Need to Know
- The home improvement retailer posted a 30% overall increase in revenue for the second quarter of 2020, and a 68.7% jump in profit.
- As more customers turn to online shopping, Lowe’s digital sales also spiked, growing by 135%, with 8% of all sales happening online.
- Lowe’s profits were up, despite the company spending $460 million during the quarter on pay increases, store safety, and community support.
U.S. retailer Lowe’s posted huge gains this week, reporting a 30% increase in revenue for Q2 of 2020, well ahead of industry forecasts for the chain.
Lowe’s, which also saw a 68.7% jump in profit, benefitted from a shift in shopping habits brought on from the pandemic, with more consumers turning towards home-improvement projects and away from purchases in other retail categories such as apparel and beauty.
“People are taking those dollars and they’re investing in their home,” Lowe’s CEO Marvin Ellison said in an interview with CNBC. “We’ve got tons of anecdotal information where someone was planning to take a vacation and now they’ve decided to remodel the kitchen, where they were planning to take a vacation and they decided to remodel their entire backyard to make it a place where they could spend more time.”
Also due to the pandemic, the retailer saw a massive jump in online sales, with purchases made digitally jumping 135% over the quarter. In total, 8% of Lowe’s sales over the quarter were made online. Ellison noted that the pandemic hit just as Lowe’s had made substantial investments in gearing its image towards home professionals, which included an overhaul of its website. The company also recently launched a video chat tool for virtual repair and home improvement consultations. “We just happened to walk right into this pandemic when those improvements were just starting to kick in,” he said. “So this is a little bit about timing for us also.”
In addition, the company reports that, over Q2, it completed its transition to the cloud, allowing Lowe’s to continue its digital success going forward. “With our transition of lowes.com to the cloud now fully complete, the teams are working quickly to accelerate the front end work and deliver improved customer-facing capabilities in the second half of this year,” said William Boltz, EVP of merchandising, adding that these capabilities include online delivery scheduling, online order tracking, a more personalized online shopping experience, and an expanded online product offering.
Lowe’s profits were up for the quarter, hitting $2.83 billion, or $3.74 per share, even as it invested substantial cash in increased employee pay and better safety measures due to the pandemic. The company reported havnig spent $460 million in Q2 on higher pay for hourly workers, store safety, and community support. Lowe’s also plans to pay out a quarterly bonus of $107 million to staff at all locations for surpassing quarterly sales and revenue targets.