It may be March, but it’s the holiday season for home improvement retailers.
Unlike most retailers that bank on the winter holiday season for a large percentage of their annual sales, Santa comes in the springtime for retailers such as Home Depot and Lowe's. That's when homeowners finally begin those home improvement projects they’ve been putting off all winter.
But with milder temperatures sweeping across the country, Home Depot said it will begin its third annual “Spring Black Friday” promotion Thursday, complete with doorbuster specials. This year, it’s a simultaneous nationwide rollout because of the unusually mild winter.
It is a different strategy than they've used previously. For the past two years, the home improvement retailer rolled out “Spring Black Friday” region by region over the course of several weekends, to follow the warming weather.
But because of the warmer-than-normal winter, many Home Depot customers have already begun painting and spackling — resulting in double-digit same-store sales gains as customers bought gutters, roofing materials, vinyl siding, patio furniture, fencing, exterior paint, pressure washers, exterior lighting and concrete in their fiscal fourth quarter.
And Home Depot isn't alone in benefiting from the early spring. According to Global Hunter Securities, retail sales for lawn and garden home improvement companies increased 13 percent in January, and 18 percent in February year-over-year.
But regardless of weather, the housing market is always an important indicator for home improvement projects. While new home saleshave fallen for two straight months, contracts for existing home salesare near a two-year high, a bullish sign for home improvement-related retailers and product makers.
“The homeowner wants to do something to improve the overall appearance and marketability and comfortable nature of living in the home that they have,” says Richard Hastings, macro and consumer strategist for Global Hunter Securities.
But homeowners remain cautious when spending on higher ticket home improvement projects, he says. “The outdoor landscaping and lawn and garden part of it will hold up pretty well because it’s lower ticket, but we’re a little bit concerned right now about the home remodel, bigger ticket side of the story.”
Hastings also notes that recent robust refinancing activity is a positive for the existing home market. However, today the Mortgage Bankers Associationsaid seasonally adjusted mortgage applicationactivity dropped 2.7 percent for the week ended March 23rd driven by a 3.4 percent drop in conventional refinancing applications.
Floor maker Armstrong, lumber company Weyerhaeuser and fertilizer and lawn care company Scotts Miracle-Gro are just a few companies that make the products sold at home improvement retailers like Home Depot and Lowe’s , and their shares have posted solid growth so far this year, and could continue to bloom for investors in the spring. Year-to-date, shares of Armstrong are up 31 percent, Weyerhaeuser has gained 18 percent and Scott’s Miracle-Gro shares have increased 17 percent.
While weather has and will continue to play an important role in sales for home improvement retailers, Home Depot says regardless of weather, the last weekend in March is always an important one for sales related to those home improvement projects.