U.S. retail earnings for Home Depot and Lowe’s face serious challenges as the housing market slows and tariffs pressure consumer demand. Both retailers report quarterly results this week, and investors want clear signals about future performance. High interest rates limit housing turnover, and consumer spending on home improvement stays weak.
Executives once described spring and summer as the peak retail season for home improvement chains. However, sales data showed declines instead of gains. Building material and garden supply sales fell at least 4% year-over-year each month from May through July. Other retail categories managed to grow, which highlighted the pressure on U.S. retail earnings from this sector.
Consumers now spend more on essentials, and price remains their top concern. Back-to-school shopping lifted July sales, but home and garden demand lagged. Analysts say lower interest rates will be needed before shoppers return to big-ticket purchases. Yet Home Depot and Lowe’s stand in stronger positions than smaller competitors such as Ace Hardware and True Value. Their brand recognition and pricing power help them capture market share.
Credit card data from Affinity Solutions gave mixed results. Home Depot sales held steady in May and July, with a 3% decline in June. Lowe’s recorded modest growth in May and July, but sales slipped in June. Analysts expect Home Depot to post revenue growth above 5% for the second quarter. Lowe’s is projected to deliver smaller gains of around 1.6%. These forecasts show that U.S. retail earnings remain resilient despite market challenges.
Tariffs create another test for both companies. Each sources over half of its products from North America, which helps reduce exposure. Still, Lowe’s depends on China for about 20% of its inventory. Home Depot plans to diversify its supply chain further and insists it will avoid raising prices, though some products could disappear. Lowe’s confirmed that it expects price hikes later this year.
Both companies also grow their business with professional contractors. Demand for bulk purchases of concrete, siding, and gypsum continues to rise. Contractors focus less on price, so their purchases create steady revenue streams. This professional demand offsets weaker household spending and supports stability while the housing market struggles to recover.
Overall, U.S. retail earnings at Home Depot and Lowe’s face strong headwinds from housing weakness and tariff uncertainty. However, their scale, branding, and contractor business give them a competitive edge over smaller rivals.
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