Home Improvement Giants Under Pressure: What to Expect from Home Depot and Lowe's Earnings Reports

As the season turns warmer and homeowners begin to engage more passionately in lawn care and DIY projects, the lens on major players in the home improvement sector becomes increasingly focused. Specifically, investors are keenly watching the earnings reports from two notable retailers: Home Depot (NYSE: HD) and Lowe’s (NYSE: LOW), which are set to be released shortly. This heightened scrutiny comes on the heels of lukewarm sales data that suggests potential headwinds for both companies.

With credit and debit card sales at building and garden supply stores indicating a decline of 2% year-over-year in April, despite growth in other retail categories, the outlook appears grim. Lowe’s has reported a nearly 3% drop in sales when compared to the same month in the previous year, following a robust 6.6% increase in March. Meanwhile, Home Depot’s sales crept up a mere 0.7%, having previously experienced a 4.2% boost the month prior.

Mark Mathews, the executive director of research at the National Retail Federation, highlighted some concerning trends: “Consumers have diminished savings post-pandemic and are heavily reliant on stable employment and wage growth to sustain their spending habits.” This sentiment is echoed by surveys from HundredX, which reveal a slight decline in consumer intent to shop at both retail giants. Overall, future purchase intentions dropped by approximately 1% year-over-year, a figure that shows a more pronounced decrease among lower-income customers, typically more susceptible to economic fluctuations.

Analysts have been cautious about declaring a recession imminent, pointing instead to steady job and wage growth as stabilizing factors. Nonetheless, the recent turmoil surrounding tariffs from President Donald Trump adds an additional layer of uncertainty. On April 2, sweeping tariffs were announced on various trading partners, which were later postponed, but the unpredictable landscape is discouraging consumer expenditures, particularly on larger items.

Courtney Yakavonis, a senior equity analyst at Columbia Threadneedle Investments, has mixed feelings about a prospective rebound in the U.S. housing market. While she believes in its eventual recovery, the timeline remains foggy, leaving investors pondering the potential impacts on Home Depot and Lowe’s going into their earnings releases. Both companies' approaches to managing uncertainties related to tariffs will be significant indicators of their financial health moving forward.

As Home Depot prepares to unveil its earnings on Tuesday and Lowe’s follows up on Wednesday, traders will want to keep an eye on broader economic signals and consumer behavior that could illuminate potential opportunities or pitfalls in the home improvement sector. The narrative around these stocks is becoming increasingly complex, and astute investors will need to decipher the implications of this landscape carefully.