Gardening tools. Backyard grills. And supplies for a staycation?
As home improvement’s peak sales season begins, Lowe’s said it expects shoppers’ spring purchases to continue to be influenced by the Covid pandemic. Along with typical merchandise, the retailer said it will cater to consumers’ desire for a getaway — even if they’re just camping in the backyard or planning an at-home spa day.
Its spring assortment, from tents to cocktail shakers, is part of the company’s strategy to sell a wider range of items that consumers may need to maintain, decorate or enjoy their homes — particularly as it tries to sustain a strong, pandemic-fueled run. During the holiday season, Lowe’s sold bedding, small kitchen appliances like air fryers and kids’ toys. The company has added exercise equipment, such as spin bikes, to its website and begun to test it on the sales floor.
Lowe’s website now has over 2 million different products — more than four times as many as it had in 2018, Bill Boltz, executive vice president of merchandising, said.
He said it makes sense for the retailer to sell trampolines and towels, along with lawn mowers, patio sets and bathroom shelving.
“We’re not going to enter into the grocery space, but we think there’s an opportunity to do some things here and push it a little bit where we have a right to play,” he said in a CNBC interview.
Lowe’s is turning its spring event, which is typically a weekend, into a monthlong fest. It will include pandemic-friendly activities, like garden-to-go kits that customers can pick up in the parking lot.
Rival Home Depot is also stretching out its spring sales and touting items that make home more comfortable and fun. It’s featuring spring-themed DIY ideas and virtual and livestreamed workshops on its website.
Lowe’s shares are up 134% over the past year and touched an all-time high of $184.15 on Wednesday. Its market value is $129.6 billion, as of Wednesday’s close, but some analysts bet it will rise even higher. Its comparable sales, a key metric that tracks sales at stores open for at least a year and online, rose by 26% in the most recent fiscal year compared with the year prior.
Yet even Lowe’s itself cautioned it is unlikely to keep up that pace of growth in the quarters ahead. Chief Financial Officer Dave Denton said on a fourth-quarter earnings call that the retailer anticipates a 5% to 7% drop in demand for the home improvement sector on a mix-adjusted basis in a favorable market. That would mean Lowe’s net sales for the year would be around $86 billion — a decline from $89.6 billion in 2020.
Home Depot declined to provide a forecast for the year, saying it’s too difficult to predict how factors from stimulus checks to Covid-19 cases will influence consumer spending. Like Lowe’s, it reported strong comparable sales gains of 19.7% for the most recent fiscal year. Its shares also hit an all-time high on Wednesday of $296.78, raising its market value to $315.18 billion as of Wednesday’s close. Home Depot’s stock is up 58% over the past 12 months.
The two retailers have a hot real estate market and the growth of remote work acting in their favor for now.
Zack Fadem, a senior equity analyst for Wells Fargo, said as consumers wait for a Covid-19 vaccine appointment or push off travel and entertainment for several more months, they may continue to spruce up their backyards and take on DIY projects. His price targets are above where both retailers are trading: $310 for Home Depot and $200 for Lowe’s.
“As much as we all want to go on vacation, the light switch has not been flipped on as far as the vaccine goes, and it could take a little bit of time before everyone decides ‘Ok, time to go to the movies. Time to go on an airplane again,'” he said.
Travel has picked up, but is still far below pre-pandemic levels — particularly during a popular time like spring break. The Transportation Security Administration screened more than 1 million people on Tuesday, more than the same day a year ago but 56% below the number in 2019.
Home gyms and ‘hometrips’
Lowe’s is betting that people’s enthusiasm for home projects hasn’t tapered off. The retailer’s leaders pointed to survey findings. Nearly 70% of respondents with children plan to have a “staycation” at home instead of taking a spring break trip, according to a survey of 2,000 homeowners in late February by Morning Consult commissioned by Lowe’s. Eighty-nine percent of respondents who have completed home projects since March 2020 are planning for more this spring, the survey found.
“While obviously we’re craving the ability to feel safe and well and able to get out and do more, this idea of the importance of home is strengthening, not weakening,” Marisa Thalberg, Lowe’s chief brand and marketing officer, said in a virtual news conference.
As people hold off on booking big trips, she said people’s homes have become the “must-do destination.”
Lowe’s has expanded into another category that’s gained steam during the pandemic: at-home fitness. It now has more than 1,700 products from brands like Life Fitness and ProForm and plans to add even more, Boltz said. He said it is testing sales of the equipment at more than one store in different markets, but declined to say how many or where they are located citing competitive reasons.
As part of its virtual spring preview, Lowe’s joined a growing list of retailers trying to link their brand to the near-cult following of Peloton and other at-home fitness companies. Adidas is working with Peloton on an exclusive apparel line. Nordstrom struck a deal with Tonal to open mini shops that sell the wall-mounted, high-tech workout stations in its stores. And athleisure brand Fabletics has a partnership with rowing machine Hydrow.
Lowe’s teamed up with Ally Love, a Peloton instructor. She showed off how she used decor from Lowe’s, including a plant, pillows, bedding and a wicker chair, to transform her New York City apartment into a “hometrip” to Miami.
Love, who lives with her fiance, said the pandemic has forced them to get creative, too. Their guest bedroom is now a home gym and a office, with a Peloton bike and treadmill. She said she’s tried to make the most of every square foot with mirrors and different places to sit.
“Since we’ve been pretty much forced to spend time at home, I thought about redefining what do these positions or these areas or this corner or this pocket mean, even in a small apartment,” she said.
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