandising at Lowe’s
Lowe’s anticipated the lower sales volume in grills and stocked accordingly. Stepping back from grills though, the continued weak consumer sentiment caused them to lower their guidance for the year.
It’s exactly what we heard and saw from Home Depot. Extending beyond grills, the high interest rate environment hurts home purchases, which hurts their business.
Even with a reduction in interest rates though, the consumer is hesitant overall. There will be some lag even after interest rates are reduced.
As it relates to the interest rate environment. So for us, it’s difficult to know at what absolute interest rate level, we’re going to see our consumers fully engage or how long the demand will lag the actual rate cuts that we’re seeing. And we absolutely, as we sit here today see pent-up demand in the business.
But on the flip side, when we look at consumer sentiment that continues to remain weak, we are hopeful that the lower rates, the drops that we’re seeing are going to have a dual impact of one relieving pressure on consumers and then secondly, driving the existing home sales activity.
But the reality is when we look at the lock-in effect, the majority of homeowners are still at 4% mortgage rates or less. So even if we do see, some level of decrease that we do believe there still might be a reluctance to engage. So we’re staying close to it beyond the rates. Marvin reiterated the primary drivers of our business, and that’s been consistent.
Brandon Sink, CFO at Lowe’s
Online Sales Growth
One area of the business where Lowe’s is seeing growth is with online sales. They continue to work at their omnichannel strategy and have been driving more business through their website. A big part of this is making it easier and more convenient to shop online.
When it comes to online sales, we delivered growth across all three business areas, driven by continued improvement in conversion rates as customers responded to our compelling offers and to our new expanded same-day delivery options that are now available on multiple platforms.
In Q2, we added Uber Eats to our list of delivery partners, which also includes DoorDash, Shipt, and Instacart. In addition to our last mile technology partner, OneRail provides a fully integrated solution available on lowes.com and in store.
As we continue to evolve our omnichannel strategy, we’ve learned that having multiple delivery platforms, extend our reach into both urban and suburban areas and helps us drive incremental sales with different types of customers, especially younger generations who are more digitally savvy.
Marvin Ellison, President and CEO at Lowe’s