While the DIY frenzy created by the COVID pandemic may be cooling a bit, both Lowe’s and Home Depot reported strong earnings in the second quarter of this year. While there is some concern about the spending power of the Do-It-Yourself crowd, both retail chains proudly told reporters about gains in the Pro category this year.
“We also see customers more comfortable taking on larger projects, as evidenced by the continued strength with our Pro customer, which outpaced the DIY customer for the second quarter in a row,” Craig Menear, Chairman and CEO of Home Depot announced as he kicked off his earnings report conference call.
“We were able to capitalize on Pro demand, driving the growth of 21% this quarter and 49% on a 2-year basis,” Marvin Ellison, Lowe’s President, Chairman, and CEO said 24 hours later during his conference call.
For Home Depot, the amount the Pro customer is spending is a big story. While only 4 or 5% of Home Depot customers are professional contractors, they make up 45% of total sales, meaning they are buying a solid amount of big ticket items. “We’re encouraged by the momentum we are seeing with our Pros,” Ted Decker, Home Depot’s President and Chief Operating Officer added. “Growth with our larger Pros continues to outpace that of our smaller Pros, and they tell us their backlogs are long and growing.”
Home Depot also talked at length out its B2B e-commerce offering, Pro Xtra and the benefits it provides for contractors. “We’re building a B2B website and all of our Pro Xtra members now have been transferred over to that B2B experience,” Decker added. “With the combination of the benefits that you’re getting with Pro Xtra we’ve put up a separate Pro Xtra app that those Pros are using, and the ability to engage on the B2B website which has all sorts of functionality build-out specifically for the Pro.
“So think of builds, and material for jobs, tracking jobs, quotes, building quotes, reorder capability, tracking all receipts, preferred pricing in certain instances. All of that is coming together as well as personalization in building relevance on that Pro B2B website so think of something like search results.”
Decker also said the website has a new function to help electrical contractors find what they need faster than ever when they are online.
“If you or I would put in pliers, we have thousands of pliers that could be returned in that search result,” Decker reported. “We’re getting to the point now that we know an electrician is performing that search so we’re going to provide relevance, and we’re going to provide our electrical pliers as the first results in that search query. So this is just another great add to our Pro ecosystem and just been tremendous engagement with the Pro Loyalty app, the Pro Xtra program, and now B2B website.”
A downside for Home Depot is familiar with many electrical distributors: getting products on the shelves remains very difficult.
“Our in-stock levels are still not where we want them to be,” Decker admitted. “But we were able to meet strong customer demand despite ongoing pressures throughout the supply chain. Raw material shortages, production constraints, and pressures across modes of transportation are creating a difficult supply chain environment.”
Lowe’s is highlighting the 49% growth in the Pro business over the past two years. During its conference call, it pointed out that one of the double-digit comp growths came from lumber, which makes sense after a massive lumber price spike this summer. The other double-digit comp growth came in the electrical product sector. Ellison told reporters that is due to strong Pro demand.
“As we look at our growth in Pro, anytime you grow the business, 49% on a 2-year basis, you can assume pretty confidently that you’re taking market share. And we think that that market share is coming from a host of competitors, both small and large,” Ellison said.
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