Though coronavirus-driven uncertainty reigns, Lowe’s CEO says business is holding up
Like many retailers that sell items considered essential, Lowe’s is seeing some benefit from the coronavirus outbreak (beyond just being able to keep stores open).
Shoppers are buying large appliances like freezers and refrigerators to store food they’ve purchased in preparation for staying home for extended periods of time, says Lowe’s chief executive Marvin Ellison.
They’re also “seeing people start to work down that to-do list and get those things done in their homes,” Ellison tells Fortune. That includes getting tools to fix items like water heaters, or just replacing them outright. The interview with the CEO was a rare business update for Lowe’s outside of the company’s regular quarterly reports.
Ellison wouldn’t quantify how business is going for Lowe’s right now—the company just passed the middle of the first fiscal quarter of the year—beyond saying it’s holding its own. Though Ellison does acknowledge that given the unknown trajectory of the outbreak and its impact on the economy, things could change. There is also the question of what will happen to the housing market, which has been strong for years, lifting both Lowe’s and Home Depot.
“We feel good about where we are, but this is a very fluid situation,” says Ellison. “We just don’t know what the trends are going to be in two weeks or three weeks.”
And the uncertainty around the outbreak comes at a particularly fraught time for Lowe’s. Unlike most retailers, the home-improvement chain’s busiest time of year is April and May, when Americans (and their contractors) shake off winter and start home projects.
Lowe’s is, of course, not the only retailer still open that is concerned about the future. Target CEO Brian Cornell on Wednesday said that comparable sales had risen 20% in March so far, yet he pulled Target’s 2020 financial outlook, cut capital spending, and halted share buybacks.
Despite the uncertainty, Lowe’s will still ramp up hiring of temps for the upcoming peak season at about the same levels as last year.
Even as people shop at Lowe’s to pick up essentials, there is one area of missed opportunity for the chain: e-commerce. At a time many shoppers are hesitant to set foot in a store lest they be exposed to the virus, Lowe’s digital business is still floundering. In its most recent quarter, sales on its website rose 3%, an anemic rate for any major retailer. (At Home Depot, they grew 21%.)
Though Lowe’s has had some success in modernizing its site, the chain would have an easier time navigating the current turmoil with a website that was up to industry standards.
“We’re not where we’d like to be, but the improvements we’ve made are allowing us to serve customers much better in this environment than we could have in the past,” Ellison says.
Another option that could have helped Lowe’s now would be to offer curbside or parking lot pickup of online orders. But the company is still in the process of rolling the service out, and it won’t help in the short term. (Home Depot doesn’t offer that option.)
As for its stores, Lowe’s is taking the same steps many other retailers are to protect workers and customers from contact with COVID-19. The company has set up markers at checkout lanes to help customers respect social distancing and cleans the area around the cash registers more often. It also announced $80 million in financial incentives for store workers on Wednesday.
For now, Ellison hasn’t seen the need to preserve cash by taking steps that other retailers have in the past week, such as cutting Lowe’s dividend, suspending share buybacks, or tapping its credit line. But he did allow that Lowe’s will regularly assess whether it needs to rethink those options in this “unprecedented crisis.”
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