Lowe’s finalizes billion-dollar acquisition to win back customers

Last year, Lowe’s faced significant challenges in attracting customers; many are struggling with inflation, the impact of tariffs and an uncertain housing market.

The home improvement retailer said in its latest earnings report that sales rose slightly in the second quarter of this year; however, customer behavior remained concerning.

• Comparable sales increased 1.1% year over year.

• The average amount of money customers spent per purchase increased by 2.9%.

• Comparable transactions decreased 1.8%.

Moreover, latest data A study from Placer.ai found that overall customer visits to Lowe’s same-store locations were down 3.9% in the quarter compared to last year.

during a earnings call In August, Lowe’s Chief Financial Officer Brandon Sink said difficulties in the U.S. housing market and high labor costs were causing Pro clients (professional contractors) to pull back from completing large home improvement projects and instead focus on smaller projects involving repairs, remodeling and maintenance.

“We are still working through some short-term challenges, including high mortgage rates; cautious consumer affordability remains a pressure point leading to the lock-in effect we are seeing, as well as the stagnant housing market.”

While the average 30-year mortgage interest rate continues to remain above 6 percent, last report The National Association of Realtors (NAR) found that existing home sales in August fell 0.2% month over month, while the average existing home sales price increased 2% year over year to $422,600.

“Home sales have slowed over the past few years due to high mortgage rates and limited inventory,” NAR Chief Economist Lawrence Yun said in a press release. “But mortgage rates are falling and more inventory is coming to market, which will boost sales in the coming months.”

As Lowe’s Pro customers continue to avoid tackling major home renovation projects, the retailer has signed a multibillion-dollar deal to help combat this alarming trend.

Lowe’s carries hardware, drywall, insulation, ceiling systems, etc. for residential and commercial professionals. It completed its $8.8 billion acquisition of Foundation Building Materials, a leading distributor of interior building products such as.

The home improvement retailer first announced plans to acquire Foundation Building Materials (FBM) in August. Through this acquisition, Lowe’s plans to expand its offerings to Pro customers, hoping it will create a positive domino effect on sales and profits.

Related: Home Depot announces convenient service for customers

“The completion of the acquisition of FBM is an important step in accelerating our Total Home strategy to serve large Pro customers in a $250 billion total addressable market,” said Marvin Ellison, Lowe’s CEO. Press release. “We would like to extend a warm welcome to the FBM team and look forward to building on their proven track record of profitable growth.”

This move by Lowe’s follows its acquisition of Artisan Design Group (ADG) in June for approximately $1.3 billion. ADG specializes in providing home builders and property managers with design, distribution and installation services for interior finishes such as flooring and cabinets. The move also helped Lowe’s expand its professional offerings to customers.

Lowe’s big bet on building out its Pro business to boost sales follows in the footsteps of its biggest rival, Home Depot, which recently increased its Pro offerings after realizing its customers were avoiding major home renovation projects. Foot traffic in the same store decreased by 2.6% in the second quarter of this year compared to the same period last year. data From Placer. ai.

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Last month, Home Depot completed its $5.5 billion acquisition of GMS, a major distributor of construction products such as drywall, ceilings and steel framing.

A year ago, it acquired construction material supplier SRS Distribution for $18.25 billion. SRS distributes landscaping, roofing and pool construction products.

“The addition of GMS further strengthens SRS’ position as a leading multi-category building materials distributor, bringing distinct capabilities, product categories and customer relationships that are highly complementary to SRS’ business today,” said Home Depot CEO Ted Decker. Press release last month. “We want to serve Pro throughout the entire project, and the combination of SRS and GMS will enable cross-selling synergies, strengthen our capabilities and provide even more opportunities to grow with this important customer.”

Related: Home Depot signs billion-dollar acquisition to win back shoppers

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