Home renovation and maintenance activities have been gaining prominence lately, thanks to increased stay-at-home practices amid the coronavirus pandemic. The trend has been benefiting certain home improvement market players, including Lowe's Companies, Inc. LOW. This apart, the company’s efforts to expand digital offerings is worth appreciating. These upsides were well-reflected in the company’s second-quarter fiscal 2020 results, with the top and the bottom line improving year on year. Let’s dig deeper.
Bright Prospects in Home Improvements Market
Growing inclination toward home improvement projects is quite visible in Lowe’s second-quarter fiscal 2020 results. Comparable sales (comps) for the company’s U.S. home-improvement business increased 35.1% in the second quarter, following an increase of 12.3% in the first quarter.
In the reported quarter, comps gained from sturdy project demand from DIY and pro customers across channels, product categories and geographies. It saw comps growth of more than 20% across all its merchandising divisions, while all the U.S. geographic regions posted comparable sales increase of at least 30%.
Industry experts point out that that consumer spending on home improvement products are likely to remain favorable in the near term. Safety concerns and continued work-at-home practice amid the pandemic have compelled individuals to stay inside. As a result, DIY projects for remodeling, decorating as well as maintenance of furniture and fixtures are being widely undertaken. We expect Lowe’s to keep gaining from such trends.
Digital Investments are a Key Growth Catalyst
Lowe’s is investing toward boosting its omni-channel operations for a while. When shopping preferences began witnessing a major shift with the onset of the pandemic, Lowe's accelerated its efforts to expand digital offerings. In this context, the migration of Lowes.com to the cloud as well as the roll out curbside pickup helped the company sustain online growth.
We note that the company has been building upon its in-store technology and delivery network over the past 18 months to support elevated DIY and Pro customer demand. Markedly, sales at Lowes.com increased 135% in second-quarter fiscal 2020, as the company’s pro and DIY customers increasingly shopped online. This drove online penetration to 8% of sales.
Moreover, the company is focusing on further enhancing capabilities such as online-delivery scheduling and order tracking as well as search and navigation. Moreover, with rising demand for contactless services, Lowe’s latest investment in self-service lockers is another feather in its cap. More than 60% of the company’s online orders are picked up in stores. Hence, broadening pickup options are a worthwhile strategy for the company for creating a frictionless shopping experience for time-pressed customers.
Well Lowe’s isn’t the only company in the home improvements space striving to gain from consumers growing digital inclination. Other players such as Home Depot HD, Fastenal FAST and Beacon Roofing Supply BECN are also gaining on the back of prudent digitization efforts.
These Stocks Are Poised to Soar Past the Pandemic
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The Home Depot, Inc. (HD): Free Stock Analysis Report
Fastenal Company (FAST): Free Stock Analysis Report
Lowes Companies, Inc. (LOW): Free Stock Analysis Report
Beacon Roofing Supply, Inc. (BECN): Free Stock Analysis Report
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