Pro sales delivered growth of 20% in the fiscal first quarter of 2022 and growth of 64% on a two-year basis at home-improvement retailer Lowe’s. Overall, total sales for the retailer decreased from $24.4 billion in the first quarter of 2021 to $23.7 billion in the first quarter of 2022. Chairman and CEO Marvin Ellison said the company’s sales were in line with expectations, with the company experiencing a delayed spring selling season due to prolonged unfavorable weather that impacted sales in spring-related categories.
“Although the late spring postponed our DIY sales, our pro customers continue to shop to fuel their strong business demand,” Ellison said in the company’s first quarter earnings call. “And our recent pro surveys indicate that the majority of our pro customers continue to report strength in their business and a full slate of projects for the year.”
Since 2019, Lowe’s has taken steps to enhance the in-store and overall experience for pro customers with Lowe’s. The retailer took steps to improve inventory and job lot quantities in 2019 and launched its Lowe’s For Pros Loyalty program in 2020. The company also introduced a Lowe’s Tool Rental program, launched a job site for pros in partnership with Streem, and partnered with HomeAdvisor to offer Pro Loyalty customers one-year subscriptions to the lead generation platform. Lowe’s also reset the layout of its stores with pros in mind and launched a MVP Pro Rewards and Partnership Program for Pro Loyalty members.
Ellison said the initiatives undertaken by Lowe’s have resulted in positive sales penetration among pro customers. Pro sales penetration in the U.S. at Lowe’s has increased from approximately 19% in the first quarter of 2019 to approximately 25%% in the first quarter of 2022. Ellison said that pro customers enrolled in the MVP Loyalty Program and credit program are spending 300% more than pro customers not enrolled, giving the retailer “confidence that our pro growth is sustainable.”
“We are really pleased to see better-than-expected adoption rates for the new [MVPs Pro Rewards and Partnership] program, and we expect to build on this momentum with the pros as we launch enhanced features to the loyalty program in the coming months,” said executive vice president of stores Joe McFarland. “Through this program, we are also gaining valuable insight about our pro customers that will enable us to better anticipate and meet their project needs through our pro CRM platform and allow us to continue to expand our share of wallet with these valuable customers.”
McFarland said Lowe’s is also expanding its pro fulfillment capabilities and recently opened a pro fulfillment center in Charlotte. The Charlotte facility is stocking top CKUs that “pros consistently need in job lot quantities,” according to McFarland.
“As we pilot this new approach to pro fulfillment, we are building on our existing job site delivery capabilities handled through our stores and Lowe’s pro supply branches today,” McFarland said. “Although we are pleased with our 600 basis points of growth in pro penetration over the past three years, improving our fulfillment capabilities will allow us to accelerate this growth and continue to gain market share.”
Quarterly Results
The comparable average ticket at Lowe’s grew 9.1% in the first quarter, driven by higher pro sales, increased levels of product inflation, and commodity inflation. U.S. comp sales were down 3.8% in the first quarter, but up 19.7% on a two-year basis. Online sales increased 2% in the quarter and over 39% on a two-year basis for the company. Bill Boltz, executive vice president of merchandising, said pro momentum helped deliver strong positive comp growth in the building products category. In the quarter, 10 of 15 merchandising categories posted comps above the company average, while eight categories were up over 20% on a two-year basis.
