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Lowe’s, Home Depot Tell Tale Of Two Majap Cities

NEW YORK — Lowe’s and The Home Depot, the industry’s No. 1 and No. 3 majap retailers, respectively, reported starkly different results for their white-goods businesses during their second fiscal quarters.

Lowe’s, which supplanted Sears as top majap dog for the first time on TWICE’s Top 100 Major Appliance Retailers Report, acknowledged “some weakness” in white-goods comps for the three months, ended Aug. 1.

On a conference call, chairman, president and CEO Robert Niblock attributed the softness to the competitive marketplace and “incredibly strong” prior-year comparisons, when same-store majap sales were up by the high teens as consumers replaced appliances damaged by Superstorm Sandy.

He said performance was further impacted by poor room air sales in July due to the cool summer.

“It was a competitive environment out there for major appliances, and tough numbers we were going up against,” he told analysts.

Nevertheless, average two-year majap comps are still up double-digits, added chief customer officer Mike Jones. “So [appliances are] actually performing very well.”

Looking ahead, Niblock noted, “We believe homeimprovement spending will continue to progress in tandem with strengthening job and income growth.”

Net profits for the No. 2 home-improvement chain increased 10.4 percent to $1 billion amid tighter expense controls, while net sales rose 5.7 percent to $16.6 billion and comp sales increased 4.4 percent.

In contrast, Home Depot’s major appliance business continued to climb in its second fiscal quarter, ended Aug. 3. On an earnings call, U.S. retail president Craig Menear, who will succeed Frank Blake as CEO this fall, said majaps enjoyed “another quarter of outperformance, posting double-digit comps.” Comps for appliance replacement parts also rose by the double digits.

The comp gains were achieved on top of strong yearago numbers, stemming from post-Sandy replacement sales, and despite the cooler summer weather that led to “some lost sales” of ACs, fans and dehumidifiers, Menear said.

But the company “more than made up for the loss” in its sell-through of grills and other outdoor seasonal categories, he noted.

Also buoying the business, said Menear, is an expanded assortment that now includes the Samsung, Whirlpool, Electrolux and Frigidaire brands, as well as the expansion of Home Depot’s “Jumbo” majap departments, from 250 stores last year to 800 locations currently.

The format, which was introduced in 2012 and features an expanded 2,400-square-foot display area, is being rolled out to an additional 183 stores, said chief financial officer Carol Tomé.

Menear said the chain will also introduce new products for the connected home, including garage door openers, thermostats, water heaters and light bulbs, in the current quarter.

Net earnings for the No. 1 home-improvement chain rose 14 percent to $2.1 billion for the quarter, while total sales rose 5.7 percent to $23.8 billion. Comps increased 6.4 percent at U.S. stores, and online revenue, which comprises about 4 percent of total sales, shot up 38 percent, with about a third of web-based orders retrieved in-store.

Transactions were up 4.1 percent for the three months, and comp ticket increased 1.7 percent, Menear reported.