Slow consumer spending has gotten the best of Lowe’s (LOW) and homebuilder exchange traded funds (ETFs) as third quarter profits fell 24%.
Nevertheless these ho-hum figures are better than Wall Street’s expectations. It is obvious many consumers are cutting spending and the among the first things to go are home improvement projects, and big-ticket purchases, reports the Associated Press.
This year’s results were helped by a sales boost from a busy hurricane season on the Gulf coast. But consumers only stuck to necessities and didn’t buy things such as kitchen cabinets.
Tomorrow, Home Depot (HD) will release their figures, and with Lowe’s down 30% in the past two months, the prospects are not favorable. The numbers show that investors aren’t expecting much.
Barron’s reports that Home Depot has been making some changes, including installing new management and implementing a new pricing policy. Instead of occasional promotions, it’s moving to an “everyday low price” model to lure customers seeking consistent value.
- SPDR S&P Homebuilders (XHB): down 42.1% year-to-date; Home Depot is 5.2%; Lowe’s is 5%