RETAIL ALERT | Lowe’s Q3 Earnings Report | November 22, 2023

In Q3, Lowe’s executives reported a greater-than-expected pullback in DIY volume, a customer base that represents 75% of the company’s sales. Lowe’s reported positive comps among Pros; however, that was not enough to offset the DIY declines. With one quarter to go in its 2023 fiscal year, the company reduced its annual sales goal to $86 billion (previously $87 - $89 billion) and said comparable sales are expected to be down -5%, a bigger decline than the previous estimate of -2% to -4%.

Q3 by the numbers:

• Sales were 2.0% below expectations.
• Comp sales decreased 7.4%.
• Transactions declined by 6.9%, and the average ticket declined by 0.5%.
• Online sales were down 4.0%. 

Bright spots for the quarter:

The company opened its 15th Lowe’s Outlet store during the quarter and said its rural stores exceeded expectations in the quarter. 

• The company’s rural stores have become a one-stop shop for home and farm/ranch/outdoor products, and the Petco store-in-store concept has performed well.
• The company will explore options going forward, including adding incremental categories to the current rural stores, putting some successful categories into non-rural stores, and expanding the profile and definition of ‘rural’. 

Improving the front end of the store:

Lowe’s expects to have 450 stores that have undergone a transformation of the front end completed by the end of the year. One goal of the transformation is to “get another item in the basket” during the checkout process.

• Front-end transformation includes improving the checkout experience and enlarging the area dedicated to BOPIS transactions. 

Other areas of focus for Lowe’s:

To provide simple and straightforward messaging to customers, Lowe’s introduced its Lowest Price Guarantee to replace the previous Lowe’s Price Promise. Other focal points for the company include:

• Expanding Pro loyalty and CRM programs designed to drive basket and mix improvements.
• Sunsetting their 30-year-old operating system.
• Helping customers save time and money during the holidays, including delivering live holiday trees to customer homes in select markets.
• Focusing on appliances, which represent 14% of the company’s sales, including 10 major appliance doorbusters to kick off the Black Friday weekend. 

What this means for you:

Brands should focus on ways in which they provide everyday value and convenience for price-sensitive consumers as well as small to medium-sized Pros, which are the sweet spot for Lowe’s. Brands can also leverage their role in supporting the company’s goal of being the go-to solution for critical home repairs.