Shoppers Spending Less at Home Improvement Stores

New York, NY, August 20, 2009--Traffic is up at home-improvement giants, but sales continue to slide, according to the International Council of Shopping Centers.

Shoppers are still flocking to home-improvement big boxes, but they’re spending less and putting off big projects in favor of fresh coats of paint and lawn maintenance, according to executives from rival chains Home Depot and Lowe’s.

Both retailers are cutting back on new store openings and refocusing merchandising efforts on do-it-yourself customers after seeing same-store sales and profits sink along with the ongoing housing slump.

“We expected challenging economic conditions but wavering levels of consumer confidence, unseasonable weather in many areas, and tougher-than-anticipated comparisons to last year’s stimulus related spending led to lower sales than we expected,” said Lowe’s CEO Robert Niblock on a conference call with investors. Lowe’s reported sales of $13.8 billion for the second quarter, a 4.6 percent decrease from last year’s second quarter.

Same-store sales dropped 9.5 percent. Total customer count increased 4 percent, but average ticket decreased 8.2 percent to $61.43.

“Consumers are only taking on home improvement projects that they feel are absolutely necessary and are postponing discretionary projects until clarity about the future returns,” Niblock said.

“In fact, 40 percent of consumers say they have a major home improvement project they are postponing because they are waiting for their confidence about the future to improve.” To stem losses, Lowe’s is opening fewer stores next year (between 35 and 45) and spending about $45 million to get out of agreements it had made to open stores.

Meanwhile Home Depot’s second-quarter sales dropped 9.1 percent year-on-year to $19.1 billion, while same-store sales declined 8.5 percent. Despite the sales slump, traffic is up at Home Depot stores, executive vice president of merchandising Craig Menear said on a conference call.

“Our total customer transactions were positive for the first time in two years at positive 0.3 percent and comp transactions were flat year over year,” Menear said. “In the U.S., our comp transactions were up 0.4 percent and this is the first time since the second quarter of 2003 that we have not had a comp transaction decline in the U.S.”