By Nicholas P. Brown
(Reuters) – As Home Depot and Lowe’s get set to report earnings this week, April sales data from independent firms have investors gauging the likelihood of recession against the uncertainty of tariff whiplash.
With homeowners tending to lawns, gardens and DIY projects as the weather warms, investors are keeping an eye not just on the home retailers’ sales, but indicators about the health of the consumer.
“People don’t have the savings they did during the pandemic, and they’re relying on high employment and wage growth to continue to be able to spend,” said Mark Mathews, executive director of research at the National Retail Federation.
Home improvement spending tends to be a bellwether for broader economic health, Mathews said, because it reflects consumers’ ability to take on big projects, and can be a leading indicator of activity in the housing market.
April credit and debit card sales were not promising. Spending at building and garden supply stores fell 2% year-over-year in April, even as every other retail category saw growth, according to May data from NRF.
At Lowe’s, April sales tumbled nearly 3% year-over-year after having risen 6.6% in March, debit and credit card purchase data from Affinity Solutions revealed. Home Depot saw just a 0.7% jump after a 4.2% rise in March, according to the data.
Consumers’ intention to shop at these stores in the future also fell slightly in April, according to HundredX, a company that uses surveys to gauge public sentiment about retailers.
Compared to April of 2024, both stores saw about a 1% year-over-year decrease in future purchase intent. Among lower-income shoppers – those more vulnerable to economic instability – the drop was sharper, HundredX found.
Home Depot and Lowe’s declined to comment.
It might indicate that a rebound in the stalled U.S. housing market is a ways off. “People keep baking in the assumption of a recovery, and then it keeps getting pushed out,” said Courtney Yakavonis, a senior equity analyst at Columbia Threadneedle Investments, which holds stock in both retailers. “I believe it’s going to happen eventually, but the timeline is murky.”
Others in the sector have hinted at the specter of a slowdown. Tractor Supply Co. cut its annual profit forecast in April, citing macroeconomic uncertainty.
But experts interviewed by Reuters weren’t ready to forecast a recession. Wage and job growth is fairly steady, and there could be plenty of reasons for an April sales slump – including tariffs, said Morningstar analyst Jaime Katz.
President Donald Trump on April 2 announced sweeping tariffs on a host of trade partners, only to later pause them for 90 days. He imposed a virtual embargo on Chinese imports on April 9, but earlier this month paused those tariffs as well.
The uncertainty has discouraged consumers from buying big items, Katz said, which is why she’ll be putting more weight on how Home Depot and Lowe’s performed last quarter with professional contractors.
Yakavonis said she wants to hear more about how Home Depot and Lowe’s will manage tariffs. Though neither company is overly exposed to China, tariff uncertainty makes it hard to assess their financial health.
“It’s hard to just do the Excel math without knowing what steps they’re taking to offset that,” she said.
Home Depot is due to report earnings on Tuesday, while Lowe’s is slated to report on Wednesday.
(Reporting by Nicholas P. Brown; Editing by Anna Driver)
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