It’s a big earnings day today, as we saw quarterly updates from Target, Lowe’s and Home Depot. It looks like back to school is already having a big impact and home projects are continuing – although it would appear both Lowe’s and Home Depot are seeing a bit of a slow down.
Target earnings top estimates, and retailer raises forecast as back-to-school spending kicks in: Comparable store sales grew 8.7%, while digital comparable sales grew 10%. Boosted by back to school shopping and digital sales (which don’t seem to be slowing down), Target raised its forecast for the rest of the year and approved a $15B stock buyback program.
Lowe’s earnings beat estimates, as home professionals help drive growth. Despite a 1.6% decrease compared to last year, Lowe’s still beat estimates for the qaurter – fueled by home professional installations and the continued focused on home improvement. A pretty telling quote from CEO Marvin Ellison, “The pandemic has created a long-term impact of the home’s importance, and we just don’t see that changing,”
Home Depot Q2 income, sales beat Street; same-store sales miss. Similar story to Lowe’s as much of the performance was driven by the continued boon of home improvement projects. However, it seems as though Home Depot saw customer transactions drop 5.8% compared to last year – although basket size increased 11.3%. The retailer said kitchen and bath and lumber were its two strongest categories. Sales in paint, hardware, and indoor and outdoor garden were negative on a year-over-year basis.
Grocery sales fall as more shoppers return but basket size shrinks, says Kantar. This is based on European data, but Kantar is seeing a trend of more shoppers returning to the stores but smaller basket sizes. Perhaps shoppers don’t feel the need to stock up as much as they were before, but it did cause a 0.5% decrease in grocery sales over the recent weeks. Definitely something to keep an eye on.
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