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Lowe's Sees Bigger Sales Increase Than Rival Home Depot

By Jennifer Saibil – May 20, 2020 at 10:38AM

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The home improvement chain finally nails digital to drive sales.

Lowe's (LOW -1.12%) efforts to increase sales, pump up digital, and become a serious threat to Home Depot's (HD -1.61%) hold on the top spot in home improvement are paying off in a big way as the COVID-19 pandemic sent shoppers to town in the home improvement area.

Movin' on up

In Lowe's first quarter, which ended May 1, comps were up 11.3%, U.S. comps were up 12.3%, and net sales increased to $19.7 billion. Earnings were $1.3 billion and earnings per share were $1.76, compared with $1.31 in 2019. Home Depot's comps increased 6.4% with U.S. comps rising 7.5% during the same period.

Lowe's workers in front of a store.

Image source: Lowe's.

Digital sales increased 80%. This was a big win for the company, which had trouble gaining steam with e-commerce previously. As an essential business, Lowe's has been allowed to keep its stores open, but digital became more important as people stayed at home. Lowe's implemented curbside pickup at all of its locations to expand the power of its e-commerce model as well.

The company ended the quarter with $6 billion in cash and cash equivalents as well as $3 billion in undrawn revolving credit. Despite the strong quarter, Lowe's is pulling its fiscal 2020 outlook given the uncertainty of the current situation.

Dealing with COVID-19

The company spent $340 million in employee and sanitation-related activities because of the pandemic, including increased hourly wages, bonuses, sanitizing stations, and third-party cleaning services. 

"Our strong first quarter performance, which continues into May, also reflects the benefits of our retail fundamentals strategy, the improvement in our execution, and the resiliency of our home improvement business model," said CEO Marvin Ellison.

Jennifer Saibil has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Home Depot. The Motley Fool recommends Lowe's and recommends the following options: long January 2021 $120 calls on Home Depot and short January 2021 $210 calls on Home Depot. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Lowe's Companies, Inc. Stock Quote
Lowe's Companies, Inc.
LOW
$186.02 (-1.12%) $-2.11
The Home Depot, Inc. Stock Quote
The Home Depot, Inc.
HD
$266.58 (-1.61%) $-4.36

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