9 months ago • 1 min
Home improvement retailer Lowe’s gave a worrying results lowdown on Wednesday.
What does this mean?
Lowe's was laughing all the way to the bank this time last year, as a red-hot housing market spurred folk to reach for their toolboxes and spruce up neglected pads. But today it's a different story: cash-strapped shoppers are spending whatever money they can scrimp together on experiences like entertainment and travel – not patio furniture and paint. That meant that Lowe’s same-store sales dropped 1.5% last quarter, despite a few bright spots like increased sales to tradespeople and strong orders online. In fact, the only thing that saved Lowe's from a dip in overall revenue was the fact that the quarter was a week longer than the same one the year before.
Why should I care?
The bigger picture: Feeble retail.
Things only got worse from there for Lowe's shareholders, with the full-year sales outlook coming in well below expectations – mirroring forecasts by rival Home Depot. But hey, at least Lowe’s investors weren’t short of company, especially since Kohl’s and Dollar Tree shared some dismal outlooks and flailing quarterly results of their own on Wednesday. Put it together, though, and that’s a worrying trend: if retail’s this weak when consumer spending is still holding up, then who knows what a recession might do to it.
Zooming out: Homesick.
It's not just demand for home improvement that's slipping: buying a home isn’t appealing to folk right now either. Data out earlier this week showed that US house prices tumbled for the sixth straight month in December, and it’s not hard to see why: first-time buyers are daunted by rising borrowing costs, and current owners, who’ve already locked in low mortgage rates, are pretty happy to stay put.
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