February 24, 2022
The home improvement industry, which includes the sale of building materials, appliances, décor, and other home enhancements, has enjoyed robust activity since the onset of the pandemic. A shortage of housing, record high home valuations, low interest rates and many consumers opting to spend more time at home has created a perfect storm – to the delight of industry retailers.
In 2021, home improvement sales in the United States amounted to approximately $538 billion, according to market research provider Statista. While demand may have waned since pandemic heights, the Leading Indicator of Remodeling Activity (LIRA) expects “strong growth” in home improvement and maintenance expenditures this year. Produced by the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University, LIRA provides a short-term outlook of national home improvement and repair spending to owner-occupied homes.
As the home improvement – and the overall housing markets – continues its ascent, let’s take a quick look at some of the leading publicly traded players in the space.
Let’s start with the retail giants. With 2,317 retail stores, industry leader Home Depot, Inc. (Tii:HD) is coming off of a strong year. Sales for the fourth quarter of fiscal 2021 reached $35.7 billion, an increase of $3.5 billion, or 10.7% from the fourth quarter of fiscal 2020. Comparable sales for the fourth quarter increased 8.1%, and comparable sales in the U.S. rose 7.6%. For fiscal 2021 full-year, the retailer reached a milestone by exceeding $150 billion in sales. This strong performance was driven by contractors purchasing lumber and other supplies and Millenials tackling DIY projects in their first homes.
Home Depot’s main rival, Lowe`s Cos., Inc. (Tii:LOW) operated 1,971 home improvement and hardware stores in the United States and Canada, representing 208 million square feet of retail selling space as of January 28, 2022. The retailer reported fiscal fourth-quarter net earnings of $1.2 billion on $21.3 billion in net sales, an increase of 23.3% and 5%, respectively, from the same period last year. The company attributed the strong performance to a 6.9% increase in comparable sales and focus on productivity and enhanced pricing strategies. Lowe’s, whose fiscal 2021 sales exceeded $96 billion, raised its fiscal 2022 sales outlook to between $97 billion and $99 billion.
As a retailer of natural stone and man-made tiles, Tile Shop Holdings, Inc. (Tii:TTSH) is coming off the best quarter in company history, thanks to an increase in home improvement projects. The operator of 143 stores in 31 states and the District of Columbia is coming off a third-quarter in which net sales Increased 13.2% to $92.24 million, and comparable-store sales grew 12.8%. Another company coming off a record third quarter, Builders FirstSource, Inc. (Tii:BLDR) is the largest U.S. supplier of building products, prefabricated components, and value-added services to the professional market segment for new residential construction and repair and remodeling. Driven by demand for single-family housing, net sales for the period were $5.5 billion, a 62.7% increase compared to the combined pro forma prior-year period.
Homeowners aren’t the only ones looking to upgrade their digs. The Sherwin-Williams Co. (Tii:SHW), a global leader in manufacturing, development, distribution, and sale of paint, coatings and related products, has a new global headquarters under construction – a one-million-square-foot facility in downtown Cleveland. The construction comes on the heels of a strong 2021 in which consolidated net sales increased 8.6% in the year to a record $19.94 billion. While supply chain disruptions, inflation and ongoing challenges tied to the pandemic impacted results, the company expanded its reach by opening 79 paint stores in the U.S. and Canada and hiring approximately 1,400 management trainees.
It’s uncertain how long the home improvement market will remain hot – particularly given that rising interest rates and supply chain challenges remain serious factors. But for now, the home improvement wave is showing little signs of crashing.
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