Home Improvement

The early indications are encouraging, but will the recovery in the home improvement field be sustained?

Both The Home Depot and Lowe’s have raised sales and earnings forecasts for 2010 after improved performance in bellwether markets like Florida and California, where sales had plummeted in the wake of the housing and mortgage crises. The Home Depot’s same-store sales rose 3.3 percent in the first three months of this year, topping Lowe’s 2.4 percent gains — the first positive quarterly same-store sales movement for Lowe’s in nearly four years.

Some of this year’s sales increases have been attributed to the federal funds available to consumers for the purchase of energy efficient major appliances, which typically are big ticket discretionary purchases. As The Home Depot CFO Carol Tome cautiously observes, “It’s going to take some time for people to spend a lot of money in that category” as they struggle to answer fundamental questions like “‘Is my house an investment, or is my house an expense?’”

This sentiment was echoed by Robert Niblock, chairman and CEO of Lowe’s. “It is still a fragile mindset for the consumer,” he said in explaining why his company is expecting only moderate sales improvement this year but “significant growth” in 2011, “when many economists are predicting housing prices will bottom out.”

Privately held Menards keeps much to itself as it expands across the mid-section of the country. Earlier this year, it closed a store in the Minneapolis suburb of Eden Prairie in order to build a superstore at the same location. The new facility, scheduled to debut in spring 2011, will be a two-story affair, with bulkier and slow-moving goods on the upper level to make room for non-traditional merchandise like pet supplies, convenience food and grocery items at the front of the entry level.