ATLANTA – Strength in majaps, an improving housing market, and better operational execution helped fuel third-quarter sales and earnings gains for The Home Depot and Lowe’s.
The increases came in sharp contrast to Sears, which reported weakness in its core appliance business as it continued to shed majap market share.
Profits at Home Depot rose 48 percent to $1.4 billion and net sales increased 7.4 percent to $19.5 billion for the three months, ended Nov. 3, while comp sales also grew 7.4 percent company-wide and increased 8.2 percent in the U.S.
“Our third-quarter results reflect the continuing improvement in the housing market and our solid operational performance,” said Frank Blake, chairman/CEO.
On an earnings call, merchandising executive VP Craig Menear noted that majaps saw double-digit growth both in-store and online during the quarter thanks to an expanded assortment and enhanced white-goods departments in about 400 stores. “Using localization tools in these stores that have various footprints, we optimize the space between our kitchen appliance showrooms and showcase our expanded assortment,” he said.
During the quarter the number of customer transactions rose 4 percent to 344.3 million, average ticket edged up 3.2 percent to $56.27, and average weekly sales per store increased 7 percent to $659,000.
At No. 2 majap chain Lowe’s, profits increased 26 percent to $499 million for the three months, ended Nov. 1, while sales rose 7.3 percent to $13 billion and comp sales increased 6.2 percent.
In a statement, chairman/president/ CEO Robert Niblock said the company “delivered another solid quarter driven by … improved collaboration and execution within a strengthening homeimprovement market.”
During an earnings presentation, chief customer officer Gregory Bridgeford included major appliances among the quarter’s strongest category performers. “We performed particularly well in large project categories such as flooring and kitchens and appliances,” he said, partially crediting a coordinated “All for Fall” marketing campaign that promoted interior home projects.
At the end of the quarter, the No. 2 home-improvement chain operated 1,831 stores throughout North America — including the 72-store Orchard Supply Hardware chain it acquired from Sears Holdings in August — for a total of 200 million square feet of retail selling space.
On the call, Niblock said consumers’ primary concern during the recession was “how to adapt to what felt like a free fall. That perspective has started to broaden,” and the home-improvement industry is now poised for continued gains this quarter and next year due to “stronger job and income growth, improving household financial conditions, and the lagging benefit of the recovery in home buying.”