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Home improvement retailers saw mixed first quarter results this week: Home Depot (HD) reported a slight earnings miss while beating on revenue, Lowe's (LOW) beat earnings forecasts while its revenue came in line with Wall Street expectations.
Both stores are seeing their stocks in the red ahead of Wednesday's market close.
Yahoo Finance senior retail reporter Brooke DiPalma joins the Market Domination team in assessing what the two chains are signaling about consumer demand for home renovation purchases and the broader US housing market, as well as the stores' messaging on prices in relation to tariffs.
To watch more expert insights and analysis on the latest market action, check out more Market Domination here.
Lowe's delivering on subdued expectations for the first quarter amid pressure in demand. This comes after rival Home Depot's mixed earnings results with more on what this means for the home improvement market. Let's get to Yahoo Finance's Brooke DiPalma, Brooke.
Good afternoon to you both. Certainly, what we heard from both retailers is that that discretionary DIY demand is still not as strong as what it used to be, and consumers are taking on less big projects. We also heard there was a slow start to the spring season because of this poor weather in February. And all in the background, we have those ongoing challenges around the housing market, as well as higher mortgage rates. They're persisting higher interest rates are persisting that are putting off large projects, and this uncertainty around tariffs are certainly lingering. One source telling me, quote, "We see positive takeaways from both earnings reports, but we are not fully recovered just yet." And if we take a closer look at same-store sales growth, you see this reverse this past quarter from both Lowe's and Home Depot after a positive uptick in Q4. Now, Lowe's main Lowe's main business is here in the US, its whole business. We did see same-store sales fall there. Home Depot also saw same-store sales growth fall as well. But keep in mind, Home Depot also has this mega Canada, Mexico, as well as US business. And here in the US, it did see a slight uptick. Something to watch out for though here is CFO Brandon Sink, uh, that is of Lowe's. He did say on the call this morning that the chain has yet to see those shoppers re-engage in that discretionary categories, but he said, "Hey, trends aren't getting worse, we're seeing a lot of the same here."
Um, and what about the messaging around tariffs? Because, as we just heard from, uh, Ben Warshaw, you know, that's now has some political overtones as well.
Right, many retailers touch and go on if they should say that they're going to raise prices here. And so what we heard today from Lowe's, they said that roughly 60% of sales originate here in the US. They also said that if, hey, something doesn't make sense to have on the shelf anymore, they will go to eliminate that product. We heard the same thing from Home Depot yesterday. And they also said that they're seeking to limit their exposure to China here. A far similar tone to what we heard from Home Depot. So, these home improvement retailers sharing a similar tone when it comes to tariffs. What we heard, uh, on Tuesday from Home Depot was that more than 50% of purchases are sourced in the US. They also said something interesting here. They said that in 12 months, no single country outside of the US will represent more than 10% of their purchases. So really thinking strategically about their supply chain here, Home Depot came up front and center and they said they have no plans to raise prices. Of course, after that major pushback from the president that we saw over the weekend when it comes to Walmart.
