Lowe's (LOW 0.89%) is still a much bigger business today than it was before the pandemic, but it isn't growing like it was in 2021. The home improvement giant this week announced declining sales compared to the same period a year earlier.

Management said the slump was just a side effect from cooler weather conditions, which pushed some sales outside the quarter into Q2. But Lowe's results still seemed weak compared to its bigger rival, Home Depot (HD 0.17%).

Let's dive right in.

Two people renovating a house.

Image source: Getty Images.

1. Sales trends helped Home Depot more

Lowe's reported a 20% increase in two-year comparable-store sales for the period that ran through late April. However, comps declined 4% in the core U.S. market on a standard one-year basis. In contrast, Home Depot announced a 2% increase.

The difference apparently came from Home Depot's bigger gains with the professional contractor niche. "We were thrilled with our pro performance," COO Ted Decker said in a conference call.

Lowe's, on the other hand, said that because so much of its sales base is tied to the do-it-yourself niche, cooler spring temperatures in April hurt the business. CEO Marvin Ellison said in a press release, "Our sales ... were in line with our expectations, excluding our outdoor seasonal categories."

2. Lowe's couldn't close gap on profitability

Lowe's achieved a higher profit margin, which is impressive given all the supply chain and cost pressures in the industry today. Gross profit margin rose slightly, with help from rising prices. And operating margin ticked up by nearly a full percentage point.

HD Operating Margin (TTM) Chart

HD Operating Margin (TTM) data by YCharts

Yet Lowe's still hasn't closed the gap with Home Depot, which has an operating margin above 15% of sales. Lowe's is aiming to get that annual figure to roughly 13% of sales this year, while its bigger rival is targeting 15.4%.

3. The outlook favors Home Depot

Comparing the two updated outlooks shows how Home Depot is capturing a bit more than its fair share of industry growth. Lowe's affirmed its 2022 forecast that calls for flat comps this year. Home Depot is now expecting to boost sales by about 3% following last year's 11% surge. The industry leader is also calling for profitability to edge up slightly, compared to the 15.2% rate it achieved last year.

Lowe's is expecting a better Q2 ahead because many of its spring season sales occurred in May rather than April this year. However, Home Depot is on track to beat the retailer in key metrics, including growth and return on invested capital.

While both companies are generating solid earnings and promise to deliver increasing cash returns to investors through dividends and stock buybacks, there's no question which one is taking better advantage of the positive selling environment today.