Home Depot and Lowe’s - DIY giants growing profitably

The American DIY giants Home Depot and Lowe’s have been able to maintain their stellar performance during the pandemic. Especially Home Depot has been performing well as it was able to grow by 3,8% even on top of the 32,7% growth a year ago. Lowe’s on the other hand declined by -3%.

Both companies managed to sustain a healthy profit level 14% for Lowe’s and 15% for Home Depot.

In the last two years Home Depot has grown by +37,7% (from the base of $112 billion in annual revenue) maintaining 12-16% operating margin during every quarter.

The hot topic of the first quarter (after Target & Walmart earnings) has been the inventory glut that some retailers are facing after the pandemic. Of the two DIY giants, Home Depot is managing a more lean inventory with inventory levels at Q1/2022 of 65% of revenue. Lowe’s has a 85% inventory level to revenue.

In terms of the inventory turnover metric, Home Depot again is performing better to Lowe’s. In 2021 Home Depot turned it’s inventory over 5,2 times, whereas Lowe’s had a 3,8x inventory turnover.