Lowe’s CEO on housing market difficulties, and what’s next for the company
Lowe’s CEO Marvin Ellison described the current home improvement environment as “the most difficult housing market that I’ve faced in this business since the financial crisis.” He was speaking Wednesday during the company’s first-quarter earnings call.
Despite notching its fourth consecutive quarter of positive sales, the retail giant reported a modest increase in comparable sales as it leans into digital innovation and new service offerings.
Ellison noted that while the current economic environment is stagnant, it differs significantly from the 2008 crash. During that financial crisis, “consumer sentiment for housing was low because you had such a large number of foreclosures,” leading to non-existent home improvement investment.
Today, the challenge is a “lock-in effect,” where homeowners with low fixed mortgage rates are reluctant to move as current rates remain north of 6%.
“It’s just causing stagnation,” Ellison said, noting that the DIY customer — representing 60% to 65% of Lowe’s revenue — is under considerable pressure. “This is a much different environment when you look at the DIY pressure the customer is not spending on larger ticket just because of the current rate,” he said.
Lowe’s earnings update
The Mooresville-based home improvement chain reported first-quarter net sales of $23.1 billion, up 10.3% from the same time last year, driven by acquisitions like Foundation Building Materials and Artisan Design Group. Lowe’s comparable sales increased by 0.6% compared to last year.
Growth categories included lawn and garden, paint, plumbing, tools, electrical, power equipment, cleaning and appliances.
The company beat expectations and is still taking market share, even in a “really tough housing” environment, through strong spring sales, growth in the professional customer segment and a 15.5% surge in online sales, Ellison said.
Lowe’s addresses other economic pressures
Lowe’s is grappling with a renewed round of inflationary pressure from rising oil and fuel prices, which are impacting commodity-based products like resin and plastics, Ellison said. While the impact in Q1 was “pretty manageable,” the company is working with vendor and supply chain partners to mitigate risks.
The company remains confident in its ability to manage these external factors, including tariffs, which have been in flux since last year. “We’ll manage through this,” Ellison said.
Lowe’s highlights new customer strategies and AI
To maintain engagement with its DIY base, Lowe’s continues to invest heavily in loyalty and digital tools. A key strategy is the deployment of Mylow, an AI-powered shopping assistant launched a year ago. Mylow now supports over 1 million customer inquiries each month, offering project guidance and recommendations.
The tool is proving its value, as the conversion rate for online customers who engage with Mylow is triple that of those who do not, Ellison said. The company also is enhancing its loyalty program with new subscription services.
Home Care Plus, a subscription service to support customers with routine home maintenance tasks, is available for $99 a year to MyLowe’s Rewards members. This service, with trained Lowe’s workers helping customers with their to-do lists, is viewed by Lowe’s executives as a “long-term play” to build relationships with the DIY customer. Lowe’s has also enhanced its fulfillment options, including offering free same-day delivery for purchases over $25 to loyalty members.
Lowe’s is one of the Charlotte region’s largest employers with about 11,000 corporate and tech hub employees. But it cut 600 corporate and support jobs in February, effective by May 1.
The layoffs heavily impacted the Charlotte area, eliminating 227 positions at its Mooresville headquarters and South End Tech Hub.
Lowe’s has about 300,000 workers companywide with 1,759 home improvement stores.
