Home Depot does not break out sales by category, though it said plumbing outperformed its overall same-store sales figure, or sales at stores open at least a year, an important measure of retail health. Home Depot’s same-store sales for the three months ending Aug. 3 fell 7.9 percent. (Adjusting for a shift in the company’s fiscal calendar this year would put that figure at a decline of 7.2 percent.)
Both Home Depot and Lowe’s , the world’s second-largest home improvement retailer, acknowledged that consumers had shied away from costly discretionary items. “During the quarter we continued to see soft demand in cabinets and countertops, and fashion plumbing,” Larry D. Stone, president and chief operating officer of Lowe’s Companies, said in a conference call with investors on Monday. Sales of repair and maintenance products, on the other hand, were solid.
Home goods retailers know all too well that getting a consumer to buy a new kitchen is nearly impossible these days. Instead Home Depot expanded its offering of low-priced items across the store, a tactic it said it thought made more sense than limited-time blowout sales.
“We were less promotional over all compared to last year,” Craig Menear, Home Depot’s executive vice president for merchandising, said Tuesday in a conference call with investors, “and consciously focused on eliminating margin-eroding promotions.”
Ms. Tomé said transactions for $25 and under were down “a lot less” than items over $600.
David Strasser, a Banc of America Investment Services analyst, said this was an industrywide trend. “The bifurcation between low ticket and high ticket has become more dramatic,” he said.
In addition to making necessary repairs, consumers — bracing for higher fuel prices this winter — are also trying to save money by making their homes more energy-efficient.
“This is a trend we expect to continue into the third quarter,” Mr. Menear said. “Products such as weather stripping, caulk, CFL light bulbs, air circulation and pipe insulation all performed well. In the Northeast, we are already seeing strong sales in our fireplace category as customers are stocking up on pellet fuel before the cold weather arrives.”
Home Depot plans to introduce more energy-efficient products like dimmable compact fluorescent light bulbs, water-saving faucets and toilets and a flush-mount programmable thermostat.
The two biggest home improvement retailers are experiencing the same trends: same-store sales declines, a boost from stimulus checks, weakness in big-ticket item sales, even strong sales of pellet heaters.
Home Depot reported Tuesday that profit for the three months ending Aug. 3 fell 24 percent, to $1.2 billion, or 71 cents a diluted share, compared with $1.6 billion, or 81 cents a diluted share, for the same period last year. Grim as the numbers may sound, they were better than analysts had expected.
“I thought they were actually very strong,” said Mr. Souers of Standard & Poor’s, “much stronger than my estimate of 63 cents a share. The Street was 61 cents.”
Matthew J. Fassler, an analyst with Goldman Sachs, said he expected sales at Home Depot and Lowe’s to slow further based on the historical relationship between home sales and home improvement retail sales. “From Lowe’s on Monday and Home Depot today you can see that the home sector bucked the trend that you would typically expect in the middle of a shared housing downturn,” he said.
Mitch Kaiser, senior research analyst for Piper Jaffray, also liked the earnings results but said declines in same-store sales at Home Depot and Lowe’s were likely to last at least another year. Every retailer is suffering in this economy, but “they’re hurt worst,” he said. “Their products are going into a declining price asset.”
Lowe’s said its profit for the three months that ended Aug. 1 decreased 7.9 percent, to $938 million, or 64 cents a diluted share, compared with $1 billion, or 67 cents a diluted share, for the same period last year. Same-store sales declined 5.3 percent for the quarter.
Home Depot and Lowe’s were cautious in their forecasts for the future. Even so, as the home improvement industry consolidates, analysts, including Mr. Kaiser, say Home Depot and Lowe’s are well positioned. It is smaller home improvement retailers that are in deeper trouble.
“It’s not a Home Depot versus Lowe’s industry right now,” said Mr. Strasser of Banc of America Investment Services. “They both will come out of this very well. And the longer it lasts the better and stronger they’re going to be in some respects.”
He added, “Other people can’t survive.”