Lowe’s, Home Depot Keep Taking Hits

Both Lowe’s and Home Depot reported their second quarters this week, and there weren’t many surprises.

Lowe’s experienced a same-store sales drop of 5.3% year over year, while Home Depot posted a 7.9% slide, due to continued weakness in the housing market. Additionally, Lowe’s earnings per diluted share were down 4.5%, and Home Depot’s fell 7.8%.

Though it is the smaller chain, with 1,575 units compared to Home Depot’s 2,257, Lowe’s is still growing, with plans to open 120 new locations this year. Meanwhile, Home Depot announced earlier this year it would call off 50 future openings, now only planning 55.

Is there anything these mega chains can do to combat problems in the economy? Or are their business models as such that little can be done at their huge stores, and they’re just going to have to wait it out?


6 Responses to “Lowe’s, Home Depot Keep Taking Hits”

  1. 1 E August 19, 2008 at 8:25 am

    Both chains will just have to wait it out. They’re smart – they’re still running print/tv/radio ads to keep themselves out in front of the consumer with “get ready for Fall” ticklers. They have to keep advertising, they can’t go “black” — it’d be a huge mistake.

    Not much more they can do right now. New store openings? Risky. They’re both trying to “keep up with the Joneses” forecasting new store openings but to-what-end at this point? There’s nothing in the market right now that justifies this kind of thinking other than a kind of survival posturing for the benefit of their competition, not their customers.

  2. 2 James August 19, 2008 at 9:00 am

    Ace is the Place with the Happy Hardware Man. When the economy retracts we get phantom vacancy, what’s that? Phantom Vacancy is when the lights are on and the door is open but the customers are not in the store, it is when two stores are available when only one could truly be supported by the trade area. It is the product of overly aggressive expansion strategies when times are good. It is when two stores go head to head with almost identical product lines instead of distinguishing themselves from each other. Can you actual tell if you are in a Lowes or a Home Depot?? If it wasn’t for their paint scheme I couldn’t. They are going to half to wait it out and and hopefully mull over their prior sins in search of a little humility!

  3. 3 Nancy H August 21, 2008 at 1:31 pm

    Actually, I think Home Depot has lost its shine. The employees seem to be disgruntled – you can never find anyone to actually help you – and their product lines have deteriorated in quality. Even their garden department is losing its lustre. Lowes on the other hand, seems to offer better products, more variety, and friendlier service. At least that is the case here in Scottsdale/Phoenix. So I am not surprised to see that Home Depot is suffering more than Lowes. One of HD’s biggest problems here is that there are just too many of them – forget about two different stores going head to head – we have three Home Depots & an Expo within 5 miles of each other – to one Lowes within that same area. HD should be looking at closing some of the stores it has – especially the ridiculously high-priced Expo stores. I think they wanted to compete with The Great Indoors – but they missed the mark.

  4. 4 CubilceDweller August 26, 2008 at 11:14 am

    At the present time, buying paint, barbecues and lawn mowers is a luxury.

    When presented with the choice of putting gas in your vehicle/food on the table or redecorating a home that you can no longer afford anyway, it isn’t a big surprise that these stores aren’t mobbed with people wanting to spend thier money there.

    It is going to take a while for our economy to bounce back enough for people to do this.

  5. 5 Bubba August 26, 2008 at 11:58 am

    Sit and wait. Close a few stores. Fire a few people who are not your buddies (women, minorities). You know, the usual.

  6. 6 Downsize August 26, 2008 at 12:02 pm

    Maybe they can carve out 10, 15 or 20k square feet for a Toys R Us/Babies R Us combo, and reduce their costs.

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