### Lowe's Faces Sales Slump As Shoppers Shy Away From Big Projects

Lowe's, the renowned home improvement giant, has recently observed a notable shift in consumer behavior, which is significantly affecting its sales. As per their latest earnings report, the company's comparable sales experienced a year-over-year decline of 1.7% in the first quarter, with the number of transactions falling by an even steeper 3.9%. Foot traffic has also decreased, with Placer.ai revealing a 3.6% drop in visits and a 3.7% decline in visits per location during the same period. In April alone, store visits decreased by nearly 7%.

Despite this trend, Lowe's managed to generate an operating income of $2.4 billion this quarter, which is still about 6% less than what the company earned in the same period last year. The decrease in sales is largely attributed to reduced spending on major home improvement projects. Bill Boltz, the Executive Vice President of Merchandising at Lowe's, indicated that both adverse weather conditions in February and a deliberate postponement of larger purchases by customers have contributed to the slump.

The company's CEO, Marvin Ellison, highlighted elevated mortgage rates as a significant factor driving this trend. With the average 30-year mortgage rate in the U.S. remaining above 6%, potential homebuyers are shying away from purchasing new homes. Data from the National Association of Realtors showed a 5.9% month-over-month reduction in existing home sales in March, alongside an 8.1% increase in housing inventory.

Lowe's main competitor, Home Depot, has also observed similar consumer behavior influencing their lower-than-expected sales for the first quarter. Home Depot CEO Ted Decker noted that consumers are focusing on smaller projects like painting and yard work instead of undertaking more significant renovations, primarily due to high interest rates.

Additionally, Lowe's is preparing to mitigate potential cost increases due to a 10% baseline tariff imposed by former President Donald Trump on internationally imported goods, which may lead to higher prices once reciprocal tariffs resume in July. Ellison stressed the company's commitment to keeping prices competitive through strategic sourcing and reducing dependency on imports from countries with high tariff rates, such as China.

Presently, about 20% of Lowe's products are imported from China. However, Ellison affirmed the company's ongoing efforts to diversify its sourcing strategies both domestically and globally to minimize impacts on customers. The global sourcing team at Lowe's is actively seeking new opportunities to further broaden their supply chain and ensure competitive pricing for consumers.