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Home Depot and Lowe's were expected to post modest sales growth as their quarterly results approached, offering insight into whether U.S. renovation and DIY spending was improving. Both retailers have faced higher raw material costs due to tariffs, though a temporary pause on duties was expected to ease pressure. Analysts said lower interest rates and rising home sales could support demand after high borrowing costs had delayed big-ticket projects. Comparable sales at Home Depot were forecast to rise 1.5%, while Lowe's was expected to see a 1% increase. With DIY demand soft, both companies expanded acquisitions to strengthen their professional contractor business amid ongoing economic uncertainty.
Home Depot and Lowe's were set to post modest increases in sales earlier this week as they prepared to announce their quarterly results. The forthcoming updates were expected to provide investors with a clearer indication of whether the outlook for renovation and do-it-yourself spending was beginning to improve or whether caution among U.S. consumers continued to limit discretionary investment in home projects. Advertisement
Both retailers had been dealing with elevated raw material costs across categories such as flooring, hardware and lighting. The increases followed tariff measures introduced by President Donald Trump, and the companies passed some of these higher costs on to customers. Analysts, however, anticipated that a temporary pause in duties on Chinese imports would offer short-term cost relief.
According to Yale's Budget Lab, the effective tariff burden on U.S. consumers had risen to 17.9% this year, the highest level recorded since 1934. This compounded pressure on household finances, which had already been affected by what became the longest government shutdown in U.S. history.
Despite these strains, the U.S. Federal Reserve had cut its benchmark interest rate by 25 basis points in both September and October, leading Wall Street analysts to express optimism that lower borrowing costs could help revive consumer spending.
Home improvement retailers were also hoping for stronger demand after a prolonged period of relatively high interest rates had led many homeowners to delay projects typically dependent on financing, including kitchen remodels, bathroom upgrades and swimming pool installations. Portfolio manager Joseph Gabelli from Gabelli Funds, which holds under 1% of shares in both retailers, said the acceleration in sales of existing homes was likely to support a rise in renovation activity, although he noted this would depend on improved affordability, reduced rates and greater consumer confidence.
Analysts expected Home Depot to report a 1.5% increase in comparable sales for its third quarter, contrasting with the 1.3% decline posted in the same period last year, according to LSEG data. During the past 12 months, Lowe's shares had fallen by about 16%, while Home Depot's stock had dropped by more than 11%. This compared with a 15% rise in the broader S&P 500 index.
Lowe's, which was scheduled to release its results later in the week, was projected to report a 1% increase in same-store sales, reversing the 1.1% fall seen last year. Joe Feldman of Telsey Advisory Group remarked that professional contractors were expected to drive demand, while do-it-yourself customers were likely to continue focusing on smaller-scale jobs.
In response to softer DIY spending amid subdued housing activity, both companies had increased acquisitions aimed at strengthening their presence among professional contractors and builders. Lowe's acquired Foundation Building Materials for nearly USD 8.8 billion in August, following its USD 1.33 billion purchase of Artisan Design in April. Home Depot, meanwhile, announced in late June that it would acquire speciality building materials distributor GMS for about USD 4.3 billion.
Truist analyst Scot Ciccarelli commented that while consumers had previously avoided major home projects due to high interest rates, broader economic uncertainty driven by tariffs and inflation had since become the main factor discouraging larger renovation spending.
Source - Reuters
5th Jun, 2025
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